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Logitech: Launching a Digital Pen
Logitech is an international company that designs and manufactures computer peripheral products. The retail pointing devices unit director is thinking about the development of the next generation of his device, the Logitech io Digital Pen. The digital pen is about to be launched in less than two months, and he is still unsure which features were valuable to potential users, who these potential users were and for which applications the digital pen could be used. -
Living.dupont.ca: Virtual Business, Real Money
Dupont Canada manufactures and sells the raw materials that are used to produce brand name home renovation and home decorating products, including fabrics, carpets, countertops and paints. In order to develop relationships with consumers and acquire information on their purchasing needs and purchasing patterns, the company launched a Web site that offered decorating idea and product information through a Virtual Home. After 12 months, the company's project team must decide whether the project was a worthwhile investment and whether they should invest in the second phase. In making their decision, they need to identify the performance metrics to use in estimating the return on investments. They also need to determine whether to pursue revenue generation through the sale of advertising space or online sales through the Web site. Finally, the project team needs to assess whether their value chain partners would be willing to invest in the second phase of the project. -
Fidelity Incorporated: Pricing the Fidelity Blue Chip Growth Fund
This case presents an application of conjoint analysis in a financial services setting. It is best used in a course on marketing research. The decision in the case centers on a fund manager's need to generate additional profit from a mutual fund. To do this, he needs to determine a new pricing structure for the fund. The case presents students with the results from a real-world conjoint analysis and requires them to work through the pricing and profit implications of that analysis. -
International Federation of Red Cross and Red Crescent Societies
Didier Cherpitel, CEO of the International Federation of Red Cross and Red Crescent Societies (IFRC), is implementing a new strategy that will fundamentally change the role of its International Secretariat. The organization is in the early stages of implementing a best practice tool called the National Society Self-Assessment and Cherpitel's challenge is to move forward with the implementation of this tool, while ensuring that the International Secretariat takes the necessary actions to strengthen IFRC's brand and image. -
Shanghai COS Software Ltd.
Shanghai COS Software Ltd. designs and develops smart card operating systems. The company's marketing manager must decide the best basis for segmenting the burgeoning market for smart cards for wireless devices in China. She has excellent data on this duopoly market, the segments and their buying criteria. In fact, she already has received significant orders for low-end cards from each of the two large customers. However, she and the senior management team must decide on a market positioning for this young high-tech start up. She must select one of the two major customers whose size, structure and procedures are quite different. She must also decide whether the company should market low margin/high volume or high margin/low volume products. Both products seem to have a very short life expectancy in the face of rapidly changing customer expectations. The investors in the company want it to achieve profitability fairly quickly and still adopt sustainable positioning in the marketplace. -
Customer Management Strategy in Business Markets
Describes in detail customer management strategies in business markets, including selection decisions, design and management of customer relationship strategies, monitoring the health of customer relations, and linking the vendors' customer management effort to customer profitability. -
Living.Dupont.ca: Virtual Business, Real Money
DuPont Canada manufactures and sells the raw materials that are used to produce brand name home renovation and home decorating products, including fabrics, carpets, countertops, and paints. To develop relationships with consumers and acquire information on their purchasing needs and purchasing patterns, the company launched a web site that offered decorating idea and product information through a virtual home. After 12 months, the company's project team must decide whether the project was a worthwhile investment and whether they should invest in the second phase. In making their decision, they need to identify the performance metrics to use in estimating the return on investment. They also need to determine whether to pursue revenue generation through the sale of advertising space or online sales through the web site. Finally, the project team must assess whether their value chain partners would be willing to invest in the second phase of the project. -
Hedging Customers
You are a marketing director with $5 million to invest in customer acquisition and retention. Which customers do you acquire, and which do you retain? Up to a point, the choice is obvious: Keep the consistent big spenders and lose the erratic small ones. But what about the erratic big spenders and the consistent small ones? It's often unclear whether you should acquire or retain them and at what cost. Businesses have begun dealing with unpredictable customer behavior by following the practices of sophisticated investors who own portfolios comprising dozens of stocks with different, indeed divergent, histories and prospects. Each portfolio is diversified so as to produce the investor's desired returns at the particular level of uncertainty he or she can tolerate. Customers, too, are assets--risky assets. As with stocks, the cost of acquiring them is supposed to reflect the cash-flow values they are likely to generate. The authors explain how to construct a portfolio based on the notion that a customer's risk-adjusted lifetime value depends on its anticipated effect on the riskiness of the group it is joining. The concept of risk-adjusted lifetime value has a transforming power: For companies that rely on it, product managers will be replaced by customer managers, and the current method of accounting for profit and loss--which is by product--will be replaced by one that determines each customer's P&L. Once adjusted for risk, those P&Ls will become the firm's key performance and operational metric. -
Diamonds in the Data Mine
Harrah's Entertainment may not offer the most dazzling casinos in the business, but it is the most profitable gaming company in the United States. Since 1998, Harrah's has recorded 16 straight quarters of same-store revenue growth. It boasts the most devoted clientele in the casino industry, a business notorious for fickle customers. In this article, Harrah's Entertainment CEO and former Harvard Business School Professor Gary Loveman explains how his company has trumped its competitors by mining customer data, running experiments using customer information, and using the findings to develop and implement marketing strategies that keep customers coming back for more. Harrah's identified its best customers--who were not typical high rollers--and taught them to respond to the casino's marketing efforts in a way that added to their individual value. The company's customer preference data were collected through its Total Rewards incentive program; in addition, it used decision-science-based analytical tools and database marketing. This deep data mining has succeeded because Harrah's has simultaneously maintained its focus on satisfying its customers. Loveman outlines the specific strategies and employee-performance measures that Harrah's uses to nurture customer loyalty across its 26 casinos. -
Gardenburger Advertising Strategy (A)
In 1997, Lyle Hubbard, CEO of Gardenburger, a producer and marketer of veggie burgers and meat alternative products, had called together his executive team to discuss Gardenburger's advertising strategy, which until then had consisted mainly of print ads in food service trade publications, trade shows, off-invoice promotions with distributors, in-store sampling, and radio advertising. When Hubbard arrived at Gardenburger, he had wanted to create a rapidly growing, highly profitable company by taking veggie burgers from a small health food niche to the consumer mainstream. He believed that key to achieving this strategy was establishing national distribution in the largest channel, the grocery channel (which Gardenburger had only penetrated 30% by the beginning of 1996); innovating with flavor variety (but generally focusing on the veggie patty vs. expanding into other meat alternatives); and creating broad consumer awareness and trial. -
Gardenburger Advertising Strategy (B)
In 1997, Lyle Hubbard, CEO of Gardenburger, a producer and marketer of veggie burgers and meat alternative products, had called together his executive team to discuss Gardenburger's advertising strategy, which until then had consisted mainly of print ads in food service trade publications, trade shows, off-invoice promotions with distributors, in-store sampling, and radio advertising. When Hubbard arrived at Gardenburger, he had wanted to create a rapidly growing, highly profitable company by taking veggie burgers from a small health food niche to the consumer mainstream. He believed that key to achieving this strategy was establishing national distribution in the largest channel, the grocery channel (which Gardenburger had only penetrated 30% by the beginning of 1996); innovating with flavor variety (but generally focusing on the veggie patty vs. expanding into other meat alternatives); and creating broad consumer awareness and trial. -
Keeping to the Fairway (HBR Case Study and Commentary)
Sandy Michaels, chief marketing officer of financial services giant Pace Sterling, faces a tough dilemma now that the high-profile golf tournament her company sponsors has been tainted with controversy. The Dover Hill country club, where the prestigious Champions invitational is played, accepts only men as members. This year, a powerful women's organization has decided to make a bigger issue of that exclusivity. Under pressure from the Women's Rights Organization (WRO) to withdraw its support, Pace Sterling must think about the marketing value it gets from the sponsorship and how much that value might be diminished--or heightened--by the controversy. CEO Cal Buckley enlists the help of Michaels and other senior executives in the company to determine just that. Michaels firmly believes that Pace Sterling should stay the course and sponsor the event. Michaels is unwavering--that is, until the day she comes across this newspaper headline: "Tommy Ward Should Boycott Dover Hill." Ward is the undisputed king of the golf world and the odds-on favorite to win the Champions. The WRO is clearly turning up the volume. Should Pace Sterling proceed with its sponsorship? In R0304A and R0304Z, offering advice are Sergio Zyman, former chief marketing officer of Coca-Cola; James E. Murphy, global managing director of marketing and communications at Accenture; Kim Skildum-Reid, co-author of The Sponsor's Toolkit and The Sponsorship Seeker's Toolkit; and Paul A. Argenti, a professor of management and corporate communication at Dartmouth's Tuck School. -
Luxury for the Masses
There is a new class of American consumer and a new category of products and services has sprung into being to cater to it: new luxury. America's middle-market consumers are trading up to higher levels of quality and taste than ever before. Members of the middle market (those earning $50,000 and above annually) collectively have around $3.5 trillion of disposable income. And they will pay premiums of 20% to 200% for well-designed, well-engineered, and well-crafted goods that can't be found in the mass middle market and that have the artisanal touches of traditional luxury items. Supply-side forces are essential to the rise of new luxury. Like the consumers of their goods, entrepreneurs are better educated and more sophisticated about their customers than ever before. In addition, global sourcing, falling trade barriers and transportation costs, and rising offshore manufacturing standards are making possible the economical production of alluring products of high quality. Unlike old-luxury goods, new-luxury products can generate high volumes despite their relatively high prices. As a result, companies at the new-luxury forefront are achieving levels of profitability and growth beyond the reach of their conventional competitors. -
Keeping to the Fairway (HBR Case Study)
Sandy Michaels, chief marketing officer of financial services giant Pace Sterling, faces a tough dilemma now that the high-profile golf tournament her company sponsors has been tainted with controversy. The Dover Hill country club, where the prestigious Champions invitational is played, accepts only men as members. This year, a powerful women's organization has decided to make a bigger issue of that exclusivity. Under pressure from the Women's Rights Organization (WRO) to withdraw its support, Pace Sterling must think about the marketing value it gets from the sponsorship and how much that value might be diminished--or heightened--by the controversy. CEO Cal Buckley enlists the help of Michaels and other senior executives in the company to determine just that. Michaels firmly believes that Pace Sterling should stay the course and sponsor the event. Michaels is unwavering--that is, until the day she comes across this newspaper headline: "Tommy Ward Should Boycott Dover Hill." Ward is the undisputed king of the golf world and the odds-on favorite to win the Champions. The WRO is clearly turning up the volume. Should Pace Sterling proceed with its sponsorship? In R0304A and R0304Z, offering advice are Sergio Zyman, former chief marketing officer of Coca-Cola; James E. Murphy, global managing director of marketing and communications at Accenture; Kim Skildum-Reid, co-author of The Sponsor's Toolkit and The Sponsorship Seeker's Toolkit; and Paul A. Argenti, a professor of management and corporate communication at Dartmouth's Tuck School. -
Keeping to the Fairway (Commentary for HBR Case Study)
Sandy Michaels, chief marketing officer of financial services giant Pace Sterling, faces a tough dilemma now that the high-profile golf tournament her company sponsors has been tainted with controversy. The Dover Hill country club, where the prestigious Champions invitational is played, accepts only men as members. This year, a powerful women's organization has decided to make a bigger issue of that exclusivity. Under pressure from the Women's Rights Organization (WRO) to withdraw its support, Pace Sterling must think about the marketing value it gets from the sponsorship and how much that value might be diminished--or heightened--by the controversy. CEO Cal Buckley enlists the help of Michaels and other senior executives in the company to determine just that. Michaels firmly believes that Pace Sterling should stay the course and sponsor the event. Michaels is unwavering--that is, until the day she comes across this newspaper headline: "Tommy Ward Should Boycott Dover Hill." Ward is the undisputed king of the golf world and the odds-on favorite to win the Champions. The WRO is clearly turning up the volume. Should Pace Sterling proceed with its sponsorship? In R0304A and R0304Z, offering advice are Sergio Zyman, former chief marketing officer of Coca-Cola; James E. Murphy, global managing director of marketing and communications at Accenture; Kim Skildum-Reid, co-author of The Sponsor's Toolkit and The Sponsorship Seeker's Toolkit; and Paul A. Argenti, a professor of management and corporate communication at Dartmouth's Tuck School. -
Role of Differentiation in Markets Driven by Advertising
Firms put enormous intellectual and financial resources into creating differentiated products or services for their consumers. However, in many situations, differentiation may not be a profitable strategy. Spells out the conditions under which it is profitable to differentiate and those when it is not. Consumers learn about alternatives from advertising, and many consumers do not see advertising for all relevant alternatives. As a result, a significant fraction of consumers make decisions with limited information about the available alternatives. The value of creating differentiated products is ambiguous when awareness of products and their characteristics is the key determinant of consumer behavior. -
Unleashing the Power of Yield Management in the Internet Era: Opportunities and Challenges
The profitability of many firms hinges on their ability to extract the maximum amount of revenue from a fixed quantity of perishable goods and/or services. Yet, most firms in this situation have not invested in yield management systems. Explains why minimal use of yield management techniques may have been appropriate in the pre-Internet era. Discusses the major changes to the marketing landscape fostered by the Internet that enable the effective practice of yield management. Many yield management approaches have the potential to increase profitability significantly. Highlights the most important factors for managers to consider when reassessing the viability of yield management systems at their firms. -
Salesforce.com: The Evolution of Marketing Systems
Salesforce.com evolves from a fledgling start-up to a leader in the provision of Web-based management systems. Throughout its growth, the management team faced several strategic decisions, which resulted in the development of new products and the entry into new markets. -
ZARA
Fashion retailer ZARA has achieved spectacular growth via a distinctive design-on-demand operating model. This case describes this model and outlines a number of challenges facing the company, with a particular emphasis on its international expansion. Includes color exhibits. -
Disintegrated Marketing
Companies typically divide up the aspects of major marketing campaigns, assuming that the efforts of a half-dozen or more specialty agencies and internal groups will reinforce one another. But a better approach is to "systems engineer" a campaign, which may require that each component be compromised to serve the needs of the whole.