Using Customer Relationship Trajectories to Segment Customers and Predict Profitability

A central premise of relationship marketing theory is that economic benefits flow fromretaining customers. However, the early research focus on the duration of the relationship may obscure other important aspects of the interactions with the customer that drive profitability. Borrowing from the branding literature, where different types of customer relationships have been described (but not empirically examined), we study the patterns of business customers’ buying behavior, or trajectories that characterize customer-firm relationships over time, and their impact on profitability. We develop a finite mixture model relating customer relationship trajectories to profitability over a three year period. Our analysis yields five segments, or types of customer-firm relationships, for this dataset. We find key determinants of profitability vary across types of customer relationship. Interestingly, in none of these segments does duration predict profitability.marketing ;

Rethinking Marketing Programs for Emerging Markets

We point to a fundamental inconsistency in the emerging market strategies of multinational firms. On the one hand, they seek billions of new consumers in the emerging markets of China, India, Indonesia, and Latin America; on the other, their marketing programs are scarcely adapted for these markets. The result is low market penetration, low market shares, and poor profitability. These multinationals are trapped by their own devices in gilded cages, serving the affluent few and ignoring the potential of billions of new consumers that attracted them in the first place. In this paper, we propose that, in order to attract billions of new consumers, the marketing programs of multinationals need to be rethought from the ground up. We identify three key factors that characterize emerging markets: (1) low incomes, (2) variability in consumers and infrastructure, and (3) the relative cheapness of labor, which is often substituted for capital. We draw on numerous case studies from around the world to illustrate how to incorporate these realities into marketing programs. We conclude with a discussion of the implications of such an approach for the multinational's core strategic assumptions.http://deepblue.lib.umich.edu/bitstream/2027.42/39704/3/wp320.pd

Rethinking Marketing Programs for Emerging Markets

We point to a fundamental inconsistency in the emerging market strategies of multinational firms. On the one hand, they seek billions of new consumers in the emerging markets of China, India, Indonesia, and Latin America; on the other, their marketing programs are scarcely adapted for these markets. The result is low market penetration, low market shares, and poor profitability. These multinationals are trapped by their own devices in gilded cages, serving the affluent few and ignoring the potential of billions of new consumers that attracted them in the first place. In this paper, we propose that, in order to attract billions of new consumers, the marketing programs of multinationals need to be rethought from the ground up. We identify three key factors that characterize emerging markets: (1) low incomes, (2) variability in consumers and infrastructure, and (3) the relative cheapness of labor, which is often substituted for capital. We draw on numerous case studies from around the world to illustrate how to incorporate these realities into marketing programs. We conclude with a discussion of the implications of such an approach for the multinational's core strategic assumptions.marketing, emerging market consumers, consumer behavior, multinationals

So You Want To Buy A Brand?

A company’s brand portfolio serves as its link to customers and markets, protects it from competitors, and provides it with a degree of channel power. Historically, brand portfolios were built, brand by brand. But in today’s fast-paced and highly competitive marketplace, companies cannot afford to rely solely on brands built from scratch. Consumer preferences change, yesterday’s star brands are today’s dogs, new segments emerge, and established competitors and nimble start-ups are quick to spot and respond to new opportunities. A brand portfolio that does not continually evolve to meet the changing strategic needs of the market risks becoming obsolete. At the same time, building brands has never been more costly, nor more fraught with risk. In response to these challenges, firms are increasingly choosing to acquire brands from other companies. Acquisitions of brands allow firms to respond far more quickly to the needs of an emerging market segment or to a competitive move. Furthermore, buying an established brand is considerably less risky than undertaking the launch of an entirely new brand. But acquiring brands presents its own set of challenges. Not only must the purchased brand have the potential to fulfill the strategic objectives for which it is purchased, but it must also be integrated into the existing portfolio of brands and brand management structures of the acquiring company, and be properly deployed to capture market opportunities. Strategic match, portfolio fit, and effective deployment can mean the difference between success and failure of a brand acquisition. Yet managers tend to underestimate the effort and risk associated with brand acquisition. Brand acquisitions may have a lower rate of failure than new products, but they are not risk- free. We develop a framework to guide managers in assessing potential acquisitions against key success factors. To develop the framework, we have assembled and examined a comprehensive set of brand acquisitions in the food and health and beauty sectors that took place over the past 25 years. We studied key variables that helped us understand how and why brands change hands, as well as the financial consequences of acquisitions that were ultimately deemed to be either successes or failures. We supplement the statistical results with in-depth case studies of brand acquisitions that help illustrate the key lessons.marketing ;

Image, brand and price info: do they always matter the same?

We study attention processes to brand, price and visual information about products in online retailing websites, simultaneously considering the effects of consumers’ goals, purchase category and consumers’ statements. We use an intra-subject experimental design, simulated web stores and a combination of observational eye-tracking data and declarative measures. Image information about the product is the more important stimulus, regardless of the task at hand or the store involved. The roles of brand and price information are dependent on the product category and the purchase task involved. Declarative measures of relative brand importance are found to be positively related with its observed importance