Bargains, bargains, bargains—they're everywhere! Too many marketers to count seem to have dropped prices on everything from clothes to plane fares, burgers to cars, over and over again during the past two years. Price-obsession, driven by the incorrect assumption that price—especially during a recession—is the most important factor in a purchase decision for the vast majority of buyers in any and every category, has blinded many companies to the needs and wants of their customers.

As a result, consumers have become bored—unresponsive to sale offers and uninterested in buying what marketers are selling. As Steve Tipps of Copernicus says, "it truly is a much less interesting world if everything comes down to price." And companies have suffered the consequences.

Fortunately, marketers in some of the most price-obsessed categories—clothing retailers, airlines, and fast food restaurants—are finally getting the message that low prices generate about as much excitement as a fruitcake at Christmas. Several retailers, for instance, are gearing up for back to school, not by cutting prices or advertising sales, but by boosting quality. Many including J.Crew, Brooks Brothers, The GAP, J.C. Penney, and The Children's Place are offering more colors, softer fabrics, more style, and better durability. Nina Miner, VP for trend and design at The Children's Place, explains that to get a customer to buy, "we know we have to hit her in the eye. We've got to catch her 14 feet away in the mall. Price alone is not going to do it."

In the airline industry, Virgin Atlantic Airways, refabbed its Upper Class seating with "the longest flatbed seat of any airline in the world." Virgin's colorful chairman Richard Branson explained the $75 million overhaul as a move to position the airlines' Upper Class offering as the ultimate in in-flight luxury. While some discounts are planned to build volume, Branson maintains his airline will woo first-class customers away from British Airways with Virgin's relaunched Upper Class product that, "gives you everything and more than you get" from competitors at a slightly lower—but not bargain-basement—price.

And perhaps most amazingly, McDonald's—a company that for years has focused on out-cheaping its main burger competitor BK—has a new focus on the quality of the ingredients and freshness of its products. The company's advertising for its chicken McNuggets and new salads doesn't promote a low price, but instead talks about the fact that McNuggets are now all white-meat and the salads have fresh, gourmet vegetables and meats along with Newman's Own high-end dressing.

Rising quality consciousness is certainly good news for the 65%-85% of buyers in any category that our research indicates considered something other than price as the most important purchase consideration. It's not only a very positive force for reversing buyer apathy and declining profits, but also for reversing the significant declines in brand equity that across-the-board price cuts have wrought.

In our last issue, we told our readers about the startling finding that marriage doesn't make people happier. For thirty years, academic researchers had published over 60 studies on the relationship between marital status and personal happiness. The conclusion? Marriage works wonders.

Since married people have been found to be happier than singles, the state of marriage must be a "causal agent" contributing to a couple's bliss. But along came a large-scale, 15-year longitudinal study involving more than 24,000 people that found most married people were happy and satisfied with their lives long before they actually got married.

Now some might question overturning a long-held belief supported by over 60 studies based on the results of one opposing study, but we wouldn't. You see, those 60 studies were driven primarily by cross-sectional correlation analysis—essentially comparing all marrieds versus all singles at a single point in time and observing who's happier. Seeing a high correlation between marriage and happiness, researchers "derived" the importance of marriage to happiness and incorrectly concluded that marriage lead to happiness.

But as anyone who has ever taken an introductory statistics class will tell you (because professors drill it into their head), correlation does not equal causation. It's a plain fact that evidence of a relationship reveals nothing about the cause of the relationship; derived importance is by no means an exception to this inescapable truth. Nevertheless, researchers not only in the social sciences, but also in marketing, continue to act like it is, particularly in studies of brand positioning and of customer satisfaction.

Too many marketing researchers have been telling companies that they don't have to query respondents to find out what's really motivating: all positioning and satisfaction research requires is correlation analysis. As part of a sample survey, researchers pull out a list of 30 or more product and/or service attributes and benefits and ask respondents to rate different brands on each dimension. For a soft drink, as an example, a researcher might ask how satisfied a respondent is with taste, carbonation, youthfulness, etc. The survey then goes on to ask about the likelihood of purchase and/or overall preference for each of the same set of brands.

The next step is to run correlations between each attribute/benefit (or factor) and the dependent variable of purchase interest or behavior.

Ceteris paribus, the attributes and benefits that yield the highest correlations with likelihood of purchase and/or overall preference (positive or negative) are labeled the "Most Important." Thus, they've derived the importance of the attributes and benefits.

Yet the winning attributes from this analysis may really be losers and vice versa. See the six illustrations from the soft drink category below for further insight into this problem. But as an example, for a soft drink, the presence or absence of carbonation or an energy stimulant such as taurine, the image of youthfulness or a health claim might be revealed to be unimportant (when, in fact, they can be very powerful), while a red and blue can and a consumer hotline might be (incorrectly) revealed to be the drivers of preference.

Conclusion: Beware of traditional correlation-based measures of derived importance. They're liable to bring you toward a contrived disaster. It can be a path to the wrong strategy.

Six Illustrative Problems with Derived Importance
A Soft Drink Example

Price of Entry Example	Reverse Causality Example	Irrationality Example	Unfamiliarity Example	Spurious Correlation Example	Innovation Example
If an attribute or benefit is so important that everyone wants it and every brand delivers it (e.g., carbonation in a soft drink)	If an attribute or benefit is associated with market leadership because consumers believe the best must offer it (e.g., a global consumer soft drink hotline which offers advice on ingredients and recipes)	If an attribute or benefit is intangible (e.g. youthfulness in a soft drink), some consumers have trouble rating brands high or low on this dimension - in part because it's irrational to apply animate descriptions to inanimate objects	If an attribute or benefit is relatively unfamiliar, never heard of before (e.g. the "Taurine" in Red Bull)	If an attribute or benefit is not important but big brands have it (e.g. a red and blue can for a soft drink) and small brands don't	If an attribute or benefit is breakthrough, innovative and, therefore, no brand currently delivers it (e.g. a health claim for a soft drink)
All companies achieve high scores	Big brands get high scores; small brands low scores	Scores are low and randomly distributed across brands	All companies achieve low scores	Big brands get high scores; small brands low scores	All companies achieve low scores
Correlation will be zero: implication is no importance	Correlation will be high; implication is high importance	Correlation is weak; implication is no importance	Correlation will be zero; implication is no importance	Correlation will be high; implication is high importance	Correlation will be zero: implication is no importance
Yet if you strengthened a brand on a "price of entry" dimension, the brand might perform better; take it away and the brand would suffer badly	Yet if you took this characteristic away, no one would care and monies could be better spent on something else	Yet if the dimension is highly appealing, as is the case with youthfulness, and the brand is positioned as delivering on this dimension, the brand would benefit.	Yet if the dimension is or could be highly appealing, and the brand offered it, the brand would benefit	Yet if you strengthened the big brand on this dimension, nothing would happen; strengthen the small brand and you would create brand confusion	Yet if the dimension is highly appealing, and the brand offered it, the brand would benefit - it would be a successful new product

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It's often said that the adoption of technological advances precedes society's ability to deal with it. In the case of marketing, the time span between the introduction of a new technology—what we define as the tools, methods, and knowledge to perform an existing or new task better than before—and marketers ability to deal with it is exactly 30 years. The newest evidence: today's red-hot research technique ethnography was cutting-edge in the social sciences in the early 1970s.

Ethnography is "the study of behavior in its naturally occurring context," described Professor Richard Elliot of the UK's Exeter University in an interview with brandchannel.com on the subject. "Other research is about asking questions; this is long-term observation—precisely what brand owners lack and what makes it different to any form of social science research." "Commercial," as opposed to academic, ethnographers spend a few days living with people from different market segments, observing behaviors such as how a particular product is used. While commercial ethnographic studies have been going on for about a decade, the technique is increasingly replacing focus groups as the research method of choice as more and more companies want researchers "in the field," collecting information about what their customers are really thinking and feeling.

Intel, for example, had researchers ride on double-decker buses in London to understand how people interact with technology. "Our job is to find new uses for technology by spending time with people in their daily lives," a senior researcher and design ethnographer at Intel explained. "Being on a bus is part of people's daily life; it's part of what it means to be urban in London." Eastman Kodak has also made extensive use of ethnography. A Kodak study of how people purchase and initially use film cameras, for instance, led to updates in packaging and store displays.

A couple years ago, The Economist lamented, "Everything else has been reinvented—distribution, new product development, the supply chain. But marketing is stuck in the past." The fact that ethnography is starting to catch-on demonstrates that, unfortunately, The Economist's observation still holds true.

For more insightful marketing discoveries, visit http://www.copernicusmarketing.com/discover/index.htm

Have a hot discovery for our next release? Contact us at info@copernicusmarketing.com

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We were a sucker for the title of this book: Your Marketing Sucks. The book itself is a relatively quick and straightforward read with some helpful information and tools, including an on-line test, for figuring out if your marketing does in fact "suck." We especially appreciated the sentiment that runs throughout the book that if your marketing programs aren't generating significant sales, something isn't right.

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How do you recognize a highly effective marketer? They're the marketers who understand the components of strategy, as well as the importance of obsessive planning and implementation. They know marketing is as much of a science as an art, so they use marketing science tools and techniques to find a profitable target and compelling positioning, to determine how to configure and price a new product, and to evaluate brand equity.

As a result, they can unequivocally answer important questions about their marketing programs for their CEO and other senior executives, questions such as, "For each of our core businesses or brands, how do we describe—in words and numbers—the critical market target?" And, "Does our positioning tap into what we have determined to be the market target's key motivations?"

How do you become a highly effective marketer? You can start by downloading the Six Habits of Highly Effective Marketers by clicking here.

And if you are in the retail business, we also suggest you click into the free upcoming webinar, "Highly Effective Retailers," put on by our sister company Marketing Management Analytics (MMA).

During the 30-minute webinar at 12 p.m. EDT, on August 12 and 25, MMA SVP Dennis Moore will offer lessons learned from retailers who really know how to mix their media for maximum return on their marketing investments. Every attendee will also receive a free copy of MMA's white paper: Marketing Analytics: Not Just For Packaged Goods Anymore. And as a special bonus, the first 15 registrants will receive a free lunch, courtesy of MMA.

To register, visit http://reveries.com/reverb/webinars/retailers.html.

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