The Correlation Between Consumer-Generated Media and Sales

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As the democratisation of consumer expression leads to a viral proliferation of information online, the new age communication ecosystem has prompted the need for a careful evaluation of the potential of CGM or buzz as it is called. With each passing day, consumers find innovative ways to express their satisfaction/dissatisfaction about a product or brand.

An investigation of the relationship between blog buzz, market promotion and sales in the Consumer Packaged Goods(CPG) industry, by Nielsen Buzzmatrix revealed the following-

1.CGM has the potential to influence and generate incremental publicity for products, enough to effect their commercial prospects, specially in the CPG category.

2.CPG Marketers should consider the role of Buzz in their Marketing Mix, with respect to New product communication plans.

3.Ad spend is a large factor involved in generating CPG buzz.

4.There is a strong correlation between buzz and sales.

5.Buzz helps in generating accurate forecasts.

6.Buzz Magnitude: Top 10 % of products were responsible for over 85% of total buzz generated. Buzz is higher

7.Buzz Timing: Buzz usually precedes product launch and sales and is usually highest in the initial stages

As the above reiterates the prime motivational factor for consumers to create and post CGM-To be on the forefront of something new, it is profoundly clear that CGM will need to be an intrinsic component of the new product communication plans for marketers.

4 COMMENTS

  1. Vandana

    Another interesting post. It’s great to see more posts about social marketing.

    I too read the NielsenBuzzmetrics report on ‘The Origin and Impact of CPG New Product Buzz’. Pete Blackshaw alerted me to the report on his CustomerGeneratedMedia.com blog.

    I think we have to be careful about over-extrapolating the results of the study. I have no doubt that ATL & traditional media do influence buzz, which does in turn influence sales. But the study is only one of very few studies that have been done in this area to-date and it is not an academically robust study. More work needs to be done on providing a structural model that shows how ATL & traditional new product media influence buzz and how buzz influences sales.

    Until further statistical analyses are done, the findings are noteworthy, worth using as the basis of further marketing experiments but not generalisable.

    Keep up the great posts.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

  2. Thanx for the comment.CGM is a new concept, and you are right in the need to tread carefully…but the logic behind this is clear…the power of influence and it’s role in shaping consumer behaviour can not be discredited…channelising this power for an organisation’s benefit needs to be a marketer’s priority….and yes…further analysis should help channelise efforts appropriately.

  3. Vandana

    Look around you at all those logical ideas that have largely failed to create value in business: TQM in the 80s, ERP in the 90s, BPR in the 90s and now NPS in the 2000s. All were no-brainer, logical business ideas. All have been found wanting in one way or another.

    Like yourself, I believe the evidence gathered to-date points in the direction of CGM being an important business concept. But so did many of the above. The trouble starts when they get over-simplified, over-extended and over-applied by management looking to make a fast buck.

    If CGM is to avoid going the way of the other business dinosaurs, it has to be carefully experimented with to see if it really works, how it works and when to apply it. In the interim, marketing’s real priorities should proceed in parallel.

    Perhaps this is a case where ‘more haste and less speed’ is required.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

  4. [quote=graham_hill]
    Look around you at all those logical ideas that have largely failed to create value in business: TQM in the 80s, ERP in the 90s, BPR in the 90s and now NPS in the 2000s. All were no-brainer, logical business ideas. All have been found wanting in one way or another.
    [/quote]

    That’s a pretty sweeping generalization, Graham. And why leave out “CRM” as another logical idea found wanting, according to some?

    As I see it, these initiatives each added value–ask youself if the business world would be better off if we had not tried these concepts. We now take quality for granted, thanks in part to TQM/Six Sigma, except when we don’t get it (think recent furor over quality of certain products from China).

    Business would never move forward if executives waited for the “proof” that academics and consultants seem to want. Another consideration is that once a technique becomes widely adopted, it ceases to be the differentiator that caused businesses to adopt it in the first place. And becomes just a business necessity.

    That said, I do agree that blindly following an idea just because it’s the current hot thing doesn’t make much sense, either. But I won’t hold my breath that people will stop searching for the “one thing” that will magically deliver business success. That leaves the door open for hypsters to enter.

    My favorite example of our willingness to suspend commonsense is the fad diet book, part of the $55 billion weight loss industry. The so-called “maple syrup diet” advocated by Beyonce Knowles consists of replacing normal meals with a liquid made up of the maple syrup, lemon juice, water and cayenne pepper. I’m not making this up! Sales are soaring of the Madal Bal syrup on which the diet is based. If you don’t like this one, there are 232,236 diet books available on Amazon.com.

    I don’t think CGM is a fad, but it certainly could suffer the same fate as other TLAs. Will be interesting to see what happens.

    Bob Thompson, CustomerThink Corp.
    Blog: Unconventional Wisdom

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