A few weeks ago, I was up late reading an article for class about Zappos Customer Service excellence. I remembered earlier in the semester watching a YouTube clip for Dr. O’s class in which Tony Hsieh told the story of how a Zappos Customer Service Rep helped him and his friends find a pizza joint that was still open after a long night out at the bar. I’m sure you remember the story. And, as I was remembering this, I was feeling skeptical. I’ve ordered plenty of shoes from Zappos and couldn’t recall anything remarkable about it except that shipping was free, but it was offset by paying MSRP on the shoes. Thus, I called Zappos Customer Service. For no reason in particular.

 A gentleman named John answered. I said, “Hi, John. My name is Katherine. I have no intention of placing an order. I just called because I am reading an article about Zappos Customer Service, and having had plenty of customer service experience myself, I wouldn’t say I believe that it’s all just wine and roses when people call complaining all the time.” John responded, “You know, I’ll tell you, I’ve worked here for about 8 months, and I have had hardly any customer complaints. They’re pretty rare around here, and when we have them. It’s a pretty easy fix.”

 Anyway, John and I talked for close to two hours! Not once was he interrupted by someone telling him to get back to work, nor did he put me on hold to take another call. He didn’t try to sell me anything and didn’t even stop at all to check if a boss was around. Turns out, he’s from Pennsylvania, graduated from law school there, and moved to Las Vegas because it’s where he wants to practice law. He got the job at Zappos for something fun to do while he studying for the Bar Exam, and he hopes to work in the legal department for Tony’s nonprofit organization, Delivering Happiness, once he passes. 

 Another thing he told me, which I thought was cool, was that everyone who works at Zappos has met Tony, and John regularly runs into him whenever Zappos is offering up free food. John said that Zappos often supplies free food for everyone, for no reason, just because they figure people get hungry. In fact, John said that from his desk, he can see Tony’s office and Tony never closes the door and pretty much always wears jeans. John described him as “completely down to Earth. If you met him on the street you would have no idea how successful he is.” And so, as our conversation came to an end, I thanked John for his time. Before I could say goodbye, John asked for my shipping address. “I didn’t order anything,” I said. “No, no. I know. I’m going to send you a great book. It’s a really easy read. You’ll love it.”

 And he did. A few days later, I received a copy of Delivering Happiness: A Path to Profits, Passion, and Purpose signed by Tony Hsieh – one of Dr. O’s “Important Books” from the syllabus. No charge. No delivery fee. Just because.

 In the end, John made me a believer. Zappos really did live up to their reputation. So, I wanted to let you both know that you can both borrow the book whenever you would like. I’ve heard it’s great. J  

 Sincerely, 

KATHERINE E. LIPPMAN

 J.D./M.B.A. Candidate, 2014 | Marketing

Eli Broad Graduate School of Management

Michigan State University College of Law

lippmank@msu.edu| LinkedIn Profile

I wrote this a week ago in the Brand Consortium Forum:
What is more important: Investor satisfaction or customer satisfaction? Netflix announced a price increase and share price jumped 2% the next day as customers howled. Is this a trade of short term gain for long term loss? Certainly, Netflix needs the cash and it needs to appropriately charge customers who are high volume streamers. According to Brand Keys, Netflix met 99% of consumer expectations earlier this year, but that score is now 93%. This is brand equity erosion. As every marketer knows, its not easy to build brand equity. How much will Netflix invest in brand equity-building? How much will it cost to bring the brand back to where it was earlier this year? Given its competitive situation, Netflix can’t afford to invest in brand equity. Careful Netflix, this could be the beginning of a downward spiral. It needs to preserve what it has.

Today, the NY Times reports that Netflix lost 600,000 subscribers, making it only the second quarterly customer loss in its history. This does not include the customers who opted for DVDs rather than get their movies streamed. But what of its stock price? Does the investment market believe that 600,000 subscribers were not worth keeping anyway? Share price was down almost 19 percent to $169.25 on heavy trading yesterday.

This cost-driven price increase is not an uncommon situation for many companies. Additionally, the economy is making customers think twice about monthly subscription services. These services are commodities despite the providers’ use of technology to deliver the service rather than brick and mortar. Customers will trade off price for convenience and/or time shifting. Netflix is not the only source for movies.

Is there a way out for Netflix? Maybe there are some lessons from the CPG industry. CPGs are in the same situation: increasing costs, price-sensitive customers, commodity-like products. SymphonyIRI recently reported that product categories with the highest brand loyalty demonstrate less sensitivity to price increases. For example, 67 percent of coffee buyers are loyal to their coffee brand, and that is a decline of only 1.5 points from 2008, despite a 21 percent rise in prices in the same period. In contrast, 33 percent of sugar buyers are loyal to their sugar brand, and that is a loyalty loss of 6.5 points since 2008 as prices went up about the same amount. Some brands and collectively, some product categories, successfully invest on building brand loyalty. Brand loyalty mitigates the effect of price increases on sales.

How can you build loyalty? One way is through innovation. Since 2008, SymphonyIRI reports loyalty to brands in the beer category is generally down by 0.4 points. But within that category, craft beer sales are up as smaller firms produce new blends. The national brands then buy or partner with the craft brews to provide broader distribution. Without meaningful innovation, the category would have suffered a steeper decline in loyalty. Meanwhile, wine has seen a 0.8 point gain in loyalty as it new labels have rushed to market. New offerings build connections to the offerer.

First, provide a 400-piece product portfolio that ranges over clothing and accessories (men, women, kids, babies), home décor, kitchenware, office supplies, furniture, and toys that “targets” the full range of Target consumers and delivers a Missoni-unified zig-zag lifestyle.

Second, provide an interactive engagement tool (Lookbook) to allow consumers to preview what was to come and create the copy-able content fodder for buzzy blogging social media.

http://www.facebook.com/media/set/?set=a.261915133821363.73304.195794080433469

Sample blog:

http://fashionista.com/2011/08/here-it-is-the-full-missoni-for-target-lookbook/

Third, encourage bloggers by providing press previews and “forbidding” the bloggers from reveal the secrets.

http://racked.com/archives/2011/05/18/top-secret-the-details-on-the-missoni-x-target-collaboration.php

Fourth, co-opting the traditional media by bringing out Margherita Missoni herself, and Vogue happily added coverage of Target’s forthcoming event.

http://www.vogue.com/parties/missoni-for-target-collection-preview/

Fifth, run out of merchandise and website traffic management capacity. Presumably, these are unintended artifacts of the foregoing success, but it certainly created additional news coverage.

HOW THEY RESEARCHED IT:
The purpose of the study was to examine the relationship between a salesperson’s distributor and brand identifications, as well as the impact of both in accordance with control systems on sales effort and performance. The authors define distributor identification as the degree to which a person identifies with his or her employer. Brand identification is the degree to which a person defines himself by the same attributes that he or she believes defines a brand. Control system alignment is the extent to which channel member control systems align with supplier sales goals.

A multilevel analysis was performed on data gained from 18 CPG distributors throughout the country. Surveys were administered to 260 salespeople, 59 route supervisors, and 18 sales managers while objective sales performance data were obtained from company records. Sales managers supplied control system alignment measures, route supervisors rated salesperson brand effort, and salespeople supplied all other necessary information. The combined data set resulted in 192 full data records and 743 usable brand observations. Brand effort, brand extra-role behavior, distributor identification and brand identification were measured.

WHAT HAPPENED?
There is a strong positive relationship between control system and brand performance, as well as between brand identification and brand performance. Regardless of whether or not distributor control systems support a given brand, if a salesperson identifies with said brand he or she will exert more effort when selling it. A salesperson will also exert more effort selling a brand supported by control systems from a distributor which he or she identifies with. Overall sales performance improves from strong brand performance only when control system alignment is high.

Brand identification was positively related to brand extra-role behaviors, meaning a salesperson that identifies with a given brand is more likely to use it both in his or her personal life as well as promote it to others outside of the work place. No evidence was found to support the hypothesis that a positive relationship exists between extra-role brand support and brand performance. Researchers suggest this may be due in part because extra-role brand behavior is less likely to impact sales in the relevant period.

Distributor identification was shown to strengthen a salesperson’s adherence to control systems, which can work for or against a given brand. A salesperson’s performance on a specific brand improves overall sales performance only when that brand is supported by distributor control systems. In other words, strong brand performance improves total sales performance only when salesperson and distributor emphasize the same brand.

The separate interests of suppliers and distributors are illustrated through the sometimes conflicting identifications of salespeople with either a brand or an organization.

WHY MANAGERS SHOULD CARE:
A primary function of brand managers is to ensure maximum allocation of resources towards their brand relative to others; however the challenge is competing with the multitudes of other brands resellers work with. In the past, managers have held substantial influence with resellers only when supplier and distributor control systems align.

The research presented here suggests a new way for managers to improve brand sales performance – by reaching out directly to salespeople. The importance of channel member control systems is by no means lost, however most managers realize the impossibility of convincing every reseller in every channel to prioritize their brand. Salesperson brand identification creates a new avenue for managers to influence brand sales in channels where their brand does not play a significant role in the reseller’s overall strategy.

Managers are encouraged to present brand marketing efforts towards resellers, and more specifically salespeople, in the same manner as they are presented to the end consumer. Results have shown that salespeople who identify with a given brand will exert more effort towards selling it, whether or not the reseller supports the same brand. Managers should approach resellers as consumers instead using the traditional middleman approach, in an effort to gain strong brand identification from all aspects of the sales channel.

The end goal of resellers is to encourage distributor identification from salespeople, while manufacturers are working towards brand identification in those same people. Both sides should be wary of how much the salesperson identifies with the other entity, especially when control systems between manufacturers and resellers do not align.

CAN YOU HELP?

Can you relate an experience where sales of your brand were higher or lower than expected due to mitigating factors of reseller brand identification?

Do you have systems in place to encourage salesperson brand identification as well reseller loyalty?

Source: Douglas E. Hughes and Micahael Ahearne (2011), “Energizing the Reseller’s Sale Force: The Power of Brand Identification,” Journal of Marketing, Vol 74 (July), 81-96.

The Blog-Health-o-Meter™ reads This blog is doing awesome!.

Crunchy numbers

A Boeing 747-400 passenger jet can hold 416 passengers. This blog was viewed about 4,100 times in 2010. That’s about 10 full 747s.

In 2010, there were 3 new posts, growing the total archive of this blog to 11 posts.

The busiest day of the year was November 8th with 107 views. The most popular post that day was Is There a Way to Improve Success in Brand Extensions?.

Where did they come from?

The top referring sites in 2010 were michiganstate.academia.edu, strategicmarketsegmentation.com, marketingtechie.com, twitter.com, and broad.msu.edu.

Some visitors came searching, mostly for shopping shelf, does in-store marketing work, and in store sampling.

Attractions in 2010

These are the posts and pages that got the most views in 2010.

Is There a Way to Improve Success in Brand Extensions? January 2010
1 comment

Does In-Store Marketing Work? October 2009
1 comment

Can In-Store Sampling Benefit Long-Term Sales Growth? September 2009

Are customer loyalty programs a good thing? May 2009
1 comment

Women and Gen Y Are Key Targets for Retail Loyalty Programs July 2009
3 comments

Frequently, we want to get a new product out into the market as swiftly as possible so as to enjoy our returns as swiftly as possible, but costs accumulate swiftly. To mitigate initial costs, we could roll out less aggressively and let introduction costs accumulate slowly. Do we know when to accelerate our efforts, and when to go easy? It matters depending on whether the underlying innovation is technology-based or design-based, whether we are marketing to global markets and whether those market cultures tend to avoid or embrace uncertainty, and the importance of social status in those market cultures.

HOW THEY RESEARCHED IT:

This study examines the length and success of new product rollout strategies, based on variables including types of innovation as well as cultural factors. Fourteen new product innovations of cell phones were observed in eight European countries by 17 unique firms between 2000 and 2007. Innovations were either technology-based or design-based. Technological innovations improve functionality whereas design innovations improve stylistic product features. The researchers measured uncertainty avoidance (culture seeks ways to control future events via planning, institutions, etc.), power distance (sensitivity of citizens to social status differences), and individualism for each country. Hypotheses were created based upon each of the four factors and whether or not a long or short time lag for technological and design innovations would be more successful. Time lag was by the number of months elapsed between the month in which an innovation was initially introduced and the month in which the innovation was launched in another focal country.

WHAT HAPPENED?

The researchers found that a longer rollout strategy for a new product is more effective when the product is a technology-based innovation. In contrast, a shorter new product rollout strategy is more effective for design innovations. Further, longer rollouts lead to greater market share in high uncertainty avoiding markets for technology-based products, but shorter rollouts lead to greater market share for low uncertainty avoiding markets for design-based products. The researchers inferred that technological innovations require time for education and accommodation in cultures that are high in uncertainty avoidance. Regarding power distance, technology-based innovations were found to be more readily adopted in cultures with high sensitivity to social status, suggesting that technology adoption may facilitate status perceptions. Surprisingly, individualism and uncertainty avoidance did not affect performance and/or market share; this is not consistent with prior research that suggests individualist countries are more likely to adopt new products, in comparison to collectivist countries.

WHY MANAGERS SHOULD CARE:

Substantial investment is made in developing and launching new products and global competition pressures firms to rollout new products as quickly as possible. Many factors are considered, but lead time management is rarely considered. Regional cultural differences as well as the type of innovation should be factored in planning new product launch strategy. Manager must expect a longer rollout for technology-based products in uncertainty avoiding markets to give the market time to absorb complexities, although cultures with high status sensitivity might be quicker to adopt. Design-based rollouts can be accelerated. While the authors suggest no such speculation, a technology-based product with high design value could accelerate a successful rollout process. This would explain how Apple has been so successful regardless of where it introduces its iPod, iPhone or iPad.

CAN YOU HELP?

Does your actual experience support or refute these findings?

This research was done by Gaia Rubera and David A. Griffith at Michigan State University, and Goksel Yalcinkaya of the University of New Hampshire and published in Journal of Product Innovation Management. The authors want to thank Alatest.com, developed by International Consumer Services Sweden AB, for providing access to the data pertaining to the product category investigated.

HOW THEY RESEARCHED IT:
Jonah Berger and Katherine Milkman, assistant professors at the University of Pennsylvania, led a study examining the relationship between psychological processes and whether a specific New York Times article makes the newspaper’s most emailed list. Berger and Milkman used a webcrawler to capture data from the Times homepage, which continually reports which 25 of its articles have been emailed most frequently, every 15 minutes over a period spanning six months. The webcrawler recorded the title, full text, author, topic area, and one sentence Times summary, as well as the section, page, and publication date of each article. Of the 7,500 original articles, 3,000 were randomly sampled and coded based on inclusion of practical content, inspired awe, and evoked surprise. The emotion and positivity of a given article were also included and determined by an automated sentiment analysis. Control variables such as placement of articles both in the print and electronic versions of the Times, time spent in prominent positions, gender and fame of the author, page advertising on the homepage, writing complexity, article length, and how interesting each article was were accounted for through various means.

WHAT HAPPENED?
Analysis of article content and frequent emails reveals that content’s ability to inspire awe is strongly associated with its virality. Stories that inspire awe are more likely to make the NYT most emailed list, even when distinguished from other virality causing factors such as practically useful information, surprise, positive valence, and affect laden content. The relationship between awe and virality is robust even controlling for prominent article placement and other external factors. Additional analyses were implemented to verify data, including the General Inquirer’s automated textual analysis software as well as an alternate hand-coded measure of awe.

Previous research on drivers of diffusion focuses on aggregate social structures or the positions of certain individuals within those structures. This research is unique in that evidence reveals the important role played by psychological characteristics of content in determining field virality. Whereas transmissions of practical information suggest a simple motive of value exchange, awe-inspiring virality is about deepening social connections and placing value in knowledge for knowledge’s sake. Awe-inspiring and emotional content are both more likely to make the most emailed list, and consumers are more likely to pass on information that is positively valenced. Surprise influences virality to a lesser extent, however surprising content differs from awe-inspiring content in that it lacks vastness as an elicitor.

WHY MANAGERS SHOULD CARE:
If you have not yet seen Steven Jobs’ launch of the iPad, take a look at this ‘awesome’ 3-minute condensed humorous perspective:

Apple is famous for its ‘awesome’ products. Inspiring brand awe in consumers is not oft heard in the context of management goals such as creating brand awareness, satisfying customers, and targeting new market segments. However, the notion that the ‘awesomeness’ of a brand can lead to viralness and a fanatic following is something worth looking into. Many of the content factors discussed in the New York Times experiment are commonly found in today’s marketing. But how often does a branded message inspire awe? As defined by the study, “stimuli that open the mind to vast and often unconsidered possibilities can inspire awe, a unique human emotion that expands a reader’s frame of reference”.

Managers should strive to force consumers to think outside his or her frame of reference in order to achieve top brand virality. Awe-inducing stimuli are usually entertaining, inspiring, and contain a good deal of information, as well as challenge existing mental structures. The consumer must also experience something vast, be it physically, conceptually, or socially. Examples of the most awe-inspiring articles from the New York Times include “The Promise and Power of RNA” as well as “Fury of Girl’s Fists Lifts Up North Korean Refugee Family”. Reevaluating current strategies to emphasize eliciting positive emotional responses as well as challenging the thinking of consumers may lead to a significant increase in brand awareness, saturation, and virality for managers.

CAN YOU HELP:
Comment back by discussing how your company has attempted to increase brand virality. Have your efforts been rewarded? Do your techniques qualify as awe-inspiring?

From: Jonah Berger and Katherine L. Milkman at the Wharton School, “Social Transmission and Viral Culture.” A copy is available here: http://opimweb.wharton.upenn.edu/documents/research/Virality_Feb_2010.pdf

HOW THEY RESEARCHED IT:
Rajeev Batra and Peter Lenk from the University of Michigan, as well as Michael Wedel from the University of Maryland, conducted two studies measuring the “atypicality” and “fit” between brands and brand categories. “Atypicality” is the degree to which the associations and imagery of a given brand extend beyond its product category; brands that are perceived more broadly receive higher atypicality scores. “Fit” is described as the extent to which perceptions of a brand correlate with perceptions of a potential brand extension category, wherein a high correlation indicates a better fit. The first study used a national sample of 200 consumers from an online panel. Participants were asked to rate ten brands from each of three categories (cars, jeans, and magazines) on five dimensions (sincere, exciting, competent, sophisticated, and rugged). The second study assessed the levels of atypicality and fit for the 30 aforementioned brands based on category perceptions created from brand data and the researchers’ own statistical model.

WHAT HAPPENED?
Results suggest higher “atypicality” scores indicate a better candidate for brand extension, however the evidence is not conclusive. Still, one positive example is Porsche, which has an exceptionally high atypicality score and fits with multiple other brand category perceptions, has successfully extended into markets such as eyewear, briefcases, and watches, and is a strong candidate for further expansion. The better generalized finding is that brands with higher “fit” scores are more likely to succeed as brand extensions. For example, whereas GQ, Polo, Gap, Honda, and VW are all companies with high atypicality scores, each “fits” with the imagery of another category, suggesting that GQ could succeed extending into the jeans market, Polo and Gap could license or brand cars, and finally VW retains the image acceptable to launch a magazine.

WHY MANAGERS SHOULD CARE:
Companies invest considerable time and money researching, testing, and surveying consumers regarding potential new brand extensions. The statistical model created through studying atypicality and fit scores reduces the need for managers to imagine all possible brand extensions. As opposed to polling consumers on their reactions to extensive lists of hypothetical products, company research can instead ask consumers about their perceptions of current brands. Results can then be used to find the category with the “best fit” to those associations. Atypicality and fit scores also provide managers the ability to generate brand extension combinations that are more likely to succeed – especially relevant as the current rate of brand extension failure is estimated at 70%. Though the inherent knowledge covered in the research is not new, it is “the first to apply a statistical model that draws on established-brand imagery data to strategically generate ideas as to which brands have the greatest potential for succeeding in an extension, co-branding, or licensing.”

CAN YOU HELP:
Comment back by describing any successes or failures your company has had in creating brand extensions. Do the results fall in line with your personal experience in brand extensions?
From: Rajeev Batra, Peter Lenk, and Michel Wedel, “Strategic Planning of Brand Extensions Using Fit and Atypicality Measures” 2009 (MSI Report No. 09-111)

HOW THEY RESEARCHED IT:
Professors at the psychology department of Tufts University conducted the study comparing Facebook personas to real-life counterparts using 37 undergraduate volunteers. Undergrads were individually paired with one of six confederates in a four-minute “get-to-know-you” meeting. The confederates rated the undergraduate subjects on a number of dimensions related to likability. Undergraduates from another university viewed videos of the meetings and coded specific cues about the subjects’, non-verbal expressivity. Undergraduate subjects’ Facebook page was accessed by the researchers with the permission of the undergraduate subjects. Undergrads from a private university then rated the undergraduate subjects based on his or her Facebook page in terms of likability, and these ratings were combined to reveal a final “Facebook liking” score.

WHAT HAPPENED?:
Results from the survey indicate that impressions made through social media are similar to those attained through real-life interaction. The correlation between confederate liking and Facebook liking was statistically significant, and males and females were perceived similarly across all variables. Positive first impressions based on Facebook correlate to increased webpage expressivity and likewise positive first impression based on dynamic behavior correlate to increased non-verbal expressivity. In accordance with previous research the study finds no evidence of a linear relationship between self-disclosure and impressions of liking with relation to face-to-face interaction or personal web pages respectively. Other concluding evidence finds that online behavior is similar to that of personal interaction, for example people who disclose personal information and are expressive in face-to-face interactions tend to display the same traits on web pages. An interesting caveat of the study is that self-disclosure and expressivity are unrelated to one another, both online and in dynamic interactions. Overall concluding evidence shows that while there is some divergence between online and real-life personas, for the most part the two are very highly correlated.

WHY MANAGERS SHOULD CARE:
Marketers in today’s technologically driven business environment rely increasingly heavily on social media to provide a glimpse of what consumers want. The issue of whether or not social media accurately portrays consumer personalities is therefore an important concern for anyone using the Web to glean information about the consumer market. For marketers this study reveals positive news: searching Facebook sites is not for nothing. Nearly all Gen Y consumers update information on at least one social networking site, and older consumers are increasingly joining the trend. A high correlation between real-life and online personalities means that marketers can use the social networking sites to gather lifestyle information from consumers who may otherwise be unwilling to share, or instead of using costly and time consuming methods primary data collection methods. Social networking sites should not be the sole source of consumer research as there is some differential between dynamic interaction and online personas.
CAN YOU HELP?
Comment back by sharing how you have implemented data gained from social networking sites to improve marketing and promotional strategies. Does this study make you feel like you can rely on Facebook profiles or do you think more research is needed before you will rely on social website data? If you have been relying on social website profiles, have these profiles been efficacious?

From Max Weisbuch, Zorana Ivcevic, and Nalini Ambady “On being liked on the web and in the ‘‘real world”: Consistency in first impressions across personal webpages and spontaneous behavior,” Journal of Experimental Social Psychology 45 (2009) 573–576