How Companies Learn Your Secrets

In class we have focused on how firms obtain and use consumer information. This article discusses Target's strategies for finding information. It follows Andrew Pole and his goal to target women in their second trimester of pregnancy. To stores like Target, all-in-one superstore, expecting mothers are the "holy grail". Their previous buying routines, some across multiple stores, begins to decline because of pregnancy and newborns. Target wants to intervene and make their store the only store an expecting mother uses. They find information by tagging each customer with a "Guest ID" and every purchase and visit is logged. From this information Target can analyze the buying habits, and to some degree determine the "Guest's" demographic and even if they are likely to be expecting mothers. This is termed Predictive Analysis, and it analyzes shopping habits and behavior. Target is one of the smartest and leading companies in this type of information analysis.

The scientific research behind this idea of analyzing the habits of people began at MIT with rats in a T-shaped maze. In the beginning these rats searched and figured out where the chocolate was. After repeated trials the rats became accustomed to the maze and the chocolate, and in turn decreased the amount of brain activity; essentially this maze became a habit, and less of a thinking activity. They call this emerging habit as "chunking" process combined to create a habit. This habit forming process has 3 steps: a cue which triggers the reaction and habit, a routine, which is the emotional or physical act, and finally a reward which makes the routine worth remembering, it is positive reinforcement.

This habit forming loop was introduced to marketing upon its public reception. One notable company that employed it was Proctor and Gamble for their product Febreeze (c). They went about advertising the wrong way, by trying to introduce a new habit, instead of working upon old habit routines. They added to spray of Febreeze to the end of a consumers cleaning routine where Febreeze was the reward and not the routine. this turned a dead product into one leading a market comprising of $1Billion a year in sales.

Target then started to employ this strategy by targeting the vulnerable moments in a person's life where their buying habits change, or at least are open for persuasion. These times are marriage, divorce, new homeowners, and the arrival of a newborn. Pole constructed a list of 25 items that frequent pregnant shoppers and compared all female guest shoppers at target and could rate them on the probability that they were expecting. They then focused these women with coupons and emails to buy newborn essentials at target. Once shopping at Target they would push for groceries and other products that these mothers would buy at Target, where previously they would have purchased other places.

These are just a few ways large companies are attaining information and using it to promote sales and increase value to their store. Target was a forerunner in this information analysis and their sales show, between 2002 and 2012 their sales grew from $44Billion - $67Billion.

More information can be found at: http://www.nytimes.com/2012/02/19/magazine/shopping-habits.html?_r=1&ref=business