Week 12: Final Week: Community Relations & Social Media

This is the home stretch, nearing end of the marketing journey of last 12 weeks. I have enjoyed learning about the marketing function, by way of case projects, article readings, video recordings, team discussions and of course the blogging mode. Thank you !

This week's blogging topic is Community Relations & Social Media's impact on marketing.

1. Does your firm use social media in its communications effort? How? Is it effective?
I am aware Cummins uses social media for recruiting related communications and for some branding messages. Online media such as Facebook, twitter are used for recruiting announcements. I am not very aware of all the modes used for advertising our branding messages. Though I am aware our company’s brand manager and his team is actively engaged in looking at all possible modes to reach out to the customers and stakeholders that matter most to the company.

As for how effective the online communication efforts are is hard for me to answer as I do not have first hand access to that data. The limited experience I have is from participating in college campus recruiting and branding events. For sure, online presence creates interest and enthusiasm from college students interested in pursuing careers at Cummins. This question has made me curious to find out the increase in ‘application to conversion rate’ of our new hires, using the social media communication tools.

Based on my personal experiences, I would imagine that online communications effort would attract Gen X & Gen Y audience, as majority people in this group spend considerable amount of their time online.

The increase of online presence in our daily lives with each passing day is an indicator that social media would continue to gain momentum as a communication mode for most companies going forward.

2. What types of messages do you think work best in Social media? Why?
The messages that are short and to the point would be more apt for use in Social media. Messages requiring more detailed explanations, supporting data and other references are more suited for emails and other traditional forms of advertising.

Few examples of messages for social media -à

‘Cummins will be at the North American Truck Show on March xyz, 2012 – Come visit our Booth and learn about the cutting edge technological inventions’.

‘Cummins would be at UofM Fall career fair on Sept xyz, 2012. Our booth would be at the entrance of Duderstadt center, you cannot miss us! We are hiring: Engineering majors – ME/EE/CS/Aero/Materials – Remember to stop by’.

3. Will social media make other Marketing Communication forms obsolete?
Based on the change from ‘news on paper’ to ‘news online’, I would have to say that social media is moving fast to catch up to the traditional forms of marketing communications. I would not go as far as saying that social media will all together make the traditional marketing communications obsolete, because, there are some marketing promotions that cannot generate the same excitement as an in-person experience can. But I would not be surprised if social media does intake surpass the traditional non-online marketing communication modes.

Based on my experience, there would still be room for non-online advertising. For example, the excitement generated via Road shows for engine and OEM manufacturers is hard to replace by just social media communications. People like to see, hear and touch the items they are interested in buying. If their purchase is a big and expensive item, the desire to see physically is even more.

Instead of thinking whether social media would make other forms of marketing communications obsolete, I would like to think social media can compliment few existing forms and that could be a competitive edge for companies to harness.

Whether a company uses a particular media for advertising or not, every company needs to start getting acquainted to the various media options out there. As the Community Relations article points out, it is becoming critical for firms to be aware of the various social media options to find out what is being said about a particule company's xyz venture and be in a position to defend its image if erroneous information is being used to malign the company name.

There are not just couple social media options out there, but a dozen there with a new one springing almost every other day.
                                        

Interpretation of information online is different for different people. Firms need to watch out what is being said about them, whether right or wrong. You cannot defend something if you do not know it.
                                                        

                            Social Media is/will continue to spread….whether firms like it or not.
               Better to embrace this truth and learn to adapt/work in this dynamic environment.

                                                        

Week11: Customer Lifetime Value & Rosewood Hotels

Customer lifetime Value: It is hard to get a loyal and profitable customer, but fairly easy to lose one. Constant effort and strategic planning is required to keep profitable customers happy and engaged. Any company that starts to take its customers for granted is in for a rude awakening.

1. Does your company explicitly know the value of its customers?

The company I work for, Cummins Inc. puts significant focus on understanding and attending to needs of its customers, esp. the key customers! Customer Support Excellence is a key initiative at Cummins. A recent company article announcement, May 11, 2012.

Excelling at customer support across Cummins will demonstrate to our customers that we care about their success as much as we care about our own. In fact, delivering customer support excellence is one of the five growth accelerators outlined by Tom Linebarger (Cummins CEO) as necessary to accelerate Cummins growth into the future.

2. If not could your company utilize CLV (Customer Lifetime Value)?

I am not directly involved on the sales and marketing function, and therefore cannot comment on the utilization of CLV at Cummins. But based on what I have seen, I would be surprised to hear if CLV analysis is not being used in some capacity at Cummins. I do plan to float this concept to my colleagues within the customer engineering group that I interact with on a regular basis.

I find the CLV analysis an excellent tool to bring objectivity in decision making. Many times subjective reasoning is critical in making decisions, but without impact and correlation to the bottom line, a purely subjective decision cannot be sustainable. CLV analysis is a good tool to bring objectivity into the decision making process without discarding the subjective nature of customer relationship management.

3. What are some of the practical issues of implementing the use of CLV in a firm

Upfront investment cost, operational cost to implement and maintain CLV, lack of historical data to predict future customer behavior, lack of company-wide buy-in towards a huge investment, lack of cohesion within various business units to make CLV a success, territorial protection within departments and scale of implementing CLV, are some of the practical issues I see with this concept.    

3.  What are the major issues in the Rosewood Case? 5. What recommendations do you have for the management of Rosewood.

I am part of Team 1, tasked with submitting case memo on Rosewood, so decided to

keep my comments reserved for the 1 page summary J.

3. Which Rosewood property would you like to visit?

I’d like to visit Las Ventanas al Paraiso, located in Los Cabos, at the tip of Mexico’s Baja Peninsula on the azure Sea of Cortez. I will be honest the pictures of this property piqued my interest. I am that customer who values what the pictures have to say or at least try to project. A week-long vacation near the beach sounds like an amazing idea to re-charge my batteries after a 12 week spring term J.

Week 10: Brand Valuation

I like all of these Brands as they satisfy one or my other need!

1.     What makes a brand valuable?

Perception of the value that a brand offers is what makes a brand valuable. The benefits, real or perceived, a brand offers or claims to offer, to its stakeholders is what makes a brand popular. A valuable brand is one that can influence the choices of customers, employees, investors and government authorities.  In a world of choices that we live in, such influence is crucial for commercial success and creation of shareholder value.

2.     What do brands do?  How do they create value?

Brands create value, real and/or perceived in the minds of its key stakeholders i.e. consumers. Brands create value by understanding the consumer needs and consistently fulfilling those needs. How the needs are full-filled is where creative marketing comes into play. Brands do create value, but whether it is real value or perceived value can have different meaning for different consumers.

3.     What are some of your most favorite brands?  Why?

I have several favorite brands depending on the particular need the brand fulfills. In apparels, I enjoy shopping at Ann Taylor/Loft (part of Ann Inc.). I like their design of clothes, the uniqueness that is season specific, durability and the price point. In home-items, I like Crate & Barrel, Bed Bath & Beyond, Target and IKEA. Each of these stores offers different items that I like to buy in different price ranges while balancing my key requisites, durability, maintainability, style, uniqueness and cost. For electronics, I like to shop at Apple & Amazon. I have transformed from an ignorant user to an ardent fan of Apple products given their evergreen ability to pleasantly surprise the customer with unique and useful feature sets. Amazon offers useful products at amazing price points (Cell phone covers @ $1.99!). In shoes, I like Aldo as comfort, durability and style are all beautifully synchronized. In cosmetics, Estee Lauder, wins my vote. Last but probably the most important category is grocery/food purchases. If cost, reliability and bulk purchase is the driving factor, Walmart/Sams club stands on top. For specific items (dried mango and sesame crackers), Trader Joes wins hands-down.

Outside the product usefulness, I also care about the social value of brands. If I learn that a particular company is misusing its workforce or exploiting cheap labor to increase its bottom line, then it would make me reconsider my brand loyalty.

4.     Should Brands be on the balance sheet?  Why?  Why not?

In my opinion, Brands should be included on the balance sheet. Not including brand value on the balance sheet appears to me like ignoring a significant asset. Following are key reasons why I vote for including Brands on balance sheet.

Ø To attach financial value to respective brand.

Ø To accurately evaluate effect of brand during a merger / acquisition deal.

Ø To determine transfer pricing & licensing agreements during brand transfers.

Ø To avoid monopolistic dominance by few companies.

Ø To institute transparency and ethical behavior in brand formation & maintenance.

The moot point is how to quantify Brand Value. Brand evaluation models outlined in the course pack article offer some good suggestions, but I am not sure if the evaluation will be straight-forward. We shall find out during the brand valuation project when evaluating Mr. Woods brand value decline after the 2009 episode.

Week9: Culinarian Cookware. Pricing and Promotion Strategy

 1) Was the previous promotion effective in achieving the goals specified in the case. Most importantly was it profitable?

Given that Culinarian Cookware has established itself in the marketplace as an elite brand (advanced performance technology for serious cooks, leader in metallurgy technology and the first manufacturer to provide benefits of copper cookware with effortless cleaning and maintenance), my assessment of the case indicates that the previous promotion of price discounts was not successful in achieving the goals the company would have liked to go after. I want to highlight that there is no mention of what the company’s goals were in 2004 when it offered its first price promotion or at least it did not come out clearly in the case write up. It is not until 2006, that the company clearly outlines its strategic priorities, to inturn use to define its marketing promotions.

Even if Sr. Sales Manager, Victoria Brown, is right in highlighting that the outside consultants’ calculations are not correct and in turn revenue from sales of CX1 went up during the period of March-May, 2004, I chose not to focus on the mathematical calculations when deciding success of the promotion for following reasons.

(a)    Sales of CX1 went up only during the promotion period and did not remain high after the promotion. Therefore, the brand excitement was built for a reason different from what Culinarian Cookware is trying to advocate.

(b)   The discount did make the retailers happy as they were able to sell products to the customers, but only 30% of the customers who buy cookware shared that price is the most important criterion (Exhibit 3). The remaining 70% customers need to be found and better understood to sell quality cookware to.

(c)    Price discount does dilute a company’s image when the company is interested in competing over superior product offerings.

(d)   Since there is limited data on cannibalization and inventory cost savings, I did not include that in my assessment of the promotion’s success, but that is a critical factor to not ignore.

If the 2004 promotion’s goal was to sell more units without concern to revenue generated, customer loyalty built and brand image impacted, then I can agree the promotion achieved its goals. But I don’t think that is what the company goal was after learning about its priorities documented in 2006.

Second part of the question asks about profitability. I am not sure if profitability is asked about the promotional period only or for the year that price promotion was offered. The incremental contribution impact formula can be used to calculate whether price discounts on CX1 model resulted in increasing revenue for Culinarian Cookware. To calculate profitability of the promotional model, it is critical to evaluate sales not just for CX1 product line, but also for the other three product lines, DX1, SX1, PROX1 to identify if other product line sales were cannibalized due to increase in CX1 sales. If only CX1 sales are taken into consideration, then assuming there was decrease in 2004 March-May normal sales (not as much as 24% but between 15-20%) then, incremental contribution impact calculations indicate increase in contribution. But again, as mentioned above, sales of CX1 cannot be taken in isolation to find profitability numbers.

2. What aspects of the promotion worked best and which were less successful?

Promotion offered some benefits but in my understanding of the case, it appears the side effects were more beneficial than the direct benefits that probably Culinarian Cookware was interested in. Following are the positives that can came out from the promotions.

(a)    Promotion worked well for retailers especially the ones in the 50% category who chose to only transfer 10% of the offered 20% discount to the customers.

(b)   Data gathered from the 2004 promotion highlighted that price discounts are useful to attract cost conscious customers but not necessarily brand conscious buyers.

(c)    Price discount may have helped to advertise Culinarian Cookware amongst first time buyers.

As the answer to the first question highlights, there were several aspects of the promotion that were less successful or rather detrimental to Culinarian Cookware’s market place, key being dilution of elite brand image.

3. Should Culinarian run a promotion prospectively?  Why or why not? 

Marketing promotions should be well-aligned with the company’s strategic objectives to achieve profitable and sustainable results. From the case, I could not gauge whether in 2004 the pricing promotions were aligned up with the company’s strategic objectives since there is no mention of the strategic objectives/priorities in 2004. It is not until 2006 that the CEO establishes the company’s strategic priorities which must be used as guiding principles when defining its promotional plans. In 2006, Culinarian’s CEO, Audrey Roux, took the right step of establishing the strategic priorities for the company, namely, (1) widen its distribution network, (2) increase its market share of the premium cookware segment, (3) preserve its prestigious image, and (4) continue to capture revenue growth of at least 15%, while maintaining pretax earnings margins of 12%.

From the 2005 telephone survey commissioned by Culinarian, it is evident that unaided brand awareness of Culinarian ranges from 15% respondents with household incomes under $75,000, and 25% for those with household incomes over $75,000. Therefore, definitely, there is room for running promotions prospectively. But the key is to run the promotions that align well with the company’s objectives. Following are few suggestions on potential promotions to run.

a)      Well-made television advertisements in popular channels such as food-network that the most likely buyers of Culinarian watch. The ads should clearly highlight the differentiating values that Culinarian offers.

b)      Relevant advertisements in online media such as Facebook, Twitter to target young working women who are looking for the right product to make their life easier and may not mind spending the extra dollars to get that additional value.

c)     Continue the retail sales training on product technology and features, as this is an established program that is a good forum to spread product value to retailers.

d)     Continue to conduct customer surveys, to identify what the customer is interested in. Existing methods such as warranty cards, telephone surveys and new methods such as  online surveys maybe worth pursuing.

e)     Remain connected with the market to identify what your competition is offering, you may learn something that your own promotions are not showing. Customer maybe willing to buy single cooking items in non-holiday season but may only buy bundled items in holiday sales.

Single item Vs Bundled set!