Exclusive ‘Communities’ generate new consumer products.

As the world becomes more wired by the day, consumer products companies are creating their own online “communities” in hopes of discovering the next big product.

These online communities, which consist of Web sites, bulletin boards, online chat and other forms of group communication, are designed to gather months of data on how consumers feel about a corporate brand or product. For instance, online communities helped food companies discover that women watching their weight like to reward themselves once in a while, according to Patricia Seybold, an industry consultant.

“While [online communities] don’t replace traditional focus groups, it helps companies brainstorm about new products,” Seybold says.

After discovering that consumers wanted small rewards for dieting, food companies came up with 100-calorie servings of cookies, chips and other snacks. The portion-control packaging has turned out to be a “blockbuster” concept, says Phil Lempert, also a consultant for the packaged goods industry.

The gradual shift to online marketing has fueled the growth of consumer product communities. Since 2002, annual spending on online advertising has more than doubled, reaching $12.5 billion in 2005, according to Interactive Advertising Bureau, an industry research group.

Meanwhile, print and TV advertising has been declining as marketers are recognizing that certain demographic groups spend a great deal of their time on the Internet.

Using the same concept as social networking sites, firms are creating their own communities with exclusive memberships, with the caveat that the sponsor can eavesdrop on conversations and activities.

In such forums, executives can get an unvarnished look at what consumers really think about a company and its products, says Diane Hessan, CEO of Communispace, a creator of private communities for companies such as Kraft and Nabisco.

Exclusive online communities will differ based on the audience. For instance, Hallmark created an “idea exchange” in which participants can leave messages, instant message each other and post pictures of themselves and family members. Facilitators highlight new site additions — such as a link to greeting cards — and direct members to surveys.

In addition, members of the Hallmark online community can communicate with card creators and writers.

Company-sponsored communities have to offer an interesting context as well as content, says Anastasia Goodstein, director of online viewer-created content for Current TV, a new national cable station. If consumers feel they are being invited to a community as part of a sales pitch, they won’t participate.

“Marketers that don’t have an established cache with groups on the Internet shouldn’t just [put] their brand in the middle of an [online] community space,” Goodstein says. “It looks like they are trying too hard to sell products.”

The advantage corporate communities have over “social networking” sites like Myspace is companies can select the audience they want. “It’s like a focus group, but these spaces can gain deeper insights,” Hessan says.

Unlike focus groups, which meet for hours at a time, online community members stay in contact for weeks or months. A company will invite hundreds of people to participate, keeping a supply of potential participants in case some leave.

Each community is designed to reflect the demographics of a particular community, Hessan says. For instance, the Charles Schwab’s community has a conservative look and feel compared to Hallmark’s, which encourages participants to discuss personal matters.

Members are given incentives such as gift certificates every six weeks for participating in the community for at least 30 to 45 minutes a week. The certificates range in value from $15 to $50; in some instances, consumers receive goods from the company sponsoring the space.

But it’s not the rewards that keep participants returning, but the opportunity to speak to a company directly: “People like feeling they have a voice and they are special,” Hessan says.

Hessan, whose company has built more than 225 communities, says it’s important that company listen to consumers, even if they’re complaining. Companies also get feedback on products and get to brainstorm on new products, she says.

In Kraft and Nabisco’s online communities, more than 200 women participated in and were able to discuss dieting and weight loss.

“They didn’t like to think in terms of diet, but they were interested in portion control — and they wanted to feel as though they were being rewarded,” Seybold says. “They know they are being eavesdropped on, but they love the fact that they are being listened to.”

The popularity of exclusive consumer products communities is partly a result of the wildly successful Myspace, which counts more than 70 million members, as well as other social networking Web sites.

Myspace, Friendster and Facebooks allow users to post information and form social networks based on similar interests. Brand giants Coke and Toyota have been using these platforms to reach certain consumer segments, particularly young adults and teenagers who dominate social network sites.

Toyota is using Myspace to market its Scion line of vehicles, priced between $13,000 and $17,000. Scion users can customize their own page, and post pictures, music and comments.

“The marketer has to be authentic in talking to this audience; otherwise they will [have] a poor reception,” Current TV’s Goodstein says.

By Kathleen Kiley, Managing Editor, Consumer Markets Insider

Courtesy of http://www.kpmginsiders.com