Industry Tidbits

April 2009

Internal Corporate Culture Found to Be a Stronger Influence for Radical Innovation than Major External Factors

When examining the enabler of radical innovation, an important driver of growth, success, and wealth, Tellis et. al. found that the corporate culture of the firm is a stronger indicator of radical innovation than either government policy, labor, capital, or national culture.  Three key attitudes found for driving innovation are the willingness to cannibalize assets, future orientation, and risk tolerance.  Three key practices found for driving innovation are the empowerment of product champions, incentives for enterprise, and the management of in internal markets.  See Gerard J. Tellis, Jaideep C. Pradbhu, & Rajesh K. Chandy, “Radical Innovation Across Nations:  The Preeminence of Corporate Culture,” Journal of Marketing 73 (January 2009), 3-23. 

Innovation Drivers

Stock Valuations Driven by Strategic Marketing

In an econometric study, Srinivasan et. al. found that adding marketing actions to established financial benchmarks greatly improves explained variance in stock returns.  In particular, investors react favorably to companies that launch pioneering innovations, that have higher perceived quality, that are backed by substantial advertising support, and that are in large an growing categories.  See Shuba Srinivasan, Koen Pauwels, Jorge Silva-Risso, & Dominique M. Hanssens, “Product Innovations, Advertising, and Stock Returns,” Journal of Marketing 73 (January 2009), 24-43. 

Customer Loyalty Effectiveness Driven by Company, Customer, and Competitive Factors

As with other strategic marketing efforts, the effectiveness of loyalty programs in improving profitability are found to be driven factors of the company, the customers, and its competitors.  Overall, larger firms with broader offerings benefit disproportionately from loyalty programs than smaller firms, and firms early to enter with a loyalty program benefit higher than those late to enter. 

Yuping Liu and Rong Yang, “Competing Loyalty Programs:  Impact of Marketing Saturation, Market Share, and Category Expandability,” Journal of Marketing 73 (January 2009), 93-106. 

Loyalty Program Effectiveness Driver

March 2009

Branding Affects Price Power Research Indicates

The annual Brand Keys Customer Loyalty Engagement Winners are those brands best able to engage consumers and create loyal customers. Initiated in 1997, the Brand Keys Customer Loyalty Engagement Index (CLEI) is fielded annually in the spring and fall. The current Index examines customers' relationships with 444 brands in 63 categories.

This year's CLEI data predicts a consumer shift away from price to the expectation of value in the form of real brand differentiation.  The brands that won are the beneficiaries of consumers' new expectations regarding the perception of brand value. These shifts provide opportunities for brands that pay attention to what the consumer really expects and offer meaningful differentiation, will tip the value scales in their direction, because value matters more than ever.

The complete listing of the 62 category rankings can be found at www.brandkeys.com/awards

New Word-of-Mouth Research Shows Reward Programs Are Marketers’ Best Source for Finding Consumers Who Recommend their Brands

Consumers who are loyalty reward program members are far more likely to be Word-of-Mouth (WOM) champions for their favorite brands than non-members, and the more active their program participation, the more likely they are to exhibit WOM behavior, according to a study released today by COLLOQUY.

Key findings:

• Reward program members are 70% more likely to be WOM champions (defined as customers who are “actively recommending” a product, service or brand) than the general population;
• 55% of reward program members are self-described WOM champions;
• Only 32% of non-reward program members are self-described WOM champions;
• Actively participating reward program members are over three times more likely to be WOM champions;
• Reward program members who have redeemed for experiential rewards are 30% more likely to be WOM champions than those who have redeemed for discounts.

The COLLOQUY study is titled “The New Champion Customers: Measuring Word-of-Mouth Activity Among Reward Program Members.” It is available as a free download at www.colloquy.com/whitepaper and will be presented as a free webinar on March 5, 2009 at 1:00 PM EST.  Register at www.colloquy.com/wom-webinar. 

February 2009

A model to replace profit sensitivity analysis for price promotions

was proposed by Nelsin and Shoemaker.  Key in their analysis is the decision to include factors that reflect the difference between a sales promotion profit enhancements versus those which merely steal sales from future periods or provide discounts to customer that otherwise would have purchased without the sales promotion.  See below for a pictorial representation of their model.    Scott A. Neslin and Robert W. Shoemaker, “A Model for Evaluating the Profitability of Coupon Promotions, Marketing Science 2, no. 4 (Autumn, 1983), pp. 361-388 (Stable URL: http://www.jstor.org/stable/184031) Accessed: 28/01/2009 12:38

January 2009

Branding Definitely Works With Even Tivo Viewers.

Through eye-tracking studies, researchers have shown that fast-forwarding viewers pay more attention during commercials, but their attention is heavily limited to the center of the screen.  Fast-forwarding advertisements containing brand information at the screen center still create brand memory even with a 95% reduction in frames and complete loss of audio, whereas advertisements with brand information located elsewhere are of virtually no value.  A further study demonstrated that fast-forwarded commercials containing extensive central brand information can positively affect brand attitude, behavioral intent, and even actual choice behavior.  For more information, see S. Adam Brasel and James Gips, “Breaking Through Fast-Forwarding:  Brand Information and Visual Attention,” Journal of Marketing 72 (November 2008): 31-48.

Private-Label Use Improves Store Loyalty Only For Mid-Use Private Label Shoppers. 

Through store tracking and behavioral data, researchers have shown that private-label shoppers are loyal to specific retailers only if their private label purchase habits are in the mid range, between 40% and 60%.  Heavy private label shoppers have little store loyalty and tend to make purchase decisions solely based on the lowest prices.  Light private label shoppers have inadequate interaction with a specific private label brand to develop any retailer loyalty.  Medium private label shoppers tend to develop retailer specific loyalty and select private label brands for customer specific categories.  For more information, see Kusum L. Ailawadi, Koen Pauwels, and Jan-Benedict E.M. Steenkamp, “Private-Label Use and Store Loyalty,”  Journal of Marketing 72 (November 2008):  19-30.

Customer Lifetime Value Driven by Manageable Marketing Levers. 

While accurate metrics of customer lifetime value may remain cost prohibitive today, executives can take advantage of the proven means to improve customer retention and repeat purchases.  Loyalty Intention increases with (1) Value Equity (the perceived ratio of what is received in a product to what must be sacrificed), (2) Brand Equity (the ability of a brand to be meaningful, unique, and desirable), and (3) Relationship Equity (the perceived belief that customers are well treated and handled with particular care).  Value, Brand, and Relationship equity are all within the influence of executive choice and action.  For more information, see Verena Vogel, Heiner Evanschitzky, and B. Ramaseshan, “Customer Equity Drivers and Future Sales,” Journal of Marketing 72 (November 2008): 98-108.

American Marketing Association’s Mplanet:  Navigating the New Marketsphere

Whether you like it or not, we are all part of it. It’s a borderless planet of seismic changes occurring at warp speed, throwing a dizzying array of challenges at marketers:

• New computing and communication platforms in a techno-driven, hyper-connected environment
• Fragmented array of media and channels 
• Greater diversity of customers and emergence of new customer segments
• Empowered customers with more information, more choices, more control
• The rise of influential social networks, user-generated content and endorsement
• More resistance to many traditional marketing tactics

The implications of the New Marketsphere are enormous for both B2B and B2C marketers.  But the opportunities are equally big.  At Mplanet, you can to take advantage of those opportunities and enhance the skills and knowledge you’ll need to succeed.  For More Information, see http://www.mplanet2009.com/

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