Some of the great financial brands such as Merrill Lynch built trust with customers over decades—but lost it in a matter of months. Harvard Business School marketing professor John Quelch explains where they went wrong, and what comes next.
The willingness by American consumers to adopt new products, processes, and services more rapidly than those in other countries may be the most important enabler of entrepreneurship and innovation in America, says marketing professor John Quelch.
Everyone agrees it is wrong to buy things made with sweatshop labor. Yet many of us are willing to justify our decision when a product—a pair of jeans, for example—is something we really want. HBS doctoral student Neeru Paharia and Professor Rohit Deshpandé study the dark side of buying behavior. Their good news: We can influence change for the better.
This downturn has likely changed people's buying habits in fundamental ways. Professor John Quelch discusses why marketers must start planning today to reach consumers after the recession.
Published in 2008
Think of IKEA and eBay. Some popular companies make it easy for customers to become "volunteers" in the organization's success, says HBS professor Jim Heskett. Is there a downside? Or will customer-fueled strategies provide competitive advantage in the future? Online forum now closed.
The mass consumption of the 1990s is fast fading in the rearview mirror. Now a growing number of people want to declutter their lives and invest in experiences rather than things. What's a marketer to do, asks professor John Quelch.
Every corporate mission statement pays lip service to respecting customer needs, but actual customer expertise is typically a mile wide and an inch deep, says Harvard Business School professor John Quelch. Here's why every CEO should spend at least 10 percent of his or her time thinking about, talking to, and steering the organization to the customer.
Although the Long Tail theory might argue otherwise, HBS marketing professor John Quelch believes in the power of blockbusters to excite consumers, motivate salespeople, and attract top talent.
Good news for makers of $20,000 watches and other luxury goods and services. Recent research from Harvard Business School professor Anat Keinan and a colleague suggest that we often regret not indulging ourselves earlier in life.
Despite an increased standard of living in the United States and other developed countries, health problems attributable to poor nutrition persist in part due to consumers' inability to translate the dietary advice of nutrition experts into anything actionable. Citing the improvement of public health as a primary objective, numerous studies have highlighted the need for a nutritional scoring system that is both comprehensive in its coverage of food products and easily understood by consumers. In this paper the researchers advance this objective by proposing a nutrition metric that is based on the current views of leading experts in the field. The metric can be used to score any food or beverage for which several component nutrient quantities are known.
Published in 2007
Discount membership clubs have a large and growing presence in retail—one recent survey reported that Costco sells to 1 in every 11 people in the United States and Canada, and warehouse clubs are estimated to be a $120 billion industry today in the United States alone. As a result, many people have had the experience of entering one of these popular clubs and leaving hours later with more goods than can fit in their car. One rational reason for such behavior is that membership clubs do offer lower prices than other retailers. However, Norton and Lee offer a counterintuitive explanation for such buying behavior. They propose that the presence of membership fees alone—independent of the actual savings on any given product—can lead consumers to infer a "fees → savings" link, leading them to spend more than they otherwise would to capitalize on these perceived "great deals." Norton and Lee explore this phenomenon by setting up their own "membership clubs" and comparing profits across stores with varying membership fees.
Sure, most marketing efforts aim to influence consumer behavior. But consumers can also market themselves to influence vendors, says Professor John Quelch. Want to get a little extra whipped cream from your neighborhood barista? Here are tips to become a valuable customer.
This past summer's launches of the iPhone and final Harry Potter book were textbook examples of companies profiting in part by creating the illusion of scarcity. Professor John Quelch explains the advantages of this strategy when executed well, and tells how to recover from a real product shortage.
Pizza or salad? Consumers use different approaches to buying things they want (pizza) versus items they should buy (salad). In their research on online grocery-buying habits and DVD rentals, Harvard Business School's Katy Milkman and Todd Rogers, along with Professor Max Bazerman, provide insights on the want-should conflict and the implications for managers in areas such as demand forecasting, consumer spending habits, and effective store layout.
When can variety be helpful and when can it be harmful? Conventional wisdom suggests that a product provider enhances the overall attractiveness of a set of options by adding more alternatives to the mix. By contrast, Gourville and Soman's research indicates that in certain, predictable cases, adding more alternatives to an assortment leads consumers to choose either the most basic or the most "fully loaded" product or service, be it a camera, car, cable TV service, laptop, or vacation package in Italy.
Brazilian retailer Magazine Luiza has developed an innovative strategy for selling to the poor, combining technology with great service that please both customers and employees. The question of how the company can grow without sacrificing the special qualities that have made it successful is at the heart of a case study developed by Harvard Business School professor Frances X. Frei.
Consider a retailer who operates both brick-and-mortar stores and direct channels such as direct mail catalogs and an Internet Web site. What effect does the opening of a new retail store have on direct channel sales in the retail trading area surrounding the store? Does the existence of more opportunities for consumer contact with the brand increase the retailer's direct sales, or does intra-brand, inter-channel competition erode the retailer's direct sales? Does consumer response to the retailer's brand evolve over time, perhaps as consumers go through some process of trial-and-error learning about the relative merits of stores and direct channels, or is the impact of the new store relatively discrete? Does the answer depend on whether consumers in the retail trading area have had the opportunity for previous experience with the brand's stores? This research used a proprietary longitudinal dataset from a multichannel retailer to understand what happens and to probe the implications for channel management strategy.
The growing use of MRI (magnetic resonance imaging) devices for studying decision making means that in 2007 we may hear a number of striking conclusions based on studies involving a small number of brain scans, says Jim Heskett. What are the more general implications of this trend? Will it have strong explanatory as well as manipulative potential for us as consumers, managers, and citizens?
Published in 2006
"Partitioned" price tags that include a main price plus additional charges (Lamp: $70, Bulb, $5, Shipping: $15) may be confusing your customers at best or even causing them to reject the product, warns HBS professor Luc Wathieu. When is an all-inclusive price the best bet?
The "Long Tail," a term coined by Chris Anderson—and the title of his new book—describes the item popularity curve. Does the Long Tail represent a paradigm shift for business and consumer behavior? What are its implications for management going forward?
How do consumers evaluate different pricing scenarios? This study looks at different pricing models to see which is more likely to result in positive customer perception. Specifically, the authors look at all-inclusive pricing (e.g., the price of a chair is $85.95 including shipping) versus partitioned pricing (e.g., the price of a chair is $81 and shipping is $4.95). When consumers are presented with a partitioned price, they place an exaggerated weight on their evaluation of each individual component.
People who buy retail prescription drugs, invest funds, or participate in auctions rarely have complete information about the product they are buying. Often the only auction information participants have is the number of bidders, observed bids, and product characteristics. If data from an auction, for instance, is a function of bidder behavior, then external survey data may help in testing hypotheses about bidding behavior. Researchers often avoid using surveys because they consume time and effort, but Yin presents a survey design technique and econometric tool to deal with a general population of survey respondents. Her application tested eBay online auctions selling personal computers.
How can auctions be used most effectively? Government and industry traditionally use auctions to price and allocate assets and contracts with high but unknown value. Millions of people use Internet auctions for goods that are often of unknown value (e.g., used goods, unknown brands). This paper asks: Do bidders behave in the way auction theory predicts they should? And, what are the effects of different types of information on prices? To answer these questions, Yin combined theory, econometric modeling, and survey data.
While neither buyers nor sellers may be certain of the worth of used goods, both may possess private information about the value. Do prices become more informative as the number of bidders grows? Using data from a sample of eBay auctions for computers, Yin looked at how and under what conditions auction prices converge to the common value of a given item.
Marketers should think less about market segments and more about the jobs customers want to do. A Harvard Business Review excerpt by HBS professor Clayton M. Christensen, Intuit’s Scott Cook, and Advertising Research Foundation’s Taddy Hall.
Published in 2005
Americans these days have a lot more choices in products and services. But do consumers and suppliers suffer from choice overload? If so, what does this abundance mean for companies?
Consumers like choice—but not too much of it. Presented with too many options, buyers may run to a competitor, says professor John Gourville. Here's what new research says about "overchoice."
There is a kind of "always on" communication system shaping up between the most committed of tech-minded users and those who supply them. Is the close monitoring of developing trends always in our best interests as marketers and customers?
Published in 2004
This paper is about discrete-choice and econometric models. The "invariant proportion of substitution," or IPS, property comes into play when, for example, a consumer faces a choice among three laptop computers with slightly different attributes. How will improvements to one laptop's attributes affect how the consumer chooses to substitute one alternative for another? Steenburgh looked at probabilities based on assumptions about consumers' utility-maximizing behavior.
In the past, we knew a lot about the seller of a product (through ads, marketing, or reputation) but little about the individual buyer. Times have changed. From the Internet to store loyalty cards, technology has made the marketplace into an interactive exchange where the buyer is no longer anonymous. The future market will likely be one in which personal information is shared and leveraged. Consumers who are willing to share their information will be more attractive to sellers and more sought-after than those who have bad reputations or refuse to participate.
Published in 2003
Regulation won’t stop privacy invasion, says HBS professor John Deighton. What will? What if companies paid us to use our identity? A market approach to privacy problems.
Harvard Business School professor Gerald Zaltman says that 95 percent of our purchase decision making takes place in the subconscious mind. But how does a marketer reach the subconscious? Zaltman explains in this Q&A.
Published in 2002
It seems almost counterintuitive. But this Harvard Business Review excerpt by Harvard Business School professor Stefan Thomke and MIT's Eric von Hippel suggests that you stop listening closely to your customers—and instead give them tools for creating their own products.
That little red number looked smashing onscreen, but the puce caftan the delivery guy brought is just one more casualty of the online shopping battle. HBS professor Jan Hammond researches what the textile and apparel industries can do to curtail returns.
Published in 2001
The Internet grocer Webvan died a nasty death along with many other online delivery services—or did it? HBS professor John A. Deighton describes how the forces that propelled it are here to stay.
Buying a house, buying a car, investing for retirement. These are among the most important purchasing decisions people make. But who is there to advise them? HBS professor Max H. Bazerman has some ideas.
Published in 2000
HBS Professor Gerald Zaltman makes metaphors come alive with his patented Zaltman Metaphor Elicitation Technique or ZMET, a process that draws on psychology, anthropology, neuroscience and other disciplines to delve deep into the mind of the consumer. In this interview, Zaltman talks about the imagery and inspirations behind this unusual market research tool.
