Marketing

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The Upside to Large Competitors

  • Research Highlight
  • Read Time: 7 min 

New research suggests that a smaller company can benefit by making consumers aware that it competes against bigger corporations. In six lab and field studies, the authors explored the effects of having a large, dominant competitor and found advantages in highlighting a competitor’s size and proximity. “Small brands see consumer support go up when they are faced with a competitive threat from large brands,” write the authors. “This support translates into higher purchase intention, more purchases and more favorable online reviews.”

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When Customers Help Set Prices

To many managers, the idea of involving customers in pricing decisions seems counterproductive. For most companies, pricing is a sensitive, private affair. But it may be time to reexamine those ideas. Letting customers have input on prices provides opportunities for customization and can promote greater customer engagement. Opening up customer participation also offers a way for companies to create a new sense of excitement.

Image courtesy of Flickr user Roy Luck.
Free Article

Ethnography in Action at Wells Fargo

  • Blog
  • Read Time: 2 min 

How do companies gain value from ethnography — the in-person study of how people actually use a product or service? Wells Fargo Bank commissioned an ethnographic project and found out for itself. The bank was able to determine that customers approach retirement with three styles: they were either Reactors, Poolers or Maximizers. The bank learned, for instance, that the language of customers who were Maximizers would not resonate with Poolers — and so it developed new kinds of messaging for each.

Image courtesy of Flickr user Sjors Provoost

How to Win a Price War

There are usually no winners in price wars. But under the right circumstances, it’s possible to win a price war by leveraging a specific set of strategic capabilities. These include the ability to read how things are changing, the skills to analyze data to identify trends and opportunities and the wherewithal to implement organizational changes both internally and across the value chain. Albert Heijn, a Dutch grocer, started and won a price war through its strategic capabilities and skills.

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Is Your Brand a Living Entity?

Traditional ways of building brands have passed their sell-by dates, while social media opens up new possibilities. Effective Twitter strategies, for instance, are helping brands such as Starbucks and Whole Foods gain a special status and sense of personality among some of their Twitter followers.

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Image courtesy of Flickr user DaveMN

What Unhappy Customers Want

Companies have tried for decades to improve customer complaint resolution — without notable success. Customer expectations are rising; customers now expect positive results and not just the chance to complain. Many customers want nonmonetary remedies, such as an apology or a chance to vent. In addition, companies must recognize that they must treat every customer interaction as if it were playing out on a Facebook page or a YouTube video, because it might be.

Image courtesy of Flickr user mike fabio.

The High Price of Customer Satisfaction

No company can last for long without satisfied customers. But misguided attempts to improve satisfaction can damage a company’s financial health. Research finds that the relationship between customer satisfaction and customer spending behavior is very weak, and that the return on investments in increasing customer satisfaction is often trivial or even negative. What matters is how customers rank your brand in satisfaction relative to your competitors.

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Free Article

From the Editor: How Important Is the Customer’s Voice?

It’s easy to say customer satisfaction is very important – but harder to put that into practice. The Spring 2014 issue of MIT Sloan Management Review features a special report on understanding your customers, from gauging global clients’ satisfaction through the use of big data to figuring out better strategies for improving customer complaint resolution.

Image courtesy of Flickr user Peyri Herrera.
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The Big Upside of Customer Participation

  • Blog
  • Read Time: 2 min 

Encouraging customers to provide feedback and recommendations directly to a company engages them in valuable ways. Researchers looked at customers of a global bank who engaged in either positive word of mouth, or provided suggestions, or both. They found that customers who ranked high in participation tended to purchase more products and services. In other words, participation was more closely associated with customer spending than word of mouth was.

Image courtesy of Arm & Hammer Facebook page.
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The Untapped Opportunity of Visual Logos

  • Blog
  • Read Time: 2 min 

Research shows that corporate logos can have a significant positive effect on customer commitment to a brand: “separate visual symbols used as logos tend to be more effective than brand names at creating a sense of emotional connection with consumers,” write C. Whan Park (University of Southern California Marshall School of Business), Andreas B. Eisingerich (Imperial College Business School at Imperial College London) and Gratiana Pol (Marshall School of Business).

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The Problem With Online Ratings

Studies show that online ratings are one of the most trusted sources in e-commerce decisions. But research suggests that these ratings are systematically biased and easily manipulated. The heart of the problem lies with herd instincts — natural human impulses characterized by a lack of individual decision making — that cause us to think and act in the same way as other people around us.

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Stories That Deliver Business Insights

Companies are gaining value from ethnography, the in-person study of how people actually use a product or service. Through its attention to the details of people’s lives, ethnography can be a powerful tool to help executives gain insights into their markets. Ethnographic stories can also be indispensable in helping executives rethink their assumptions about what customers care about and about overall strategic direction.

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Why Customer Participation Matters

These days, many businesses are focused on increasing customers’ positive word of mouth. But emphasizing customer participation — such as providing feedback or suggestions — may be a more important vehicle for generating valuable repeat business. As one COO said, “Levels of feedback is a way we identify our most profitable customers. Those that bother to write to us do care. And they do spend money with us.”

Image courtesy of Flickr user Stuck in Customs.

The Power of a Good Logo

The authors’ research found that corporate logos that express a brand’s symbolic, functional or sensory benefits, have a significant positive effect on customer commitment to a brand — and thereby a significant impact on company performance in terms of revenues and profits. The research also indicated that separate visual symbols used as logos tend to be more effective than brand names at creating a sense of emotional connection with consumers.

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Should You Punish or Reward Current Customers?

Should you offer your best prices to new customers or existing ones?

Recent research suggests that the answer depends on customers’ shopping flexibility and the degree to which customers’ value varies.

When consumer preferences are highly fluid and the highest-value customers are much more valuable than others, then companies should reward their best existing customers. But if either of those characteristics is not in place, companies should offer their best prices to new customers.

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How to Drive Customer Satisfaction

There are six significant drivers of customer satisfaction for companies to pay attention to: adaptability, commitment to customers, connection with other customers, product assortment, easy transactions and appealing environment. A Trader Joe’s grocery store, for instance, carries about 4,000 items, compared to 50,000 in a typical store. Less is better: Items are chosen to match the demographic and psychographic profiles of Trader Joe’s customers, and provide the assortment customers want.

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Why Managing Consumer Privacy Can Be an Opportunity

How many privacy policy updates does your credit card company send you each year? Companies often “manage privacy” and “keep consumers informed” by drafting their privacy policies as broadly as possible and consider their job done if they change the policy 10 times a year to fit with changing practices. However, managing privacy should not be seen by businesses as a burden. Instead, it can be a valuable way to generate and maintain a good relationship with your customers.

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The Myth About Viral Marketing

The idea that messages go “viral” and diffuse through social networks is now a given in corporate marketing and the culture. But recent research suggests that the term “viral” marketing does not describe what happens most often online. In fact, true viral diffusion is rare, according to Sharad Goel, a senior researcher at Microsoft Research. For marketers, this research suggests that it may be time to abandon the idea that viral marketing will frequently lead to, say, tenfold organic growth.

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How to Identify the Best Customers for Your Business

It’s difficult to start a venture that gains traction with paying customers, but it’s even harder to grow beyond certain levels of sales. The original business model must deal with new products or markets. Early leadership behaviors are often no longer viable. Moreover, different customers come with different transaction costs for the seller. This article discusses the importance of customer selection and how intelligent opportunity management can help companies scale their selling initiatives.

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The Gap Between the Vision for Marketing and Reality

The growing number of chief marketing executives reflects the increasing importance companies attach to marketing. Yet the average tenure of a chief marketing officer (CMO) is three and a half years, well below that of the typical CEO. Both the prevalence of the CMO position and its precariousness give rise to the question,“Has marketing realized the vision to which its adherents have long aspired?” This article asks if that question is an important one — and where marketing goes from here.

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