Week 12 - Community Relations

Customer Relations and Social Media - Reflections from the Readings and Videos

The advent of social media and the internet has been transformational in how quickly information can be spread and accessed. This can have both positive and negative consequences. On the positive side, companies can reach farther and wider much more quickly and much more cost effectively than ever before. People can connect in a way that transcends geographical boundaries like never before, and support one another and create virtual communities for common causes. On the negative side, bad press (either justified or not) can spread much more quickly than a company may have time to respond, and also adding in the factor that it is impossible to control. Social media can be much more anonymous as well, which makes it very difficult to pursue legal remedies for misinformation.

And there is no limit to the amount of misinformation that gets published. Any person or group with an agenda can propagate whatever message they wish, and we see this play out in the bitter vitriol ever present in political campaigns. Another example is that Medical websites and wikis are not always accurate. This has resulted in the increase of technologically savvy public relations teams present in various organizations, which has now become a necessary tool to conduct business. Constant monitoring of the “buzz”, contingency plans on response to negative press will be the new norm. Privacy issues will need to be addressed, as the lines between work and play get more blurred in the online reality. Clear policies need to be established and communicated to employees on what is expected both at work and at home regarding what is published online.

At my company, we have embraced social media and internet technologies to promote the company vision, mission and values, as well as our product launches and services. I believe we have been especially effective in using social media to enhance our recruitment activities, reaching out to a younger generation of potential employees who have increasingly embraced new technology as a given. We have websites to process and advertise candidate applications, groups established on LinkedIn, Facebook pages, and Twitter feeds. In my role in the UK, we are using social media to market our upcoming launch of Euro6 engines: http://cumminseuro6.com/ . Our press release included all our marketing materials on a clever credit card sized USB flash drives with the logos emblazoned on them, including links to all of the social media regarding the products.

While I believe the social media formats will continue to establish as the dominant form of communication moving forward in the near future, I don’t believe this necessarily means it will fully replace more traditional formats. People are not online 24/7, they still watch television and drive by billboards, and do other things besides sit in front of the laptop or play with the Smartphone. The mail service is not going away anytime soon, as there is still a significant portion of the population who do not have access to online media. Although I would look forward to the day when I receive much less junkmail in the post! Although I will most likely not be around when this day comes, I do worry about the loss of significant pieces of our history which exists only in the virtual format – if we ever do run out of cost effective energy, it will be difficult for anything not in actual print to survive the ages.

Week 11 - Customer Lifetime Value and Rosewood Hotels

Customer Lifetime Value – Reflections from Customer Profitability and Lifetime Value

I do not have direct visibility to how my company knows the value of its customers. I believe there are some fundamental concepts of CLV that could be used, however, the nature of my company’s business is such that it primarily business to business relationships, rather than selling direct to the consumer. Since we sell engine systems, it is often necessary to work with OEM’s, which require individual attention and a case by case valuation. Our Marketing function therefore assigns account representatives for all of the major customers, and the smaller, more niche market customers are attended to by the Distributorship network. The Parts and Service division is probably the closest analogy to the model of product being bought directly by the consumer. Because of the B2B aspect, and being very tailored to each customer, I believe it would be difficult to apply the formula as it is being used for the retail examples in the article.

Unfortunately, all of my old pictures
of Massave Video are on "real" film, and
back in the US. But, this does look a little
 like my store.

I started a video rental business in 1997, called MassAve Video on 425 Massachusetts Avenue in downtown Indianapolis (no longer there though!). Although I sold my interest in the venture in early 1999, the business survived for almost another 10 years despite the shift in technology trends that buried most brick and mortar video rental stores, including Blockbuster. I can tell you from firsthand experience that there is certainly a cost to getting customers and quantifying the returns from those efforts, and I humbly wish that I would have had this Marketing Class back then. I could have definitely utilized the CLV aspect, to help me to identify which customers to target, measure from my own databases on which customers were actively renting for promotional considerations, and which customers to stop wasting my time with. I remember my first advertising campaign – I printed our logo with a coupon for a free introductory rental on colored half sheets of thick paper (about 5000 copies), and canvassed the Chatham Arch neighborhood with them, some by direct mail, others of me walking around and distributing them myself. The campaign netted around 300 customers in the first 3 months. By the time I sold my share, we had about 1700 customers in the database. I could certainly write many more blogs about things I learned (including many humorous stories) and what I would have done differently during that time. I also won’t go into my thoughts on their target segmentation after my departure, which was definitely towards the over 18 crowd!  Despite my lack of marketing knowledge at the time, the store actually did decent business and we broke even in the first year. Running a small business was a true learning experience that has helped me keep perspective working in a large corporation.

The Rosewood Hotels Case Study

The Rosewood Hotel case outlines the challenge in trying to keep those with a traditional view of the brand while trying to appeal to a larger market opportunity. The goal is that they want their customers to recognize and utilize other Rosewood locations, but customers seem to be unaware that these hotels exist or are connected to the same parent company. They want the enhanced name recognition by making the brand more prominent, but don’t want to lose the impression that each hotel is so distinctive and posh, that each property speaks for itself without needing such “common” advertising.

It seems to me that there can be a balance to achieve both goals, if the message is shaped thoughtfully. Associate the brand of Rosewood, but highlight the distinctiveness of each location while emphasizing the standard expectations of exceptional quality and service via the brand. I don’t believe this would really cost that much more than implementing the loyalty program proposed, and could be handled creatively while guests are staying at the hotel. Printed material in the guest rooms can highlight the other locations, and reservations can be directed through a common website using today’s internet technology. Email confirmations can include promotional material and links, and they can target major travel publications to advertise collectively rather than individually.

Rosewood Little Dix Bay

For myself, I am eyeing the resort in Virgin Gorda, BVI. After 6 months of dreary grey cold and rain that is the hallmark of English weather, I am ready for some warm Caribbean sun, beaches and fruity drinks!

Week 10 - Intro to Brand Valuation

Brands – what do they do, what makes them valuable, how do we account for them?



Honestly, what motivates someone to
put this on their vehicle, besides an
irrational brand loyalty? Still, these are
quite popular, and one can pick what
brand they want to show dislike for.



A successful brand evokes recognition and value in the eyes of the consumer. They can play upon strong emotions, such as tradition. If my mother’s mother used Clabber Girl Baking Powder for the traditional Christmas dessert, than that is the one that I also must use (or it just won’t be the same). My grandfather was a Ford dealer for decades starting back in the early 50’s (Tom O’Daniel Ford right in Bloomington), his dedication to the brand was so especially fierce, that my bringing home a Chevrolet resulted in open disappointment. He was always trying to get me to the dealership long after he retired, saying that only Ford had the value and quality worth having. He was thrilled in 1998 when I bought an Explorer… I never had the heart to tell him it was the worst vehicle (it was expensive, thirsty and had lots of problems) I had ever owned!    

The next Pepsi campaign to feature
Michael Jackson

A brand is a product’s reputation, built bit by painstaking bit, to portray what the company wants the consumer to perceive when they see the brand. This could be low cost, quality, performance, status, etc. It takes great effort to build the brand and it is all too easy for the reputation to become damaged, for instance by a quality issue or campaign. Once that trust is damaged, it can be rebuilt, but takes a tremendous amount of time and effort. We have the example of Tiger Woods to demonstrate this. However, in Tiger’s case, I do believe that he may be on the cusp of rebuilding much of what was lost. I see that Pepsi is getting ready to introduce a new promotion featuring Michael Jackson. Who would have thought, after all of the scandal surrounding MJ, that a strong brand like Pepsi would use this as their primary strategy to claw back declining market share from its competition? http://abcnews.go.com/blogs/business/2012/05/pepsi-announces-michael-jackson-ad-campaign/

A brand also defines to the consumer what to expect when they buy the product; a brand implies a consistency that consumers come to rely on. One can be assured that entering a McDonalds’ anywhere in the nation, that a QuarterPounder with Cheese will look and taste exactly the same. Although there is a focus to adapt the brand to respond to regional tastes and cultural expectations, McDonalds has been very effective at promoting the brand all over the world.

Where's the Beef? I took this picture while travelling in India
last year. Instead of the Big Mac with hamburger, McDonalds has
introduced the Chicken Maharaja Mac. The Filet-O-Fish is the same.

Therefore, what makes a brand valuable? It is that despite the availability of substitutes at lower prices, consumers are loyal to purchasing the brand. They promote the brand themselves by word of mouth, by wearing  promotional clothing, by decorating their homes and vehicles to let others know about the brand. Consumers derive self-esteem from promoting the brand. The fact that anyone would pay $1700+ for a Gucci handbag that costs $50 to make is the overwhelming argument (although incomprehensible to me personally) that brands matter, and that they are valuable.  

I believe that brands should be included on the balance sheet, although I still struggle with an objective way to quantify them, despite the methods mentioned in the Brand Valuation article. To me, it is just like a tangible asset, and Professor Talbot mentioned real estate as a good example in his video. True value is what someone else is willing to pay for the asset, no matter whether it is tangible or intangible. We know that if McDonalds’ or Coca Cola were to be acquired, it would cost much more to purchase than just the value of their buildings and equipment. It is this excess that should be placed on the balance sheet.

Week 8 - Pricing/Channels and IMC

Effective firm/product that brings the mix together for its consumers:

I am a caffeine junkie. While my first love is coffee to achieve my habit, I do like fizzy drinks and sometimes I want something other than a hot drink. I cannot say what first drew me to try Red Bull, but discounting the dubious claims of the health benefits of the ingredient, Taurine, it was primarily the tangible benefit of its caffeine content that reeled me in. I did find the drink refreshing, I liked the taste and it was a nice change from the routine.   

I would categorize Red Bull as having an intensive distribution approach, being widely available in grocery stores, convenience stores, restaurants and bars. It started more selectively however, relying on the word of mouth and viral effects. With a tagline of “Red Bull Gives you Wings”, it was originally targeted at young males with the emotional appeal of advertising to associate itself with the image of extreme sports and the energy needed to participate in these activities, “it revitalizes the body and mind”. It has also grown as a subculture product in bars and dance clubs. This is attributed to the interesting nature of mixing alcohol with a stimulant: this allows young partygoers to drink more while masking the depressant effects of alcohol, thereby giving them stamina well into the wee hours of night.  Although the company seems to officially shy away from this particular use of their product, the fact that their promotional activities involve sending representatives in attention getting vehicles to alcohol related events and festivals suggest they understand the value this particular benefit provides to this segment, and its importance to the overall business.

The pricing is pretty high for what I consider a soft drink, and I have rarely witnessed discounts, despite increasing competition and availability of other energy drink brands. Thus, I would categorize it as a fixed pricing scheme, with premiums paid for the drink on an individual basis (primarily for the convenience at particular establishments) vs. buying it in bulk at the grocery store. Keeping the price high maintains its positioning as a premium, highly desired and “cool” product for its target base.

As the product has gained in popularity amongst the young, it would seem that the company does seek to target further growth with other segments. This is evidenced by their quirky commercials on television and other mainstream media with the very simple cartoons and the impression when you drink the product, that you can fly away. I am not sure if these commercials are targeted towards the very young as future customers (being a cartoon with a fantasy theme) or whether they promote general awareness to a broad market.

Red Bull chooses its communication tools very effectively. The Red Bull website, www.redbull.com, barely mentions the actual product, just all the activities they are sponsoring. Curiously, you have to look for the small link under other menu options to actually view information about the product.  Its Facebook page boasts nearly 28 million “likes”, evidence of its success at social media. This page also emphasizes more heavily on the sports and activities for which it seeks to be associated rather than the actual product it sells. Even more curious, Red Bull pretty much is about this single product, the energy drink. They have packaged it differently (the “energy shot”, a “cola”), but it is essentially a one product company. However, they have capitalized on this product to offer apparel, posters and other chotchkies  (for the various activities they sponsor at premium prices, I might add) which in turn provide more advertising and promotion for them. It is quite a feat when a company can get the consumer to pay for merchandise which essentially helps the company advertise its product! Red Bull is active in public relations, with its “Wings for Life” campaign, selling merchandise with a portion of the proceeds benefitting research for spinal cord injuries.

The company reported over 4.6 billion cans of the product sold in 2011, with revenues of €4.2B. Although I am not sure of the distribution of these revenues of the drink vs. promotional merchandise, it is a very impressive mix of perceived value by the targeted consumer segment involving clever advertising, channel selection, and pricing strategy.

Week 7 - Colgate Palmolive Cleopatra Case

My team was selected to write up the case memos for this topic this week, therefore, I will be submitting that separately. I will resume normal blogging next week, stay tuned!

Week 6 - Product Development Management

Reflections from the readings and videos

Considering the “products” that I personally use, I have to imagine I am not a branded company’s ideal consumer. Looking around my household, I see a plethora of “generic” brands, no real tendency towards repeat purchases, and I tend towards products that I believe best fit the need at the lowest price. I don’t wear brand name jeans, I have no preference to the electronics I buy, and vehicles, etc. are functional and practical to me (tangible goods), not status symbols (even if I was a millionaire, I would not pay $1700 for a Gucci handbag!). As for the layers of the products, I believe it is the same story – my personal PC hardware has to be powerful enough to run the specific software that I plan to use on it, anything provided beyond that is all well and good, but not particularly necessary for me.  I do look to reputation for quality and reliability for vehicles (my intagibles side). I am usually willing to try new things to satisfy needs in better ways, rather than stick loyally to a particular brand. 

This is especially true now that I have located from the US to the UK, where the land of brands is new and somewhat unfamiliar. I guess it’s a good thing that I don’t have a strong affinity for my old brands, because most of them are unobtainable in this new market, at least under their “old” names. It is interesting, because I can tell that some brands have been modified by the same parent company to better target the UK consumer, such as dish detergent. Paper towels (or “kitchen towels” as they are called here) are essentially the same thing under a different brand. About the only thing I do have an affinity to stay with is my toilet paper brand, LOL, but I guess I had better get over that as well!



Joy (US) and Fairy (US) liquid dish soap,
essentially the same product by the same
parent company, P&G.



Do these brands look familiar to one another? Bounty (US),
owned by P&G, sold its right to this product in the UK
to SCA of Sweden in 2007 with the understanding that it
would be under a separate brand.



As for new product development (PD) and product lifecycle, there are multiple examples of products becoming obsolete, ranging from the electric typewriter to music cassettes (who can forget vinyl and 8-track as well?) to 35mm camera film. And I suspect that music CD’s and DVD’s will not be long in also becoming obsolete. True, there does become something of a small niche following for the older technologies, but not on a volume based scale. The pace of emerging technology has a direct impact on PD and only the most nimble companies will be able to capitalize on new innovations, compared to those who move too slow to realize that technology will obsolete their tried and true products. The advent of digital media really drives this point home, and has been a very disruptive technology for many companies who formerly relied on older technologies to offer the same products/services. The following example highlights the 7 (or 8) step PD process, it is from a firm called Ideo, which specializes in innovative product concepts. This example in particular shows how this firm tackled a redesign of the shopping cart, getting from idea generation to prototype design in only 5 days, which I found particularly impressive. Although the product has not yet caught on in a mass market, I think it is an excellent basis on how firms can respond to shorter product lifecycles when considering their own PD needs. It was highlighted on ABC’s Nightline, and the 8 minute video can be found at the following link: http://www.youtube.com/watch?v=M66ZU2PCIcM

Ideo Shopping Cart Concept

Week 5 - Segmentation, Targeting, Differentation and Positioning Examples

Last week, I sought to better understand the definitions and explanations for Market Segmentation, Targeting and Positioning. I wanted to give myself some time to think about and observe some key examples of how companies have done this with various products. I have chosen two examples which I feel provide insight into differentiation in the marketplace, and that have had the most recent impact on my own experience and perception with products.

Comes in convenient multi-purpose
dry sheets.

Laundry detergent: If one thinks about the purpose of laundry detergent, it is very basic – overall, consumers want a product that is going to do the job of cleaning clothing in the most value added way.  Given that all detergents on the market essentially meet this basic need, why would consumers choose one brand over another? Thus, companies have invested heavily into determining how to differentiate their product from the competition and what influences various consumers. Throughout the years, we have seen basic detergents evolve into specific cleaning purposes (formulated especially for bright colors, or for use with hard water, etc.), more concentrated versions of detergent for the cost conscious consumer (more loads per amount used), liquid vs. powder vs. tablets, claims of superior cleaning ability and other distinctions. For myself, the scent of the laundry detergent carries great weight in my choice – even if a particular brand is the best value for the money, if I don’t like how it smells (especially considering one has to wear it all day), I won’t buy it.  I have recently chosen a new brand due to my expat assignment in the UK, due to the way the washing machines work here. Purex has laundry detergent and fabric softener in the form of a dry sheet, which I can toss into the load very conveniently (and the scent is tolerable as well).

DVDs: A market segmentation that I have not liked as well is the DVD industry. Did you know that DVD’s are formatted by geographical region, so that DVD’s released in the US do not work with players in Europe, etc.? Presumably, this is to allow the marketers to differentiate pricing and maximize promotional activities with release timing in each of the regions (heaven forbid that a person in the UK be able to buy a copy of “John Carter” at the same time as someone in the US, it would just ruin the profitability of the film!). However, for someone who brought a substantial collection of US DVD’s with her to Europe only to have the US DVD player fail 4 months into the assignment, I am frustrated at the inconvenience of not being able to readily procure a player that is compatible. One thing I can assure the industry is that I will NOT be buying replacement DVD’s in the Euro market as a result of this setback – I will figure out a way to utilize that which I already have, or not watch them at all.

In my opinion, the segmentation strategy for the DVD market does not seek to enhance customer value at all, but only to maximize profit for the industry. This is a key difference to the example of the laundry soap market, which is more representative of obsession on the consumer and what is valued in the product offered.