Consumer Research: Is there an algorithm for that?

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How does a company know what consumers want? In the case of Nexflix, executives simply look at the selection of videos that consumers choose to watch.

Last year, NPR produced a segment on the importance of algorithms as a critical aspect of Netflix’s consumer research. The company uses algorithms to analyze consumer choices, and armed with that consumer research, the company then personalizes an individual’s Netflix queue.

Netflix is banking that this personalized strategy helps maintain high consumer satisfaction.

“Every time a Netflix member streams a title from us, we learn a little bit more about what’s interesting to them,” said John Ciancutti, vice president of engineering at Netflix, in the NPR article.

Netflix is not alone in its use of algorithms.  Facebook also uses algorithms to moderate sponsored posts that appear in an individual’s news feed.

But Netflix has taken it to another level—but using consumer research to create shows of its own. Consider the series $100 million “House of Cards” series featuring Kevin Spacey and Robin Wright: Netflix reports the series is the most popular show on its streaming service.

One can argue that Netflix needed to innovate and create House of Cards to stay ahead of the pack, given competition from companies such as Amazon. It seems to be working: Netflix’s strategy has resulted in revenue growth, and the company reports an increase in subscribers for its streaming services. Given this growth, perhaps Netflix’s algorithms will help the company maintain its competitive advantage.

–Team D (Bobby Hangar and Rachanee Srisavasdi)

News Flash – Marketing Wars have been declared. We are at DEFCON 1.

“Gentlemen! Start your engines.”  A famous introduction heard to start some of the most prestigious auto racing events like the Indianapolis 500.  Historic races have pinned the highly favored No. 1 racer going against the promising field.

No, war has not been declared on a sporting event, but instead it is being declared in the highly competitive internet radio market featuring No. 1 – Pandora being challenged by the smaller No. 3 – Slacker.

Marketing wars have been the stuff of legends, and one of the greatest battles featured rental car underdog AVIS going head-to-head against the almighty giant, Hertz.  In one of the most memorable marketing wars ever declared, a nearly bankrupt AVIS launched its long-running ad campaign, “We try harder,” against Hertz.  AVIS turned its business around, not only saving the company, but earning itself the marketing respect and admiration of the corporate world.

In 1962, Hertz was the leading rental car provider followed by a number of distant competitors, including AVIS.  AVIS was losing money, and the company realized that consumers had not understood the value and benefits of their brand.  When AVIS hired world renowned marketing agency DDB, the advertising execs asked AVIS execs why rental car patrons weren’t choosing AVIS.  Unsure why patrons weren’t responding to the AVIS brand, DDB first interviewed executives and employees before discussing any ad campaigns, and made the recommendation to restructure its business.

DDB took AVIS through three steps that would be the basis to gain market share:

  • Step 1 – Before running any AVIS ads the company had to overhaul their customer service department and upgrade their product portfolio.
  • Step 2 – AVIS executives were forced to answer, “Why does anyone ever rent a car from you?”  Their response gave the company clarity as to the direction of their campaign, and they answered, “We try harder because we have to”.
  • Step 3 – Create employee involvement and support.  Each worker received copies of the ads before they were run in an effort to get their involvement and support.

These three steps led AVIS to launch its campaign from a position of strength, rather than from a position of weakness.  During the campaign, AVIS changed its brand to the “right choice” for rental car services going from an 11% market share to a 35% market share.

Slacker AdSlacker finds itself in a very unique position as they must prove to their core audience and potential internet radio listeners that they have to try harder than its competition to earn their business.  Slacker recently launched its internet ad, a 30-second sling against Pandora which finds a young women opening a blue “Pandora’s box” labeled “P,” in reference to Pandora’s app icon.  As she sits with a friend at a coffee shop, the box opens with an annoying song playing, and patrons can hear the women complain to her friend on how “it plays that over and over again,” blaming Pandora for the “small music library.”  Looking at her phone, the friend points out that Slacker has 10 times as many songs, and features.

US Monthly InternetSlacker offers free, ad-supported Internet radio with a two tier premium service subscriptions.  Listeners can choose the Slacker Radio Plus for $3.99 a month that excludes ads, and includes ABC News, ESPN radio, unlimited song skips, download stations on mobile, and complete song lyrics.  If you prefer a premium service, subscribers can choose Slacker Premium for $9.99 a month that includes all the Plus features and plays songs and albums on demand, single artist stations, download playlists on mobile, and create playlists.

Live AVIS, Slacker is struggling with consumers understanding its brand as they have been slow to react.  Slacker currently has over 4 million monthly users, however only 560,000 pay a monthly subscription.  Compare that to Pandora, which enjoys more than 65 million users a month with 20 million monthly subscribers.  Pandora is the leading internet radio provider, however roughly 90% of its revenue comes from ad-based sources while subscription revenue accounts for just 10% of total revenue.

US Monthly Internet #2Slacker is banking on its large music library, and its ability to provide unlimited access to its music library to increase its user base, especially its subscription based users.  Pandora is struggling to build a profitable business as the company has to pay high royalty fees for any music heard by listeners.  Pandora is currently lobbying congress to restrict the amount of royalty fees charged to internet radio company’s that would improve its bottom line, and many industry analysts are skeptical of the company’s ability to survive if the legislation is not passed.

US Monthly Internet #3Slackers core audience are the 18-to-44 year olds, slightly more females than males, and the company is creating a brand based on the consumers listening experience.  Current listeners are responding by confirming that Slackers personalized approach to music is better than others, like Pandora who use algorithm calculations to create musical playlists.

Industry analysts and music lovers are listening carefully to see how this plays out.  Do you think that Slackers will be the AVIS of the internet radio market?

Global marketing management

Marketing management is key to the achievement of aspirations, it is in general factor of economy improvement and of course before that  companies, employees, and workers , and we believe according to that marketing management is  the most important player in economy field  with important role of managing the economy all over the world.

On the other hand B2B is one of the most important player in marketing management because it is build on business ​​among different companies and huge amounts of money not only that but also it could be among  companies in other countries.

So B2B represents the concept of the global village, which refuses to restrictions and limitations and is based on building strong relationships both internally and externally, Value satisfies all parties, including consumer.              
For example transportation, manufacturing, banking communications and with more details we can see new task buying modified rebuy straight rebuy with cooperative systems.

Consumer Involvement Marketing – from A to E-Ticket

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You shop. Sometimes because you have. Sometimes because you want to.

But how involved are you in your consumer choices? What drives you to look beyond a storefront, product or service, and… stay with them?

Over the next few weeks Team E-Ticket will be exploring acquisition to brand loyalty, to experiential involvement, and we invite you to think about how at each stage you as a consumer interact with the brands in your life.

A+R

Next time: A. Acquisition.

Are You Listening?

Ever wonder if you’re marketing message is being heard?  The Chicago-based media group The Onion, created a marketing-focused offshoot in 2012 called Onion Labs to identify if audiences where hearing marketing messages.  The big brands where taking notice of Onion Labs, and their research.

Marketing Blog - The Onion LogoThe Onion is a “news” paper that was launched in 1988 that mocks real news items with humorous headlines becoming masters of satire and rambunctious wit.  The Onion is popular in bars and cafés as many of its followers read their stories on smartphones.  Popular among the Gen Xers and Yers, Onion Labs was created to understand if the papers message was reaching the millennials, who are the 18-to-34-year-olds.

According to staff writer Molly Soat of the American Marketing Association, brands big and small are in hot pursuit of millennials, who now encompass that marketing sweet spot, but it’s a hard audience to reach.  In her recent article, Onion Labs: Success by Self-Deprecation, Soat describes how “millennials are notoriously ad-blind, shunning—or simply not noticing—print or Web ads, or speeding past TV commercials with their DVRs.  To get their attention, marketing teams continue to experiment with a tech-heavy mix of tools such as Twitter feeds, Instagram accounts and videos in hopes of becoming a household (or dorm room) name.  But regardless of the tool or channel that marketers choose to use, one trend is quickly accelerating amongst Gen-Y-focused brands: content marketing—often the more ridiculous, the better.”

In the past, young consumers were often motivated by the use of humor, peppering print ads with pop-culture references or filming TV spots full of slapstick.  That market has now changed as “viral videos” are the king of persuasion.  Just look at the brands like Old Spice and Red Bull, who have created brand-focused messaging that consumers wanted to share with their peers.  These content-heavy brands are becoming bolder, and even poking fun at themselves, admitting their shortcomings, and revealing the human side as they try to connect with their audience.

The Onion recently discovered the power of bold when recent headlines read “Planned Parenthood Opens $8 Billion Abortionplex,” and “Kim Jong-Un Named The Onion’s Sexiest Man Alive for 2012.”  If you’re wondering how powerful this media group has become The Onion sports 5 million Twitter followers with 90% of its audience falling into the age group of 18-to-44-year-olds, 26% have household incomes over $100,000, and 35% have advanced degrees.

When Microsoft Corp. was launching Internet Explorer 9 (IE9) in 2012, the company admitted “…that our traditional marketing efforts didn’t work as well in this audience because they’re so skeptical of us.”  Microsoft partnered with The Onion to design a marketing campaign that was effective in reaching the millennials.  What happened next was unexpected as The Onion sent Microsoft 40 different ideas designed to make people laugh, in fact Microsoft exec’s where caught off guard and described many of the ideas as being “completely out of left field,” but they appreciated their approach of not catering to corporate sensibility.

Marketing Blog - Uninstall
“Uninstall” Campaign – Click photo to view video.

The new campaign started with an online video of a young man with his therapist hating Internet Explorer (IE).  The young man flashes back forcibly uninstalling IE from his friends and families computers saying the only thing that IE is good for is downloading other internet browsers.  The video ends with him saying, “IE9 is actually good.”  The “BrowserYou Loved to Hate” video appeared on Microsofts Tumblr site dedicated to IE9 reinvention, and got an average viewership of 2.6 times per unique visitor, 765,000 YouTube views, over 14,000 Facebook “Likes” and more than 5,200 Twitter mentions.

If you’re wondering about the results of the marketing campaign, IE9 has over 2 billion users.

It’s a brave new world, and the marketplace is changing.  Are you ready to be bold, and different?  Ready to make your target audience laugh?

REI Invests in Targeted Marketing Campaign… In Store and Out

REI (Recreational Equipment Inc.) was named most respected brand in the private company category by branding and advertising firm GreenRubino in 2011.  So how does this iconic outdoor retailer invest in marketing to support their success?

In 2011 REI spent approximately $60M to support their $1.8B business.  To put this in perspective, they spent 3% of their sales on advertising to drive an 8% growth in sales compared to one of their competitors who spent 8% of their sales on advertising to drive a 5% growth in sales.  REI’s marketing dollars are aimed toward supporting their catalog distribution and their social media campaign.  REI puts a lot of stock in their Facebook and Twitter relationships as well as their educational videos on YouTube, known as ‘REI Expert Advice.’  These simple short videos, which can reach millions of people, help foster a relationship with the consumer by sharing tips on topics from the basics of paddle boarding to how to teach your child to ride a bike.

REI doesn’t just market their brand through traditional market techniques that appear on their income statement.  Shopping with REI is very experiential–from the knowledge of their employees to their store design and layout.  They invest a disproportionate amount of time on training and focusing on employees, as compared to other retailers, to ensure that if you want to know which sleeping bag is best for camping in Yosemite in November or the best secret camp sites in the Sierra Nevada’s… the sales person will know the answer.  Their store designs and layouts also offer terrain to test out hiking boots and, in some locations, a rain tunnel to test the latest waterproof gear.  For REI it’s all about the experience and they rely on positive customer experience to build generational customer relationships.

Screen Shot 2013-02-12 at 3.03.38 PMAnother  example of REI’s relationship marketing is their ‘REI ADVENTURES’.  REI provides travel arrangements and packages to bring fellow outdoor enthusiasts together to enjoy what they love.  Pictured here is an example of one of REI’s adventure packages.

Bottom line,: REI spends their marketing dollars in all the right places.  They seem to have mastered how best to market their brand and created their desired customer experience in all that they do.