Facebook, Twitter and Foursquare as corporate discussion groups

Frito-Lay is developing a new potato chip flavor that once would have involved a series of focus groups, research and trend analysis.

Now he uses Facebook.

Visitors to Lay’s new Facebook app are invited to suggest new flavors and click an “I’d eat that” button to save their preferences. Results so far show that a flavor of beer-battered onion rings is popular in California and Ohio, while a flavor of churros is a hit in New York.

“It’s a new way to get consumer research,” said Ann Mukherjee, chief marketing officer for Frito-Lay North America. “We’re going to have a ton of new ideas.”

While consumers may view social media sites like Facebook, Twitter and Foursquare as places to post thoughts and interact with friends, companies like Wal-Mart and Samuel Adams are turning them into extensions of market research departments. . And companies are just beginning to understand how to use the enormous amount of information available.

When Wal-Mart wanted to know if it should stock lollipop-shaped cake pops in its stores, it studied the chatter on Twitter. Estée Lauder’s MAC Cosmetics brand has asked social media users to vote on which discontinued shades to bring back. Stuffed animal brand Squishable sought Facebook feedback before settling on the final version of a new toy. And Samuel Adams asked users to vote on yeast, hops, color and other qualities to create a crowdsourced beer, an American red beer called B’Austin Ale that received rave reviews.

“It tells us exactly what customers are interested in,” said Elizabeth Francis, chief marketing officer of Gilt Groupe. Gilt asks customers to vote on which products to include in a sale and sets up Facebook chats between engineers and customers to help refine products. “It’s amazing that we can get this kind of real feedback, instead of speculation,” Ms Francis said.

Wal-Mart acquired social media company Kosmix last year for an estimated $300 million, largely due to Kosmix’s ability to extract trends from social media conversations.

The unit, now called @WalmartLabs, reviews Twitter posts, public Facebook posts and Walmart.com search terms, among other clues, to help Wal-Mart narrow down what it sells. Its technology can identify the context of words, distinguishing “Salt”, the Angelina Jolie film, from salt, seasoning, for example. He establishes baselines for what is a normal level of buzz around, say, electronics or toys, so he can gauge when interest gets high. It also analyzes sentiment, because if people don’t like a new video game, ordering palettes from the game isn’t a good bet.

“There are mountains and mountains of data created in social media,” said Ravi Raj, vice president of product for @WalmartLabs, adding that the company uses data to decide what merchandise to ship where.

In one of its first analyses, conducted last summer, @WalmartLabs found that cake pops – small bites of cake on lollipop sticks – were becoming popular. “Starbucks had just started having it in its cafes, and people were talking about it a lot,” Mr. Raj said.

His team alerted merchants at Wal-Mart’s headquarters. Merchants had also heard of the product and decided to offer cake-pop makers in Walmart stores. They were popular enough that the company is considering bringing them back this holiday season.

More recently, @WalmartLabs found that enthusiasm for “The Avengers” and “The Dark Knight Rises” was growing ahead of the movies’ release, and suggested stores increase their orders for related merchandise. And after Walmart started offering a spicy chip called Takis, @WalmartLabs found most of the positive talk about it came from California and the Southwest.

Merchants, feeling they could sell additional products in those states, ordered a spicy chip similar to Walmart’s house brand and rushed to introduce another, called Dinamita, from Doritos. Walmart began selling both lines in California and the Southwest earlier this year and is now adding them to other stores.

For Frito-Lay, looking for product ideas on Facebook, through the Lay’s Do Us a Flavor app, has a few benefits.

Once the company has identified what is popular and where, it can tailor its products to specific regions of the country. While Frito-Lay will produce three of the flavors in its competition and award a million dollar prize to the creator of one of those flavors, Ms Mukherjee said the company will also consider other suggestions. “It’s a real competitive advantage for us,” she said.

Frito-Lay has previously hosted the contest overseas, resulting in chip flavors like hot and spicy crab in Thailand and pickled cucumber in Serbia.

The social media approach also appeals to young customers. The people who sign up for focus groups or consumer panels aren’t usually young fashionistas, but Facebook users often are, so adding social media to the mix allows Frito- Lay to get a wide range of consumer feedback.

Kohl’s, which began asking its Facebook fans in July to choose products to include in sales, said those fans were more heavily represented than its overall customer base in the 18-24 demographic.

Marketers are trying to balance privacy concerns with the wealth of data available online. Mr Raj said Wal-Mart only analyzed Facebook posts that users had made public. On the other hand, apps like Frito-Lay require access to a user’s location, gender, birthday, photos, friends list, and status updates; the products for which he clicked on “Like”; and more.

In most cases, when someone uses a brand’s Facebook app, they can get a range of personal information, said Mark LaRow, senior vice president of product at software company MicroStrategy. MicroStrategy has created its own app, Wisdom Network, which can access about 13 million private Facebook profiles once a user gives it permission.

The application collects information about users and their friends. Marketers can use data to see what current or potential customers do and like, or what wealthy customers prefer to poorer ones. (MicroStrategy cross-references app users’ job titles and locations, which are part of the standard information Facebook requests, to estimate their likely salaries.)

For example, Mr. LaRow said that if the FC Barcelona football team, a MicroStrategy customer, finds that a large number of its fans like actor Vin Diesel, it may seek new partnerships.

Not everyone believes in data alone. “Data can’t tell you where the world is going,” said Lara Lee, chief innovation and operations officer at design consultancy Continuum, which helped design the Swiffer project and One Laptop per Child. .

But companies using social media data said the ability to see what consumers are doing, wanting and talking about on such a large scale, without consumers necessarily knowing that companies are listening, was unprecedented. “It’s like the biggest focus group anyone could imagine,” LaRow said.

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