Marketing 580 Blog

dI am here at the Harvard Internet Law Program listening to a very interesting discussion on the Digital Divide. The discusssion of whether or not the devloping world can effectively use technology to leapfrog a stage of development and play "catch up" with the developed world. This is very relevent for issues of economic development here (I guess technically there) in New Mexico. We still have areas of our state that our still very economically endevelolped. The same question can be posed in relation to these areas. How can we tie concrete improvements in economic development to bridging the digital divide in these areas to achieve a leapfrog effect?

Just a repost about our Saturday gathering. Our house is located at 1104 San Rafael Ave NE. I tride to post a mpa on the FTP site, but I was for some reason unsuccessful. My suggestion would be to go to what used to be Mapblast. As for written directions, San Rafael is between Academy and Paso Del Norte on Tramway. We are on the east side of Tramway on the corner of San Rafael and Marigold. The phone number is 294-2549 if you have problems.

A couple of weeks ago we talked about Relationship Marketing and I must confess that I am a big fan of this marketing trend. However, I cannot deny that sometimes is not as effective as we expect, but contrary to what many people think, the failure it is not associated with the Relationship Marketing itself but with the marketers and managers that implement it in inappropriate ways. Thus, the major problem with Relationship Marketing is that marketers don’t obtain the results that they want simply because many of them don’t fully understand this new marketing approach. One common misconception about Relationship Marketing is confusing it with Database Marketing and Marketing One to One, when those are only one form of Relationship Marketing. The big difference between them is that Relationship Marketing is a new Marketing Philosophy that it is executed through other tools such as Database Marketing, or Business to Business. The big difference between Relationship Marketing and Database Marketing is that the first one is focused on the creation of long-term relationships with customers, while Database Marketing is focused in the short-term, which implies that it is not concerned with the creation of relationships, but with increase profitability and sales volume. I found an interesting article that better clarifies the differences among them here

On the other hand, as marketers we cannot understand what is Relationship Marketing if we don’t understand first how the traditional marketing works, if we don not understand the importance of customer satisfaction, positioning and perceived value, we cannot effectively use Relationship Marketing. In this context, every Business School should have two types of marketing courses; one where students can learn the traditional marketing as we know it and a second one, as an upper level course, that teaches Relationship Marketing. The reason to teach both marketing approaches separately has to do with the fact that Relationship Marketing implies different points of view in terms of the Marketing Mix, Positioning and even Marketing Strategy; it is a totally new form of approaching the market. If you feel curios and want to know which are the differences, you definitely should read “Relationship Marketing” by Regis McKenna, this book is not a traditional marketing textbook because it presents the theory behind Relationship Marketing not like someone that is teaching you, but rather that it is encouraging you to think about the material, so you can learned the concepts thinking about the market and arrive to the conclusion that there is no other way to differentiate your product than creating relationships with your customers.

Another interesting thing that I found while looking for information about Relationship Marketing is that “Marketing Management” by Philip Kotler, the most purchased marketing book in the world, only have a couples of paragraphs about Relationship Marketing, so the first thought that comes to your mind is that maybe this new marketing approach is not good enough that “Philip Kotler” didn’t write so much about it, or if you had read Regis MacKenna, you could think that Kotler didn’t write more because it implies write another totally different book, with a totally different approach in every issue related with marketing.

Many people think that Relationship Marketing doesn’t work, but there is a lot of research that proves the opposite, I picked up one, which I consider interesting because with only two people assigned to create relationships with customers, a company obtained an increase of 81% in total revenue and a return of investment of 6.2 to 1, which is really amazing!!!. You can read about this experience here

As Joel pointed out couple of days ago, there are many things that can be said about Relationship Marketing and we can spend hours and hours talking about if it works or not, and furthermore in which type of industries works and on which not. Well it certainly surprised me to find in this book “Market Research and Marketing Strategy” (Laurentino Bello et.al) that Relationship Marketing can work for almost everything, for a very simple reason, inside Relationship Marketing, as in the relationships between people, there are levels of relationships, and depending on which industry you are you should try to reach one level or another, the interesting part of this is that even if you choose to develop the most elemental level of relationship with a massive consumption product, the minimum level of relationship well developed will work better than using the traditional marketing, for example look at this article to find information about how RM is being used in the pharmaceutical industry.

I know it sounds incredible that RM works for almost if not every type of business, but if you read the literature that has been written about Relationship Marketing you will conclude that it certainly is the best way to do marketing nowadays and in the future. Just think about this: More than 50 years has been passed since marketing was first developed and almost 10 years since Regis McKenna talked about Relationship Marketing and still as marketers we cannot implement any of them effectively, so maybe it is time to start learning marketing again!! coming back to the basics with a different perspective by the hand of Relationship Marketing.

Just a quick note about our Saturday gathering. Our house is located at 1104 San Rafael Ave NE. I am going to post a map on the FTP site or you could just go to what used to be Mapblast. As for written directions, San Rafael is between Academy and Paso Del Norte on Tramway. We are on the east side of Tramway on the corner of San Rafael and Marigold. The phone number is 294-2549 if you have problems.

According to New York Times (Is ‘Made in Korea’ a New Synonym for High Quality?), Hyundai, South Korean Automaker, raced past domestic and European automakers in the J.D. Power initial quality rankings released last week (Hyundai Near Top of a Quality Ranking), tying with Honda for second place and finishing just a tick behind Toyota, the perennial quality leader. That’s big news for the South Korean automaker, which has worked for years to bootstrap its reputation from a maker of bargain-basement vehicles to being recognized as a genuine marketplace contender. I agree with Paul that the quality is by no means the number one deciding factor when it comes to purchasing a car. It, however, can be the strong and fundamental basement to expand its market. The increased image of Hyundai’ high quality can play a great role in advertising its cars more effectively. Now, I think, is the time for Hyundai to perform marketing aggressively like Toyota, which raced past Nissan in Japan long time ago.

Yongseek, May 6, 2004

Super Size Me: A film of epic proportions.

Promoting his film due out soon, Morgan Spurlock is hitting the news and talk show circuit this week and proclaiming he gained 25 pounds in a month long diet of nothing but hamburgers and fries. What a McLoser! McDonalds is stating that this guy made poor choices in his exclusive diet. They state they offer salads and lean alternatives that the filmmaker neglected to choose. Another individual seeking 15 minutes of fame, Soso Whaley to try the diet and she lost 10 pounds. She has a daily diary account of her efforts to make heself healthy while dining at the golden arches. When Roger & Me was developed in the late 80s, GMs sales were not effected. This appears not to be a negative or positive “buzz” about McDonalds, just two people out for 15 minutes of fame.

This is an interesting article about the ongoing controvery over copyrights and online music distribution. Apparently even large music publishers have trouble collecting royalties on copyrights across international borders, since traditional copyright licensing procedures have tended to vary from country to country. When distributing music online, this get more complicated, because you can end up selling to people anywhere in the world and it is hard to always know how to go about collecting royalties. So, copyright holders often employ "collection societies" to handle the receipt of royalty payments in particular foreign countries. A group of these collection societies banded together in 2001 to offer "one stop shopping" to commercial users who sell to anyone in the countries they cover. This makes some sense from a buyer behavior perspective for the commercial customers, because it simplifies things, but some argue that this also gives these collection societies a virtual monopoly over royalty collection world-wide. The European Commission (EC) has now ruled that these agreements may violate the European Unions competition rules. They argue that this type of cross-licensing extends the kind of monopolies that some of these collection societies have enjoyed offline into the Internet world. I think this is a pretty classic conflict between competition and convenience. I find it interesting that online music publishers did not demand more competition among these collection societies and were willing to sit by while they formed a virtual monopoly. Clearly, many publishers valued convenience more than competitoin. Ultimately, this is not just a problem for publishers, but it also translates into an issue of how much freedom of choice end consumers will have. If all music providers get locked into certain high-priced contracts with collection societies, the price of music and the variety of music are likely to suffer. I hope there will be a similar debate about this in the United States.

After our discussion on building customer relationships the name T-mobile came up. Since I am a customer I recently found out that now current customers are able to get new customer prices on new phones, a few months ago this was not the case. I found in article in Wireless Data News that states that it costs T-mobile $335 to bring in a new customer compared to the industry average of $292. And the average customer stays with T-mobile for 30.3 months, which is a shorter period than most of its competitors. This lets us see that T-mobile clearly needs to focus on its current customers to keep them around longer. The article is about T-mobile getting rid of its termination charges in Hawaii. This change will not go into the continental US, but it will be interesting to see if this plan goes well for them in Hawaii. It is possible that customers will drop them sooner than if they had a contract.
Rita

I know that not too many people have time to even come here to look at this stuff at this time of semester, but I thought that this would be interesting.

I found a story on Coke's new drink, called C2, that will be released on the US nationwide market this summer. However, Pepsi will not stay behind, as they have a new drink called Edge. Both of these are supposed to taste like the regular Coke and Pepsi, but with half the sugar, carbohydrates and calories.

I am sure that most of the American consumers (especially the ones who, for various reasons, care about the sugar, carbohydrates and calories which they consume) will welcome these new drinks, but I shudder at the thought of what carcinogenic artificial sweeteners the companies may put into them to maintain the taste.

Best drink water, I say!

Cheers!

Sasha.

P.S. Here is the story - on Comcast news.

http://www.comcast.net/News/HEALTHWELLNESS//XML/1500_Health__medical/122d6181-b464-4680-a261-1814728008f4.html

I have been very interested in the class discussion on relationship/database marketing and the effect on and reactions of consumers. I decided to do some research on how consumers are reacting to the increased intrusion on their private lives. I found a fascinating article, Panopticon.Com: Online Surveillance and the Commodification of Privacy (please note, this link may only work from computers on the CIRT network). In the article, the authors make a case that privacy is becoming a commodity that consumers can trade for benefits in the marketplace, such as discount prices, faster checkout, and tailored marketing messages. The authors use amazon.com and other online retailers as an example. They discuss how consumers can create a profile to expedite future purchases from a given online retailer. In this example, consumers are trading personal information for ease of use and decreased checkout time. We can tie this line of thinking into several class discussions on relationship marketing. I think the most pertinent topic we have discussed in class is the frequent shopper cards now ubiquitously employed by retail grocers. In this example, consumers are trading personal information (both demographic/socioeconomic and purchase information) for lower prices. While individual consumers are free to withhold participation in these programs, they must pay for their withholding in the form of lower convenience and higher prices.

Joel

I am by no means a car expert, but I try to follow what is happening in the automotive world. It is interesting to learn that Hyundai has surpassed Toyota as the highest quality car brand on the market. For years Toyota has been synonymous with quality in automobiles. It will be interesting to see how Hyundai tries to use its number 1 quality ranking to try to attract consumers. Hyundai is made in South Korea, and when people think of quality products, South Korea is not the first place that comes to mind. Hyundai has been successful in the economy car market with its Elantra and Accent models. Buyers in this segment are likely to find Hyundai even more appealing now that it is the number one car for quality. It would seem that buyers who are looking to spend more on a car will still avoid Hyundai even though it has such a high quality ranking. The Hyundai brand still does not offer any status to drivers who may rather drive a brand that they feel is more established and offers some status. While a lot of people claim that a quality car is important to them it doesn’t seem to be the real deciding factor for cars. When luxury cars are considered, the only brands that beat the industry average for quality are BMW and Lexus. Yet we still see plenty of Mercedes, Infiniti and Audi cars on the roads. It seems that in the world of automobiles, the brand and style of the vehicle still play a large role in purchase decisions. Quality may be important, but it is by no means the number one deciding factor when it comes to purchasing a car.

If you want to read more about the quality rankings check out these links:

http://money.cnn.com/2004/04/28/pf/autos/powerqualitysurvey/index.htm

http://money.cnn.com/2003/11/07/pf/autos/cheap_cars/

http://www.suntimes.com/output/auto/cst-fin-cars29.html

I stumbled across this by dumb luck.
This Dude Selling His Ex-Wifes Wedding Dress has been spreading through email forwards like wildfire. (Note the hit count at the bottom of the page). Some of you may have already seen this and gotten the same laugh I did. It's a bit long but if you've got the right sense of humor it will be worth it. I think this a great example of consumers acting irrationally. This is an item on ebay in which a guy sold his ex-wifes wedding dress. He gives potential purchasers the straight story and the reaction is ovewhelming. Please note the dress originally cost $1200 and somebody paid over $3800. Why would somebody pay $3800 for a used $1200 dress surrounded by such bad karma. This after the guy admits he wants beer money for it!! Just thought this was an interesting example of how something quite simple can get really out of hand. Enjoy!

Get ready for some politics and religion…. Last week, the television show Frontline had a program on George W. Bush and the impact of his born-again Christianity on his political career and, most significantly, on his presidency. The producer of the program, Raney Aronson, answered viewers’ questions online after the broadcast. I think this is relevant to consumer behavior, particularly in an election year, as candidates attempt to effectively market themselves to voters. I read somewhere that 2/3 of people in the U.S. describe themselves as having a personal relationship with Jesus. The recent overwhelming success of the movie “The Passion of the Christ,” which is a very conservative Christian perspective, underscores a growing Christian-oriented voting bloc in the U.S. This article draws from the Frontline special to relate how George W. Bush has made his political career by galvanizing Evangelical groups. Yet isn’t there supposed to be a separation of church and state in this country? Furthermore, at a time when the U.S. military is occupying a largely Islamic country, it seems that Bush’s rhetoric is only adding fuel to terrorists' fire. Is winning over voters in this country’s election worth the cost of alienating and increasing the wrath of non-Christians around the world?

P.S. On a lighter note, when I was asking students to complete some surveys for another class last week, a student asked me to visit the website she and her student group were creating for a class. If you are a pet owner or just a fan of animals, you may want to visit this site.