SLOW Movement

WSJ: Japan's Philanderers Stay Faithful to Their 'Infidelity Phones'

THE A-HED

January 11, 2013, 2:21 a.m. ET

Japan's Philanderers Stay Faithful to Their 'Infidelity Phones'

Cads Attracted to How Outdated Device Hides Calls, Texts; Juggling Three Girlfriends

By DAISUKE WAKABAYASHI

Philanderers in Japan prefer one particular model of mobile phone, as WSJ's Daisuke Wakabayashi reports. He runs down how the phone works.

TOKYO—Over the past few years, as many people rushed to trade in their old phones for smartphones, Japan's philanderers have remained faithful to one particular brand: Fujitsu Ltd.'s older "F-Series" phones, which feature some attractive stealth privacy features.

The aging flip-phone—nicknamed the "uwaki keitai" or "infidelity phone"—owes its enduring popularity to customers who don't believe newer smartphones are as discreet at hiding their illicit romances.

Bloomberg News

Older DoCoMo phones, shown 2009, are still popular because of privacy features.

A Japanese blogger who goes by the name Bakanabe and writes anonymously about picking up women, said he looked into buying a new device but found the privacy settings fell short of his current phone. Instead, he opted to refurbish his battered, three-year-old Fujitsu flip-phone with a new casing and a new battery.

"Women may want to check my phone for strange emails or calls when I'm not around. With Fujitsu's 'privacy mode,' they can't see that information at all," he said in an email. "The key is to give off the impression that you're not locking your phone at all."

Fujitsu's "privacy mode" is a layer of nearly invisible security that hides missed calls, emails and text messages from contacts designated as private. If one of those acquaintances gets in touch, the only signal of that communication is a subtle change in the color or shape of how the battery sign or antenna bars are displayed. If ignored, the call doesn't appear in the phone log.

The changes are so subtle that it would be impossible to spot for an untrained eye. When the privacy mode is turned off through a secret combination of keys, the concealed calls and messages appear, and voice mail becomes accessible.

This comes in handy to another blogger who calls himself "Poza." He claims to have various romances on dating sites while juggling three girlfriends. He said he was introduced to the Fujitsu phone nearly five years ago and uses the privacy features to keep from getting caught. He says he recently bought an iPhone, but giving up his Fujitsu phone to carry just a smartphone is "unthinkable."

"In terms of keeping my cheating hidden, this does more than enough," he wrote in an email. Poza, who says he works for a design company in western Japan, declined to provide his real name.

The older Japanese phones also run on software created for the domestic market. For years, this gave the manufacturers significant control over new features but limited their international reach. With smartphones running Google Inc.'s Android operating system—the main software option for today's handsets—the Japanese makers don't have as much control to develop new features.

Fujitsu started offering the privacy mode in 2002 as part of more stringent security requirements for all phones offered by NTT DoCoMo Inc., Japan's largest carrier. Takeshi Natsuno, a senior DoCoMo executive at the time, said he insisted on tougher security after hearing too many stories of couples splitting or workers landing in hot water because they left their phones out and unguarded.

FUJITSU F-03 PHONE

"If Tiger Woods had this Japanese feature in his phone, he wouldn't have gotten in trouble," said Mr. Natsuno, now a professor at Keio University's Graduate School of Media and Governance.

The phones, though, aren't available outside Japan.

With emails, phone calls and text messages all coming into the phone, it is also where many affairs are carried out. Toshiyuki Makiguchi, who runs Uwaki Rescue SOS, a Tokyo-based consulting company to help people find out if their partners are cheating, said more than half of his 600 customers a year find some evidence of cheating on their partner's mobile phone.

Fujitsu promotes the strong security of its phones, but does so without acknowledging its subset of loyal cheater fans. Fujitsu spokesman Naoki Mishiro said tight security is critical these days with so much sensitive information on handsets. He declined to comment on the infidelity phone nickname.

These days, the devotion of infidelity phone users is being tested. Both Japanese carriers and Fujitsu are starting to phase out the older phones for an all-smartphone lineup. And a growing number of so-called cheater apps are looking to bring similar functions to smartphones.

As a result, Fujitsu has added some of the privacy features to its smartphone lineup. The company's new models conceal calls and emails from contacts marked private. Like its older cousin, it alerts the users with a subtle change in the battery or antenna mark. However, the privacy mode requires a separate mail and address book app designed by Fujitsu, rather than the default email program and address book provided by the carrier.

"It's totally useless," said blogger Bakanabe, who researched the Fujitsu smartphone before sticking with his existing phone. "I hold out hope that Fujitsu adds the real privacy mode with its next smartphone."

Fujitsu said it aims to roll out more convenient and secure features in the future.

The world appears to be catching up with the infidelity phone.

Delaware-based CATE, or Call and Text Eraser, has been offering a similar level of security since last year. It is an app for Android-based smartphones that intercepts and hides text messages and phone calls from people on a selected "blacklist." Those texts and calls, as well as the app itself, remain hidden until the user punches in a code.

"I believe most cheaters use text and get caught by the text," said Neal Desai, a 25-year-old entrepreneur from Austin, Texas, who raised $70,000 for the $4.99 app on ABC's reality TV show "Shark Tank."

At $4.99 per download, CATE has been downloaded more than 10,000 times, and an iPhone version will be available soon, said Mr. Desai.

When told about Fujitsu's privacy features that have been available in Japan for several years, Mr. Desai was impressed: "That's more genius than my app."

—Miho Inada contributed to this article.

Write to Daisuke Wakabayashi at [email protected]

NY Times: Where Apps Become Child's Play

 

July 7, 2012

Where Apps Become Child’s Play

By NICOLE LaPORTE

AN iPad case that doubles as a teething toy? Yes, such a product exists. It’s known as the Fisher-Price Laugh & Learn Apptivity Case (also available for iPods and iPhones) and it sells for $35.

It’s well known that children are quick to learn new technology. But 6-month-olds? How did the idea arise for a toy that allows its user to gnaw on its brightly colored handles and drool on its protective screen, while also manipulating apps for counting and singing?

At Fisher-Price, such products result from a process known as spelunking, which in its literal sense means to explore caves. But in the realm of toy making, it refers to the simple act of watching children play.

A similar process is alive and well at other companies, like LeapFrog, maker of the LeapPad, a touchscreen tablet for children as young as 3; and at Hasbro and Crayola, which have partnered with digital media companies to create apps for very young children.

At Fisher-Price, “we bring babies in with their moms and watch them at play with different types of apps, different types of products,” said Deborah Weber, senior manager of infant research. Her job, she said, is to “understand the ages and stages of babies — what they can and can’t do, what their interests are, and the growing needs of families today.”

Spelunking has been around since the Fisher-Price PlayLab was formed in 1961, the same year that bricks made by a Danish company called Lego made their American debut. In its earlier days, the lab was filled with toys like a googly-eyed rotary phone known as the Chatter Phone, and the Corn Popper, a kind of mini-lottery machine on wheels.

Today, the lab, located at the Fisher-Price headquarters in East Aurora, N.Y., looks more like an Apple store. But instead of adults and teenagers, there are infants staring into computer screens, and parents and toddlers are passing iPads back and forth.

The setting is similar at LeapFrog’s Kid Lab in Emeryville, Calif., where digital devices and apps are tested by children who both have and haven’t had regular exposure to computers.

“Two years ago, it was harder to find kids who had used an iPhone or an iPad at home,” said Alissa McLean, a senior researcher in LeapFrog’s user experience group, which examines how children interact with online content and computers. “Now it’s not hard at all.”

“We used to talk about kids being the first generation of digital natives,” said Jason Root, chief content officer at the Ruckus Media Group, which has partnered with companies like Hasbro to create storybook apps. “Now we have a generation of newborns who are going to be weaned on touch devices.” 

At Fisher-Price, Ms. Weber said, “We see 6-month-olds batting at the screen, 9-month-olds swiping, and 12-month-olds pointing out objects to see.” Observations like these are passed along to toy producers and industrial designers, resulting in products like the iPad case and the Laugh & Learn Apptivity Monkey, which comes out in August.

The Apptivity Monkey would pass for just another stuffed animal if it didn’t have a thick, plastic iPhone case attached to its belly; the front of the case is made of see-through plastic. An iPhone can be placed inside, and a child can play apps on it, either by pressing on the iPhone directly or on the monkey’s paws, which interact with an array of alphabet and singing apps.

The monkey is big enough and soft enough so that the iPhone can sustain even major tumbles, Fisher-Price asserts. But the iPhone is not included. So doesn’t that make for a pretty expensive toy?

Maybe not. When Kathleen Kremer, another spelunker who is the company’s senior manager of user experience, was observing how preschool-aged children played with their parents’ iPhones and iPods, she stumbled on the “pass-back factor.”

“People are now on their second-generation iPad or second iPhone, so what they typically do with the old one is give it to their child, so the kids actually have ownership of these devices,” she said. She has also studied diaries and scrapbooks that parents were asked to keep, documenting their children’s behavior.

Because of the pass-back factor, the new Kid Tough Apptivity Case — similar to the Laugh & Learn product, but designed for older children — is made to fit all generations of the gadgets, Ms. Kremer said.  

Innovations like this are fueling the digital toy trend, according to Lisa Harnisch, senior vice president and general merchandising manager at Toys “R” Us. Last year, she said, the trend in children’s apps and app-related products “really started to heighten and explode.” Indeed, in the last year, there have been nearly three million downloads of Fisher-Price’s Laugh & Learn apps. By year-end, LeapFrog expects to have 325 apps at its online App Center, double the number at the end of 2011.

Not everyone sees this as a justification to ply infants with computers. “Infants learn best from real people and playing with real toys,” said Dr. Ari Brown, a pediatrician in Austin, Tex., and the author of “Baby 411.” “They learn how to communicate, how to engage with others and how to problem-solve using their five senses. While technology can offer a virtual way to learn some of these skills, they will never replace the value of interacting with humans or being able to manipulate and play with toys in one’s hands.”

In any case, it might be too late to stop an 18-month-old from discovering the joys of Netflix — selecting a movie or TV show to watch, or rewinding and replaying a favorite scene — something that Ms. Kremer has come across in her field research.

“It was pretty remarkable that she could master all those different steps,” she said of the tech-savvy toddler. “The motivation was there.”

E-mail: [email protected].

 

NY Times: The Yin and the Yang of Corporate

 

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January 26, 2012

The Yin and the Yang of Corporate Innovation

By STEVE LOHR

IN the hunt for innovation, that elusive path to economic growth and corporate prosperity, try a little jazz as an inspirational metaphor.

That’s the message that John Kao, an innovation adviser to corporations and governments — who is also a jazz pianist — was to deliver in a performance and talk on Saturday at the World Economic Forum in Davos, Switzerland. Jazz, Mr. Kao says, demonstrates some of the tensions in innovation, between training and discipline on one side and improvised creativity on the other.

In business, as in jazz, the interaction of those two sides, the yin and the yang of innovation, fuels new ideas and products. The mixture varies by company.

Mr. Kao points to the very different models of innovation represented by Google and Apple, two powerhouses of Silicon Valley, the world’s epicenter of corporate creativity.

The Google model relies on rapid experimentation and data. The company constantly refines its search, advertising marketplace, e-mail and other services, depending on how people use its online offerings. It takes a bottom-up approach: customers are participants, essentially becoming partners in product design.

The Apple model is more edited, intuitive and top-down. When asked what market research went into the company’s elegant product designs, Steve Jobs had a standard answer: none. “It’s not the consumers’ job to know what they want,” he would add.

The Google-Apple comparison, Mr. Kao says, highlights the “archetypical tension in the creative process.”

Google speaks to the power of data-driven decision-making, and of online experimentation and networked communication. The same Internet-era tools enable crowd-sourced collaboration as well as the rapid testing of product ideas — the essence of the lean start-up method so popular in Silicon Valley and elsewhere.

“These are business and management innovations lubricated by technology,” says Thomas R. Eisenmann, a professor at the Harvard Business School.

The benefits, experts say, are most apparent in markets like Internet software, online commerce and mobile applications for smartphones and tablets. “The cost of creation, distribution and failure is low, so it takes relatively little time, money and effort to float trial balloons,” says Randy Komisar, a partner in Kleiner Perkins Caufield & Byers, the venture capital firm, and a lecturer on entrepreneurship at Stanford.

That style of innovation is being applied well beyond Google’s products and Internet start-ups. The National Science Foundation, for example, is embracing the formula to try to increase commercialization of the university research it finances. Last fall, the foundation announced the first of a series of grants for what it calls the N.S.F. Innovation Corps. The 21 three-member teams received a crash course at Stanford in lean start-up techniques, and have been given $50,000 each and six months to test whether their inventions are marketable.

The lean formula, with its emphasis on constantly testing ideas and products with customers, amounts to applying “the scientific method to market-opportunity identification,” says Errol B. Arkilic, program director at the foundation.

Yet while networked communications and marketplace experiments add useful information, breakthrough ideas still come from individuals, not committees. “There is nothing democratic about innovation,” says Paul Saffo, a veteran technology forecaster in Silicon Valley. “It is always an elite activity, whether by a recognized or unrecognized elite.”

Successful innovation, Mr. Saffo observes, requires “an odd blend of certainty and openness to new information.” In other words, it is a blend of top-down and bottom-up discovery.

OPEN innovation isn’t a new idea. It flourished, in its way, even in the late 19th and early 20th centuries, notes Tom Nicholas, a historian at the Harvard Business School. In fields like electricity, pharmaceuticals and communications, big corporations including General Electric and Dow Chemical routinely monitored the research beyond their walls, and bought or licensed promising work, especially the inventions of university scientists. The result, Mr. Nicholas says, was a thriving “ecosystem of private and corporate innovation.”

A century later, the corporate labs at G.E. are trying to quicken the pace of innovation — but this is long-cycle innovation, since G.E.’s power generators, jet engines and medical-imaging equipment last for decades. The company is opening a software center in Northern California to make its machines more intelligent with data-gathering sensors, wireless communications and predictive algorithms. The goal is to develop machines, such as jet engines or power turbines, that can alert their human minders when they need repairs, before equipment failures occur. Such smarter machines, the company says, are early arrivals in what it calls the Industrial Internet.

To tap outsider ideas, G.E.’s research arm has made investments with venture capital funds in clean-energy technology and health care, and it works with corporations, government labs and universities on hundreds of collaborative projects. “We’re much more externally focused and connected to the outside world than we were several years ago,” says Michael Idelchik, G.E.’s vice president of advanced technologies.

Apple’s smartphones, tablets and computers typically have life spans measured in a few years instead of decades, with new models introduced regularly. But like G.E., Apple is in the hardware business, where innovation cycles are beholden to the limits of materials science and manufacturing.

Apple’s physical world is far different from Google’s realm of Internet software, where writing a few lines of new code can change a product instantly. The careful melding of hardware with software in Apple’s popular products is a challenge in multidisciplinary systems design that must be orchestrated by a guiding hand — though it will no longer be the hand of Mr. Jobs, who died last October.

Yet Apple has also repeatedly displayed its openness to new ideas and influences, as exemplified by the visit that Mr. Jobs made to the Palo Alto research center of Xerox in 1979. He saw an experimental computer with a point-and-click mouse and graphical on-screen icons, which he adopted at Apple. It later became the standard for the personal computer industry.

In 2010, Apple bought Siri, a personal assistant application for smartphones. At the time, it was a small start-up in Silicon Valley that originated as a program funded by theDefense Advanced Research Projects Agency of the Pentagon. Last year, Siri became the talking question-answering application on iPhones.

Apple product designs may not be determined by traditional market research, focus groups or online experiments. But its top leaders, recruited by Mr. Jobs, are tireless seekers in an information-gathering network on subjects ranging from microchip technology to popular culture. “It’s a lot of data crunched in a nonlinear way in the right brain,” says Erik Brynjolfsson, director of the M.I.T. Center for Digital Business.

Apple and Google pursue very different paths to innovation, but the gap between their two models may be closing a bit. In the months after Larry Page, the Google co-founder, took over as chief executive last April, the company eliminated a diverse collection of more than two dozen projects, a nudge toward top-down leadership. And Timothy D. Cook, Apple’s C.E.O., will almost surely be a more bottom-up leader than Mr. Jobs.

“What we’re likely to see,” Mr. Kao says, “is Google and Apple each borrowing from the playbook of the other.”

NY Times: Using Google's Data to Reach Consumers

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December 22, 2011

Using Google’s Data to Reach Consumers

By ANDREW ADAM NEWMAN

THE viruses that Google researchers usually focus on are those that strike computers, but in recent years, they have studied those that infect people, too.

Google correlated billions of flu-related Web searches from 2003 to 2008 with actual Centers for Disease Control and Prevention data over the same period. Then, because Web searchers’ Internet addresses indicated location, Google devised a formula to estimate regional flu activity based solely on searches, with a reporting lag of only about a day, outdoing C.D.C. flu reports, which typically are published a week or two after outbreaks.

In 2009, researchers from Google and the C.D.C. wrote an article summarizing their findings in the journal Nature, and stated that the new predictive model — now called Google Flu Trends and accessible in an interactive format online — could be a boon to public health. “Up-to-date influenza estimates may enable public health officials and health professionals to better respond to seasonal epidemics,” they wrote.

What the researchers probably did not predict was that the Google flu data would end up being the cornerstone of an advertising campaign.

For the Vicks Behind Ear Thermometer, a new product that determines temperature when placed in the soft area behind the ear, marketers wanted to reach mothers, the primary purchasers of thermometers.

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A mobile campaign by Blue Chip Marketing Worldwide, which is based in Chicago, places the ads for the thermometer within popular apps like Pandora that collect basic details about users, including their sex and whether they are parents, and can pinpoint specific demographics to receive ads.

But not all mothers will see the ad on their smartphones. Rather, the ads will be sent only to devices that, according to Google, are in regions experiencing a high incidence of flu. Also, the ads will only be delivered to mothers within two miles of retailers that carry the thermometer, including Walmart, Target and Babies “R” Us.

“Flu levels in your area are high,” says the banner ad within an app. “Be prepared with Vicks revolutionary Behind Ear Thermometer.”

Tapping the ad, which also notes the nearest store that sells the thermometer (“Buy at Rite Aid .3 miles away.”), brings users to a product page with items including an informational video and a list of nearby retailers. Tapping a retailer reveals directions there.

Also handling the campaign, which was introduced in a limited way early in December and will be at full throttle when flu season peaks in January and February, is Where, the location-based mobile advertising network that is a division of PayPal, a unit of eBay.

“It understands how this mom lives and shops, and she receives the message in the most relevant manner,” said Stanton Kawer, chief executive of Blue Chip, about the campaign. “It is so fantastically targeted that it’s really amazing.”

The new thermometer is made by Kaz, which through licensing agreements markets thermometers under the Vicks and Braun brands (both owned by Procter & Gamble), and which also makes Vicks humidifiers.

Sales for thermometers follow flu season, picking up in October, peaking in January and February, and tapering off in March and April, according to Lara Peterson, a vice president for marketing at Kaz, a subsidiary of Helen of Troy Limited.

Smartphones are used by 53 percent of Americans ages 18 to 24 and 64 percent of those 25 to 34, according to Nielsen. Google reports that 79 percent of owners use them for shopping purposes like comparing prices and locating a retailer.

Organizations including the American Academy of Pediatrics now recommend against mercury thermometers (citing the danger of both mercury and glass). Sales of digital thermometers are up, growing about 17 percent from 2005 to 2010, according to a report from Mintel, a market research firm.

The American Academy of Pediatrics still recommends taking temperature rectally for newborns under 3 months, and not taking it orally until children are at least 4 years old. The newest generation of digital thermometers measure parts of the body including the underarm, forehead and inside the ear.

The new Vicks thermometer, with a suggested retail price of $40 to $50, is the first in the category made specifically to measure behind the ear, according to Ms. Peterson, of Kaz.

“It measures fever in a very noninvasive way,” said Ms. Peterson, adding that the location’s proximity to the carotid artery, which carries blood to the brain, ensures accurate readings.

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Because feverish children can be particularly fidgety, the ease of use strikes a chord with parents. Kaz recently commissioned a study where the device was used to take the temperature of napping babies at a day care center, and 95 percent slept through it.

In addition to print and online advertising, also by Blue Chip, commercials for the thermometer will be shown in more than 2,600 pediatricians’ offices for two months beginning Jan. 15, through a deal with KidCare TV, which provides informational programming to waiting rooms.

As for the mobile campaign aimed at mothers in high-flu areas, Brian Morrissey, editor in chief of Digiday, an online publication that covers digital marketing and media, said being tracked by advertisers had a “creepy factor” for some consumers.

Many Facebook users, for example, balked when in 2007 it introduced Beacon, a program that shared their online purchases with their social network. “Creepiness comes in when consumers are surprised,” Mr. Morrissey said.

But he predicted consumers would actually like the thermometer campaign.

“It seems like they’ll pull it off, because they’re using the data in a smart way, for advertising that’s more relevant and useful,” Mr. Morrissey said.

WSJ: Why You Didn't Hit 'Reply'

HEAD CASE
DECEMBER 10, 2011

Why You Didn't Hit 'Reply'

Online, friends still get premium treatment

• By JONAH LEHRER

It's hard to imagine a world without email. It's now the dominant form of exchange, with the typical American adult spending more than an hour a day managing the inbox. (People under 25 now spend more time texting from their cellphones than talking on them.) The shift has been most dramatic for "knowledge workers" like computer programmers and lawyers, who devote nearly half their workdays to email.

Email has also profoundly influenced the kinds of people we interact with. According to a new study by Stefan Wuchty and Brian Uzzi at Northwestern University, we exchange the highest volume of email with those people we know the least. Perhaps it's a new colleague, or a friend of a friend, or a total stranger writing out of the blue: Email makes these exchanges possible.

Getty Images

'An easy way to see how you feel about a person: How long does it take you to return their email?'

"These are folks you almost certainly wouldn't talk to on the phone," Mr. Uzzi says. "You also probably wouldn't bump into them on the street. But email allows us to communicate with them all day long."

What makes this study noteworthy is that the researchers had access not only to the complete email records of a midsize company—nearly 1.5 million messages sent by 1,052 employees over a six-month time span—but also to a detailed map of social relationships. (The employees were asked to list all of their personal contacts.)

By comparing these two data sets, Messrs. Wuchty and Uzzi developed an algorithm that let them predict the nature of a given relationship based solely on the details of an email exchange. "We didn't need to read the messages or anything like that," Mr. Uzzi says. "Just looking at the speed of a reply was more than enough."

People reply to their close friends, on average, within seven hours of getting the email, the data show. Professional contacts take a bit more time: We don't hit send for nearly 11 hours. But the biggest difference came when the scientists looked at those people we barely know. On average, it took us 50 hours to reply. In other words, there's a surprisingly easy way to figure out how you feel about someone—just count the hours before you hit the "reply" button.

"Although these messages [from people we don't know well] account for the majority of messages, people replied much more slowly to them," Mr. Uzzi says. "We clearly give email priority to our close friends, just as we do in real life."

The researchers imagine many practical applications for this algorithm, at least once the obvious privacy issues are settled. Companies, for instance, could use it to more effectively assign people to teams, searching for the optimal mixture of close friends and total strangers. Email programs might use it to sort our messages automatically into various folders, while social networking sites could use the algorithm to construct more accurate maps of online connections, thus allowing companies to precisely target their advertising.

This research is also reassuring. Like all new technologies, the Internet has provoked a tremendous amount of anxiety, as people worry about the decay of our attention spans and the dissolution of authentic human contact. We are sometimes so busy texting that we forget to talk, and it seems to some that our online "friending" has ruined real friendship.

But this study is a reminder that even in a world transformed by digital devices, the most important things remain constant. Although we can interact with anyone, we still respond most quickly to our closest friends. We now know many more people, but we haven't forgotten which members of our circle really matter.

The same constancy also applies to social networking sites. The average Facebook user has more than 130 online "friends," but the site hasn't fundamentally changed the nature of real-world friendship. When surveyed, those with the most Facebook contacts still have roughly the same number of close relationships as everyone else. The only difference is that they seem to get more emotional support from these friends.

We always fret over new things, but so far, it's hard to see a social downside to the Internet. Online interaction has allowed us to meet many new people, but it has not diminished our yearning to maintain older relationships. As the song about new and old friends goes, one is silver and the other is gold.

Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved

 

Strategy + Business: A New Way to Gain Customer Insights

Published: November 7, 2011   Marketing, Media & Sales   A New Way to Gain Customer Insights How conjoint analysis, a tried-and-true market research tool, can be used to support organic growth. by David Meer When Dow Jones decided to revamp the Wall Street Journal in the mid-2000s, the newspaper had just endured five years of flat circulation and advertising revenue, and the whole industry was ailing. Although the Journal didn’t want to alienate its core readership, it wanted to attract new readers — in particular a younger demographic that advertisers would value. Dow Jones knew it had to make changes to its then 125-year-old newspaper. But the company’s bigger purpose was to understand the needs of an emerging segment of business news consumers that the Journal was not successfully reaching. To help develop its strategy, Dow Jones employed a variant of conjoint analysis, a technique that has been widely used in market research for 30 years. In a traditional conjoint analysis, survey respondents are asked which products or product attributes they value as a trade-off between two or more options, repeated in enough combinations to yield a reliable ranking of each attribute’s importance. Dow Jones used this type of analysis in a new way, to identify prospective readers and reveal their preferences. After its redesign to attract this new customer segment, the Journal (now part of the News Corporation) saw a 35 percent improvement in its efforts to add new subscribers through direct marketing, reversed a three-year slump in ad sales, and experienced an annual revenue improvement of US$25 million from new programs and pricing initiatives. In fact, for companies in industries as varied as luxury goods and retail banking, conjoint analysis is emerging as a strategic tool, providing actionable intelligence businesses can use to go beyond product optimization to support organic growth. The methodology needed to use conjoint analysis in this new way is very similar to the methodology that traditional practitioners of this type of analysis have used, but has a key variation: The marketing team uses the results to organize customer groups (and prospects) with similar preferences, providing a more detailed view of the categories they fall into, the needs they have, and the likelihood that they might become bigger (or smaller) sources of revenue. In other words, conjoint analysis has become a new source of insight into customer segments. Of course, it would be hard to find a company that hasn’t done some kind of customer segmentation, and using conjoint analysis is certainly not the only way to achieve it. Companies usually have a sense of who their real and prospective customers are, and have an idea of what each segment considers important. But by segmenting customers with the help of conjoint analysis, companies can develop a more layered form of intelligence, with implications for which segments to prioritize, which value propositions to offer them, and how to market to them. Looking for Luxury Shoppers In recent years, a manufacturer of luxury gifts had become dissatisfied with the pace of growth in one of its largest geographic markets. Was the company targeting the wrong customers? Using the wrong materials? Supporting a brand with an undifferentiated value proposition? Advertising ineffectively? The company thought that if it could answer these questions, it would gain some of the insights needed to transform its organic growth strategy. Using traditional conjoint analysis techniques, the manufacturer surveyed 2,000 luxury gift–buying consumers to find out the extent to which they were price- and brand-conscious; valued materials such as fine leather, fabrics, and metals; and wanted their gifts to elicit oohs and aahs from friends and family. The manufacturer then combined the data from the conjoint analysis with the results from other survey questions to define five customer segments and decided it had headroom — an opportunity to pick up significant market share — in several of those segments, including a group it called “classic shoppers.” Thanks to the conjoint analysis survey, the manufacturer knew that in the “classic shopper” segment, customers ascribed great importance to prestige, cared a lot about high-quality materials, and preferred designs that made bold statements. The least important attribute to this customer segment was price — these customers didn’t mind paying a premium to get what they wanted. The company might have already had an intuitive sense of these findings. However, the intelligence from the conjoint analysis was definitive. The results of the analysis have played a role in changing the company’s product line, changing what happens within the company’s distribution channels, and changing how and where the company spends its marketing dollars. Protecting Profits at a Bank In another recent example, a European bank was picking up signals that regulators were going to force it to become more transparent about the costs of loan protection, a product the bank made available to consumers who held unsecured loans. The bank didn’t make money selling unsecured loans, but it made a considerable profit selling insurance that guaranteed payment if a borrower lost his or her job or otherwise suffered an interruption of income. What would happen to the business model if regulators insisted on changes? Would there be a way to keep making money in the business of unsecured loans and loan protection? The bank used a conjoint analysis survey of 1,600 people who had unsecured loans to estimate price elasticity for the loans themselves and for loan protection insurance. This was a way of anticipating the options it would have in the event that the regulatory environment changed, and banks were forced to raise (or lower) prices on either loan or loan-protection products. The conjoint analysis answered the price elasticity question in the aggregate. After the bank clustered the panelists into five segments, it was also able to answer this question in a more granular way. For instance, customers in a segment the bank called “bargain hunters” were very sensitive to pricing — this group would not pay more to take out a loan or to insure it. By contrast, customers in a segment the bank designated as “personal bankers” (those who liked the high-touch approach, were willing to hear advice, and were open to special offers) were not particularly price sensitive. There would be ways, even in the event of a regulatory change, of selling this segment higher-priced unsecured loans and loan protection and profiting from it. Indeed, one of the intriguing things about this bank’s use of conjoint analysis was the broad utility of the results. Although the analysis started off as a way to test price elasticity and prepare for external changes, the information the conjoint analysis generated — not only about how customers would respond in the event of a price increase, but also about more basic findings such as how people make borrowing decisions and how they think about financial providers — allowed the bank to identify tailored product strategies that would appeal to all its customer segments. The company decided its existing product would work for some of those segments, but that it should probably develop a no-frills product for the “bargain hunters” among its customers and a premium product for its “personal bankers.” Segmenting for Growth In an era of cautious consumer spending, many companies are looking for new ways to identify growth opportunities through improved customer insight. Conjoint analysis is at the forefront of this effort. The analytic rigor it brings is helping creative companies move forward with promising initiatives that they may have thought sounded good but couldn’t agree to implement without the data to back them up. Other companies find that it is generating avenues for organic growth they might not have come up with on their own. In this way, conjoint analysis, which has historically informed relatively narrow product decisions (enhance this feature, remove that one) is turning out to have bigger strategic implications. It is a powerful tool that can fundamentally change companies’ perceptions about where opportunity lies and how to pursue it.

 

WSJ: In China, IKEA Is a Swede Place for Senior Romance, Relaxation

THE A-HED
DECEMBER 1, 2011

In China, IKEA Is a Swede Place for Senior Romance, Relaxation

Free Coffee, Empty Beds Set Intimate Tone; Retailer Struggles to Police the Unruly

By LAURIE BURKITT

At 62, Tang Yingzhuo, a retired widow looking for love, doesn't think it is appropriate to scope out men at bars, clubs or Karaoke joints. That's why she goes to IKEA.

Yang Jie/The Wall Street Journal

Chinese seniors find coffee and love at IKEA.

The former tax-bureau worker is among the throngs of seniors who meet every week at the Swedish retailer's cafeteria in Shanghai's Xuhui shopping district to take a second shot at romance.

Retired and divorced chiropractor Qian Weizhong is also on the prowl. On a recent Tuesday at IKEA Mr. Qian was excited to get the number of a woman he referred to as a "nice lady." He plans to ask her out soon, he said.

While Ms. Tang and the rest of the lonely hearts club flock to the do-it-yourself furniture shop for its clean, homey environment, they pose something of a challenge for IKEA. They sit for hours in the cafeteria, leaving behind orange peels and egg shells they have picked off boiled eggs brought from home. Occasionally, security guards intervene to try to keep order.

At the weekly IKEA romance session in Shanghai, the elderly arrive in swarms of 70 to 700 to get the free coffee offered to holders of the IKEA Family membership card. Zhou Hong, the official IKEA card swiper, says she typically hands out an average of 500 coffee cups each time the group meets.

Ms. Tang, seated amid the backdrop of Poang reading chairs and Vreta poufs, sips coffee and says she is grateful to have such a meeting place. "I make more senior citizen friends when I come here," said Ms. Tang. "There's more to offer than meeting a boyfriend at IKEA."

In China, IKEA is planning to up its nine locations to 17 stores by 2015 to meet demand from the nation's growing middle class, who aspire to Western lifestyles at affordable prices. But some are still in the gawk-phase. They come out of sheer curiosity, or to behold the vast spaces bursting with thousands of gadgets and creature comforts.

As culture and commerce intersect, some unusual behavior has emerged. And older folks aren't the only troublemakers. Young people, often with kids in tow, plop on chairs to watch videos on their smartphones. People aren't shy about kicking off their shoes and tucking into display beds for a nap.

On a recent Sunday in Beijing, Liu Yunfeng sat in a 3,999 yuan ($625) white leather Tirup chair, watching home videos from the screen of her Sony digital camera while her shoeless daughter jumped on the Nyvoll bed of a mock-up room.

"She loves all the different rooms they have," said Ms. Liu, sitting near a man who had dozed off on another bed.

IKEA isn't alone. Other big chains, including Wal-Mart Stores Inc. and McDonald's Corp., are accustomed to Chinese consumers spending lots of quality time—if not serious money—at their often huge, comfortable stores.

Policing the freeloaders and the unruly isn't so easy. Attempting to tell a rowdy crowd of seniors to lower their voices recently, 24-year-old security guard Li Ya says he encountered resistance. An older man who didn't enjoy being hushed by someone 40 years his junior, says Mr. Li, once splashed scalding coffee on him. "They always argue that they have the right to do what they want here," says Mr. Li.

Earlier this year, after a spate of altercations—and realizing that the seniors were taking seats away from paying customers—managers of the Shanghai IKEA outlet decided to take action.

To keep order, they bolstered security, assigning six guards to the cafeteria on Tuesdays and Thursdays in addition to the usual two posted there on other days.

They created a special roped off zone for sitting, allowing more tables to be open for shoppers who wanted warm tilapia, not hot dates.

They also propped up a notice board at the entrance of the cafeteria, pleading with the group to disband. "IKEA would hereby like to inform this group and its organizers: Your behavior is affecting the normal operations of the IKEA cafeteria," the notice said.

It went on: "Frequent fights and arguments do serious harm to the image both of Shanghai residents and IKEA. Bringing in outside food and tea violates the cafeteria's regulations…If you are a member of this group, we feel we have warned you, do not use the resources of IKEA to organize events of this kind."

Spokeswoman Yin Lifang said IKEA is attempting to find the group's organizers so that it can negotiate with them. Members of the group deny there are organizers.

With people of all ages using big-box stores as their personal playgrounds, a new term has emerged: "retailtainment."

A blend of the words retail and entertainment, it is now frequently used by companies and strategists.

Several years ago, some Wal-Mart stores in China set up a children's camp for summer and winter school breaks. During daily sessions, children are encouraged to try their hands as part-time greeters and announce deals over the broadcast system.

Whether that is enough to convert the campers into consumers is another matter. "If I go to Wal-Mart I'll want to go for the day," said Cui Hongyan. "I can buy my goods somewhere else much more quickly."

McDonald's, with its free Wi-Fi and clean bathrooms, is adding more electrical outlets to most of its China stores in hopes that people will actually come and hang around longer.

In Hong Kong, the fast food giant is developing a service known as "McWedding" to encourage people to marry in their stores. One proposed feature of the ceremony: When it is time for the big kiss, the bride and groom can each chomp on the end of a french fry until their lips meet.

Meanwhile IKEA, known for its Swedish meatballs, has no plans to allow nuptials in its cafeterias.

—Yang Jie contributed to this article.

Write to Laurie Burkitt at [email protected]

Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved

NY Times: You Love Your iPhone. Literally.

September 30, 2011

You Love Your iPhone. Literally.

By MARTIN LINDSTROM

WITH Apple widely expected to release its iPhone 5 on Tuesday, Apple addicts across the world are getting ready for their latest fix.

But should we really characterize the intense consumer devotion to the iPhone as an addiction? A recent experiment that I carried out using neuroimaging technology suggests that drug-related terms like “addiction” and “fix” aren’t as scientifically accurate as a word we use to describe our most cherished personal relationships. That word is “love.”

As a branding consultant, I have followed Apple from its early days as a cult brand to its position today as one of the most valuable, widely admired companies on earth. A few years back, I conducted an experiment to examine the similarities between some the world’s strongest brands and the world’s greatest religions. Using functional magnetic resonance imaging (fMRI) tests, my team looked at subjects’ brain activity as they viewed consumer images involving brands like Apple and Harley-Davidson and religious images like rosary beads and a photo of the pope. We found that the brain activity was uncannily similar when viewing both types of imagery.

This past summer, I gathered a group of 20 babies between the ages of 14 and 20 months. I handed each one a BlackBerry. No sooner had the babies grasped the phones than they swiped their little fingers across the screens as if they were iPhones, seemingly expecting the screens to come to life. It appears that a whole new generation is being primed to navigate the world of electronics in a ritualized, Apple-approved way.

Friends who have accidentally left home without their iPhones tell me they feel stressed-out, cut off and somehow un-whole. That sounds a lot like separation anxiety to me. Not long ago, I headed an effort to identify the 10 most powerful, affecting sounds in the world: I found that a vibrating phone came in third, behind only the Intel chime and the sound of a baby giggling. Phantom vibration syndrome is the term I use to describe our habit of scrambling for a cellphone we feel rippling in our pocket, only to find out we are mistaken. Similar to pressing an elevator button repeatedly in the belief that the elevator will descend sooner, we check our phones for e-mails and texts countless times a day, almost as if we can will others to text, call, e-mail or Skype us.

So are our smartphones addictive, medically speaking? Some psychologists suggest that using our iPhones and BlackBerrys may tap into the same associative learning pathways in the brain that make other compulsive behaviors — like gambling — so addictive. As with addiction to drugs or cigarettes or food, the chemical driver of this process is the feel-good neurotransmitter dopamine.

Earlier this year, I carried out an fMRI experiment to find out whether iPhones were really, truly addictive, no less so than alcohol, cocaine, shopping or video games. In conjunction with the San Diego-based firm MindSign Neuromarketing, I enlisted eight men and eight women between the ages of 18 and 25. Our 16 subjects were exposed separately to audio and to video of a ringing and vibrating iPhone.

In each instance, the results showed activation in both the audio and visual cortices of the subjects’ brains. In other words, when they were exposed to the video, our subjects’ brains didn’t just see the vibrating iPhone, they “heard” it, too; and when they were exposed to the audio, they also “saw” it. This powerful cross-sensory phenomenon is known as synesthesia.

But most striking of all was the flurry of activation in the insular cortex of the brain, which is associated with feelings of love and compassion. The subjects’ brains responded to the sound of their phones as they would respond to the presence or proximity of a girlfriend, boyfriend or family member.

In short, the subjects didn’t demonstrate the classic brain-based signs of addiction. Instead, they loved their iPhones.

As we embrace new technology that does everything but kiss us on the mouth, we risk cutting ourselves off from human interaction. For many, the iPhone has become a best friend, partner, lifeline, companion and, yes, even a Valentine. The man or woman we love most may be seated across from us in a romantic Paris bistro, but his or her 8GB, 16GB or 32GB rival lies in wait inside our pockets and purses.

My best advice? Shut off your iPhone, order some good Champagne and find love and compassion the old-fashioned way.

Martin Lindstrom is the author of “Brandwashed: Tricks Companies Use to Manipulate Our Minds and Persuade Us to Buy.”

Economist: Social networking - Rules of Engagement

Social networking

Rules of engagement

May 25th 2011, 11:34 by G.F. | SEATTLE

A FRIEND has been toying with Twitter, and wonders how best to get her feet wet. Whom should she follow? What should she read? Here are some thoughts.

Viewed as a loudspeaker for others—celebrities, creative types, or just acquaintances, pronouncing on what are all too often fatuous banalities—Twitter does indeed resemble the empty medium derided by those outside its embrace; like sitting around an abandoned and empty pool in a solitary chaise longue, with TVs blaring nearby—an experience that is neither convivial nor informative.

Sticking to the bathing analogy, an alternative (though by no means the only one) would be to attend a crowded ocean beach, with swimmers constantly throwing themselves in and out of the water, some more expertly than others. The beach is likely to be lined with reclining observers listening to the water-borne banter, but they are not the ones having the most fun.

Twitter rewards engagement in a way that few other media do (the sea is such a medium, albeit only in a physical sense). The relationship between users is nearly always asymmetrical: following someone does not entail being followed by them. That leads to enormous mismatches: the glitziest twitterati amass hundreds of thousands, even millions of followers, and yet themselves follow just a few dozen people.

Babbage's friend had thrown her lot in some months ago, following a small number of people, and issuing a few tentative tweets. She was not impressed by the response. Her view of Twitter was of an unplugged toaster where the bread neither browns nor pops out.

Suffer as he does from logorrhoea, this Babbage blathers through the day. He also, like his departed mother, knows no shame in striking up conversations with complete strangers—she, in public; he, on Twitter—that he finds interesting. As a child, he complained of her habit. Now, the grudging inheritor of it, he finds easy sociability indispensable in the digital world.

Enter what is perhaps Twitter's greatest, and inadvertent, innovation: the goad in the form of an at-sign (@) followed by a Twitter handle, known as a mention. Twitter did not invent this referral, which was picked up from older chat-system conventions. But the firm adopted it and uses it to create threaded conversations. The mention is distinct from a direct message (DM), which Twitter created intentionally, and which allows a private bit of text to pass between two parties, so long as the recipient follows the sender. The DM is reserved for those who have established a relationship; the mention, meanwhile, works for anyone.

Mentions may easily be ignored—@stephenfry, say, with 2,647,917 followers as this sentence is being written (likely to rise by the time Babbage is done with the post), would be physically incapable of responding to all. To make life a little bit more manageable, most Twitter software, whether from the company itself or innumerable third parties, can be set either to list all mentions in a main chronological stream mixed in with tweets by those the user follows, or only to include the mentions by the latter.

Your correspondent, with 4,000 or so followers, is small fry, as it were, and has the time to engage with nearly everyone who mentions him. ( @EconSciTech, Babbage's official feed, currently nudges 10,000 and engages a little less fully.) He has made many acquaintances, and even some new friends. Over time, he has ditched nearly all those who, whether with ten followers or 10m, never reply to anyone, or reply to just a small coterie. Such tweeters are listening to the sound of their own typing.

Twitter users who are not household names tend to start by following loved ones, colleagues, favourite writers, etc. Replying to those you do not know personally is no faux pas, whether or not they are extremely well known. And if a popular tweeter retweets you—ie, redistributes the tweet to his followers—that can do wonders to your tally.

What should Babbage's friend make of all this? She is a writer, filmmaker and former television presenter, yet Twitter makes her strangely shy. Your correspondent's advice: the only way to go is to take the plunge and start talking, loudly and often. Well, not too often.

Bloomberg Businessweek: In Brazil, the Bikini Wax Is a Harbinger of Inflation

Indicators May 26, 2011, 5:00PM EST text size: TT

In Brazil, the Bikini Wax Is a Harbinger of Inflation

The cosmetic procedure is one of the services used to gauge prices, and it's costing more

By Iuri Dantas

If you're getting a bikini wax in Brazil, you'll likely find that the cost is rising. And if you're an economic policy maker, you'll likely see that as a problem, since the bikini wax is one of the items the Brazilians track to figure out inflation.

As with services ranging from car repair to dentistry, the price of waxing is going up in one of the world's most important emerging markets. Inflation is moving above the government's target and may force Alexandre Tombini, the central bank president, to prolong his policy of interest-rate hikes.

Price increases for services, which make up 24.1 percent of Brazil's benchmark inflation index, outpaced all other categories in the past two months, according to data released on May 11 by the central bank. They rose 8.57 percent in the year through April, the fastest pace in at least 15 years. "Services will continue to be the main villain of inflation," says Fernando Fix, chief economist at Votorantim Wealth Management in São Paulo. "Domestic demand is too strong."

That includes demand for bikini waxes, which are often considered a necessity, says Elzimar Siqueira, former owner of a beauty shop and now head of administrative affairs at the Syndicate of Women's Beauty and Hairdressing Institutes of Rio de Janeiro. "We have summer all year, we're always wearing bikinis and miniskirts," she says. At the Imaculada Hair and Makeup shop in Brasilia, owner Alessandra Rita de Arruda Lopes says she's raised the price to 35 reais ($21.63) from 30 reais. The average price of the depilation procedure rose 12.4 percent in the year through April, the national statistics agency says. A bikini wax at J. Sisters in Manhattan costs $75.

Consumer price increases in Latin America's biggest economy breached the government's 6.5 percent target ceiling in the year through April for the first time since June 2005. The benchmark interest rate has now reached 12 percent, and economists expect the central bank to boost it to 12.5 percent by year-end, a recent survey showed.

Gross domestic product per capita reached a record $10,813 last year, after the economy grew 7.5 percent, the fastest pace in more than two decades. Such growth boosts demand for services. Also contributing to higher prices is a tight labor market, which drives wages up. Wages may be bumped up again after collective bargaining late this year and next, says Constantin Jancso, an economic analyst at São Paulo-based HSBC Bank Brasil. "Negotiations with metalworkers and bankers begin in the third quarter," he says. "I wouldn't be surprised to see increases of 10 percent."

Prices of 20 of 41 services monitored by the central bank accelerated in April from March. Oil changes and car cleaning prices rose 18.25 percent in the year through April. Hotels increased prices by 14.03 percent.

Price hikes in Brazil are also spurred by indexation, in which past inflation is used as a benchmark for raising prices. The minimum wage, for example, is computed annually by adding the previous year's inflation to economic growth from two years back. In 2012 the minimum wage will likely go up more than 13 percent.

Higher wages are one reason beauty shop owner Lopes is raising prices. Meal vouchers, cosmetics, and the cost of "depi rolls," which are used to spread the wax for depilation, are also rising, she says. "Some clients are coming less frequently for haircuts because of the higher price," she says. "But not for waxing. Brazilian women will never stop getting waxed."

The bottom line: Services from bikini waxes to car repairs are getting pricier in Brazil, prompting fears of higher inflation and higher wages.

Dantas is a reporter for Bloomberg News.

Media: Why you can't lie to me

Why You Can't Lie to Me

Douglas Quenqua, Apr 13, 2011 05:24 PM

You've seen the TV show but there's some real science behind facial coding It's true: Advertisers lie. But here's another fact: so do consumers. Anyone who's ever monitored a focus group can tell you that. Maybe it's not lying of the shameless "It was like that when I got here" variety. It's more the "I base my grocery-buying decisions on nutrition, not packaging" kind of fibs. But either way, it's misleading and advertisers pay the price for it. Luckily, faces don't lie. Someone watching an offensive commercial is going to look disgusted, just as the lips of someone watching a poignant ad will quiver as he fights back tears. All the questionnaires in the world can't match what a trained professional (or now, software) can learn from watching someone's face. If only there were a way to harvest the facial expressions of consumers of all demographics from all over the world, then translate them into actionable marketing data. To be clear, there isn't...yet. But there are a handful of companies doing some clever things with facial coding and eye tracking and other whizbang technologies to help advertisers better gauge how their customers really feel about them. Or at least how they feel about their products, packaging, ads, store designs and Web sites. "Darwin realized that the face was the best place in the body where we reflect and communicate our emotions," says Dan Hill, president and founder of Sensory Logic, a market-research firm based in Minneapolis, Minn. "It's the only place in the body where muscles attach right to the skin." Darwin's insight was based on the observation that blind people make the same facial expressions, corresponding to the same emotions, as sighted people, suggesting that facial expressions are not learned but hardwired into our brains. Facial coding may owe a philosophical debt to Darwin. But the technology traces back to a psychologist named Paul Ekman, who in the late 1970s developed what's known as the Facial Access Coding System, or FACS. The system, which has so far been of greater use to animators than advertisers, reduces all facial movements to mathematical units. By measuring the movements of a person's face, one can interpret that person's emotions. Thirty years after the development of FACS, companies like Sensory Logic are helping advertisers apply that technology to market research. The primary way Sensory Logic does this is exposing test subjects to a commercial or a radio ad while a Logitech camera records the subject's face (the process is called "exposure"). Experts then decode the facial expressions and line them up with the content the subject was watching to determine, down to the second, how that person really felt about what he was watching. In the past few years, the company has even begun offering this service remotely. As long as a subject has a camera installed in his home computer, the company can record his facial expressions as he watches the content from home. Other companies are now working on bringing the technology to smartphones. The invention of the Flip camera has also allowed Sensory Logic to combine facial coding with traditional focus groups. Now market researchers can record the faces of focus-group subjects to see when their expressions betray their words. The company can also record the faces of subjects answering questionnaires to look for "any gaps or illumination between what they see and feel," says Hill. To appreciate the value of such tests, consider the example of a pharmaceutical company trying to determine what mattered most to doctors when prescribing medicines. When asked why they choose one drug over another, "of course the first thing the doctors say is efficacy of the drug," says Hill, "but when we looked at the emotional data they hardly emoted about that at all." What did capture the doctors' hearts, according to their faces? "Ease of filing for reimbursement and the payment schedules and so forth," says Hill. In other words, "things that were much more central to their own pocketbook. Those things were much more of interest to the doctors." This kind of research has also helped quantify the shortcomings of traditional focus groups. Most advertisers already know that people in a focus-group setting will sometimes adjust their answers to make themselves look smart, or to cozy up to an alpha dog in the room. But Sensory Logic has taken this further by looking at how people of different ethnicities and demographic backgrounds behave differently. "Hispanics tend to respect authority, which means they might be a little less forthcoming to make a criticism," Hill says. "African-Americans are pretty straightforward. In our research they come closest to just saying how they feel. But whites and Hispanics and Asian-Americans - you're talking about a gap that's double digits between how much they're willing to admit they like something" and how much they really do. In an age when advertisers spend a lot of time and money crafting discrete messages for different ethnic groups, such lapses in insight can add up to significant waste. Sensory Logic is also eager to take facial coding outside the research room and is looking to partner with companies that provide eye-tracking technology. Such companies - EyeTracking, located in San Diego, and Tobii, in Sweden, are two - use special glasses worn by the consumer to determine where his eyes settle as he walks through a retail environment. Combine that with facial-coding technology and you can tell not just where people are looking, but how they feel about what they're seeing. The application has exciting implications for retailers, who could use it when designing their store layouts. Of course, it wouldn't be an emerging technology if there weren't disagreements over how best to apply it. Gallup & Robinson, a market research firm in Pennington, N.J., practices a different brand of consumer face reading. "Our focus is on what we call emotional valence," says G&R president Scott Purvis. "Most of the other systems are on what we would call arousal." To the layperson, the difference between what Sensory Logic and Gallup & Robinson do may seem tiny. But it's significant. Put simply, emotional valence is the measurement of all human reactions on a scale of negative to positive. So Gallup & Robinson is less concerned with whether you're smiling or frowning than how intensely you're doing one or the other. "The idea is that people have a positive and a negative rewards-type system in their brain," says Purvis, "and these things operate both at the same time, so you can feel both very positive and negative toward a stimulus at the same time. It's not ends of a scale, it's two different systems, so that's why people are often ambivalent about many of the things they're seeing. We're trying to get at that relationship, rather than whether somebody is disgusted or happy." Purvis uses the example of a typical pharmaceutical commercial, the kind that begins with patients suffering from an ailment, then features a (frequently animated) illustration of the treatment working, followed by scenes of a healthy, happy patient. The intensity with which a viewer follows those phases of emotion "can be very important in terms of overall effectiveness of the commercial," he says. "And I don't know that we understand it as well when looking at it from the point of view of, 'Did you like it?'" Not surprisingly, Hill doesn't put much stock in emotional valence. He points out that there is a wide range of emotions that can be considered "negative," not all of which are the ones you may want your commercial to inspire. "Sadness versus anger versus fear are all quote-unquote negative emotions," he says. "But those emotions can not only be vastly different in their meanings, but also in their implications for your creative." Hill, too, uses the example of a pharmaceutical commercial to illustrate his point. "You're trying to create a problem-solution commercial, so you're supposed to make your viewer feel sadness at first because they're disappointed with the status quo," he says. "But what if you're actually making them angry because they're confused? Then you've lost them." Hill even has a term for it. He calls it being "off-emotion," as in being off-message. Measuring emotional valence comes with some other trade-offs. Rather than making video of a subject, Gallup & Robinson attaches electrodes to his or her face, specifically at the frown and smile muscles. The process, known as electromyography, or EMG, may do a more accurate job of measuring the intensity of muscular reaction - but it doesn't travel well. "There's some work being done now to use the camera to distribute it over the Internet so Webcams would be able to get an EMG-type response," says Purvis. "But so far it hasn't gotten to the point where I think people have a lot of confidence in it." Regardless of which method you put your faith in, there's a good reason that both remain little more than a theoretical threat to traditional market research: They have a serious scalability problem. Both approaches require trained professionals to translate the results. Training such professionals is said to take up to 100 hours; of course the process of watching the videos and drawing conclusions takes many hours more. So while face reading makes a nice complement to focus groups or questionnaires, they've never really been scalable enough to replace them. Enter ThirdSight. This 11-person firm in the Netherlands may be the newest thing in face-reading market research, having been spun off from the University of Amsterdam on January 1, 2011. ThirdSight's signature technology is software that reads and interprets video of test subjects' facial expressions, eliminating the need for a pricey, highly trained researcher to wade through hours of slow-motion video. "The software detects the face of the subject, then localizes landmarks like mouth corners, cheeks and eyebrows and tracks these facial features over time with a grid like a spire," says Theo Gevers, scientific advisor at ThirdSight and an associate professor of computer science at the University of Amsterdam. The software is taught to recognize facial configurations that correspond to six different emotions, so it can tell instantly how a test subject is reacting to content. ThirdSight has even created a smartphone app that can read and interpret a user's facial expressions. "It's not yet real time," says Gevers, "so it will record your face and then process it." But that will change quickly as smartphone CPUs become faster and more powerful. The drawback to ThirdSight's process is an admitted lack of accuracy. "We might have some disadvantages in the sense that people who have been trained for 100 hours might be a little bit better" than the software is at reading the subtleties of facial expressions, Gevers notes. "We have a fairly accurate system, but it's not as good as a human operator." Still, the potential effect of scalable facial coding on the world of market research is huge. Imagine a world in which consumers anywhere could download an iPhone app that records their faces as they watch a commercial - which also plays on their phones, incidentally - then instantly beams back that person's emotions to a waiting database. Today, companies like Sensory Logic and Gallup & Robinson are limited to running sessions with about 40 people; more than that would simply be untenable given the man-hours that go into interpreting the results. But a smartphone app equipped with software that can read faces in real-time has the potential to make facial coding an easy, inexpensive mass-market research tool with a higher level of reliability than anything available today. "The conservative estimation is that 95 percent of people's thought activity isn't fully conscious - that we're mostly intuitive, subconscious decision makers," says Hill. That, more than any other reason, is why simply asking consumers how they feel about a product or campaign is bound to come up short. No matter how much they want to tell the truth, people just might not be able to. Bypassing the consumer to go directly to his brain, courtesy of his expressions, may be the market research industry's best chance to save face.

WSJ: The Really Smart Phone

WHAT THEY KNOW
APRIL 23, 2011

The Really Smart Phone

Researchers are harvesting a wealth of intimate detail from our cellphone data, uncovering the hidden patterns of our social lives, travels, risk of disease—even our political views.

By ROBERT LEE HOTZ

Photo-illustration by Adam Magyar

'Phones can know,' says an MIT researcher. 'People can get this god's-eye view of human behavior.'

Apple and Google may be intensifying privacy concerns by tracking where and when people use their mobile phones—but the true future of consumer surveillance is taking shape inside the cellphones at a weather-stained apartment complex in Cambridge, Mass.

For almost two years, Alex Pentland at the Massachusetts Institute of Technology has tracked 60 families living in campus quarters via sensors and software on their smartphones—recording their movements, relationships, moods, health, calling habits and spending. In this wealth of intimate detail, he is finding patterns of human behavior that could reveal how millions of people interact at home, work and play.

Through these and other cellphone research projects, scientists are able to pinpoint "influencers," the people most likely to make others change their minds. The data can predict with uncanny accuracy where people are likely to be at any given time in the future. Cellphone companies are already using these techniques to predict—based on a customer's social circle of friends—which people are most likely to defect to other carriers.

A wave of ambitious social-network experiments is underway in the U.S. and Europe to track our movements, probe our relationships and, ultimately, affect the individual choices we all make. WSJ's Robert Lee Hotz reports.

The data can reveal subtle symptoms of mental illness, foretell movements in the Dow Jones Industrial Average, and chart the spread of political ideas as they move through a community much like a contagious virus, research shows. In Belgium, researchers say, cellphone data exposed a cultural split that is driving a historic political crisis there.

And back at MIT, scientists who tracked student cellphones during the latest presidential election were able to deduce that two people were talking about politics, even though the researchers didn't know the content of the conversation. By analyzing changes in movement and communication patterns, researchers could also detect flu symptoms before the students themselves realized they were getting sick.

"Phones can know," said Dr. Pentland, director of MIT's Human Dynamics Laboratory, who helped pioneer the research. "People can get this god's-eye view of human behavior."

So far, these studies only scratch the surface of human complexity. Researchers are already exploring ways that the information gleaned from mobile phones can improve public health, urban planning and marketing. At the same time, researchers believe their findings hint at basic rules of human interaction, and that poses new challenges to notions of privacy.

"We have always thought of individuals as being unpredictable," said Johan Bollen, an expert in complex networks at Indiana University. "These regularities [in behavior] allow systems to learn much more about us as individuals than we would care for."

Today, almost three-quarters of the world's people carry a wireless phone. That activity generates immense commercial databases that reveal the ways we arrange ourselves into networks of power, money, love and trust. The patterns allow researchers to see past our individual differences to forms of behavior that shape us in common.

As a tool for field research, the cellphone is unique. Unlike a conventional land-line telephone, a mobile phone usually is used by only one person, and it stays with that person everywhere, throughout the day. Phone companies routinely track a handset's location (in part to connect it to the nearest cellphone tower) along with the timing and duration of phone calls and the user's billing address.

Typically, the handset logs calling data, messaging activity, search requests and online activities. Many smartphones also come equipped with sensors to record movements, sense its proximity to other people with phones, detect light levels, and take pictures or video. It usually also has a compass, a gyroscope and an accelerometer to sense rotation and direction.

What They Know

A Wall Street Journal investigation into the world of digital privacy.

• The Web's New Gold Mine: Your Secrets
• Sites Feed Personal Details To New Tracking Industry
• On Web's Cutting Edge, Anonymity in Name Only

Advances in statistics, psychology and the science of social networks are giving researchers the tools to find patterns of human dynamics too subtle to detect by other means. At Northeastern University in Boston, network physicists discovered just how predictable people could be by studying the travel routines of 100,000 European mobile-phone users.

After analyzing more than 16 million records of call date, time and position, the researchers determined that, taken together, people's movements appeared to follow a mathematical pattern. The scientists said that, with enough information about past movements, they could forecast someone's future whereabouts with 93.6% accuracy.

The pattern held true whether people stayed close to home or traveled widely, and wasn't affected by the phone user's age or gender.

"For us, people look like little particles that move in space and that occasionally communicate with each other," said Northeastern physicist Albert-Laszlo Barabasi, who led the experiment. "We have turned society into a laboratory where behavior can be objectively followed."

Only recently have academics had the opportunity to study commercial cellphone data. Until recently, most cellphone providers saw little value in mining their own data for social relationships, researchers say. That's now changing, although privacy laws restrict how the companies can share their records.

Several cellphone companies in Europe and Africa lately have donated large blocks of calling records for research use, with people's names and personal details stripped out.

"For the scientific purpose, we don't care who the people are," said medical sociologist Nicholas Christakis at Harvard University, who is using phone data to study how diseases, behavior and ideas spread through social networks, and how companies can use these webs of relationships to influence drug marketing and health-care decisions.

His work focuses on "social contagion"—the idea that our relationships with people around us, which are readily mapped through cellphone usage, shape our behavior in sometimes unexpected ways. By his calculation, for instance, obesity is contagious. So is loneliness.

Even though the cellphone databases are described as anonymous, they can contain revealing personal details when paired with other data. A recent lawsuit in Germany offered a rare glimpse of routine phone tracking. Malte Spitz, a Green party politician, sued Deutsche Telekom to see his own records as part of an effort by Mr. Spitz to highlight privacy issues.

In a six-month period, the phone company had recorded Mr. Spitz's location more than 35,000 times, according to data Mr. Spitz released in March. By combining the phone data with public records, the news site Zeit Online reconstructed his daily travels for months.

Read More

• Our Social Networks, Ourselves
• Google Defends Way It Gets Phone Data
• Avoiding Mobile Trackers

In recent days, Apple Inc. triggered privacy alarms with the news that its iPhones automatically keep a database of the phone's location stretching back for months. On Friday, The Wall Street Journal reported that both Apple and Google Inc. (maker of the Android phone operating system) go further than that and in fact collect location information from their smartphones. A test of one Android phone showed that it recorded location data every few seconds and transmitted it back to Google several times an hour.

Google and Apple have said the data transmitted by their phones is anonymous and users can turn off location sharing.

"We can quantify human movement on a scale that wasn't possible before," said Nathan Eagle, a research fellow at the Santa Fe Institute in New Mexico who works with 220 mobile-phone companies in 80 countries. "I don't think anyone has a handle on all the ramifications." His largest single research data set encompasses 500 million people in Latin America, Africa and Europe.

Among other things, Mr. Eagle has used the data to determine how slums can be a catalyst for a city's economic vitality. In short, slums provide more opportunities for entrepreneurial activity than previously thought. Slums "are economic springboards," he said.

Cellphone providers are openly exploring other possibilities. By mining their calling records for social relationships among customers, several European telephone companies discovered that people were five times more likely to switch carriers if a friend had already switched, said Mr. Eagle, who works with the firms. The companies now selectively target people for special advertising based on friendships with people who dropped the service.

At AT&T, a research team led by Ramon Caceres recently amassed millions of anonymous call records from hundreds of thousands of mobile-phone subscribers in New York and Los Angeles to compare commuting habits in the two metropolitan areas.

Dr. Caceres, a lead scientist at AT&T Labs in Florham Park, N.J., wanted to gauge the potential for energy conservation and urban planning. "If we can prove the worth of this work, you can think of doing it for all the world's billions of phones," he said.

Thousands of smartphone applications, or "apps," already take advantage of a user's location data to forecast traffic congestion, rate restaurants, share experiences and pictures, or localize radio channels. Atlanta-based AirSage Inc. routinely tracks the movements of millions of cellphones to generate live traffic reports in 127 U.S. cities, processing billions of anonymous data points about location every day.

View Full Image

M. Scott Brauer for The Wall Street Journal

Alex Pentland, director of MIT's Human Dynamics Laboratory, above. Using location data, he said, 'I can say a lot about the music you like...your financial risks.'

What Phones Know

• One study found that the U.K.'s happiest time is 8 p.m. Saturday; its unhappiest day is Tuesday.
• European phone companies discovered their customers were five times more likely to switch carriers if friends had switched, allowing the companies to target their ads.
• Another study was able to determine that two people were talking about politics—without the researchers hearing the call

As more people access the Internet through their phones, the digital universe of personal detail funneled through these handsets is expanding rapidly, and so are ways researchers can use the information to gauge behavior. Dr. Bollen and his colleagues, for example, found that the millions of Twitter messages sent via mobile phones and computers every day captured swings in national mood that presaged changes in the Dow Jones index up to six days in advance with 87.6% accuracy.

The researchers analyzed the emotional content of words used in 9.7 million of the terse 140-character text messages posted by 2.7 million tweeters between March and December 2008. As Twitter goes, so goes the stock market, the scientists found.

"It is not just about observing what is happening; it is about shaping what is happening," said Dr. Bollen. "The patterns are allowing us to learn how to better manipulate trends, opinions and mass psychology."

Some scientists are taking advantage of the smartphone's expanding capabilities to design Android and iPhone apps, which they give away, to gather personal data. In this way, environmental economist George MacKerron at the London School of Economics recruited 40,000 volunteers through an iPhone app he designed, called Mappiness, to measure emotions in the U.K.

At random moments every day, his iPhone app prompts the users to report their moods, activities, and surroundings. The phone also automatically relays the GPS coordinates of the user's location and rates nearby noise levels by using the unit's microphone. It asks permission to photograph the locale.

By early April, volunteers had filed over two million mood reports and 200,000 photographs.

Publicly, Mr. MacKerron uses their data to chart the hour-by-hour happiness level of London and other U.K. cities on his website. By his measure, the U.K.'s happiest time is 8 p.m. Saturday; its unhappiest day is Tuesday.

Perhaps less surprisingly, people are happiest when they are making love and most miserable when sick in bed. The most despondent place in the U.K. is an hour or so west of London, in a town called Slough.

On a more scholarly level, Mr. MacKerron is collecting the information to study the relationship between moods, communities and the places people spend time. To that end, Mr. MacKerron expects to link the information to weather reports, online mapping systems and demographics databases.

Several marketing companies have contacted him to learn whether his cellphone software could help them find out how people feel when they are, for instance, near advertising billboards or listening to commercial radio, he said.

Mr. MacKerron said he's tempted—but has promised his users that their personal information will be used only for scholarly research. "There is a phenomenal amount of data we can collect with very little effort," he said.

Some university researchers have begun trolling anonymous billing records encompassing entire countries. When mathematician Vincent Blondel studied the location and billing data from one billion cellphone calls in Belgium, he found himself documenting a divide that has threatened his country's ability to govern itself.

Split by linguistic differences between a Flemish-speaking north and a French-speaking south, voters in Belgium set a world record this year, by being unable to agree on a formal government since holding elections last June. Belgium's political deadlock broke a record previously held by Iraq.

The calling patterns from 600 towns revealed that the two groups almost never talked to each other, even when they were neighbors.

This social impasse, as reflected in relationships documented by calling records, "had an impact on the political life and the discussions about forming a government," said Dr. Blondel at the Catholic University of Louvain near Brussels, who led the research effort.

The MIT smartphone experiment is designed to delve as deeply as possible into daily life. For his work, Dr. Pentland gave volunteers free Android smartphones equipped with software that automatically logged their activities and their proximity to other people. The participants also filed reports on their health, weight, eating habits, opinions, purchases and other personal information, so the researchers could match the phone data to relationships and behavior.

The current work builds on his earlier experiments, beginning in 2004, conducted in an MIT dormitory that explored how relationships influence behavior, health, eating habits and political views. Dr. Pentland and his colleagues used smartphones equipped with research software and sensors to track face-to-face encounters among 78 college students in a dorm during the final three months of the 2008 presidential election.

Every six minutes, each student's phone scanned for any other phone within 10 feet, as a way to identify face-to-face meetings. Among other things, each phone also reported its location and compiled an anonymous log of calls and text messages every 20 minutes. All told, the researchers compiled 320,000 hours of data about the students' behavior and relationships, buttressed by detailed surveys.

"Just by watching where you spend time, I can say a lot about the music you like, the car you drive, your financial risk, your risk for diabetes. If you add financial data, you get an even greater insight," said Dr. Pentland. "We are trying to understand the molecules of behavior in this really complete way."

Almost a third of the students changed their political opinions during the three months. Their changing political ideas were related to face-to-face contact with project participants of differing views, rather than to friends or traditional campaign advertising, the analysis showed.

"We can measure their daily exposure to political opinions," said project scientist Anmol Madan at MIT's Media Lab. "Maybe one day, you would be able to download a phone app to measure how much Republican or Democratic exposure you are getting and, depending on what side you're on, give you a warning."

As a reward when the experiment was done, the students were allowed to keep the smartphones used to monitor them.

Write to Robert Lee Hotz at [email protected]

WSJ: Uniqlo Pop-up Store Targets Sweaty Tokyo Commuters

Impressed with Uniqlo on their sales approach!

 

April 22, 2011, 11:59 AM JST

Uniqlo Pop-up Store Targets Sweaty Tokyo Commuters

Pop-up stores aren’t new. Nor are casual-wear chain retailer Uniqlo’s ‘Silky Dry’ and ‘Sarafine’ innerwear summer lines, designed to help wearers stay cool.

Uniqlo

Uniqlo’s pop-up store at the Ikebukuro subway station in Tokyo.

But the March 11 disasters knocked out a significant chunk of power utility Tepco’s electricity production capacity. And the possibility that a shortage of energy this summer in Japan will leave air conditioners idle as citizens drip with perspiration more intensely than the past is a very real and new scenario.

The likelihood has Uniqlo, the flagship chain of Fast Retailing Co., mashing the two well-worn concepts to test the likely pick-up in Tokyo commuter demand for the tech-savvy clothes: A pop-up store selling exclusively silky dry and sarafine innerwear products.

Uniqlo, ubiquitous in Japan, Thursday opened a temporary shop in the hubbub of Tokyo’s Ikebukuro station, one of the capital’s busier intersections. The merchandise is strictly apparel made using the cool summer-wear lines – a counterpart to Uniqlo’s popular winter hit, “Heat Tech” innerwear that’s designed to retain body heat.

The store, which looks roughly like a raft that docked in the middle of the station, will carry the basic innerwear lineup: crew necks, v-necks, camisoles and boxer briefs, among others, typically retailing for 990 yen, or about $12. The store will be open until June 26.

Launched in March last year, the Silky Dry line is for men, while the Sarafine garb is for women. The retailer touts the material of the men’s line as being like “a second skin” that’s barely perceptible. Sarafine’s fabric is made of “breathable fibers” woven together with nylon specially produced by fibers company Toray Industries Inc. The stretch fabric of both, the company says, absorbs and removes sweat and keeps body odor at bay.

Copyright 2008 Dow Jones & Company, Inc. All Rights Reserved

Economist: Peggy Sue got old

Media's ageing audiences

Peggy Sue got old

Viewers, listeners and readers are ageing fast. Oddly, media companies don’t regard that as a catastrophe

Apr 7th 2011 | from the print edition

A FEW years ago Universal Music Group spied a gap in the market. How about a CD for people who grew up in the 1950s and wanted to revisit the pop music of their youth? The label pulled together songs by British and American artists, some well-known (Buddy Holly, Roy Orbison), others largely forgotten. “Dreamboats and Petticoats” was released in time for Christmas 2007.

That gap turned out to contain a seam of gold. “Dreamboats and Petticoats” has sold enough copies to be certified as double platinum. It has inspired a West End musical and three follow-up albums, with another due in November. In total the series has sold 2.3m copies, mostly in Britain—a country where fewer than 120m albums were shifted last year. And virtually everybody who bought the album forked over money for a compact disc. “They don’t download, and they don’t want to download,” says Brian Berg of Universal.

“They” are consumers in late middle-age or beyond, who increasingly drive the music market. In Britain people aged 60 or over spent more on pop-music albums in 2009 than did teenagers or people in their 20s, according to the BPI, a trade group. Sony Music’s biggest-selling album worldwide last year was “The Gift”, by Susan Boyle, a 50-year-old Scot whose appeal derives in part from her lack of youth. And what has happened to music has also happened to other forms of entertainment.

The noisy disruption of media business models by the internet in the past decade has obscured a profound demographic transformation. Whether they are buying music, listening to the radio, reading newspapers or watching television, media consumers are ageing even more quickly than the overall population. Rather than trying to reverse this trend by attracting younger people, many companies are attempting to profit from the greying of media.

Grey anatomy

In America the audiences of all four big English-language broadcast networks are looking middle-aged. Since 2003 the median age of a prime-time CBS viewer has increased by three years, according to Nielsen, a research firm. Viewers of ABC and NBC are five years older; Fox’s, seven and a half. In that time the median age in America has probably risen by a year and a bit. Some shows are greying faster than the networks that carry them, in part because they have fan bases that are ageing naturally. The audience that tunes in for the desperate housewives of Wisteria Lane is approaching 50 (see chart 1).

Indeed, every network except Fox had a median age of 50 or over last year. That is significant because advertisers tend to be most interested in how a show rates among people aged between 18 and 49. As Alan Wurtzel, head of research at NBC, puts it, a growing proportion of viewers are becoming almost invisible to marketers—“forgotten but not gone”.

If broadcast television is growing old gracefully (helped by Botox injections), newspapers are racing towards senescence. Between 2002 and 2010 the proportion of American papers’ regular readers who were aged 55 or more rose from 37% to 46% (see chart 2). Fully 43% of readers of Britain’s Daily Telegraph and Daily Express are at least 65 years old, according to the National Readership Survey. Such papers are littered with advertisements for comfortable shoes, cruises and stairlifts.

The reason why newspaper readers are ageing so quickly is simple: the young are abandoning print faster than everyone else. They may pick up free papers to read on public transport, but when reception is good they tend to plump for mobile phones and the internet. The Pew Research Centre, an American think-tank, finds that 65% of 18- to 29-year-olds describe the internet as their primary or secondary source of news. Only 14% of people aged 65 or over say the same.

In music, too, the young have drifted to illegal file-sharing and, more recently, to free streaming services such as Spotify. By and large, the middle-aged and old have not. David Munns, who manages Bon Jovi, a rock band that was formed in the early 1980s and is still going strong, notes that older fans have more money and more scruples. They also regard illegal downloading as “too much work”, he says. Bon Jovi’s “Greatest Hits” was the 15th-biggest-selling album in the world last year.

As the young cut back on conventional media, their elders consume more of it. In Spain 54.2% of people aged 55 to 64 routinely listened to the radio last year—up from 46.6% in 2000. As a result, the Spanish radio audience has greyed even as overall listening has risen. Japanese baby-boomers carry on buying music at an age by which earlier generations had largely stopped. Singers who appeal to the middle-aged and old, such as Hideaki Tokunaga and Junko Akimoto, rule the charts.

The same is true of television. British 55- to 64-year-olds spent an average of five hours and ten minutes a day watching television last year—50 minutes more than in 2001. The middle-aged and old now have free digital channels dedicated to their tastes, such as ITV3, home of wrinkly detective dramas, and the highbrow BBC Four. They have seized on easy-to-use gadgets like digital video recorders, which increase their enjoyment of television.

The young are not watching less TV. But some of their viewing is now done through computer screens. And much of it is of unconventional channels. Instead of the evening news, American 20-somethings watch “The Colbert Report”, a spoof news show. MTV has moved beyond music videos into reality shows, and is enjoying its best ratings in years. Media outfits that appeal to immigrants and their children often have youthful audiences. Univision, a Spanish-language broadcast network, boasts a median age of 37.

Now they’re 64

Greying audiences are causing discomfort among media executives. But not as much discomfort as you might expect, given the industry’s long preoccupation with youth. The ageing of the large baby-boom generation means there are a lot of potential customers in their 50s and 60s. Furthermore, the executives argue, people of this age are worth much more than in the past.

The practice of measuring television audiences by the number of 18- to 49-year-olds they contain is simply an historical anachronism, argues Mr Wurtzel of NBC. David Poltrack, his counterpart at CBS, agrees. It used to be assumed, he says, that older people had already worked out which brands they liked and could not be persuaded to try new things. But the middle-aged have taken to toys such as e-readers and iPads. Mr Poltrack has devised an alternative way of classifying viewers that emphasises tastes and attitudes to media (for example as “sports enthusiasts” or “surfers and streamers”) rather than age.

It is not surprising that ageing television networks should argue that the old are becoming more valuable. But the West’s economic slump has given force to their claims by sapping the earning power of the young. In March the unemployment rate among Americans aged 20 to 24 was 15%. For 16- to 17-year-olds it was 29%.

Lack of work has combined with tighter lending standards to squeeze young people’s buying power. Between 2007 and 2009 average spending on new cars and trucks by Americans under 25 fell by half, according to the Consumer Expenditure Survey. It fell by 31% among people aged between 25 and 34. By contrast, expenditure by those over 65 was flat, and the over-75s actually spent more, on average. The young also spent less on audio-visual equipment and services—that is, television sets and cable TV—while the old shelled out more. This helps to explain why advertising money has flooded back to the ageing broadcast networks since the recession. Advertisers are not so in thrall to the cult of youth that they are prepared to overlook such a shift.

Desperate, but not for younger viewers

Another reason why media companies are not too worried about the ageing of their audiences has to do with a change in business models. A firm that depends on advertising needs to attract valuable consumers. A firm that relies on subscriptions, by contrast, cares only whether its consumers pay their monthly bills. And perhaps the strongest trend in media in the past few years—stronger even than ageing—is the growing reliance on subscription as a means of paying for content.

BSkyB, Discovery Communications, ESPN, Netflix: many of the media industry’s best-performing companies and hottest stocks of recent years rely on subscriptions. The recession may have slashed advertising and discretionary spending. But most people carried on paying the bills for entertainment. As a result, subscription-based businesses were able to sustain spending on content. So clear are the advantages of these businesses that even firms that have habitually relied on advertising are moving to copy them.

As newspaper advertising has declined, publishers have raised the prices of subscriptions and single copies. Last year 41.3% of the New York Times’s newspaper revenues came from subscriptions—up from 28.8% in 2007. Similarly, broadcast networks are battling for “retransmission fees” (essentially a cut of subscriptions) from cable and satellite distributors. As the broadcasters become less dependent on advertising, sheer numbers will come to matter more than demography.

The clearest sign of this shift is the appearance of online paywalls. Last month paywalls went up around the New York Times and the Dallas Morning News. The websites of Britain’s Times and News of the World began to restrict access to subscribers last year. Hulu, an American website that carries broadcast TV programmes, and Spotify, a European music-streaming service, are both pushing subscriptions.

One good reason for media firms to erect paywalls is that new media are beginning to age, too. The proportion of people aged 65-plus who get most of their news from the internet may be only 14%—but in 2006 it was a mere 2%. Online video streaming began as a young person’s hobby but has increasingly become mainstream. “Often it’s the young who adopt a technology, but others follow them,” explains Patricia McDonough, a television analyst at Nielsen.

With a few exceptions, media firms have found it hard to make money online. Consumers seem to tolerate fewer ads, and rates are low. When digital media were the province of youth, this did not matter much: media firms could argue that they were at least promoting their brands to young people, while deterring them from piracy. But let the middle-aged and the old, too, discover they can have entertainment for nothing? That would not do.

from the print edition | Briefings2

Fast Company: How to Build an Unforgettable, "Smashable" Brand Identity (Hint: It's not the Logo)

April 11, 2011

How to Build an Unforgettable, "Smashable" Brand Identity (Hint: It's Not the Logo)

By Martin Lindstrom

No, you don't have to tell me, because I know what you're about to say: your new product is brilliant. It's a game-changer. Problem is, you need a killer logo. Well, today, designers, inventors, and investors are facing a dilemma similar to the one that writers and artists have struggled with for decades: there's nothing left. Or here's another problem: if you do manage to create a jaw-droppingly clever or memorable image, rather than engendering widespread consumer recall of your brand, your Easter-blue palette risks looking uneasily similar to the Tiffany box, and your little black bull is a transparent rip-off of the one that dangles from the neck of Sangre de Toro red wine.

As far as the logo is concerned, to paraphrase Bill Maher, it's time for New Rules. Today, what counts far more than a puma, a monkey, or a snarling aardvark is the cross-sensory experience your brand offers. I'm talking not only the emotion, beliefs, and desires your brand evokes, but its feel, touch, sound, smell and personality, of which the logo is just one small part. Whether it's a soda can, a car, a doll, a fragrance, a smartphone, or laptop, your brand needs to be smashable, e.g., instantly identifiable via its shape, design, copy, contours, and even navigation. Aside from adolescents, who are always on the lookout for the coolest logos to set them apart from, or help them gain traction with, their peers, today for most consumers the logo comes in near-to-last place to other considerations.

Why? Well, various reasons. The first is, when we see a logo, our defenses go up and stay up. We fear we're being played, or manipulated. Not least, I might also add that subconsciously, a logo reminds us of our complicity with big brands, of our own shot-with-guilt overconsumption that helped drive the world's recent financial downfall.

The term "smashable" dates back to 1915, when the Coca-Cola company asked a designer in Terre Haute, Indiana, to design a bottle that consumers could still recognize as a Coke bottle, even if someone flung it against a brick wall and it shattered into a hundred pieces. Coke is a smashable brand. So are Guinness, Ferrari, Harley-Davidson and, of course, Apple (take a sledgehammer to an iPad and you'll know what I mean). Which suggests that the logo as we once knew and loved it--from Citibank's Scowling Umbrella (I don't know what else to call it), to Nike's Swoosh, to Starbucks's Whoever-The-Heck-She-Is--needs to be re-considered if it's going to play any role in future brand-building.

Let's do a little experiment: Erase the logo from every single one of your brand identifiers--products, stationary, signage. Close your eyes, now reopen them. Is there anything left? Would consumers still recognize those items as belonging to your brand? Look at your packaging, your copy, your colors, your design, your font, your spacing. Do any of them convey your brand's identity? Or without a logo are you adrift and bailing water?

Next let's examine your website. Again, by eliminating the logo, you'll embark on a fun (I promise) and instructive exercise that will relieve you of any stubborn logo-fixations that may still be nagging at you. It's one that will force you into acknowledging the value that every single one of your communication elements plays in defining your brand's identity. Okay, still hiding the brand logo, eyeball your copy, your graphics, whether your pages are spare or dense-looking. Do all these things convey what your brand represents? Does your brand have a personality anymore, or is it standing shyly and stiffly against the wall, hoping no one notices it now looks (I hate to tell you) like every other brand out there?

To wrap up, let's have a look at your navigation. By navigation, I'm talking about everything from the iPod's clicking wheel, to the ritualized twist and snap you hear when you open your favorite soft drink, to Amazon's simple, one-click button you press to buy books or download them onto your Kindle. In my experience, once consumers have used Amazon a few times, they get hooked on the site's simplicity and navigational ease (During a recent round of focus groups, by a long shot Amazon was at the very top of consumers' favorite brands.). Sure, the site stocks every book (and everything else) under the sun, it over-delivers, it undersells iTunes, its data-mining techniques are on the positive side of creepy, but I'm pretty sure that most consumers' loyalty to the company derives in large part from Amazon's incredible and intuitive ease of navigation.

We're creatures of habit. Once we grow accustomed to a certain way of shopping, running, eating, drinking, shaving, brushing our teeth, showering, dressing, or any of 100 other things, our methodology becomes our own. Like the familiar, well-worn route we take to our favorite beach or restaurant, habit becomes personal, automatic, and unconscious. In the same way, navigational rituals are a vital, whispered element of any brand's attraction. Having said this, human beings are supremely adaptable. Basically, we can get used to anything. If you've ever switched cell phones, or made the change from an Apple to a PC, yes, at first it felt obnoxious and foreign and even wrong. But once we became accustomed to that new environment--be it a trackball or a new, melodic suite of start-up and shut-down sounds--nothing else would do the trick.

So reserve a brick wall, cock your arm, aim, and begin smashing your brand. While you're at it, smash your website, to ensure your brand remains consistent via your web pages' navigation, style, ease, and/or special features. Now ask yourself: does my brand "own" this cross-sensory experience, from web to wireless to PDA, right down to the bricks-and-mortar product I'm gripping in my right hand? If not, your carefully crafted logo might as well not even exist.

Martin Lindstrom is a 2009 recipient of TIME Magazine’s “World's 100 Most Influential People” and author of Buyology—Truth and Lies About Why We Buy (Doubleday, New York), a New York Times and Wall Street Journal best–seller. A frequent advisor to heads of numerous Fortune 100 companies, Lindstrom has also authored 5 best sellers translated into 30 languages. More at martinlindstrom.com [1].

Read more by Martin Lindstrom: The 10 Most Addictive Sounds in the World [2]

Top image via Lawrence Whittemore [3]; small photo via thewhitestdogalive [4]

Article location:http://www.fastcompany.com/1745884/how-to-build-an-unforgettable-smashable-brand-identity-hint-its-not-the-logo

NY Times: Stuffed Piled in the Aisle? It's There to Get You to Spend More

 

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April 7, 2011

Stuff Piled in the Aisle? It’s There to Get You to Spend More

By STEPHANIE CLIFFORD

Americans like stuff.

That’s a given. But it turns out that lots and lots of stuff piled onto shelves or stacked in the middle of store aisles can coax a shopper to buy more.

After the recessionary years of shedding inventory and clearing store lanes for a cleaner, appealing look, retailers are reversing course and redesigning their spaces to add clutter.

Dollar General is raising the height of its standard shelves to more than six feet; J. C. Penney is turning its empty walls into jewelry and accessory displays; Old Navy is adding lanes lined with items like water bottles, candy and lunchboxes; and Best Buy is testing wheeling in bigger items, like Segways and bicycles, to suck up the space created by thinner TVs and smaller speakers.

Wal-Mart Stores may provide the marquee example of a failed makeover. Two years ago, it remodeled, trying to hang on to Target shoppers who traded down to Wal-Mart during the recession.

Out went the pallets of items like juice boxes or sweatshirts stacked in the centers of aisles. Merchandise on “end caps,” displays at the ends of aisles, slimmed down. Shelves got shorter, and Wal-Mart whittled the number of items it carried by about 9 percent, so as not to overwhelm shoppers. Customer satisfaction scores soared.

Despite those ratings, Wal-Mart has been encountering one of the longest slides in domestic same-store sales in its history. 

“They loved the experience,” William S. Simon, the chief executive of Wal-Mart’s United States division, said at a recent confer-ence. “They just bought less. And that generally is not a good long-term strategy.” 

So after remodeling a large percentage of its stores, Wal-Mart is now re-remodeling them, adding back inventory, plopping stacks of stuff into aisles and stacking shelves with a dizzying array of merchandise. 

As it turns out, the messier and more confusing a store looks, the better the deals it projects. 

“Historically, the more a store is packed, the more people think of it as value — just as when you walk into a store and there are fewer things on the floor, you tend to think they’re expensive,” said Paco Underhill, founder and chief executive of Envirosell, who studies shopper behavior. 

Retailers are crowding shelves for a couple of strategic reasons.

After years of expansion, many retailers are halting building plans and closing stores as sales and traffic shift to the Web. That means the main way to increase revenue is by selling more stuff at the existing stores. 

“All the retailers are stuck with less traffic going to the stores, and leases that are 15 to 20 years long,” said Fiona Dias, executive vice president of strategy and marketing at GSI Commerce, which provides e-commerce technology for retailers like Toys “R” Us. “What do you do with all the extra space that you’re paying for?” 

Also, same-store sales are getting stronger, so retailers are adding back merchandise. At Wal-Mart, for instance, inventory at the end of January was 11 percent higher than a year earlier. 

Best Buy, which had big stores to begin with, recently was faced with “bowling alleys’ worth of space because the product has all shrunk or gone digital,” Ms. Dias said, noting the switchover to music sold on MP3s rather than racks and racks of CDs.  

J. C. Penney is also trying to maximize its existing spaces. 

Old Navy has added “fast lanes” where shoppers can pick up Nantucket Nectars, toys and other impulse items. About 100 stores now have the lanes, and about 200 more are being added this year. It is meant to maximize sales per square foot around the checkout area, a spokeswoman, Louise Callagy, said in an e-mail, especially important as many Old Navys have been or will be remodeled into smaller spaces.

“One of the ways to improve the productivity is to get more things out on the floor and to show the product in a better way,” said Jan Hodges, senior vice president and general merchandise manager of women’s accessories at J. C. Penney. The retailer has turned empty back walls into accessory displays, added coordinating jewelry and handbags to tables of clothes, and later this year will switch from flat tables to ones with pegs that can carry loads of hanging socks or underwear. 

At Dollar General, the tops of the shelves have been raised to a standard 78 inches. Some were as short as 62 inches.

“Think of the shelf heights as air rights, if you will — it’s easier to raise the shelf height than expand the footprint” of the store, said a spokeswoman, Mary Winn Gordon.  

Raising the shelf height, she said, raised sales per square foot to about $201 in 2010 from $165 in 2007. 

Dollar General is now adding what Ms. Gordon called “speed bumps,” merchandise in the aisles or at the entrance, or stacks of related items — like piles of bananas alongside boxes of vanilla wafers.  

“We think of them more like virtual speed bumps — they don’t really impede or slow down the shopping in a physical way, but highlight in a consumer-friendly way items that we know our customers are interested in, or items that go together,” she said. “You’ve got just a few seconds to capture your customers’ attention when they come into the store.” 

Wal-Mart is realizing the same thing. It has dismissed or reassigned the top executives who came up with the cleaner-stores plan, and a new group of executives is adding items — and a little bit of mess — back to shelves. Still, Wal-Mart says that it is not totally repeating the past and that the stores are easier to maneuver than they were years ago.)

“We just overreacted,” said the chief financial officer, Charles M. Holley Jr., in a February call with reporters. “It didn’t allow us to carry the assortment that our customer wanted.”  

It is not just about what customers want but how they perceive a store.

“Messiness, or pallets in the middle of an aisle, are also a cue for value,” said Ben DiSanti, senior vice president of planning and perspectives for TPN, a retail marketing consultant. “There are a lot of cues that the shopper picks up on in stores.” 

A streamlined, simplified store, he added, “begins to alter that shopper’s perception of, ‘Does Wal-Mart have the best prices?’ ”

 “Whether they know it to be more of a discounter or not, if shoppers walk into a less organized environment, I’d bet their first impression is going to be, ‘O.K., you’re going to find lower prices here,’ ” Mr. DiSanti said. 

Still, not all price-conscious retailers are crazy for clutter. Family Dollar has been taking items out of the middle of aisles, hanging them or stocking them on shelves instead. 

“Most of our customers, regardless of their walk of life, want a pleasant experience,” said Mtu Pugh, vice president of format and space management. 

And Mr. DiSanti suggested that an untidy ambiance could be counterproductive. 

“The clutter doesn’t help the shopping experience,” Mr. DiSanti said. “If I have the choice, I will always choose a cleaner environment.” 

Then again, in that pleasant atmosphere, a shopper might just stick to her list and not get distracted by Easter decorations toppling from a shelf, or the two-for-one cereal special she has to maneuver her cart around. 

“If you have the temptations there, it will lead to additional sales,” Mr. DiSanti said. 

===

An Eye for Retailing

Successful retailers strive to establish familiar spaces for their customers, emphasizing a number of messages through the look and feel of their stores, their merchandise and their employees. Sharon Love, chief executive of TPN, a retail marketing agency, offers an annotated guide to the designs of four chains. Clockwise from top left: Wal-Mart; Uniqlo; Best Buy; and Dollar General. 

http://www.nytimes.com/interactive/2011/04/08/business/20110408-clutter.html?ref=business

WSJ: Why Are Fitting Rooms So Awful?

FASHION
APRIL 6, 2011

Why Are Fitting Rooms So Awful?

Stores Try To Beautify Spaces, 'Seduce' Shoppers to Buy More With Better Lighting, Mirrors, Design

By ELIZABETH HOLMES and RAY A. SMITH

You spot a gorgeous dress on a hanger and, hopes high, make your way to the fitting room.

The Dream Dressing Room

Stores are making over these spaces with a variety of features.

View Interactive

It's downhill from there. The door doesn't fully shut, the lighting makes you look ill and the frock looks frumpy in a mirror fit for a fun house.

The retail dressing room can be a total sales killer.

Now stores are making a big push to transform the dingy fitting room into a more flattering space. It's part of an ongoing struggle by retailers to coax consumers to spend more. Having saturated the market with stores over the last decade, they can't expand to increase sales. Instead, companies are trying to squeeze more profits out of their current fleet.

Retailers are taking steps to battle a sales killer: the dressing room. As Elizabeth Holmes explains, by fixing up the rooms, stores can increase the odds customers will buy clothing.

Customers who try on clothes in fitting rooms have a conversion rate—meaning they ultimately buy something they tried on—of 67%, according to retail consultant Envision Retail Ltd., of Surrey, England, based on observations of more than 8,000 shoppers. Customers who don't use the fitting rooms have only a 10% conversion rate. Shoppers who use the fitting rooms spend a third of their in-store time there.

Aesthetically, the dressing-room makeovers are an attempt to go from bland and barren to comfortable and inviting, as if the shopper is trying on clothing in her own home. Chandeliers are cropping up in luxurious anterooms, where racks of camisoles hang waiting to smooth the unexpected bulge. Inside the fitting rooms, wallpaper and back-lit mirrors aim to flatter, not frighten.

Before

To revamp its fitting rooms, Ann Taylor changed a bland space, above, into a lounging area for shoppers with clothing, accessories and seating, below.

After

Stores are focusing their design efforts on dressing rooms in the women's clothing sections. Men tend to buy without trying on in the store, says Paco Underhill, founding president of Envirosell, a retail behavioral research and consultancy firm, who has timed men's visits in stores.

The new design at Ann Taylor, a division of Ann Inc., is intended to replicate a shopper's walk-in closet, says Samantha Dorfman, senior vice president of store development, design and facilities. A huge chandelier and larger-than-life marketing poster fill the entrance to "seduce" customers back to the space, Ms. Dorfman says. It's an about-face from the barren, beige entrance to the fitting rooms in the current layout.

Old Navy, the bargain-priced division from Gap Inc., moved fitting rooms to the center of its new store design. The relocation came after customers referred to the old tucked-away location as the "dungeon," says Tom Wyatt, Old Navy's president. To further cater to its target customer—a time-starved, young mother—the chain added what it calls "quick change" areas. The half-circle spaces are enclosed by a curtain.

Noticing that many women like to go into a fitting room together, Anthropologie, a division of Urban Outfitters Inc., makes sure each room can accommodate more than one person. "They consider it a little bit of a party," says Co-President Wendy B. McDevitt.

This Bloomingdale's concept store has created a dressing 'pod' made of fabric that can be hoisted to the ceiling to make room for events. Bloomingdale's plans to use these in other stores as well.

For women shopping with children or a boyfriend or husband, department store chain Macy's Inc. has been gradually updating its stores to add communal waiting spots with flat-screen TVs tuned to either sports or cartoons and upholstered seating. The theory: Parking a husband, boyfriend or kids in that spot helps a shopper feel "less rushed and stressed," a Macy's spokeswoman said in an email.

Clothing stores typically allot about 20% of the square footage towards fitting rooms and storage and 80% towards displaying the merchandise, says Robin Kramer, head of Kramer Design Group, a retail branding and design firm which works with clients from Talbots to Alexander Wang. She has lobbied stores to dedicate more space to their fitting rooms. "It's the moment where you put the brand on your body and decide if that's what you want," Ms. Kramer says.

Anthropologie wants shoppers to feel 'relaxed and out of the fray,' says Co-President Wendy B. McDevitt.

Some retailers are filling the fitting room area with merchandise. At Ann Taylor, racks and drawers in the lounge area display undergarments such as shapewear and camisoles. Its sister division, Loft, also includes a bar of belts and jewelry. Sales associates manning the fitting room are able to sell more items to a customer without leaving the space.

Lighting is a critical component. "Any woman who goes into a fitting room that has really bad lighting, you look at yourself, you look at your skin and you're completely distracted," says Anthropologie's Ms. McDevitt. "Then you lose the real reason why you were in there."

The new Ann Taylor rooms have six sources of lighting and three types of bulbs, compared to one source and type of lighting in the old design. The mixture of ceramic metal halide, compact fluorescent and low-voltage bulbs is more flattering, Ms. Dorfman says.

Bloomingdale's has installed rear-lit three-way mirrors, which allow customers to see themselves from a variety of angles. There is also a ceiling-mounted light three feet back from the mirror to eliminate shadows on the shopper's face, says Jack Hruska, executive vice president of creative services at Bloomingdale's.

Old Navy added quick-change areas.

Personal touches at Old Navy include labels placed over a trio of bright yellow hooks, helping shoppers organize their haul. "I love it!" and "Not for me," the signs read. Anthropologie writes shoppers' first names on the fitting room door, making it easier for sales staff to refer to them by name. That one-on-one time with a customer helps the store to engage shoppers on an intimate level, Ms. McDevitt says.

Because fitting rooms are highly trafficked areas, stores must make the design durable as well aesthetically pleasing. At Ann Taylor, the gray tones of the custom-designed floral wallpaper mask scuffs. The leather benches were chosen for the material's resistance to stains, like lipstick.

To help shoppers get the attention of salespeople, some fitting rooms at Bloomingdale's, such as those in the intimates departments, have phones. Customers are automatically connected to a sales associate to obtain another size, or ask questions regarding fit. Bloomingdale's says the phones are used frequently.

Victoria's Secret, a lingerie chain from Limited Brands Inc., is testing buttons in a small number of its fitting rooms which, when pushed, alert a sales associate via headset. The system also keeps track of how many people use the fitting rooms, how long they stay and how many times they ask for help, says Marge Laney, president of Houston-based manufacturer Alert Technologies, which installed the Victoria's Secret system.

Write to Elizabeth Holmes at [email protected] and Ray A. Smith at [email protected]

Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved

Performance Insider: Putting It All Into Context

Putting It All Into Context

Jesse Chenard, Mar 31, 2011 01:15 PM

As each phase of online offerings prove, there are many reasons we spend an increasing amount of time searching, emailing, connecting with friends, colleagues and family, and entertaining ourselves with the amazing array of options available via a browser or mobile app. What state of mind are you in when you read your favorite news source, check sports scores, or gossip sites? What about when you are in the market for something (could be a car, could be a new recipe for dinner, information on health matters, whatever) or when you just need to connect, to feel like the people, places and opinions that matter most to you are close and accessible? Despite all the digital analytics, it's surmising your state of mind that is the ultimate goal: are you searching car sites because you are in market or because you just love to see new cars, or maybe you need to know what is coming down the pike in automotive offerings because your job requires it? What emotions are triggered by content is why endemic advertising is so highly prized. Knowing someone is actively engaged reading about new car models is one indicator that they may be in market for purchasing a car soon. Medical information about specific conditions is valuable to marketers of medicine for that condition because people who have the condition, or those that treat them, read it closely. That's why one of the most time-honored ways advertisers choose to engage with their intended customers is via association with content that triggers emotions, matching what the marketer hopes to activate - association and action because the state of mind is ripe for what the marketer is offering. When considering context, online widens the options for marketers in surprising ways. When your message is associated with content that is aligned with your message, the 'halo' effect heightens the message's impact. For example, most of us care about safety features in the cars we drive, but it's not necessarily the only reason we choose to buy one model over another. While reading an article on safety measures for children, ads highlighting features specifically about car models and brands in the context of safety can greatly increase engagement and improve brand metrics for the advertisers. Since few can afford to place their message indiscriminately to the fragmented masses, consider all options of filtering to find your ideal consumer at the ideal time. This has been the promise that's fueled mobile marketing's growth for years now. It's also why audience segment targeting is widely used. However, in the rush to target exactly the right people at the exact right time, we sometimes overlook the most powerful association available: contextually relevant content. Bottom line: if you put your brand in context, within content that is aligned with your product or service, and associated with the brand promise, you will gain valuable impact. Just because placing ads in context within specific content is an age-old technique for heightening advertiser results, doesn't mean it's no longer valuable. Indeed, today's fragmented audience and marketplace make context even more important than ever.

Economist: Clothes may make the man, but it is the label that really counts

Status displays

I've got you labelled

Clothes may make the man, but it is the label that really counts

Mar 31st 2011 | from the print edition

What more could a boy want?

DESIGNERS of fancy apparel would like their customers to believe that wearing their creations lends an air of wealth, sophistication and high status. And it does—but not, perhaps, for the reason those designers might like to believe, namely their inherent creative genius. A new piece of research confirms what many, not least in the marketing departments of fashion houses, will long have suspected: that it is not the design itself that counts, but the label.

Rob Nelissen and Marijn Meijers of Tilburg University in the Netherlands examined people’s reactions to experimental stooges who were wearing clothes made by Lacoste and Tommy Hilfiger, two well-known brands that sell what they are pleased to refer to as designer clothing. As the two researchers show in a paper about to be published in Evolution and Human Behavior, such clothes do bring the benefits promised: co-operation from others, job recommendations and even the ability to collect more money when soliciting for charity. But they work only when the origin of the clothes in question is obvious.

In the first experiment, volunteers were shown pictures of a man wearing a polo shirt. The photo was digitally altered to include no logo, a designer logo (Lacoste or Hilfiger) or a logo generally regarded as non-luxury, Slazenger. When the designer logo appeared, the man in the picture was rated as of higher status (3.5 for Lacoste and 3.47 for Hilfiger, on a five-point scale, compared with 2.91 for no logo and 2.84 for Slazenger), and wealthier (3.4 and 3.94 versus 2.78 and 2.8, respectively).

To see if this perception had an effect on actual behaviour, the researchers did a number of other experiments. For instance, one of their female assistants asked people in a shopping mall to stop and answer survey questions. One day she wore a sweater with a designer logo; the next, an identical sweater with no logo. Some 52% of people agreed to take the survey when faced with the Tommy Hilfiger label, compared with only 13% who saw no logo.

In another experiment, volunteers watched one of two videos of the same man being interviewed for a job. In one, his shirt had a logo; in the other, it did not. The logo led observers to rate the man as more suitable for the job, and even earned him a 9% higher salary recommendation.

Charitable impulses were affected, too. When two of the team’s women went collecting for charity on four consecutive evenings, switching between designer and non-designer shirts, they found that wearing shirts with logos brought in nearly twice as much—an average per answered door of 34 euro cents (48 American ones) compared with 19 euro cents when logo-less. It seems, then, that labels count. The question is, why?

The answer, Dr Nelissen and Dr Meijers suspect, is the same as why the peacock with the best tail gets all the girls. People react to designer labels as signals of underlying quality. Only the best can afford them. To test that idea, they checked how people responded to a logo they knew had cost the wearer nothing. To do this, they asked their volunteers to play a social-dilemma game, in which both sides can benefit from co-operating, but only at the risk of being taken advantage of.

Each volunteer was given €2 in 10 cent coins and told he (or she) could transfer as much as desired to an unseen partner, and that any amount transferred would be doubled. If both partners transferred all of their money, each would end up with €4. But because there was no guarantee that the unseen partner would give back any money at all, players tended to hedge their bets, and transfer only some money.

When shown a picture of their purported partner wearing a designer shirt, volunteers transferred 36% more than when the same person was shown with no logo (95 cents, as opposed to 70 cents). But when told that the partner was wearing a shirt given by the experimenters, the logo had no effect on transfers. The shirt no longer represented an honest signal.

This study confirms a wider phenomenon. A work of art’s value, for example, can change radically, depending on who is believed to have created it, even though the artwork itself is unchanged. And people will willingly buy counterfeit goods, knowing they are knock-offs, if they bear the right label. What is interesting is that the label is so persuasive. In the case of the peacock, the tail works precisely because it cannot be faked. An unhealthy bird’s feathers will never sparkle. But humans often fail to see beyond the superficial. For humans, then, the status-assessment mechanism is going wrong.

Presumably what is happening is that a mechanism which evolved to assess biology cannot easily cope with artefacts. If the only thing you have to assess is the quality of a tail, evolution will tend to make you quite good at it. Artefacts, though, are so variable that mental shortcuts are likely to be involved. If everyone agrees something has high status, then it does. But that agreement often transfers the status from the thing to the label. Maybe a further million years or so of evolution will eliminate this failing. In the meantime, marketers can open another bottle of champagne.

from the print edition | Science and Technology

Copyright © The Economist Newspaper Limited 2011. All rights reserved.

Engage Teens: Tribal Marketing

By Tina Wells Thursday, March 24, 2011

Tribal Marketing

If you enter a roomful of crying but healthy babies, chances are they all share at least one of the same needs: food, sleep, a diaper, or some undivided attention from a loving grown-up. As they grow into early childhood, they will hit the same developmental benchmarks at roughly the same time, and they'll still want and need lot of the same basics (snacks, naps, potty, hugs), though they are beginning to assert their distinct personalities. Even before preschool, the differences start to emerge. This kid loves soccer, that one only wears sandals, this kid cares about animals, this one is afraid of animals, and this kid collects menus. And so it goes as they grow, with each young soul becoming his or her own person.

Any parent or teacher will tell you that, although they may have similarities, all children are different. Yet we consistently make the mistake of behaving as if they all want and need the same things. While this is obviously practical and necessary on many levels, children become even less alike as they grow into their tween and teenage years -- and we still often act as if they're all cut from the same cloth. This true paradox is that tweens, especially, are bursting out of their early childhood selves, trying to figure out where they fit in, attracted to and afraid of the idea of more independence. They want to be "like the other kids," but they have already formed a distinct set of likes and dislikes. They face a substantial challenge in striking a balance between being like their peers and flexing their one-of-a-kind personalities.

Marketers -- and society in general -- have typically categorized people by their age. You might read something like, "Adult males between the ages of 35 and 45 are more likely to have a Facebook account than adult males between the ages of ..." or "New Yorkers between the ages of 15 and 18 are using the subway at alarming rates." Classifying people by age makes it easy to survey them and is often appropriate. However, in an era of growing individualism and the use of technological profiles to display individual characteristics, it's important to see past the demographic boundaries and begin to define people based on their cultural attributes -- instead of focusing first on numbers.

While we may be inclined to think of them as "ages 9 to 12," the 12 year old may be making the same choices as a 15 year old, and the 9 year old may be an early adopter of certain trends, regardless of his or her age. It's not about how we view them; it's about how they define themselves -- and how the lines often blur between the tween and teenage groups. With that in mind, I've developed a new system for looking at teens and tweens by separating them into four tribes: the wired Techie; the conformist but somewhat paradoxical Preppy; the always-mellow Alternative; and the cutting-edge Independent. We'll have look at each of these in further detail, but first, it's important to explain why we need to look at Millennials in this way.

At some point, we began to blur the lines of which brands, products, and services should be consumed by whom. In another post, I'm going to talk in depth about the concept of a "tweenebe." Tweenebes are adults who want to be tweens. Now, they may not truly want to be 12 again, but they are consuming a 12 year old's culture and loving it. Do you know those moms who love Justin Bieber? Are you one of them? Do you know dads who seem to enjoy rocking out to the Disney channel more than they should? It's okay; they're just enjoying the benefits of being a tween. I have to admit, in a society full of major economic, social, and political concerns, we'd all love to fawn over the latest tween singing sensation, read a Twilight book, or grab a Frappuccino with friends. Oh wait -- don't we already do those things? I think that there are more tweenabes out there than I can even imagine.

As we look at these tribes, we have to ask ourselves: Do you have to be 13 to be a Preppy? Twenty-something to be an Independent? No, you don't. That seems like an easy question to answer, but it has stumped marketers for generations. Now, I doubt that you'll see an ad for Tampax Pearl in Sports Illustrated or a Justin Bieber ad in AARP magazine, but you will see major brand extensions happening over the next few years. And I'm not talking about product development; I'm talking about market development. Marketers have to get outside of thinking in boxes, whether it's ages 7 to 12, 13 to 19, or 20 to 24.

Technology has created so many generationally shared experiences. Facebook is no longer for elite college students. Indeed, the fastest-growing demographic on Facebook is women over 50. How people think, feel, and react to brands is a completely new experience. Because of that, I've developed four tribes that I feel are universal. I think that these tribes definitely have sub-tribes (which I'll explore in the future at some point), and I do believe that consumers can belong to more than one tribe. But the tribal migration is happening, and has been happening for years. As with any good disruptive innovation, technology has forced us to deal with this issue.

Ten years ago, if you wanted to launch a new product for teens, you'd probably launch a major ad campaign in a teen magazine like Seventeen. You would likely reach more than 10 million girls and call it a day. Fast-forward to 2011, where readership of Seventeen is now about 4 million. Where did all those readers go? Well, they're online, of course. They're on thousands of web sites. How are you going to find them? Well, sure, you can just launch a campaign on a network of web sites and hope that you're going to reach your entire target.

However, there's an easier way. Targeting a tribe is also about understanding a mind-set. A tribe is defined as a "social division of people." The key word here is social. Social involves so many things. What are people doing? How are they doing it? With whom are they doing it? How often? How long? When? Where? This is starting to sound like an invitation to the best party. That's the mind-set a marketer should have when thinking about tribes, and that's why tribal marketing works.

If you start to think about these consumers -- Preppies, Techies, Alternatives, and Independents -- as tribes, and then think about all of their social activities, you can easily figure out how to reach them. Then you won't just be bowling in the dark. You will hit your mark every time.