Bronner Slosberg HumphreyBronner Slosberg HumphreyCase Analysis – Mkt 642Case Analysis – Mkt 642
Presented by:Presented by:
Michael MiyagishimaMichael Miyagishima
Peter AtmaliPeter Atmali
Bronner Slosberg HumphreyBronner Slosberg Humphrey
Founded in 1980 as Eastern ExclusivesFounded in 1980 as Eastern Exclusives Distributing coupon booksDistributing coupon books Early customers: American Express and AT&TEarly customers: American Express and AT&T
Provides relationship marketing servicesProvides relationship marketing services Mission Statement: “Mission Statement: “Enable and assist clients Enable and assist clients
to maximize the value of their customer base, to maximize the value of their customer base, and return on their customer base investments, and return on their customer base investments, across all points of contactacross all points of contact””
Bronner Slosberg HumphreyBronner Slosberg Humphrey
Small client rosterSmall client roster 80-20 rule80-20 rule
Strategic Interactive Group (SIG)Strategic Interactive Group (SIG) Wholly owned separate entityWholly owned separate entity Internet capabilitiesInternet capabilities
Ways to grow - add customers, add capabilities, Ways to grow - add customers, add capabilities, both?both?
Now known as DigitasNow known as Digitas
Eastern ExclusivesEastern Exclusives
Direct marketingDirect marketing Bring companies together to create valueBring companies together to create value
American Express & local establishmentsAmerican Express & local establishments AT&T & GE, American Air, JC PenneyAT&T & GE, American Air, JC Penney
Measurements based on response ratesMeasurements based on response rates Segmenting customers by valueSegmenting customers by value
Profitable customersProfitable customers
Behavior OptimizationBehavior Optimization
Behavior gap analysisBehavior gap analysis Customer’s actual behaviorCustomer’s actual behavior Desired behaviorDesired behavior
Economic value of closing gapEconomic value of closing gap Focus on market communicationsFocus on market communications Relied on database management & Relied on database management &
modeling, teleservices, and creative modeling, teleservices, and creative advertisingadvertising
Customer Base Customer Base ManagementManagement
Evolved from Behavior OptimizationEvolved from Behavior Optimization Includes all sales and service interactionsIncludes all sales and service interactions Client may have to undergo structural Client may have to undergo structural
changeschanges Example: FedExExample: FedEx
Bronner’s Contribution to Bronner’s Contribution to FedExFedEx
FedEx’s ProblemsFedEx’s Problems Weak marketWeak market Increased competitionIncreased competition Stagnant growthStagnant growth Information overloadInformation overload Little understanding of customersLittle understanding of customers
FedEx’s Marketing StrategyFedEx’s Marketing Strategy Mass marketing – list rate structureMass marketing – list rate structure
Solution: Construct a more comprehensive Solution: Construct a more comprehensive databasedatabase
Bronner’s Contribution to Bronner’s Contribution to FedExFedEx
What Bronner learned:What Bronner learned: Dual accountDual account Volumes & classes of service with other Volumes & classes of service with other
shippersshippers Service requirementsService requirements Who values on-time delivery vs. fast shipmentWho values on-time delivery vs. fast shipment Early delivery optionsEarly delivery options Greater use of computersGreater use of computers
Bronner’s Contribution to Bronner’s Contribution to FedExFedEx
Pilot test: different prices and services to Pilot test: different prices and services to some customerssome customers
Segmenting the marketSegmenting the market Cost: less than $5 millionCost: less than $5 million ROI: $50 million in incremental revenueROI: $50 million in incremental revenue
Reducing Behavior GapReducing Behavior Gap
Assigning segment managers Assigning segment managers responsibilitiesresponsibilities Implement customer base management Implement customer base management
procedureprocedure Learning from experienceLearning from experience
Placing high value on FedEx’s best Placing high value on FedEx’s best customerscustomers
Deepened customer loyaltyDeepened customer loyalty
Would All Companies Benefit?Would All Companies Benefit?
Segmenting and targeting customers is Segmenting and targeting customers is important to all companiesimportant to all companies
Need to have resources available to Need to have resources available to implement this approachimplement this approach organizational supportorganizational support customer informationcustomer information
Packaged or soft goods may be difficultPackaged or soft goods may be difficult
Would All Companies Benefit?Would All Companies Benefit?
Need to have direct channels of Need to have direct channels of communicationcommunication direct maildirect mail InternetInternet TeleservicesTeleservices
Bronner needs international capabilitiesBronner needs international capabilities Conclusion: Not all companies would Conclusion: Not all companies would
benefit benefit
Wal-Mart Would Not BenefitWal-Mart Would Not Benefit
BargainBargain Efficient – Retail Link, no excess, no shortagesEfficient – Retail Link, no excess, no shortages Economies of ScaleEconomies of Scale
SpeedSpeed 70% of its merchandise is rung up at the 70% of its merchandise is rung up at the
register before the company has paid for itregister before the company has paid for it Point: Suppliers are doing the behavior gap Point: Suppliers are doing the behavior gap
analysisanalysis
Wal-Mart Would Not BenefitWal-Mart Would Not Benefit
Mass AppealMass Appeal 60% of ad budgets go to retailers for in-store 60% of ad budgets go to retailers for in-store
promotionspromotions
One-Stop ShopOne-Stop Shop Economies of Scope Economies of Scope
Rotating Seasonal ItemsRotating Seasonal Items Most Product CategoriesMost Product Categories
Point: Market segmentation not crucialPoint: Market segmentation not crucial
Wal-Mart Would Not BenefitWal-Mart Would Not BenefitMASS
MARKETINGDIRECT
MARKETINGAverage customer Individual customer
Customer anonymity Customer profile
Standard product Customized market offering
Mass production Customized production
Mass distribution Individualized distribution
Mass advertising Individualized message
Mass promotion Individualized incentives
One-way message Two-way messages
Economies of Scale Economies of Scope
Share of market Share of customer
All customers Profitable customers
Customer attraction Customer retention
Bronner’s Contribution to Bronner’s Contribution to Coca-Cola - BackgroundCoca-Cola - Background
1984 – Coca-Cola was losing market 1984 – Coca-Cola was losing market shareshare
Pepsi ChallengePepsi Challenge Studies on possible launch of Studies on possible launch of
““New Coke”New Coke”
““New Coke” FindingsNew Coke” Findings
Behavior Gap: Coca-Cola had a place in Behavior Gap: Coca-Cola had a place in the heart, not refrigeratorthe heart, not refrigerator
Consumers don’t mind line extensionsConsumers don’t mind line extensions Consumers were never told about “New Consumers were never told about “New
Coke”Coke”
““New Coke” BlunderNew Coke” Blunder
Coca-Cola executives wanted to make Coca-Cola executives wanted to make Coca-Cola #1Coca-Cola #1
Even at the cost of Coke loyalists (11%)Even at the cost of Coke loyalists (11%) Lesson: Lesson:
Coca-Cola is more than a soft-drink iconCoca-Cola is more than a soft-drink icon Coca-Cola stood for traditional values Coca-Cola stood for traditional values
Bronner’s Contribution to Bronner’s Contribution to Coca-ColaCoca-Cola
Can Bronner come up with this Can Bronner come up with this conclusion using their methods?conclusion using their methods?
Customer DatabaseCustomer Database Questionaires and InterviewsQuestionaires and Interviews
MetaphorsMetaphors
Next StepNext Step
Segment the marketSegment the market Coke loyalistsCoke loyalists ““Dual” drinkersDual” drinkers Non-drinkersNon-drinkers
Target the market segmentsTarget the market segments Trigger the love for the brandTrigger the love for the brand Line extensionsLine extensions Brand extensionsBrand extensions
Questions?Questions?