Posts Tagged ‘MARKETING WEBLOG#8217;

20
Dec

In a previous post, I introduced to you a joint effort by the IE marketing department and Travel-Club, the purpose of which was to study consumer loyalty (for more details, see here).

In this post, I am excited to present to you the first results!

The IE research team(marketing professors Dilney Gonçalves, Shameek Sinha, myself, and our research collaborator David Santos), leaded by the head of the marketing department, professor Teresa Serra, started investigating a key question: Do loyalty programs really work?

To respond to this question we have analyzed a database of near 4 million of real customers’ transactions, which took place in the multi-sponsor loylaty program Travel Club (www.travelclub.es), the greatest experts in loyalty programs in Spain, recently collaborating with one of the leading international loyalty agencies – Aimia.

 

Some of the key results so far are:

  • Use the channels efficiently: Communication with customers is the key of the program (optimizing the number and the timing of offers and communications does increase memberspending)
  • Use the rewards strategically: Give a final push to members who are close to getting a reward.
  • Use the presence of other partners in the program wisely: Having more partners in the program can increase the members’ spending through cross-selling.

In summary, loyalty programs really work only when they are used strategically, taking into consideration the needs and behavior of the program mebers, and being with them as much as possible, not only at the time of a transaction.

For further information, and for a full report of the results, you can visit directly: www.catedrafidelizacion.ie.edu (only in Spanish – sorry :) )

No doubt, that with such great infornation on such an interesting and important topic, you will be hearing from us more in the future!

Let me wish Merry Christmas and a Happy New year to everyone!

 

Antonios (Adoni) Stamatogiannakis, Ph.D.

Assistant Professor of Marketing IE Business School – IE University

Antonios . Stamatogiannakis @ ie . edu

*This post is co-authored with David Santos

29
Nov

Christmas is fast approaching, and so the “national craze” of Lotería Navidad. Millions of Spaniards are rushing into buying lottery tickets in all likely and unlikely ways, just to get a shot to be mulch-millionaires.

But why are they doing it? As any economist would tell you, buying a lottery ticket is basically one of the worst things you can do with your money. For instance, it is a lot more likely to get struck by a lightning, than to win in a lottery (for more interesting examples check here).  Yet very few people would bet on the former.

So why are people still buying lottery tickets? Is it that they are completely unaware of their low chances? This is probably true, but only partially. To fully understand this behavior, let’s take a look at the latest advertisement of the  Lotería Navidad – which already has about 4 million views on youtube.

YouTube Preview Image

The fact that there is a remote chance to win, is only a small part of this story. At the same time, the plot capitalizes on several other important drivers of human decision making.

  • Reference point and loss aversion. Many decades of research have shown that losses loom larger than gains. For instance, losing 100 euros would make you a lot more unhappy than finding 100 euros would make you happy. Interestingly, the “no win” situation in the ad is depicted as a loss. This is a lot more impactful.
  • Anticipated regret. When people make a difficult choice, they often try to minimize anticipated regret. The ad cleverly illustrates this. It basically re-frames the decision as “a 20 euros expense vs. potential lifetime regret”. Looked at this way, buying a lottery ticket makes a lot more sense.
  • Identification. The protagonist has been buying a lottery ticket for many years. He never won so far… Wait a minute!! This is probably the story of almost EVERY lottery ticket buyer! So “this guy, could actually be me. I cannot let that happen!” is what many potential buyers would think.

There are many more – but there is no need to analyze everything. The point is that to sell a lottery ticket, like many other products and services, an organization has to appeal to a more hot-emotional side, and not to a cold-rational one. This ad does that in an excellent way.

Let me wish very good luck to those who will play!

 

Antonios (Adoni) Stamatogiannakis, Ph.D.
Assistant Professor of Marketing
IE Business School – IE University

Antonios . Stamatogiannakis @ ie . edu

27
Sep

Hello everyone,

today I just want to open up an issue I was thinking about over the last few days…No answers, just questions.

Probably most of you have noticed the “bend-gate” of the last few days.. The new Iphone 6 bends in people’s pockets… Here is an illustration.

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So, angry Iphone users are wondering why they are paying so much money…But wait a second! Bending is not so bad, as Samsung exemplifies in related products!!

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So, could apple (with a bit of R&D and a lot of marketing investment of course), could turn the “bend-gate” into a “Bend-able phone that everyone loves”? Something like this:

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What would it take? As I said in the beginning, I am not sure at all. Could it be that Apple is starting to lose a bit of their marketing magic? Or will they turn this around, sooner or later?

What do you think? Well, let’s wait and see!

Best,

Antonis

Antonios (Adoni) Stamatogiannakis, Ph.D.
Assistant Professor of Marketing
IE Business School – IE University

Antonios . Stamatogiannakis @ ie . edu

22
Mar

When faced with a bad event, most humans have the tendency to look for a “bright side”. This tendency has been captured by popular idioms in many languages, such as “Να χρυσώσει το χάπι” (“to coat the pill with gold”) and “Ουδέν κακόν αμιγές καλού” (“There is nothing bad without a bit of good in it”) in Greek, or “every cloud has a silver lining” in English.

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But what is a “silver lining” in economics? The answer comes from important research published in Marketing Science by Richard H. Thaler (University of Chicago; 1985, 2008). Thaler (among many other behavioral economists) argues that every financial transaction is mentally categorized as either a “gain” or a “loss”, relative to a reference point (usually the status quo). In addition, the perceived value of money is very different depending on how it relates to the reference point. Put simply, not all money is equal. Although an amount of money (let’s say 500 euros) can  buy the exact same things regardless where it comes from, its value for people can vary dramatically. One such variation is the “silver lining” principle. Let me explain this with an example.

Over the past (let’s say 3) years, Greece is experiencing the biggest post-second world war economic crisis. Many Greek citizens have lost large parts of their income, and the amount of this loss is for many something like 500 euros / month. For 3 years, this is a 3 x 12 x 500 = 18 000 euros. Now, the Greek economy seems to be slowly recovering. The Greek Prime minister just announced that Greece had surplus, 500 million of which will be distributed to about a million needy Greek citizens (see here). That is 500 / citizen, on average.

 

 

There are two possible ways to frame this 500. The first, is to “integrate” it in the previous loss: The prime minister, in this case, would say: “From the surplus, we will reduce the loss that the neediest Greek citizens had over the last 3 years from 18000 to 17500”.

Instead, he chose to say, more or less: “From the surplus, we will give to the neediest Greek citizens 500 euros each”. Which one sounds better? Clearly the second. Reducing the huge loss of 18000 by 500, would not make anyone any happier. They would still be losing 17500, roughly equal to 18000. Instead, the 500 windfall gain is presented in isolation from the disproportionately larger loss. Now, everyone is happy to have gained suddenly 500 euros; That is a silver lining.

In general, although traditional economics would say that X euros is always X euros, people do not understand money this way. They seem to be considering mostly “what difference does this amount make?”. For example, very small amounts of money may make a difference in how people pursue their financial goals (see here: http://marketing.blogs.ie.edu/archives/2013/07/improving-versus-maintaining-which-one-is-harder.php*). Or, as the “silver lining” principle suggests, when people face a big loss and a disproportionately smaller gain, combining the two into a slightly smaller loss would not make much difference. In these cases, people will “like” the same amount of money more, if they were treated as gains (i.e., gain 500) than if they are treated as “loss reductions” (i.e., limit a 18000 loss by 500)….and politicians seem to know that J.

 

Antonios (Adoni) Stamatogiannakis, Ph.D.
Assistant Professor of Marketing
IE Business School – IE University

Antonios . Stamatogiannakis @ ie . edu

 

*The Research leading to these results has received funding from the People Programme (Marie Curie Actions ) of the European Union´s Seventh Framework Programme (FP7/2007-2013) under REA grant agreement No. 298420.

4
Jan

New Year’s Resolutions. Why people fail?

Written on January 4, 2014 by Antonios Stamatogiannakis in ADVERTISING, Research in practice, Servicios

Hello again,

first of all let me wish a very happy new year to everyone!!

These days, it is common for many people to set resolutions for the new year. Those are commonly things that they want to achieve or do in order to improve their lives. This trend is so important, that the US government has devoted a special webpage to it: http://www.usa.gov/Citizen/Topics/New-Years-Resolutions.shtml.

Many of these resolutions focus on a better and more healthy lifestyle. Consumers typically aim, for instance, to exercise regularly. This exercising can take the form of either a daily workout routine ( X minutes per day) or a weekly schedule (e.g., 3 times per week). Many marketeers that work on domains that are related to these longer-term goals capitalize on the way that consumers consider them, promoting in their offerings exactly that: The benefits of a standard workout schedule (I am sure you have seen may ads like the following in the past).

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Yet, despite the efforts of governments, marketeers, and consumers themselves, long-term goals, such as new year’s resolutions, often are not achieved… Why may that be the case? Are people so bad at sticking to their goals?

resolutions pic

Recent research by a Cornell university psychologist (Dunning 2007), gives an answer to this question. Dunning argues that people are not that bad in pursuing their goals, but rather they are not very good when setting a goal, in the sense that they do not account for all the information they may have available. For example, when making these resolutions, people often fail to consider that the reason they did not work out as much as they wanted till now, is not that they did not have exercising equipment or a gym membership, but that they lacked the time or the motivation to exercise; It is very hard to find time to exercise, if one’s day is full with other obligations (e.g., career, family, commuting, etc.). Put simply, the day will always have 24 hours, no matter if one owns a gym membership or not!

So, the next time you fail in sticking to a plan of yours, instead of blaming yourself for being lazy, consider whether the plan was feasible to start with.

 

Having said that, I wish you never face such a situation during 2014!

Antonios (Adoni) Stamatogiannakis, Ph.D.
Assistant Professor of Marketing
IE Business School – IE University

Antonios . Stamatogiannakis @ ie . edu

 

 

11
Nov

Is Microfinance the panacea for poverty alleviation?

Written on November 11, 2013 by María López Escorial in Bottom of the Pyramid

The microfinance boom was, among other reasons for its claim to be the only way to tackle poverty in a sustainable, scalable and long term way. Not using donation funds, recovering the invested money and the fact that the poor were directing their own path, gave the microfinance industry the magic bullet.

30 years later many voices claim the opposite. There is no empiric substantial evidence, that microfinance improves the income of its clients in big numbers.

Maybe, we were a bit naïve when advocating for this instrument alone to alleviate such a complex issue and dificult measure as poverty.

Here, there are a few reasons for it:

1- Not all poor are microenterpreneurs

According to Oliver Wyman study, of the 2.640 total poor, there are 180 microenterpreneurs, 80 artisan, fishermen of pastoralist, and 640 small holder farmers that would need working capital or fix capital for their businesses. Those are still less than half of the total poor.

Oliver wyman lively-hood base segmentation

2- Poor are often entrepreneurs by circumstance, not by choice

Some of them do not want to grow their business but just have enough money to subsist or do not have the capabilities to grow it. Not all of us are entrepreneurs or would succeed and increase income by having a microenterprise. Some of us would maybe decrease our income and destroy value in the process.

microenterpreneur

3- Not all microcredits are used for businesses

Some microcredits are used for consumption and family needs. Most of that money would not in general increase income.

4- Poor have other needs to be covered to get out of poverty.
As we saw in another post, by having better and cheaper lighting, housing, cooking devises, household goods, poor would save money for other purposes, increase income, free valuable time to be used in productive purposes, improve health an in turn have more working hours, improve business efficiency, etc…

standar BOP family budget

Microfinance is not the panacea, but a necessary condition to lift people out of poverty, but
Other needs have to be covered and other actors need to be involved.

There are huge opportunities out there to cover those opportunities and work in both ways: create business and social value..
I will try to cover them in another post.

Any other reason you may think of?

I will wait for your comments! here and at @marialescorial

2
Nov

“When a man’s knowledge is sufficient to attain, and his virtue is not sufficient to enable him to hold, whatever he may have gained, he will lose again.”

-          Confucius

Most marketers would be surprised to learn that an important objective they have was so concisely summarized by Confucius many centuries ago. Companies, just like individuals, must strive to attain and hold on their objects of desire. The only difference is that whereas individuals usually have a diverse set of objectives (for consumers’ pursuits to attain and maintain whatever is desirable for them, see my previous posts here, here, and here), companies frequently have only one: CUSTOMERS!

Customer loyalty has been an important focus for both managerial and academic research. Hundreds of reports have been published, dealing both with general loyalty-related issues (e.g., by McKinsey) as well as with loyalty in specific business sectors (e.g., by Bain, on retail banking). This “research frenzy” on loyalty is well justified, as there is little doubt that increased customer loyalty leads to increased profitability. A seminal paper (Reichheld & Sasser 1990; Harvard Business Review) identifies the sources for this increase in profitability. Specifically, loyal customers are usually less costly to have (compared to acquiring new ones), are more likely to buy other products and services from the company, are less price sensitive (allowing the company to charge price premiums), and finally are the best ambassadors for the brand, generating thus additional sales via referrals.    

Despite the great amount of work investigating customer loyalty over the last decades, the topic is still “hot”. Why? Well, first, because it is super-important. And, second, because we still need to understand it better.

2tc_tarjeta

 

 

 

 

 

IE Business School has partnered with Travel-Club (the biggest multi-sponsor loyalty program in Spain, handling loyalty programs of companies such as Repsol and Eroski) to respond to this need for further investigation. They have created a “Loyalty Research Chair”, the purpose of which would be to combine the resources and expertise of Travel-Club with the research capabilities of IE Business School in order to answer questions like:

  • What are the benefits of a customer loyalty program for a company?
  • What are the benefits of a customer loyalty program for loyal customer?
  • How can these benefits be reliably measured?
  • What variations of a loyalty program maximize these benefits? Do they differ by business sector?

IE marketing department has compiled a team of excellent researchers (marketing professors Dilney Gonçalves, Shameek Sinha, and myself), leaded by the head of the marketing department, professor Teresa Serra, to carry this task

If customer loyalty is an interesting topic for you, stay tuned for the exciting outputs of this initiative!

Antonios (Adoni) Stamatogiannakis, Ph.D.
Assistant Professor of Marketing
IE Business School – IE University

Antonios . Stamatogiannakis @ ie . edu

14
Sep

Hello again, I hope you had a nice summer!

In several discussions I have about sports marketing and sports business in general, many people seem to confuse the “sports” with the “business” side. A frequent confusion is the one of “sports value” with “brand value”. This point is subtle, because the two are frequently correlated. For example, Real Madrid FC is doing great from both a sports and a business perspective. It is both a great brand and a great team, and one side helps the other.

A recent case from Greek football however clearly illustrates that these two aspects can be very different. Here is a summary of the story. The formerly public Greek betting agency (ΟPAP), was always the most important sponsor for the Greek football “Super League” (the Greek equivalent for “La Liga”). The plan was the same for the coming 2013-14 season. However, the situation changed when a major club of “Super League” (AEK Athens) was relegated  to play at a lower-level league.

 

 

 

 

 

 

 

 

The new management of OPAP, judged that this major drawback from the sports side would have a little impact on the value of the brand “AEK Athens”. Thus, it decided to keep sponsoring AEK, with an amount that is a lot higher than the amounts received by many current “Super League” clubs. From a marketing perspective, this seems to make sense. If many eyes are watching AEK every weekend, then putting your brand on the jerseys is clearly desirable.

This decision however was not accepted as easily by other interested parties. First, the clubs that will be playing with AEK Athens (and which have a lot less commercial value) next year, see this sponsorship as contaminating the competition. They would have to play against an opponent with much more resources. Then, the “Super League” clubs are furious to see that a club not competing at top national level is getting more money than they are. Many of these clubs (including the champion Olympiacos FC) have already publicly declared that they will deny the sponsorship from OPAP this year, as a sign of protest.

This case, although extreme, is not the only one. For instance, Liverpool FC has been struggling sports-wise for many years, but it is still a great brand in the UK. Similarly, the Chicago Bulls have not won the NBA title for some 15 years, but their brand is still strong.

 

 

 

 

 

 

 

 

To conclude, in several businesses (e.g., sports, education, health), marketing actions that make perfect sense from a business perspective, might raise problems if the non-business perspective is neglected. Reconciling the two perspectives is the job of a good marketing manager, but the question “How much should we consider business vs. non-business” is not an easy one to answer.

What do you think?

Antonios (Adoni) Stamatogiannakis, Ph.D.
Assistant Professor of Marketing
IE Business School – IE University

Antonios . Stamatogiannakis @ ie . edu

10
Aug

Young males, living in big cities…

Written on August 10, 2013 by Antonios Stamatogiannakis in ADVERTISING, International Marketing

In several of my classes, this is how students (especially those with little marketing training) describe market segments for a product or service; Gender, age (or age range), and geographical location. Then the discussion goes on with me explaining that such description is inadequate, or even misleading, and that a more appropriate description should include “psychographic” and/ or “behavioral” elements as well. At this point, I sense several students wondering: “What does this mean?” “What is psychographic, anyway?” “What is the use of this, besides learning more fancy marketing buzzwords?”

Well, here is an excellent example from McDonald’s advertisements in China that shows why. The target segment of McDonald’s is exactly: “young males, living in big cities”. These are the people who are more likely to opt for fast food versus other, more expensive or time-consuming eating options. This targeting was reflected in a controversial campaign that provided discounts to male customers only.

When however MacDonald’s had to decide on the advertising, they realized that “young males, living in big cities” see themselves differently, and aspire for very different things depending on the big city that they live in. Thus, in their “Manly Man” campaign, McDonald’s created different ads for different cities, trying to appeal to characteristics of the target segment deeper than “gender, age, location.” Some of these characteristics were very common among young males (e.g., interest in females), but others were tailored to the specific image of a “Manly Man” in different regions of China.
Young males living in Shenzhen, the first “special economic zone” in China, saw an advertisement stressing the importance of career in a man’s life:

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Young males living in Shanghai, where a man must take good care of his wife and home, saw an advertisement stressing these qualities:

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And young males living in Beijing, saw an advertisement stressing that real men are tough and decisive:

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Interestingly, regardless of whether the focus is on career achievement, care-taking, or toughness, the slogan is always the same: “Manly Man”. Thus, the different foci of the ads do not merely reflect differences in how desirable some traits are in different parts of China. Rather, they show that these characteristics (successful, care-taker, tough) define what a “manly man” is in each of these cities, at a deeper “psychographic” and “behavioral” level.

 

Antonios (Adoni) Stamatogiannakis, Ph.D.
Assistant Professor of Marketing
IE Business School – IE University

antonios.stamatogiannakis@ie.edu

27
Jul

Congratulatory messages are flooding in from around the world to mark the birth of the Duke and Duchess of Cambridge’s son, the third in line to the throne.

Which is a unique occasion for the BRANDS to join the congratulation showing off how creative they can be + engage with their customers.

I am enclosing a sample of the Advertising carried out. I look forward knowing your favourite one.

 

J&J

royal george j&j

 

 

COKE

 royal george coke

 

OREO

royal george oreo

 

 MINI

Mini Royalty has arrived video

 

MAGNUM

royal george magnum

 

 

CHARMIN

royal george charmin 

 

DELTA

royal george delta 

 

GRANOLA

royal george granola 

 

HOSTESS SNACK

royal george hostess snacks 

 

MUMM

royal george hMumm

 

SMURFS

 royal george smurfs

 

STARBUCKS

royal george sb

 

 

Look forward for your comments here or @ignaciogafo.

THINK DIFFERENT!!!

Ignacio Gafo

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