Pizza Express vouchers: devaluing the brand one discount at a time

Restaurant discount vouchers have become normal in the recession. Squeezed disposable incomes mean the casual dining chains need to complete hard to attract custom. On my high street there’s six chains all offering variants of the same thing (Pizza Express, Pizza Hut, Strada, Zizzi, Prezzo, Ask).

The chains themselves are addicted to vouchers, nowhere more so than Pizza Express.

Last week I watched a large group come into a half-full restaurant without a booking, eating then searching for a voucher on a mobile just before ordering the bill. They expected not to have to book; they expected a voucher to be available.

It struck me then how much things had changed in the past few years, the normalisation of vouchers and about the status of Pizza Express.

Warming to theme I asked an employee about how things had changed over time (see table):

Comparing this against UK search volumes broadly bears out the trend.

You can understand companies like using discount vouchers: they can go back to customers repeatedly with targeted offers. With gross margin on pizza being around 80% that there’s definitely room for some sales promotion. And with a reported database of 3.6 million customers (6% of uk population, gulp!) the strategy has been successful, achieving impressive reach. The tailoring is undoubtedly clever and time sensitive, for example  encouraging boozy groups to re-visit the week after with boozy incentive (see below).

It’s a good way of stretching your marketing budget. I can see the benefits.

It’s also a way of undermining your brand. Discounting has devalued the Pizza Express offering. It used to be the upmarket high street pizzeria but it doesn’t feel that way any longer: it feels more suited to an everyday rather than a treat occasion.

For what it’s worth, when I asked friends about this many say they wouldn’t go to Pizza Express without a voucher now; paying full price would feel wrong. I’d wager margins have fallen, and locked into this cycle of discounting they will continue to do so. The parent company made a £40m loss in the last financial year and its annual report shows the average spend per head is now £14, lower than other brands in their portfolio (see below).

If anyone has the info, I’d love to know the real data on what has changed in the past 4 years since the recession started:

1)     Is the frequency of visit among loyalists up or down?

2)     Has there been sustained business from new customers?

3)     Has the customer demographic changed?

4)     How much have margins per customer dipped?

Posted in Branding, Choice, Consumer Psychology, Market research, Marketing, Marketing Research, Social Media | Tagged , , | 2 Comments

7 reasons Comet failed

Comet’s failure paints a bleak picture for bricks and mortar retail. Today’s Observer summed up its woes concisely. Several themes emerge:

New competitors

Comet was squeezed in a pincer movement by internet retailers and by supermarkets encroaching on their territory. The former enjoy much lower fixed costs; the latter have greater buying power and a loyal customer base who visit them frequently.

A competitive market  

Selling electricals is tough as margins are thin. New products like flatscreen TVs command a premium when introduced: prices halve annually thereafter meaning retailers have to sell double the volume to keep up.

“Must have” products supplied direct

Recent innovations like 3G TV have failed to piqué consumer interest. The products people wanted (tablets and EReaders) were often bought direct: iPads from Apple and Kindles from Amazon.

Low consumer confidence

Not only is there less cash around but people are reticent about big-ticket purchases. Fewer people are moving house – thus are not reappraising their white goods.

Savvy consumer behaviour

Comet, like all bricks and mortar retailers is a victim of showrooming: people visiting a brick and mortar retail location to touch and feel a product and then going online to buy it at a lower price.

A dated retail estate

…Comet’s stores are generally grim, underinvested outlets on first-generation out-of-town retail parks: the sort that have a burger van in the car park rather than a Starbucks.”

Not keeping up with direct competitors

I’d add a final point: Comet’s main competitor Dixons has spent millions on staff training. They realised the one thing bricks and mortar stores can do online retailers can’t is give  face-to-face advice and guidance. The rollout of their KNOWHOW programme is testament to this. Dixons will be the main beneficiary of Comet’s demise.

Reviewing the roll-call of recent high street casualties the article sums up:

“If you are not best in class, you are a dead man walking.”

These themes are largely borne out from other sources.

BBC

http://www.bbc.co.uk/news/business-20164564

Telegraph http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9648883/Comet-most-high-profile-retail-casualty-since-financial-crisis.html

Independent

http://www.independent.co.uk/news/business/news/another-day-another-death-on-the-high-street-as-investors-pull-the-plug-on-comet-8273828.html

Posted in Market research, Retail, Strategy | Tagged , , , | 1 Comment

Inspiration in retail

 

Kochhaus is a German grocer which presents customers products themed around recipes. A colleague returned from Berlin last week raving about their stores (above). Rather than an exhausting library of aisles the store is more a living recipe book, with a rotating selection of suggested ingredients for 20 recipes – starters, mains and deserts. You can even buy the cookware.

It’s a brave, distinctive approach to grocery retail. The surprising thing is that – although upmarket – it is not aimed at the super affluent. Meals start from around a fiver per person:

“The rules we make for ourselves are strict and easy to understand: no dish costs more than €10, about $13, a serving; no dish takes more than one hour to prepare; there are no more than twelve steps to any recipe; there are never more than twenty recipes to choose from in the store, although two new ones are rotated in each week.” Dorothée Stöber, Marketing Director, NYT 2010   

Kochhaus tells us something about choice. It’s tiring to think. The habitual auto-pilot of the weekly shop is a response to the retail environment: most ignore the 30,000+ products on offer and pick out the same 30 they always buy. This selective perception helps us cope: we can get in and get out of a shop promptly.

Kochhaus tells us something about the retail environment: it can make us snap out of autopilot. Beautiful presentation and in-store theatre achieves this in Kochhaus, perhaps  slightly more subtle than everyday grocery POS.

Kochhaus also tells us something about the future of grocery shopping. As the Grocer reported last week there is a growing reliance on internet shopping, driven by high petrol prices and digitally-savvy consumers.

In the UK this has wrong-footed even Tesco whose expansion strategy through huge out-of-town Extra hypermarkets now looks clumsy: in the words of Kantar Retail analyst Bryan Roberts they look like “expensive warehousing.”

Two questions remain.

In the future, if the role of the web for grocery retail is to escape the drudgery of the weekly shop, will the role of the store be to inspire?

UK supermarkets are operations-led businesses: is inspiration and theatre in grocery retail practical at scale?

Further reading:

Website: http://www.kochhaus.de/

Someone who has tried the food: http://expatmummyinberlin.blogspot.co.uk/2012/07/kochhaus-review-romantic-dinner.html

Another perspective: http://curiositykilledtheconsumer.wordpress.com/2012/06/16/its-time-to-throw-your-microwave-away-kochhaus-walk-in-cookbook/

 

 

Posted in Choice, Consumer Psychology, Market research, Marketing Research, Retail | Tagged , , , , , , | 2 Comments

Grayson Perry: decoding the British class system

“Nothing has as strong an influence on our aesthetic taste as the social class in which we grow up.” 

Image

Transvestite potter Grayson Perry is one of Channel Four’s most recent signings. His first series All in the best possible taste saw Perry going on safari with families in Sunderland, Tunbridge Wells and the Cotswolds to explore working, middle and upper class culture.

Perry focused on taste through the lens of consumer choice, specifically “what they are trying to say about themselves when they make these choices”. Enigmatic but approachable, he resists any urge to pass judgement helping his participants open up. A by-product of his ethnography was a series of six tapestries, recently displayed at the Miro gallery near Angel.

Class is an incredibly nuanced and dynamic topic to take on. Many of Perry’s everyday observations were spot on (see bottom), but the broader generalisations he tried to impose fell flat. It’s facile reducing identity to simple rules of thumb (e.g. working class taste is about being part of the tribe, middle class taste is all about differentiation). Motivations vary from person to person.

Kate Fox – author of the superb Watching the English - popped up for a short interview, anchoring the proceedings. “We intuit it – a class GPS is inherited.” In her view “…class is not defined by income or occupation, but by how we speak, our manner, our taste, our lifestyle choices, our kid’s names”.

More could have been made of her talents, but this was Perry’s show.

Ultimately he was more successful in his examination of the lowers and middles than the uppers. The blessed middles merited a series of their own. The divide between the ostentatious residents of the King’s Hill estate (Beamers and Beyoncé) and the upper middle Tunbridge Wells types (Organic Veg Boxes and the Guardian) was aptly described as “the Berlin Wall of British taste.” (see pic).

The series is available on 4OD. I’d urge you to seek it out. The most telling observations are listed below.

Perry’s observations: the working classes

Tattoos can be seen as a cue for men to talk about their personalities, the opportunity to broach a subject e.g. my son’s birth, my mother’s death, the day I joined the army etc.

A young man spending £900 on a full-sleeve tattoo is spending a higher proportion of their income on ‘art’ than a banker does splashing their bonus on a Damian Hirst

Male display is often always accompanied by the excuse/disguise of function e.g. the hours and pounds I spend working on my car are excused by talk of craftsmanship/performance.

Female display, getting dressed up on a Friday night, is described as a transformation to the weekend dream persona – the chance to see the dream you, taking pride in the fantasy present.

Display is as much for ourselves as for the opposite sex.

The pride and community values of working class jobs (formerly in the factory or pit) have fewer outlets, and are now most commonly expressed in support for football. The heraldry of football is an identity to grasp in a changing world with fewer traditional roles for men.

Perry’s observations: the middle classes of the King’s Hill estate

Their taste is about aspiration, proving what you can afford, the choices open to you. The desperation to be individual is doomed to failure.

A known brand can provide affirmation, security – the message that ‘you’ve got it right’.

These choices can be exhausting. One way of getting it right is by buying the showhome on the King’s Hill estate thereby not having to make any choices at all: “A new home is a blank canvass – it’s quite scary – you don’t want to get it wrong.”

Perry’s observations: the middle classes of Tunbridge Wells

Their taste is a tug of war between displaying discernment and individuality WITHOUT being showy or being seen to try too hard. Many people agonise over taste decisions “scrutinising them with an internal CCTV.” The ideal choice is that of a knowledgeable individualist – “my sofa is from a vintage fair – not DFS”.

The trend for modern retro vintage & the knowing juxtaposition of quirky objects is all about discernment. Not shopping but curating – alighting on things & bestowing meaning on them.

Their choices are consumerist, but the badges are hidden. They take pride not to being brand consumers, they are trying to do something knowledge-driven. They feel the anxiety of consumption keenly – but this is related to cultural capital.

Confidence can be expressed by proudly noting how you have dipped into the mainstream (bought a trinket at TK Max for £7.50). The implied message is “I know my choices and I sure of them.”

Food is a battle ground – tribal groups are teased apart and defined by food. Many declare themselves intolerant to proletarian staples like bread and milk. It is a visible differentiator, an identity marker. People are saying things about themselves in their food decisions.  In this light Jamie Oliver is “the god of class mobility” (!)

Taste for this group is about the vanity of small differences. Perry’s view is that underpinning all of their choices is a moral subtext “I am a good person / a respectable person / I know the rules.”

Perry’s observations: the upper classes

Understatement, quality and not having to try is central to upper class choices.

Appropriate dress is about making others feel comfortable. Fitting in, selecting the right uniform, signalling subtly to others.

Shabby chic – frayed cuffs etc – conveys that don’t have to try too hard. The subtle inverted snobbery here is that by wearing your father’s clothes you are saying they were made so well they have lasted a generation.

The historic affiliation of objects is key differentiator from other classes: the continuity of taste. To a certain extent upper class taste is about not having taste at all, but keeping traditions alive.

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64 things you need to know now for then, Ben Hammersley

Anyone wanting to understand our digital world could do worse than take Ben Hammersley’s book 64 Things to the beach this summer. Instead of the usual idea entrepreneur approach (a scary title, an instruction to forget everything we thought we knew & a selective retelling of the evidence) the book takes us through a series interrelated ideas in bite-sized chapters and lets the reader come to their own conclusions. Urgent, witty and well argued Hammersley is an enthusiastic guide who refuses to fall into the cyber-utopian camp, remaining objective throughout.

As well explaining techie nuts and bolts like how messages are sent via the internet the book focuses more on the consequences of technology, its’ intended and unintended effects on behaviour. Some of the most compelling parts describe the political, social or media change resulting from our networked culture.

A unifying theme is that “…etiquette around usage lags way behind the technological capabilities”. We’re in the midst of profound technological shift and are still working out the right balance in many areas of our lives:

Where we live – early commentators assumed the internet would allow us to cut physical ties and work anywhere. As the chapters on the Rebirth of Distance and Spatial Fix explain encouraging people to remain in their separate units is actually a pretty conservative argument. People enjoy other people: “chat is a much higher bandwidth activity than we realised”. Ultimately “the internet augments real space, it doesn’t replace it”. The knowledge work of the twenty first century seems more effective in high density urban hubs.  The post-war shift to suburban living doesn’t suit our new economy very well it seems.  The planning response – clusters like East London’s Tech city recognises this.

How we interact with others – as we know it’s easier to voice extreme views online. Anonymity combined with a lack of social cues lead to the Online Disinhibition Effect. Hammersley suggests the ODE is so pervasive that the only way to maintain online discourse is by community moderation orcompelling posts to be linked to real life identities.

Being authors if our own record –The social networking revolution means we create huge data shadows. One interesting question posed is “is there such as thing as the right to privacy of one’s future self?”

Choosing how we use technology – perhaps our relationship with technology is not as linear as had been assumed. Instead of an ever closer relationship with technology, perhaps we’ll gain perspective and pick and choose more judiciously? Hammersley describes people going from “excited first contact with the basics of the networked environment, via exhilarating immersion in its complexity, to, increasingly a pared-back simplicity in their internet usage that allows them to live harmoniously with and on the new platform”.

Thought provoking stuff.

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Deconstructing qual: the Unilever Qualitative Researcher Accreditation Programme

There was suspiciously little competition for the canapés at the Association for Qualitative Research’s AGM on Wednesday. Hunger was stunted.

A delegation from Unilever had come to quell the hearsay about their qualitative research accreditation programme.

Concerned at the variation in quality of qualitative insight across its territories, Unilever set the illustrious Rebecca Wynberg to review global practice. She concluded that, whilst pockets of excellence exist, there was significant variation in quality. All too often qual was being used tactically (launch/don’t launch) rather than strategically. The commissioning teams were briefing poorly and only junior execs were getting involved, leading to a vicious circle of under investment on both sides, with the quality of insight falling short as a result (“…four of the six respondents liked the stimulus”).

The accreditation programme is part of Unilever’s response. Combined with internal training programmes, Manish Makhijani described how the company has now moved to an individual accreditation model for qualitative researchers in an attempt to work with the best. A team of 5 assessors will judge their peers on an 80 attribute assessment to produce a skills report, examining the quality of their thinking and how they go about solving problems. For objectivity, fairness and transparency the same process is used globally:

  • Unilever issue a test brief;
  • The individual responds with a proposal and suggested discussion guide;
  • The individual is then invited to talk this through in detail, justifying their decisions;
  • The individual then moderates a live group discussion, skills ablaze;
  • The assessors observe, and discuss how the moderator would approach analysis afterwards.

The detail is where the controversy lies. Agencies are responsible for the cost of the test – probably £1,500-2,000 per person. The pass rate varies by market, from 10-50%. Seasoned, trusted partners must work through the accreditation process the same as a recent graduate. Anyone who fails is given a list of development points and is welcome to try again in 12 months. Accreditation is for life. There is no formal roster after the process, but individuals are free to build relationships with Unilever teams.  Unilever want as many people as possible to go through the accreditation process – but inevitably incumbent agencies get priority.

Contrary to the tumbleweed that often follows industry presentations questioners from the floor had several points to make and were reluctant to release the roving microphone. The atmosphere was at times fractious as assorted industry grandees took their turn to be exasperated. The language reflected the combative nature of the proposition. Q: “Are we being treated like babies?” A: “No, this is a response to an industry problem – it is needed to stop the bleeding!”

Take emotion out of the equation and ask three questions. Does the industry have a problem with quality? From my standpoint, no. The competitiveness of the marketplace means you don’t get the chance to drop the ball with a client more than once.

Secondly, is accreditation needed? I’m agnostic on this one. The programme is just an expression of the desire for more transparency about what quallies do and what skills are required. We work in an industry without standardised training and certification. Whilst this freedom tends to suit the practitioner and has never stood in the way of talented people doing inspirational work, it is obviously incompatible for a global FMCG firm trying to “codify their insight processes”. Some form of accreditation might have benefits for us all, if only providing a rebuttal the challenge ‘It’s only asking questions. Couldn’t anyone do that?

Thirdly, will this approach work for Unilever? Only time will tell. In practical terms the 3 hour assessment may be limited in judging moderator fitness even without the risk of having ‘one weird group’. Or the inconvenient fact there’s more to the quallie toolkit than groups.

By Christmas the first tranche of results will be out and the first accredited researchers will start playing their trade. Unintended consequences – like the anointed few being overworked and over approached by headhunters – may well abound. The only certainty is we’ll be hearing lots more on the subject in 2012.

 

 

 

Posted in Market research, Marketing Research, Qualitative research | Tagged , | 2 Comments

Owners vs. experts: the JD Power UK car satisfaction survey 2012

The Whatcar? website has just released the 2012 JD Power Vehicle Owner Satisfaction Survey (VoSS) results.

Based on a sample of 18,000 car owners the survey is the most comprehensive car ownership survey in the UK. People who bought new cars from January 2009 and December 2010 were eligible to take part making the cars between one to three years old at the point of measurement.

This year’s top performing motor was the Kia Sportage, a mild-mannered Korean SUV. The worst, a full 117 places lower in the league table, wearing the dunce hat and sitting in the corner of the class was the Vauxhall Vectra.

Compare these owner reviews with the expert reviews on the Whatcar website. The Merc-murdering, Beamer-bashing Sportage, the best car in Britain today scored 3 out of 5. The Vectra, supposedly the worst car anyone can own? 4 out of 5. Anyone looking to buy a new car might be forgiven for being confused.

Why do experts and owners come to such different conclusions? Most importantly, if you’re trying to decide what to buy – which do you rely on?

Time spent

Owners have the undoubted advantage of living with their car over a prolonged period compared to expert reviewers who at best might get a few days to make their assessments.

Experts and owners are measuring different things

Owners rate their motors on four categories: quality and reliability, appeal, service satisfaction and ownership costs.  Each category is then weighted according to how important it is to them, which in practice means appeal (31%) and ownership costs (25%) have most impact on the overall score.

Expert reviewers score cars objectively on 9 criteria which encompass car ownership: performance, ride & handling, refinement, buying & owning, quality & reliability, safety & security, behind the wheel, space & practicality, and equipment.

Bias

Expert car reviewers are meant to be objective. A scan of past reviews might give you the impression that they are perhaps a little picky about upstart far eastern brands, perhaps.

With a third of the total JD Power rating based on the ‘appeal’ of a car I’d argue it is owners who are more subject to bias. Anyone shelling out a small fortune for new car is psychologically invested in it. This might affect results in a number of ways:

Bias – if you’ve bought it you want it to be good.

Expectation bias – if you’re not expecting much, it’s possible to be pleasantly surprised. But if you’ve spent 3 months waiting for your black sapphire Beamer with red leather interior – and its stitching comes loose – it’s going to grid your gears.

Treatment bias – reliability is as much about how a car is treated as how it is manufactured. The type of person who buys a Subaru Imprezza Turbo is wholly different in terms of demographics, attitudes and driving behaviour to the Honda Jazz owner. Whilst it’s entirely possible to drive a Jazz sideways I for one have never seen it.

It could be that JD Power control for these factors. The raw data, methodology and the questionnaire are not made publicly available.

Microscopic differences

Given that the JD Power survey is used to separate good from bad, there’s actually not that much separating the 118 cars – the world conquering Sportage scoring 83.8% (or about eight of out ten)– and the lowly Vectra 70.2% (or about seven out of ten).  At least expert reviews are more directional.

Had the JD Power survey been conducted 30 years ago things might have been different. Back then there was much more variation in quality, and the survey would have separated the wheat from the chaff. Now we have cars which are more reliable, so could it be that what is really separating cars are the number of cupholders rather than the number of calls to the AA?

What to rely on?

I enjoy reading the survey every year, and will continue to do so. Owner information about reliability and running costs over time is for me the most useful element, but I’d take the results with a pinch of salt & cross-reference them with both expert reviews and some 3rd party reliability data from a warranty provider.

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Jonathan Ive and Don Norman on beauty

Jonathan Ive, designer of the iPod, iPhone and iPad, was knighted at Buckingham Palace on Wednesday.

Asked how much beauty matters to him on the Today Programme he replied:

“Beauty is a very difficult word to define… There is incredible beauty in a very efficiently and elegantly built product. …There is beauty based on form and proportion, material and finish and colour. So I think beauty is an incredible complex concept… Sometimes you can’t actually consciously explain why you believe something is beautiful…”

Acres of newsprint have been devoted to the man and his achievements. Deservedly so when you consider that he’s changed the way many people see technology. It’s been said before: Apple products make you feel empowered you because they work intuitively. The fact that any song on an iPod is just 3 clicks away, that 18 month old children can use an iPad, or that your iPhone doesn’t even come with an instruction manual are all symptomatic of this.

For many people Apple broke the cycle of technological intimidation, where you feel stupid or frustrated as you explore by trial and error. Picking up an iPod for the first time I remember feeling pretty pleased with myself working out how to use it within 30 seconds, thumbing wildly at the clickwheel.

Describing why you like any product often comes down to such a feeling, which is hard to articulate. Design is emotive. You soon notice this when you spend time interviewing people about their product preferences. People like what they like, then rationalise why afterwards.  They give what they like the benefit of the doubt, often overlooking faults.

Don Norman’s 2002 Essay Emotion and Design: Attractive things work better articulates this notion wonderfully.  Psychology and neuroscience are now producing evidence to back up the hunches you get interviewing:

“Affect changes the operating parameters of cognition: positive affect enhances creative, breadth-first thinking… Positive affect makes people more tolerant of minor difficulties and more flexible and creative in finding solutions. Products designed for more relaxed, pleasant occasions can enhance their usability through pleasant, aesthetic design. Aesthetics matter: attractive things work better.”

It’s actually a pretty revolutionary idea. If a design makes you feel good it will work better because you are ‘on its side’. It’s also not something you can ask about directly in a market research interview.

Don describes his view of the different levels design operates in his book Emotional Design:

  • Visceral – impact, emotional connection, the feeling that ‘I want it’
  • Behavioural – usability, feeling in control
  • Reflective – what it says about you, signaling to others

This is a helpful framework for analysis. Priorities differ by person and product:

“Some people are behavioral, emphasizing the behavioral level in their choices. Some are visceral, going by appearances. Some are reflective, considering what others will think — although it is the rare person who will admit to this trait.”

Kudos to Ive for creating beauty and Norman for helping us decode it.

Posted in Consumer Psychology, Market research, Marketing, Technology | Tagged , , , , , | 2 Comments

Let the evidence fit the theory

Michael Rosen’s Word of mouth on Radio 4 focused on the uses and abuses of texting.

Texting at 15 years old is a relatively new form of communication. Limited to 160 characters thumbed on a 12 digit keypad people – notably teenagers – adopted tricks to be concise.

The use of abbreviations, misspellings & slang alarmed some people. As broadcasting attack-dog John Humphries put it, texters are:

“…vandals who are doing to our language what Genghis Khan did to his neighbours eight hundred years ago…They are destroying it: pillaging our punctuation; savaging our sentences; raping our vocabulary. And they must be stopped.”

Many assumed the young were trapped in a textspeak world, their ability to communicate permanently stunted. This has  been the dominant theory for some since, given credence and momentum by the media.

Rosen’s interview with linguist Professor David Crystal dispelled some of the myths about texting. His analysis of thousands of text messages revealed:

  • Typically, less than 10% of words were abbreviated
  • Adults were more likely to use textspeak than kids
  • Sending text messages improves literacy – it provides an opportunity for people to engage with the language through reading and writing

I spent several years researching how young people use technology for a government project. Our research showed that whilst textspeak was rife, young people code-switched depending on the context. The texts & instant messages shared between our panel of young people would have pushed Humphries puce. The texts shared upwards with adults were spelt correctly: different audience, different intention, and different approach. Panic over.

Scanning what’s been written about the subject online, you notice some of the media coverage of texting seems to be a thinly-veiled critique of young people in general. An opportunity to vent about our feral youth. There is also a widespread rejection of any positive evidence about texting (see the comments here for example). Personal experience burns more brightly than peer-reviewed science.

The merits of texting aside, the programme was a reminder that a theory can be the biggest obstacle to objectivity.

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