learnthe4ps.com - For students of marketing.

Human beings are actually not very rational decision makers — there is a great deal of evidence to that effect.  We are subject to predictable biases.  Increased computing power and better databases are allowing companies to use analytics and make better (unbiased) decisions.  This is sparking the rise of new companies that can analyze data and some new applications.  You can read more in “So, What’s Your Algorithm?” (Wall Street Journal, January 4, 2011 – non-subscribers may need to click here).

Read this article and think about how other firms (beyond the Schwan’s example in the article) could use “big data” to make better marketing decisions?  Also, how do you think trends like this will impact your future career — answer by referencing your career?

A couple of interesting stories about how retailers utilize high-tech analytics to better understand customer shopping behavior. I heard “The secret life of discounts” (Marketplace radio, December 16, 2011, link to listen or read the transcript) as I drove to the airport last night to pick up my daughter who was coming home from college. There are some examples about how stores use analytics to try to remain profitable with consumers conditioned to buy only at a steep discount.

In “Big Brother is Watching You Shop” (Bloomberg Businessweek, December 15, 2011), you can read about retailers using in-store video cameras and tracking your cell phone to better understand how you move through a retail store. Analyzing video from a Miami store allowed Montblanc managers to more strategically locate merchandising, signage, and salespeople. The result — a 20% bump in sales. Other retailers follow customers’ cell phone signals to track and map movement through stores. This of course is raising privacy concerns.

What else could stores learn by carefully analyzing video of consumers shopping?  Does it bother you that your cell phone signal allows you to be tracked while you shop?

Marketing is most interesting when you can see many of the concepts you learn tied together.  This article, “Philly Cream Cheese’s Spreading Appeal” (Bloomberg Businessweek, December 12, 2011) shows how some of the different elements you have been learning about in marketing can be tied together – with successful results.

Sales of Philadephia brand cream cheese were pretty much flat (mature or decline stage of the product life cycle) for most of the last decade. Then Kraft researchers (market research) noticed that heavy users of the product were using cream cheese (consumer behavior) as an ingredient in their cooking — not simply as a spread for bagels. Starting in Europe back in 2008, Kraft’s brand managers tapped into social media and the Internet to gather and share recipes using Philadephia brand cream cheese, they promoted it on cooking shows and with contests (Promotion). In the U.K. the share of customers using cream cheese as an ingredient (effective repositioning) has almost doubled to 37% — and sales are up 20% in Europe (results).

This is a great case study of a successful brand revitalization.  Check out the article for more details on the strategy.

Good question — especially if you think this might be a possible future career.  In this article, “How researchers explain their profession at a cocktail party,” (Quirks, November 2011), you can read a wide range of answers from those in the research profession.  Some of these are serious and some are funny (at least to researchers).  Either way, they give some insight into this profession and you might find it insightful if you are considering pursuing a career in market research.

The business side of online games is quite fascinating.  Zynga’s online games for Facebook including – FarmVille with 10% of all Facebook users growing virtual crops online.  Zynga has been adding new games like FishVille and CityVille to appeal to others.

The business has many interesting angles for learning more about marketing.  Consider the following concepts:

• Price and the freemium business model.  Freemium refers to a business model where most customers use a product for free, while a few power users cover costs.  More than 95% of Zynga’s 150 million monthly visitors pay nothing to play its games.  The other 5% pay hundreds and even thousands a year for virtual products that enhance their gaming experience.  For example, $5 might get you a chicken in FarmVille, a skyscraper in CityVille, or an anglerfish in FishVille.  Of course they love to sell these low cost virtual products…
• Fixed and variable costs.  There are minimal fixed costs for creating a new anglerfish, but the variable cost of producing hundreds of thousands of them is very small.  Almost no variable cost.Segmentation and targeting.  In this post at TechCruch (“Who Spends The Most Money In Freemium Games?” September 8, 2011), you can see by age group, who uses mobile freemium games — and who “spends”.  Not surprisingly, while more than half of users are under age 24 — this younger market contributes just 21% of the spending.  Consequently, most of the action in online games targets an older demographic.  And of course a little analytics can identify what products encourage spending…
• Marketing research.   In “Virtual Products, Real Profits,” (Wall Street Journal, September 9, 2011, non-subscribers may need to click here), Zynga’s president of data-analytics says, “We’re an analytics company masquerading as a games company.”  Zynga analyzes game player behavior and adapts the game to get players to play longer or spend more.  For example, after finding that FishVille players bought the translucent anglerfish much more often than other sea creatures, they created more variations on the anglerfish.

Do any of you play these games?  What ideas do you have for improving the customer experience?  What ideas do you have for generating more revenue?

Brain researchers at Emory University have found that brain scans can help predict the future success of new music.  The article “Songs Stick in Teens’ Heads” (Wall Street Journal, June 13, 2011, non-subscribers click here) and companion video describe the research.

Is this a new type of market research?  Should musicians (or record labels) be using it as part of the new product development process?

What do you think of this?  Does it take away — or contribute to — the creative process?  Does that matter?

As social media began to attract more consumer eyeballs, marketing managers were confused about how to deal with it.  Now some best practices are emerging. Marketing managers have a better idea about which marketing objectives different types of social media might help achieve.  This article, “Are You Talking to Me?” (Wall Street Journal, April 25, 2011, non-subscribers click here) suggests five best practices used by companies with some success in social media. Many of the lessons come from “listening” closely to customers via social media. The early heavy users of social media are listening, learning, and adapting.

What marketing objectives do you see social media working best to achieve?

Here is a great case study. What happens when the company that holds 40% of the carrot market brings in a former Coca Cola marketer to run the company? Well, he conducts market research and then brings on big name ad agency Crispin Porter + Bogusky. Together they go after new ways to increase our consumption of the orange veggie — and not promoting its healthiness. An interesting marketing tale is told in “How Carrots Became the New Junk Food” (Fast Company, March 22, 2011).  This story is still being written; we do not yet know if it will sell more carrots.

What do you think?  Will this strategy work?  What other tactical marketing suggestions would you have for Bolthouse?  Think about each of the four Ps – or other target markets?

Zappos is one of our favorite companies here at L4Ps. We also feature them in the retailing chapter in our text book. The online retailer is always innovating. Now they are using their own employees in online videos — they have produced 58,000 short videos of employees (not professional models) showing off its shoes and other apparel. The use of employees can build trust — and seeing someone actually using a product can increase its appeal. Zappos also conducted an experiment – showing the same products with and without a video. They found sales averaged 10% higher when a video accompanied the item. Check out “A New Sales Model: Employees” (Wall Street Journal, March 17, 2011 – non-subscribers may have to click here).

What do you think of this approach?  Would it make you more likely to purchase?  Which product categories would work best?

This is a nice example of marketing research – museums are hiring researchers to observe visitors and record what they see. See “The Museum is Watching You” (Wall Street Journal, August 18, 2010 – click here if the title link doesn’t work).

…watches where visitors stop, whether they talk or read, how much time they spend. He records his observations in a handheld computer, often viewing his subjects through the display cases or tiptoeing behind them to stay out of their line of sight. “Teenage daughter was with, but did not interact, sat on bench, then left,” read his notes of one visit.

The article provides a good example of marketing research in a nonprofit context.  What are the advantages of this type of research for the museum?  What are downsides or risks?