QR Codes in Retail Marketing

QR codes have come to North American marketing in a big way. They are particularly interesting to the retail marketing industry because they engage the consumer on location in the store at the point of decision. The data that comes from having someone interact with your online content in-store is powerful in measuring engagement and sales conversion.

Obviously QR codes are important to retail marketing, but there is a lot of mis-information and confusion about them. We hope to clear some of that confusion up with this article.

What is a QR Code?

QR code stands for Quick Response Code. QR codes are a standard bar code that contain alpha numeric data. That data is typically a link to a website.

People can scan these QR codes with their cell phones using the camera. The bar code is decoded by the standard camera application in some phones, or using apps in other cell phones. If the cell phone has internet functionality (ie. is a ‘smartphone’), the phone’s internet browser is directed to the link. This allows the user to get more information than on the advertisement or retail display.

Let’s go through an example. Jill is walking through Walmart and sees a display for a popular new romantic comedy. She sees that there is a QR code under the sub headline “Scan and enter to win a romantic getaway of a lifetime.” Jill has an iPhone which doesn’t scan QR codes natively, but she has installed the “QR Reader for iPhone” app. She opens that application and holds her phone up to the display so the preview from the camera shows the code on her phone. Once it recognizes it, her phone shows the link it has received, Jill accepts and her iPhone web browser is directed to the website. She fills out her personal information on the page and is instantly entered into the contest.

Where did QR codes come from? How do they work?

QR codes were invented by a Japanese automotive parts company called Denso in 1994. Denso used them initially to track parts in their manufacturing process. QR codes have the potential to contain much more information than a typical bar code. There are also features in the bar code that allow the decoder (ie. cell phone) to see position, scale, alignment and version / format information. There is also redundancy built in so that damaged or hard to read codes can be scanned. QR codes can store 4,296 alphanumeric characters or 7,089 numbers. QR codes can have different densities of information as pictured below (lowest density is recommended for retail marketing.) It was adapted to mobile marketing in 2003, and is often called ‘mobile tagging’. The QR code has ISO standardization. QR codes were very popular in Japan first, where internet- enabled cell phone use was high and the standard was built into most cell phones.

QR Code information density. Source: QRStuff.com (click image to go to article)

How do I use QR codes in my retail marketing?

QR codes have to be easily readable, and the customer has to have an incentive to take the time to read them.

QR codes have to be large enough so the cell phone cameras can focus on them. Cell phone cameras typically have very poor lenses because of space constraints, and have a hard time focusing close up. It also depends on how far away the marketing material is viewed from; a QR code on a billboard obviously has to be larger than on a retail display. The advice from this article on QRstuff.com is that the minimum size of the QR code should be 1/10th the distance the card is being scanned from. For example, if the QR code is being scanned from 24″ away (2 feet) than the QR code should be 2.4″. Codes should never be smaller than 2″.

Potential customers need to be sold on scanning the QR code just as they are sold on buying your product. To have customers take action they need to have a significant enough incentive. Using contests, discounts or exclusives are great incentives to scan QR codes. When budgeting for these incentives, keep in mind the dollar value of the data being generated by customers participating in social media. Also keep in mind that only 35% of people have smartphones. It may be more affordable than you think.

You can leverage the data gathered from QR code use to better execute future promotions. You can have your IT and web departments set up your QR codes so that you know when, where and which QR code is being scanned. That data can be used as a proxy to measure engagement. For example, if the codes on your shelf talkers are only scanned 3.6 times per piece and your retail displays are being scanned 15.4 times per display, you can make the reasonable assumption that the retail display is creating more engagement. You can adjust your marketing budget accordingly for next time. This is only a proxy; keep that in mind. If your overhead signage QR codes are not getting scanned at all, that may mean that people are not in the position to scan the code when they are looking at the overhead signage (not that the signage isn’t effective.)

Retail marketing consulting companies like matrix marketing concepts inc, would love to help you with the strategy and execution of QR codes at retail. Contact us today.

Are QR codes effective?

In short: Not yet.

From the informal survey in this article in iMedia Connection, only 11% of people in San Francisco knew what a QR code was when they saw one. Beyond them, 29% knew it was some sort of bar code and 45% of them knew they could read it with their smartphone. It took those people an average of 47 seconds to take their phones out of their pockets, boot up the app, and scan the code.  This was in San Francisco where technology adoption is high because of the cultural influence of Silicon Valley.

QR code users (32%) are only a fraction of those who know about them (72%), who are only a fraction of smart phone owners (35%), who are only a fraction of customers. This is pointed out by this article in Read Write Web. QR codes are only effective to a fraction of a fraction of a fraction of a fraction of people.

Those fractions are growing in size though. Smartphone penetration is growing by 2% per quarter.

Smartphone growth. Source: Nielson Wire. (click picture for article)

Marketers, as a group, are educating people about QR codes. Advertising associations are placing advertisements which purely educate about QR codes. This Ralph Lauren ad lays out how to use the featured QR code, as many do:

Source: FGI.com (click picture for article)

As smart phone adoption grows and knowledge of QR codes grows, QR codes can still be an effective tool in your retail marketing strategy. They give you more data to make marketing mix decisions. They can help increase participation in social media. They can help make it easier for people to enter contests. They open new doors for coupons and discounts.

Bottom line: QR codes are one more tool to engage your customers. How can we say no to that!

Happy Scanning!

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