Research: The Cost of a Queue

It may surprise some frustrated shoppers waiting on a long line that much thought has been put into the design of a store to manage such waits. “Queueing theory” has been a topic of study for over a century, however most research has focused on balancing operating costs against the level of service offered to the customers. Until now, there has been little work done to identify how the length of a line affects a customer’s purchasing behavior.

Columbia professor Marcelo Olivares and Columbia doctoral candidate Yina Lu, along with Duke professor Andres Musalem and Scopix Solutions’ Ariel Schilkrut, examined how the length of a line impacts purchase decisions. Combining novel digital imaging technology and customer transaction data, they created models that quantify the effects of queues on purchase incidence, switching behavior and sales.  For a queue length of 15 customers or more, purchase incidence reduces from 30% to 27%, corresponding to a 10% drop in sales.

The researchers also found that it is the queue length and not the anticipated waiting time that affects customer behavior. In addition, they discovered that waiting is negatively correlated with price sensitivity.

Read more from Columbia’s Ideas at Work research summary, which includes a link to the full paper.

BY KIM SHIFRIN

L’Oreal CMO on Digitizing the Path to Purchase

Throughout a long career at Colgate-Palmolive, Marc Speichert was an innovator. In 2010, he quickly incorporated this spirit into his new role as Chief Marketing Officer of L’Oreal USA, a position which had not previously existed within one of the world’s largest producers of beauty products.

“I’ve been spending quite a bit of time on preparing for the future and trying to align innovation to where the big growth bets will be.” Explains Speichert in an interview with AdAge. “There’s also the opportunity… [to create a] view of consumers and our shoppers in how they move from one department or one channel to the other.”

Speichert has helped L’Oreal USA tap into the consumer’s path to purchase by recognizing the growing importance of “evaluate” and “advocate” stages that are driven by new media. Speichert cites the use of interactive digital display banners through L’Oreal’s partnership with the cloud-based advertising platform Flite as an example. “This allows us to enter the customers’ path to purchase during the ‘consider’ stage by allowing them to actually interact with the ad in real time thus engaging them in a unique way,” he explains in an interview with Forbes.

And in August 2010, L’Oreal launched a Destination Beauty Channel on YouTube, which features video of popular “beauty gurus” who discuss the latest hair and make-up trends. The result is an engaged community of brand advocates who can also share these videos through the various social media platforms. “Destination Beauty” quickly became the most viewed channel in YouTube’s history—22M partner videos viewed, earning 287MM impressions.

See Marc Speichert speak about this new path to purchase in the digital marketplace at our BRITE ’12 Conference (March 5-6, NYC).

REGISTER NOW!

BY KIM SHIFRIN

Disruptive Innovation [VIDEO]

Socrates taught us to question every assumption. And when it comes to innovation, nothing could be closer to the truth. But Luke Williams, professor of Innovation & Design at NYU Stern School of Business and author of DISRUPT, takes this notion a step further—”disruptive innovation.”

Speaking at the BRITE ’11 conference, Williams explained that companies today tend to have a myopic vision when using new technologies to build their brands. Digital magazines, for example, may offer more features, but they’re still giving consumers what they expect in ways that they expect. “As a result, a lot of our brand-building around these new technologies has taken on some pretty predictable trajectories.”

Disruptive innovation, however, is not about technological change. According to Williams, it’s about a revolution in behavior and “changing the way you think about a category.” Brands need to move beyond focusing on what the latest technology can do for their company or product. Williams challenged the audience to break free from conventional assumptions about a category to see from a new perspective. To do so, he reminds us to be careful of cultural influence and to pay attention to context, not just the foreground. As consumers and the marketplace evolve, it is increasingly important to embrace disruptive innovation before it is forcibly imposed by a new competitor or shifting consumer landscape. To quote Harvard Law School professor, Roberto Unger, “the task of the imagination is to do the work of crisis without crisis.”

BY ALLIE ABODEELY

The Effects of Choice: Columbia Research

People love choices, but at times they can also find them quite overwhelming. Sheena Iyengar, S.T. Lee Professor of Business at Columbia Business School and author of The Art of Choosing, spoke at BRITE ’11 about how an organization can best create a mutually beneficial, collaborative relationship between the choices they provide and their consumers. Iyengar’s research shows that what people want most is to have a great choosing experience, that allows them to trust and enjoy their ultimate choice. Watch the full video of her talk below.

Additional research at Columbia suggests that the complexities of choice impact us even more when the decisions are bigger. Rom Schrift, PhD ’11, and Professors Oded Netzer and Ran Kivetz conducted several studies analyzing this situation. In one instance they found that subjects who had initially rated the quality of two peices of artwork quite far apart ended up re-rating them as being much closer in quality when told that their ratings would impact the selection of these pieces for a museum’s collection.

“There’s a feeling of needing to do due diligence for important decisions,” Netzer says. “And if we don’t feel like we have done due diligence, we find ways to artificially create such a process.” Read more about these studies and how their underlying principles may help marketers at Columbia’s Ideas at Work.

BY MATTHEW QUINT

Think Disruptively to Transform Your Business

“The old mantra, ‘differentiate or die,’ is no longer relevant,” Luke Williams (a BRITE ’11 speaker) claims in his recently published Disrupt: Think the Unthinkable to Spark Transformation in Your Business. “The real mantra should be ‘differentiate all you want, but figure out a way to be the only one who does what you do, or die.’” Disrupt reflects Luke’s immense experience creating breakthrough solutions while working at frog design, one of the world’s leading innovation firms.  Luke has more than a decade of international strategy and design experience working with industry leaders like American Express, GE, Sony, Crocs, Virgin and Disney to develop new products, services and brands.

Disruptive thinking is “a way of thinking that turns consumer expectations upside down and takes an industry into its next generation.”  In his work with clients and as an Adjunct Professor of Innovation at NYU Stern School of Business, Luke provides a disruptive thinking framework that helps solve problems and create opportunities.

Reminiscent of our own Faculty Director Bernd Schmitt’s process of “killing sacred cows,” Luke details in an article for Mashable how to create disruptive hypothesis that smash your industry’s clichés to uncover innovative products and marketing strategies. In one example, he highlights Red Bull’s inversion of two standards in the soda category: that “soda is inexpensive” and that “soda tastes good.” Instead, “[Red Bull] placed absolutely no importance on taste, the product is double the price of Coca-Cola, and it dispensed with marketing aspirational images. The message was that Red Bull may not necessarily make you feel happy, but it’ll definitely give you a shot of energy when you need it.”

Hear Luke Williams speak at our BRITE ’11 conference (March 2-3, 2011). Register now!

BY MATTHEW QUINT