Originally published by The Soulful MBA Blog for the Lorry I. Lokey Graduate School of Business Net Impact Chapter
Last week, an article published by the New York Times Weekend Magazine, Psst You in Aisle 5 by Charles Duhigg terrified consumersacross the nation. Surveillance technology has rapidly evolved and the developments are never lost on marketing researchers.
Duhigg uncovered Target’s new and highly questionable marketing strategy while working on “The Power of Habits,” published just this month by Random House.
Target Researchers were already equipped with studies about shopping patterns that evidence the difficulty retailers face in persuading consumers to break the habits they have created regarding what they buy and where they buy it. Typically, consumers buy the same products at the same place out of habit and convenience, making it difficult for marketers to convert those that buy competitor’s products to instead buy theirs.
They did find, however, that at certain moments in one’s life, they are susceptible to conversion. When people undergo massive lifestyle changes—graduating college, moving, getting married or divorced– their routines also change. But in no other time in life did people’s routines and habits change more than when they had children.
In attempt to persuade new parents to become loyal Target customers, they partnered with researchers, primarily at MIT, to understand how habits were formed. Research on rats searching for a piece of chocolate in a maze showed that brain activity actually decreased when they worked their brains harder to get to the chocolate. This was because of something they called “chunking,” which our brains also do when forming a habit. The simple or complex steps it takes us to get what we want are eventually memorized in our brains so that we can do them in autopilot; the more we do something the less we think about it.
This research led them to identify the three-step loop of forming a habit: a cue, a routine and a reward. Habits can be formed or changed by establishing the cue and the reward to create the desired routine.
Target has already been tracking their customers via credit cards, online databases and a number of other online tools. With this research they were able to determine by simple purchases such as unscented lotion and certain vitamins when a female shopper was pregnant and even predict her due date accurately within a two-week window.
By burying coupons for prenatal vitamins, diapers, unscented lotions and baby food at the accurate time during the woman’s pregnancy with other mundane objects such as lawnmowers and wine glasses they were able to get her to associate Target with buying things for the baby without completely creeping her out.
The cue was the coupon, the routine was shopping at Target, the reward was a affordable items for baby—and maybe a few other things they didn’t plan on buying. Target can identify then if customers had a male or female child and their age and continue to bring them in, correlating in their consumer’s minds that products for home and children are best bought at target. Eventually, these new parents will identify Target as the place to fulfill most if not all of their shopping needs.
Target has gone so far as putting cameras in the shelves of their stores to watch how customers choose items off the shelf. These research and marketing programs have been highly profitable for Target, although the ethics are questionable. To date, everything Target has done has been completely legal, but again we are faced with a decision about whether or not legislative action should or can be taken to protect consumer privacy.