The rapid adoption of social-media services such as Facebook and Twitter in the United States and globally presents several interrelated opportunities and challenges for marketers. On the opportunity side, consumers are leaving increasingly large data footprints on the social web that marketers can surreptitiously analyze and mine for potentially useful insights into the ways people decide what products or services to purchase. Such data footprints include connections to other people (potential influencers), implicit and explicit reports of activities, photographs, personal product endorsements and product-usage applications, simple likes and dislikes—all of which can merge with a host of demographic data, both from internal social-media sources and through external sources. A related challenge for marketers is to gather and use these data without harming the trust relationship between consumers and companies—for example, through obvious privacy violations.
In addition to having access to a large amount of consumer-relevant data, companies now have unprecedented direct access to customers, potential customers, and nonfans through social-media platforms. One emerging market-research technique that leverages access to customers is the virtual focus group. As the New York Times recently reported, companies such as Frito-Lay, Wal-Mart, and Estee Lauder are increasingly designing methods to generate direct feedback from consumers about a host of product-related issues—including which flavor of onion rings to launch next, in the case of Frito-Lay, or which previously retired color of lipstick to revive, in the case of Estee Lauder. (See http://www.nytimes.com/2012/07/31/technology/facebook-twitter-and-foursquare-as-corporate-focus-groups.html.)
In some ways, social-media focus groups fill a gap in the traditional market-research portfolio. A cursory review of the companies and products that feature in the New York Times piece just above reveals a heavy emphasis on recruiting young and trendy consumers into social-media focus groups to generate insights about likely successes in product categories with short shelf lives, such as seasonal colors in cosmetics or predictions of the success of a movie during the opening weekend using Twitter analytics. The ability to extract information from a young demographic (specifically, 18-to-24-year-olds) has been difficult in traditional focus-group settings, participation in which often requires taking time out to drive to an industrial-park office to sit still for a lengthy group discussion.
The ease of information extraction by means of social-media platforms makes the social-media focus group a tempting insight generator for a host of companies. Unfortunately, many companies examining the global size of the population of social-media users alone may invest in social-media research without realizing that the generated insights may not be valid for the customers they are ultimately trying to reach.
The basic question appears to be whether social-media focus-groups-generated feedback actually increases sales. Frito-Lay's social-media app allowed participants to design a new flavor of snack under the traditional assumption that customer feedback in the product development generates more successful products at launch. The disconnect for firms may be that the people who are likely to respond to company incentives online, participate in games, or use social-media focus-group apps are often not members of the key target segments for the products. For example, according to spring 2012 VALS™/Gfk, MRI data, nearly two-thirds of Frito-Lay products are bought by consumers who are unlikely to participate in social-media focus groups, because of either lack of interest or time constraints. The "gamification" of consumer feedback for a small segment of young, trendy and heavy users of social media may result in the generation of products and services that ultimately may not appeal to large swaths of a brand's core customers. In other words, whereas the goal of the social-media focus-group member may be to create a particularly unusual flavor of snack to entertain himself or herself in that moment, the generated feedback may not actually translate well into sales.
A related concern is that the base of 18-to-24-year-old consumers, whether participants in social media or not, is segmented. VALS research identifies two core psychographic types of consumers who see overrepresentation within the 18-to-24-year-old category: Strivers and Experiencers. Whereas Experiencers—members of a relatively high-resource group—are trendy in a trend-setting definition of the word, Strivers are often unsure followers of mainstream trends, and they have less disposable income to rely on. The differences between these two types may result in significantly mixed messages for firms wanting a clear signal about which latest trend to build upon or which product to launch to "young people."
A global scale only compounds the potential disconnect between people who respond to social-media focus-group requests and a related incentive and people who are ultimately targeted with an offering. Companies may fail to realize, for example, that social-media usage itself is segmented, resulting in potential difficulties when attempting to standardize social-media research globally. A 2012 Nielsen research study revealed, for example, that among residents of the United Kingdom, a primary driver of social-media use is to research product purchases, whereas a primary driver of social-media use in France is to stay in touch with friends. Social-media research efforts may more appropriately focus on residents in the United Kingdom, who use social media to find out about products, than on the French, who may show less patience toward firms trying obviously to exploit them for marketing purposes. Similar differences emerge in the Asia-Pacific region—for example, between Japanese and Chinese users of social media. (See http://www.compukol.com/blog/social-media-usage-across-cultures/.) Consumer resistance to company attempts to work with consumers directly through social media often results in political efforts to protect consumers and their data from overly invasive marketing efforts. Political risks for companies such as Google and Facebook are increasing all over the globe—most prominently in Germany, France, and China.
Yet another way in which companies are beginning to use social-media research is to inform various elements of the marketing mix, including inventory management. As the New York Times reported, companies such as Wal-Mart are analyzing the frequency with which certain words, proper names, and brands are referenced in the Twitter stream to make decisions about whether to increase stock of certain items. Such strategies may be successful for large retailers who carry a range of products and cater to a wide range or target audiences simultaneously, but the strategies can backfire for firms for which generic "buzz" words are insufficiently targeted to inform downstream strategy.
In sum, social-media focus groups and related market-research activities are showing some promise for firms interested in gathering information from a limited base of potential customers that was previously difficult to reach. In many ways, social-media focus groups are remarkably traditional in that they are constrained by the various factors that limit the interpretation of qualitative group interviews in general, including lack of generalizability or problems resulting from overuse of a limited market-research technique. Companies planning to include social-media focus groups would do well to distinguish carefully the roles people play in social-media venues and the roles they ultimately play as customers of the firm, because those roles may diverge significantly.