Archive for the ‘Marketing’ Category

Over the last two months, some of our marketing faculty has published thought provoking articles in the Sloan Management Review and in strategy + business.

Most recently, Kellogg School Professors of Marketing Philip Kotler and Bobby Calder coauthored an article in the Sloan Management Review with Edward Malthouse (a Professor at the Medill School at Northwestern University) and Peter Korsten (IBM Institute for Business Value). In it, they discuss the results of the 2011 IBM Global CMO study,  focusing, in particular, on how close companies are to controlling the marketing mix, a key aspect of the vision set for marketing more than 60 years ago by Neil Borden, then president of the American Marketing Association. They find that average level of control of the marketing mix, across 1,700 CMOs, is a 3.5 in a scale from 1 (no control) to 5 (full control). According to the authors,

The CMO survey also suggests a crucial obstacle to achieving the vision of marketing: the role of the CMO vis-à-vis the CEO and other C-suite members.


A statistical analysis of the correlation between the Full-Scale Marketing Index and top management’s view of marketing […] suggests that top management’s evaluation of marketing is indeed a cause of marketing success and not a consequence.

The full article can be accessed from the link above, while the full IBM study requires a registering with IBM Institute for Business Value.

Meanwhile, early in August, Professor Mohan Sawhney co-authored an article in strategy + business with Sanjay Khosla (Kraft Foods) about a strategy used by Kraft Foods to boost organic growth. They dub this management technique “blank checks”:

What if resources were not a constraint? If managers were free to dream and act big without worrying about busting their budgets, they would be limited not by resources, but by their imagination.

The article elaborates on the concept, outlines the steps to implement it, provides some tips to manage the process and reviews case studies within Kraft.

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Starbucks Paris

Part of the pleasure of taking a trip to a foreign country is reveling in all the ways it is different from your own. But with the quickening pace of globalization, is that even possible any more? Once the world is filled with Coca-Cola, McDonald’s, and Starbucks, will there be anything to distinguish the United States from the United Kingdom or Canada from Costa Rica?

Well in many cases it’s already too late. Coca-Cola is practically defines ubiquity, McDonald’s has restaurants in 119 countries, and Starbucks is over halfway toward that mark. But success on that scale doesn’t come easy—and it isn’t achieved by carbon copying the original and distributing it around the globe. A recent New York Times article highlighted the challenges Starbucks has had with expanding internationally.

Now, Starbucks is embarking on a multimillion-dollar campaign to win over more of Europe’s coffee aficionados — with an upscale makeover of hundreds of stores to cater to an ingrained cafe culture, and adjusting beverages and blends to suit fickle regional palates.

Starbucks’ efforts in Europe aren’t unique to the company. “Many companies do tailor their products and services to local markets, although some only did so after finding it the hard way,” said Angela Lee, a professor of marketing.

Along the way, companies expanding internationally will be forced to make some tough decisions. The trick is to adjust to local tastes without overly diluting their brand. The key, Lee said, is focus. “They have to know what their brand stands for and conduct good market research to understand how that brand meaning could be executed in the foreign market.”

“It depends on what they change and how they manage that change,” Lee said. In Starbucks’ case, she thinks the coffee company is on the right track. Starbucks success can be traced to five things, she noted:

  1. A unique cup of coffee
  2. The “third place” after home and office
  3. Customer satisfaction
  4. Creating a Starbucks community
  5. Innovation (think Frappaccino, Green Tea latte…)

So long as Starbucks doesn’t lose sight of what makes them special, their efforts to adjust to local tastes should help, not hurt, the company. “I don’t see how having more seating area, lighter coffee, name tags, and chandeliers takes away from the essence of Starbucks if they add to customer satisfaction,” Lee said.

Photo by bizmac.

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The FTC released a report Monday detailing its guidelines for consumer privacy. Privacy has become a growing issue in recent years, in part because of a number of incidents, ranging from changes in privacy policies to shoddy security practices that allowed hackers to steal confidential information. With the rise in internet advertising and the soon-to–be-ubiquitous use of of big data by large companies, privacy concerns won’t be going away anytime soon.

I was curious about what affect the FTC report would have on the debate over consumer privacy, so I sent Kent Grayson, an associate professor of marketing and expert on consumer trust, a few questions. He replied with a thorough and well-reasoned essay on the topic, which I’m posting in full. Read on for Grayson’s take on consumer privacy in the internet age.


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Natalia Echeverri, writing at Polis:

Coca-Cola’s strategy in Kenya (and Africa in general) is contextually effective. It works in developing economies and uses lessons learned in Latin America. Distribution is centered on independently owned shops in cities, villages and remote locations. The soda is most often consumed in the store, so the glass bottle can be returned. The dominantly painted storefront appeals to this on-the-go reality.

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The first coupon

The first coupon

Coca-Cola’s success is based on marketing and a secret formula, but mostly marketing. So it should come as little surprise that Asa Candler, the man who took Coca-Cola and made it a household name, invented the coupon as we know it. What’s widely believed to be the first one is posted above and entitled the bearer to one free Coke. It’s a strategy the company uses to this day.

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The federal government announced Monday that pharmaceutical, medical device, and other healthcare firms will have to disclose their financial relationships with doctors. Research shows that doctors who receive financial or other compensation from such companies treat patients differently and ultimately raise the cost of care. That’s good news for patients, though the industry will undoubtedly be affected.

In a way, pharma and medical device firms already knows how to deal with such regulations. “Variations of this type of regulation have been around for a while,” said Lakshman Krishnamurthi, a professor of marketing, “particularly in the area of Continuing Medical Education where sponsoring drug companies must report their relationship with the medical presenters.”

But this new requirement, he said, “goes further.”

The majority of internists and general practitioners will probably not be affected, Krishnamurthi said, but specialists like oncologists, psychiatrists, and orthopedic surgeons who have closer relationships with pharma and medical device companies will likely notice some changes.

More likely to feel the heat of the new regulations are the companies themselves. “The rep picking up lunch for the office staff to chat up the receptionist or the nurse will not be able to do so, or will have to report it if he/she does so,” he said. “But this is small fry. The bigger question is the effect on consulting and research interactions between doctors and the drug/device industry. Yes, there can be abuses but one would expect the vast majority of these interactions to have positive effects on discovery, drug interactions, and use of drugs.”

The overall financial impact is also less clear, Krishnamurthi noted. Companies will have to generate and disclose reams of data to comply with the new laws. “This will not be costless,” he said. “These costs will be passed down. So, there can be unintended consequences of the increased reporting requirements in the form of higher prices.”

“The counter is that the companies will not be spending the monies in the first place to avoid the reporting requirements. There will be some reductions, but if the companies believe all—or most—of the spending is legitimate anyway, they will continue to spend the money.”

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Psychologist Paul Bloom writing at Fast Co. Design:

Here’s a pop quiz. Would you eat some unknown pieces of what looks like meat?

Well, a good answer is, “It depends. What is it?” Some of you would eat it if it were pork, but not beef. Some of you would eat it if it were beef, but not pork. Few of you would eat it if it were a rat or a human. Some of you would eat this only if these were strangely colored pieces of tofu.

“How senses could be so easily fooled,” notes Angela Lee, a professor of marketing.

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