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Despite an abundance of data, most companies do a poor job of predicting the behavior of their customers. In fact, the authors' research suggests that even companies that take the greatest trouble over their predictions about whether a particular customer will buy a particular product are correct only around 55% of the time--a result that hardly justifies the costs of having a customer relationship management (CRM) system in the first place. Businesses usually conclude from studies like this that it's impossible to use the past to predict the future, so they revert to the timeworn marketing practice of inundating their customers with offers. But as the authors explain, the reason for the poor predictions is not any basic limitation of CRM systems or the predictive power of past behavior, but rather of the mathematical methods that companies use to interpret the data. The authors have developed a new way of predicting customer behavior, based on the work of the Nobel Prize-winning economist Daniel McFadden, that delivers vastly improved results. Indeed, the methodology increases the odds of successfully predicting a specific purchase by a specific customer at a specific time to about 85%, a number that will have a major impact on any company's marketing ROI. What's more, using this methodology, companies can increase revenues while reducing their frequency of customer contact--evidence that overcommunication with customers may actually damage a company's sales.

In late October 2003, Randy Scott and the Genomic Health team had just received the results of Genomic Health's first pivotal trial. The company's product, Oncotype DX, a first-of-its-kind genomic assay that quantified the likelihood of breast cancer recurrence, had exceeded the standard measures of patient age, tumor size, and tumor grade in predicting recurrence outcomes. The study results would be presented at the 2003 San Antonio Breast Cancer Symposium in December and published in the New England Journal of Medicine in December 2004. Scott and his team now faced the challenge of determining how and when to launch this groundbreaking product. The team was eager to get the product to market as quickly as possible. However, extensive market research performed earlier in the year reveals that it had less than 10% awareness in the physician community and even less among consumers. When asked about what factors would influence their adoption, physicians overwhelmingly cited clinical validation studies--and lots of them. Many skeptics within the oncology field felt that the legitimate use of genomics in making treatment decisions was still 10 to 20 years in the future.

The founder and owner of Eden Creations debut line of hand-crafted specialty beaded jewelry had been well received by the local bridal industry, and several retailers throughout the region had placed orders. She now has to develop a formalized marketing plan to ensure the continued success of her company before returning to her postgraduate studies.

In March 2000, Paul Lippe, CEO of SKOLAR, faced several decisions that could determine the fate of his young company. SKOLAR had developed a Web-based information resource for doctors. The site was in beta-test at the Stanford School of Medicine, with commercial release planned for September. Lippe had just received a market study prepared by McKinsey & Company describing the potential market for the SKOLAR product. He studied the report, thought about the company's experience to date, and the decisions he had to make. Did he have the information needed to make good decisions? If not, what other information did he need, and how could he get it? Includes the McKinsey report, as well as information about the SKOLAR product and proposed business model, and other sources of medical information for doctors in 2000.

Consider a coffeemaker that offers 12 drink options, a car with more than 700 features on the dashboard, and a mouse pad that's also a clock, calculator, and FM radio. All are examples of "feature bloat," or "featuritis," the result of an almost irresistible temptation to load products with lots of bells and whistles. The problem is that the more features a product boasts, the harder it is to use. Manufacturers that increase a product's capability--the number of useful functions it can perform--at the expense of its usability are exposing their customers to feature fatigue. The authors have conducted three studies to gain a better understanding of how consumers weigh a product's capability relative to its usability. They found that even though consumers know that products with more features are harder to use, they initially choose high-feature models. They also pile on more features when given the chance to customize a product for their needs. Once consumers have actually worked with a product, however, usability starts to matter more to them than capability. For managers in consumer products companies, these findings present a dilemma: Should they maximize initial sales by designing high-feature models, which consumers consistently choose, or should they limit the number of features to enhance the lifetime value of their customers? The authors' analytical model guides companies toward a happy middle ground: maximizing the net present value of the typical customer's profit stream. The authors also advise companies to build simpler products, help consumers learn which products suit their needs, develop products that do one thing very well, and design market research in which consumers use actual products or prototypes.

In 1964, Daniel Yankelovich introduced in the pages of Harvard Business Review the concept of nondemographic segmentation, by which he meant the classification of consumers according to criteria other than age, residence, income, and such. The predictive power of marketing studies based on demographics was no longer strong enough to serve as a basis for marketing strategy, he argued. Buying patterns had become far better guides to consumers' future purchases. In addition, properly constructed nondemographic segmentations could help companies determine which products to develop, which distribution channels to sell them in, how much to charge for them, and how to advertise them. But more than 40 years later, nondemographic segmentation has become just as unenlightening as demographic segmentation had been. Today, the technique is used almost exclusively to fulfill the needs of advertising, which it serves mainly by populating commercials with characters with whom viewers can identify. It is true that psychographic types like High-Tech Harry and Joe Six-Pack may capture some truth about real people's lifestyles, attitudes, self-image, and aspirations. But they are no better than demographics at predicting purchase behavior. Thus, they give corporate decision makers very little idea of how to keep customers or capture new ones. Now, Yankelovich returns to these pages, with consultant David Meer, to argue the case for a broad view of nondemographic segmentation. They describe the elements of a smart segmentation strategy, explaining how segmentations meant to strengthen brand identity differ from those capable of telling a company which markets it should enter and what goods to make. And they introduce their "gravity of decision spectrum," a tool that focuses on the form of consumer behavior that should be of the greatest interest to marketers--the importance that consumers place on a product or product category.

In 2006, Ruth's Chris Steak House was fresh off of a sizzling initial public offering and was now interested in growing their business internationally. With restaurants in just four countries outside the United States, a model to identify and rank new international markets was needed. Provides a practical example for students to take quantitative and non-quantitative variables to create a short list of potential new markets.

Scalix Corporation, a Linux-based, e-mail and calendaring software company, was founded in 2002 by Julie Hanna Farris while she was an entrepreneur-in-residence (EIR) at Mayfield, a venture capital firm in Menlo Park, CA. Describes the evolution of Scalix's sales model. As a start-up company, it attempted to sell directly to CIOs of large enterprises. After facing an uphill battle in that market and then experiencing a few successful sales to small public sector accounts, the company corrected its course.

One of the critical tasks in the marketing of new innovations is predicting demand and rates of diffusion for those products. Focuses on four innovative products from different domains. Although one can speculate on the scope and rate of diffusion for each of these products independently, it's helpful to compare and contrast diffusion across these products. Doing so allows one to focus on the "levers" or product characteristics that influence product diffusion, making one product a star and another a dog. Importantly, looking across products allows one to pick up on things that get lost in discussing a single product.

Although e-marketing is highly prevalent, there is currently no template for managers who wish to use the Internet/Web and related information technologies to market their products and services. Provides managers with a comprehensive, actionable, and practical methodology (E-MARKPLAN) to plan, enact, and analyze e-marketing activities. Uses five case studies to illustrate the diversity of e-marketing actions. E-MARKPLAN consists of five parts: goals, actors (i.e., those who take e-marketing actions), spaces (i.e., theaters of engagement), actions, and outcomes. The E-MARKPLAN methodology is versatile and is not limited to companies with e-commerce operations.

Sante Fe Relocation Services was a premium provider of relocation services based in Hong Kong. Founded in 1980, the company had built a reputation as a reliable, high-quality packer and mover of household goods. By 2000, the company also offered a full range of relocation support services, including visa and immigration applications, home searching, and cultural and language training. Santa Fe relocated expatriates and their families between Asian countries and between Asia and other regions. The company had its own staff and assets in Asia and managed its international operations through a network of partners. In 2005, the chief operating officer faced three key challenges: differentiating and positioning the brand in a crowded and often price-driven market; incorporating an expanded service line under the original brand and gaining market recognition for those additional services; and managing the brand across the Asian region with an effective balance of standardization vs. local adaptation.

A venture fund has approached an entrepreneur to sell one of its poorly performing holdings, or if there is no reasonable sale opportunity, turn the company around. He finds no acceptable offers for the company. He searches to find more information on how buyers purchase and use the product, which is a software system for police and courts to lay charges and manage them across the court process. The case illustrates the leverage available from understanding customer budgeting and buying processes, and fitting the service to meet the mind of the customer.

Lay's was a second mover when it introduced its potato chips to rapidly evolving post-communist Hungary. By inserting cash into its potato chip bags, Lay's increased sales dramatically and permanently (i.e., also post-promotion). In contrast, after withdrawing a second "Money in the Bag" promotion, sales fell. Students prepare case A (5 pages) at home. Three in-class cases and a teaching note provide analysis and managerial implications.

Lay's was a second mover when it introduced its potato chips to rapidly evolving post-communist Hungary. By inserting cash into its potato chip bags, Lay's increased sales dramatically and permanently (i.e., also post-promotion). In contrast, after withdrawing a second "Money in the Bag" promotion, sales fell. Students prepare case A (5 pages) at home. Three in-class cases and a teaching note provide analysis and managerial implications.

Lay's was a second mover when it introduced its potato chips to rapidly evolving post-communist Hungary. By inserting cash into its potato chip bags, Lay's increased sales dramatically and permanently (i.e., also post-promotion). In contrast, after withdrawing a second "Money in the Bag" promotion, sales fell. Students prepare case A (5 pages) at home. Three in-class cases and a teaching note provide analysis and managerial implications.

Natura is a well recognized and highly regarded brand in Brazil: it enjoyed high brand loyalty among consumers and the highest retention rate among sales representatives in the cosmetics industry. Notwithstanding the triumphs in its home market, attempts at internationalization within Latin America, had thus far not been as successful as expected. The joint Presidents of Natura now wanted to take the leap and enter developed markets in which the Natura value proposition would resonate. The case raises issues related to how Natura should expand. Which market(s)? With what strategy? And what organizational structure should they adopt?

Mobile network operator Sunday Communications Ltd. burst onto the scene in 1997 with an innovative approach to branding and promotion. Its "feels like Sunday" series of television commercials depicting irreverent attitudes and typical person-presenters struck a chord with Hong Kong customers and generated an initial interest that surpassed expectations for the late-entry mobile network provider. Encouraging initial sales figures coupled with a highly visible brand positioned Sunday to be a serious contender within the acutely competitive mobile phone sector. But despite its successes, Sunday claimed a mere 9.8% of the market in 2000 and 8.3% in 2005. With the mobile phone sector in Hong Kong operating at maximum penetration, would the lure of the Sunday brand prove strong enough to sustain a loyal subscriber base long term? Would its irreverent brand image eventually wear thin?

The case discusses Yahoo!'s marketing services and various types of advertising. The main focus is on search engine advertising, one of the most important revenue sources for Yahoo. The market, Yahoo's pricing strategies and challenges are described.

Spreadsheet Supplement for INS446.

Infosys Technologies Ltd. provides a full range of IT and consulting services. One of Infosys' major customers is Prairie Four Square Insurance (PFS). PFS maintains extensive and mission critical IT systems across the United States. Relentless pressure from Wall Street to cut costs dramatically prompted the PFS senior management to outsource offshore portions of its IT maintenance activities. A PFS "white paper" had indicated that the purchasing department was one area where IT could make significant contributions in lowering operating costs. PFS managers decided to forego their traditional "best of breed" approach to outsourcing in favor of a pilot test of single sourcing. Thus, PFS managers bundled all activities related to procurement process re-engineering, vendor selection, Ariba software customization, system installation and maintenance into a single project. PFS managers narrowed candidates for the project down to two consulting firms (i.e. Excalibur and Merrimac) plus Infosys. A win for Infosys would enable it to not only grow its share of PFS business but also expand the scope of its market offerings. Successful completion of the project, in turn, would increase the likelihood that PFS would turn to Infosys for other end-to-end IT solutions.