Tuesday, February 04, 2003

February 4, 2003. Context-based Clustering™

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February 4, 2003. Context-based Clustering™

Author: Dr. Augustine Fou, Marketing Science Consulting Group, Inc. w/ Theodora Kostova

As budgets get tighter, more accountability is demanded, and consumers wield ever more choice and power, advertising as we know it must change. No longer is it viable for advertisers to spend millions of dollars on TV spots or full-page ads only to get estimates of how many people might have seen them. In the near future, advertising must have more tangible calls-to-action, more detailed data about customer response and interactions, and, of course, more scientific evidence of results. This article will explore trends already seen in the advertising industry and the economic forces necessitating its evolution. We will also propose "context-based clustering" as a new marketing methodology where several advertisers "cluster" their products in joint marketing programs based on consumers' "contexts" rather than their own.

Context Today In many ways, the advertising being done today attempts to put a frame around or give context to some product or service. They attempt to associate desirable attributes to the product or service and thus help customer make purchase decisions. For example, Target creatively features a wide variety of products which they carry in stores to color themed television commercials -- e.g. the green TV spot showcases Sprite soft drink, Irish Spring soap, Swiffer household mop, Trident gum, and Cascade dishwasher detergent. Magazines such as Seventeen use written articles and related content to provide the context for their readers to select which items to buy because they are trendy, stylish, etc. Celebrity endorsements are another well-established context-based advertising technique – by association, they imply to the customer that they can be athletic like Michael Jordan if they wear Nike shoes; stylish like James Bond if they wear Omega watches; and beautiful like Cindy Crawford if they wear Revlon cosmetics. Cause-related marketing like Avon sponsoring breast cancer awareness is also a tried-and-true advertising technique that associates positive attributes to a particular product or service. The diverse advertising techniques mentioned above have “context” as a central thread which ties them together – i.e. they all provide the customer some sort of context for considering and purchasing particular products and services.

Economic Forces Today Beyond the tried-and-true techniques of traditional advertising, strong economic forces are also at work reshaping advertising as we know it. As competition continues to increase, budgets continue to get tighter, and technologies continue to give consumers more power and choice, advertisers must employ more and more creative techniques to “stay alive” let alone get ahead. Overt product placements are now prolific in mainstream TV and film – from Frito Lay’s Doritos as food rewards on CBS' Survivor, to Tony’s Motorola StarTac cell phone on HBO’s Sopranos, to Ford vehicles on ABC’s Alias, to a can of Dr Pepper prominently placed on Spider Man’s nightstand. Not only do the programs show products being used “in their natural environments” – i.e. “context” – but such product placements are also much cheaper and arguably more effective than standalone advertising spots. Traditional 30-second spots are costly to produce, must establish their own context in the short amount of time, and can easily be skipped by consumers armed with a remote control or TiVo.

Other recent examples of advertisers seeking to save costs include Pepsi and Frito Lay’s joint TV commercials, KFC’s “meal deals” which feature Pepsi products, and MGM’s 20th anniversary James Bond, Die Another Day, which employed cooperative advertising – Revlon ran Bond-themed TV spots featuring Halle Berry, Braun ran TV spots featuring James Bond’s shaver of choice, and Ford touted the pink Thunderbird driven by Jinx in the movie. MGM effectively “offloaded” large chunks of advertising expenditures to their partners and got a lot of mileage from such cross-marketing tie-ins which touched different constituencies.

Behavioral Roots Behavioral psychology and studies of consumer behavior reveal that “context-based” decisionmaking also pervades other aspects of life. For example, religion, social circles, political parties, place of work, and even the gym to which one belongs provides the context for decisions and actions as diverse as finding someone to date, buying “in” clothes, or summering in the Hamptons. “Context” provides the necessary filters which help individuals narrow down their choices and ultimately make the choice, whether it is who to go out with, what to buy, or where to vacation.

Consumers have their own set of “filters.” These filters are established throughout each consumer’s growing-up process and influenced by their “surroundings.” Consumers also have their own “contexts” – e.g. favorite celebrity, TV shows they watch, magazines they read, gym they join, etc. Filters help individuals narrow down the available choices to the few that they are most likely to choose. Contexts help individuals make the choice based on comfort-level and trust-level. No matter how much advertising an advertiser does, it is unlikely to change or disrupt these individual consumers’ “filters” or “contexts.” Consider the following hypotheticals – “is a coupon from Pepsi really going to get a consumer to drink Pepsi instead of Coke, which he grew up drinking; or is a $25 discount offer really going to get someone to buy Banana Republic clothing if it is not her style; or is a loyalty program by Pizza Hut going to get a customer to eat pizza again at lunch when she already had it yesterday and really feels like having a salad today?” Clearly, the consumers’ own choice rules.

Another recent example that context is key is Budweiser’s Superbowl ad featuring a zebra looking at “instant replay.” By many accounts, it was the most memorable ad of the entire Superbowl. It is likely that it struck a “contextual chord” with all the football fans who experienced an “ah-ha” moment when they got what the commercial was all about. Other ads which tried to artificially associate attributes to products (Cadillac as “fast” – car heating up because it was driving so fast; Michelob Ultra as “sexy” – two sexy young people working out and then cuddling; or Levi’s jeans as “bold” – two Levi’s wearing young people facing up to an oncoming stampede of computer generated bulls.) or simply tried to be funny or “in-your-face” largely failed to communicate within the consumers’ own contexts; rather, they “pushed” the advertiser’s perception of what the brand is or should be.

Given this realization that “context” governs such a large part of individual consumers’ lives and decisionmaking process, advertisers should pay more attention to and do more research about customers’ real “contexts.” No longer is it viable for advertisers to merely do focus groups and then go on to spend tens of millions of dollars on TV ads based on such artificial feedback or on the statistically suspect Nielsen ratings system. No longer is it acceptable for them to force their own contrived value proposition upon consumers. No longer is it economical for advertisers to advertise their own product by itself.

Context-based Clustering Companies currently still do their marketing by what might be called the “push” method – they try to convey what they think their brand is or should be. If advertisers take the time to study and understand consumers’ natural “filters” and “contexts” they would be better able to communicate the value proposition of their products or services in the context of the consumers’ needs and decisionmaking process, thereby making much more effective ads.

While in the past most advertisers would only advertise their own products, some are also starting to advertise together – mostly in pairs – like the Coach edition Lexus, the Eddie Bauer edition Ford Explorer, or Frito Lay and Pepsi snack products for the big game. However, in most cases, these pairings or the joint marketing efforts are defined by existing corporate lines, relationships, or partnerships as opposed to being based on a true understanding of consumers’ needs or contexts. For example, Pepsi and Frito Lay advertise together because or their corporate relationship, not because they studied consumers’ needs; but perhaps some customers prefer to buy Coke and Doritos for Sunday football, instead. In such a scenario Frito Lay may be missing out on a sale, which they would have gotten if they had paired up with Coke instead. Again, it behooves the advertiser to study consumers’ contexts and base their advertising on such contexts, rather than their own corporate alliances.

If we take this trend further out into the future – given that budgets will continue to get tighter, more efficiency will be demanded of advertising, and consumers will continue to get more power and choice, we can see that advertisers must move beyond “pairings;” indeed they may have to or want to advertise with several partners. We call this “clustering.” Clustering means the grouping of interrelated products and services based on some natural or logical context. For example, consumers instinctively know to buy flour, butter, sugar, and vanilla extract together when they are planning to bake a cake; consumers also naturally buy soda, popcorn, and other snacks when they are preparing to watch football with their buddies on Sunday; consumers buy haircare, skincare, and makeup products, as well as fancy clothes when they are preparing for a big date. The point is that consumers already do this naturally -- cluster products within their own contexts; and yet advertisers have not tapped into these “contexts” to make their advertising efforts more effective and save costs at the same time.

Conclusions So in summary, context is about trust and the simplification of the decision making process for the consumer. In this day and age where there are a huge number of choices (i.e. products) with very little differentiation in value proposition (i.e. orange soda from Coke – called Minute Maid – versus orange soda from Dr Pepper – called Sunkist), “context” becomes ever more important to a consumers’ choice. Consumers already have their own natural “contexts” and already make purchases of “clusters” of products based on such contexts. So advertisers should heartily embrace this trend towards “context-based clustering” and advertise based on consumers’ contexts and not their own. For advertisers, “context-based clustering” represents a way to make the advertising efforts dramatically more effective while sharing the costs amongst a larger number of advertising partners.


2003, Dr. Augustine Fou

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