Markets →
- 29 Oct 2008
- Research & Ideas
The Next Marketing Challenge: Selling to ’Simplifiers’
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. Key concepts include: As the world economy slumps, one consumer segment will grow faster than ever: The Simplifiers. Simplifiers present a challenge to marketers. These are well-off people who value quality over quantity and who do not buy proportionately more goods as their net worth increases. Dining out, foreign travel, and learning a new sport will all prove more resilient than expected in the face of recession. Closed for comment; 0 Comments.
- 01 Oct 2008
- Research & Ideas
How Much Time Should CEOs Devote to Customers?
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. Closed for comment; 0 Comments.
- 10 Sep 2008
- Research & Ideas
Long-Tail Economics? Give Me Blockbusters!
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. Key concepts include: In a globally integrated market, blockbuster brands that address common consumer needs are more important than ever. Blockbusters help companies excite consumers, motivate salespeople, and attract top talent. What makes a blockbuster? Size, speed, scarcity, sustainability, sizzle. Closed for comment; 0 Comments.
- 02 Sep 2008
- Research & Ideas
Indulgence vs. Regret: Investing in Future Memories
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. Key concepts include: People can be too farsighted, or hyperopic, leaving wistful regrets of missing out on life's pleasures when they look back at how they spent their time. It's possible to motivate consumers to indulge themselves by simply asking them what they think they will regret in 10 years. Marketers can convince consumers that buying their product is actually a farsighted behavior, an investment in future memories. Closed for comment; 0 Comments.
- 23 Jun 2008
- Research & Ideas
Innovative Ways to Encourage Personal Savings
Saving money doesn't need to be so difficult. According to HBS professor Peter Tufano, "The most interesting ideas—indeed the oldest—try to make savings a fun or satisfying experience." As Tufano describes in this Q&A, different solutions appeal to different people. Here's what government policy, the private sector, and nonprofits can do. Key concepts include: A variety of levers can be used to support people who want to save (not to force someone to save who doesn't want to). Some levers are simple changes that make the process of savings easier. Other levers involve providing various incentives, be they financial or sociological. The oldest and most interesting ideas try to make savings a fun or satisfying experience. Closed for comment; 0 Comments.
- 16 Jun 2008
- Research & Ideas
Seven Tips for Managing Price Increases
Consumers get hit with the price-increase hammer every time they drive past a gas station. John Quelch offers tips on how marketers can cope with inflation and consumer sticker shock. Closed for comment; 0 Comments.
- 05 May 2008
- Research & Ideas
Connecting with Consumers Using Deep Metaphors
Consumer needs and desires are not entirely mysterious. In fact, marketers of successful brands regularly draw on a rich assortment of insights excavated from research into basic frames or orientations we have toward the world around us, according to HBS professor emeritus Gerald Zaltman and Lindsay Zaltman, authors of Marketing Metaphoria. Here's a Q&A and book excerpt. Key concepts include: Deep metaphors are powerful predictors of what customers think and how they react to new or existing goods and services. The seven deep metaphors discussed in Marketing Metaphoria appear across a variety of products. Recent advances in various disciplines are providing concepts and techniques enabling marketers to dig into what consumers don't know they know. Closed for comment; 0 Comments.
- 18 Mar 2008
- Working Paper Summaries
Modeling Expert Opinions on Food Healthiness: A Nutrition Metric
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. Key concepts include: This model encompasses the factors that matter most to the professional judgment of nutrition experts. Previous models focusing solely on either positive or negative nutrients have omitted critical information that experts take into account when assessing a food's healthiness. This model could be used to generate healthiness ratings that are displayed on or near food and beverage labels, allowing consumers to make more informed choices about which products to purchase and consume. Closed for comment; 0 Comments.
- 12 Mar 2008
- Working Paper Summaries
Allocating Marketing Resources
Deciding how to allocate marketing resources is particularly difficult because decisions need to be made at many different levels—across countries, products, marketing mix elements, and different vehicles within elements of the mix (e.g., television versus the Internet for advertising). With the increasing availability of data and sophistication in methods, it is now possible to more judiciously allocate marketing resources. In this paper, HBS professors Gupta and Steenburgh discuss a two-stage process where a model of demand is estimated in stage-one and its estimates are used as inputs in an optimization model in stage-two. The researchers propose a matrix with three approaches for each of these two stages, and discuss the pros and cons of these methods. They highlight each method with applications and case studies to present rigorous yet practical approaches to making marketing resource allocation decisions. Key concepts include: This paper lays out a framework for managers who are responsible for allocating marketing resources for their products and services. Scores of studies in the area of allocating marketing resources now make it possible to form empirical generalizations about the impact of marketing actions on sales and profits. In practical terms, information about marketing resource allocation makes a significant impact at all levels of an organization. Closed for comment; 0 Comments.
- 03 Mar 2008
- Research & Ideas
Marketing Your Way Through a Recession
In a recession, consumers become value oriented, distributors are concerned about cash, and employees worry about their jobs. But a downturn is no time to stop spending on marketing. The key, says professor John Quelch, is to understand how the needs of your customers and partners change, and adapt your strategies to the new reality. Key concepts include: Brands that increase advertising during a downturn can improve market share and return on investment. Early-buy allowances, extended financing, and generous return policies motivate distributors to stock your full product line. In tough times, price cuts attract more consumer support than promotions. CEOs must spend more time with customers and employees. Closed for comment; 0 Comments.
- 20 Nov 2007
- Working Paper Summaries
The “Fees → Savings” Link, or Purchasing Fifty Pounds of Pasta
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. Key concepts include: Consumers behave irrationally in response to membership fees. When stores charge membership fees, consumers infer a "fees → savings" link due to their belief that stores that charge fees do so because they offer better prices. The presence of fees leads to increased spending. Consumers in the study were more likely to express a desire to shop at stores that charged fees than those that did not, even when products and savings were similar. With exceptions, there may be a curvilinear relationship between fees and savings: fees that are too low serve as a hook to make people pay more later; medium fees indicate good prices and decent quality and service; and high fees signal exclusivity and high prices. Closed for comment; 0 Comments.
- 07 Nov 2007
- Op-Ed
How Marketing Hype Hurt Boeing and Apple
In his latest blog entry, professor John Quelch looks at the examples of Boeing and Apple to investigate why shareholders have little patience for companies that hype high but deliver low. Key concepts include: The penalties for not delivering on marketing promises are fast becoming as significant as not meeting quarterly earnings targets. Do not risk marketing hype unless you are sure of both your supply curve and your demand curve. Hype can hurt stock prices and investor confidence when expectations are not met. Closed for comment; 0 Comments.
- 20 Sep 2007
- Research & Ideas
How to be a Customer
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. Key concepts include: Customers should market themselves to sellers to obtain an advantage over their competition—other customers. Vendors appreciate customers who are demanding, respectful, reliable, surprising, and engaging. Closed for comment; 0 Comments.
- 14 Sep 2007
- Research & Ideas
How to Profit from Scarcity
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. Key concepts include: Marketers understand that using the illusion of scarcity can accelerate demand by encouraging us to buy sooner and perhaps to buy more than normal. Using false scarcity as a strategy also carries risk: it invites heightened scrutiny and frustrates buyers. Even if you experience a real product shortfall, take steps to mitigate potential disaster. Closed for comment; 0 Comments.
- 30 Jul 2007
- Research & Ideas
Repugnant Markets and How They Get That Way
Repugnance is different in different places and at different times, says Harvard economist Alvin E. Roth in this Q&A. As someone who designs and builds new markets, he marvels at how society decides whether a transaction is "good" or "bad"—even when such transactions are very much alike. Key concepts include: "Repugnant transactions" are transactions that some people don't want other people to engage in. From the point of view of economists, the phenomenon of repugnant transactions can be a serious constraint on markets and market design. When a market is illegal, the versions of it that arise can be quite dangerous. It is difficult to compare how markets operate when they're illegal with what it would be like if they could operate legally. Closed for comment; 0 Comments.
- 16 Jul 2007
- Research & Ideas
Understanding the ‘Want’ vs. ’Should’ Decision
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. Key concepts include: People often behave as if they possess multiple selves with different, competing interests—the "want-self" versus the "should-self." The want-self demands instant gratification while the should-self looks to longer-term interest. Online grocery shoppers order healthier groceries when ordering for delivery in the distant future (i.e., 5 days from now) than when ordering for delivery tomorrow. Grocery stores that locate the produce section ("should" buy) near the entrance have this figured out. Online and catalogue retailers should anticipate that the further in advance of delivery an order is placed, the less a customer is likely to spend. Closed for comment; 0 Comments.
- 31 May 2007
- Working Paper Summaries
Extremeness Seeking: When and Why Consumers Prefer the Extremes
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. Key concepts include: As the variety of choices available to consumers grows in size and those choices vary in their distinct features, consumers often prefer the options at either extreme—either the basic model or the fully loaded model. While getting some consumers to trade up to the "fully loaded" model may seem desirable for a seller, it is not clear that the overall effect of such polarization will be positive. Rather than encourage consumers to choose a basic or fully loaded product, product providers may wish to turn an uncertain customer into a certain customer by offering an alternative that best meets the customer's needs. Understanding how additional choices have an impact on demand for specific models in a product portfolio is essential for efficient inventory and product line management. Closed for comment; 0 Comments.
- 15 May 2007
- Working Paper Summaries
I’ll Have the Ice Cream Soon and the Vegetables Later: Decreasing Impatience over Time in Online Grocery Orders
How do people’s preferences differ when they make choices for the near term versus the more distant future? Providing evidence from a field study of an online grocer, this research shows that people act as if they will be increasingly virtuous the further into the future they project. Researchers examined how the length of delay between when an online grocery order is completed and when it is delivered affects what consumers order. They find that consumers purchase more "should" (healthy) groceries such as vegetables and less "want" (unhealthy) groceries such as ice cream the greater the delay between order completion and order delivery. The results have implications for public policy, supply chain managers, and models of time discounting. Key concepts include: Consumers spend less and order a higher percentage of "should" items and a lower percentage of "want" items the further in advance of delivery they place a grocery order. Encouraging people to order their groceries up to 5 days in advance of consumption could influence the healthfulness of the foods that people consume. Similarly, asking students in schools to select their lunches up to a week in advance could considerably increase the healthfulness of the foods they elect to eat. Online and catalog retailers that offer a range of goods as well as different delivery options might be able to improve their demand forecasting by understanding these findings. Closed for comment; 0 Comments.
- 18 Apr 2007
- HBS Case
How Magazine Luiza Courts the Poor
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. Key concepts include: The case "Magazine Luiza: Building a Retail Model of 'Courting the Poor'" looks at the Brazilian retailer's innovative approach to selling to the poor. Magazine Luiza sells a mix of furniture, consumer electronics, and white goods. The retailer's flexible procedure for credit approval employs nontraditional metrics, which enables customers with lower, less easily established incomes to make purchases. Students who discuss the case in the HBS classroom must assess the viability of Magazine Luiza's acquisition of another Brazilian retailer and consider future growth initiatives. Can the company retain the qualities that have made it special to both customers and employees? Closed for comment; 0 Comments.
How Much Can You Ask of Your Customers?
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. Closed for comment; 0 Comments.