Ohio Lottery

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From the Ohio Lottery case, answer the following questions:

  1. Detail the overall research design in the Ohio Lottery case (See Exhibit OL1). What are the advantages and disadvantages of this design?
  2. Evaluate the MET process (Exhibit OL-2). What are some of the strengths and weaknesses of the MET technique?
  3. What measurement scales are used in the sample questions provided (Exhibit OL-3)? Why might the lottery attitude and lottery importance questions have presented the most challenge to the professional researchers?
  4. Using text Exhibit 12-2, map out the likely quantitative instrument content.
  5. The survey contained several questions that would alert the researchers that the participant was not taking the research process seriously (see case exhibit OL-3). Is this a good or a poor idea? Why?
  6. Evaluate the MET discussion guide for the Ohio Lottery Research.

    Business Research Methods, 14e/Schindler

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    >cases

    >Abstract

    Used with permission

    of Pamela S. Schindler.

    © 2006.

    Ohio Lottery: Innovative Research Design Drives Winning

    The Ohio Lottery was originally developed as an additional source of public

    school funding. Today proceeds from lottery games annually provide approxi-

    mately 7% of the public educational budget. This research was originally under-

    taken because the lottery director wanted a deeper understanding of lottery

    players and insight into nonplayers. The research design described in this case is

    multistage and incorporates the use of both qualitative and quantitative research.

    This case reveals the research that guides the current Ohio Lottery promotional

    program that encourages play of its various games.

    >The Research When the Ohio Lottery was first conceived, it was presented to the voters of

    Ohio as a way to provide supplemental funding for Ohio schools.1 The Ohio

    Lottery sold its first ticket in 1974. Currently, all profits go to the Ohio Lottery

    Education fund, which supplies about 7 % of the current education budget.

    Although Ohioans annually spend about $200 per capita on lottery tickets, in

    recent years the Ohio Lottery has suffered stagnant sales. The Ohio Lottery is

    interested in stimulating more play of lottery games.2

    The process started in early January 2005 when the Ohio Lottery approached

    Marcus Thomas, LLC3 an agency that had worked with them before on media

    and research projects.

    “Rod Ingram (lottery director) basically wanted a deeper understanding of lottery

    players and insight into nonplayers,” explained Jennifer Hirt-Marchand, vice

    president of research for Marcus Thomas.4 “Rod had extensive demographic data

    on players, but it was obvious that what he needed was behavioral and psycho-

    graphic information on both players and nonplayers.”

    “I had read extensively about the metaphor elicitation technique (MET) developed

    by Gerald Zaltman (professor, Harvard University),” said Hirt-Marchand. Be-

    cause most human communication is nonverbal and metaphors are a key bridge

    between direct verbal communication and more impressionistic thoughts and

    feelings, the metaphor elicitation technique showed promise to unlock true motiva-

    tions.5 “We didn’t have experience at that time with MET, but MRSI6 did. I asked

    them to provide a video of a MET interview and, after seeing it, I was convinced

    of its potential.” Thus, Marcus Thomas partnered with MRSI to determine “why

    players purchase tickets and other emotional factors that motivate consumers to

    purchase games.”7

     

     

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    Phase I—Qualitative—MET Early in the research process, two additional agencies the Ohio Lottery had been

    using for creative development were called in. Because their work was also meant

    to stimulate demand for lottery tickets, input from these agencies was deemed

    critical to the overall success of the research project.

    “We wanted to get buy-in from them from the beginning,” explained Hirt-

    Marchand. It also helped that Ingram considered engagement with the research

    vitally important for each of its agencies. And each agency had numerous ques-

    tions, among them: What is the understanding of the pay-out or odds and how

    relevant is this understanding to making a purchase? Are purchases of lottery

    tickets routine or impulsive? Are purchases perceived as recreation or gambling?

    What motivates play? How is winning defined? What is the influence of in-store

    promotion and signage? Is playing perceived as chance or skill? What is the

    significance of the dollar value of the ticket?

    “MET interviews are long, often 90 minutes or more,” said Hirt-Marchand.”

    “Lottery staffers and agency personnel were behind the one-way mirror at every

    session.” During April through June, a total of 25 interviews were conducted in

    three Ohio cities (Cleveland, Columbus, and Cincinnati) to understand motivations

    for playing lottery games, to determine obstacles to playing or playing more often,

    and to provide guidance for the quantitative segmentation study to follow.8 MRSI

    provided the interviewer for most of the sessions, but Hirt-Marchand wanted

    Marcus Thomas to develop the expertise. She was trained by the moderator, and,

    after observing the process unfold for 20 interviews, Hirt-Marchand conducted

    the final five interviews personally. “The interviewing technique is similar to a depth

    interview. But the moderator spends most of his or her time listening, encouraging

    a deeper dialog, with head nods, answer rephrasing, and constant requests for the

    participant to elaborate.”

    Participants represented all four groups of interest: heavy player (at least twice a

    week), occasional player (at least once in three months), rare player (less than

    twice a year); and nonplayers. When using MET, participants are assigned a task

    to complete before the interview: They bring photos or other images (e.g., images

    cut from magazines or packages) that represent their feelings and emotions about

    the topic. In this case, participants were asked to choose images that reflected

    how they feel about playing the lottery, or in the case of nonplayers, images that

    help express how they feel about the lottery. The interview focuses on the images

    and what each image represents to the participant. At the end of the interview,

    participants are asked to create a collage of their images, writing phases or notes

    near each image to capture what each image meant to them as it related to the

    lottery.

    “In some ways,” said Hirt-Marchand, “the collage is for the participant—a means

    of debriefing them. Those of us that are observing the interview are taking detailed

    Ohio Lottery: Innovative Research Design Drives Winning

     

     

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    notes, so we have already summarized the learning from the exercise by this time.”

    (See Exhibit OL 1-1 on the MET discussion process used for these interviews.)

    “Because three to five Lottery staffers were present at each session, as well as

    representatives from each agency, we had very constructive discussions following

    the interviews, often well into the evening,” described Hirt-Marchand. These

    debriefing sessions were part knowledge capture and part brainstorm. “It was

    inevitable that we would discuss strategy—how we could use this piece or that

    piece of information.”

    Findings. From the direction provided by the MET interviews, Marcus Thomas

    formed a preliminary recommendation that the Ohio Lottery focus on getting more

    play from all player categories as well as encouraging nonplayers to play. A

    preliminary strategy was formulated based on the fact that in buying a ticket,

    players buy the opportunity to dream. While “winning money was a reason to

    believe [in the dream] and a critical rationalization for playing, it was not the

    primary motivation for playing.”9 In dreaming, lottery players could see themselves

    as successful and thereby feel special and in control of their lives.

    The interviews also revealed that to encourage more frequent play, or any play by

    a nonplayer, the concept of winning needed to be redefined. A win was currently

    defined as “hitting the jackpot,” when in reality players perceived this as unrealis-

    tic. In fact, a win meant winning anything, from $1 on up. Also, significant

    negative misconceptions surfaced among rare players or nonplayers about heavy

    players. They were described as addicted, out-ofcontrol, irresponsible, and

    unintelligent. These misperceptions needed to be addressed by advertising.

    Marcus Thomas developed a preliminary strategy for rare and nonplayers that

    positioned lottery play as a small indulgence, via games with simple rules, and that

    offered social reasons for buying lottery game tickets.

    Phase II—Quantitative Survey “The qualitative study provided us with significant insights, and was always

    intended to be the foundation for a quantitative segmentation study,” said Hirt-

    Marchand. Marcus Thomas wanted to validate purchase motivations and ob-

    stacles revealed by the MET interviews and determine if player segmentation

    could be refined beyond the use of frequency of play. An online study was

    chosen to validate possible messages, explore media usage, and understand

    actual purchase behavior.

    Sampling MRSI e-mailed invitations to a subset of Ohioans from their exten-

    sive online panel. Invitees who responded were further screened for qualification.

    The sample chosen was demographically proportional to the state’s population

    based on residence, age, gender, and race. Participants needed to be Ohio

    residents between 18 and 65 years of age with an annual household income of at

    least $20,000, with no moral or religious objection to playing the lottery. All

    Ohio Lottery: Innovative Research Design Drives Winning

     

     

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    1,505 (1,305 players and 200 nonplayers) participants completed the survey by

    accessing a secure website between July 22 and July 31, 2005.

    Survey and Instrument The 39-minute study covered game and advertising

    awareness, game involvement, frequency of play, lottery importance, lottery

    perceptions and attitudes, as well as numerous other demographic or behavioral

    variables that might be used in segmentation.

    The survey went through four extensive revisions, two within Marcus Thomas and

    one each with the involvement of the client and MRSI. “The most challenging

    questions to develop were those on Lottery Importance Ratings (question 25),

    and Lottery Attitudinal Ratings (question 29),” shared Hirt-Marchand. “The MET

    findings were critical to developing these questions.” And because the study was

    so long, Marcus Thomas wanted to be sure that participants were focused,

    paying attention, and not just going through the motions. To address this, it

    included alternatives to three or four questions that the serious, attentive, lottery-

    playing participant would know were wrong or inappropriate to choose (question

    6A is an example; the highlighted alternative is not available in a scratch-off

    ticket). In all, the data from six participants were suspect, and Marcus Thomas

    removed them before analysis.

    Data Analysis To verify the validity of the survey, data from a 2004 phone

    study were used for comparison. This previous study measured demographics of

    who was playing the lottery, how frequently they played, and how much they

    were spending, but did not address motivations for playing or obstacles that kept

    subjects from playing. A post hoc cluster analysis was used to place participants

    in four natural divisions or segments, where individuals within a segment held

    similar attitudes about playing and similar playing behavior, but when compared

    across segments, their motivations for playing and their actual behavior differed.

    Reporting Marcus Thomas, along with MRSI, presented results in detail to the

    lottery staff (November 2005) and later to the Ohio Lottery commissioners. The

    detailed PowerPoint slide deck used graphic data depictions to cover the exten-

    sive data. (see Sample Slides from Ohio Lottery Presentation Deck). Creative

    agencies were directed initially to emphasize the social reasons for playing (gift

    giving for birthdays, graduation, etc.) that were appropriate across all segments.

    Ads were developed using lottery study insights in early 2006 and started appear-

    ing 1st and 2nd quarters of 2007.

    What were some of the most enlightening findings? The quantitative study verified

    the lessons from the MET analysis—that messaging should emphasize fun, the

    rush experienced while learning whether the dream of the win will come true, and

    the low-risk nature of the entertainment. One participant clarified the risk by

    comparing a $1 purchase of bottled water to a $1 lottery ticket—“Only the

    lottery ticket has the power to change your life; not bad for a dollar.” Additionally,

    Ohio Lottery: Innovative Research Design Drives Winning

     

     

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    the study findings emphasized how important it was to be up-front about the odds

    of winning and the pay-out percentages. Lottery players are savvy and honesty

    also has the opportunity to chip away at the resistance among nonplayers.10

    Effectiveness Tracking During three weeks in February and March 2007,

    Marcus Thomas and MRSI again sampled the MRSI online panel to determine

    the effectiveness of the advertising. Although increasing sales is one possible

    measure, deeper understanding of lottery play motivations makes it impossible to

    link sales increases solely to advertising. Recent advances in brain studies have

    revealed that subjects are not always able to remember that they have seen ads or

    that they have been influenced by ads—either those they remember seeing or

    those they don’t recall at all.11 So Marcus Thomas wanted to be sure that

    uppressed ad recognition was a metric that was evaluated during the tracking

    study. Among other metrics this second online study will include ad recognition of

    selected outdoor, radio, and TV ads (see ads available from the text Online

    Learning Center) developed and used since the first quantitative study was

    completed.

    >Discussion Questions

    1. Detail the overall research design in the Ohio Lottery case (See Exhibit

    OL-1). What are the advantages and disadvantages of this design?

    2. Evaluate the MET process (Exhibit OL-2). What are some of the strengths and weaknesses of the MET technique?

    3. What measurement scales are used in the sample questions provided (Exhibit OL-3)? Why might the lottery attitude and lottery importance questions have presented the most challenge to the professional researchers?

    4. Using text Exhibit 12-2, map out the likely quantitative instrument content.

    5. The survey contained several questions that would alert the researchers that the participant was not taking the research process seriously (see case exhibit OL-3). Is this a good or a poor idea? Why?

    6. Evaluate the MET discussion guide for the Ohio Lottery Research.

    www.marcusthomasllc.com www.mrsi.com; www.ohiolottery.com

    >>>>>URLs

    MET Interview…four segments

    Segment 1: Establishing Rapport with Participant

    Segment 2: Explaining the MET Task

    Segment 3: Extracting Meaning from an Image

    Segment 4: Building a Collage

    Ohio Lottery Ads developed from the research in this case.

    >Video Resources (Resources Library)

    Ohio Lottery: Innovative Research Design Drives Winning

     

     

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    Ohio Lottery: Innovative Research Design Drives Winning

    1 Currently 41 states offer online or scratch-off games and lotteries. Roughly 94%

    of the population resides in such a state. “Comprehensive Annual Financial

    Report for the Fiscal years ended June 30, 2006, and June 30, 2005,” The

    Ohio Lottery Commission: An Enterprise Fund of the State of Ohio. Accessed

    February 19, 2007 (http://www.ohiolottery.com/pdf/2006_CAFR.pdf).

    2 “Ohio Lottery, Lottery Insider. Accessed February 17, 2007 (http://

    thelotteryinsider.com.au/lottery/ohio.htm).

    3 Marcus Thomas LLC is an integrated marketing communications agency that

    offers full service advertising, public relations, interactive and research for

    business-to-business, business-to-consumer and nonprofit organizations (http://

    www.marcusthomasllc.com/).

    4 Jennifer Hirt-Marchand, vice president and director of research, Marcus

    Thomas LLC; interviewed February 23, 2007.

    5 MET was developed by Harvard professor Gerald Zaltman. “What we are

    doing is using metaphors, idiomatic expressions of consumers, as vehicles for

    them to transport what may exist below their level of awareness into a domain

    of awareness.” Doug Gavel, “Mighty Metaphors—Zaltman’s method opens

    the ‘Windows of Consciousness,’” Harvard University Gazette, May 4,

    2000. Accessed February 9, 2007 (http://www.news.harvard.edu/gazette/

    2000/05.04/zalt.html).

    6 Cincinnati-based Marketing Research Services Inc. (MRSI), established in

    1973, is a full service research firm offering quantitative and qualitative

    business-to-business and business-to-consumer research that supports

    strategic planning, product development, advertising and promotion, and

    more. “History,” MRSI, accessed February 19, 2007 (http://www.mrsi.com/

    history.html).

    7 “Ohio Lottery Segmentation Study, Final Report,” Marcus Thomas LLC and

    MRSI, October 2005.

    8 “Strategic Motivational Qualitative Research Highlights: Preliminary Conclu-

    sions and Recommendations,” Marcus Thomas LLC, October 2005.

    9 “Strategic Motivational Qualitative Research Highlights: Preliminary Conclu-

    sions and Recommendations,” Marcus Thomas LLC, October 2005.

    10 “The Ohio Lottery: Quantitative Segmentation Key Learnings and Implica-

    tions,” Marcus Thomas LLC, October 2005.

    11 Rex Briggs and Greg Stuart, What Sticks: Why Most Advertising Fails and

    How to Guarantee Yours Succeeds, Kaplan Business, 2006, p. 125.

    >>>>>Footnotes

     

     

    Exhibit OL-1 Ohio Lottery Research by Marcus Thomas, LLC.

    2005 2006 2007

    Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Jan. Feb. Mar.

    2005 Review of prior OLC research.

    Present proposal for research.

    Review information needs with

    agencies.

    Choose qualitative supplier.

    Create MET screener & discussion

    guide.

    Conduct MET IDIs.

    Present preliminary qualitative

    findings.

    Design quantitative study

    Field online study.

    Data quality & validity checks.

    Segmentation analysis completed.

    Full analysis and report writing.

    Present & review all findings with

    client.

    Present key findings to OLC

    agencies.

    2006 Present findings to lottery

    commissioners.

    Discuss how findings can be applied

    to creative. Develop new ads.

    2007 Discuss tracking study with client

    Tracking study approved.

    Questionnaire designed.

    Conduct tracking study.

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    Exhibit OL-2 The MET Process, An Overview

    In the MET exercise, the participant is pretasked to find pictures that represent their

    feelings and emotions about “playing the lottery.” The participant comes to the interview

    with a stack of pictures, magazines, etc. The interview is divided into phases.

    Phase I: The interviewer talks with the participant in detail about each picture brought,

    using the following questions. The interviewer uses several probes following each

    question to extract as much understanding about each picture as is possible. In the DVD

    example, the participant is asked to select the six most important pictures brought.

    § Please describe the picture you brought.

    § How does the picture express your thoughts and feelings about playing the lottery?

    § Think about what this picture means in terms of your thoughts and feelings about

    playing the lottery. What is the title or theme of this picture (in a word or two)?

    Phase II: The interviewer determines if any images were desired but not found.

    Phase III: Using three pictures at a time, the interviewer attempts to identify the different

    constructs or themes across pictures. This process is continued until all pictures have

    been discussed in multiple triads.

    § How are two pictures similar and yet different from the third as they relate to how

    you think and feel about playing the lottery?

    Phase IV: The interviewer asks the participant to identify the most important or

    representative picture, then uses it to discuss how the participant relates to the picture,

    using a series of questions and multiple probes.

    § If you could widen the frame of the picture, what might enter the picture that might

    help me understand your thoughts and feelings about playing the lottery?

    § Thinking still of playing the lottery, if you were to put yourself in the picture, where

    would you be, what would you be doing, thinking or saying?

    § If you could invite someone or something to join you in this picture that would help

    me understand your thoughts and feelings about” playing the lottery,” who or what

    would it be?

    Phase V: The interviewer, using the emotions and feelings revealed in the interview thus

    far, asks the participant to rank order these feelings in order of importance.

    § What would you say are the five most important things to you about playing the

    lottery?

    Phase VI: The interviewer leaves the participant to create a collage of the images on

    paper, labeling these as desired, arranging them as desired. The participant is provided

    with paper, glue, scissors, and multiple markers. Once the participant is finished, the

    interviewer returns and asks the participant to relate the story of the collage.

    Ohio Lottery: Innovative Research Drives Winning

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    Exhibit OL-3 Ohio Lottery Study Sample Questions.

    The Ohio Lottery quantitative study was conducted online and took approximately 39 minutes to complete. Below are three questions from this extensive study. The header indicates the section of the study from which the question was extracted. The question layout has been modified to fit on paper.

    PAST 12 MONTH GAMING USAGE

    6A. You mentioned playing Instant Games (Scratch Offs) in the past 12 months. Which of the following dollar amounts of Ohio Lottery Instant Games (Scratch Offs) have you played in the past 12 months? (Please select all that apply.)

    $1 – 1 $2 – 2 $3 – 3 $5 – 4 $10 – 5

    $15 – 6

    $20 – 7 Other (Please specify) – 8

    LOTTERY IMPORTANCE RATINGS

    25. Now please rate the following attributes according to how important they are in deciding if you participate in lottery games.

    Using a scale from 1 to 7, where 1 means the attribute is “Not At All Important” and 7 means the attribute is “Extremely Important” in deciding if you participate in lottery games, how important are the following attributes to you? (Please select only one response per row.)

    (RANDOMIZE) Extremely Important

    Not At All Important

    ‘Win’ Importance There is a chance to win big money 7 6 5 4 3 2 1 The jackpot is big 7 6 5 4 3 2 1 There is a good chance to win 7 6 5 4 3 2 1 Playing allows me to dream of changing my life/my

    family’s life 7 6 5 4 3 2 1 Winning big would change my life 7 6 5 4 3 2 1

    General Game Importance 7 6 5 4 3 2 1

    7 6 5 4 3 2 1

    7 6 5 4 3 2 1 7 6 5 4 3 2 1 7 6 5 4 3 2 1 7 6 5 4 3 2 1 7 6 5 4 3 2 1 7 6 5 4 3 2 1 7 6 5 4 3 2 1

    Provides the rush of the chance to win The number of different ways to win per ticket is

    high I have the ability to participate without having

    complicated rules to follow There are convenient places to play The odds of winning are good Price of the ticket Is a new game/ticket Physical size of the ticket General appearance of the ticket

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    Exhibit OL 1-3 Sample Questions (cont.)

    (Question 25—continued)

    (RANDOMIZE) Extremely Important

    Not At All Important

    Recreational Importance Is a worthwhile way to spend my money 7 6 5 4 3 2 1 The money I spend helps a good cause 7 6 5 4 3 2 1 Playing the lottery is fun 7 6 5 4 3 2 1

    LOTTERY ATTITUDINAL RATINGS

    TEXT SCREEN: Now please indicate how much you agree or disagree with the following statements regarding your

    thoughts and feelings about the Ohio Lottery.

    29. Please use a scale from 1 to 7, where 1 means “Disagree Strongly” and 7 means “Agree Strongly”. And remember, there are no right or wrong answers. We are only interested in your opinions. (Please select only one response per row.)

    (RANDOMIZE) Agree Strongly

    Disagree Strongly

    REASONS NOT TO PLAY Confusion/Intimidation

    I would play more lottery games if they weren’t so confusing 7 6 5 4 3 2 1 I’m intimidated by the games I don’t know how to play 7 6 5 4 3 2 1 I don’t feel knowledgeable on how to play lottery games 7 6 5 4 3 2 1

    False Hope I do not expect to win the lottery 7 6 5 4 3 2 1 The lottery gives false hope 7 6 5 4 3 2 1 Winning the lottery is only an illusion 7 6 5 4 3 2 1

    Low Interest I am just not interested in the lottery 7 6 5 4 3 2 1 I don’t think about playing the lottery 7 6 5 4 3 2 1

    Control (Skill vs. Luck) Lottery games are boring 7 6 5 4 3 2 1 I prefer spending money at games that involve more strategy 7 6 5 4 3 2 1 I like to play games where my performance determines whether I win or lose 7 6 5 4 3 2 1

    Odds I don’t play the lottery more because of poor odds 7 6 5 4 3 2 1 Chances of winning the lottery are lower when the payout increases and more people play 7 6 5 4 3 2 1

    Myth The first few or last few tickets on a roll of Scratch Offs are more likely to contain winners than the middle tickets 7 6 5 4 3 2 1

    The odds of all Scratch Off tickets are the same regardless of price 7 6 5 4 3 2 1

    Image/Stigma 7 6 5 4 3 2 1 7 6 5 4 3 2 1 7 6 5 4 3 2 1 7 6 5 4 3 2 1 7 6 5 4 3 2 1 7 6 5 4 3 2 1 7 6 5 4 3 2 1

    Playing the lottery is the same as gambling Playing the lottery makes me feel guilty Playing the lottery is selfish People who play the lottery are greedy People who play the lottery have a problem Playing the lottery is addictive People who play the lottery are lazy

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    Exhibit OL 1-3 Sample Questions (cont.)

    (Question 29—continued)

    (RANDOMIZE) Agree Strongly

    Disagree Strongly

    Bad Financially Playing the lottery is a waste of money 7 6 5 4 3 2 1 There is little chance of return on your investment with the lottery 7 6 5 4 3 2 1

    Playing the lottery is spending money that needs to be spent on more important things 7 6 5 4 3 2 1

    REASONS TO PLAY Fun And Excitement

    Playing the lottery gives me a positive feeling even if I don’t win 7 6 5 4 3 2 1

    I enjoy a sense of anticipation when I play the lottery 7 6 5 4 3 2 1 I play the lottery mostly for the entertainment 7 6 5 4 3 2 1 Playing the lottery is fun 7 6 5 4 3 2 1 When I’m playing the lottery, I get the feeling that this one is a winner 7 6 5 4 3 2 1

    Hopes And Dreams I play the lottery for the chance to change my life/my family’s life 7 6 5 4 3 2 1

    I believe I can win big in the lottery 7 6 5 4 3 2 1 I play the lottery solely to win 7 6 5 4 3 2 1 Playing the lottery gives me a sense of euphoria 7 6 5 4 3 2 1 If I won the lottery, I would never work again 7 6 5 4 3 2 1 With the lottery, the risk is low given the chance to win big 7 6 5 4 3 2 1 All it takes is $1 and a dream to change my life 7 6 5 4 3 2 1

    Impulse vs. Planned I’m more motivated to play the lottery when I see others win 7 6 5 4 3 2 1 I play the lottery mostly when I receive tickets as gifts 7 6 5 4 3 2 1 I only play when the jackpot is high 7 6 5 4 3 2 1 Signs and advertising remind me to play the lottery 7 6 5 4 3 2 1

    Control (Skill vs. Luck) I play the lottery whenever I feel lucky 7 6 5 4 3 2 1 I play numbers that are meaningful to me such as birthdays, anniversaries, etc. 7 6 5 4 3 2 1

    Myth I spend more money on the lottery the higher the jackpot gets 7 6 5 4 3 2 1 I play the lottery so my regular numbers aren’t missed 7 6 5 4 3 2 1 The chances of winning the lottery are better when the jackpot is low 7 6 5 4 3 2 1

    Social I buy lottery tickets at a certain place because I know them and they know me 7 6 5 4 3 2 1

    If I won the lottery, I would use the money to help others as well as myself 7 6 5 4 3 2 1

    The lottery is a form of social activity for me 7 6 5 4 3 2 1 Playing the lottery helps me connect with other people 7 6 5 4 3 2 1 My friends and/or family play the lottery 7 6 5 4 3 2 1 I play the lottery in a work-pool 7 6 5 4 3 2 1

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    Exhibit OL 1-3 Sample Questions (cont.)

    (Question 29—continued)

    (RANDOMIZE) Agree Strongly

    Disagree Strongly

    Miscellaneous I play the lottery because I need more money 7 6 5 4 3 2 1 Winning anything in the lottery makes me feel like I’m somebody 7 6 5 4 3 2 1

    With the lottery, I would win more if I played more 7 6 5 4 3 2 1 I play the lottery just for the chance to win extra cash 7 6 5 4 3 2 1 The lottery is like a charity raffle 7 6 5 4 3 2 1

    GENERAL LOTTERY ATTITUDE Financial

    If I had more money to spend, I would play the lottery more 7 6 5 4 3 2 1 I consider the lottery a type of investment 7 6 5 4 3 2 1 I play the lottery when I have extra money 7 6 5 4 3 2 1

    Impulse vs. Planned When I play the lottery, I usually go to where I buy my ticket(s) with buying lottery tickets as the main reason for going 7 6 5 4 3 2 1

    When I play the lottery, it’s usually because I happen to be there with an extra buck or two 7 6 5 4 3 2 1

    Buying lottery tickets is part of a routine for me 7 6 5 4 3 2 1 When I play the lottery, it is a spontaneous decision 7 6 5 4 3 2 1 When I play the lottery, it is a planned purchase 7 6 5 4 3 2 1

    Control (Skill vs. Luck) I have a strategy when I play the lottery 7 6 5 4 3 2 1 I have to consciously stop myself from playing the lottery more 7 6 5 4 3 2 1

    The lottery is fair 7 6 5 4 3 2 1 Every player has an equal chance to win the lottery 7 6 5 4 3 2 1 The chances of winning increase when more tickets are purchased 7 6 5 4 3 2 1

    I limit what I spend on lottery games 7 6 5 4 3 2 1 Certain numbers are lucky and are more likely to come up as winners 7 6 5 4 3 2 1

    Image/Stigma Lottery is a “vice” or a bad habit 7 6 5 4 3 2 1 The lottery is a recreational activity 7 6 5 4 3 2 1 I don’t feel bad spending $10 on lottery tickets 7 6 5 4 3 2 1

    Personal Preference/Feelings I prefer some lottery games over others 7 6 5 4 3 2 1 I prefer to play lottery games with better odds 7 6 5 4 3 2 1 The lottery is easy to play 7 6 5 4 3 2 1 I only play what I am used to playing – not new games 7 6 5 4 3 2 1 Giving $10 in lottery tickets is more valuable than another $10 gift 7 6 5 4 3 2 1

    Receiving $10 in lottery tickets is more valuable than another $10 gift 7 6 5 4 3 2 1

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    Lottery MET IDI’S DISCUSSION GUIDE

    Cleveland, Columbus, Cincinnati

    Research Objective for the Qualitative Phase:

    • Identify the emotional reasons/drivers why players buy tickets and what motivates their decision

    • Identify the perceived obstacles or barriers (rational and emotional) that, if removed, would potentially increase playership

    Part I: Introduction (10 minutes)

    Section Objective: Create rapport with the consumer, explain the general structure of the discussion

    • Introduce self

    • We are interested in your thoughts and feelings. All the answers you will be giving me today will always be right!

    • Ask for permission to ask lots of questions—they are intended to clarify. Some of the questions may seem repetitive, some may even seem silly, but please bear with me.

    • Explain audiotaping, confidentiality, and back room.

    • Tell me about you:

    • Where are you from?

    • What do you do?

    • Family composition

    • Verify participant understanding of the assignment.

    • “Before we begin, could you tell me what you understood your assignment to be as you set about gathering pictures?”

    • How many pictures did you bring?

    • OK, let’s look at your pictures one at a time, you can decide the order.

    Business Research Methods, 14e/Schindler

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    Page 2

    Probes

    Probe as/when they come up through the whole Interview:

    • What does “winning” mean rationally? Is it about the money or is it about the notion of a “prize”? Is it bigger prizes? Is it more opportunities to win?

    • What does “winning” mean “emotionally”? What is the value proposition in terms of how it makes them feel to “play” vs. how it makes them feel to “win”?

    • What does “luck”/”feel lucky” mean? How does it make them feel? How does this relate to the “odds”? Do they know? Do they care?

    • What does “fun” mean? What do they get out of it (i.e., value proposition)?

    Part II: MET Interview (90 minutes)

    Step 1. Storytelling (for up to 6 pictures!)—30 minutes

    Section Objective: Using the pictures as a “spring board,” understand the “value proposition” playing the lottery offers consumers by identifying the different associations consumers make with the behavior of “playing the lottery” and exploring these further by identifying the “rational” thoughts and the underlying emotions linked to the thoughts.

    How does this picture express your thoughts and feelings about playing the lottery? (Use this opening prompt for EVERY picture)

    (FOR EACH PICTURE)

    #___ Description:

    Story:

    Thinking about what this picture means in terms of your thoughts and feelings about “playing the lottery,” what is the title or theme of this picture (in a word or two)?

    Title/Label?

    Business Research Methods, 14e/Schindler

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    Page 3

    Step 2. Missed Images—5 minutes

    Section Objective: Provide the consumer the opportunity to express any additional thought or feeling regarding playing the lottery and for which a picture is not available.

    Prompt: Were there any issues or ideas for which you were unable to find a visual image? Or, were you looking for a picture that you couldn’t find?

    If yes, ask to describe the issue or what the image would have had.

    Step 3. Kelly Grid/Laddering Constructs—10 minutes

    Section Objective: From the consumer’s perspective, identify the different constructs or themes for the associations (how they group their thoughts/feelings about playing the lottery) as well as what are the “end points” or “poles” (e.g., good/not good, winning/losing, lucky/unlucky, etc.)

    Do this process two to three times. Select three pictures randomly.

    Prompt: How are any two similar and yet different from the third as they relate to how you think and feel about “playing the lottery”?

    (1) Triad Picture #’s ___, ___

    Picture #____(This one is different? How/why?)

    (2) Triad Picture #’s ___, ___

    Picture #____(This one is different? How/why?)

    (3) Triad Picture #’s ___, ___

    Picture #____(This one is different? How/why?)

    Business Research Methods, 14e/Schindler

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    Page 4

    Step 4. Most important or representative picture/Photo Probe—10 minutes

    Section Objective: Elicit any additional information about the topic and assess how consumers relate to the situation.

    Ask participant to select the most representative image.

    Introduction: ”Let’s think differently about this picture.”

    Image #___ Description________________________

    Prompt A: If you could widen the frame of the picture, what might enter the picture that might help me understand your thoughts and feelings about “playing the lottery”?

    Prompt B: Thinking still of “paying the lottery,” if you were to place yourself in the picture where would you be?

    What would you be doing?

    What would you be doing or thinking or saying?

    Prompt C: If you could invite someone or something to join you in this picture that would help me understand your thoughts and feelings about “playing the lottery” who or what would it be?

    How would it react to you? What would it be doing? What would it notice about you? How would it react to you? What would it say to you? What would you be thinking? What would you be feeling?

    Business Research Methods, 14e/Schindler

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    Page 5

    Step 5: Hierarchies—20 minutes

    Section Objective: Understand the different emotions and values associated with playing the lottery and how they ultimately relate to the consumer’s ego/self-esteem

    You have talked about several things regarding your thoughts and feelings about “playing the lottery.” What would you say are the 5 most important things to you? (write them on a piece of paper & show respondent). As participant to rank order them from 1 to end

    What’s important to you about each? ‘What does this do for you?’ / ‘For what purpose’ / ‘So that: until they start repeating then ask: ‘How do you know… (insert the highest level response)?’

    Step 6. Digital Imaging/Collage – Get Images Out—10 minutes

    Section Objective: Allow the consumer to provide closure to the emotions discussed.

    Prompt: Please reflect upon the important ideas you have expressed today. Thinking about “playing the lottery,” I’d like for you to create a single collage, with these X images, that summarizes your thinking and feeling about “playing the lottery” by arranging them on this paper. Arrange the pictures so they tell your story. Have them ‘title’ their story and write the ‘title’ on the paper.

    Once finished, tell me the story…

    Business Research Methods, 14e/Schindler

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    Page 6

    Part III: Understanding the Decision Making Process (20 minutes)

    The trigger… (quickly, as the driving forces would have been discussed “ad nauseam” through the metaphor elicitation process)

    • Thinking about the lottery… is this about entertainment/recreation?, gambling? Does it make a difference? Why?

    • How do you decide you are going to play?

    o Is it part of a routine? Do you have a set budget? o What triggers (functional) you going to get a ticket? Probes:

    • How much does the “pay-out”/jackpot influence whether you play or not? How much does it influence how much you are going to play?

    • Extra cash? • Chances/odds? • Word-of-mouth/hears someone won?

    The Place… • Where do you typically purchase your tickets? Why?

    • How do you decide where to go? (PROBE: are some places “luckier” than others? Do you seek those where people have won?)

    • Do you interact with the clerk? If so… what do you talk about? Do you ask for advice of what to play?

    The Games… Speaking of what to play…

    • How do you know which games are available? How much does advertising help with that?

    • What are the different games you play? Just one? How many? Why?

    • How do you decide which one to play? Based on what? (PROBE for the amount, the type, do they think a new game has winners”front-loaded”?)

    • Are there games you do not play? Why? (PROBE for game complexity: if a game is believed to be complicated or simply do not know the game well… do they play or not?)

    • How do you decide how much you are going to spend? Based on what? (PROBE for size of prize/jackpot, part of a routine, etc.)

    Business Research Methods, 13e/Schindler

    Business Research Methods, 14e/Schindler

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    Page 7

    (FOR EVERYONE, BUT ESPECIALLY FOR RARE/NON PLAYERS)

    • What would it take for you to play more often? You would play more often if…

    � PROBE for each • Meaning? • What do you think would need to happen to____? • How would you know that you got it? • What if the opposite is true?

    (ONLY WHEN APPLICABLE) “What if” scenarios

    For each scenario: o What do you think of this information? o Does it change anything for you? Why? o What would be the best way for you to get this information?

    Possible Scenarios Rebuttal

    Odds are bad Odds are good Money is supposed for education but it does not

    $648 million was given to schools in Ohio in 2004 Profits support public education

    No one wins 11 million winners in March 2005 $111 million were paid in March 2005 $ 1.2 billion distributed in 2004

    NOTE: OTHER SCENARIOS MAY BE ADDED WITH OHIO LOTTERY’S INPUT.

    Part IV: Wrap-up

    Business Research Methods, 13e/Schindler

    Business Research Methods, 14e/Schindler

 
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Discuss Data Analytics And Complete Google Analytics Tutorial

To keep the momentum going, I’d like you to complete two more group discussions at our meetings scheduled for this week. You can review these discussion topics in the attachment below. It is required that you respond to both of these topics as well.
As you discuss these topics, be sure you understand the following concepts related to data analytics:working with data,tracking and collecting data,key elements of web analyticssegmentation in web analytics
Also for this week, please complete the excellent Google Analytics for beginners tutorial that is available free online. I’m providing step-by-step access instructions for the tutorial in the attachments below (see How to Access Google Analytics for Beginners Tutorial).
To get some hands-on practice from what you learned in the tutorial, activate the Google Analytics demo account when you are done.

Discussion Topics:

Topic 3

There are three key elements to be considered in any web analytics study like the kind MCS is doing for CompanyOne. These elements are (1) behavior, (2) outcomes, and (3) user experience. A powerful technique to gauge user behavior is segmentation. Explain the concept of segmentation in relation to web analytics. Some common ways of segmenting your site visitors are by new users, returning users, paid search traffic, nonpaid search traffic, direct traffic, referral source, landing page, browser, and mobile traffic, among hundreds of possible options. Recommend any five ways of segmentation to CompanyOne, including some that are not listed here, and discuss the relative merits of each.

Topic 4

In Google Analytics (GA), a funnel is a navigation path (series of web pages) that you expect CompanyOne’s online customers to follow in order to achieve the business’s goals for their website. A funnel is made up of a goal page (or pages) and one or more funnel pages (also known as the funnel steps). CompanyOne needs to choose either the Goal Flow Report or the Funnel Visualization Report in Google Analytics. They come to you for advice. What questions will you ask in order to arrive at your recommendation for CompanyOne? Explain your reasoning.

————————————————————————————————–

The past few weeks have flown by. You have just completed the GA tutorial when you receive a memo from Ying (attached) marked CONFIDENTIAL. You scan the memo to find a list of client questions that have been assigned to you. You are expected to use Google Analytics to answer the 10 questions in the memo by the end of Week 7. The Google Analytics demo account will give you access to data from the Google Merchandise Store, which in this project represents CompanyOne’s data.
Review these instructions for How to Activate the Google Analytics Demo Account.
Submit your answers to each of the ten questions in the dropbox located in the final step of this project. Use this data analysis template to record your answers and their accompanying screenshots.

Course Resource

Memo from Ying

Corporate logo for Maryland Creative Solutions. A lightbulb with colors of state flag inside.

Sensitive information. Do not share.

MEMO

Subject: Confidential Memo—CompanyOne From: Ying Bao

Directions: Please review and answer the following questions, which have been assigned to you in the CompanyOne case. You will need to capture screenshots to complete these questions; if necessary, review these instructions on capturing screenshots. Question 1 Find the number of active users (1-day, 7-day, 14-day, and 28-day) for December 2018. Calculate the daily average number of active users for each of the four time periods. For example, the daily average for the 28-day period will be the number of active users reported by Google Analytics divided by 28. Based on your calculations, what conclusions can you derive? (Note: Active users refers to the number of users who visited the CompanyOne website within the last 1, 7, 14 or 28 days looking back from the last day of the period, which is December 31, 2018.) The metrics in the report are relative to the last day in the date range you are using for the report. Thus, your date range is December 1 to December 31:

· 1-day active users—the number of unique users who initiated sessions on your site or app on December 31 (the last day of your date range).

· 7-day active users—the number of unique users who initiated sessions on your site or app from December 25 through December 31 (the last 7 days of your date range).

· 14-day active users—the number of unique users who initiated sessions on your site or app from December 18 through December 31 (the last 14 days of your date range).

· 28-day active users—the number of unique users who initiated sessions on your site or app from December 4 through December 31 (the entire 28 days of your date range).

Question 2 Plot graphs of 1-day active users for the 31 days in December 2017 and in December 2018. Compare the number of active users for both periods from the two plots. What do you conclude about the change in marketing effectiveness, if any, from December 2017 to December 2018? Please provide a screenshot to support your analysis.

Question 3 Plot a graph of the bounce rate for the 31 days in December 2018 and compare it with the same time period in December 2017. What do you conclude? Please provide screenshots to support your analysis.. Question 4 If you focus on the demographics of younger users (18–24 and 25–34), what do you observe? Has the number of younger users as a proportion of total users changed from 2017 to 2018? (Note: January 1 and December 31 are the start and end dates for a whole year comparison.) How about changes in the proportions of older users during the same time period? Please provide screenshots to support your answer.

Question 5 CompanyOne’s objective was to attract a larger proportion of female visitors (displayed as a percentage in the pie chart) to the online store in 2018 as compared to 2017. Was that objective met? Please provide a screenshot to support your answer.

Question 6 CompanyOne needs to analyze gender differences in more depth, especially in the new user segment. Did CompanyOne attract more or fewer new users in 2018 as compared with 2017, irrespective of gender? What about new male users? What about new female users? Please provide screenshots to support your answer.

Question 7 As you have confirmed, CompanyOne was not successful in attracting a larger number of new female visitors to its website in 2018 as compared with the previous year. When parsing the category of new female users, by age group, was CompanyOne more successful in certain age group(s) of female users in 2018 as compared with 2017? Please provide a screenshot to support your answer. Question 8 CompanyOne wishes to target high-value users in future marketing campaigns. These are user groups with the highest e-commerce conversion rate or average order value. Which age group generated the highest revenue for CompanyOne in 2018 in dollars? How much was the revenue from this age group? Which age group generated the least revenue? Which age group had the highest average order value? Which age group had the highest e-commerce conversion rate? Based on these observations, which age group or groups should be the focus of CompanyOne’s marketing efforts during 2019? In other words, which age group is likely to provide the most bang for the buck? Provide a screenshot to support your answer.

Question 9 CompanyOne wishes to understand its site visitors better in order to fine-tune its future marketing efforts. Understanding audience composition in terms of gender, age, and interests will allow CompanyOne to develop the right creative content and decide the media buys to make.

Google Analytics has the following ten default affinity categories:

· shoppers / value shoppers

· lifestyles and hobbies / business professionals

· sports and fitness / health and fitness buffs

· technology / technophiles

· banking and finance / avid investors

· travel / travel buffs

· travel / business travelers

· media and entertainment / movie lovers

· lifestyles and hobbies / art and theater aficionados

· media and entertainment / music lovers

Identify the top three affinity categories for CompanyOne among males and among females for 2018 in terms of the revenue from each affinity category. Please provide a screenshot to support your answer.

Question 10 The two groups every online business like CompanyOne cares about are users who convert (purchase a product) and users who don’t. Understanding the users who convert (converters) will help CompanyOne refine the successful aspects of their marketing and show them where they can improve their efforts to reach users who demonstrate untapped potential (non-converters). Developing insights into why certain users aren’t converting lets them address the weak spots in how they approach these users.

For the purpose of this analysis, CompanyOne wishes to focus on the back-to-school shopping season (July 15, 2018 to September 15, 2018). CompanyOne wishes to obtain statistics of users, sessions, page views, pages per session, average session duration, and bounce rate for these two segments (converters and non-converters). Provide screenshots to support your analysis.

 
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1 Slide For A Case SWOT Analysis

Lecturer Bill Fanning prepared this case study as the basis for class discussion rather than to illustrate either effective or ineffective handling of

an administrative situation. Exhibits are authentic slides from the company, used with permission.

Copyright © 2014 by The Regents of the University of California. All rights reserved. No part of this publication may be reproduced, stored, or

transmitted in any form or by any means without the express written permission of the Berkeley-Haas Case Series.

 

 

 

 

Date: March 3, 2014

 

 

B ILL FANN ING

Annie’s: Growing Organically

 

It was a grey day in February 2012 as the train pulled out of the Amtrak station in Berkeley, California

and headed east. John Foraker, CEO of Annie’s, Inc., a rapidly growing natural and organic food

company, sank into his seat and began to unwind from the stream of meetings and decisions that

consumed his day and moved into a part of the day that he anticipated—a chance to look out the

window and think about his business at a higher level. Big things were in the works for Annie’s and

there were key decisions to be made over the next few months in terms of entering a new category.

 

Annie’s had been enjoying strong and steady success in the marketplace with their healthy offerings in

shelf stable prepared foods across three product categories (Meals, Snacks, and Dressings), led by the

Meals category (macaroni & cheese), with Snacks (Cheddar Bunnies, Fruit Snacks, Pretzels, etc.), and

Dressings (condiments and dressings) following respectively. But the company was about to make

significant moves in terms of expanding into new categories.

 

Annie’s had strong investor support due to increasing sales and profits over the past few years (net

sales had increased from $76.8 million in fiscal 2008 to $141.3 million in fiscal 2012) and it was

likely they would be moving toward an IPO soon. They had also achieved a significant level of

success competing in non-traditional ways in very traditional CPG (consumer packaged goods)

categories. As a Berkeley-Haas School of Business graduate (MBA’94), this was particularly

satisfying to Foraker. Less certain was whether Annie’s could continue to achieve this level of

success in new categories while playing by their own set of rules.

 

As the team assessed expansion options, they kept two primary goals in mind. The first was to age up

the franchise—Annie’s had developed a strong following among younger kids and their moms. The

kids liked the taste and saw the products as fun, while the moms appreciated the fact that they could

provide healthy products for their kids that the kids actually liked. But there was an inherent

challenge with having such a strong, positive franchise with younger kids. At some point, they would

outgrow the brand.

 

The second goal was to broaden the target audience. Annie’s success to date had been driven largely

by a group they identified as “Core Consumers”. This group felt very strongly about making healthy

choices for their families, and was comfortable with the extra effort and money required to do so.

They were committed and loyal, but their attitudes were outside the mainstream. To grow the

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ANNIE’S 2

 

business, the Annie’s team felt they needed to broaden their target and attract more mainstream

consumers to the brand. They set their sights on a group they called “Prime Prospects”, who valued

healthy alternatives to the extent they were available and convenient, but were more moderate in their

attitudes (Exhibit 1).

 

Background

Annie Withey and Andrew Martin started Smartfood in Boston in 1982 with their first and best known

product, a cheesy popcorn snack. They sold the company to PepsiCo in 1986 for $15 million. A few

years later, Withey took essentially that same cheese sauce and used it in Annie’s Homegrown Shells

and Cheddar, a stovetop macaroni & cheese dinner, and in 1989, Annie’s was born.

 

Over time, the company grew through new products as well as greater acceptance of its existing line.

Annie’s was able to appeal to consumers seeking healthy/natural/organic choices as well as more

mainstream food products, and felt they were in a sweet spot that allowed them to grow their healthy

food business by taking share from traditional CPG brands as well as the organic/natural sector. As

such, their product line and their growth efforts were focused on both areas (Exhibit 2).

 

Financially, the company was in good shape. In 2001, the same year Foraker joined Annie’s, Solera

Capital, a New York women’s private equity firm, acquired a major stake in Annie’s and that support

continued to fuel their growth. Sales and profits had been growing steadily as Annie’s was able to

maintain their price points even as they competed with larger, more heavily supported brands with

lower price points. Trends and projections were strong and investors remained bullish (Exhibit 3).

 

Annie’s Culture

Like many small companies, Annie’s was strongly driven by its culture during the early days. And

Annie’s was fiercely determined to preserve their culture as they grew. Annie’s was a company that

was passionate about food, people, and the planet, and their actions needed to reflect that orientation.

 

For example, the company was careful about the suppliers it worked with, preferring to seek out

smaller, local farmers whenever possible. They were also committed to non-GMO (genetically

modified organisms) products. Although Annie herself was removed from the business operations

and living on her certified organic farm in Connecticut, the Annie’s team made an effort to integrate

her persona into products and marketing efforts whenever possible. 1 And they also viewed corporate

social responsibility as something that needed to be integrated across all the company’s activities.

According to Foraker: “Social responsibility is part of the Annie’s brand DNA. We’ve always tried to

do things differently and set an example for the broader world.”

 

Growth

Annie’s had developed a core proposition that included four pillars: authenticity, social responsibility,

great taste, and simple, healthy ingredients (Exhibit 4) that positioned them well for growth over the

long haul. The Annie’s team felt that this core proposition could be effective in a number of areas in

the grocery store. It was a proposition that made sense in terms of broad consumer trends as well as

distribution patterns that would address those trends.

 

Annie’s management team was not content to rest on their successes and simply grow with the

category as consumers moved steadily toward healthier options, in particular organic. They felt that

 

1 http://www.annies.com/about-annies#Our-Roots.

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ANNIE’S 3

 

Annie’s could lead that charge rather than sit back and simply ride the wave. To be sure, there were

also a number of offsetting factors that represented hurdles, mainly a still sluggish economy. Despite

the continuing slow recovery from the recession, which could affect the willingness of consumers to

purchase premium products, Foraker felt the time was right for growth. The core business was strong

and there was a window of opportunity in terms of available funding for the company so a few months

earlier they had decided to make their move.

 

Frozen Foods

For a variety of reasons, the Annie’s team felt that their next area for growth was in the frozen foods

category, a huge category of $12 billion in retail sales. And this was not just an attempt to get

placement for one particular product line, but an assault on the entire section of the supermarket.

They had a plan in place for a series of new product launches in frozen foods, and it began with frozen

pizza.

 

The decision to move into frozen was not an easy one. Natural/healthy/organic foods as a segment

was not well developed in the frozen section, due to a combination of factors, including:

 

 A general perception of frozen foods as less healthy  Strong consumer demand in the frozen section for desserts and snack items  A limited number of “doors” in the frozen section

 

In addition, Annie’s Core Consumers were not big users of frozen food items. But Foraker and his

team had an “aha moment” on this issue when they realized that their success in the frozen category

might also be good for their retail partners if they could convince more Core Consumers to shop the

frozen section, thus creating a “win-win” situation for both Annie’s and their partners.

 

Within the frozen category, multiple opportunities existed and the Annie’s team had a plan in place to

expand into each area, but they had to decide where to start. There were numerous areas that made

sense in terms of both potential volume and fit with Annie’s. For example, frozen entrees seemed like

an obvious fit based on their success in macaroni and cheese. However, frozen pizza was also

attractive, and represented some opportunities beyond the obvious, and the decision was made to start

there. Sarah Bird, Chief Mom Officer for Annie’s said: “We know that cooking a meal from scratch

can be a challenge for busy families. Annie’s frozen pizza was a convenient solution for parents who

wanted to provide great taste as well as better ingredients they can feel good about giving their

families.”

 

Frozen Pizza

Product

Once the decision had been made to move forward with frozen pizza, there were tough marketing mix

decisions to be made. The first was around the product itself. The initial product developed was an

all-organic product, which meant that 95 percent of the ingredients were certified organic. The USDA

had very strict definitions for products using any type of organic terminology, as well as restrictions

governing where on the package these claims could be made. But would enough consumers respond

to the idea of Annie’s offering frozen pizza, or would it be seen as too extreme in a category not

generally known for healthy offerings? And how would the channel react?

 

The alternative would be to come out with a “made with” option, meaning the product was made with

organic ingredients, such as the cheese, tomatoes, crust, etc. The “made with” organic option needed

to have 70 percent or more of total ingredients as organic.

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ANNIE’S 4

 

 

Some within the team felt the “made with” organic was the better option. They felt it would still

allow for the positive imagery connected with organic products and remain consistent with the

Annie’s brand, but at the same time, this strategy would take the product line closer to the mainstream

and to their competitors in the frozen pizza section.

 

The product had been tested successfully in Whole Foods in the San Francisco market. The version

tested was organic and there were four flavors in test: Four Cheese, Supreme, Spinach & Mushroom,

and Pepperoni. Although discussion continued about whether this was the right mix, the plan was to

move forward with these same four flavors.

 

Distribution

Closely linked to the product decision were issues about distribution. Annie’s products were sold

through the natural foods channel in chains like Whole Foods, as well as mainstream supermarkets

such as Safeway and Dominick’s. Annie’s also enjoyed a strong relationship with Target, as well as

other mass merchandisers. Their current business was divided roughly equally across these three

channels (Exhibit 5).

 

If Annie’s decided to launch their frozen pizza product with the all-organic product, would it sell at

Safeway or Target? On the flip side, would a “made with” approach be right for natural retailers? A

bigger distribution question was whether Annie’s would even get distribution in Safeway. Although

mainstream supermarkets had begun to create separate areas in the frozen section for healthy

offerings, progress had been slow, and there was some question whether it was really an advantage to

be located in these sections and away from the rest of the category.

 

Restricting distribution to natural retailers did not seem to be an option, as it would not meet their

volume goals or their goal of engaging Prime Prospects. Grocery still did the lion’s share of business

in frozen pizza, but that percentage was declining and the growth was coming from the natural and

mass channels (Exhibit 6).

 

A longer-term issue was rattling around in the back of Foraker’s mind. As mentioned, Annie’s had

been successful in achieving a delicate balance amongst three different channels—mainstream

supermarkets (Safeway, Dominick’s), natural retailers (Whole Foods), and mass merchandisers

(Target). But as the company’s volume grew and covered more categories, would they be able to

maintain that balance?

 

Each channel had demands and expectations. Target in particular had a tendency to take brands under

their wing in the food section of their stores and often chose upstart independent brands like Annie’s

rather than those owned by major CPG companies. Although the Annie’s team had worked hard and

been effective to date in keeping all channels happy, this was clearly an area of sensitivity and had to

be monitored carefully going forward.

 

Annie’s also had a strong partnership with natural retailers that had been in place from the beginning.

And although traditional grocery relationships were newer and growth was slower in this channel, the

big volume over the long haul was still going to come from traditional grocery (Exhibit 7).

 

Pricing

The pricing decision was also tightly tied to the product and distribution issues. Annie’s products had

competed successfully in other categories at significant price premiums relative to the competition (Exhibit 8). Consumers had bought into Annie’s philosophy of simple, quality ingredients providing

a healthy option that kids liked, and were willing to pay more for it.

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ANNIE’S 5

 

 

Certainly, Foraker and his team’s intent was to carry that philosophy forward into frozen pizza and

other categories in the future, as it was a philosophy that not only worked with consumers, but also

with the bottom line. But frozen pizza was new territory, and had a very different competitive

landscape. There were many competitors—strong national brands, smaller national brands, and

regional competitors (see next section). The price points for these competitors were all over the map.

 

More importantly, the category was heavily deal driven, and the reality was that new product trial

appeared to occur primarily as a result of a promotional offer. “I’m really excited about that product.

I’ll try it the next time I see a coupon” was a typical response from consumers talking about new

products in the category (based on focus groups conducted in early 2012) 2 .

 

Competition

As mentioned earlier, a competitive landscape that was fragmented, aggressive, and price-driven was

 
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Proctor And Gamble Case Study

1. Using segmentation strategies, what are the target market(s) for P&G? How does this relate to the company’s brand management strategies?

2. Who are the top three competitors of P&G, and what are their advantages/disadvantages with respect to their competitive product/service strategies?

3. P&G’s impressive portfolio includes some of the strongest brand names in the world. What are some of the challenges associated with being the market leader in so many different categories?

4. With social media becoming increasingly important and with fewer people watching traditional commercials on television, what does P&G need to do to maintain its strong brand images?

5. What risks will P&G face in the future?

Marketing Excellence Procter & Gamble

 

Procter & Gamble (P&G) began in 1837 when brothers-in-law William Procter and James Gamble formed a small candle and soap company. Over the next 150 years, P&G innovated and launched scores of revolutionary products with superior quality and value, including Ivory soap in 1882, Tide laundry detergent in 1946, Crest toothpaste with fluoride in 1955, and Pampers disposable diapers in 1961. The company also opened the door to new product categories by acquiring a number of companies, including Richardson-Vicks (makers of personal care products like Pantene, Olay, and Vicks), Norwich Eaton Pharmaceuticals (makers of Pepto-Bismol), Gillette, Noxell (makers of Noxzema), Shulton’s Old Spice, Max Factor, and the Iams pet food company.

Today, Procter & Gamble is one of the most skillful marketers of consumer-packaged goods in the world and holds one of the most powerful portfolios of trusted brands. The company employs 121,000 people in about 80 countries worldwide, has 25 billion-dollar global brands, spends more than $2 billion annually on R&D, and has total worldwide sales in excess of $84 billion a year. Its sustained market leadership rests on a number of different capabilities and philosophies. These include:

Customer knowledge: P&G studies its customers—both the end consumers and its trade partners—through continuous marketing research and intelligence gathering. It spends more than $100 million annually on more than 10,000 formal consumer research projects and generates more than 3 million consumer contacts via its e-mail and phone center. The company also encourages its marketers and researchers to be out in the field, interacting with consumers and retailers in their home environment.

Long-term outlook: P&G takes the time to analyze each opportunity carefully before acting. Once committed, the company develops the best product possible and executes it with the determination to make it a success. For example, it struggled with Pringles potato chips for almost a decade before achieving market success. Recently, P&G has increased its presence in developing markets by focusing on affordability, brand awareness, and distribution through e-commerce and high-frequency stores.

Product innovation: P&G is an active product innovator. The company employs 1,000 science PhDs, more than Harvard, Berkeley, and MIT combined, and applies for roughly 3,800 patents each year. Part of its innovation process is to develop brands that offer new consumer benefits. Recent innovations that created entirely new categories include Febreze, an odor-eliminating fabric spray; Dryel, a product that helps “dry-clean” clothes at home in the dryer; and Swiffer, a cleaning system that effectively removes dust, dirt, and hair from floors. Larry Huston, former innovation officer at P&G, stated, “P&G is largely a branded science company.”

Quality strategy : P&G designs products of above-average quality and continuously improves and reformulates them. When the company says “new and improved,” it means it. Recent examples include Tide Pods, a compact laundry detergent tablet; Pampers Rash Guard, a diaper that treats and prevents diaper rash; and improved two-in-one shampoo and conditioner products Pantene, Vidal Sassoon, and Pert Plus.

Brand extension strategy : P&G produces its brands in several sizes and forms. This strategy gains more shelf space and prevents competitors from moving in to satisfy unmet market needs. P&G also uses its strong brand names to launch new products with instant recognition and much less advertising outlay. The Mr. Clean brand has been extended from household cleaner to bathroom cleaner and even to a carwash system. Old Spice extended its brand from men’s fragrances to deodorant. Often, P&G will leverage the technologies already in place to create a brand extension. For example, when Crest successfully extended its brand into a new tooth-whitening system called Crest Whitestrips, the company used bleaching methods from P&G’s laundry division, film technology from the food wrap division, and glue techniques from the paper division.

Multibrand strategy: P&G markets several brands in the same product category, such as Luvs and Pampers diapers and Oral-B and Crest toothbrushes. Each brand meets a different consumer want and competes against specific competitors’ brands. At the same time, the company is careful not to sell too many brands and recently reduced its vast array of products, sizes, flavors, and varieties to assemble a stronger brand portfolio.

Strong sales force: P&G’s sales force has been named one of the top 25 sales forces by Sales & Marketing Management magazine. A key to its success is the close tie its sales force forms with retailers, notably Walmart. The 150-person team that serves the retail giant works closely with Walmart to improve both the products that go to the stores and the process by which they get there.

Manufacturing efficiency and cost cutting: P&G’s reputation as a great marketing company is matched by its excellence as a manufacturing company. The company has successfully developed and continually improves its production operations, which keep costs among the lowest in the industry. As a result, it is able to offer reduced prices for its premium products.

Brand-management system: P&G originated the brand-management system, in which one executive is responsible for each brand. The system has been copied by many competitors but not often with P&G’s success. Recently, P&G modified its general management structure so that a category manager runs each brand category and has volume and profit responsibility. Although this new organization does not replace the brand-management system, it helps to sharpen strategic focus on key consumer needs and competition in the category.

P&G’s accomplishments over the past 177 years have come from successfully managing the numerous factors that contribute to market leadership. Today, the company’s wide range of products are used by 4.8 billion people around the world in 180 different countries.

 
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