- Posted by: Paul Christ
Companies that have a leading market share position in their industry often have a tough time when it comes to how they are viewed by customers. For instance, Comcast, McDonalds and America Airlines/US Airways (now one company) are often at the low end of their industry’s customer service rankings. Another company that also finds itself in this unwanted position is one of the biggest on the planet – Walmart.
However, while customers who actually shop at Walmart give the retailer low ratings, many people who are not customers possess an even dimmer view. Some dislike Walmart because it has become too big and dominating, and they believe no business should be this large. Others harbor distaste not just because of Walmart’s size but because they blame it for the demise of many small, local retailers. And still others are turned off by the in-store experience that at times has lead to customer-on-customer altercations.
Whether you are a Walmart supporter or you are fiercely opposed what they do, from a marketing perspective, you have to be at least somewhat impressed with the investment they are making to improve the retail experience. Now this is not to say Walmart is at the cutting edge of retail innovation. In fact, they tend to take a wait-and-see approach before jumping into something new. For example, their entry into online selling did not occur until the early 2000s, more than five years after Amazon started shipping products. But who can blame them for taking innovation somewhat slow considering how many stores they have and that adding something new may involve spending hundreds of millions of dollars. So before they adopt a new marketing method they do what good marketers do – lots of research and testing.
A good example of Walmart researching and testing innovations can be found in this Washington Post story. It reports on several new tools the retailer is developing to assist shoppers. For example, one tool being tested at the company’s Sam’s Club division is aimed at improving online grocery orders that are then picked up at the store. This tool has customers notifying Sam’s Club when they are on their way for pick up, which enables Sam’s Club employees to wait until the customer is near the store before they package frozen product. The other tools include an order storage system, where a customer retrieves their online purchases from a secure bin housed at gas stations that are located on or near main roadways, and a mobile app that shows exactly where a specific product is located in a store.
- Posted by: Paul Christ
Over the last 20 years, probably the most significant development to impact marketing is the role collected data now plays. Whether in the form of data analytics, statistical modeling or advanced formulas created within Excel, marketers' reliance on numbers and estimations is reshaping how key marketing decisions are made. Of course, the use of quantitative techniques has long been part of the marketing research process, such as information obtained through surveys or collected through sales data. But now, with advances in computer, mobile and Internet technologies, as well as the creation of specialized customer management software, advanced web analytics and other software, the type of data being gathered has dramatically expanded well beyond what used to be obtained with traditional marketing research.
The information now collected is being used in myriad of ways including managing online advertising, selecting new locations for retail stores, and setting optimal price points. Data is also being used to predict whether a customer can be classified as a "good" customer.
As we note in our Managing Customers tutorial, marketers do not treat all customers equally, as some offer more value than others. One commonly employed way to determine whether someone can be classified as a "good" customer is to estimate how profitable he or she will be over his or her lifetime experience with the marketer. Estimating customer lifetime value (CLV) requires significant information about individual customer's purchasing habits and how they interact with the organization. For instance, a retailer can easily track purchases when customers use a shopper card. With this information, they can see what is purchased, how often purchases are made and what methods are used to make the purchase. By plugging this and other data into software that estimates CLV, a marketer can obtain a prediction on whether one customer offers more value than another. For example, a customer whose purchasing patterns do not seem to be overly influenced by price may hold more value than a customer who waits until price discounts are available before making purchases.
While CLV has been a key part of marketing strategy for many years, some have questioned how useful this is in a digital age. As discussed in this CRM Magazine story, one advocate for changing the reliance on CLV comes from Georgia State University marketing professor V. Kumar. He suggests customer value is a multi-dimensional measure and should not be based on profit alone as customers can positively affect a company in other ways. For instance, a customer's positive comments on social media can prove beneficial.
Unfortunately, tracking customers across many contact points is not going to be easy. Thus, fully assessing what customers offer and the value the provide may be challenging. However, the fact there is now discussion of changing how customer value is determined is a positive sign and marketers should at least give this serious thought.
- Posted by: Paul Christ
While the announcement regarding the arrest of FIFA executives is certainly a major news story, it also has important implication for marketing. Sports are big business for brands. And when negative publicity enters a sport, brands supporting the sport will often respond by quickly pulling their sponsorship. For example, nearly all brands that supported golfer Tiger Woods pulled their sponsorship when his infidelity issues came to light in 2009.
No one knows what will happen in the FIFA situation, but any brand associated with FIFA must be worried. The sport is so huge that any evidence of illegal activity by this group may come back to haunt a brand unless they make a quick decision to severe ties. But a company that makes a hasty decision to remove their support of FIFA could face an even greater backlash if the charges against FIFA executives do not hold. So right now, most brands associated with FIFA are taking a wait-and-see approach before making a decision.
As discussed in this Advertising Age story, major brands, including Budweiser, McDonald's and Allstate, are not making rash judgments regarding the situation. Through their public relations departments, they all are indicating their awareness of the issue but are not ready to make any decision regarding their association with FIFA. (It is interesting to note that Nike also has a stake in this though it is unclear exactly what the implications may be for them.)
As things evolve over the next few weeks, if the case against the FIFA executives becomes stronger, expect to see brands pull their sponsorship. However, also expect that once things settle down nearly all of these brands will return, likely in time for the 2018 World Cup.
- Posted by: Super User
One of the most difficult challenges a marketing organization faces is how to regrow a brand that has appeared to reach the Maturity stage of the Product Life Cycle. We have touched on this many times including our recent post dealing with the beverage industry and our 2014 post of how marketers were trying to revive the Smith Brothers brand of cough drops.
However, the problems associated with re-growing a leading brand become even more difficult when the company behind the brand has devoted little attention to it for a significant period. When this happens, if there is value in the market, competitors will take notice and will invariably take advantage by marketing their own offerings. Once the former market leader figures out they need to pay more attention to their product, competitors may have assumed a commanding position that will be difficult for the original market leader to recover.
An example of this can be found in this story from the Washington Post. It discusses how MapQuest, a once dominate online resource for providing maps for travelers, has fallen on hard times and is now struggling to reinvent itself. The problem befallen MapQuest are nearly textbook in terms of how a brand loses a dominate market position. During the dotcom frenzy of the late 1990s, MapQuest was purchased by AOL, which invested little in the product over the next 10 or so years. Competitors, most notably Google, then came in with superior offerings leaving MapQuest as a small, bit player.
Yet, things may not be totally dead at MapQuest. Understanding the brand is still widely recognized, the company is now making an effort to improve their product. They have a long way to go, but with AOL now being part of Verizon, maybe MapQuest will once again be a player in the mapping market.