What you missed at the management conference: the digital economy in 90 minutes A few weeks ago Chicago Booth held its 61st annual Management Conference. One of the sessions at that conference was a panel discussion (I moderated) about marketing in the digital economy. We had outstanding panelists participate – Ryan Shamir from Kraft Foods, Jason Keith from Digitas, and Ron Gibori and Girish Pai from Idea Booth.  We also had an outstanding audience that raised many important issues and questions about digital versus offline media; the role of social media in business-to-business and mature product contexts; how IT and marketing groups were coping with issues such as big data and new software used to monitor online activity; the role of analytics, and the need for marketers to be comfortable with statistics and concepts from computer science; lessons from the digital age for those using traditional media; differences across countries in the role of digital media. etc. In this post, I will talk about some of these issues. The topic of the discussion was very broad, and no 90-minute discussion could have done justice to the topic. The digital economy, broadly construed, can mean a lot of things.  At a macro level it encompasses issues faced by governments such as movement of digital goods and services across borders, and issues of piracy and hacking at the highest levels, even by governments.  Within a country, there are issues of privacy, taxes that consumers have to pay when making purchases online, and piracy that governments need to deal with. In many countries, the digital economy has resulted in a significant reduction in waste due to the availability of up-to-date information (e.g., fishermen in Kerala, India who use cellphones to receive real-time market prices and determine which market along the shoreline they should head to). The digital economy has even improved health outcomes (e.g., Operation ASHA, an NGO based in India which aims to  eradicate tuberculosis, can better ensure compliance on the part of patients undergoing treatment by using fingerprint-based systems to record and monitor the consumption of medicines). The digital economy has created new business models, new products, new promotional tools, and new pricing approaches. For example, cloud and related cloud-based services such as Dropbox are proliferating.  New types of products that are entirely digital in nature such as movies streamed on Netflix are widely available and accessible. New promotional tools such as banner ads, search and search ads, social media are ubiquitous. New types of pricing, such as for Office 365, are increasingly popular. We even have new virtual currencies such as Bitcoin! Of more immediate concern to marketers is the traditional ecosystem comprised of the consumer, the company, the channel, and the communication media. This ecosystem has been transformed, and some would say upended, by the digital age. In the past, if you were selling ice cream or detergent, you did some “pull” advertising on TV or in print media, dropped some coupons in the daily paper, and got the supermarkets to stock your product. Then you waited for your monthly syndicated sales report, which would help you decide what needed to be done next. Today, it is a completely different world – an ice cream brand can team up with a cellphone provider on a hot day to send a consumer an ad or a coupon while he or she is walking past a store. If I sell detergents, I can tweet during a Superbowl blackout about how my detergent cannot solve the blackout, but that it can take the stains out. As marketers, we now have a different media landscape with search, social media, etc. We have a different collaborator landscape – the mobile service provider and an ice cream brand.  Most important, however, is that my ability to measure the consequences of my actions has improved. If I am Kleenex and I find more cold related searches from some part of the country, I can dial up my marketing in those areas and then assess what happens next. The nature of the media, combined with the ability to measure the effects of marketing actions, has also resulted in a renewed interest in the concept of “test and learn.” Such experiments were often expensive when dealing with traditional media like television advertising. With digital media, however, carefully executed and controlled experiments can be a valuable source of information. We discussed several other topics as well. We conversed on the need for top management that is willing to invest in infrastructure and that encourages constant monitoring of what is happening offline and online. Related to this, a firm needs to be prepared to make decisions at short notice so that it can organize a rapid response to unfolding events and not get bogged down in bureaucracy. We also discussed the need to ensure that these rapid responses tie in with the overall marketing strategy, message, and positioning of the brand (for example Tide’s debut on the race track and support for victims of natural disasters). This requires management to have an intimate knowledge of what the brand stands for and to ensure that all activities “stay on message.” Finally, we discussed the importance of associating brands with a key story or message, and to then engage current users to amplify that message to future, potential users. All in all, the audience and the panel discussed a variety of issues that marketers are likely to be wrestling with in the weeks, months, and quarters to come. Photo by HowardStrong
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What you missed at the management conference: the digital economy in 90 minutes

A few weeks ago Chicago Booth held its 61st annual Management Conference. One of the sessions at that conference was a panel discussion (I moderated) about marketing in the digital economy. We had outstanding panelists participate – Ryan Shamir from Kraft Foods, Jason Keith from Digitas, and Ron Gibori and Girish Pai from Idea Booth.  We also had an outstanding audience that raised many important issues and questions about digital versus offline media; the role of social media in business-to-business and mature product contexts; how IT and marketing groups were coping with issues such as big data and new software used to monitor online activity; the role of analytics, and the need for marketers to be comfortable with statistics and concepts from computer science; lessons from the digital age for those using traditional media; differences across countries in the role of digital media. etc.

In this post, I will talk about some of these issues.

The topic of the discussion was very broad, and no 90-minute discussion could have done justice to the topic. The digital economy, broadly construed, can mean a lot of things.  At a macro level it encompasses issues faced by governments such as movement of digital goods and services across borders, and issues of piracy and hacking at the highest levels, even by governments.  Within a country, there are issues of privacy, taxes that consumers have to pay when making purchases online, and piracy that governments need to deal with. In many countries, the digital economy has resulted in a significant reduction in waste due to the availability of up-to-date information (e.g., fishermen in Kerala, India who use cellphones to receive real-time market prices and determine which market along the shoreline they should head to). The digital economy has even improved health outcomes (e.g., Operation ASHA, an NGO based in India which aims to  eradicate tuberculosis, can better ensure compliance on the part of patients undergoing treatment by using fingerprint-based systems to record and monitor the consumption of medicines).

The digital economy has created new business models, new products, new promotional tools, and new pricing approaches. For example, cloud and related cloud-based services such as Dropbox are proliferating.  New types of products that are entirely digital in nature such as movies streamed on Netflix are widely available and accessible. New promotional tools such as banner ads, search and search ads, social media are ubiquitous. New types of pricing, such as for Office 365, are increasingly popular. We even have new virtual currencies such as Bitcoin!

Of more immediate concern to marketers is the traditional ecosystem comprised of the consumer, the company, the channel, and the communication media. This ecosystem has been transformed, and some would say upended, by the digital age. In the past, if you were selling ice cream or detergent, you did some “pull” advertising on TV or in print media, dropped some coupons in the daily paper, and got the supermarkets to stock your product. Then you waited for your monthly syndicated sales report, which would help you decide what needed to be done next.

Today, it is a completely different world – an ice cream brand can team up with a cellphone provider on a hot day to send a consumer an ad or a coupon while he or she is walking past a store. If I sell detergents, I can tweet during a Superbowl blackout about how my detergent cannot solve the blackout, but that it can take the stains out.

As marketers, we now have a different media landscape with search, social media, etc. We have a different collaborator landscape – the mobile service provider and an ice cream brand.  Most important, however, is that my ability to measure the consequences of my actions has improved. If I am Kleenex and I find more cold related searches from some part of the country, I can dial up my marketing in those areas and then assess what happens next. The nature of the media, combined with the ability to measure the effects of marketing actions, has also resulted in a renewed interest in the concept of “test and learn.” Such experiments were often expensive when dealing with traditional media like television advertising. With digital media, however, carefully executed and controlled experiments can be a valuable source of information.

We discussed several other topics as well. We conversed on the need for top management that is willing to invest in infrastructure and that encourages constant monitoring of what is happening offline and online. Related to this, a firm needs to be prepared to make decisions at short notice so that it can organize a rapid response to unfolding events and not get bogged down in bureaucracy. We also discussed the need to ensure that these rapid responses tie in with the overall marketing strategy, message, and positioning of the brand (for example Tide’s debut on the race track and support for victims of natural disasters). This requires management to have an intimate knowledge of what the brand stands for and to ensure that all activities “stay on message.” Finally, we discussed the importance of associating brands with a key story or message, and to then engage current users to amplify that message to future, potential users.

All in all, the audience and the panel discussed a variety of issues that marketers are likely to be wrestling with in the weeks, months, and quarters to come.

Photo by HowardStrong

Virtual treasure chest - What customer forums tell you that surveys can’t  In the movie Iron-Man 3, the character Mandarin, played by the indomitable Ben Kingsley, intones ominously, “You don’t know who I am. You don’t know where I am. And you’ll never see me coming.” If the Mandarin were a brand, he would have a very worried brand manager. The essence of branding is twofold. First, you must articulate the key benefits provided by your product to the target customer. Second, you need to translate this benefit set into a defendable “position” in the mindscape of the consumer. That way the consumer knows exactly who you are and where you are coming from – quite unlike the Mandarin. A consumer’s mindscape is an embodiment of his or her perceptions of similar products, and “snapshots” of these perceptions are worth a lot to the managers of those products. Typically, these snapshots, also known as “perceptual maps,” have been obtained though periodic customer surveys, geared at measuring different brand’s effectiveness in communicating their marketer’s message.    While structured questionnaires are one way to gather information on consumers’ perceptions of brands in a category, the Internet provides a rich environment that can also be mined to obtain such information. Take, for example, an online forum where consumers come to discuss cameras. These posts and online conversations are a rich source of information both on the attributes that relate to different products, e.g.  “Nikon makes great lenses,” as well as how the products relate to each other, e.g. “Canon makes much better cameras than Sony.” Furthermore, the posts provide a constant source of updated information over time, meaning that marketers can now continuously monitor perceptions rather than be restricted to infrequent surveys. Yet another benefit of these “data” is that while structured questionnaires have to restrict themselves to asking consumers about a small set of brands in order to avoid fatigue and boredom that can influence results, no such constraints apply to the online world, where consumers can opine about all sorts of brands – big and small.  At the same time, there are several challenges to using this type of data. First is the fact that these data are unstructured. Forum posts are not numbers on scales from 1 to 7, typical of survey-based questionnaires. Resources need to be invested to process the unstructured data to convert it to usable form. Advancements in areas such as text mining (when looking at sites focused on textual interactions) and pixel matching (for sites where consumers are likely to post pictures of brands as well) have eased this burden. Nonetheless, one still needs a hybrid of machine prowess and human intervention to correctly classify and interpret the unstructured data. One can then use the simple co-occurrence of brands in conversations as the basis of the relative perceptions of these brands (i.e. Sony and Canon are mentioned together more often than are Sony and Nikon, suggesting a stronger association between the two.) One can also look at the larger network of co-occurrence of brands and attributes to form the basis of the perceptual map. A second challenge to using forum data is its sheer volume necessitates considerable computing power to parse. Lastly, it is critical to ensure the integrity of the data and make sure that it is coming from consumers whose voices are important. Once these challenges can be overcome, the brand manager can use the “snapshots” generated by online data to augment his or her dashboard. First, this enables problems to be quickly identified (“My camera’s battery seems to be heating up.”). Neglecting these customer’s concerns will not only lose their business, but influence your brand perception by other customers as well. As Conrad “Connie” Brean, the character played by Robert de Niro in Wag the Dog, sagely opines, “What difference does it make if it’s true? If it’s a story and it breaks, they’re gonna run with it.” Managers can also use this data to identify long-term trends. If Sony and Nikon are mentioned together more often than they used to be, then perhaps the manager’s marketing efforts to be viewed as legitimate player in the field of professional photography are paying off. This could translate into actual purchase behavior over time. Most importantly, general brand health can be monitored more effectively, and managers can determine if customers are generally satisfied with their experiences.  For further reading on these and related topics, consider Netzer et al (2012) and New York Times’ One Social Media Start Up Rises From the Ashes of Another by Eilene Zimmerman.Photo by Arne List
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Virtual treasure chest - What customer forums tell you that surveys can’t

 In the movie Iron-Man 3, the character Mandarin, played by the indomitable Ben Kingsley, intones ominously, “You don’t know who I am. You don’t know where I am. And you’ll never see me coming.” If the Mandarin were a brand, he would have a very worried brand manager.

The essence of branding is twofold. First, you must articulate the key benefits provided by your product to the target customer. Second, you need to translate this benefit set into a defendable “position” in the mindscape of the consumer. That way the consumer knows exactly who you are and where you are coming from – quite unlike the Mandarin. A consumer’s mindscape is an embodiment of his or her perceptions of similar products, and “snapshots” of these perceptions are worth a lot to the managers of those products. Typically, these snapshots, also known as “perceptual maps,” have been obtained though periodic customer surveys, geared at measuring different brand’s effectiveness in communicating their marketer’s message.  

 While structured questionnaires are one way to gather information on consumers’ perceptions of brands in a category, the Internet provides a rich environment that can also be mined to obtain such information. Take, for example, an online forum where consumers come to discuss cameras. These posts and online conversations are a rich source of information both on the attributes that relate to different products, e.g.  “Nikon makes great lenses,” as well as how the products relate to each other, e.g. “Canon makes much better cameras than Sony.” Furthermore, the posts provide a constant source of updated information over time, meaning that marketers can now continuously monitor perceptions rather than be restricted to infrequent surveys. Yet another benefit of these “data” is that while structured questionnaires have to restrict themselves to asking consumers about a small set of brands in order to avoid fatigue and boredom that can influence results, no such constraints apply to the online world, where consumers can opine about all sorts of brands – big and small.

 At the same time, there are several challenges to using this type of data. First is the fact that these data are unstructured. Forum posts are not numbers on scales from 1 to 7, typical of survey-based questionnaires. Resources need to be invested to process the unstructured data to convert it to usable form. Advancements in areas such as text mining (when looking at sites focused on textual interactions) and pixel matching (for sites where consumers are likely to post pictures of brands as well) have eased this burden. Nonetheless, one still needs a hybrid of machine prowess and human intervention to correctly classify and interpret the unstructured data. One can then use the simple co-occurrence of brands in conversations as the basis of the relative perceptions of these brands (i.e. Sony and Canon are mentioned together more often than are Sony and Nikon, suggesting a stronger association between the two.) One can also look at the larger network of co-occurrence of brands and attributes to form the basis of the perceptual map. A second challenge to using forum data is its sheer volume necessitates considerable computing power to parse. Lastly, it is critical to ensure the integrity of the data and make sure that it is coming from consumers whose voices are important.

Once these challenges can be overcome, the brand manager can use the “snapshots” generated by online data to augment his or her dashboard. First, this enables problems to be quickly identified (“My camera’s battery seems to be heating up.”). Neglecting these customer’s concerns will not only lose their business, but influence your brand perception by other customers as well. As Conrad “Connie” Brean, the character played by Robert de Niro in Wag the Dog, sagely opines, “What difference does it make if it’s true? If it’s a story and it breaks, they’re gonna run with it.” Managers can also use this data to identify long-term trends. If Sony and Nikon are mentioned together more often than they used to be, then perhaps the manager’s marketing efforts to be viewed as legitimate player in the field of professional photography are paying off. This could translate into actual purchase behavior over time. Most importantly, general brand health can be monitored more effectively, and managers can determine if customers are generally satisfied with their experiences.

 For further reading on these and related topics, consider Netzer et al (2012) and New York Times’ One Social Media Start Up Rises From the Ashes of Another by Eilene Zimmerman.

Photo by Arne List

On Netflix, here’s the metric worth watching Last week’s New York Times had an article detailing Netflix’s recent brush with near extinction thanks to a premature attempt to focus the company on the streaming video business and away from the DVD business. While the latter was key to winning the competitive battle with Blockbuster, the company’s CEO, Reed Hastings saw the growth in sales of tablets and other mobile devices as the future platforms for the consumption of entertainment; much like Walter Brooke’s Mr. McGuire in The Graduate who believes that the future lies in plastics and tries to convince Dustin Hoffman’s Ben Braddock to consider it for his own future. Not wanting to be caught flatfooted like other companies with legacy technologies that did not move quickly enough to embrace the new (think Kodak and the move from traditional film to digital technology), Mr. Hastings announced (in September 2011) the separation of the DVD (as a new company “Qwikster”) and streaming businesses.  Unfortunately, there were two issues that stood in the way of a smooth transition – first, Netflix tried to raise the price for the service and second, the content available for streaming was inadequate. As a consequence, the company lost 800,000 subscribers and the stock price plunged. Customers, used to exceptional quality that Netflix typically provided, were disappointed with what they saw as an attempt to make more money. It has taken almost a year and half for the company’s stock price to get back to where it was…..one can almost hear the “Deshi! Basara!…chants from the Dark Knight Rises (I understand it loosely translates to “Rise Up”) when Bruce Wayne attempts to escape the pit of his despair. Largely, the comeback has been attributed a reversal of the Qwikster decision along with a focus on the core promise of customer service – providing the content the customer desires, including exclusive content such as House of Cards and Hemlock Grove; via the channel the customer finds most convenient – DVD or streaming; and at a price that the customer feels is reasonable. The company has also, it seems discovered that there are two broad segments in the market – one loyal to the DVD format which has been reducing in size but slowly; and the other a streaming segment that has been growing at a good clip as more content become available, connection speeds improve and devices get better. With services such as Netflix, a metric to keep a close eye on is customer lifetime value (CLV). Literally, it refers to the discounted present value of the stream of income generated by a customer over his or her lifetime. While ideally this would also include referral and word-of-mouth income generated by the customer, for most practical purposes the metric focuses on the individual customer’s interactions with the firm. In their Harvard Business Review article, Customers as Assets (2003), and book,  Managing Customers as Investments (2005), Gupta and Lehmann provide a very elegant description of the concept and provide a number of readily applicable rules of thumb to compute the CLV of a customer. A simple version of the formula for computing CLV is the product of income obtained from the customer in any given year (call this M) multiplied by an income multiplier which in turn, depends on how likely the customer stays a customer the next year (the retention rate, R) and the rate at which the firm discounts future cash flows (the discount rate I). From this, we subtract the cost of acquiring the customer, i.e., marketing costs, A. Putting these factors leads to the CLV formula: M/(1 – R + I) – A. Further, if one expects margins to grow at the rate G a year, the formula can be modified as: M/(1 – R*(1+G) + I) – A. The formula can also accommodate a growing base of customers over time. In its quarterly results released last week, Netflix announced a gross margin of $297M from a customer base of 42M subscribers. This suggests a quarterly gross of $7.06 per customer or $28.25 for the year.  The results also mention marketing costs of $129M+ which spread over its customer base works out to a quarterly acquisition cost of $3.07 or $12.28 for the year. If one assumes a 95% retention rate and a discount rate of 10%, this leads to a CLV of $188.32 which multiplied by the size of the customer base leads to about $8B in customer value. Interestingly if one assumes that margins will grow at the rate of 5% a year, the resulting CLV of the customer base is about $12B, close to the current valuation of the company. One can now look at various scenarios as to what would happen with changes in retention rates, margins and margin growth and customer base and evaluate the CLV impact. Ultimately these movements will be reflected in the how the company is valued by the financial markets. For now though, the company seems to have overcome its recent travails. By not splitting up the services, it has stanched the outflow of customers bringing its retention rate back up. However, margin pressures do exist with the availability of rival services and others like Amazon Prime (that charge an annual fee and provide the additional benefit of free 2 day shipping on all Amazon purchases). Finally customer acquisition costs also are likely to mount if one accounts for the costs of new programming that seems critical for attracting new customers. How Netflix manages these diverse set of pressures over time will reveal its ability to sustain its stock price. Photo supplied by Netflix
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On Netflix, here’s the metric worth watching

Last week’s New York Times had an article detailing Netflix’s recent brush with near extinction thanks to a premature attempt to focus the company on the streaming video business and away from the DVD business. While the latter was key to winning the competitive battle with Blockbuster, the company’s CEO, Reed Hastings saw the growth in sales of tablets and other mobile devices as the future platforms for the consumption of entertainment; much like Walter Brooke’s Mr. McGuire in The Graduate who believes that the future lies in plastics and tries to convince Dustin Hoffman’s Ben Braddock to consider it for his own future. Not wanting to be caught flatfooted like other companies with legacy technologies that did not move quickly enough to embrace the new (think Kodak and the move from traditional film to digital technology), Mr. Hastings announced (in September 2011) the separation of the DVD (as a new company “Qwikster”) and streaming businesses. 

Unfortunately, there were two issues that stood in the way of a smooth transition – first, Netflix tried to raise the price for the service and second, the content available for streaming was inadequate. As a consequence, the company lost 800,000 subscribers and the stock price plunged. Customers, used to exceptional quality that Netflix typically provided, were disappointed with what they saw as an attempt to make more money. It has taken almost a year and half for the company’s stock price to get back to where it was…..one can almost hear the “Deshi! Basara!…chants from the Dark Knight Rises (I understand it loosely translates to “Rise Up”) when Bruce Wayne attempts to escape the pit of his despair.

Largely, the comeback has been attributed a reversal of the Qwikster decision along with a focus on the core promise of customer service – providing the content the customer desires, including exclusive content such as House of Cards and Hemlock Grove; via the channel the customer finds most convenient – DVD or streaming; and at a price that the customer feels is reasonable. The company has also, it seems discovered that there are two broad segments in the market – one loyal to the DVD format which has been reducing in size but slowly; and the other a streaming segment that has been growing at a good clip as more content become available, connection speeds improve and devices get better.

With services such as Netflix, a metric to keep a close eye on is customer lifetime value (CLV). Literally, it refers to the discounted present value of the stream of income generated by a customer over his or her lifetime. While ideally this would also include referral and word-of-mouth income generated by the customer, for most practical purposes the metric focuses on the individual customer’s interactions with the firm. In their Harvard Business Review article, Customers as Assets (2003), and book,  Managing Customers as Investments (2005), Gupta and Lehmann provide a very elegant description of the concept and provide a number of readily applicable rules of thumb to compute the CLV of a customer. A simple version of the formula for computing CLV is the product of income obtained from the customer in any given year (call this M) multiplied by an income multiplier which in turn, depends on how likely the customer stays a customer the next year (the retention rate, R) and the rate at which the firm discounts future cash flows (the discount rate I). From this, we subtract the cost of acquiring the customer, i.e., marketing costs, A. Putting these factors leads to the CLV formula:

M/(1 – R + I) – A.

Further, if one expects margins to grow at the rate G a year, the formula can be modified as:

M/(1 – R*(1+G) + I) – A.

The formula can also accommodate a growing base of customers over time.

In its quarterly results released last week, Netflix announced a gross margin of $297M from a customer base of 42M subscribers. This suggests a quarterly gross of $7.06 per customer or $28.25 for the year.  The results also mention marketing costs of $129M+ which spread over its customer base works out to a quarterly acquisition cost of $3.07 or $12.28 for the year. If one assumes a 95% retention rate and a discount rate of 10%, this leads to a CLV of $188.32 which multiplied by the size of the customer base leads to about $8B in customer value. Interestingly if one assumes that margins will grow at the rate of 5% a year, the resulting CLV of the customer base is about $12B, close to the current valuation of the company. One can now look at various scenarios as to what would happen with changes in retention rates, margins and margin growth and customer base and evaluate the CLV impact. Ultimately these movements will be reflected in the how the company is valued by the financial markets.

For now though, the company seems to have overcome its recent travails. By not splitting up the services, it has stanched the outflow of customers bringing its retention rate back up. However, margin pressures do exist with the availability of rival services and others like Amazon Prime (that charge an annual fee and provide the additional benefit of free 2 day shipping on all Amazon purchases). Finally customer acquisition costs also are likely to mount if one accounts for the costs of new programming that seems critical for attracting new customers. How Netflix manages these diverse set of pressures over time will reveal its ability to sustain its stock price.

Photo supplied by Netflix

Pizza Hut’s crazy cheesy crust pizza: maybe not entirely crazy In the movie Mystic Pizza, Jojo, the character played by Lili Taylor, asks Julia Roberts’ Daisy, “What the hell do you think Leona really puts in that pizza?” The answer for most pizza chains is usually some combination of three key ingredients – dough, cheese, and tomato sauce (with a variety of toppings). While the market for pizza is huge – Americans consume about three billion pizzas a year accounting for about $40 billion in revenues – there are a large number of independent (65 percent) and chain (35 percent) restaurants; about 75,000 of them compete for a proverbial slice of the pie. A number of these stores are local, catering to neighborhoods in the towns and cities they are located in. At the same time, the big three chains – Pizza Hut, Domino’s and Papa John’s – dominate the national landscape and are engaged in a constant battle for gastric dominance; for the stomachs and wallets of the consumers. While some chains have focused on the quality of the products (most notably Domino’s, with its recent emphasis on product improvement based on consumer research), the ingredients and the consequent appeal to the family consumer, Pizza Hut has often taken a different route. The chain often launches “extreme” pizzas having introduced the world to such cheese-intensive concepts as the stuffed-crust pizza (regular and ultimate versions), the “pizza in a pizza,” and now the Crazy Cheesy Crust Pizza, a new pizza that comes surrounded by 16 circular pockets of cheese that can be pulled off and eaten separately. Cheesy sticks physically bundled with your pizza, anyone? Clearly, the launch of such a product is predicated on the existence of a customer segment that Pizza Hut caters to that hungers for any concept that maximizes the amount of cheese per square inch! Unlike Yogi Berra who famously quipped “you’d better cut the pizza in four pieces because I am not hungry enough to eat six,” they are likely to embrace the craziness of the product – all 16 pockets of it. At the same time, there are several noteworthy aspects of these products that give us insight into Pizza Hut and its marketing. The company is able to generate a lot of “buzz,” both positive and negative, that gives Pizza Hut a lot of free publicity. Count as part of that buzz both this blog and this Fortune story about the trend to name and promote certain foods as “crazy.” Also, many of these Pizza Hut concepts tend to be available for limited time periods. This has several benefits. First, it creates urgency among those that are genuinely attracted to the concept. Second, it limits any negative fallout to a finite horizon. Third, it gives the company the opportunity to “test” a number of different concepts that can then be assessed for a regular launch. Fourth, if the cost associated with the concept is high, it helps to limit losses while at the same time reinvigorating interest in Pizza Hut and its other products. Fifth, it communicates to a consumer that even if (s)he is not particularly enamored by any one concept, Pizza Hut is constantly innovating to provide the consumer different experiences with pizza. The implication of all this innovating is that if you were to go to a Pizza Hut, you might be surprised by some innovative product you might encounter. So whilst the health conscious amongst us might cringe at the Crazy Cheesy Crust Pizza, one cannot deny that it does bring Pizza Hut into our “evoked” set whenever we think about pizza. And for a category that is so competitive, this is an important accomplishment. In the movie Independence Day, Captain Steven Hiller, the character played by Will Smith, exclaims, “I have got to get me one of these,” after starting up an alien ship. For Pizza Hut and its franchisees, one route to offering its customers something out of this world is constant innovation with cheese, dough, and sauce. Photo by Janine
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Pizza Hut’s crazy cheesy crust pizza: maybe not entirely crazy

In the movie Mystic Pizza, Jojo, the character played by Lili Taylor, asks Julia Roberts’ Daisy, “What the hell do you think Leona really puts in that pizza?” The answer for most pizza chains is usually some combination of three key ingredients – dough, cheese, and tomato sauce (with a variety of toppings). While the market for pizza is huge – Americans consume about three billion pizzas a year accounting for about $40 billion in revenues – there are a large number of independent (65 percent) and chain (35 percent) restaurants; about 75,000 of them compete for a proverbial slice of the pie. A number of these stores are local, catering to neighborhoods in the towns and cities they are located in. At the same time, the big three chains – Pizza Hut, Domino’s and Papa John’s – dominate the national landscape and are engaged in a constant battle for gastric dominance; for the stomachs and wallets of the consumers.

While some chains have focused on the quality of the products (most notably Domino’s, with its recent emphasis on product improvement based on consumer research), the ingredients and the consequent appeal to the family consumer, Pizza Hut has often taken a different route. The chain often launches “extreme” pizzas having introduced the world to such cheese-intensive concepts as the stuffed-crust pizza (regular and ultimate versions), the “pizza in a pizza,” and now the Crazy Cheesy Crust Pizza, a new pizza that comes surrounded by 16 circular pockets of cheese that can be pulled off and eaten separately. Cheesy sticks physically bundled with your pizza, anyone?

Clearly, the launch of such a product is predicated on the existence of a customer segment that Pizza Hut caters to that hungers for any concept that maximizes the amount of cheese per square inch! Unlike Yogi Berra who famously quipped “you’d better cut the pizza in four pieces because I am not hungry enough to eat six,” they are likely to embrace the craziness of the product – all 16 pockets of it.

At the same time, there are several noteworthy aspects of these products that give us insight into Pizza Hut and its marketing. The company is able to generate a lot of “buzz,” both positive and negative, that gives Pizza Hut a lot of free publicity. Count as part of that buzz both this blog and this Fortune story about the trend to name and promote certain foods as “crazy.”

Also, many of these Pizza Hut concepts tend to be available for limited time periods. This has several benefits. First, it creates urgency among those that are genuinely attracted to the concept. Second, it limits any negative fallout to a finite horizon. Third, it gives the company the opportunity to “test” a number of different concepts that can then be assessed for a regular launch. Fourth, if the cost associated with the concept is high, it helps to limit losses while at the same time reinvigorating interest in Pizza Hut and its other products. Fifth, it communicates to a consumer that even if (s)he is not particularly enamored by any one concept, Pizza Hut is constantly innovating to provide the consumer different experiences with pizza. The implication of all this innovating is that if you were to go to a Pizza Hut, you might be surprised by some innovative product you might encounter.

So whilst the health conscious amongst us might cringe at the Crazy Cheesy Crust Pizza, one cannot deny that it does bring Pizza Hut into our “evoked” set whenever we think about pizza. And for a category that is so competitive, this is an important accomplishment.

In the movie Independence Day, Captain Steven Hiller, the character played by Will Smith, exclaims, “I have got to get me one of these,” after starting up an alien ship. For Pizza Hut and its franchisees, one route to offering its customers something out of this world is constant innovation with cheese, dough, and sauce.

Photo by Janine

Mi casa es su casa? Assessing the ‘collaborative’ economy Anyone who has used services such as Airbnb or Wheelz has already participated in the “collaborative consumption” or “peer-to-peer rental” economy (the Economist recently ran a cover story on this topic). The idea behind these services is simple. If you have a high value asset – say an apartment, house, car, or a boat – that is not being used 24/7, then you can have others rent it from you when you are not using it yourself. So in the case of Airbnb, if business takes you out of town for a week, then your place of residence can be offered, via Airbnb, to others who may be visiting your town in your absence and are willing to pay what you believe your house or apartment is worth a night. This way, you the host gets to make some money when times are tough, the customer gets the convenience of an apartment without paying the price of a hotel, and Airbnb makes money off that transaction. Fundamentally, this is the concept of sharing, not out of altruism, but for a fee. Prima facie, one might be concerned about allowing strangers to cavort on your bed or to put pedal to metal on your car. However, barring a few unfortunate incidents (the trashing of an apartment in California and the conversion of another apartment into a brothel in Stockholm), most hosts and customers of this service seem to be satisfied with the outcomes. While financial considerations clearly play an important part, the role played by the internet and social media in making people comfortable with such a concept cannot be overstated– after all consumers seem to be perfectly willing to trust strangers when making choices about a variety of products and services. Importantly, new institutions have been created by enterprising individuals; these institutions recognize the scope of the inefficiency in asset use, provide a platform for interaction, and finally provide protections to those willing to open up their homes and automobiles to strangers (e.g., by providing insurance coverage). While the growth of these services has been remarkable, it will ultimately be limited by hosts’ comfort levels. Basically, I might be willing to invite my friends or my friends’ friends into my home, at the same time, I might be less willing to have a perfect stranger in my house. To paraphrase Carl Fredricksen, the irascible character played by Ed Asner in the movie Up, “he can have my house….when I’m dead.” This is where I believe sites like Facebook can play an important role. Given knowledge of my social network and those of (say) my immediate friends, social media sites can play a role in limiting the access of my property to only these individuals. The host can decide how many “layers” of friends (s)he is willing to tolerate in her or his home. Clearly limiting access to a tighter circle makes one’s home less likely to generate income; on the flip side there is greater assurance that the prospect of vandalism is limited by greater personal knowledge of the renters (or at least their friends). Of course, Facebook will then need to figure out a way to provide the types of services and guarantees that outfits like Airbnb provide. Whether the economics of something like this works out for the company is something it needs to assess. Another marketing issue of interest is the disruptive nature of the collaboration economy to the traditional hospitality business. A hotel chain whose customers are interested in apartment-style living at a lower cost should be concerned about the growth in such a service. Similarly, a car rental company could lose business and have to lower prices to compete with such services.  As Clayton Christensen, author of Disruptive Technologies, points out, there are several approaches to dealing with disruptions. The first is to focus on and invest in the traditional business. The idea here is a “fortressing” strategy where the firm puts its resources into keeping its current client base satisfied while trying to acquire new customers that are similar to them. The second approach is to attack back – disrupt the disruption. In this case, such an approach might be difficult to implement – e.g., lowering costs without compromising the level of service quality could be problematic. A third alternative is to adopt the innovation by playing both games at once. This is perhaps the strategy closest to the one adopted by some firms in the auto rental business. For example, a lead investor in Wheelz is Zipcar, a more traditional car sharing service and itself a disruptor of the car rental business. Zipcar, in turn, has recently been taken over by Avis – a traditional car rental company. In this way, Avis is playing both in the traditional and disruptive businesses at the same time. A final approach is to embrace the innovation completely and scale it up. This would require the firms in the traditional businesses to abandon that way of doing business in favor of the collaborative approach. While this could occur “ultimately,” it is not something that one expects to see in the very near future. The collaborative economy is still young but offers many interesting possibilities. In any event, traditional businesses should ignore this phenomenon at their own peril. Photo by Masur
View Separately

Mi casa es su casa? Assessing the ‘collaborative’ economy

Anyone who has used services such as Airbnb or Wheelz has already participated in the “collaborative consumption” or “peer-to-peer rental” economy (the Economist recently ran a cover story on this topic). The idea behind these services is simple. If you have a high value asset – say an apartment, house, car, or a boat – that is not being used 24/7, then you can have others rent it from you when you are not using it yourself. So in the case of Airbnb, if business takes you out of town for a week, then your place of residence can be offered, via Airbnb, to others who may be visiting your town in your absence and are willing to pay what you believe your house or apartment is worth a night. This way, you the host gets to make some money when times are tough, the customer gets the convenience of an apartment without paying the price of a hotel, and Airbnb makes money off that transaction.

Fundamentally, this is the concept of sharing, not out of altruism, but for a fee. Prima facie, one might be concerned about allowing strangers to cavort on your bed or to put pedal to metal on your car. However, barring a few unfortunate incidents (the trashing of an apartment in California and the conversion of another apartment into a brothel in Stockholm), most hosts and customers of this service seem to be satisfied with the outcomes. While financial considerations clearly play an important part, the role played by the internet and social media in making people comfortable with such a concept cannot be overstated– after all consumers seem to be perfectly willing to trust strangers when making choices about a variety of products and services. Importantly, new institutions have been created by enterprising individuals; these institutions recognize the scope of the inefficiency in asset use, provide a platform for interaction, and finally provide protections to those willing to open up their homes and automobiles to strangers (e.g., by providing insurance coverage).

While the growth of these services has been remarkable, it will ultimately be limited by hosts’ comfort levels. Basically, I might be willing to invite my friends or my friends’ friends into my home, at the same time, I might be less willing to have a perfect stranger in my house. To paraphrase Carl Fredricksen, the irascible character played by Ed Asner in the movie Up, “he can have my house….when I’m dead.”

This is where I believe sites like Facebook can play an important role. Given knowledge of my social network and those of (say) my immediate friends, social media sites can play a role in limiting the access of my property to only these individuals. The host can decide how many “layers” of friends (s)he is willing to tolerate in her or his home. Clearly limiting access to a tighter circle makes one’s home less likely to generate income; on the flip side there is greater assurance that the prospect of vandalism is limited by greater personal knowledge of the renters (or at least their friends). Of course, Facebook will then need to figure out a way to provide the types of services and guarantees that outfits like Airbnb provide. Whether the economics of something like this works out for the company is something it needs to assess.

Another marketing issue of interest is the disruptive nature of the collaboration economy to the traditional hospitality business. A hotel chain whose customers are interested in apartment-style living at a lower cost should be concerned about the growth in such a service. Similarly, a car rental company could lose business and have to lower prices to compete with such services. 

As Clayton Christensen, author of Disruptive Technologies, points out, there are several approaches to dealing with disruptions. The first is to focus on and invest in the traditional business. The idea here is a “fortressing” strategy where the firm puts its resources into keeping its current client base satisfied while trying to acquire new customers that are similar to them. The second approach is to attack back – disrupt the disruption. In this case, such an approach might be difficult to implement – e.g., lowering costs without compromising the level of service quality could be problematic. A third alternative is to adopt the innovation by playing both games at once. This is perhaps the strategy closest to the one adopted by some firms in the auto rental business. For example, a lead investor in Wheelz is Zipcar, a more traditional car sharing service and itself a disruptor of the car rental business. Zipcar, in turn, has recently been taken over by Avis – a traditional car rental company. In this way, Avis is playing both in the traditional and disruptive businesses at the same time. A final approach is to embrace the innovation completely and scale it up. This would require the firms in the traditional businesses to abandon that way of doing business in favor of the collaborative approach. While this could occur “ultimately,” it is not something that one expects to see in the very near future.

The collaborative economy is still young but offers many interesting possibilities. In any event, traditional businesses should ignore this phenomenon at their own peril.

Photo by Masur

When Bricks Click: Why Retailers are Embracing Online and Offline   The New York Times has a story out about online retailing phenom Warby Parker. The article explores the changing habits of e-commerce companies (why they’re cutting out middlemen) and celebrates innovation in online channels. And it starts to make a larger point: alongside all the enthusiasm for innovative online retailing, there’s much to be said for having some elements of brick and mortar stores. Even Warby Parker might benefit. One hears the terms “multichannel” and “omnichannel” a lot these days. The basic idea behind an omnichannel strategy is for the firm to be present everywhere and anywhere that a consumer might feel the need for its product or service. As Haley Joel Osment’s character, Cole Sear, puts it in the movie Sixth Sense in response to Dr. Malcolm’s Crowe’s question about how often he saw ghosts: “All the time. They’re everywhere.” Or Bill Paxton’s Private Hudson in the equaling chilling movie Aliens characterizing the slimy beasts: “They’re everywhere man! They’re all around us man!” So too by being “omni”-present, firms can ensure that their products are available in brick and mortar stores (if consumers feel the urge to see, touch and feel the product and require it at short notice) and also online (if consumers want to access the product from the comfort of his or her home). Based on the doom and gloom surrounding them, it had appeared over the past several years that businesses dependent largely on brick and mortar stores were in trouble. It is not easy to forget the demise of the beloved bookstore Borders, the travails of music chains like Coconuts, Tower Records, Sam Goody, etc., and the tribulations of Hollywood and Blockbuster video. Retailers like Best Buy and even Target are not immune from “showrooming” – where the brick and mortar store acts as an unwitting showroom for an online retailer like Amazon; a consumer satisfies herself about the adequacy of the latest LCD TV from Sony or Samsung at a Best Buy store and promptly places an order for it on Amazon, sometimes even when she is still physically in the store.  The George Pappas (Steve Zahn’s character in You’ve Got Mail) view of the Internet as “just another way to be rejected by women” has over the past several years given way to that of an important marketing channel that can effectively meet the needs of consumers in a large number of product and service categories. Given the move to the online channel, one might wonder about the enthusiasm for a multi- or omni-channel strategy even among those retailers that have originated online with no brick and mortar presence. Where then is the desire for a “hybrid” strategy coming from? There are several reasons why erstwhile pure-play online retailers such as Warby Parker (for eyeglasses), Kiddicare (a UK retailer for baby car seats, strollers, beds, etc.), BaubleBar and Bonobos (online fashion purveyors) have or are in the process of setting up brick and mortar operations. Even companies like Etsy and Ebay are embracing the concept of pop-up stores in various cities – temporary stores in high traffic areas or even in mobile form in buses. First and foremost, a number of customers still like to hold, touch, feel, and see product before committing to make a purchase. One can think of a world consisting of experienced shoppers in a category that know the attributes of the various products and have a good idea as to what they are looking for. Think of second- or third-time parents that have already shopped offline for their first child and know what type of car seat they prefer, how to install it in the car, etc. For such consumers, ordering online is a cinch. On the other hand, first time parents might be far less certain about their preferences for different elements of car seat design. Further, they are likely to be less familiar with how to install a car seat once they purchase it. If there are many of the latter type of customer in the population, it would make sense for a company wanting to show growth to consider catering to such a customer’s needs with offline stores. A related factor to the above is in the context of durable goods or technology products. In such product categories, later adopters – say, of personal computers, who are far less savvy about technology — may prefer to make their purchases at brick and mortar stores. The example of Dell is appropriate in this regard. When the bulk of sales in the PC category was coming from businesses, especially businesses that were familiar with PCs and were in the process of replacing their existing machines, companies like Dell with their low-cost business models thrived at the expense of companies like HP that were heavily dependent on channel partners, very often bricks and mortar intermediaries. These “experienced” customers knew what they wanted in terms of configuration, and at the same time they demanded value and low prices. Thus purchasing from Dell made sense. As the PC market evolved and shifted towards the consumer market where, at that time, several households were still purchasing their first or second PC, the “direct” model made less sense as these consumers were more risk-averse and demanded the comfort of seeing and feeling what they were purchasing. The resurgence of HP and Apple, while attributable to other factors as well, was at least partially attributable to the evolution of the PC product lifecycle. A third factor is the nature of customization required for the product or service. A Taylor Swift album is the same regardless of whether it is purchased online or off. However, products like eyeglasses and shoes tend to be different. Here the satisfaction with the product depends critically on its fit – either to the wearer’s face or to his feet. And while Zappos allows you to return items for free, and Warby Parker also allows for several styles to be tried in-home for free, consumers in these product categories are likely to go through several dozen alternatives before settling on the one that they would like to purchase. Another reason for an offline presence is to build the brand and its credibility. An online-only bank might be very stable and sound, but seeing its physical presence is often reassuring for consumers who might be worried about how genuine the operation might be. Besides brand credibility, a physical presence also promotes instant gratification that online shopping does not yet provide – although judging by recent moves by the likes of Google and Amazon, these retailers are constantly striving towards providing precisely such gratification for customers. Further, an offline presence also enables returns and exchanges of items purchased online; such trips to the store, can in turn, lead to additional opportunities to purchase and consequently more sales and revenues. Offline retailers are constantly aiming to boost store traffic and browsing behavior in their stores. The logic is simple – the more customers browse, the greater the possibility that they encounter something they like, thereby enhancing the probability of a sale. Online stores are not as conducive to the discovery of new items because the traditional notion of browsing is much more difficult to implement. Indeed, research in the context of online grocery shopping has shown that new products introduced in online stores take a longer time to be “adopted” by customers than in their offline counterparts (see Andrea Pozzi). To expand a consumer’s share of wallet at the store, an online-only operation may look to an offline presence to boost its chances of landing a sale. Having on offline presence with the ability to observe consumers at the point of purchase can also provide useful feedback to the company. This in turn can help the company re-jigger its products, price points, delivery, etc. Witness the meteoric rise of Lululemon (notwithstanding its recent “transparency” problem). The CEO Christine Day spends hours watching customers’ shopping behavior. This is then used as an input, along with any complaints customers might have, to modifying the product offerings and the store layout and assortment. By placing the clothes-folding tables on the sales floor near the fitting rooms rather than in a back room, the company facilitates employees eavesdropping on customer complaints. The company also encourages and gathers information in store on customer pain points. This information is then fed back to headquarters to try and improve performance. Ultimately, there are several factors that can motivate an online seller to look for an offline presence. Critically, to the extent that these factors can be aligned with the goal of providing a superior customer experience in a profitable manner, there could be a compelling motivation to consider the hybrid online-offline channel strategy. Recent, low real estate costs have served to facilitate such a move. Further, several companies are convinced that there could be synergies with the multi-channel approach as a greater presence will get people to buy more. Writing off brick and mortar stores could be a trifle premature. When asked by Raoul Silva, the character played by Javier Bardem as to the nature of his hobby, Daniel Craig – James Bond in Skyfall deadpans – “Resurrection.” This sentiment might well be shared by the new brick and mortar stores being set up by online retailers. Photo by WestportWiki
Pop-upView Separately

When Bricks Click: Why Retailers are Embracing Online and Offline

 

The New York Times has a story out about online retailing phenom Warby Parker. The article explores the changing habits of e-commerce companies (why they’re cutting out middlemen) and celebrates innovation in online channels. And it starts to make a larger point: alongside all the enthusiasm for innovative online retailing, there’s much to be said for having some elements of brick and mortar stores. Even Warby Parker might benefit.

One hears the terms “multichannel” and “omnichannel” a lot these days. The basic idea behind an omnichannel strategy is for the firm to be present everywhere and anywhere that a consumer might feel the need for its product or service. As Haley Joel Osment’s character, Cole Sear, puts it in the movie Sixth Sense in response to Dr. Malcolm’s Crowe’s question about how often he saw ghosts: “All the time. They’re everywhere.” Or Bill Paxton’s Private Hudson in the equaling chilling movie Aliens characterizing the slimy beasts: “They’re everywhere man! They’re all around us man!” So too by being “omni”-present, firms can ensure that their products are available in brick and mortar stores (if consumers feel the urge to see, touch and feel the product and require it at short notice) and also online (if consumers want to access the product from the comfort of his or her home).

Based on the doom and gloom surrounding them, it had appeared over the past several years that businesses dependent largely on brick and mortar stores were in trouble. It is not easy to forget the demise of the beloved bookstore Borders, the travails of music chains like Coconuts, Tower Records, Sam Goody, etc., and the tribulations of Hollywood and Blockbuster video. Retailers like Best Buy and even Target are not immune from “showrooming” – where the brick and mortar store acts as an unwitting showroom for an online retailer like Amazon; a consumer satisfies herself about the adequacy of the latest LCD TV from Sony or Samsung at a Best Buy store and promptly places an order for it on Amazon, sometimes even when she is still physically in the store.  The George Pappas (Steve Zahn’s character in You’ve Got Mail) view of the Internet as “just another way to be rejected by women” has over the past several years given way to that of an important marketing channel that can effectively meet the needs of consumers in a large number of product and service categories.

Given the move to the online channel, one might wonder about the enthusiasm for a multi- or omni-channel strategy even among those retailers that have originated online with no brick and mortar presence. Where then is the desire for a “hybrid” strategy coming from? There are several reasons why erstwhile pure-play online retailers such as Warby Parker (for eyeglasses), Kiddicare (a UK retailer for baby car seats, strollers, beds, etc.), BaubleBar and Bonobos (online fashion purveyors) have or are in the process of setting up brick and mortar operations. Even companies like Etsy and Ebay are embracing the concept of pop-up stores in various cities – temporary stores in high traffic areas or even in mobile form in buses.

First and foremost, a number of customers still like to hold, touch, feel, and see product before committing to make a purchase. One can think of a world consisting of experienced shoppers in a category that know the attributes of the various products and have a good idea as to what they are looking for. Think of second- or third-time parents that have already shopped offline for their first child and know what type of car seat they prefer, how to install it in the car, etc. For such consumers, ordering online is a cinch. On the other hand, first time parents might be far less certain about their preferences for different elements of car seat design. Further, they are likely to be less familiar with how to install a car seat once they purchase it. If there are many of the latter type of customer in the population, it would make sense for a company wanting to show growth to consider catering to such a customer’s needs with offline stores.

A related factor to the above is in the context of durable goods or technology products. In such product categories, later adopters – say, of personal computers, who are far less savvy about technology — may prefer to make their purchases at brick and mortar stores. The example of Dell is appropriate in this regard. When the bulk of sales in the PC category was coming from businesses, especially businesses that were familiar with PCs and were in the process of replacing their existing machines, companies like Dell with their low-cost business models thrived at the expense of companies like HP that were heavily dependent on channel partners, very often bricks and mortar intermediaries. These “experienced” customers knew what they wanted in terms of configuration, and at the same time they demanded value and low prices. Thus purchasing from Dell made sense. As the PC market evolved and shifted towards the consumer market where, at that time, several households were still purchasing their first or second PC, the “direct” model made less sense as these consumers were more risk-averse and demanded the comfort of seeing and feeling what they were purchasing. The resurgence of HP and Apple, while attributable to other factors as well, was at least partially attributable to the evolution of the PC product lifecycle.

A third factor is the nature of customization required for the product or service. A Taylor Swift album is the same regardless of whether it is purchased online or off. However, products like eyeglasses and shoes tend to be different. Here the satisfaction with the product depends critically on its fit – either to the wearer’s face or to his feet. And while Zappos allows you to return items for free, and Warby Parker also allows for several styles to be tried in-home for free, consumers in these product categories are likely to go through several dozen alternatives before settling on the one that they would like to purchase.

Another reason for an offline presence is to build the brand and its credibility. An online-only bank might be very stable and sound, but seeing its physical presence is often reassuring for consumers who might be worried about how genuine the operation might be. Besides brand credibility, a physical presence also promotes instant gratification that online shopping does not yet provide – although judging by recent moves by the likes of Google and Amazon, these retailers are constantly striving towards providing precisely such gratification for customers. Further, an offline presence also enables returns and exchanges of items purchased online; such trips to the store, can in turn, lead to additional opportunities to purchase and consequently more sales and revenues.

Offline retailers are constantly aiming to boost store traffic and browsing behavior in their stores. The logic is simple – the more customers browse, the greater the possibility that they encounter something they like, thereby enhancing the probability of a sale. Online stores are not as conducive to the discovery of new items because the traditional notion of browsing is much more difficult to implement. Indeed, research in the context of online grocery shopping has shown that new products introduced in online stores take a longer time to be “adopted” by customers than in their offline counterparts (see Andrea Pozzi). To expand a consumer’s share of wallet at the store, an online-only operation may look to an offline presence to boost its chances of landing a sale.

Having on offline presence with the ability to observe consumers at the point of purchase can also provide useful feedback to the company. This in turn can help the company re-jigger its products, price points, delivery, etc. Witness the meteoric rise of Lululemon (notwithstanding its recent “transparency” problem). The CEO Christine Day spends hours watching customers’ shopping behavior. This is then used as an input, along with any complaints customers might have, to modifying the product offerings and the store layout and assortment. By placing the clothes-folding tables on the sales floor near the fitting rooms rather than in a back room, the company facilitates employees eavesdropping on customer complaints. The company also encourages and gathers information in store on customer pain points. This information is then fed back to headquarters to try and improve performance.

Ultimately, there are several factors that can motivate an online seller to look for an offline presence. Critically, to the extent that these factors can be aligned with the goal of providing a superior customer experience in a profitable manner, there could be a compelling motivation to consider the hybrid online-offline channel strategy.

Recent, low real estate costs have served to facilitate such a move. Further, several companies are convinced that there could be synergies with the multi-channel approach as a greater presence will get people to buy more. Writing off brick and mortar stores could be a trifle premature. When asked by Raoul Silva, the character played by Javier Bardem as to the nature of his hobby, Daniel Craig – James Bond in Skyfall deadpans – “Resurrection.” This sentiment might well be shared by the new brick and mortar stores being set up by online retailers.



Photo by WestportWiki

Do The Math: The Mu-Sigma Customer Summit Celebrates Analytics Last weekend, I attended the 2013 Customer Summit in Las Vegas hosted by Mu Sigma, a decision sciences and “pure-play” analytics company started by one of our graduates, Dhiraj Rajaram. The company’s slogan says it all: “Do the math.” The slogan effectively communicates to both the external world as well as to  employees what the company is trying to accomplish (see my earlier post on effective slogans). The summit provided an opportunity for current and prospective customers to understand the ways in which decision sciences in general, and Mu Sigma in particular, have helped address various business problems. Current customers shared their analytics-related experiences. Panel discussions then highlighted trends and possible future directions for the role of decision sciences in organizations. The confab kicked off with a very interesting discussion between Dhiraj and Gary Reiner, an operating partner at General Atlantic and a former CIO at GE. Mr. Reiner provided an insider’s view on how GE came to have an office of the CIO, and on the role played by GE’s legendary former CEO Jack Welch in the evolution of the company. GE initially did not pay much attention to information technology but was not only at the forefront of this function but was also an early mover in the trend towards raising efficiency by offshoring some of these operations. The fundamental point made during this session: note the importance of both the “art” and the “science” of decision-making. To draw the contrast, Dhiraj used a movie analogy and compared the movie Moneyball (the Brad Pitt feature based on the book of the same name by Michael Lewis) to the Clint Eastwood–Amy Adams movie Trouble with the Curve. While the first movie highlighted how data and statistics helped a baseball team that was resource constrained make better decisions, the latter emphasized the importance of baseball scouts in identifying talent, even in situations where data and statistics were not widely available. Ultimately, Dhiraj noted, both were important in providing a more holistic picture of players and the game, as “the scout can see things that numbers cannot see — or in the case of Gus Lobel, Eastwood’s character in the movie, hear what numbers cannot hear — and the numbers say things that the scout cannot say.” Similarly, decision sciences are, and will continue to be, an intelligent interplay between art and science. In other words, do the math, but do it wisely. Another highlight of the summit was a keynote talk by Gary Loveman, an erstwhile HBS professor and current CEO of Caesar’s Entertainment. Mr. Loveman emphasized the importance of “profitably influencing consumer behavior” by engendering loyalty and increasing the customer’s share of wallet. He did the latter at Caesar’s by encouraging customers to visit to properties operated by the company in destinations all across the globe. Contrasting the tendency of grocery stores to “reward” low-spending customers by having express lanes for those who shop little (think “10 items or less”) and not have special lanes for people who shop a lot and are likely to be more valuable to the store, Mr. Loveman emphasized that the more a customer or client spends at Caesar’s Entertainment’s properties, the better he or she is treated. Granted, there are costs to investing in customer retention. To help determine the amount the company should spend on, say, coupons for a steak dinner, tickets to see Celine Dion, flights and hotel rooms, or even a night that recreates the experience of the movie Hangover (if a high-roller requests),  the company looks at the data and uses analytics. Mr. Loveman also emphasized the importance of the service-profit chain, the idea that satisfied employees lead to satisfied customers. To deliver superior service, he noted that Caesar’s HR system ensures that employees are ready (have the required information), willing (are given the appropriate incentives based on customer satisfaction) and able (possess the requisite training) to help customers. This leads to employee loyalty and, by the very nature of its design, to higher customer satisfaction. The higher satisfaction then generates customer loyalty and, consequently, greater profitability and growth. A point that both Dhiraj and Gary Loveman made in their talks was the central importance of learning. Often decision makers have hunches or hypotheses about various aspects of the business – why sales are declining in market X, or why customers for product Y are defecting, for example. It is critical to test such hypotheses with data, otherwise they could lead to incorrect decisions or rules that simply end up exacerbating the situation. At Mu Sigma this idea is ensconced in their DIPP™ (Descriptive – Inquisitive – Predictive – Prescriptive) framework to analytics. At Caesar’s, Mr. Loveman also advocated the use of randomized experiments that can determine whether price increases on drinks at the casino’s bars would be accepted by customers, for example. The key, then, is to test your hypothesis and ultimately learn from it. In his quest for a bride, Prince Akeem (played by Eddie Murphy), the future ruler of Zamunda in the movie Coming to America has a hypothesis about where in New York one can find a woman with grace, elegance, taste and culture; a woman suitable for a king - Queens! And he spends the rest of the movie testing the hypothesis with ultimate success. Overall, I came away from the summit with the feeling that firms are increasingly open to the role of analytics and decision sciences to translate data into usable information. At the same time, if the model and the mind combine to extract a usable insight, that can help businesses move forward.  Article author Pradeep Chintagunta serves on the Advisory Council for Mu Sigma.Photo by henribergius
Pop-upView Separately

Do The Math: The Mu-Sigma Customer Summit Celebrates Analytics

Last weekend, I attended the 2013 Customer Summit in Las Vegas hosted by Mu Sigma, a decision sciences and “pure-play” analytics company started by one of our graduates, Dhiraj Rajaram. The company’s slogan says it all: “Do the math.”

The slogan effectively communicates to both the external world as well as to  employees what the company is trying to accomplish (see my earlier post on effective slogans). The summit provided an opportunity for current and prospective customers to understand the ways in which decision sciences in general, and Mu Sigma in particular, have helped address various business problems. Current customers shared their analytics-related experiences. Panel discussions then highlighted trends and possible future directions for the role of decision sciences in organizations.

The confab kicked off with a very interesting discussion between Dhiraj and Gary Reiner, an operating partner at General Atlantic and a former CIO at GE. Mr. Reiner provided an insider’s view on how GE came to have an office of the CIO, and on the role played by GE’s legendary former CEO Jack Welch in the evolution of the company. GE initially did not pay much attention to information technology but was not only at the forefront of this function but was also an early mover in the trend towards raising efficiency by offshoring some of these operations. The fundamental point made during this session: note the importance of both the “art” and the “science” of decision-making.

To draw the contrast, Dhiraj used a movie analogy and compared the movie Moneyball (the Brad Pitt feature based on the book of the same name by Michael Lewis) to the Clint Eastwood–Amy Adams movie Trouble with the Curve. While the first movie highlighted how data and statistics helped a baseball team that was resource constrained make better decisions, the latter emphasized the importance of baseball scouts in identifying talent, even in situations where data and statistics were not widely available. Ultimately, Dhiraj noted, both were important in providing a more holistic picture of players and the game, as “the scout can see things that numbers cannot see — or in the case of Gus Lobel, Eastwood’s character in the movie, hear what numbers cannot hear — and the numbers say things that the scout cannot say.” Similarly, decision sciences are, and will continue to be, an intelligent interplay between art and science. In other words, do the math, but do it wisely.

Another highlight of the summit was a keynote talk by Gary Loveman, an erstwhile HBS professor and current CEO of Caesar’s Entertainment. Mr. Loveman emphasized the importance of “profitably influencing consumer behavior” by engendering loyalty and increasing the customer’s share of wallet. He did the latter at Caesar’s by encouraging customers to visit to properties operated by the company in destinations all across the globe. Contrasting the tendency of grocery stores to “reward” low-spending customers by having express lanes for those who shop little (think “10 items or less”) and not have special lanes for people who shop a lot and are likely to be more valuable to the store, Mr. Loveman emphasized that the more a customer or client spends at Caesar’s Entertainment’s properties, the better he or she is treated.

Granted, there are costs to investing in customer retention. To help determine the amount the company should spend on, say, coupons for a steak dinner, tickets to see Celine Dion, flights and hotel rooms, or even a night that recreates the experience of the movie Hangover (if a high-roller requests),  the company looks at the data and uses analytics.

Mr. Loveman also emphasized the importance of the service-profit chain, the idea that satisfied employees lead to satisfied customers. To deliver superior service, he noted that Caesar’s HR system ensures that employees are ready (have the required information), willing (are given the appropriate incentives based on customer satisfaction) and able (possess the requisite training) to help customers. This leads to employee loyalty and, by the very nature of its design, to higher customer satisfaction. The higher satisfaction then generates customer loyalty and, consequently, greater profitability and growth.

A point that both Dhiraj and Gary Loveman made in their talks was the central importance of learning. Often decision makers have hunches or hypotheses about various aspects of the business – why sales are declining in market X, or why customers for product Y are defecting, for example. It is critical to test such hypotheses with data, otherwise they could lead to incorrect decisions or rules that simply end up exacerbating the situation. At Mu Sigma this idea is ensconced in their DIPP™ (Descriptive – Inquisitive – Predictive – Prescriptive) framework to analytics. At Caesar’s, Mr. Loveman also advocated the use of randomized experiments that can determine whether price increases on drinks at the casino’s bars would be accepted by customers, for example.

The key, then, is to test your hypothesis and ultimately learn from it. In his quest for a bride, Prince Akeem (played by Eddie Murphy), the future ruler of Zamunda in the movie Coming to America has a hypothesis about where in New York one can find a woman with grace, elegance, taste and culture; a woman suitable for a king - Queens! And he spends the rest of the movie testing the hypothesis with ultimate success.

Overall, I came away from the summit with the feeling that firms are increasingly open to the role of analytics and decision sciences to translate data into usable information. At the same time, if the model and the mind combine to extract a usable insight, that can help businesses move forward.

 
Article author Pradeep Chintagunta serves on the Advisory Council for Mu Sigma.

Photo by henribergius

Maker’s Mark… undiluted, after all [Pt 2 of 2] In a previous post I discussed the case of Maker’s Mark and its move to dilute the alcohol content of its product from 90 to 86 proof. At that time, I noted the tradeoff facing the company – one the one hand it risked upsetting loyal consumers used to the stronger drink, on the other hand many current consumers might have been amenable to the shift (just like the case of Jack Daniel’s before). Further, new customers, especially those in overseas markets who had not tried the drink before, could get accustomed to the new formula from their very first sips.  But after several days of listening to unhappy customers, Maker’s Mark changed its mind. To quote the powerful Borg of Star Trek fame, the company realized that “resistance is futile.” In an apology that made clear loyal customers were paramount to the firm’s interests, top executives also promised to work towards alleviating the problem by increasing capacity. Back in 1985, the case of public indignation with Coke’s new formula was impressive — as many as 400,000 consumers are rumored to have called and written (hand-written and snail mailed) to the company. But today’s consumers have access to the internet and to social networking sites, which means they can not only aggregate displeasure but also amplify it by getting others involved. Others before Maker’s Mark have learnt this lesson – from Bank of America, which last year backed down from charging account holders  new fees, to the “cheese monopolists” in Israel who felt public wrath over the increasing price of cottage cheese in that country.  Ultimately concerted public action helped reverse corporate decisions – a point that was not lost on Maker’s Mark and should not be lost on future marketers. While Travis Bickle (Robert De Niro) in Taxi Driver might have been uncertain as to whether he was being spoken to – “You talkin’ to me?” – marketers should have no illusions. Their customers are indeed talking to them when they express their unhappiness on social networking sites and elsewhere.   See Part 1 of this Post Photo by Nicor
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Maker’s Mark… undiluted, after all [Pt 2 of 2]

In a previous post I discussed the case of Maker’s Mark and its move to dilute the alcohol content of its product from 90 to 86 proof. At that time, I noted the tradeoff facing the company – one the one hand it risked upsetting loyal consumers used to the stronger drink, on the other hand many current consumers might have been amenable to the shift (just like the case of Jack Daniel’s before). Further, new customers, especially those in overseas markets who had not tried the drink before, could get accustomed to the new formula from their very first sips.

 But after several days of listening to unhappy customers, Maker’s Mark changed its mind. To quote the powerful Borg of Star Trek fame, the company realized that “resistance is futile.” In an apology that made clear loyal customers were paramount to the firm’s interests, top executives also promised to work towards alleviating the problem by increasing capacity.

Back in 1985, the case of public indignation with Coke’s new formula was impressive — as many as 400,000 consumers are rumored to have called and written (hand-written and snail mailed) to the company. But today’s consumers have access to the internet and to social networking sites, which means they can not only aggregate displeasure but also amplify it by getting others involved. Others before Maker’s Mark have learnt this lesson – from Bank of America, which last year backed down from charging account holders  new fees, to the “cheese monopolists” in Israel who felt public wrath over the increasing price of cottage cheese in that country.

 Ultimately concerted public action helped reverse corporate decisions – a point that was not lost on Maker’s Mark and should not be lost on future marketers. While Travis Bickle (Robert De Niro) in Taxi Driver might have been uncertain as to whether he was being spoken to – “You talkin’ to me?” – marketers should have no illusions. Their customers are indeed talking to them when they express their unhappiness on social networking sites and elsewhere.

 

See Part 1 of this Post

Photo by Nicor

Is Maker’s Mark (Literally) Diluting Its Brand? [Pt 1 of 2] When asked by a bartender as to whether he wanted his vodka martini shaken or stirred, James Bond, the character played by Daniel Craig in Casino Royale replies: “Do I look like I give a damn?” Loyal drinkers of Maker’s Mark though did certainly seem to “give a damn” when the venerable American whisky (note the absence of the “e” a la Scotch and unlike typical American brands of whiskey) Maker’s Mark announced that they were lowering the alcohol content of the tipple from 90 proof (45% alcohol by volume) to 84 proof (42% alcohol by volume). The main reason provided by the company was that the demand for Maker’s Mark, one of Beam Inc.’s signature brands, has been skyrocketing, especially in overseas markets. Several factors have contributed to this rise in popularity – from favorable exchange rates to explicit overseas marketing by US firms facing declining demand in the domestic market. According to the firm’s current COO, Rob Samuels, who in a previous role was in charge of forecasting, he did not foresee the rapid increase in demand. This led to the firm’s predicament of possibly having to disappoint its many current and potential customers. How does a firm deal with such a situation? The most obvious solution (no pun intended) is for the firm to raise prices. However, this did not seem to appeal to the marketers of Maker’s Mark. After all, a firm may be reluctant to raise prices in the presence of reference prices in the market. Notice how tuna cans have shrunk from 6 oz. to 5 oz. to stay close to the reference price of $1, or how orange juice cartons have downsized from 64 oz. to 59 oz., or how diaper boxes are no longer quite filled to the brim. In the case of Maker’s Mark, the firm also needs to keep in mind two types of customers – the end consumer who purchases liquor for at-home consumption and the bartender who re-sells the product to the bar’s patrons. Strong reference prices for either of these groups would make a price increase, for want of a better word, unpalatable. Another option is to tinker with the product itself. The canonical example etched into the American psyche is that of Coke’s reformulation. That situation has been interpreted by some as a marketing fiasco and by others as a brilliant marketing ploy owing to the successful re-introduction of the original Coke formula as Coca-Cola Classic. Closer to the Maker’s Mark example is that of Jack Daniel’s, the other famous whiskey from the South that twice lowered its alcohol content – once from 90 proof to 86 proof in 1987 and again from 86 proof to 80 proof in 2002. The argument in that case was that consumers preferred the lower proof version. Granted there was some resistance from the drinking population, most notably from the Modern Drunkard Magazine (to which Phil Lynch, a spokesperson for Brown-Forman, the maker of Jack Daniel’s, is known to have famously retorted, “We don’t think it’s appropriate to have a magazine called Modern Drunkard dictate how we make our whiskey”). The reasoning by Maker’s Mark seems along the same lines –discerning drinkers in their tests could not distinguish between the two versions of the product. This is perhaps the strongest justification for the firm’s actions although it does raise the specter, literally, of brand dilution. Loyal customers who know of the dilution are likely to perceive the product as being watered down even if they might not be able to tell the products apart in a blind taste test. Those who remember Intel’s defense of the flaw in the Pentium chip — in which users would have encountered the flaw once in 9 billion or so operations — would also recall something else:   a buyer of a Pentium chip only needed a single operation, not 9 billion, to actually encounter it. Although Intel finally recalled all the defective chips, considerable damage was done to the brand’s name. There are two other justifications for the move by Maker’s Mark. If the brand expects to bring in new customers who have never tasted Maker’s Mark, it might argue that those new customers will not have any expectations based on how the whisky previously tasted. As long as these drinkers like the taste of the whisky, they will continue to consume it. In other words, existing consumers will matter less in the “long run.” This of course will depend on the relative sizes of the two groups- and on the ability of existing customers to rally against the company’s move. Early indications are that these customers have vociferously expressed their displeasure. Another justification is based on product-line considerations. If the feeling in the company is that Maker’s Mark was cannibalizing the higher-proof Maker’s 46 (which has a 46% alcohol content), then lowering the alcohol content for the flagship brand will enable the company to better differentiate its products and lessen cannibalization. Further, as the company is part of the Jim Beam stable of brands, it needs to take into account the Jim Beam product line, which includes 80, 86 and 90 proof brands. The Maker’s Mark product needs to fit into this line-up. Taken together, there are a number of factors driving a decision like the one taken by Maker’s Mark. From a marketing perspective, success will stem from whether the move keeps customers happy and loyal to the brand. In the Raiders of the Lost Ark, when Marion Ravenwood (the character played by Karen Allen) is captured, her first question to her captors is, “Whatta ya got to drink around here?” To that question from her and from others around the world, if the answer is and continues to be “Maker’s Mark,” it would indeed be music to the company’s ears. See Part 2 of This Post Photo by SimonQ錫濛譙
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Is Maker’s Mark (Literally) Diluting Its Brand? [Pt 1 of 2]

When asked by a bartender as to whether he wanted his vodka martini shaken or stirred, James Bond, the character played by Daniel Craig in Casino Royale replies: “Do I look like I give a damn?” Loyal drinkers of Maker’s Mark though did certainly seem to “give a damn” when the venerable American whisky (note the absence of the “e” a la Scotch and unlike typical American brands of whiskey) Maker’s Mark announced that they were lowering the alcohol content of the tipple from 90 proof (45% alcohol by volume) to 84 proof (42% alcohol by volume).

The main reason provided by the company was that the demand for Maker’s Mark, one of Beam Inc.’s signature brands, has been skyrocketing, especially in overseas markets. Several factors have contributed to this rise in popularity – from favorable exchange rates to explicit overseas marketing by US firms facing declining demand in the domestic market. According to the firm’s current COO, Rob Samuels, who in a previous role was in charge of forecasting, he did not foresee the rapid increase in demand. This led to the firm’s predicament of possibly having to disappoint its many current and potential customers.

How does a firm deal with such a situation? The most obvious solution (no pun intended) is for the firm to raise prices. However, this did not seem to appeal to the marketers of Maker’s Mark. After all, a firm may be reluctant to raise prices in the presence of reference prices in the market. Notice how tuna cans have shrunk from 6 oz. to 5 oz. to stay close to the reference price of $1, or how orange juice cartons have downsized from 64 oz. to 59 oz., or how diaper boxes are no longer quite filled to the brim.

In the case of Maker’s Mark, the firm also needs to keep in mind two types of customers – the end consumer who purchases liquor for at-home consumption and the bartender who re-sells the product to the bar’s patrons. Strong reference prices for either of these groups would make a price increase, for want of a better word, unpalatable.

Another option is to tinker with the product itself. The canonical example etched into the American psyche is that of Coke’s reformulation. That situation has been interpreted by some as a marketing fiasco and by others as a brilliant marketing ploy owing to the successful re-introduction of the original Coke formula as Coca-Cola Classic.

Closer to the Maker’s Mark example is that of Jack Daniel’s, the other famous whiskey from the South that twice lowered its alcohol content – once from 90 proof to 86 proof in 1987 and again from 86 proof to 80 proof in 2002. The argument in that case was that consumers preferred the lower proof version. Granted there was some resistance from the drinking population, most notably from the Modern Drunkard Magazine (to which Phil Lynch, a spokesperson for Brown-Forman, the maker of Jack Daniel’s, is known to have famously retorted, “We don’t think it’s appropriate to have a magazine called Modern Drunkard dictate how we make our whiskey”).

The reasoning by Maker’s Mark seems along the same lines –discerning drinkers in their tests could not distinguish between the two versions of the product. This is perhaps the strongest justification for the firm’s actions although it does raise the specter, literally, of brand dilution.

Loyal customers who know of the dilution are likely to perceive the product as being watered down even if they might not be able to tell the products apart in a blind taste test. Those who remember Intel’s defense of the flaw in the Pentium chip — in which users would have encountered the flaw once in 9 billion or so operations — would also recall something else:   a buyer of a Pentium chip only needed a single operation, not 9 billion, to actually encounter it. Although Intel finally recalled all the defective chips, considerable damage was done to the brand’s name.

There are two other justifications for the move by Maker’s Mark. If the brand expects to bring in new customers who have never tasted Maker’s Mark, it might argue that those new customers will not have any expectations based on how the whisky previously tasted. As long as these drinkers like the taste of the whisky, they will continue to consume it. In other words, existing consumers will matter less in the “long run.” This of course will depend on the relative sizes of the two groups- and on the ability of existing customers to rally against the company’s move. Early indications are that these customers have vociferously expressed their displeasure.

Another justification is based on product-line considerations. If the feeling in the company is that Maker’s Mark was cannibalizing the higher-proof Maker’s 46 (which has a 46% alcohol content), then lowering the alcohol content for the flagship brand will enable the company to better differentiate its products and lessen cannibalization. Further, as the company is part of the Jim Beam stable of brands, it needs to take into account the Jim Beam product line, which includes 80, 86 and 90 proof brands. The Maker’s Mark product needs to fit into this line-up.

Taken together, there are a number of factors driving a decision like the one taken by Maker’s Mark. From a marketing perspective, success will stem from whether the move keeps customers happy and loyal to the brand. In the Raiders of the Lost Ark, when Marion Ravenwood (the character played by Karen Allen) is captured, her first question to her captors is, “Whatta ya got to drink around here?” To that question from her and from others around the world, if the answer is and continues to be “Maker’s Mark,” it would indeed be music to the company’s ears.

See Part 2 of This Post

Photo by SimonQ錫濛譙

The Latest In Celebrity Branding: Alicia Keys For Blackberry [Pt 3 of 3] Blackberry, the company formerly known as Research in Motion, made a series of announcements last week. Although Yoda always encouraged others to succeed, I’m not entirely sure he would approve of using celebrity as means to an end. One  buzz-worthy moment was the introduction of former self-described “iPhone junky” Alicia Keys as Blackberry’s new creative director. She, along with other artists like director Robert Rodriguez are slated to produce content for the devices. (The move follows the decision by Microsoft to use the singer Gwen Stefani as a spokesperson for the Windows phone). Not only does this move pique the public’s interest in the brand but it could also signal that it is okay to switch away from the iPhone. Of course, it is also unlikely that most customers are being paid as much as Ms. Keys for switching to the Blackberry. The value of such a move for Blackberry’s customers is still to be seen. I’ve written before about celebrity branding, you can read that here. See Part 2 of my series on Blackberry See Part 1 of my series on Blackberry Photo by Blackberryimages
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The Latest In Celebrity Branding: Alicia Keys For Blackberry [Pt 3 of 3]

Blackberry, the company formerly known as Research in Motion, made a series of announcements last week. Although Yoda always encouraged others to succeed, I’m not entirely sure he would approve of using celebrity as means to an end.

One  buzz-worthy moment was the introduction of former self-described “iPhone junky” Alicia Keys as Blackberry’s new creative director. She, along with other artists like director Robert Rodriguez are slated to produce content for the devices. (The move follows the decision by Microsoft to use the singer Gwen Stefani as a spokesperson for the Windows phone). Not only does this move pique the public’s interest in the brand but it could also signal that it is okay to switch away from the iPhone.

Of course, it is also unlikely that most customers are being paid as much as Ms. Keys for switching to the Blackberry. The value of such a move for Blackberry’s customers is still to be seen.

I’ve written before about celebrity branding, you can read that here.

See Part 2 of my series on Blackberry

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