Bronner Slosberg HumphreyBronner Slosberg HumphreyCase Analysis – Mkt 642Case Analysis – Mkt 642

Presented by:Presented by:

Michael MiyagishimaMichael Miyagishima

Peter AtmaliPeter Atmali

Bronner Slosberg HumphreyBronner Slosberg Humphrey

Founded in 1980 as Eastern ExclusivesFounded in 1980 as Eastern Exclusives Distributing coupon booksDistributing coupon books Early customers: American Express and AT&TEarly customers: American Express and AT&T

Provides relationship marketing servicesProvides relationship marketing services Mission Statement: “Mission Statement: “Enable and assist clients Enable and assist clients

to maximize the value of their customer base, to maximize the value of their customer base, and return on their customer base investments, and return on their customer base investments, across all points of contactacross all points of contact””

Bronner Slosberg HumphreyBronner Slosberg Humphrey

Small client rosterSmall client roster 80-20 rule80-20 rule

Strategic Interactive Group (SIG)Strategic Interactive Group (SIG) Wholly owned separate entityWholly owned separate entity Internet capabilitiesInternet capabilities

Ways to grow - add customers, add capabilities, Ways to grow - add customers, add capabilities, both?both?

Now known as DigitasNow known as Digitas

Eastern ExclusivesEastern Exclusives

Direct marketingDirect marketing Bring companies together to create valueBring companies together to create value

American Express & local establishmentsAmerican Express & local establishments AT&T & GE, American Air, JC PenneyAT&T & GE, American Air, JC Penney

Measurements based on response ratesMeasurements based on response rates Segmenting customers by valueSegmenting customers by value

Profitable customersProfitable customers

Behavior OptimizationBehavior Optimization

Behavior gap analysisBehavior gap analysis Customer’s actual behaviorCustomer’s actual behavior Desired behaviorDesired behavior

Economic value of closing gapEconomic value of closing gap Focus on market communicationsFocus on market communications Relied on database management & Relied on database management &

modeling, teleservices, and creative modeling, teleservices, and creative advertisingadvertising

Customer Base Customer Base ManagementManagement

Evolved from Behavior OptimizationEvolved from Behavior Optimization Includes all sales and service interactionsIncludes all sales and service interactions Client may have to undergo structural Client may have to undergo structural

changeschanges Example: FedExExample: FedEx

Bronner’s Contribution to Bronner’s Contribution to FedExFedEx

FedEx’s ProblemsFedEx’s Problems Weak marketWeak market Increased competitionIncreased competition Stagnant growthStagnant growth Information overloadInformation overload Little understanding of customersLittle understanding of customers

FedEx’s Marketing StrategyFedEx’s Marketing Strategy Mass marketing – list rate structureMass marketing – list rate structure

Solution: Construct a more comprehensive Solution: Construct a more comprehensive databasedatabase

Bronner’s Contribution to Bronner’s Contribution to FedExFedEx

What Bronner learned:What Bronner learned: Dual accountDual account Volumes & classes of service with other Volumes & classes of service with other

shippersshippers Service requirementsService requirements Who values on-time delivery vs. fast shipmentWho values on-time delivery vs. fast shipment Early delivery optionsEarly delivery options Greater use of computersGreater use of computers

Bronner’s Contribution to Bronner’s Contribution to FedExFedEx

Pilot test: different prices and services to Pilot test: different prices and services to some customerssome customers

Segmenting the marketSegmenting the market Cost: less than $5 millionCost: less than $5 million ROI: $50 million in incremental revenueROI: $50 million in incremental revenue

Reducing Behavior GapReducing Behavior Gap

Assigning segment managers Assigning segment managers responsibilitiesresponsibilities Implement customer base management Implement customer base management

procedureprocedure Learning from experienceLearning from experience

Placing high value on FedEx’s best Placing high value on FedEx’s best customerscustomers

Deepened customer loyaltyDeepened customer loyalty

Would All Companies Benefit?Would All Companies Benefit?

Segmenting and targeting customers is Segmenting and targeting customers is important to all companiesimportant to all companies

Need to have resources available to Need to have resources available to implement this approachimplement this approach organizational supportorganizational support customer informationcustomer information

Packaged or soft goods may be difficultPackaged or soft goods may be difficult

Would All Companies Benefit?Would All Companies Benefit?

Need to have direct channels of Need to have direct channels of communicationcommunication direct maildirect mail InternetInternet TeleservicesTeleservices

Bronner needs international capabilitiesBronner needs international capabilities Conclusion: Not all companies would Conclusion: Not all companies would

benefit benefit

Wal-Mart Would Not BenefitWal-Mart Would Not Benefit

BargainBargain Efficient – Retail Link, no excess, no shortagesEfficient – Retail Link, no excess, no shortages Economies of ScaleEconomies of Scale

SpeedSpeed 70% of its merchandise is rung up at the 70% of its merchandise is rung up at the

register before the company has paid for itregister before the company has paid for it Point: Suppliers are doing the behavior gap Point: Suppliers are doing the behavior gap

analysisanalysis

Wal-Mart Would Not BenefitWal-Mart Would Not Benefit

Mass AppealMass Appeal 60% of ad budgets go to retailers for in-store 60% of ad budgets go to retailers for in-store

promotionspromotions

One-Stop ShopOne-Stop Shop Economies of Scope Economies of Scope

Rotating Seasonal ItemsRotating Seasonal Items Most Product CategoriesMost Product Categories

Point: Market segmentation not crucialPoint: Market segmentation not crucial

Wal-Mart Would Not BenefitWal-Mart Would Not BenefitMASS

MARKETINGDIRECT

MARKETINGAverage customer Individual customer

Customer anonymity Customer profile

Standard product Customized market offering

Mass production Customized production

Mass distribution Individualized distribution

Mass advertising Individualized message

Mass promotion Individualized incentives

One-way message Two-way messages

Economies of Scale Economies of Scope

Share of market Share of customer

All customers Profitable customers

Customer attraction Customer retention

Bronner’s Contribution to Bronner’s Contribution to Coca-Cola - BackgroundCoca-Cola - Background

1984 – Coca-Cola was losing market 1984 – Coca-Cola was losing market shareshare

Pepsi ChallengePepsi Challenge Studies on possible launch of Studies on possible launch of

““New Coke”New Coke”

““New Coke” FindingsNew Coke” Findings

Behavior Gap: Coca-Cola had a place in Behavior Gap: Coca-Cola had a place in the heart, not refrigeratorthe heart, not refrigerator

Consumers don’t mind line extensionsConsumers don’t mind line extensions Consumers were never told about “New Consumers were never told about “New

Coke”Coke”

““New Coke” BlunderNew Coke” Blunder

Coca-Cola executives wanted to make Coca-Cola executives wanted to make Coca-Cola #1Coca-Cola #1

Even at the cost of Coke loyalists (11%)Even at the cost of Coke loyalists (11%) Lesson: Lesson:

Coca-Cola is more than a soft-drink iconCoca-Cola is more than a soft-drink icon Coca-Cola stood for traditional values Coca-Cola stood for traditional values

Bronner’s Contribution to Bronner’s Contribution to Coca-ColaCoca-Cola

Can Bronner come up with this Can Bronner come up with this conclusion using their methods?conclusion using their methods?

Customer DatabaseCustomer Database Questionaires and InterviewsQuestionaires and Interviews

MetaphorsMetaphors

Next StepNext Step

Segment the marketSegment the market Coke loyalistsCoke loyalists ““Dual” drinkersDual” drinkers Non-drinkersNon-drinkers

Target the market segmentsTarget the market segments Trigger the love for the brandTrigger the love for the brand Line extensionsLine extensions Brand extensionsBrand extensions

Questions?Questions?