It seems media is not the only functional area where marketers are running like scalded dogs from what they believe is not working, into what they think is or surely will. Just as they are pulling out of the traditional media, they've come to know and loathe (i.e., TV), so too are marketers jettisoning their once beloved research tool—focus groups—in favor of emerging new methods, such as ersatz psychoanalystics, brain wave analysis, "immersion groups", and archetype analysis. "My research department doesn't know it, but I'm killing all of our focus groups," announced Cammie Dunaway, CMO at Yahoo!, to a receptive audience at a conference in September. As BusinessWeek recently reported:

Exasperation with focus groups, while not universal, is growing as companies look for better ways to get inside consumers' heads, often assisted by new technology and the Internet. The dissatisfaction and the proliferation of new research approaches has been escalating so rapidly that the ad industry's main trade group has been spurred to conduct the first widespread study of testing methods since the 1950s.

John Osborne, CEO of BBDO, echoed the sentiments of many frustrated practioners: "There's peer pressure in focus groups that gets in the way of finding the truth about real behavior and intentions." Fanning the fire, Malcolm Gladwell, author of the best-selling Blink: The Power of Thinking Without Thinking, has repeatedly criticized focus groups with statements like, "asking someone to explain [their behavior and intent] is not only a psychological impossibility....but it biases them in favor of the conservative, in favor of the known over the unknown."

As is the case with the rush from traditional to non-traditional media, marketers are, very unfortunately, moving into something else without first examining the root cause of their frustration. The main beef with focus groups is the huge disconnect between the information that comes out of a focus group and what actually happens in the real-world. Product concepts, for instance, may receive favorable ratings in a group, but absolutely bomb when launched into market or, vice versa, the concept bombs in the focus group, but the company goes ahead anyway and achieves unprecedented success.

The source of the disconnect isn't exactly a complex mystery, however. Sociologist Robert K. Merton, the father of focus groups, repeatedly warned about what he called the "misuse" of focus group data (he called them focused groups, which is correct English). While he believed focus groups were an excellent technique for stimulating new ideas and concepts, collecting general information about a particular category or topic, and generating hypotheses about buyer behavior, problems, needs, etc., he warned that under no circumstances should marketers treat focus group data as reliably valid. Focus groups were intended to be a first step in a rigorous research process; not the only step. Focus groups cannot provide projectable data about the likelihood of a new product's success, an advertising campaign's impact, or a marketing program's profitability. Disturbingly, many of the up-and-coming methods of choice that marketers are moving into have many of the same limitations as focus groups in terms of their scientific merits and projectability—they are still based on the opinions of a small number of people who may or not be representative of the company's or brand's most profitable targets and have no standards of interpretation.

Take, for example, BusinessWeek's report on the movement away from focus groups. It cites the example of Pepsi Edge, a new product introduced by soda giant Pepsi in 2004, as a "classic case of a focus-group false-positive." Copernicus took a closer look to see how accurate this statement really is. Pepsi went to market with Edge, a lower carb and lower calorie version of the original, allegedly after focus groups warmly embraced the concept. However, we wonder if participants were given an actual product to taste and advertising to view or just a concept to look at. In other words, did Pepsi expose participants to what they actually brought to market? It had an unclear target and an even fuzzier positioning; it tasted terrible; it went onto store shelves in June to coincide with the launch of Coke's similar low-carb/low-cal offering, but advertising support didn't come until several weeks later; and did we mention it tasted terrible? In this case, as in myriad others, failure could have had as much, if not more, to do with what happened AFTER the research than what came out of it. True, Pepsi should never have made a final go/no go decision based on the opinions of 20 or so people, but no research method—either qualitative or quantitative—can predict success or failure with any degree of accuracy if what's tested bears only a remote resemblance to what is actually launched and/or how it was launched.

The problems with traditional focus groups go way beyond their inability to "get inside the consumer's head," and the reasons research sometimes appears to give marketers inaccurate and/or inadequate information aren't limited to the short-comings of a particular research method. If marketers really want to get the information that will lead them to the most profitable marketing decisions, they need to understand why a particular research tool—be it a focus group, simulated test market, or something else—didn't give them the necessary, adequate, or correct insights. The "out with the old, in with the new" mentality needs to apply to habits, not just tactics, if marketers want to see improved performance.

For decades, marketers, particularly technology marketers, have invested heavily into reaching Early Adopters to capitalize on their supposed significant influence on the rest of the market. "Managers of mainstream brands have become fixated on 'Early Adopters,'" proclaimed Salon.com a few years ago. We wondered recently how many marketers actually knew that a tracking study of the purchase patterns of hybrid seed corn by farmers in rural Iowa published in 1957 formed the basis of this popular market segmentation approach. We also wondered how much they knew about sociologist Everett Rogers' work to expand on the Iowa study by investigating the "adoption levels over time" curves of over a hundred different innovations. He found that most of the curves resembled the standard bell shaped curve which he divided into different sections. He labeled each segment and, based on standard deviations, offered approximate sizes for each:

1. Innovators (2.5% of population)
2. Early Adopters (13.5% of population)
3. Early Majority (34% of population)
4. Late Majority (34% of population)
5. Laggards (16% of population)

We wondered because we think if they were more familiar with the data behind the Early Adopter strategy, they'd see that Early Adopters are NOT the guaranteed gateway to success conventional wisdom makes them out to be.

As technology writer Peter de Jager has pointed out, Rogers' segment sizes were based on the division of the adoption curve generated after a population had embraced a new innovation. "The adoption terms are accurate only in hindsight," writes de Jager, "they tell you nothing about how a population might respond to a change/innovation." They are not predictive or, in other words, it's by no means a guarantee that at least 13.5% of the population will adopt a new product or service within the first few months of availability. Just ask Kimberly-Clark, makers of the failed Cottonelle Fresh RollWipes; Coca-Cola, makers of Coke Zero; or any number of companies with failed products and services who may still wonder where that 13.5% was. According to research conducted by USA Today and Claritas, 29% of U.S. households are likely to be early adopters of technology, but where were these households when Apple brought its Newton to market or Microsoft with its Bob interface?

Rogers also described Early Adopters as opinion leaders who are respected by their peers and are perceived as a role model. What he did NOT say was that opinion leaders, individuals who are highly respected by their peers, and role models are the first to adopt any given new technology or idea. "Yes, there is a positive correlation between the two terms [Early Adopters and opinion leaders]," explains word-of-mouth marketing maven Emanuel Rosen, "but opinion leaders don't automatically adopt every new product they come across." Just like everyone else, they may be the first to try and buy something or they may be the last—it depends on the category, the new product or service, their individual needs, problems, and pains, and a whole host of other factors. The propensity to adopt early is neither a function of status within a community nor a constant across different categories.

Very importantly, the first people to buy a product or service may or may not have any influence with other people. They may, in fact, fall into the "Innovator" category, and Rogers reported that these folks are more often than not derided by their neighbors for their readiness to adopt something new than seen as visionary and someone to follow. According to the ACNielsen report, "Early Adopters also want incentives to try new products," so companies may have to offer discounts or other promotional offers to stimulate a purchase. Early Adopters might also need a great deal of service and support help—interest in new technology and products, after all, does not equal facility with using new technology or products. Added discounts and services sound expensive to use. The USA Today and Claritas research found that, at least among early technology adopters, "by age, income, lifestyle, and buying behavior, it's [Early Adopters are] a diverse group." This fact makes it difficult to buy media efficiently because an Early Adopter could really be anyone. This issues all beg the question as to whether or not Early Adopters are even profitable to pursue.

What's going to make a new product or service in any category successful is getting the most profitable buyers to try it and start buying it. Companies would be much better off focusing on taking the steps necessary to identify the most profitable buyers, configuring the financially optimal product or service, and devising the most effective and efficient communications plan to generate awareness as opposed to concentrating efforts on getting Early Adopters, who ever they are, if they exist at all, to buy what they have to sell.

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Here's a novel approach for determining how to fix an ailing established brand: launch an entirely new sub-brand—with all the bells and whistles—and use it for real-world experimentation. Delta Airlines, one of the top ten U.S. carriers now in Chapter 11, introduced Song as its discount-airline unit and a "lifestyle brand" in 2003. Many industry watchers thought that, "Song initially seemed to be a distraction amid the financial crisis at Atlanta-based Delta," or so reported the Wall Street Journal. These folks soon realized, however, that Delta had converted Song essentially into a real-world test market: "it [Song] quickly became a laboratory for improvements in operations and customer service...." Over the course of the next two years, said the Journal, "Delta tried out innovations, including reducing the amount of time aircraft spent on the ground between flights, a simplified fare structure, and flexible employee work rules that lowered costs. Those strategies have since been applied to improve Delta's operations and customer service."

When Delta announced its intentions to shutdown Song by May 2006, it shared plans for how it will incorporate many of Songs popular attributes into its offering, such as the laid-back attitudes of its "talent" (flight attendants), stylish interiors, drinks designed by celebrity bar owner Rande Gerber, snacks from Dylan's Candy Bar, and in-flight entertainment system. "It was a great learning experience Delta's CEO told the New York Times at the time of the announcement. "It gave us the chance to test ideas and bring them over."

Now it's not an uncommon occurrence for a long-established brand to grow staid and challengers to strip away buyers who aren't so interested (or simply aren't offered anything by) the legacy brand. Naturally, these firms have to take action. Some companies attempt to attract a larger and/or different set of buyers by upgrading, updating, or otherwise altering the existing brand to appeal to a new group. Wal-Mart, for example, began a new foray into "cheap chic" with more stylish clothing and home goods in its existing stores and burger giant McDonald's introduced the Starbuck's-inspired coffeehouse McCafé around the world. Meanwhile, other businesses opt instead to roll-out a spin-off or sub-brand rather than try to overcome the history, connotations, and associations of the existing brand. Reasonable and reliable Toyota, for instance, launched luxurious Lexus and BMW introduced the quirky, small, and definitely-not-the-ultimate-driving-machine Mini.

The vast majority of firms carefully contemplate and many also rigorously test potential options before making the decision whether to update the current core brand or start a new sub-brand. Certainly, several sophisticated technologies on the market today can help marketers test hundreds, or even thousands, of concepts to find the financially optimal configuration for a concept which may or may not include an entirely new brand name. Dunkin' Donuts, for instance, used this kind of concept engineering to guide its current operations and plans for expansion; it determined what it could do to improve profitability at existing locations and what new restaurants should ideally look like, offer in terms of products, services, and prices, etc.

Some companies also do a real-world test on a limited scale, opening a few stores, for instance, to gauge market reaction and refine an upgraded brand concept or new sub-brand. Best Buy, for instance, simultaneously converted a limited number of Best Buy stores to a new format to attract more profitable customers; opened a Studio D store targeted to middle- and upper-income women in suburban Chicago; and an Escape store aimed at early adopter 20-something men. This kind of small-scale experimentation allows the company to make refinements, iron-out implementation issues, and further perfect what ultimately is brought to market.

Obviously, we've heard of and certainly used many of these techniques, but we can't think if a single instance when we've heard of a company spending $65 million to launch a new brand plus millions more on operations and equipment; recruiting a large management and front-line staff; stretching resources to manage two brands; or jeopardizing a core brand (there was overlap on routes and Song frequently offered better services) for experimental purposes only. From all accounts, Delta did not originally intend for Song to serve as its brand laboratory, but management saw no problem in converting Song's raison d'être from competition against JetBlue to an exploratory study in short order.

Delta points to all the great ideas that came out of Song, but has anyone at the company considered how transferable the data really is? Song's VP of Marketing described the brand's target audience as "a woman who is at least 35, with a household income above $150,000. She's married with two or three kids and is likely to live in towns around Boston or New York City." The VP told CMO Magazine that Song was targeting a very different passenger than the rest of the traditional industry, including Delta. So unless Delta plans on revamping its current targeting strategy (assuming it has one to begin with) what appealed to Song's customers may not, in fact, appeal to Delta's. It certainly could—who wouldn't like a snack from Dylan's Candy Bar—but is it a profitable feature for Delta, with a much larger fleet and ostensibly different target, to offer? In our experience, it's the combination of features that adds most to potential financial success, but did Song offer any information to Delta on what that magic combination is or just what customers seemed to respond the most to?

Though the Wall Street Journal called Delta's decision to close down Song—which will likely live on as the name of Delta's in-flight entertainment system—as evidence of the "turnaround of Song," we see it as an unnecessarily wasteful research project that could have been done much more effectively and efficiently.

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

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

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We share in the business world's collective sorrow over the recent loss of Peter Drucker, the most influential management thinker in the past century. His thoughts on the importance of marketing and innovation as the purpose of the business has had a profound impact on our own approach to helping businesses and we constantly reference his books and articles in our own work.

In one of its numerous odes to Drucker, The Wall Street Journal wrote: "Books on management are published by the hundred each year, but for our money you can skip everything else and simply re-read Peter F. Drucker, who was the Shakespeare of the genre." We couldn't agree more and here's our list of essential Drucker:

The Practice of Management (HarperCollins 1993)

Managing for Results (HarperCollins 1993)

Management: Tasks, Responsibilities, Practices (HarperCollins 1993)

The Frontiers of Management (Truman Talley Books 1999)

Managing for the Future (Truman Talley/E.P. Dutton 1992)

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Everyone is talking about branding these days: consumer companies, B2B service firms, industrial marketers, and even not-for-profits such as the Boy Scouts of America, the Red Cross, and Massachusetts General Hospital. As BusinessWeek reported recently, "Companies have realized that a vibrant brand, with its implicit promise of quality, is an important asset. It has the power to command a premium price among customers and a premium stock price among investors. It can boost earnings and cushion cyclical downturns." Although this talk is exciting to us—building great brands is what marketing is about, after all—the sad truth is that more brands are becoming commodities than vice versa.

In two recently published articles, Copernicus' own Kevin Clancy and Peter Krieg offer some Six Sigma-inspired advice for how to turn this trend toward commoditization around. Click on the links below to read more.

As seen in Marketing Research: Resurrect Your Brand Using Six Sigma Thinking

As seen in The Advertiser: A Six Sigma Approach to Marketing Accountability

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