·         Server log: record kept at the server level that records each file requested from a website; server log files are created by the server that houses the web site. Each time a browser requests a file in order to build a web page, it generates an entry in the server request log.

·         Panel Data: the process for using panel data to generate site effectiveness data is the same as using panels in the general marketing research process. The first step is to recruit a statistically representative panel of internet users who agree to participate in the data collection. Specialized software is downloaded onto the participant’s computer to record the click stream data. The software is polled at regular intervals to upload the data. First, the source of the data is unambiguous, which it often it not with server logs. Second, a person who uses the internet from both home and work is two separate people according to server logs, but carefully planned and maintained panel data can overcome this issue. Third, the measurement firm can collect demographic and behavioral data from panel households that can be useful in reporting and analytics.

·         Coded pages: the use of coded pages is a new method of collecting data, on the “browser (user’s) side” of the information transaction instead of on the “server side” The tag part of the page that is requested by the served to the user’s browser. The file then sends data back to the server. Working with cookies, the tag can send back detailed information about the visitor’s activity on the page. One the surface, the data are the same as those collected by a server log. Data collected by tags has several advantages over server log data: the data may be more accurate, data collected by web bugs has smaller storage requirements because it stores only relevant data, and when data are collected in this manner, it permits real-time processing and viewing of site metrics.

Similarities

·         Used for recording activities in a web site

Differences

·         Server Logs record information on the server side while Coded Data collects information from the browser side

·         Coded Pages are more useful than server logs because the user’s IP address may change during the session, causing the server log to, in effect, record different visitors instead of the same visitor

·         When using Coded pages, data collected by Web bugs has smaller storage requirements because it stores only relevant data, not all the site operating data stored by server logs.

• With Coded pages, when data are collected in this manner, it permits real-time processing and viewing of site metrics. Server log data, on the other hand, must be transferred to a separate analytics system for batch processing. It can be made available quickly, but not in real time.

·         With Panel Data, the source of the data is unambiguous, which it often is not with server logs a person who uses the Internet from both home and work is two separate people according to server logs, but carefully planned and maintained panel data can overcome this issue

·         The measurement firm can collect demographic and behavioral data from panel households that can be very useful in reporting and analytics. Because server logs identify most users by dynamic IP addresses, it is not possible to use much third-party data to enhance it.

Measuring Metrics

Internet Traffic Measuring Metrics:

·         hits: the number of files requested

·         impressions: the number of times and ad banner is requested by a browser

·         page views or deliveries: the number of times a web page is requested

·         sessions: the amount of activity on a site during a specified period

·         click-through: the number of times visitors come to the site by clicking on an ad

Audience Measuring Metrics::

·         visitors: the number of people who visit the site

•                total (includes multiple visits) or unique (different people) during a specified time frame

•                unidentified (anonymous) or identified (registered or customer)

·         unduplicated audience: the visitors that are unique to a web site

·         behavior on the site

•                number of page views

•                session time

•                path through the site

•                shopping cart abandonment

•                entry page (many visitors do not enter through the home page)

Campaign Measuring Metrics

·         by communication channel: e-mail, mail, online banner, and so forth

·         by offer: promotion offered (free shipping versus 25% off)

·         search effectiveness by keyword

·         The customer adoption process is generally accepted conceptualization of the stages a consumer goes through when confronted with a new product or service.

·         According to the adoption process, the consumer must first become aware of the product, then develop an interest in it, perform some pre-purchase evaluation, and then try the product, either as a consequence of a purchase or of a marketer-sponsored promotion or incentive.

Diffusion of Innovations

·         Diffusion process is a communications model and as such it consists of four elements: the innovation, communication channels, time, and social system within which the innovation is spreading

·         The Consumer Adoption Process explains consumer behavior and how consumers adapt to a product, while the diffusion of innovations describes the life of a product over time.

Pervasive Computing

·         Pervasive computing implies that a single person has access to myriad computing devices to assist in performing all sorts of daily tasks.

·         Pervasive computing aims to enable people to accomplish an increasing number of personal and professional transactions using a new class of intelligent and portable devices. It gives people convenient access to relevant information stored on powerful networks, allowing them to easily take action anywhere, anytime.

·         There, new intelligent appliances or “smart devices” are embedded with micro-processors that allow users to plug into intelligent networks and gain direct, simple and secure access to both relevant information and services. These devices are as simple to use as calculators, telephones or kitchen toasters.

Changes Likely to Bring about in the way marketer approach the Internet

·         Marketers have to seize the opportunities presented by the changing technological environment and develop new products and services that successfully take advantage of it such as RFID.

Strategic Drivers of Wireless Adoption

·         Context: providing necessary information when and where the customer needs or wants it

o    Localization: location of the user can be identified and information specific to that location can be provided (GPS, Tracking Device)

o    Personalization: the customer can select not only the type of information desired but also the frequency of information provision (consumer may select specific stocks and specific price levels at which he or she wishes to be notified.)

·         Time sensitive: because screens are small and storage in limited, information must be provided at the time appropriate to the customer, not convenient for the marketer (As a customer passes a store in a shopping mall, he or she may be willing to receive a coupon for a purchase in that store, which can be saved or retained on the screen until the customer shows it when checking out the purchase.)

·         High value:  The coupon will have to have a reasonable value in order to make it welcome in the wireless context

·         Voice activation: there are many situations in which it is not safe to use the keyboard (voice activation)

·         One-click payment mechanisms: a system is which payment is easily and securely authorized and billed to a single account because consumers are not going to be willing to enter credit card information on mobile keyboards and may be uncomfortable with the idea of their credit card data being transmitted wirelessly

·         Security: users must be assured that data transmissions are secure, and authentication services must be provided in a way that is suitable for the devices (smart cards that can be inserted or taken out)

·         Privacy: providers of content and services will have to be sensitive to download times, lack of storage, and the fact that users are paying for airtime- They must not abuse technological capabilities like geographic locational services.

·         Expanded permission marketing: marketers will have to extend the concept of permission marketing beyond simple opt-in scenarios. They must find out what kind of information consumers are willing to receive, how often they are willing to receive transmissions, and where they are willing to receive it

·         Marketers are interested in a narrower set of activates that focus on integrating front-and back-office services and delivering information to customer service personnel and decision makers when and where they need it.

·         They are connected about customer experience and realize they must deliver it seamlessly through multiple channels at times and places demanded by the customer. This requires marshalling all the resources of the enterprise to create usable knowledge from the multiple types of customer data and the expertise of best workers. 

·         Knowledge management in marketing enable human agents to do their work better, faster, and in a way that provided maximum customer satisfaction, al creates automated systems that perform at least as well as the most skilled human agent

• Being proactive, not simply waiting passively until customers request service
• Companies must anticipate potential problem areas before they become troublesome, develop solutions, and provide service that exceeds customer expectations.

Role in Successful Customer Service Delivery

• Anticipatory customer service builds customer scenarios by using data including call center reports, e-mai logs, chat transcripts, and Website software.  These scenarios allows companies to intervene and prevent problems.
• It also makes customer service pervasive by fulfilling common requests before the customer even asks and ensuring that service is readily available throughout the value chain.
• A.C.S. also guides customers to the service they need without having to move through frustrating layers of information that does not fit the needs of customers.

Article:

IN THE LATE 1990S, Tiffany & Co.’s silver charm bracelet was a must-have fashion accessory. Teens jammed Tiffany’s hushed stores clamoring for the $110 silver bauble. Sales skyrocketed, investors cheered.

Tiffany’s managers worried. They knew the bracelet had become a fad, one that could alienate the jewelry firm’s older, wealthier, and more conservative clientele. Worse, it could forever damage Tiffany’s reputation for luxury.

“The large number of silver customers did represent a fundamental threat — not just to the business but to the core franchise of our brand,” says Tiffany CEO Michael Kowalski.

So in a dramatic gamble, Tiffany decided to kill its golden goose. In 2002, the firm began raising prices on its fast-growing, highly profitable line of less expensive silver jewelry. It simultaneously introduced pricier jewelry collections, renovated stores and showed off its craftsmanship by highlighting spectacular gems like a $2.5 million pink diamond ring.

Like a growing number of publicly traded luxury-goods makers, Tiffany is attempting to walk a razor-thin line: broadening offerings to the upper-middle-classes while pitching privilege to the truly rich. The dilemma is particularly common these days, as investors clamor for sales growth on one side and fickle luxury buyers demand exclusivity on the other.

Other purveyors of designer wares have stumbled trying to satisfy both groups. Burberry Group PLC, the venerable British fashion house, plastered its iconic tan plaid on everything from dog collars to headbands, only to struggle with the resulting overexposure.

Wealthy consumers aren’t as loyal as they used to be. “Even though we’re seeing more millionaires than ever, they now have lots of choices on how to spend their money,” says Arnold Aronson, a managing director of consulting firm Kurt Salmon Associates and former CEO of Saks Fifth Avenue.

The jury is still out on whether Tiffany’s daring move has worked. Although high-end jewelry has replaced silver as its fastest growing business, the company’s profit margins and stock price have yet to reach the highs of years past. Yesterday, Tiffany reported an 8% rise in U.S. same-store sales from Nov. 1 to Dec. 31 and a 7% increase world-wide. Total sales rose 15% to $818 million in the period, with U.S. retail sales up 12% to $432.4 million, exceeding the company’s expectations. Tiffany said robust sales in most global markets offset a same-store sales decline in Japan.

High-end jewelry is expensive to produce and rising commodity prices on gold, silver and platinum pose an added risk. Consumers in Japan have strongly resisted the price increases on silver jewelry, causing business there, about 20% of Tiffany sales, to struggle. In the most recent quarter, sales in Japan stores open at least a year fell 5%, worse than the company had anticipated.

Meanwhile, Tiffany said yesterday that a 2001 operating agreement between its Japan unit and department-store operator Mitsukoshi Ltd. is set to expire Jan. 31, according to a filing with the U.S. Securities and Exchange Commission.

Tiffany Japan operates 19 boutiques in Mitsukoshi stores. Tiffany said Mitsukoshi has indicated it is willing to renew the agreement. Further talks between Tiffany Japan and Mitsukoshi will be required before a new agreement is reached, the SEC filing said.

While it was long known for silver household goods, Tiffany for most of its history didn’t sell silver jewelry. The firm — which prides itself on offering a wide array of price points and treating all customers well — made silver chic in the 1970s, when it introduced a line of bold silver bracelets and necklaces made by jewelry designer Elsa Peretti.

In the go-go years of the late 1990s, Tiffany’s managers decided to create less-expensive silver jewelry to address the then-emerging trend toward affordable luxury. Middle-class consumers were becoming increasingly brand-conscious. And silver had emerged as the “it” metal.

The 1997 introduction of the silver “Return to Tiffany” collection, which offered jewelry inscribed with the Tiffany name for just over $100, was a huge hit. The charm bracelet was a sensation. Elle Woods, the ditzy law student portrayed by Reese Witherspoon in the 2001 hit movie “Legally Blonde,” accessorized her string bikini with a Tiffany charm bracelet and matching necklace.

Thanks to Return to Tiffany and other similarly priced silver pieces, Tiffany’s sales exploded, rising some 67% during the height of its silver-jewelry boom from 1997 to 2002. Earnings more than doubled over the same period, to $189.9 million from $72.8 million. The stock rose about 500% from late 1998 through the end of 1999, topping $44 by the end of that year. By 2003, silver represented 31% of total U.S. sales.

Before the silver rush, management worried that Tiffany’s expansion into smaller cities posed the biggest immediate threat to the Tiffany image. But soon they became more concerned about the crowds in Tiffany’s suburban stores, where teens like to shop. In peak holiday shopping periods, some salespeople passed out beepers to alert shoppers when a sales associate became available.

In the winter of 2000, Carolyn Cippoletti headed to a Tiffany’s to buy a silver necklace for her 12-year-old daughter. She was surprised by jostling crowds. “There was nobody in the diamond section — everyone was in the silver jewelry,” says the New City, New York, resident. “I felt like I was in Macy’s.”

People inside the company debated the problem for months. “Some people would look at it one way and say, ‘If every 16-year-old gets her silver jewelry from Tiffany, they’ll eventually want their engagement ring from Tiffany 10 or 20 years later,’” says Mark Aaron, Tiffany’s vice president of investor relations. But “what if some of those teenagers fill up their jewelry boxes with Tiffany silver, and as they get older, they perceive Tiffany as where they got their teenage jewelry?”

Everyone knew how beneficial lower-end silver was to Tiffany’s bottom line. Any effort to curb it could dramatically slow sales and affect profitability — and likely upset shareholders.

Ultimately, the company says it relied on focus groups to make the decision. Complaints about crowding were beginning to appear in internal consumer research. The research also flagged concerns that Tiffany’s brand was becoming too closely associated with inexpensive silver jewelry. “We didn’t want the brand to be defined by any single product,” says Mr. Kowalski.

In 2002, Tiffany began aggressively raising prices on the pieces most popular with teenage girls, particularly the Return to Tiffany charm necklace and bracelet.

Customers took the first round in stride. So in 2003, Tiffany tried again. By 2004, the Return to Tiffany bracelet cost $175, up 30% from 2001. The necklace price jumped to $250 in 2004, up 32% from the year before, according to a study by Goldman Sachs. Other silver bracelets, rings and necklaces rose in price by 20% or more.

It wasn’t until the second quarter of 2004 that the craze died down, and Tiffany finally noticed a definitive decline in sales of silver jewelry and other pieces under $500. “There was a sort of amazement,” says Mr. Aaron. “A lot of people would think that as soon as you raise prices at all, you’ll start to see some reaction to that, but it really took a few years.”

While Tiffany reported price increases in 2003, it didn’t report that the price increases led to a slowdown in silver-jewelry sales until a conference call in 2004 — some two years after the strategy was implemented.

As expected, not all investors were thrilled. “By becoming less affordable to this aspirational customer, Tiffany risks alienating her when she returns for later milestones,” Goldman Sachs analyst Adrianne Shapira wrote in a 2004 research note. “If Tiffany is viewed as too expensive for smaller ticket purchases, then more substantial purchases might be sought elsewhere.”

The following year, earnings took a big hit. By 2005, the company’s earnings fell 16% to $295 million. Tiffany’s stock price — damaged by lower sales of silver jewelry, especially in Japan — sunk about 40% from late 2003 to late 2004.

Mr. Aaron says some executives may have been a “little nervous.” “I hope we didn’t go too far, and at what point will it stabilize?” he says they wondered.

Meanwhile, Tiffany plunged ahead with the other half of its plan: courting upscale shoppers. It renovated stores to better handle both “transactional” purchasers, such as those buying silver jewelry, and “fine jewelry” buyers, who require more of a “relationship.”

At the Tiffany store in New Jersey’s Mall at Short Hills, the main entrance still leads shoppers to counters housing its fine jewelry. But just aside, a private viewing room was added with a ready stock of chilled water and champagne. “We wanted to create an environment that was more intimate,” says Elisabeth Ames, a Tiffany vice president. A side entrance was also added to lead “transactional” shoppers directly to the counters of Tiffany’s silver jewelry. Other Tiffany stores have undergone similar renovations.

Tiffany also rolled out some higher-end collections, including new diamond-ring designs. Targeting a mature audience, it launched new silver lines, including a 2004 collection by longtime Tiffany designer Paloma Picasso and a 2006 collection by architect Frank Gehry. Such higher-price, more sophisticated launches helped boost the average price of a silver bracelet to $445 in 2004, according to Goldman Sachs.

At its flagship New York store, Tiffany began inviting its best customers to observe artisans creating one-of-a-kind jewelry in its storied seventh-floor workshop, which is closed to the public.

Now, Tiffany can boast that its biggest sales growth in the U.S. came from sales and transactions over $20,000 and over $50,000. In the most recent quarter, sales in stores open at least a year grew 4% over the year before, with the newly renovated New York flagship posting a gain of 13%.

But concerns remain. In its most recent quarter ended Oct. 31, Tiffany posted a 23% increase in earnings to $29 million, but a significant portion of that profit was due to the sale of some investments. And gross profit margin, still sagging from loss of the lower-end jewelry, has declined to 53.6%, compared with 54.1% the year before.

Since hitting a 52-week low in August of $29.63, Tiffany stock has risen about 30%. Yesterday morning, shares were down 55 cents each, or 1.4%, at $39.07 on the New York Stock Exchange.

And some high-end shoppers haven’t yet been lured back into Tiffany stores. Barbara Graffeo has a jewelry box full of Tiffany pieces. But, she says, “I don’t wear them anymore because everyone wears them now.” The 46-year-old owner of a New York apparel company adds, “You used to aspire to be able to buy something at Tiffany, but now it’s not that special anymore.”

Tiffany is continuing to aggressively expand into smaller U.S. cities such as Indianapolis and Atlantic City, New Jersey. The company, which now has 64 U.S. stores and 104 locations in foreign markets, is well aware that too many stores — particularly those based in malls — have the potential to dilute the allure of Tiffany as a special destination. So far, sales at Tiffany’s branch stores are brisk.

License this article from Dow Jones Reprint Service http://www.djreprints.com/link/DJRFactiv…]

Document WSJE000020070111e31b0001b

•          Ebay began to utilize more levers, and the additions were focused in two places: the commitment column in the matrix became heavily utilized, as did the community row.

•          Ebay did also seek to drive awareness and exploration among new users, but the firm designed the bulk of the new levers added to the matrix to advance users to the commitment stage and keep them there.

Key principles for lever selection within the Marketspace Matrix

Choose Levers to Effect a Change

·         Firms must understand the behavioral change they are trying to create.

·         After establishing the desired outcome, the optimal levers will be easier to pick.

·         E.g. Amazon.com 1-click ordering capability

Determine Which Levers Have the Most Leverage

·         Firms must understand which levers are decisive in moving customers from one stage to another.

·         While one lever may help generate awareness or exploration, another may prove to be the tipping point from one stage to another.

·         E.g.: Offline sale of cosmetics

o    Magazine ads generate awareness, but decisive point is at the cosmetic counter.  Firms thus need to move customers to the counter since that is the commitment or dissolution point.

Consider Barriers to Advancement

·         Need to understand what prevents people from moving from one stage to another.

·         The obstacle that stands in the way of advancement should be the target of a lever.

·         E.g.Handspring adopted Palm operating system for its devices so that Handspring users could use existing Palm applications (product lever) and was able to compete and build awareness using the price lever.

Consider the Medium’s Effect on Desired Behavior

·         To advance from one stage to another, the medium used for the awareness stage may be quite different from the one for the commitment stage.

·         E.g.MSN CarPoint – To enable commitment behavior, CarPoint refers customers to local dealers who have the customer’s car of choice, a unique distribution lever.

Level of Involvement Matters

·         High-involvement purchases will have different marketing levers than low-involvement purchases.

·         To know which lever to use, firms need to understand where the product falls on the involvement spectrum.

·         E.g. High-involvement decision is a consumer’s choice of bank. 

Understand Consumer Learning Trends

·         Firms need to understand how consumers learn about products.

·         Often different segments learn in different ways.  Elderly customers usually do so through offline channels whereas younger consumers usually do so through the Internet.

·         For firms to effectively reach their target customers, they must use marketing levers that are consistent with the preferred learning processes of that particular segment, especially during the awareness and exploration stages.

Credibility of the Channel Matters

·         The credibility of the channel matters more than the literal message.

·         A message can be ignored when delivered via one medium, but completely absorbed when delivered by another.

·         E.g. The Blair Witch Project

o    By choosing to initially promote the movie almost exclusively via the Internet, promoters were able to create a hype and anticipation around the movie and its release that would not have been possible through conventional channels.

The Choice of Levers Must be Consistent with Positioning Choice

·         The firm’s marketing levers must support the choice of position the firm takes in a certain segment of the market.

·         This would mean that certain levers would be ruled out and others will be more attractive.

·         E.g. American Express Platinum Card

o    Personal invitations are sent to potential members which is consistent with the positioning of prestige, exclusivity and unique services for the frequent spender.

The Medium can be the Message – or the Product

·         By choosing the channel, the firm is already making a choice about what it is saying.

·         E.g. By advertising in Town and Country, the firm is perceived as targeting an affluent audience with fairly conservative values, even if it sells eggs.

Matrix Design Must be Adaptive

·         A firm must be able to adapt its matrix to respond to evaluation of the campaign and changes in the market.

·         As levers prove ineffective or extremely effective, resources must be allocated in response to these discoveries.

•          A name, term, sign, symbol, or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of the competition

Brand Equity

•          A set of assets (and liabilities) linked to a brand’s names and symbol that add to (or subtract from) the value provided by a product or service to a firm and/ or that firm’s customers.

•          Brand equity is a combination of intermediate consumer responses and both customer and firm benefits.

Consumer Responses that Make up Brand Equity

Strength of Association

•          Refers to the intensity with which target consumers link a particular word, phrase, or meaning to a particular brand.

•          Strong associations tend to those that are “top of mind” for the customer.

•          Measures of strength include the number of times an association was mentioned, rank order of the association and speed of recall.

•          Strength of association is often divided among two criteria: relevance and consistency.

•          Relevance: degree to which the brand is perceived as meeting the needs of the target customer.

•          Consistency:degree to which each element of the brand reinforces the brand intent.

Valence

•          Refers to the degree to which the association is positive or negative.

Uniqueness

•          Captures the degree to which the association is distinct relative to other brands.

•          Uniqueness can be further subdivided into distinctiveness and memorability.

•          Distinctiveness is the degree to which the brand is differentiated from competitors.

•          Memorability is the brand’s ability to provide a lasting communication effect.

Ways to Measure Brand Equity

Depth Interviews

•          Needed to dig deeply into respondents’ memories.

Portfolio of techniques

•          No single technique is adequate.

•          Complementary techniques interact with each other to stimulate respondents’ abilities to access and verbalize memories and overcome their unwillingness to share them with the researcher.

Validate research findings

•          Can be achieved using multiple techniques including structured and unstructured projective methods, in-depth interviews and surveys.

•          Finding the same associations with more than one method adds confidence to the results.

Techniques for measuring brand associations:

•          Thought listing

•          Visual techniques

•          Projective technique

•          Sentence completion

•          Depth interviews

•          Rating scales

Using Marketing Programs to create Brand Equity

Pricing Program

•          In some instances, consumers may infer that quality and price are related – the higher the price, the better the quality. 

•          Price has been found to signal higher quality in situations where:

o    Consumers are not able to assess quality easily

o    High quality is demanded

o    There is a sufficiently  large percentage of the market that is able to assess quality and is willing to pay a higher price for it.

•          Product categories where such criteria apply include wine, consumer electronics, appliances, video tapes and consulting services.

•          Frequent discounting is likely to have a negative impact on brand equity as it communicates undesirable brand characteristics such as “they must have trouble selling it at a regular price” or “it is a discount brand and is therefore not suitable as a gift”.

•          Marketing consultants Al Ries and Jack Trout argue that one of the worst pricing strategies multiproduct companies can undertake is to market products at different price levels under the same brand name.  E.g. Johnny Walker black (premium) and Johnny Walker red (less expensive).

Product Program

There are seven dimensions of quality that are thought to apply to a wide variety of products:

•          Performance – capacity of product to carry out primary function

•          Features – characteristics that supplement product’s primary functioning.

•          Reliability – probability that a product will malfunction within a specified time period.

•          Conformance – engineering term that relates to the degree to which a product’s design and operating standards meet established standards.

•          Durability – amount of product use that is achieved before replacement is preferred to repair.

•          Serviceability – ease with which a product can be serviced or upgraded.

•          Aesthetics – how the product looks, feels, smells, and sounds.

Distribution Program

•          Channels used to distribute a product can have a significant effect on brand equity and sales success.

•          E.g. Rolex would want to distribute only through retailers that are capable of presenting their brand and product in the best possible light.  Every retailer that handles their brand should provide a high level of customer care in terms of return policies, warranty handling procedures, pricing and advertising support.

•          Another important way distribution can affect brad equity is the number of retailers. 

•          If an extensive distribution is used, the brand could be affected negatively because of the increased competition among retailers and causes a downward pressure on price which ultimately leads to negative brand perceptions.

Promotional Program

•          Promotion is the “voice” of the brand and is fundamental to brand equity.

•          Includes all forms of communications designed to inform, remind, or persuade target customers.

•          Advent of the Internet has meant an increase in the number and complexity of branding communications.  It has also led to message inconsistency caused mainly by three factors:

o    Technological constraints – brands “fracture” when they reach the Web.  E.g. Home Depot is known for its vast selection of 50,000 items and knowledgeable, accessible salespeople, but this is hard to replicate on the Web.

o    Creative differences for online and offline – firms often use different agencies for their online and offline branding efforts which increases the likelihood of inconsistent communication.

o    Media fragmentation – The difficulties associated with integrating the firm’s branding strategy across media are significant, especially considering the differences that exist in the nature of the brand message that can be represented in each medium.

Seven-Step Branding Process

1. Clearly Define the Brand Audience
2. Understand the Target Customers
3. Understand the Competition
4. Design Compelling Brand Intent
5. Identify Key Leverage Points in Customer Experience
6. Execute the Branding Strategy
7. Establish Feedback Systems

•          A relationship is a bond or connection between the firm and its customers.

•          This may be strong, weak or nonexistent.

•          It can be based on logic or emotion

•          Logical bond – realization that a customer simply cannot get a better product elsewhere.

•          Greatest potential for strong buyer-seller relationships exists when the product is an important part of consumers’ lives.

•          Buyer-seller relationships are based on exchange, where each party expects, or perhaps even demands value for what is given (i.e. money for products).

•          Customers who have a relationship with the firm tend to feel good about remaining loyal, are not as likely to seek out competitive offerings, actively promote the firm to others and are willing to pay higher prices.

•          Over time, some customers will cease to be profitable and firms should take steps to dissolve the unprofitable relationships.

Integrated Lever Selection important in a marketing plan

•          The 2Is allow firms to choose levers that can move customers through the relationship phases faster and more effectively than ever possible.

•          the 2Is demands that firms leverage the 2Is across the matrix design as much as possible in order to advance customers to the commitment stage.

•          Product – Individualization of user pages (Yahoo!) sustains commitment and increases switching costs.  Individualization also spurs users to move from awareness to exploration.

•          Pricing – Targeted price promotions, which can be both individualize and interactive in the form of a permission email, can advance users from exploration/ expansion to commitment by giving them a price incentive to make the purchase.

•          Communications – Interactive targeted banner ads are a classic example of the 2Is influence on communications levers.  Banner ads can be targeted at particular segments, and the interactivity of a banner ad allows a user to move from awareness to exploration just by clicking on it.

•          Community – In the case of eBay, the strong vibrant community sustains buyers’ commitment by ensuring a constant supply of a wide range of goods.  In turn, the large number of shoppers benefits sellers by driving up auction prices.

•          Distribution – Interactivity allows for tight linkages between suppliers and buyers, which can facilitate a collaborative relationship that results in benefits in logistics, inventory planning and responsiveness, especially just-in-time production.

Ebay’s application of the Marketspace Matrix Change Over time

•          Ebay began to utilize more levers, and the additions were focused in two places: the commitment column in the matrix became heavily utilized, as did the community row.

•          Ebay did also seek to drive awareness and exploration among new users, but the firm designed the bulk of the new levers added to the matrix to advance users to the commitment stage and keep them there.

Key principles for lever selection within the Marketspace Matrix

Choose Levers to Effect a Change

·         Firms must understand the behavioral change they are trying to create.

·         After establishing the desired outcome, the optimal levers will be easier to pick.

·         E.g. Amazon.com 1-click ordering capability

Determine Which Levers Have the Most Leverage

·         Firms must understand which levers are decisive in moving customers from one stage to another.

·         While one lever may help generate awareness or exploration, another may prove to be the tipping point from one stage to another.

·         E.g.: Offline sale of cosmetics

o    Magazine ads generate awareness, but decisive point is at the cosmetic counter.  Firms thus need to move customers to the counter since that is the commitment or dissolution point.

Consider Barriers to Advancement

·         Need to understand what prevents people from moving from one stage to another.

·         The obstacle that stands in the way of advancement should be the target of a lever.

·         E.g.Handspring adopted Palm operating system for its devices so that Handspring users could use existing Palm applications (product lever) and was able to compete and build awareness using the price lever.

Consider the Medium’s Effect on Desired Behavior

·         To advance from one stage to another, the medium used for the awareness stage may be quite different from the one for the commitment stage.

·         E.g.MSN CarPoint – To enable commitment behavior, CarPoint refers customers to local dealers who have the customer’s car of choice, a unique distribution lever.

Level of Involvement Matters

·         High-involvement purchases will have different marketing levers than low-involvement purchases.

·         To know which lever to use, firms need to understand where the product falls on the involvement spectrum.

·         E.g. High-involvement decision is a consumer’s choice of bank. 

Understand Consumer Learning Trends

·         Firms need to understand how consumers learn about products.

·         Often different segments learn in different ways.  Elderly customers usually do so through offline channels whereas younger consumers usually do so through the Internet.

·         For firms to effectively reach their target customers, they must use marketing levers that are consistent with the preferred learning processes of that particular segment, especially during the awareness and exploration stages.

Credibility of the Channel Matters

·         The credibility of the channel matters more than the literal message.

·         A message can be ignored when delivered via one medium, but completely absorbed when delivered by another.

·         E.g. The Blair Witch Project

o    By choosing to initially promote the movie almost exclusively via the Internet, promoters were able to create a hype and anticipation around the movie and its release that would not have been possible through conventional channels.

The Choice of Levers Must be Consistent with Positioning Choice

·         The firm’s marketing levers must support the choice of position the firm takes in a certain segment of the market.

·         This would mean that certain levers would be ruled out and others will be more attractive.

·         E.g. American Express Platinum Card

o    Personal invitations are sent to potential members which is consistent with the positioning of prestige, exclusivity and unique services for the frequent spender.

The Medium can be the Message – or the Product

·         By choosing the channel, the firm is already making a choice about what it is saying.

·         E.g. By advertising in Town and Country, the firm is perceived as targeting an affluent audience with fairly conservative values, even if it sells eggs.

Matrix Design Must be Adaptive

·         A firm must be able to adapt its matrix to respond to evaluation of the campaign and changes in the market.

·         As levers prove ineffective or extremely effective, resources must be allocated in response to these discoveries.

http://news.cnet.com/2100-1043_3-6171474.html

• A set of interwoven relationships built upon shared interests, which satisfies members’ needs otherwise unattainable individually

Criteria that Define Successful Community

• Membership is a conscious choice
• Member base has achieved critical mass and sustainability:  sufficiently large membership base that consistently gathers, participates, and adds value in community meeting areas
• Members feel a great sense of trust: feeling safety when making a transaction, sense that an individuals personal information will not be misused (e-mail spamming), knowledge that members generally respect and self-enforce community etiquette
• Members achieve benefits in scale
• Roles are not hierarchical or imposed
• Effective facilitationand site structure keeps community activities on track: successful communities share a high degree of focus within their operations– threads are easy to follow, no inappropriate postings, etc.
• A spirit of participation and feedback is clearly cultivated: encourage community-wide feed back
• A sense of affiliation is achieved through ownership of equity in the community: ebay members can build equity through methods such as garnering a more credible online reputation
• Efficiency in interaction is maximized: through mailing lists, bulletin boards, or live chats- choose formats which maximize the efficiency of a typical community interaction
• The community is easily navigable: easy for visitors to explore

Foundations of Community

• Information-driven communities: built upon shared interest in information and seek to exchange information such as facts and opinions
• Activity-driven communities: shared interests in activities that can range from buying antiques to meeting new friends to playing a role in an online game
• Commonality-driven communities: shared interest arising out of commonality from sharing the same profession, ethnicity, or lifestyle stage

Ways Communites Function

• Real-time systems: immediate communication where messages are sent, read, and replied to immediately (Internet relay chat, web–based chats, virtual worlds)
• Asynchronous formats: delayed communication where time between a message being sent, read, and replied vary (mailing lists, news groups, bulletin boards)

Three Primary Value is Created withing Community

• User to User: user-generated content such as member-written articles, opinions and advice (advice, shareware, good conversation)
• Administrator to User: administrator-created content such as exclusive research and reports and activities such as scheduled chats and special guests (can also take place as offline events such as parties)
• User to Administrator: User-generated value such as revenue from product sales, content fees, usage fees, commissions and advertising sales

Benefits that Community Generate From Parent Firms

• Cost Benefits: Reduced Customer Service Costs, Reduced Customer Acquisition Costs, Reduced costs from decreased product flaws and marketing mistakes, reduced marketing costs
• Revenue Benefits: increased customer segmentation and customization, increased branding, deepened customer relationships

Different Levels of Community

Amy Jo Kim Levels

• Visitors: no persistent identity in the community
• Novices: new members who need to learn the ropes and be introduced into community life
• Regulars: established members who are comfortably participating in community life
• Leaders: volunteers, contractors, and staff who keep community running
• Elders: Long-time regulars and leaders who share their knowledge and pass along culture

Randall Farmer Levels

• Passives: individuals who do not actively engage in but attend virtual communities
• Actives:  those who participate in activities and topics created by others
• Motivators: those who create topics and plan activities of interest to other community members
• Caretakers:  Those who serve as intermediaries between community members