Which Starbucks will close?

To many Starbucks patrons out there, the news that Starbucks is closing 600 stores may be a cause for panic. Around the office, a few of us thought about starting an office pool to bet on which ones near us might close. So, I began to wonder what factors will go into their decision to close a particular location. (I guess this is the curse of working in market research: asking “why” all of the time.)

My initial thought was that Starbucks would close the 600 lowest performing stores. Easy. But how would “lowest performing” be defined? And why 600 stores? I had a discussion, fittingly over a cup of coffee, with fellow analyst, Dave, about the factors we might look at: total customers, revenue (and profit) per customer, and some other typical business measures.

Our conversation then meandered to more complicated factors, such as the amount of pedestrian traffic around the stores; proximity to other Starbucks; whether closing one store would cause another location to become too crowded; ease of entry and exit (and whether there is a drive through); and rent/lease terms in various locations, among others. I quickly decided my initial thought of just looking at the numbers ignored the many interdependent variables that must be taken into account and the change in consumer behavior that would occur if a particular location were to close.

Their final decision about which stores should close, and how many will close, must be based on several of these variables weighted by their order of importance. Simply identifying low performing stores in a vacuum ignores the interplay between the features of each store and its environment as well as the complex interactions between locations, especially given the close proximity of many Starbucks locations (there are no fewer than 10 Starbucks locations within a mile of Corona’s office). As a side note, these factors would probably be the same variables used in determining whether and where to open a new store.

While I don’t think I’ll do this analysis in my free time (unless Starbucks would like to hire us to do so), it would be one complex – and yes, fun – optimization model to build. Then I would be sure to win that office pool.


It’s not about what people “want”- it’s about what they need

I occasionally run across articles, blogs, or other people at events who seem quite opposed to market research – and that’s putting it lightly sometimes.

The most recent of these examples is this opinion piece arguing that common sense trumps market research. One of his main arguments is that people don’t know what they want in the future, so you can’t ask if they want some new, completely foreign product because they’ll have no context to put it in and therefore say no. I agree that you usually can’t ask people what they think about products for which they have no context. I’m sure when people first heard of the idea of machines flying, or a bulb glowing with light, or talking to people over very long distances – all points made by the article’s author – they would have responded with great skepticism. Ask me what I want in my next car and I wouldn’t say, “a car with a removable, flexible skin.

But what all of these inventors and many more did were to identify needs; communicating over long distances, safer and cleaner lighting, and the possibility of quicker transportation. And this is what market research is great at – identifying needs. Sometimes this may be simply asking people what they like/dislike about products, but often times it’s about identifying broader needs and seeing how you can develop your products or services to fulfill those needs. Frozen dinners were developed because of two larger societal trends: television and time-saving appliances.

Successful companies today continue to invest in products based on consumer insights. You have to look no further than your home to see many of these … the Swiffer (the need: a duster that picks up dust instead of spreading it around), Febreze (the need: eliminate odors not cover them up), whitening toothpaste (the need: whiter teeth and a better smile).


Auf Wiedersehen Stephanie!

Last Friday was the last day at Corona for Stephanie Papilaris, the Administrative Coordinator for CEO Kevin Raines and the glue that kept the quantitative analysis team running (and kept us from making mixed metaphors).  She’s returning to her home in Tampa, Florida and we sent her off in the high style that Corona is famous for:

If you (or someone you know) is organized, motivated, quantitatively inclined, and willing to work with a great group of research whizzes, please apply to join our team!


Market research for the individual

Ran across this site today, thanks to a Google alert.

FaceStat – which allows you to rate (and be rated on) attractiveness, occupation, political leanings, and several other characteristics of random individuals who post their picture – seems to be one more twist in social networking sites that bills itself as “market research for the individual. ” My initial gut reaction was, “Yeah, its stereotyping at its worst,” but isn’t that what we do with brands (or nearly anything else when we first see it)?

We even test for this during focus groups or other methods of testing logos, media, etc, when we are asking for people’s initial reaction. What does it remind you of? What does it convey? Though, when doing it with real people it may become too personal.

It would be interesting to compare different people with the same descriptions to see if trends start appearing. Does certain clothing make an individual smart? Does smiling in their picture make them more likely to be attractive? Can you really tell how liberal someone is just by looking at them?

Of course, the value of the ratings are only as good as the people doing the ratings. Most people, if they click at all, are probably only going to rate a few pictures before they lose interest and spend their time on the web doing something more interesting. Those few souls who, for whatever reason, like rating pictures will likely be doing most of the ratings. And whatever their reasons for doing so, it probably makes them (and likely their ratings) systematically different from the majority of society.


The many uses of research

We’ve completed research on topics for which most people would never imagine that market research could be used (romance writers, pregnant smokers, and mountain lions, to name a few). In fact, I’m sure many people only consider market research to be used for consumer goods.

But, even I was surprised when I ran across this article on market research being used to design parenting classes. It is a classic market research example showing the disparity between the product offering (i.e. the classes) and the consumer needs (i.e. what parents wanted). In reality, market research can help better understand the needs and wants of the target audience for virtually any product or service, whether that product or service is being sold, or provided at no-cost, say by a government agency, or nonprofit organization. Is there any subject or industry market research can’t help?


Market research on gaming leaked

I first saw this post the other day and since then I have been seeing information on this story pop up everywhere.  In short, Intellisponse, a marketing research firm, appears to have leaked some information about their clients’ potential products.

While its always fun to read about other research, I hate to do so at the expense of another company – in this case, Intellisponse. At least on the outside, it appears their clients (Microsoft, Activision) are not acting upset, confirming that they are looking into many concepts, but that none are guaranteed. We’ll see how this plays out down the road. My take is that the amount of PR they’re getting for upcoming games will probably outweigh the potential leaks to competitors (though this doesn’t justify an unapproved leak by the company if that was the case).

In the mean time, gamers everywhere (and a few market researchers) will enjoy the gossip (and research).


The U.S. Census: Great-great-grandparent to this Blog

We use a lot of data from the Census Bureau in our work at Corona, from building demographic profiles to weighting surveys, so I love seeing how the census has had an effect on society outside of its nominal purpose.

On the bus this morning to work I started reading Jonathan Zittrain‘s new book The Future of the Internet – And How to Stop It. It looks like a really interesting argument for open, customizable systems (i.e., the current internet) over secure-but-sterile closed systems (i.e. AOL, the iPhone). But what caught my eye was this passage early in the first chapter:

Herman Hollerith was a twenty-year-old engineer when he helped to compile the results of the 1880 U.S. Census. He was sure he could invent a way to tabulate the data automatically, and over the next several years he spent his spare time devising a punch card system for surveyors to use. The U.S. Government commissioned him to tally the 1890 Census with his new system……It took only two and a half years to tally the 1890 census, compared to the seven years required for the 1880 census. Hollerith’s eponymous Tabulating Machine Company soon expanded to other governments’ censuses, and then to payroll, inventory, and billing for large firms like railroads and insurance companies.

Today, we know Hollerith’s firm as IBM.

IBM, of course, led the computing revolution by contributing to the development of mainframes (and, just as importantly, the sale of mainframes), which led to personal computers, which led to the widespread adoption of that academic curiosity “the internet,” which led to the development of blogging.

(Of course, blogging owes just as much of a debt to Napoleon’s invasion of Egypt, but that’s another story).

So, after a long chain of connections, the decisions of the Founding Fathers have lead directly to you reading these words today!


Polling at the POP

I have been offered short surveys during checkout (i.e. POP: Point of Purchase) several times in the last few months at several retail stores. One such example is at Wal-Mart (okay, they could have been doing this for a while, but I don’t shop there frequently). The screen just asked one question: “Was the cashier friendly today?” I heard from someone else that they asked if the bathrooms were clean (must be a low incidence rate: how many people actually use the restroom in Wal-Mart?).

I think that it is a good idea to solicit feedback as close to the moment of the interaction that they’re trying to measure, but is it too close? The cashier must know that they’re being (formally) evaluated on the spot. I think the value of this particular survey may be to encourage the cashier to act nice since they know they’re being evaluated rather than truly measuring overall satisfaction or performance. As a former retail manager, trying to encourage employees to be “on” at all times with with customers can be a challenge.

Does anyone know how this data is used? Does it directly impact the employee (do they see their results)?


I’ve been SUGGED!

As we’ve discussed previously, it has become a popular sales technique to get a foot in the door by posing as a no-strings-attached research study, and then transitioning to the hard sell. (This is called SUGGING, or Selling Under the Guise of Research.) I’ve recently moved to a new neighborhood, and I’m finding that it’s a hot spot for door-to-door marketing tactics of all kinds. I get fliers left in the screen door by the ton, weekly visits from Jehovah’s Witnesses, and now the traveling salesmen. Salesmen in researcher’s clothing, as it were. Read on.

Earlier this week I answered my door to find a well-dressed man holding a box of baking soda. He asked if I was the lady of the house (who says that kind of stuff anymore? clearly, this should have been a clue …) and proceeded to hand me the baking soda and tell me he gets paid for getting my opinion about a product. As I was wondering, “How does one evaluate baking soda?”, he sprinted away calling over his shoulder that he’d be right back with the product, and I was left on my stoop, somewhat dumbfounded, holding a box of baking soda and watching a grown man run down my sidewalk in slacks and a button-down. He was back in a flash with a box and a friend, and before I knew what was going on, he had a vacuum cleaner assembled in the middle of my two-week-old living room carpet. Then guy number one was out the door (off to the next house) and the new guy was sticking filters in a window box on the vacuum and showing me what was coming out of my new carpet (mostly dog hair), then my couch (horrifying!), and then my mattress (ew!). I was kinda digging the couch cleaning because I’ve got a thrift store number that dates to at least the 60’s and he was doing a really thorough job. And because I’m obviously the most naïve person imaginable, (and in my defense it was my first encounter with the door-to-door salesmen) I was thinking, “This is great! When do I get the questionnaire to fill out?!”

But as you may suspect – and to my great disappointment – there was no questionnaire. There was only a price worksheet with available payment plans for this industrial quality vacuum, which retails for just shy of $2,000 (!), and, of course, includes the carpet shampoo kit, etc. And not only that, but purchasing the vacuum will help the salesman (in researcher’s clothing) to win a contest for which the prize is a trip to Phoenix (!) to hobnob with company executives. Now, I understand that Phoenix in the summer is a top vacation destination, so I can imagine the desire this man has to win the competition. However, under no circumstances (and I say this despite my obsession with cleaning and my newfound awareness of the filth in my home) am I going to purchase a $2,000 vacuum cleaner! So I politely, but firmly, declined and sent the nice men on their way.

What I’ve learned is this: If a strange man solicits your opinion with a box of baking soda (which, by the way, was ground into my carpet and then sucked back out for purposes of demonstration) do not get your hopes up for a survey! These door-to-door “researchers” are already confident that you will like their product; all they want to know is whether you can be convinced to buy it!


They get one right

In a recent post, Auto Dealers and their Research, I chastised businesses that try to sway customer surveys in order to look good, without trying to learn anything from the research.

Well, to be fair, I want to offer some praise for something they recently got right. I recently made several trips to my auto dealer to fix a minor problem under warranty. Four trips into the process it still hadn’t been fixed and on each trip, their “repairs” were causing more damage. I got a survey, filled it out online with my experience and provided my contact information. Less than two days later, I received a phone call from the service manager apologizing and offering to personally take care of it himself.

It is great to see a company actually have the systems in place to route surveys both correctly and quickly. The only problem? At the end of the final visit, they said that I would be getting another survey and asked if I would please give them passing scores. Oh well, it’s a start.