Using social media to gain insights

It was very exciting to learn about generative research as a tool to gain insights about what consumers want and how to better serve them. The tools we have discussed in class were interesting mechanisms to get a glimpse into the world of your target customer. I enjoyed reading and experimenting with those techniques because they sparked conversations that were deeper than any survey; they moved beyond the distance that is generated when an interviewer is asking questions and the subject is responding. Generative research gives us tools to move passed what is socially acceptable to answer and into what the consumers really do with the products they take home, their real needs and struggles, and secret desires.
The web offers marketers with something similar to generative research: a platform for people to communicate with one another, sharing opinions, views, and even very personal information, all the while maintaining a certain level of anonymity. Okay, maybe social networking sites are not that anonymous, but reviews, blogs, and tweets can be. It is the fact that you have an easy platform to express yourself without being criticized to your face that makes publishing things on the web so attractive! The whole idea of having to ask yourself what other people will think is gone on the web (again, with the exception of SNSs, where your name is there for all to see, even potential employers).
One of the groups that I have noticed taking a lot of advantage of the anonymity to share information is the Alpha Mom group, discussed in groundswell. This group is the one I have been researching for my group project for this class, which led me to read some blogs that were posted by mothers interested in sharing information about parenting.
What amazed me the most was the amount of personal and sensitive information these women were willing to disclose on a blog or a discussion forum! Check out this forum discussion about a woman's sex life post-baby.
It was the kind of detail I would only share with my closest friend, behind closed doors, but alpha moms were talking about it in on their blogs and forums, protected by their aliases. This abundance of unsolicited and uncensored information is a mine for a marketer! It is great, because the groups already segment themselves; alpha moms writing to other alpha moms, tech savvy people sharing their knowledge with other tech savvy people.
It is a matter of sifting through the mountain of data to find interesting ideas. I am not sure if the munchkin diaper pail was developed by gathering insights like this, but I can definitely see it as being the case. http://www.munchkin.com/products/detail.html?pID=1335
Imagine a mommy sick and tired of the smell of the dirty diapers, and of having to make several constant trips to take the diapers outside. She has tried other things, like febreeze, but she is worried that the chemicals will be bad for the baby. As a typical Alpha mom, she goes to a forum and inquires about a way to get rid of the smell. Other mommies are having the same issue and one says she has been putting baking soda in the trash can and it seems to help. Munchkin has been monitoring that forum and comes up with the diaper pail “powered” by Arm and Hammer.
Not only marketers can gather information from existing forums, they can create a forum and encourage the groundswell to congregate there to share their views, thus gathering interesting input for new developments. The input that comes out the forums and blogs can help on other fronts. Knowing what the customers’ needs really are, their concerns, and where they are likely to shop and discuss their products, it is easier to position a new product and to cater a message to that segment. Also, advertising online can be much more dynamic than in print or on TV. The ads can be changed as the trends online are changing too.
Of course, it sounds easy and simple. But it does require that the marketing department be constantly on the look for the new blogs, trends, tweets, forums, or any comments that may provide insight or jeopardize the brand.

Using data for "evil"

Last Fall I had the opportunity to listen to Walmart’s treasurer talk to a group of GWIB (Graduate Women in Business) members. Most of us were curious about Walmart’s ability to deal with the financial crisis that had struck the country the year before. Of course, low debt levels and high cash flows generated daily in stores all over the country where the main reason Walmart didn’t have many issues during the crisis. However, the treasurer mentioned that the executives at Walmart understood their social responsibility towards the public and that they saw their customers as counting on them during the tough times.
The use of data played an important role in the story told by the treasurer, because Walmart was actually doing analysis on their data and have found out that stores in areas severely hit by the falling real estate prices and unemployment were experiencing increase in sales. Other trends, he pointed out, were the redemption of coupons and acquisition of smaller packages. While the redemption of coupons is an obvious event during a recession, the acquisition of smaller packages seemed strange. Usually consumers prefer to buy larger packages of goods, to get a better price and save also by making fewer trips to the grocery store. In the past couple of years, there has been an increase in the number of people living paycheck to paycheck and not being able to afford a large pack of diapers before the next paycheck.
All this information does serve Walmart well to build their competitive advantage. Knowing that their consumers are struggling enables Walmart to create promotions that will bring the customer in the store. They recently released a campaign advertising even lower prices on particular items in particular days. Negotiations with suppliers to reduce the package sizes are another application of Walmart’s plethora of data.
Other businesses have access to data that could be used for “evil”. Google, for example, keeps a log of all searches performed in their search engine by each IP address. This kind of data can be subpoenaed by the court system and used to convict criminals. Google could be using the data to define new product offerings to the public, to improve the algorithms on their search engine, and to sell advertising space on their website, increasing Google’s profitability.
Most companies in fact use data they accumulate from their customers to perfect their offerings and encourage buys. For example, amazon.com recommends books and other products based on past purchases and purchases from people with similar profiles.
So far, Walmart has showed customers they can be trusted with the data they have. Walmart seems to be using the data to tailor the offers and promotions to the customers, benefiting both the customer and Walmart. While the data could be used to select or turndown customers, it doesn’t seem Walmart has been doing that.
I think Walmart is not doing more with the data because it goes against their proposition of keeping costs and prices low. Once Walmart starts digging through the data and increasing segmentation and differentiation between its customers to create different experiences for each of the segments, costs will go up, reducing Walmart’s traditional competitive advantage. In my opinion, there is no harm in using the data acquired to profit directly from making better offerings to the customer. The problem with the use of the data comes when companies use the data to discriminate against customers or employees, as described on the article.
For the suppliers, having access to the data is helpful on several levels. One advantage to the suppliers is to be able to better forecast future sales, so the companies can optimize inventory, distribution, and negotiations with their own suppliers. Another advantage to the suppliers is the ability to find out more information about their customer and cater promotions to them, such as end-caps, combinations with other products, and figuring out the best time to run price promotions.
On the other hand, the suppliers have no access to competitor data, making it difficult to calculate market share and identifying what other marketing strategies the competition is using, without using additional data from companies such as Nielsen.
Carefully managing data from customers to get increase profitability is not a problem, it is part of business. People may take issue with the amount of data Walmart has overall. Thinks may change if Walmart decides to use its data as a discrimination tool.