The human being is a wanting animal and rarely reaches a state of complete satisfaction except for a short time. As one desire is satisfied, another pops up to take its place. When this is satisfied, still another comes into the foreground and so on. It is a characteristic of human beings throughout their whole lives that they are practically always desiring something.
—Abraham II. Maslow
The more you know about the customer the better. You never know when a small fact might lead to a better product.
—R. Stephen Fountaine. vice president of market research.
You’re somewhat in the Ruffles camp. You must have confidence to dress that way, so flat chips aren’t for you. You aren’t taking a trip on the wild side, though; not exciting enough for jalapeno-flavored. Maybe on a Friday night you’ll try cheddar to really step out. Bean dip too if you loosen up.
—Howard Davis. chairman of Frito-Lay’s advertising agency,
Imagine this. Your target customer is a female baby boomer, a women of 40 years of age who juggles a management job and family. You have designed a product line just right for her household. And now you have a chance to make the sale, because she is on her lunch break, shopping for a gift for her husband’s birthday.
She has given herself a half-hour today to visit the mall nearest her office building. That’s less than half the 66 minutes spent by visitors to U.S. shopping malls on average. Will she manage to find her way into the right store, right aisle, and right display, in order to find the product you market and select it for purchase? You hope so!
All goes well at first. She notices the appealing window displays and signs outside the store, and turns in to examine the merchandise. Browsing her way down an aisle, she encounters your product display and stops, interested. “Ah, I bet he’d like one of these!” she says to herself, leaning forward to examine a sample. But then something goes terribly wrong. It’s hardly noticeable to the average observer, but more than enough to interrupt your customer’s concentration. What happens is this. Another customer wanders down the same aisle and, because the aisle is so narrow, accidentally brushes against your target’s rear end. Distracted, your would-be buyer begins to move down the aisle again, looking for other items. Then she glances at her watch, mutters “Darn, I’m going to be late for the staff meeting,” and heads for the door.
No sale. Sorry. Another marketing exchange falls prey to consumer behavior. This particular problem—one of a seemingly infinite number of things that can go wrong—happens to be well studied by Paco Underhill, founder of Envirosell, a New York-based retail consulting firm. In thousands of hours of videotapes of shopper behavior, Underhill has identified a great many facts of relevance to marketers, including the observation that a woman shopper’s probability of being converted from a browser to a buyer is inversely proportional to the likelihood of her being bumped while examining the merchandise.
How could you have made that sale? Well, you might give more attention to where and how your products are displayed in retail stores. If aisles are narrow and crowded, then perhaps a free-standing island rack or an end-of-aisle display would eliminate what Underhill terms le facteur bousculade. And how about selecting a display location that is to the right of the doorway on the way into the store—since Underhill’s research shows shoppers almost always turn right upon entering a store. Oh, but don’t let them display your products too close to the door. If they fall into the shopper’s decompression zone, the area just inside the door where shoppers slow down and refocus before beginning their shopping, then the displays will probably be ignored.
If demographics and forecasting are all about identifying the customer, consumer behavior is all about understanding that customer. And customer behavior can be remarkably complex, as our brief observations of this lunch-time shopper revealed. In many ways, understanding customer behavior is a far more difficult task than simply identifying your target customers. As the psychologist Abraham Maslow observed, people practically always desire something. But it takes a great deal of insight to know what they desire, when, and where.
Howard Davis has a clear understanding of chip desires. It comes from hundreds of hours of thought and research on the topic. In his lesson-opening quote, he is sizing up a visitor to his office at the ad agency Tracy-Locke based on a quick assessment of the man’s clothing and appearance. Clues like boat shoes, khaki pants, red tie, plain blue shirt, navy socks, and a matching plastic pen provide the raw material for his Sherlock Holmes-style deductions. He thinks he can narrow down the visitor’s preferences to only a few of Frito-Lay’s 85 varieties of corn and potato chips. Is he right? Unfortunately, the journalist who reported this conversation did not say.
But the odds of being right are strongly in Davis’ favor because Tracy-Locke goes to incredible lengths to understand the personalities of each Frito-Lay brand and its users. The agency gets a head start from Frito-Lay, which operates an elaborate laboratory near Dallas dubbed the Potato Chip Pentagon. Staffed with close to 500 psychologists, chemists, and engineers, the lab studies everything from chip thickness to flavor patterns. For example, researchers have learned that people prefer their chips to break under approximately four pounds of pressure per square inch, and that they do not like the “Frito Breath” and “Dorito Breath” that people have after eating these chips. (Incidentally, Frito-Lay is experimenting with ways to reduce this effect.) The reason Frito-Lay invests so much in chip research comes down to a startlingly simple observation of human behavior. As Dennis Heard, senior vice president of technology, explains, “We have to be perfect; after all, no one really needs a potato chip.”
Nonetheless, Howard Davis is determined to find out who wants chips, and which chips they want. To start with, the agency does consumer surveys to find out what people say they want (Frito-Lay’s research queried a total of 500,000 people in a single year). But for some reason, people rarely tell the truth about their chip passions. Davis explains that “a lot of people who say they feed their families only alfalfa sprouts also eat potato chips.” And careful tests have revealed that consumers actually eat about a third more chips at one sitting than they say they do. (How did they find this out? By giving people pre-measured large bags of chips at a movie theater, then measuring the leftover chips afterward.) Perhaps people are not entirely honest about their chip behavior because chips are, with all that salt and fat, a somewhat unhealthy indulgence. And chip consumption is essentially a private affair—research shows that 65 percent of all chips are eaten in private.
Thus, Frito-Lay’s survey research, psychographics, and other standard research must be supplemented with creative insight. The insight starts with projective research designed to learn more about consumers than they know about themselves. Respondents are shown photographs, for example, each depicting different people in different situations. Questions such as “Is this person likely to eat potato chips?” are used to get at underlying attitudes and values. (Some of the results are amusing: Someone with an umbrella is not likely to eat chips, whereas someone watching TV is very likely to.) Tracy-Locke combines the insights from this qualitative research with the mass of survey research to develop personality profiles, and then prepares videotapes portraying the types of people whom they expect to eat various types of chips. Each of these tapes comprises images collected from modern culture—bits of ads, movies, and television shows. The videos are then kept strictly under wraps, for use only by the agency’s copywriters.
The public will never see these videos, but thanks to the diligence of a Wall Street Journal reporter, we can at least read a quick review of them:
The videos reflect distinct personality differences among eaters of various snacks. Some examples: Lay’s Potato Chips Consumers of these flat chips are seen as “affectionate, irresistible, casual and a fun member of the family.” Scenes show bubbling streams, puppies, flowers, a couple exchanging wedding vows, a farmer driving mules and a little girl stroking a cat. The music theme is the soft rock “Little Pink Houses” by John Cougar Mellencamp.
Ruffles Potato Chips Customers are depicted as ‘expressive, aware, confident enough to make a personal statement. Scenes show people getting into a BMW and other new cars, a man opening champagne, wind surfers, and a woman working out in a fashionable outfit. The music is from the fast-paced soundtrack from “Caddyshack.”
These videos are the culmination of an incredible effort to understand the people who eat chips. We don’t even want to think about how much this effort costs Frito-Lay, and Frito-Lay does not want to reveal how much it costs either. But the results of the research pay handsomely. Americans eat more than six pounds of chips each in the average year, spending more than $4 billion in the process. And Frito-Lay’s share of the market has grown from 25 percent a decade ago to 40 percent at present.6 With pretax profit close to 20 percent of retail sales, it is difficult to visualize the potential earnings from this market! For example, a 1-percent gain in Frito-Lay’s market share would be worth about $8 million in profits. The value of knowing your consumer’s behavior a little better than the competitors can be incredibly high.