Are Social Media Sites Replacing Focus Groups?

Stephen DeAngelis

August 02, 2012

In a post entitled Changing Tastes in Food are Challenging Food Providers, I noted that food companies are racing to keep pace with the changing tastes of today’s consumers. Making things more complicated for them is the fact that older generations and younger generations aren’t changing in the same ways. Stephanie Clifford reports that some food companies are turning to social media sites to help them keep up with changing tastes. [“Social Media Are Giving a Voice to Taste Buds,” New York Times, 30 July 2012] She writes:

“Frito-Lay is developing a new potato chip flavor, which, in the old days, would have involved a series of focus groups, research and trend analysis. Now, it uses Facebook. Visitors to the new Lay’s Facebook app are asked to suggest new flavors and click an ‘I’d Eat That’ button to register their preferences. So far, the results show that a beer-battered onion-ring flavor is popular in California and Ohio, while a churros flavor is a hit in New York. ‘It’s a new way of getting consumer research,’ said Ann Mukherjee, chief marketing officer of Frito-Lay North America. ‘We’re going to get a ton of new ideas.’ While consumers may think of social media sites like Facebook, Twitter and Foursquare as places to post musings and interact with friends, companies like Wal-Mart and Samuel Adams are turning them into extensions of market research departments. And companies are just beginning to figure out how to use the enormous amount of information available.”

For years companies have tried to find an alternative to focus groups. Sandy Thompson, Global Planning Director at Young & Rubicam, writes, “Like everyone else in marketing, I’ve put in my time behind the double-sided mirrors watching and listening to focus groups. Here’s what I’ve learned: Focus groups will never get to the truth.” [“Finally, The Truth About Focus Groups!” Huff Post’s The Blog, 30 July 2012] She continues:

“Focus groups … will fill your head with information but they cannot give you true understanding. But isn’t understanding the goal here? Focus groups are relics of the World War II era. Meanwhile, today’s consumers are bombarded with branding messages, and they are not going to pledge lifetime loyalty to a product just because their mom used it. They are smart, they know when someone’s selling them something, and they have their guard up. But many marketers haven’t changed how they get to know the opinions, the lives, and the feelings of the people they want to fall in love with their brand. They bring people into a cold, impersonal, and totally artificial setting and expect them to open up and act natural. They ask them the same old questions that they know to ask and think that, somehow, they’ll learn something new. Does this approach make any sense?”

Clifford reports that Frito-Lay isn’t alone in turning to social media sites. She explains:

“When Wal-Mart wanted to know whether to stock lollipop-shaped cake makers in its stores, it studied Twitter chatter. Estée Lauder’s MAC Cosmetics brand asked social media users to vote on which discontinued shades to bring back. The stuffed-animal brand Squishable solicited Facebook feedback before settling on the final version of a new toy. And Samuel Adams asked users to vote on yeast, hops, color and other qualities to create a crowdsourced beer, an American red ale called B’Austin Ale that got rave reviews. ‘It tells us exactly what customers are interested in,’ said Elizabeth Francis, chief marketing officer of the Gilt Groupe. Gilt asks customers to vote on which products to include in a sale, and sets up Facebook chats between engineers and customers to help refine products. ‘It’s amazing that we can get that kind of real feedback, as opposed to speculating,’ Ms. Francis said.”

Doug Henschen reports, “The promise of a never-ending focus group (along with fear of not knowing what’s being said about you) has given rise to a fast-growing market for social media monitoring and sentiment analysis software and services.” [“Sentiment Analysis: How Companies Now Listen To The Web,” InformationWeek, 22 June 2012] Henschen, however, asserts that sentiment analysis isn’t as simple as it first appears. He explains:

“If you wade even ankle deep into social media monitoring, you quickly realize that it’s a much more nuanced problem than spotting positive or negative opinions. For starters, comments often have multiple meanings or gradations of meaning. And when it comes to marketing research, the best insights often come with no mention of a specific company or its products.”

Clifford reports, however, that the challenges haven’t stopped companies from turning to social media sites looking for ways to profit from consumer sentiment. She continues:

“Wal-Mart acquired the social media company Kosmix last year for an estimated $300 million, chiefly because of Kosmix’s ability to extract trends from social media conversations. The unit, now called @WalmartLabs, looks at Twitter posts, public Facebook posts and search terms on Walmart.com, among other cues, to help Wal-Mart refine what it sells. Its technology can identify the context of words, distinguishing ‘Salt,’ the Angelina Jolie movie, from salt, the seasoning, for example. It sets baselines for what a normal level of buzz around, say, electronics or toys is, so it can measure when interest is getting high. It also analyzes sentiment, because if people overwhelmingly dislike a new video game, ordering pallets of the game is not a great bet. ‘There’s mountains and mountains of data being created in social media,’ said Ravi Raj, vice president for products for @WalmartLabs, adding that the company used the data to decide what merchandise to carry where. In one of its first analyses, performed last summer, @WalmartLabs found that cake pops — small bites of cake on lollipop sticks — were becoming popular. ‘Starbucks had just started getting them in their cafes, and people were talking a lot about it,’ Mr. Raj said. His team alerted merchants at Wal-Mart headquarters. The merchants had also heard about the product, and decided to carry cake-pop makers in Walmart stores. They were popular enough that the company plans to bring them back this holiday season. More recently, @WalmartLabs found that enthusiasm for ‘The Avengers’ and ‘The Dark Knight Rises’ was surging before the movies were released, and suggested that stores increase their orders of related merchandise. And after Walmart started carrying a spicy chip called Takis, @WalmartLabs found that most of the positive chatter about it was coming from California and the Southwest. The merchants, judging that they could sell additional products in those states, commissioned a similar spicy chip from Walmart’s private-label brand and hurried to introduce another, called Dinamita, from Doritos. Walmart began selling both lines in California and the Southwest earlier this year, and is now adding them to other stores.”

There is a difference, however, between monitoring social media sites looking for trends and directly asking consumers for input. Frito-Lay is offering a $1 million prize to the creator of the flavor they select for production. That much money is certainly a good incentive to get people talking. Another benefit for Frito-Lay (in addition to getting the idea for a new product flavor) is that by combing the entries it can also detect other trends that might give it a competitive edge. Clifford points out, however, that using social media sites is probably a better way to reach younger generations than older ones. She writes:

“The social media approach … attracts younger customers. People who sign up for focus groups or consumer panels are generally not young fad followers, but Facebook users often are, so adding social media to the mix lets Frito-Lay get a wide range of consumer feedback. Kohl’s, which started asking its Facebook fans in July to pick products for inclusion in sales, said those fans were more heavily represented than its overall customer base in the 18-to-24 demographic.”

Of course, not all sites cater to the young and socially hip. Food companies, for example, are likely to find much more valuable information monitoring cooking or recipe sites than they are monitoring other kinds of sites. Frank Cotignola, consumer insights manager at Kraft Foods, told Henschen that how companies monitor web sites is almost as important as which sites they monitor. “The mistake people make is they just listen for brands and miss all the conversations,” he said. “I tell people who are using this data to flip it around: Listen to what people are saying, and then see how your brand fits in.” Henschen notes, “Knowing what percentage of comments about a barbecue sauce brand are positive or negative may be far less valuable than gathering insight into what people like about barbecuing, how they cook, or how they’d like to cook.”

Clifford’s article raises the privacy issue, which is always the elephant in the room during discussions of big data analytics, but she notes that a lot of people agree to share their information. She concludes:

“Not everyone is a believer in data alone. ‘Data can’t tell you where the world is headed,’ said Lara Lee, chief innovation and operating officer at the design consultancy Continuum, which helped design the Swiffer and the One Laptop per Child project. But companies using data from social media said the ability to see what consumers do, want and are talking about on such a big scale, without consumers necessarily knowing the companies are listening in, was unprecedented. ‘This is like the biggest focus group someone could ever imagine,’ [Mark LaRow, senior vice president for products at the software company MicroStrategy], said.”

In the years ahead, sentiment assessment, online surveys, and other solicited consumer opinions are likely to draw increased support from consumer packaged goods manufacturers and from retailers. The economics and ease of such methods almost ensure this happening. The only drawback, of course, is that such methods don’t reach consumers who continue to live offline.