Category: Cognitive Economics

Cognitive economics is a specialty within Mind Genomics. Cognitive economics is concerned with how people value aspects of products, services, or experiences.

What Type of Online Wine Buyer are You? Mind-type Yourself!

I often start presentations of Millennials, Mindsets & Money … And Buying Wine Online by asking participants to discover their mind-type for buying wine online directly from wineries. I take them through a simple web-based four-question exercise to do that.

You can do it, too, just as I do. Just click the graphic. An external page will open presenting four questions. Answer each question. Then click the Submit button. The first time you do it, answer honestly for yourself.  You will then be “mind-typed,” presented with your mindset segment, a description, and the ideas that resonate most strongly and negative with you about buying wine online directly from a winery. Afterwards, play around with different patterns to uncover the three mindsets.

Strong statements within a mindset increase interest in buying wine online directly from wineries. These are the types of marketing and sales messages that wineries can communicate to increase the likelihood that a web visitor might convert to a paying customer. The trick is to mind-type your winery’s website visitors, segment them by mind-type, and then deliver the most resonant messages to each mindset segment.

I’ve personally mind-typed over 100 winery executives. You might think that people who work together would be of similar minds. I sure did. But when I mind-typed any group of 2 or larger, the mindsets were diverse and not determined by age (a point made in the presentation linked to above. The presentation contains links to the full study e-book, the complete data set, and an ROI calculator for wineries who execute strategies based on mind-type and those that do not).

Go ahead and try it. Contact me with your thoughts and experiences. If you’re interested in using this tool for your winery, send an email to steve at sdrconsultingllc.com

Millennials, Mindsets & Money – & Selling Wine Online: Executive Summary

Sonoma State Wine Business Education students started contacting me about 10 days ago to request a copy of “Millennials, Mindsets, and Money … & Selling Wine Online” an e-book co-authored with my long-time colleague Howard R. Moskowitz. I wrote a couple of posts summarizing the research, but I also present an executive summary of the e-book to wineries and industry groups, embedded below for reading, clipping, or downloading. Evidently a lecture given by Rob McMillen of Silicon Valley Bank  stimulated the students’ interest. McMillen referenced comments we exchanged in his post “The Tough Questions Wine Clubs Face.” Scroll down a little ways in the comments section to read them.

Through sharing the presentation, my hope is that “Millennials, Mindsets, and Money … and Selling Wine Online,” will help the many wineries impacted by the October 2017 wildfires. Although those fires spared many of the vineyards, they damaged buildings and roads. Because small and mid-sized wineries depend on direct-to-consumer sales through their tasting rooms, wine clubs, and gift shops, developing online wine sales needs to become a priority that aims to establish an additional revenue stream while reducing the shortfall from a probable decline in sales from drop-offs in wine tourism.

Millennials, Mindsets & Money … and Selling Wine Online (Part 2)

Note: Millennials buying wine onlinePart 1 explained just how competitive the US wine industry is and the reasons behind choosing online wine sales by Millennials as the research focus for this study in the Millennials, Mindsets & Money initiative that Howard Moskowitz and I lead.

If you would like a copy of the full report as an e-book please email me:  steve at sdrconsultlingllc.com. The report is complimentary.

This post summarizes the five most important research findings from our study. But first, some words about our research aims.

The 3 Aims of Our Research

Moskowitz and I set out to discover 3 things that will help wineries create productive marketing strategies that increase their online wine sales. We used our research methods of Mind Genomics and Cognitive Economics and, in a first, combined them with the emotional research technique called MindSight developed by applied neuroscientist Dr. David Forbes. (Discussion of these is beyond the scope of this post, but will be detailed in the e-book we’re preparing on this study).

Identify and define mindsets people hold towards buying wine online from wineries. Mindsets are collections of ideas people have towards some “thing,” such as coffee, season tickets for sports teams, or hotel check-in. Ideas within mindsets can raise their interest in that thing, lower their interest in it, or have little impact. Mindsets are unique segments.

Specify the marketing messages that most strongly interest a person in buying wine online from a winery. People respond to marketing messages differently. One person can be turned on by an idea or message, another appalled by the same idea or message. We studied 36 messages about online wine buying from wineries to find those with the most “pulling power.”. Those messages included the stories that wineries tell about themselves and their business practices; the online and mobile wine-buying experience; buzz, reviews, ratings; shipping, rewards, discounts, and the motivations for buying wine online from a winery.

Identify the emotional satisfactions online wine buyers seek from a purchase. All product buying involves an emotional component, which is often subconscious.

Achieving these goals enabled us to uncover the “why” underlying online wine buying, not simply the “what” that so many studies report.

The Five Key Findings

1. Millennials are interested in buying wine directly from wineries.

About 50% of Millennials in our study would make a purchase within the next six months. There was no difference in intent between Younger Millennials (21-26) and Older Millennials (27-34)

2. There is no single type of Millennial online wine buyer. Millennials fall into one of three unique mindset segments towards buying wine online from a winery. 

I’ll briefly describe each segment and recommend a messaging strategy based on the marketing messages that substantially raise interest in buying wine online.

Segment 1: Discerning, Buys into the Winery and Wine (15% of Millennials)

People in this segment are interested in buying high quality wine from a winery with a great story.

Messaging Strategy: Appeal to their interest in distinctive, artisanal, handcrafted wines. Lower their purchase risk by giving them confidence in the wine they are buying—provide detailed descriptions and tasting notes, and highlight those bottles that earned high community ratings. It’s not the wine alone. Wineries should emphasize their compelling back stories and show how they conduct operations with uncompromising integrity. Downplay rewards and discounts as these do not drive Segment 1 people’s interest in buying wine online.

This group will pay the most for a bottle.

Segment 2: Quality Wine at a Great Price (20% of Millennials in sample)

This group is most interested in a fantastic deal, even a steal, on a great wine.

Messaging Strategy: In contrast to Segment 1, tout discounted or free shipping, quantity discount availability, and specials and promotions. Like Segment 1 they want quality wine from right-minded wineries. But these are table stakes for them. For Segment 2, the deal matters most.

This group will pay less than Segment 1 for a bottle.

Segment 3: On the Cusp (65% of Millennials in sample)

This, the largest group, is uncertain about buying wine online from a winery.

Messaging Strategy: None of the ideas crossed our threshold for high “pulling power.” Several ideas bubbled below the threshold that may be worthwhile to employ as background assurances. These concerned pricing, reducing purchase risk, and enjoying their wine with friends and family.

This group will pay the least for a bottle.

3. Each segment reflects a different potential for sales. 

Marketing effectively to each segment means that wineries should have a way of identifying visitors and assigning them to a segment, target them, and then tailor visitors’ onsite experience with the marketing messages that work best for their segment. We developed an app that assigns people to a segment—it takes under a minute, so that wineries can know which visitors belong to each segment nearly instantaneously. The app can be incorporated into a web or mobile page, email form, etc. so that it is easily and seamlessly accessible to visitors. You can try the app out here.

Segment 1 and Segment 2 represent near-term opportunity—they account for 35% of Millennials, and should be the most productive for wineries selling wine online. Segment 3, although larger, appears to offer less potential today and would most likely be considered a secondary target for most wineries selling online.

Wineries marketing online to Millennials should create unique strategies for each mindset segment that are developed in line with their winery’s business goals, business model, values, practices, offerings, services, and experiences.

4. Millennials seek specific emotional satisfactions from online wine buying. These are the same no matter which mindset segment a Millennial belongs to.

For many people online wine buying is an emotionally risky business. That risk can be a turnoff if not addressed, leading to abandoned shopping carts and lost sales. Combined with the mindset messaging strategies wineries create, including ways to satisfy the emotions that come into play can help visitors overcome resistance to buying and feel great about their purchases.

In all mindset segments, online wine buyers do not want to feel insecure—they want to feel that they are buying the right wine and have a sense of accomplishment about it. They do not want to feel disempowered—they want to feel that that they are getting what they want. Nor do they want to feel disengaged – they want to look forward to drinking what they’re buying and to feel that they will enjoy it with others.

5. Millennials are not unique. The mindset segments apply to all generations. 

We also studied Boomers and Xers in equal numbers to Millennials so that we could compare and contrast them with Millennials. The older generations fell into the mindset segments in nearly the same percentages as Millennials. Emotional satisfactions showed the same patterns. In addition we didn’t see any meaningful demographic or attitudinal differences that explained the mindsets. It’s the ideas that define the mindsets.

The upshot is that marketing strategies based on the segments and emotions can be consistent across generations so that wineries can create a “total market” strategy if they desire. Doing so has advantages for brand growth. However specifics like imagery, sounds and language should be tailored to each generation to ensure that the messages are seen as relevant.

Wrapping Up

In talking with various wineries about our results, I learned that numbers of wineries have some of the ideas about segments and use some of the marketing messages. Our findings provide a framework that sharpens and organizes a winery’s understanding of their customers’ thoughts and emotions so that they are better able to offer a compelling site and buying experience for each visitor. And it’s not ivory tower. Wineries selling wine online can act on our findings and recommendations right now. Those that do should also think about how to express the messages and emotional assurances in images and sounds to engage more of the senses.

Millennials, Mindsets & Money … and Selling Wine Online. Part 1

Millennials buying wine onlineNote: This is Part 1 of a 2-part post on our study on selling wine online to Millennials. This post presents background on the wine industry and the rationale for doing the research. Part 2 toplines the key findings and marketing strategies guided by the research. The wine category is one we are researching for our Millennials, Mindsets & Money initiative.

How would you compete in a $40 billion industry with over 8,000 competitors? One where the top 3 firms control nearly half of the US market, and the top 8 control 60%, leaving thousands upon thousands battling for fractions of the remaining 40%? Complicating matters: most of these businesses can’t get retail distribution; most don’t advertise; barriers to entry are very low; and the number of competitors increases yearly. That’s the US wine business.

Most Wineries are Small Businesses Competing Like Crazy

For all of wine’s glamour, the lush valleys, the terraced hillsides, the local foods and award-winning restaurants, the well-appointed tasting rooms, event spaces, inns and spas, the reality is that the overwhelming majority of wineries are small- and mid-sized businesses working passionately and very, very  hard to make and sell their wines in an incredibly complicated and mind-boggling competitive market.

Direct-to-Consumer Sales are their Lifeblood

Most wineries depend on revenue from wine sales in their tasting rooms, wine club memberships, and events. These direct-to-consumer (DTC) sales depend on wine tourism, where people come to the winery, taste, and buy. But wine tourism, though big, is under attack as communities oppose new winery development and expansion plans, potentially applying a brake on their sales engines. And industry consolidation at all levels makes it tougher every day.

The good news is that the online wine channel is poised to become more important than it has been. Direct shipping, accounting for about 2 percent of wine sales last year; grew roughly four times faster than retail wine sales overall, although the base is quite small. Direct sales represent a promising revenue source, one that can help wineries tackle their daily challenges, bolster their short-term financial position, and help assure their long-term viability.

Our Research: How Can Wineries Increase their DTC Sales to Millennials?

Wineries know more about navigating tasting room and wine club sales than they do the new frontier of online sales, which many offer but have less experience with. Given the growth of e-commerce and the march of Millennials into the wine category, Howard Moskowitz and I decided to include it in our Millennials, Mindsets & Money initiative. We set out to crack the code of Millennial online wine buying – what do you say, how do you say it, who do you say it to – so that our work could guide wineries to sell effectively online, grow their revenue, and improve their business results.

I’ll have the findings posted in a couple of days. If you’d like to learn more, just drop me a line.

Research Sponsored by Nomacorc

Nomacorc sponsored the research for Millennials, Mindsets & Money. Nomacorc is one of the world’s leading manufacturers and suppliers of wine closure systems. Nomacorc provided access to their clients and prospects, which helped us understand their business issues and decide on the research topic, and they provided subject matter expertise during the design phase of the research. Nomacorc was not involved in the research fielding or analysis preferring, instead, to let the research speak for itself.

Mind Genomics and Cognitive Economics: Introduction and Methodology

The paper below introduces mind genomics and cognitive economics, and explains the methodology. The subject of the paper is “artisanal bread,” but the mechanics for every study are exactly the same.

Download (PDF, 1.32MB)

Millennials, Mindsets & Money

Millennials, Mindsets, and MoneyMillennials, Mindsets & Money is an initiative led by me and Howard Moskowitz using mind genomics science and cognitive economics (see Malcolm Gladwell’s TED talk for background),

We aim to help brands improve their understanding of Millennials while providing actionable guidance that will help their marketers answer the question: “How do we market our product, service or experience to Millennials?” – and grow our business today, sustainably, and profitably over time.

Our goal is to create a science of Millennials through which we understand the mindsets, preferences, and economic trade-offs Millennials make daily about products, services or experiences. Each “chapter” of the initiative will focus on a single product category. To date we completed two studies on beer, one on macro, the other on craft, and have one on wine in the field. We will rollout to financial services, food, travel, entertainment, transportation, and more.

We plan to make top-line findings available through this blog, and we plan to publish a series of ebooks, one for each studied category. We expect to publish 3-4 per year.

Sponsors underwrite the cost of the research. They gain a thought leadership platform for their marketing, and they have access to the full data set for slice-and-dice analysis for themselves or to advise key business partners.

Interested in sponsoring a study in your category?

Contact Stephen Rappaport who will provide you with all the details, benefits, costs, and timeline.

Millennials, Mindsets, Microbrews … and Golden Suds

Beers of the world, microbrews, macrobrews, lagers
Beers of the world

With 2,592 unique craft brands sold Millennials—and all persons of legal drinking age—enjoy a stunning and sometimes bewildering array of lagers, pilsners, IPAs, stouts, pale ales, sours, and porters. They can be malty, hoppy, clear, dark, spicy, citrusy, or taste of coffee, toffee, nuts, cloves, bananas, and bittersweet chocolate. And we’re just scratching the surface. Millennials, we’re told, love choice. Marketers are told, “give them choices.”

Giving choices is one thing … but no guarantor of marketing success. We need to know why a person chooses—or doesn’t choose—a marketer’s offering.

Millennials … Why Do They Prefer One Beer—And Buy One Beer—Over Another When There are So Many to Choose From?

That’s the question my colleagues Howard Moskowitz, Kimmy Lee, and Helena Bollini will answer through two cognitive economics studies that are now in the field: one on microbrews, the other on macrobrews—the big-company “golden suds” lager beer like Budweiser, Miller, and Coors that is the most popular style worldwide.

When thinking about Millennials and beer, the issue is this: Generations may shape demand for beer, but they don’t buy beer: Individuals buy beer … one bottle, one draft, one six-pack, or one case or keg at a time. And individuals differ from one another. People may look alike on the outside and share some common traits, but they differ on the inside—the ideas they hold, what interests them, and what motivates them to buy. Discovering those “inside differences” and then exploiting them for product development, innovation, marketing, and sales are keys to brand growth and profitability. Hence, our research.

Discoveries We Will Make about Millennials and Beer

Using the Mind Genomics and Cognitive Economics research tradition, we expect to make a number of discoveries, which are:

  1. Identifying the different mindsets MIllennials hold toward microbrews and nationally distributed macrobrew lagers like Budweiser, Coors, and Miller?
  2. Within each mindset, specifying which elements of beer increase interest, decrease interest, or have no effect … and by what amount?
  3. In dollars and cents, what is a Millennial willing to to pay for what interests them in microbrews or macrobrews?
  4. What are the narratives that each mindset has towards microbrews or macrobrew lagers?
  5. Guided by the narratives … What does a brand say—and who does it say it to—to bolster a brand’s chances for success in the market.
  6. Approaches a beer marketer can take to accurately assign any single Millennial or millions of Millennials to a mindset segment using an algorithm produced by inputs from the research … enabling them to target individuals with personalized, tailoring messaging?

Aspects of Beer We are Studying

The elements included in the two studies are in these areas: style, taste, appearance, mouthfeel, finish, food, origin, packaging, presentation, promotion, and emotions.

Demographics, Attitudes, Media, and Consumption

Our research captures Millennial demographics; their attitudes towards beer and beer occasions; their social media use regarding beer; and patterns of consumption. The data will be analyzed and cross-tabulated with the mindset data.

Millennials, Mindsets, Microbrews … and Golden Suds – the book, will be Available in Q3 2015

The book will be available as an e-book during Q3 of 2015. This title is one volume in our series Millennials, Mindsets, and Money. 

Millennials, Mindsets, and Money … A Series of Books on the Consumer Economy

Millennials, Mindsets, and Money (M3) is a series of books developed by me and Howard Moskowitz, with contributions from colleagues in the business world and academia.

M3 researches categories that are essential to the consumer economy from the Millennial perspective. Each book tackles an area and answers the six questions above. Our initiative primarily concerns advertised categories that are part of the everyday experience of Millennials.

You Can Sponsor Category Research in Millennials, Mindsets, and Money

Brands targeting Millennials who are interested in cost-effective and fast ways to grow their business are invited to sponsor a category study. Please
email me for details.

Invitation: Keep Up to Date with the Research

Please select a valid form

 

A Cognitive Economics Primer – Q&A with Mitch Joel

Mitch Joel, President of Mirum, digital expert and host of the Six Pixels of Separation podcast series, interviewed me and Howard Moskowitz about our work in cognitive economics. We talk about mind genomics, cognitive economics, research we’ve done, such as the classic study of red wine, and our book Millennials, Mindsets, and Money, which is in development.

You can listen to the podcast here: Cognitive Economics With Howard Moskowitz And Stephen Rappaport from the Six Pixels site, or from iTunes.

Here’s how Mitch introduced us:

Cherry Vanilla Dr. Pepper, Vlasic’s zesty pickles, and Prego’s extra chunky tomato sauce. None of these products would exist without Dr. Howard Moskowitz. His work has been immortalized in Malcolm Gladwell‘s TED Talk, Choice, Happiness And Spaghetti Sauce. The speech familiarized the world with his research on consumer segmentation. This work in horizontal-segmentation helps brands understand that their products should not be hierarchical in a world where different kinds of products suit different kinds of consumers.

Now, Moskowitz is pushing his work further with Stephen Rappaport (a former executive for the Advertising Research Foundation and business book author). Their work is looking to help brands rethink their consumer behavior through the science of mind genomics in a specialized area they call cognitive economics. Using robust listening studies mapped against consumer segmentation techniques, they’re unearthing fascinating and new consumer intelligence on how consumer behave. Enjoy this very fascinating conversation…

 

Consumer Mindsets Tuesdays: Three YouTuber Mindsets

This post is about the mindsets of YouTubers.
A gallery of popular YouTubers

The “Ideas from Outside” conference Moskowitz and I spoke at opened with a panel discussion moderated by Sari Katz, Partner Manager of YouTube Canada. She assembled a panel of four very popular Canadian YouTubers. I needn’t mention them by name. One had a cooking show, two were long-time friends who created comedy programs, and the fourth was a director and producer who has his own show and creates videos for others, brands included.

They appeared similar on the outside: mid-to-late 20s, backgrounds in communications arts, especially film and video. They aim to build media brands and work with advertisers, and they are aggressively metrics-driven in their decision-making. You might think that they would be alike because we typically assume that people who share characteristics are alike. That’s the logic underlying almost all segmentation. But when we listened closely to them talk about their viewers, subscribers, ad clients, and how they went about building their businesses and brands … they were remarkably different … on the inside: There were three unique mindsets up there, We called them the Marketer, the Storytellers, and the Rugged Individualist.

Continue reading “Consumer Mindsets Tuesdays: Three YouTuber Mindsets”

Latest Books and Resources

New coverDigital Metrics Field Guide now available for pre-order is SHIPPING NOW from Amazon, Barnes & Noble, and Independent Booksellers in the US and around the world
The Digital Metrics Field Guide is the definitive reference for brands of all sizes who use the Web, social media, mobile, or email for marketing, advertising and consumer engagement. It is written for the marketing, media or advertising business person whose job requires selecting, understanding and acting on the performance of their digital communications. Read more about the Field Guide …

lect_genomics_0

Interested in learning about Mind Genomics and Cognitive Economics? Howard Moskowitz and I are sharing our Dropbox stuffed with books (over 20), peer reviewed articles, original research, and presentations for free and without any obligation. Access the Mind Genomics Dropbox.