fdin weds 11th june 11 ·...

FDIN Insight Event 2014; Tim Nicol’s Round-‐Up June 11, 2014

FDIN Weds 11th June, 2014; Insight Event An independent commentary from seminar observer and unofficial ‘scribe’, Tim Nicol, whose opinions are not necessarily those of FDIN, nor anyone else for that matter.

These are notes designed to supplement the slides that are available as downloads.

It was a pleasantly warm and sunny day in June, but unusually, a Wednesday, when we all assembled for another packed day of learned content in a full house at the Holiday Inn Bloomsbury. The theme was “Putting Insight at the Heart of your NPD”, which gave me the expectation that what we were about to receive was a day tackling one of the key issues at the heart of NPD and innovation these days; are there any new insights left to be discovered that support a genuinely new product? And if so how do we get at them? After a typically brisk and energetic introduction from Jeffrey and our conventional introductions around the table, before we knew it the imposing but sartorially challenged figure of Dr Nick Southgate, billed as an ‘Applied Behavioural Thinker’ was on the stage and well into his stride.

Nick set up the day very well, by pointing to the fundamental need for quality insight in a successful NPD process, and it would be very simple if it were a science of hard facts, but we know from the often poor success rates of NPD that this isn’t always the case. There are two ways to look at the problem, either we’re getting the wrong answers or we’re asking the wrong questions.

Today’s summit was going to be about asking better questions, and the contribution that behavioural science or neuro-‐science can make to that.

There are very few true disasters in NPD, but just a few true successes too.


It was clear that the day was going to unfold around the Behavioural Economics revolution; Daniel Kahneman’s quote got us thinking.

There are two ways of thinking-‐ fast or slow. Nick gave us a visual exercise to illustrate this; deciphering the words “upper and lower” in “LOWER and upper” case. The effort required contrasted with the fast automatic, gliding, effortless thinking of ‘fast’ thinking. There are three implications:

• The speed of fast thinking makes it hard for people to introspect and report their own behavior, and harder still to predict that behavior.

• People want elegant simple solutions that ring true without having to think about it too hard. But they may not know the answers until they see them.

• The forces shaping people’s decisions are only partially internal ones; thoughts, beliefs, preferences-‐ and largely external ones; driven by environment and context.

So we have Heuristics, the simple rules of life, the helpful short cuts that allow us to cope with all the information that gets presented to us. For example, a dog (or a human) automatically adjusts its head to the correct angle of gaze to catch a ball (without knowing how), and when presented with a long wine list, we know the short cut is to choose the second cheapest.

Brands are Heuristics. E.G. John Lewis (Nick gave an amusing example of how people buy a dinner service-‐ choosing against all options would drive you insane, so you go to John Lewis; a typical Middle class solution). His summary of John Lewis’s brand position was, rather provocatively, ‘Middle class success without the effort’.

For an early introduction, Nick was perilously close to an accurate summary of the whole topic with his slide on “today’s lessons”:


He finished his introduction with a Free Offer, for Phil Barden’s book “Decoded”-‐, we all get a copy, whether we want one or not, but he reassured us that it comes highly recommended, and just because it’s free it doesn’t mean its worthless.

This was the cue for Phil Barden, together with Matt Hunt, the Marketing Director of Hovis, to take the stage, as a double act. Phil was introduced as the brains, and Matt works in the world of bread, a category bought on belief not knowledge. By his own admission bread is not an attractive category but he’s learned more in the last 2.5 years than the 5 before then. Bread is bought on autopilot, it’s the epitome of a low involvement category.

Autopilot happens because of overload, time pressure, complexity, and the motivation to process information.

At the same time, illustrated by the David Ogilvy quote about research, can we trust what consumers tell us?

Matt humbly pointed out that some of us have learned the hard way-‐ expensive mistakes have been made on Hovis packaging, despite traditional quantitative


research telling them that consumers wanted to see the fresh natural bread, when in reality they wanted the Heuristic of the yellow packaging. So as the story goes, Matt wanted to understand more, so he read Phil’s book…cue Phil. Phil is an ex client, (Unilever, Diageo, T Mobile). He was introduced to decision science at T Mobile and that led to the Liverpool St Flashmob ad, which tripled brand consideration, and many other commercial successes. So he left T Mobile and set up Decode Marketing. In his presentation, Phil then helpfully returned to the fundamentals of Behavioural Science and Kahneman’s work. This says that thinking breaks into two types, System 1 (automatic, learned, autopilot) and System 2 (reflection and control). It’s important to recognize that this is not just a redefinition of emotional and rational, left brain/right brain thinking. He showed examples of communications to illustrate the power of system 1 thinking;

• 2 ready meal pack design alternatives; one with the fork on the left and one on the right. There was a higher purchase intent score for the right handed fork pack

• A Pizza cutter price promotion ad-‐ just increasing the distance between the standard and promoted prices increased value perception

• The Brain fluency effect-‐ Mars Bar sales increased when the Nasa Mars probe was launched

The implicit and explicit systems and goals can be separated and the data comparison between implicit and explicit can yield very different, sometimes conflicting results. A brain scan of the same person was shown considering a strong, familiar brand and then considering a weak brand. There was more brain activity for the weak brand (due to thinking and burning energy to consider it) compared to the strong familiar brand. The brain will naturally try to conserve energy, so buying a familiar brand is literally a ‘no-‐brainer’.

The brain has a known set of neuro-‐psychological goals-‐ promotion, prevention, excitement, security, and automony. It is now possible to quantify brands against these goals. Previous implicit research results on Hovis helped to understand the ‘psycho-‐logic’ – in particular how Hovis was different compared to the category

on implicit goals. Their commercial challenge was how Hovis was to sell more white bread, and Phil returned to explain the methodology of research to measure the impact of the new pack design in terms of the implicit system, the autopilot. We returned to the science-‐ in essence it seems that it


boils down to things we can’t say or won’t say. By looking at the speed of response to questions researchers can gauge the automatic nature of the association. We were shown images of Brad Pitt and Boy George and to consider their “fit” with the term “Man”. Both are men, but the speed of response to such questions tests the implicit system. By understanding the implicit goals associated with the current and new pack design, the Hovis “White” design was able to trigger a key association that the brand had lacked vs competition.

The commercial results of new pack design are very encouraging – Hovis’ share in white bread has grown by 7% despite major ATL from Allied Great White. In concluding, we are invited to read Phil’s book and sign on to the Decode website http://www.decodemarketing.co.uk to get science updates-‐ that sounds like great free offer.

We were running ahead of time, so there was time for a supplementary question to get a bit more detail on the 6 goals.

Matt was asked if the process of making the decisions as a client was easier using this way of working, and his reply was that as traditional research hadn’t really worked, so the understanding of how low involvement the category was, was itself very useful. The lean structure of Hovis helped, and the science behind a theory always helps good marketers to be great marketers. “Asking the obvious questions (‘do you like this?’) is not always most revealing”

Jeffery then spoke up for how important behavioural economics is, but it doesn’t stop you asking consumers questions, and what’s important is developing the rapport with consumers.

Stephen Yap, Head of Ipsos MarketQuest UK then took over.

(as there are no slides supplied I’ll have to be brief…) He spoke about Shopper Neurovation, and introduced his presentation as being ‘light on insight, heavy on methodology’-‐ as there is a dearth of case studies, and it’s still new. As an introduction, he referred to the dynamic tension in market research-‐ System 2 is Ipsos heartland, and it’s built a £1billion business. So although some of this new thinking is disruptive, Ipsos is embracing it. System 1 versus system 2 is like Windows versus Mac; auto pilot versus considered thinking. Shopper behaviour is instinctive and it should be a smooth, ‘friction free’ experience, so shopper marketing is about removing the friction in the process. As Neuroscience is becoming better understood and tools are becoming scalable and affordable, Ipsos are being asked to roll their techniques out to multiple markets globally.

In terms of broad methodology, system 2 uses self-‐completion surveys and interviewing, and more and more projective techniques. System 1 measures the implicit via facial coding, biometrics, eye tracking, and then more invasive techniques such as EEG and fMRI (these last 2 being very expensive and hard to scale).


In measuring implicit networks, looking at how long it takes to answer the question adds to the diagnostics. Stephen showed how the Implicit Reaction Time is measured using a 5 point scale with equidistant buttons. They then overlay the reaction time to similar ratings to distinguish brands on the basis of how hard coded the attribute is. A case study from KFC used a combination of EEG and eye tracking to design menu boards for instore. They were tested in the lab and in real stores, and the new boards introduced in Poland increased store traffic by 15%. Ipsos have also researched the repositioning of shopping centres in Poland – 187 attributes rated against implicit and explicit levels. This allowed Ipos to cut down on the attributes for positioning, so they could lose the ‘lip service’ and ‘cost of entry’ factors as they were common to the category and therefore not differentiators. Stephen showed us some work in progress from Spain; Mercadona and Carrefour shopping behaviour in 3 categories, researched with skin conductors, and emotion tracking in sync with eye tracking. There was some fascinating video footage, but he admits there’s more to be done on interpreting the data. There are peaks and troughs in the data, showing how active the brain is during the shopping experience, and this gives rise to debate over whether the high levels of thinking are a good thing or is frictionless shopping the aim? We may need to overlay conventional methods to get the answer, and to ask how people feel about the experience. Do we think a longer dwell time at the fixture is good or bad?

The data showed that time spent looking at SKUs is consistently lower for brands than Private Label, so more evidence of Heuristics. Carrefour’s processing time and emotions are higher than Mercadona, but is that good or bad? Some techniques that are coming, ‘around the corner’ include in-‐store facial coding, touchscreen shopping, and virtual shelves. Stephen’s view is that good shopping is stress-‐free shopping, which it may well be as an overall statement, and maybe even as a driver of store choice, but if the experience at the fixture doesn’t require shoppers to engage their brains at all, how will we get their attention to our innovations? Nick Southgate introduced the next speaker, Tim Reid, as someone who had thought about the topic much more than him. To which I would say, that’s quite a claim. Having heard Tim before on this topic, I knew we were in for some serious exercise of the little grey cells. And so we were, to the point where I may have lost the thread myself at times, so I refer you to Tim’s own notes-‐ he didn’t provide slides for download, but he has provided a very good paper; ‘7 shortcuts our minds take to make decisions’. What follows is a paraphrase of Tim’s paper.

The thinking has come about as a result of the criticism of qualitative research, which at its basic level shows us ‘where the icebergs are’ but doesn’t tell us about what’s below. Typical research cannot access the real reasons for behavior, just our own conscious post-‐rationalisation of the subconscious (System 1) decision.


What’s more, when we as researchers or marketers interpret the results we tend to react more positively to information that confirms our own belief or judgment.

Tim took us through 7 main shortcuts (or ‘evolved adaptations’) to System 1 thinking, (intuitive, subconscious) and the 4 main relationships between System 1 and 2. Together these 4x7 relationships explain most of the decisions we make. Perception and intuition are similar; they are fast, parallel, automatic, and effortless whereas reason is slow, serious, controlled, and effortfull.

We don’t have the time or the ability to process everything on system 2, we filter via system 1, and these are the 7 major evolved adaptations that filter our decisions:

• Availability-‐ ‘The King of them all’, the ease with which something comes to mind. Could be fear, familiarity, or anchoring in an association with something else-‐ e.g. the KitKat Break, Coca Cola and Christmas.

• Hot and Cold; No decision from system 1 so we go around in circles. E.G. Tiptree jams-‐ too many flavours to choose from. Too hard to make a decision. So they reduced the range and got 6x higher sales on range of 6 vs range of 24.

• Signalling; We unconsciously communicate what we like. What we say about ourselves by our actions and choices.

• Handicap principle (it’s the name of a book)-‐ basically about sex (?!). In order to be effective, signals have to be reliable; in order to be reliable signals have to be costly. The more similar the signals, the more we need to judge them.

• Immediate context-‐ immediate rewards are processed in system 1, deferred in system 2. Delayed rewards are processed differently. Price is evaluated very differently by context-‐ for example wine in restaurant vs a supermarket. The people around you influence you.

• Framing-‐ e.g surgery vs radiotherapy defined by survival or mortality • Loss aversion-‐we value what we have much more than we did when

getting it in the first place. There are only 4 ways our unconscious then sends a message as a reaction to stimuli. These are listed in order of importance

• Go along with it (Automatic, habitual) • Think about it (Anchored; system 2 thinks about the system 1 decision) • Disagree with it (System 2 attempts to make a decision on its own) • No message, go it alone (Cognitive Dissonance-‐ rare) The conclusion is that system 1 and 2 are not defined just by ‘logical and emotional’ labels. In winding up, Tim invited the audience to ‘take the 7 shortcuts and go through your pile of research’-‐ you could have heard a pin drop.

All Tim’s material is generously available on www.timreidpartnership.com.


Again there were some immediate follow up questions from Nick-‐ which frankly made me think I was eavesdropping on a discussion between 2 intellectuals.

After Jeffrey’s ‘name in the hat’ speech, and some questions around the table, we went for lunch and a rest of the brain cells.

The sessions after lunch were billed as being more on application than theory, which sounded useful as a means of making sense of what we’d heard in the morning, and making it relevant to the day job. The first session, called System 1 and Brand Design, was from John Clark, Planning Director of Coley Porter Bell. John promised lots of images in his presentation, and started off by posting pictures of his fellow presenters. His introduction was spot on-‐we should all be converts to system 1 and 2 by now, but we might be thinking there are some gaps in strategy and execution. His content majored on design but it should be relevant to other disciplines too. I liked one of his opening slides with this quote:

He followed this with another belter to underline the power of design to influence our behaviour; “Convincing the conscious whilst seducing the subconscious”

and then showed a great ‘before and after’ shot of Morrisons value range:


The sales results of this move were impressive; +24% before advertising, +48% after advertising. The appeal comes from the subconscious-‐ handcrafted type and the images. He made the very valid point that human involvement is a positive in food.

John then went on to share some thoughts on how to “bake in” System 1 success; He gave us 5 rules of thumb and one approach to strategy:

1. Move from signpost to invitation; Muller’s brand block is used as example of shouting ‘I’m here’ as against findability. The redesign shorthand was ‘yoghurt in kitten heels’-‐ light, and blue is still the key colour but it’s more ‘sassy’. The Corner redesign communicates the ‘cornerness’ of the product-‐ not rocket science but it was more inviting. As a result, the brand went from no2 to no1.

2. Know the visual impact of trends. If a trend is associated with a visual, you can use the visual to associate to the trend. Health has become more enjoyable and it’s reflected in bright colours in contemporary healthy brands. The drive to a simple, pared down lifestyle is associated with simple packs, not necessarily the products.

3. Think B2P (Business to Person) not B2B or B2C. The human nature of brands like Bonne Maman, Ben and Jerrys, and Ella’s Kitchen is crucial.

4. Connect visual codes to consumer needs. Connection is the most important. People buy goals not needs. Understand the visual codes to consumer needs and connect them.

5. Define your brands DNA visually. In addition to the brand planning models and descriptors of attributes, values, essence etc, use visuals (they looked like mood boards to me). Examples were shown of Hendrick and Beefeater-‐ who trade on their London Distilled distinction and apply that to their visuals.

The new approach to strategy contrasts with the old way, where research tells us that consumers want this or that, then we have lots of clever conversations, then we produce clever diagrams. This is all very ‘system 1’, and then we hope that someone can translate that system 1 into system 2.

Given the power of visuals, we should recognise and utilise visuals as a strategic language-‐ not just the output from strategy. CPB have been using visual planning for years, illustrated by the Saul Bass quote from 1920 I think; ‘Design is thinking made visual’.


Jossy Pilgim was next up, from HeyHuman. Jossy is a Planning Director, works with Nick Southgate, and is Ex Billington Cartmel. HeyHuman is a creative agency trying to understand how people really behave in relation to brands.

Her presentation was called ‘Getting past myths to new truths about how people buy’. Jossy explained that she has worked with people like Nick over the last couple of years to move from the old way of ‘hunt, guide, motivate’-‐ which was becoming less relevant. Buying decisions are becoming more like the pinball

machine, subject to lots of random influences, and in her view, the old ways won’t get you to new truths. In explaining more about what HeyHuman are about as an agency, she used a Snakes and Ladders board; they focus on the short cuts to get to the top. Avoiding the snakes of course.

Getting back to the Human theme, they examine and work with behavioural principles-‐to make behaviour easy.

• how can we make comparisons. • how can we remove barriers • how can we create rewards

This was a good example of changing behaviour in pillow purchasing. The problem is that few of us change our pillows as often as we should, (or as often as the manufacturers would like), and the solution was to make a comparison with fresh food and put a sell-‐by date on the pillow and the pack.


Human use techniques such as Eye Tracking to measure actual behaviour, and Neuroscience to see what makes people tick. This was used to understand why an ‘on pack takeover’ using celebrity images was so successful for Lucozade. It found that the emotional attributes of the pack were as emotionally powerful as the TV ad running at the time. Uncovering new truths isn’t easy; again we heard that focus groups are good at confirming what we already knew. The new process breaks out; what we know, what we think we know; and what we don’t know. They built hypotheses – for example that ‘On Demand’ coffee machines are a personal, socially visible statement, and owning the ‘right one’ is key. That’s to say it’s an emotional purchase not a rational one. They put together a panel of respondents for online research and asked 10 of them to buy a coffee machine, but under a variety of situations created to eliminate certain influences. Post purchase, social sharing and inviting friends round was a universal reaction; the post purchase validation. But validation was as important both pre and post purchase. This leads to a new truth; self validation is the short cut to buying. The opportunity was then to create the post purchase environment pre-‐purchase. This in turn led them to understand and encourage the retailers where trust is high-‐ John Lewis and Currys. They also invested in demonstrations and endorsements from MumsNet, and encouraged validation via social media. All this drove a 40% increase in

brand penetration and a sales uplift of 135%.

Jossy finished by again saying that this is a journey, and they are still looking for people to work with and keep learning.

The final presentation of the day went to another double act, Richard Savage and Jonathan Webb, Joint CEOs and Founders of Snapshot Worldwide. They described themselves as a new business moving the experience of ‘Retail in Action’ into the cloud. And as the Mr Holland and Mr Barratt of retail. Their presentation bore no resemblance to the one in the book, but it has since been loaded onto the FDIN site.

Their premise is that retail needs some help-‐ so they offer a gift of a simple planning tool, a Venn Diagram. (see below), with a unique value proposition at the centre.


There is an uneasy tension at retail; Retailer, brand, shopper all have their problems. The solution is all about working more closely together.

Their observations of the consumer issues are:

• Being on auto pilot • Compelled to get shopping over with • Habitual behaviour • Looking for inspiration • Budget • Health imperative • Pack size/portion control

The Brand has its own set of issues:

• Visibility • Location in store • Own label competition • Limited promotional opportunities • Category complexity/organization • On site infrastructure • Creating new occasions • Remind main occasions • Not top of mind

As does retail:

• Space restrictions • Category positions • Inundated with brand marketing collateral • Low footfall into category • Category under engaged, ‘dull, boring’ • Navigation • Cost of logistics vs. sales densities

Richard and Jonathan say that they see the 3 groups operating separately and not seeing the issues of the other, so collaboration is the key.


We were shown a number of visuals, and invited to consider;

Does it show the appreciation of the partnership and does it reflect the collaboration? In retail, the shopper solution is often not catered for. Many activities are aimed at the consumer not the shopper. We saw a jazzy video of ‘Claire in Sainsburys’, highlighting the number of messages assailing her in store, and an example of the range of chickens available, presented as being complex with no explanation of the benefits.

This shot shows the complexity of the juice fixture; 134 skus, 6 deals, 16 brands, 8 varieties (segments). 6 deals. As Richard and Jonathan said, does mum worry about the brand goal/’taste like sunshine’ when she’s got 2 screaming kids with her and she’s faced with this range?

Their value equation is; Price + quality + experience=value. It’s not just about price. They talked about a range of observations from various stores and illustrated them with a barrage of shots;

• Agility in retail is rewarded by shoppers • Convenience comes in many guises-‐ changing the game by getting things

out of packaging • Getting consideration by out of category merchandising of associated

product • Occasional solutions-‐ strawberries merchandised with free cream • Identifying shopper missions; routine, rational, occasion, emotional

shopping mission segments. We moved on to brand owner solutions at retail; with illustrations and observation a-‐plenty, but I was struggling to see any insight.

• A disruptive category device-‐ a motion controlled device in Mexico for Ritz

• Lyles Golden Syrup sampling on pancake day • Macys Flower show-‐ creates an event to make a connection • Application of technology and innovation to make things less dull-‐ a wine

selection (this was turning into a list)


As they skipped over several slides, the main point seemed to be that these things should be done in concert, and ‘the big take out is tomorrow is about collaboration; Managing reputation’ Puzzlingly the final slide dropped a bit of a bombshell-‐ “tomorrow convenience will have disappeared”. Not sure I got why…

Then we were onto the Q&A. I captured some of the main questions:

To what extent is NPD intended to create a new behavior and what extent is it building on existing? Tim; availability is the key. You can do both-‐ to what extent depends on whether your brand meets the category goals. If not, improving on the goals is incremental. Define your source of business. If you are not credible then you need to launch anew or shift, but that takes time and money-‐ to build new associations. So in short term build on autopilot. What was the sample size in the Hovis study? 100 minimum as a rule, so 200 in Hovis split between brand users and non users.

Packaging question for Hovis-‐ are the learnings hard and fast in the market? Square loaves are not too attractive so they keep it covered, others not so.

KFC manage to sell new packaging costs internally, but not store refurbishment, as it’s a long term benefit.

So what’s the best way to bring quantitative proof to long term intuitively right decisions? No measurable effect admitted. So (question then better defined by Nick) how could you predict improvement and payback in the long term of changing the restaurant environment? No-‐one was able to offer hard and fast solution, it would take time and different studies. Are focus groups the root of all evil? What methods do you use for focus groups and analysis. Tim-‐ go in know knowing all we know now. Qual can identify the icebergs and can then advise other methodologies. So the future for groups is as a rough guide. Look at quick responses and depth of thinking, then use


techniques that add depth. So there is a future but only when done properly; learning to spot the too quick, too immediate response.

I’m doing a biscuit launch, what’s the best example of instore activation? Milka were launching cookies, and tested 2 pack designs, one with many small cookies, one with a few large cookies. The research went for the large design, but instore went for more small cookies. The best feedback to the brain is sampling and trial.

What’s after convenience? Experience.

So that was it, and with Bradley Hopkins winning the ‘survivors champagne’, we packed up and escaped for the tube. As I left I wondered whether the seminar had been about the wider issues of consumer insight, or just about behavioural economics and system 1 and 2. Has this new thinking eclipsed all the old thinking, and what is the fuller perspective on discovering meaningful and actionable insights in the future? Indeed what is insight? Have we let the definition slip back into the generic label for consumer research, when what we really need is new, genuine insight based on unmet needs that drives real NPD?

It was however a very educational and informative seminar, with some stretching content and exposure to new techniques, all expertly chaired and managed by Nick and Jeffrey. Any comments on these ‘Round-‐Ups’, positive or negative, are most welcome. Please drop me a line if you have read this far.

Thanks

Tim Nicol [email protected] www.mihcentre.co.uk

fdin weds 11th june 11 ·...

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