Applied Marketing Management

The Fish Model

The Four Effective Connected Strategies

1. Respond to desire

2. Curated offering

3. Coach behavior

4. Automatic execution

Connected Strategy Example

• Disney World MagicBands

• Allow visitors to enter, get priority access to rides, pay for food, and unlock hotel rooms.

• Help Disney locate guests and create customized experiences for them i.e. character wishing someone a Happy Birthday.

• Can also encourage people to visit attractions with idle capacity.

Connected Strategy Example 2

McGraw Hill Education:

• Instead of just selling textbooks, now offers customized learning experiences.

• If someone struggling with assignment, teacher will find out based on data gathered and McGraw Hill will direct the student to a chapter or video offering helpful explanations.

Buy What We Have Model

Companies interact with customers only episodically, after customers identify their needs and seek out products or services to meet them.

Respond to Desire

Providing customers with services and products they’ve requested and doing so as quickly and seamlessly as possible.

Essential capabilities: Fast delivery, minimal friction, flexibility, and precise execution.

Curated Offering

With this strategy, companies get actively involved in helping customers at an earlier stage of the customer journey: after the customers have figured out what they need but before they’ve decided how to fill that need. The key capability here is a personalized recommendation process. Customers who value advice—but still want to make the final decision—like this approach.

Coach Behavior

Coach-behavior strategies proactively remind customers of their needs and encouraging them to take steps to achieve their goals.

Automatic Execution

Customers authorize a company to take care of something, and from that point on the company handles everything.

Modern Online Buyer Journey Model

New Online Buyer’s Journey Model Terms

1. Awareness

2. Consideration (Research and discovery loop)

3. Purchase

4. Post-purchase experience (Loyalty loop)

Awareness (Online Buyer Journey)

Largest addressable qualified audience with no commercial intent, audience is becoming aware of an issue that may lead to a future purchase.

Consideration (Online Buyer Journey)

Audience has some commercial intent, often takes to social media and the Internet for research

Purchase (Online Buyer Journey)

Customer takes action, loads of commercial intent

Post-purchase Experience/Loyalty loop (Online Buyer Journey)

Current customer with two or more commercial transactions

Where does research and discovery take place in the Online Buyer’s Journey?

Examples:

• Influencer marketing

• Billboards

• Social Media (TikTok)

• Google Reviews

• Youtube informational videos

DTC (Direct-To-Consumer)

• Selling products directly to the end consumer without third-party retailers, wholesalers, or other intermediaries

• Primarily using social media

• Non-traditional route that focuses on the customer alone

DTC Example: Dollar Shave Club

• Monthly service for all things you need for personal grooming

• Relies on subscription services

• Primarily targets men through social media

Why are DTC brands so popular?

• Multichannel retailing model is falling because the margins are too small

• Rise of Internet and COVID decreased foot traffic in a traditional sense

• Owning the customer relationship is what allows for more leverage to increase customer lifetime value

Why buy from retailers when you can buy direct?

• Traditional companies are enticing customers through retail, but DTC does it through social media strategies

• DTC activates the research and discovery loop

• Now connected to more products

  • Convenience

  • Shop anytime, from anywhere

  • No contact

  • Can pick the brand of your choice

  • eCommerce easily accessible

Disruption

A process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses. Specifically, as incumbents focus on improving their products and services for their most demanding (and usually more profitable) customers, they exceed the needs of some segments and ignore the needs of others. Entrants that prove disruptive begin by successfully targeting those overlooked segments.

Modern DTC Challenges

• Higher online sales lead to the prioritization of low or free shipping costs, exemplary customer service, and quick response times (more difficult for startups, compared to department stores)

• DTC must constantly fuel money into marketing/advertisement to stay relevant and gain new customers.

• 22% of all sales are conducted online compared to in-store sales.

4 Building Blocks required to launch a successful celebrity brand

1. A deeply engaged following

2. A genuine fit between the celebrity and the product

3. A superior product

4. A strong two-way engagement with fans and followers

Influencers

• Limited time engagement

• Pay for performance

• Role = salesperson

• Social media posts

• Examples: Kim Kardashian (Dolce and Gabbana)

Dynamic Pricing

Strategy that bases products or services’ prices on evolving market trends i.e. sports & concert tickets, rideshare services, airline industry.

Dynamic Pricing - Ridesharing

Why?

Matching supply with demand. If there’s a snowstorm, many drivers won’t log on, but with higher prices there is more of an incentive.

Dynamic Pricing - Airlines

Dynamic pricing in the airline industry has caused consumers to “hack” the algorithm:

• Buy tickets on Tuesdays

• Look up flights in Incognito mode

• Erase cookies before searching

• Use an android device over an iOS

Low Price Variability

“Everyday low pricing”

• Prices don’t vary much over time

High Price Variability

“Hi-Low Pricing”

• Prices change a lot over time

Price Uncertainty

Are firms transparent about their pricing?

Do they tell customers their strategy?

Low Price Uncertainty and Low Price Variability

Southwest:

• e.g., $150 - $200 (no matter when you buy

• Consumers buy earlier – less uncertainty for firm too

High Price Uncertainty and High Price Variability

American, United, Delta

• e.g., $99 - $700 (goes up and down over time)

• Consumers don’t know when to buy

• Firms adjust prices based upon remaining open seats and algorithms

Drip Pricing

Occurs when “consumers face additional charges after committing to purchase or showing intent to purchase, where sometimes these charges are for additional goods or services.”

The Re-emergence of Pricing Regulation

The “Honest Pricing Law” or “Hidden Fees Statute” requires that “the posted price must include all amounts that the consumer will be required to pay”

Algorithmic Pricing

When competing sellers use machine learning algorithms to run real-time dynamic price experiments.

Algorithmic Pricing Type 1

Simple, rule based algorithms (Price-matching, undercutting by specified margin)

• Common among online sellers

• i.e. competitor increases their price, therefore the algorithm raises its own prices (vice-versa)

Algorithmic Pricing Type 2

AI-Driven Algorithms with reinforcement learning (RL)

• If a type 2 algorithm increases prices, then competitors employing Type 1 algorithms will follow suit

• Type 2 algorithms can deduce tactics (from rule-based algorithms), leveraging them to “inflate market prices at the expense of consumer welfare”

Pitfalls of Algorithmic Pricing

• Algorithms can go rogue with absurd prices

• Algorithms struggle with balancing consumer trust and profit

Pitfalls of Algorithmic Pricing (HBR Article)

1. Determine an appropriate use case and narrative

2. Designate a Pricing Algorithm Owner

3. Set and Monitor Pricing Guardrails

4. Override the algorithms when necessary

Programmatic Buying

• Automated bidding on (and direct buys of) advertising inventory in real time, for the opportunity to show an ad to a specific customer in a specific context

• Exactly reach your target consumers

Real Time Bidding (RTB)

Auction-based ad transactions based on real-time impressions in open and private marketplaces.

Programmatic Direct

Ads purchased via a publisher-owned application program interface (API) like Facebook and Twitter or an existing demand-side platform (DSP) like DoubleClick Ad Exchange or MediaMath.

(New) Hybrid Operation - Curation

Working with a selected group of publishers

Real-Time Bidding versus Programmatic Direct Image

Programmatic Direct = CPM Cost per thousand impressions

RTB = eCPM Effective Cost per thousand impressions

Response Rate Formula

Click Through Rate (CTR) * Conversion Rate = Response Rate

Number of customers formula

Response Rate * # of Ads Served = # of Customers

Revenue formula

Number of customers * Purchase amount = Revenue

Ad costs formula

Number of ads served * (CPM/1000) = Ad costs

Net Revenue formula

Revenue - Ad costs = Net Revenue

Net Revenue from Direct Example

Net Revenue for Real Time Bidding Example

Retargeting

How to make Retargeting more effective

• Narrow your audience

  • Only retarget those who viewed products, prices, or checkout on your website

  • Customers who were seconds away from converting but didn’t

• Feature product collections (instead of product just purchased)

Is all Retargeting intentional?

• NO

• But it costs TIME to fix

• Site pixels: track where a person has been on websites. Necessary for serving ads

• Consumers view the same product on different devices or browsers

What’s not working for advertisers?

• Simple software programs that prevent ads from being shown on websites

• Blocking of third party cookies

Google and Third-party cookies

• These cookies are on millions of websites, feeding the company a ton of information about the sites you visit

• These cookies power much of Google’s massive ad business

Content Marketing

A strategic marketing approach focused on creating and distributing valuable, relevant, and consistent content to attract and retain a clearly defined audience.

• NOT advertising

• You are attracting an audience to a brand-owned destination versus interrupting or buying an audience on someone else’s platform

• Key sector is influencer marketing

How does Content Marketing use Attract and Retain?

• Attracts by putting information out there in creative ways

• Retains by being searchable

What classifies content marketing?

Content Marketing =

• Influencer marketing

• Products mentioned in posts

• Sponsored content

• Reviews

NOT Content Marketing =

• Programmatic advertisements

• Banner advertisements

• Email advertisements

Influencer Marketing

A form of social media content marketing involving endorsements and product placements from influencers

• Growth of micro-influencer marketing

  • Micro-influencers have better engagement rates then mega-influencers

• Growing field with the increase of social media use

• Takes time: the time it takes to manage influencer marketing programs is ranked as a top challenge

• Measure success by brand awareness, impressions and engagement, less about sales

Mega-Influencers

Social superstars with more than a million followers. These are often celebrities.

Macro-Influencers

Influencers with between 100,000 and 1 million followers

Micro-Influencers

Someone who has between 1,000 and 100,000 followers. While their following may be small(ish), their authenticity is high

• Mid-tier influencers: 50,000 and 500,000 followers

Nano-Influencers

Someone with fewer than 1,000 followers who has immense influence with a comparatively narrow niche

Benefits of Influencer Marketing

• Creating authentic content about brands

• Drive traffic to websites/landing pages

• Driving engagement about a brand

Bauer marketing at a glance

How does Bauer measure Content Marketing?

AI in Marketing

Tasks performed by marketers can be augmented by AI to create highly personalized and meaningful connection with customers.