A roadmap to the digital marketplace

Including online in the channel mix requires significant investment in e-commerce website setup and digital marketing expertise. For many firms, these are uncharted areas, which could be overwhelming to venture into. The central message of this article is a roadmap for firms to adopt for setting up their online channels.

Framework

The roadmap is based on schema-incongruent, a notion well used in advertising. It involves presenting viewers with incongruent or contradictory information to get their attention. The contradiction activates their cognition to decode the message for themselves. For example, a baby in a diaper driving an SUV to convey the ease of driving. Our study extended this notion to a virtual context.

Background

The digital landscape has given firms direct access to markets defined by psychographic values. This has allowed them to offer value that appeals to an exclusive group of customers. For example, in New Zealand, My Food Bag (MFB) offers ready-to-prepare meals online, which is not how customers usually purchase perishable produce. The approach defies the existing practice, but it appeals to customers whose lifestyle choices do not permit them to keep up with regular grocery shopping. MFB offered values that meet customers' lifestyles and health needs, which enabled it to rapidly grow into a $100 million business.

We explain the success of MFB with 'schema incongruence', a framework for firms to follow to adopt the online channel. It can be explained in the following way: When the value offered does not fit with what we already know, our brains work to make sense of it. If the difference is small, we might not notice it. But if it is big, we pay attention and try to make sense of the value. This could end up either accepting or rejecting the value. The magnitude of the difference from the norm is crucial to triggering the brain process. Studies have found that small and moderate differences often get ignored. Whereas an extreme difference gets us to think in order to make sense of it, as was the case for many customers with MFB offerings.

The online channel has the potential to become an industry-wide norm, as observed in the travel sector. Selling airline tickets online was once incongruent with the norm, but now it is the preferred channel. In like manner, as more FMCG firms like MFB enter the market, customers will start accepting the online channel for purchasing perishable goods. We investigated the schema incongruence to propose a two-step roadmap for firms to adopt the online channel.

Research

Our study was conducted on Haraways Oats' Quick Serve Oats Sachets. This iconic New Zealand breakfast cereal brand typically sells its products through supermarkets. Therefore, offering Quick Serve Oats Sachets online was incongruent with how customers normally buy this product. We investigated three levels of incongruence: no incongruence (sold via supermarkets), moderate incongruence (sold online as a product), and extreme incongruence (sold online as a subscription plan). The first level served as a control, and the third was an innovation, treating the product as a service.

Method

The three incongruence levels were implemented as Facebook postings on Harraways Oats' Facebook followers. The posts were kept separate to avoid data contamination by showing them to followers from different postal code locations. Participants were asked three open-ended questions: What do you think of the offering? How much would you pay for it? Would you purchase it? The responses were analysed using text mining. Firms can easily apply our method on their own Facebook page to identify the appropriate incongruence level for their offerings.

Results

The participants were sceptical about buying the product online. The moderate level of incongruence was not a viable option. On the other hand, the extreme level of incongruence offered online received strong approval. The psychographics of those who approved the online channel were heavy users and oat lovers, as they found this option assured the supply of their favourite breakfast cereal.

Conclusion

We suggest a two-step roadmap for firms to adopt the online channel. Step one is to innovate the offering to make it suitable for online selling (e.g. online subscription plan). Step two is to identify niche target markets that readily see the value of the innovation (e.g. heavy users).

Our study was done on a breakfast product. The scheme incongruity was observed for MFB, which is now an established business. Hence, we can suggest our two-step roadmap for adopting the online channel for firms marketing fast-moving consumer goods.