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RESEARCH ON THE CHEAP

Budget cuts spur marketing executives to seek out the most efficient methods of consumer research available

By Dakota Smith

When it’s time to trim the budget, the marketing dollar frequently gets cut first, leaving a marketing director without funds for consumer research. But with a little creativity, some skillful e-marketing, and even a few Peter-to-Paul transactions involving other departments, researcher and bean counter alike can each emerge with something.

Ask Toronto-based Cadillac Fairview. Like most development firms, this owner of 29 retail properties in Canada relies heavily on so-called intercept research — the surveying of shoppers right at the shopping center itself — to find out the background and habits of its customers.

But since an intercept project can cost anywhere from C$15,000 to C$20,000 ($13,000-$17,000) per property, according to Susan E. Williams, the firm’s director of market research, it may be necessary to find ways to economize.

One solution: Cadillac Fairview asks research companies to do multiple studies at many different properties for a reduced rate of $9,000 per property. Combining intercept research with phone interviews, focus groups and other services can also help cut rates, Williams says. “You can get cost-effectiveness by grouping services together,” she said. “It is about getting more for less money.”

This is important because marketing departments face huge pressures right now, says David Lobaugh, president of August Partners, a Marietta, Ga.-based consumer research firm whose clients include CBL & Associates Properties, The Macerich Co. and Weingarten Realty Trust. And yet, pinched budget or not, companies need to know “what the market is like and who their core shoppers are,” Lobaugh said.

Labor accounts for much of the cost of intercept research, says Lobaugh. Most research firms pay their on-site interviewers about $30 per hour. To reduce the time, Lobaugh says his firm uses hand-held electronic devices to record information rather than pen and paper. Additionally, the firm controls costs by asking fewer questions, he says, keeping them to about 10 to 15.

If information about shopping patterns and store-visit frequency are to be noted and compared to the average, says Lobaugh, skip the questions about consumers’ hobbies.

“Do you really need to know that your customers like to fly-fish?” he asks.

Get straight to the point, says Ann Natunewicz, director of research at The Mills Corp., which conducts intercept research every two years at all of its 42 shopping centers.

“What kind of things do you plan to spend money on in the next six months?” and “What would you like to see added to the mall?” are examples of questions Mills asks.

And do not waste time asking outdated questions, says Natunewicz. Mills used to ask consumers about their ethnicity, for example, but people claim so many different types of ethnicities nowadays that this kind of information is irrelevant, she says.

One key piece of information researchers can obtain relatively quickly and cheaply is zip code data, says Gary Butcher, regional vice president of marketing at Macerich, which operates or manages 75 malls around the country.

“If you don’t have a lot of money to spend, you can still do an exit survey and do multiple properties to get a good representation,” said Butcher.

The old college try
Another highly economical resource is college students — they are plentiful and energetic, and they can be hired for about $10 an hour, a third of the usual cost, says Charlotte Ellis, president of Ellis & Others, a Raleigh, N.C.-based market consulting firm that has worked for General Growth Properties, Kane Realty Corp. and The Richard E. Jacobs Group.

Ellis also suggests that graduate-level business school classes might welcome the chance to do an intercept project for the hands-on market analysis and tabulation practice it would provide. Some schools could charge a nominal fee, but others might even be willing to do it for free.

A newspaper can be a great source of demographic data, Ellis says. Through their sales of ad space, newspapers possess extensive demographic information about nearby populations, and they might be willing to share that information for a fee.

Or skip the third-party help altogether, says Macerich’s Butcher, and leave marketing questionnaires at a customer-service or welcome center for consumers to fill out independently.

Getting graphic
Gathering demographic data is useless if that information is not paired with so-called psychographic data, according to Jeff Green, president of Jeff Green Partners, a retail consulting firm in Mill Valley, Calif. “Psychographic” is a relatively new term in the market research field; it refers to the information gleaned from consumers’ lifestyle choices. This data can be purchased relatively inexpensively from clearinghouses.

“Often consumers are in the same demographic but have different lifestyles,” said Green. If demographic data reveal that the households in a certain suburb earn about $100,000 a year, for example, psychographics would delve deeper to specify that husband and wife both work in an office, say, and that they bring home $50,000 a year each.

Green points to Lucy Activewear, a Portland, Ore.-based women’s athletic apparel retailer, as an example of a company that carefully considers lifestyle data in promising markets and opens successful stores as a result. The approach certainly seems to be working. In July Fort Myers, Fla.-based clothing chain Chico’s paid $10 million for a minority stake in Lucy Activewear, which currently operates 18 stores in the Western U.S.

Not that the validity of psychographic data is by any means widely accepted at this point. But Macerich’s Butcher is among those who say it does have its place and that it merits further attention. “It’s more subjective,” he said. “It’s not black and white.”

Data mining for less
E-marketing is another inexpensive way to mine for consumer information, as over against direct mailing, says Cadillac Fairview’s Williams. Currently, Cadillac Fairview has an online database of 270,000 consumers who receive newsletters containing information about promotions and the like. Their e-mail addresses are culled through in-mall contests or advertisements. When they register, participants are asked to supply basic information, such as age and family size, as well as shopping preferences. This data is updated throughout the year.

In May Cadillac Fairview promoted a new gift card. As part of the promotion, the company offered a card with $5,000 on it free to one contest winner, usable at any one of its centers. The contest drew regular database users and new customers equally, to be sure.

The costs of running the database represent less than 2 percent of the company’s total marketing budget, says Williams. Specifically, it costs roughly $50,000 for Cadillac’s largest property and $5,000 each for its smaller ones.

Likewise, Mills keeps an e-mail database of 350,000 shoppers. When new members sign up, they are asked a series of profile questions and given coupons for their trouble, says Natunewicz.

Last, companies may want to reconsider the source of the research funds. One positive trend August Partners’ Lobaugh sees is that marketing dollars are increasingly coming from the leasing department rather than from marketing.

“I’ve seen much more of a teamwork approach between marketing and leasing, and that’s a good thing,” said Lobaugh. “Leasing is asking the marketing department some really interesting questions and getting smarter and smarter about who their target customers are.”

Thus, landlords have learned that sometimes you can get more for less money.

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