Managing Customer Heterogeneity

• The fourth marketing principle holds that all resources are limited, so firms must develop resource trade-off strategies that are relevant for their current target segments (MP#1) and maintain their current AER strategy (MP#2) and stated SCA (MP#3), which together constitute MP#4. • In the input–output framework for managing resource trade-offs, the inputs include the outputs from the first, second, and third marketing principles; the outputs are the metrics that firms need to manage their resource allocation activities, as well as the specific resource allocation decision that managers make for that period.

COMPANION WEBSITE

Please visit the companion websites, www.macmillanihe.com/palmatier-ms-2e and SAMSinstitute.com, to access summary videos from the authors, along with full-length cases with datasets and step-by-step solution guides.

INDEX

Page numbers in italics denote a figure or photograph, bold indicates a table.

A

A/B experiments 19, 342 AB InBev 199, 200 Abercrombie & Fitch 61, 61 accounting processes 167 Acer 198 acquisition, expansion, retention (AER), approach advantages 107

CLV combination 115 customer dynamics 18, 20 customer dynamics, process managemesnt 105–7, 105, 121–4, 130–1, 332–3 definition 18 disadvantages 106–7, 108 hidden Markov model (HMM) 108–11, 110, 130, 333 integration 31, 31 lost customer analysis 112–13, 333, 348 resource trade-offs 27, 29, 285, 292, 308, 311 strategy grid 175, 176, 178–9, 200 sustainable competitive advantage (SCA) 24–5, 172, 173 acquisition stage

AER approach 106, 113, 122, 125–6

AER approach example 126–7

CLV approach 116, 117 Acura 45, 99, 113, 202 adidas 226 adoption lifecycle 237–8, 241, 244 advertising awareness index 305 brand equity 207, 210–11 customer equity 168 offering equity 228 one-to-one marketing 49–50 online search expenditure 300 optimization 296, 299, 311, 339 relationship equity 253 television/cable channels 47, 48, 305, 325 Aetna 90–1 aging effect, customer 96 Airbnb 143–6, 241 Airco, case study 280–1 Alibaba 226, 299 Amazon brand value ranking 194 buyouts 266 customer-centric approach 75, 76

interactive marketing 209 market expansion 285, 347 one-to-one marketing 49, 50 partnership potential 91 anchoring and adjusting heuristics 27–8, 30, 297–8, 305, 313 Anomaly 340 Antinori, Thierry 268 Apple brand equity 195, 198 brand value ranking 163, 194 iPhone and market growth 8, 9 marketing strategy 46, 160, 347 offering equity 228, 235, 239 positioning strategy 60 service sector 163 smartwatch market 90 supplier relationships 253 Art of War (Sun Tzu) 69, 149 ASOS 106 associative network memory model 195–7, 196, 217 AT&T 44, 299 attribution approach, resource allocation experimental attribution 299–302, 300, 302 overview 28, 30, 295, 298–9, 336 response models 302–7, 304, 307 Away 207

B

B2B (business-to-business) customer analytics 340 hidden Markov model analysis 109, 110 lost customer analysis 112 personal selling 209, 210 price premiums 9 relationship lifecycle 264, 264–5 relationship marketing analysis 276–7, 276 relationships 23, 156–7, 251, 254, 262 segmenting 72 B2C (business-to-consumer) 112, 251, 266, 340 Barnum & Bailey 159, 233 Bass model 244, 245 “bathtub model” see acquisition, expansion, retention (AER), approach Baumgartner, Felix 208–9 beer, brand equity 165, 165, 198 Berger, Jonah 9 Best Buy 71, 233, 286, 346–8 betrayal 259–60, 264 Bezos, Jeff 75, 76 “Big 5” traits 40, 41 “big data plus” era 325–6, 326–7 bimodal rating distributions 42 Blockbuster 16–17, 151 blue ocean strategies 159, 232, 232 BlueScope 226 BMW 43, 107, 196–7, 197, 228 Bose 60, 228 boundary spanners conflict resolution 260 customer service culture 266–7 relationship equity 177, 177, 178, 251–2, 277 seller expertise 257–8 Bow-mar Instruments 155 brand definition 194 historical developments 162–3 relative advantage 200, 205–6, 218 as SCA source 8, 22–3, 152, 153–4, 153–4, 194–5, 197–200 strategies 200–2, 201, 217 targeted marketing 47 brand architecture 202–3, 203, 217, 334 brand associations 203 brand audit 212, 214–16, 216, 218, 334 brand awareness associative network memory model 195–7, 196, 217 definition 195 positioning 200, 205–6, 217 price promotions 6 relationship programs 96–7 resource trade-offs metrics 311 sustainable competitive advantage (SCA) 22–3, 153–4, 153–4, 195 brand breadth 205 brand category extensions 204, 217 brand depth 205 brand elements 194 brand equity assets and liabilities 154, 195 associative network memory model 195–7, 196, 217 benefits 197–8 brand value ranking 163, 194, 194 building process 205–6, 206, 250, 334, 349 customer lifetime value (CLV) 165–6, 195

definition 195 metrics 164–5, 166, 168, 212–16, 213, 216, 218 relationship equity comparison 277 summary 217–18 brand extensions 198, 203–5, 217, 334 brand identity brand positioning 196–7, 200

EnergAid, case study 220–1, 220 loyalty effects 198, 199 product differentiation 43, 202 brand image associative network memory model 196–7, 197 customer heterogeneity 45 definition 196 exclusivity 60 identity linkage 42–3, 76, 107, 197, 206 positioning 60–1 price premiums 9 sustainable competitive advantage (SCA) 22–3, 173, 194, 202 targeting 43, 73, 74 brand line extensions 203–4, 217 brand metrics 216 brand, offering, relationship (BOR) equity stack benefits 165 customer equity 164–8, 165–6, 178 definition 23, 165 equity grid 175, 176–7, 179, 200–1 micro-macro duality 339 resource trade-offs 29, 292, 308, 311 strategies 173, 174, 176–7, 178, 334, 335, 349 sustainable competitive advantage (SCA) 23–5, 157–8, 178 tangible assets comparison 164 see also brand equity; offering equity; relationship equity brand positioning 200–1, 292, 334 branded house architecture 202, 203, 217 Bristol-Myers 290 Brooks Running 52 BRT Tribune, case study 316–20, 317,

319–20

Brussels Airlines 174 Buckman, Mark 267 Buick 99 bystanders 259–60

C

Cadbury 253 case exercises, unsolved app adoption, MHG 247–8 brand identity, EnergAid 220–1, 220 new customers, Airbnb 143–6, 144 product development, MobilMax Inc. 189–92, 191–2

relationship equity, Airco 280–1 resource allocation, Kreyers Froyo 321–3, 323 segmentation, smartwatch market 90–2 case studies customer dynamics, TKL 133–42 customer heterogeneity, DentMax 79–89 overview xxiv–xxv, xxvi–xxvii resource trade-offs, BRT Tribune 316–20 sustainable competitive advantage (SCA), Exteriors Inc. (EINC) 181–8 causality 166–7, 169–70 chain ratio 8–9, 8 Channel Nine 264 channel partners 251 Chevron 309 China 43, 155–6, 295 China Unicom 121 Chipotle 97 choice models 113–15, 115, 333, 342 Christensen, Clayton 233–4, 234 Cirque du Soleil 159, 233 Clairol 60 classification analysis 69–71 Clausewitz, Carl von 3 cluster analysis customer dynamics 122 customer heterogeneity 72, 76, 331 data analytics technique 57, 58, 342 definition 53 process 52–4 worked example 59–60, 59, 59–60 Coca-Cola 47, 154, 155, 163, 206 coefficient of imitation (q) 244 coefficient of innovation (p) 244 Comcast 50, 299 commitment 252–3, 254, 255, 258, 263–4, 277 “commodity products” 39 communication 258, 264, 267 compatibility 239 competitive marketing efforts 305 competitive parity method 298, 313 competitive strength 55, 56, 73–4 complexity 239 conflict 257, 264, 266 conjoint analysis case study, Exteriors Inc. (EINC) 184–6, 185–7, 188 case study, MobilMax Inc. (MOIC) 191–2 methodological capabilities 342 offering, design and launch 241–4, 243, 334 cooperative behaviors 255 Corning 253 corporate strategy 6, 7 Coupang 164 covariation check 301 Covid-19 pandemic 288 Crest 203–4 Cricket Australia 264 crossing the chasm 237–8, 241 customer analytics 31–2, 339–41, 340, 349 customer-centric approach benefits 63–4, 75, 77, 345 combined with STP 14, 76, 77 definition 14 disadvantages 64, 77 historical developments 4–5 market size 45 organization structure 50–1, 63, 63–4, 75–6 overview 77, 344–5 see also customer lifetime value (CLV) approach customer dynamics approaches, historical developments 100–1, 130–1, 329 brand, offering, relationship (BOR) equity stack 25 case exercise 143–6 customer lifetime value (CLV) 115–18, 119 definition 16

First Principles xxxiv, 16–21 historical developments 101 input–output framework 18–19, 19, 119–21, 120, 131 integration 337–9, 338, 349 lifecycle approach 102–5, 103–4, 130, 329 management process 122–6

Marketing Principles xxix–xxx, 31, 31, 33 marketing strategy re-evaluation 98–9 migration paths and triggers 122–4, 123 overview 95, 129–31 problems and solutions overview 332–3, 333, 348 resource trade-offs 26, 30, 285 segmentation approach 105–13, 105, 110, 122–4, 130–1, 329 segmentation approach, example 126–8, 127–8 simulation software 129, 129 sources 17, 95–8, 96, 98 customer dynamics case study, TKL case overview 133 dataset description 141, 142 problem background 133–4, 134 problem statement 135 segmentation, data collection 136–7,

137

segmentation, exercise analysis 137–8, 138–9 solution findings 141 targeting and positioning 139–40,

140

customer equity accounting process 167 advertising expenditure 168 brand, offering, relationship (BOR) equity stack 164–8, 165–6, 178, 250–1, 273 customer lifetime value (CLV) 23, 165–6 definition 23, 164 metrics 166, 168 sustainable competitive advantage (SCA) 23, 25, 164–8, 166, 178, 330 customer heterogeneity approaches, historical developments 47–51, 48, 329 brand, offering, relationship (BOR) equity stack 24 case exercise 90–2 definition 13

First Principles xxxiv, 12–16, 13 input–output framework 14–16, 15, 65–6, 65–6, 68–9 integration 337–9, 338, 349 latent 44–5

Marketing Principles xxix–xxx, 31, 31, 33 marketing strategy examples 44–6 overview 39–40 problems and solutions overview 331, 332, 348 relationship marketing (RM) 261–2 resource trade-offs 30, 285 segmenting 14 sources 40–3, 41, 42, 76 customer heterogeneity case study,

DentMax case overview 79 dataset description 88–9 industry segmentation, cluster analysis 84–6, 84, 85 problem background 79–80, 80, 80 problem statement 81 segment targeting and positioning 86–8 segmentation, data collection 81–2,

83

solution findings 88 customer learning effect 96–7, 103 customer lifecycle aging effect 96 customer dynamics 18, 95–6, 102–5, 103, 121, 130 definition 18 life experiences 41, 41, 76 customer lifetime value (CLV) analysis goal 5 brand equity 165–6, 195 customer dynamics 18–20 customer dynamics, process management 115–19, 119, 124, 126, 131 customer-focused metrics 64 definition 18 relationship equity 272–3 customer loyalty brand image 206

CRM system 326 customer service culture 266 negative “lock in” 107 positive referral benefits 9, 10 relationship investment 258 strong brand protection 198–9, 199–200 customer onboarding 97, 106 customer relationship management (CRM) customer dynamics 19, 120–1, 122–4 definition 251 historical developments 325 investment 7, 326 relationship marketing comparison 251 see also relationship marketing (RM) customers as unit of analysis 4–5

D

data analytics benefits 341 brand audit 214–16, 216 choice models 113–15, 115 classification analysis 69–71 cluster analysis 53–4, 57–9, 58–9, 59–60, 76 conjoint analysis 184–5, 242–4, 243 customer analytics 31–2, 339–41, 340, 349 customer lifetime value (CLV) analysis 118–19, 119 discriminant analysis 69–71, 76 factor analysis 53–4, 54–5 hidden Markov model (HMM) 108–9, 109 marketing evolution 325–6, 326 marketing experiments 169–70

Marketing Principles 31–2, 336

Markstrat 32, 129, 129 multivariate regression analysis 273–5, 274 overview xxii–xxiii, xxvi response models 306–7, 306 software 342–3 survey design 214–16, 216

SWOT analysis 66, 67, 67–8 3C analysis 66, 67–8 usage growth 340 data capabilities 32, 325–6, 326, 341, 349 data era 295, 296–7, 325, 326, 330 Datril 290 decline/recovery stage, relationships 264, 270 Dell 210, 223 demographics 51–2, 53, 65, 69, 72 DentMax, case study 79–89 dependence 258, 259, 261 designers’ curse 230, 230 diffusion factors 237–9, 240, 241, 245 Digital Equipment Corp. (DEC) 233 direct marketing 209, 325 DirecTV 244 discrete life events 17, 95–6 discriminant analysis 69–71, 76 DISH Network 107 disintermediation 163 disruptive technologies 234–5, 234, 245

E

early adopters 227 eBay 228 E-commerce, China 255, 346 eFinance 251 emerging markets 262 Emirates Airline 268 empathic behaviors 256 endorsed brand strategy 203 endowment effect 230 EnergAid, case study 220–1, 220 Enginius 343 Enterprise Holdings 64, 225 entry barriers 101 environmental trends customer dynamics 97–8, 130 customer heterogeneity 44–5 resource trade-offs 287–8, 292–3, 296 sustainable competitive advantage (SCA) 21, 25, 173–4, 176, 178–9 Ergen, Charlie 107 Ericsson 206 Eurosport Soccer 48 events and experiential marketing 208–9 Excel (Microsoft) xxvi exchange uncertainty 261 exclusivity 60 expansion stage

AER approach 106, 113, 122, 126

AER approach example 126–7

CLV approach 116 expenses 9 experimental attribution 299–302, 300, 302, 311, 313 experiments data analytics technique 169–70, 342 definition 166 external validity 302 innovative offering, case study 247–8 internal validity 301–2 natural 167 resource trade-offs 300–1, 311, 313 sustainable competitive advantage (SCA) 166–7, 169–70, 241 worked example 171–2, 171–2 exploratory/early stage, relationships 263 Exteriors Inc. (EINC), case study 181–7,

184–7

F

Facebook 152 factor analysis 53–4, 54–5, 72, 342 financial RM programs 268–70, 334 first movers and early followers 155–6, 225–6 First Principles definition 2, 44 logic 10–12 overview xxi–xxii, xxxiv–xxxv, 2–3 summaries 16, 20–1, 25, 30, 34–5 Fischman, Ben 9 Flipkart 264 Foodpanda 157 Ford Motor Company

Ford Edsel 155 marketing strategy 39

Model T 12, 39 4Ps of marketing mix 2, 57 Foyr.com 155 free will 263, 269 “freemium” products 11 Friendster 152 Funai 104 functional needs, customer 41–2, 41, 46 Furdo.com 155

G

Galeries Lafayette 48 Gallo Winery 56 Garmin 158, 235 Gatehouse 292 Gateway 198 GE matrix 56, 56, 73, 76, 292, 295 General Electric (GE) 21, 149, 202, 203, 223 General Motors 47, 99, 205 geographic marketing 43 globalization 7 Godiva 14 Goldman Sachs 46 “goodwill” 167 Google brand value ranking 163, 194 offering equity 158, 235, 239 partnership potential 90 search advertising 299–300 GPS 158, 228, 235 graphic processing units (GPUs) 90 gratitude 253, 254, 260, 263, 264, 269–70 growth/developing stage, relationships 263

H

Harley-Davidson 107 Heineken 296 heuristic-based processes 27, 30, 294–5, 295 heuristics era 294–5, 330 Hewlett-Packard 210 hidden Markov model (HMM) customer dynamics solutions 333, 348 data analytics technique 108–9, 109 relationship states and migration paths 108–11, 130 historical method (budgeting) 297–8, 313 Home Depot 224 Honda 45, 63, 99, 113, 202 house of brand architecture 202, 217 Howard Johnson 159 HSBC 291

I

IBM 209, 267 IKEA 194, 301 India 155 individual differences 40–1, 41, 43, 76 Industrial Revolution 162 industry lifecycle 18, 102, 130 industry segmentation 68 influencer marketing 207 innovation budget factors 288 competitive offerings 158–60, 160, 163 definition 223 latent customer heterogeneity 44–5 offerings, SCA source 23, 224–8, 244, 334 strategies 222–3, 229–35, 234, 236, 244–5, 334 sustainable competitive advantage (SCA) 155 innovation radar 224–5, 225 innovators 227, 237 input–output framework customer dynamics 18–19, 19, 119–21, 120, 131 customer heterogeneity 14–16, 15, 65–6, 65–6, 68–9 resource trade-offs 28–30, 29, 307–10, 308, 310 sustainable competitive advantage (SCA) 24–5, 24, 172–5, 172, 178 integrated marketing communications (IMC) 207–11, 208, 218, 305 Intel 63–4, 63, 90–2, 210, 223 interaction frequency 258, 260, 268 interactive marketing 209 Interbrand 216 interfirm relationships 254, 271, 277 Internet of things (IoT) 90, 325 interpersonal relationships 254, 266 Intuit 345 iPhone 8, 9, 160 iterative approach 345–6, 349

J

J. Walter Thompson 43 Jobs, Steve 160 John Lewis 258 Johnson & Johnson 290 jugaad practice 231, 240, 245

K

Kahneman, Daniel 230 Kellogg’s 62, 198, 237 Keurig 101 Keytrade Bank 326 KIND 292 Kleenex 205 Kodak 150, 235, 236 Kreyers Froyo, case study 321–3, 323

L

Lamkin, Simon 174 latent customer heterogeneity 44–5 latent loyalty 199 Laura Ashley 95 learning effect 17, 96–7, 103 Lego 330 Lexus 45 location marketing 43 lost customer analysis 20, 112–13, 120–1, 126, 130–1, 333, 348 loyalty 9, 10, 255–6 loyalty programs 123–4, 258–60, 267–8, 270, 278, 326 Lubetzky, David 292 Lululemon Athletica 211 luxury goods 60, 173, 198, 267

M

Macy’s 299–302 Maguire, Bevin 267 Maktoob 226 MapQuest 235 market attractiveness 55, 56, 65–6, 73–4 market orientation 64, 345 market research 72–3 market sensing 340 marketing activities 41, 42–3, 291 marketing elasticity 303–4 Marketing Engineering (MEXL) xxvi, 342–3, 344 marketing metrics 29–30 Marketing Principles analytics capabilities 339–43, 340 definition 11 implementation 30–3, 31–2, 327–8, 343, 344 integration 30–1, 31, 337–9, 338, 349 iterative approach 32–3, 345–6, 349 overview, xxii, xxix–xxx, 11–12, 11

problems and solutions overview 331–6, 332–3, 335, 337 solutions and supporting DATS 336 trends 329–30 marketing strategy corporate strategy comparison 6, 7 customer-centric perspective 4–5, 4 definition 3, 5 execution 344–7 historical developments 3–5, 325–6 importance 6–9 micro-macro duality 25, 174–5, 175, 177, 178, 339, 349 resource trade-offs 291–3, 293 summary 348–9 temporal interconnections 337–8, 338 trends and First Principles relevance 328–30 Markstrat xxvii–xxix, 32, 129, 129 Marriott 56, 203, 288 Mars 341 mass marketing 47–8, 291 maturing/maintaining stage, relationships 264 McDonald’s 47, 51, 159, 205, 223 Mercedes-Benz 194 methodological capabilities 32, 341–3, 342, 349 metrics see data analytics MHG, case study 247–8 micro-macro duality 25, 174–5, 175, 177, 178, 339, 349 micro-marketing see niche marketing Microsoft 90, 152, 286 Microsoft Excel xxvi, 342, 343 migration paths and triggers

AER approach 106, 122–4, 128

Hidden Markov model (HMM) 109–12, 110 military strategy 3 millennials 97, 105 mobile marketing 43, 106, 258, 296 MobilMax Inc. (MOIC), case study 189–92, 191–2 monopoly power 44, 99, 292 Moore, Geoffrey 237 motives 263, 269–70 movie placement 196–7 multiple discriminant analysis (MDA) 54 multivariate regression analysis 272–5, 274, 334, 342

N

narrowcasting 48 natural experiments 167 needs, customer relationship marketing (RM) 263 resource trade-offs 288 segmenting 52, 53, 65 net promoter score 64 Netflix 18, 50, 151, 239 Netscape 152 network theory 254, 277 newspaper industry 292–3, 293 niche marketing 45, 48–9, 49 Nike 195 Nokia 206 non-spuriousness check 301 Nordstrom 48, 156, 259

O

observability 239, 242 offering equity benefits 226–8, 244 building process 240–1 customer equity 165, 166

R&D investment 223, 334, 349 offerings competitive displacement 158–60, 160 definition 223 design and launch research 242–4 historical developments 162–3 launches and diffusion factors 236–9, 240 new product/service benefits 227–8 overview 223–4 as SCA source 155–6 strategies 229–35, 229–30, 232, 244–5 summary 244–5 sustainable competitive advantage (SCA) 23, 25, 224–8 Olsen, Ken 233 one-to-one marketing 49–51, 329 online sales and services customer relationships 157, 208 innovative offerings 155, 176, 224, 226, 239 mobile marketing 106 product lifecycle 18, 103 repositioning strategies 233, 291 resource trade-offs 291, 299–300 targeted marketing 43, 49 O’Reilly, David 309 Oreo 204 Osborne 155

P

Panera Bread 176 patents 156, 163, 226, 227, 290 Peppers, Don 49 Pepsi 154 percentage of profits method 297, 313 percentage of sales method 297, 298, 313 perception brand equity 197–8 empathic behaviors 256 motives 263, 269–70 resource trade-offs metrics 309 perceptual maps 61, 61, 65–6, 74–5, 76–7 performance trajectory 235 personal selling 209, 210, 291, 304 pharmaceutical sector 156, 226–7, 227, 240, 290 Philips 5 points of difference 201, 205–6, 218 points of parity 201, 205–6, 218 Polaroid 150 Porsche 204 positioning statements customer dynamics 20, 121, 124–5 customer heterogeneity 15–16 definition 62 process 62–3, 69, 72, 74–5 resource trade-offs 28–9, 308, 311 sustainable competitive advantage (SCA) 24, 173 premium products 60, 173, 198, 204 price discounting 9, 207 price-sensitive customer 46 pricing methods 326 Procter & Gamble (P&G) 45, 47, 202, 242, 285 product design conjoint analysis 241–4, 243, 334 functional needs 41–2, 41 positioning 60 stage-gate development process 229–31, 229 product failures 155, 236–7 product lifecycle adoption lifecycle 237–8 customer dynamics 18, 97, 102, 103, 104, 105, 130 definition 18, 97 launch, diffusion factors 238–9, 241, 245 resource trade-offs 26, 288, 290 product uncertainty 261 profit, chain ratio 8, 9 Progressive Insurance 224–5 Proximus 124 public relations (PR) 208

Q

Quaker Oats 8, 154 qualitative analysis 212, 213, 213–14, 218 quantitative analysis 213–14, 218

R

Radio Shack 103, 346 R&D (research & development) budget factors 288 offering equity 223, 334, 349 pharmaceutical sector 226–7 resource trade-offs 292

US national spend 223

Razer 208 reciprocity 253, 254, 255, 258, 263, 269–70 Red Bull 208–9 red ocean strategies 231–2, 232 referrals 255–6 see also word of mouth (WOM) regression analysis 272–5, 334 regulatory trends 25 relational loyalty benefits 156, 157, 255, 261–2 definition 255 individual salespersons 156–7, 268 online facilitation 157 retention stage (AER approach) 106–7, 113 relationship breadth 254, 270, 277 relationship composition 254, 270, 277 relationship duration 258–60, 272 relationship equity

Airco, case study 280–1 benefits 255–6 brand equity comparison 277 building process 250–1, 265–70, 265, 269, 334, 349 customer behavior 251 customer equity 165, 166, 209, 272–3 customer lifetime value (CLV) 272–3 definition 251, 272 metrics 270, 271–2, 272–3 summary 277–8 relationship investment 111, 258, 260 relationship marketing (RM) best practices 265 customer relationship management comparison 251 customer service culture 266–7 definition 250 delivery effectiveness 263 financial programs 268–70, 334 metrics 270, 271–2, 272–3 overview 250–1, 250 relationship lifecycle stages 264–5 social programs 267–8, 334 strategies 253, 256–63, 257, 260, 278 structural programs 268, 334 sustainable competitive advantage (SCA) 23, 25, 251–2 targeting and adapting 261–3 theoretical approaches 252–4, 277 relationship orientation 261–3, 271 relationship proneness 261 relationship quality 254, 271, 272, 277 relationship states and migrations (HHM) 109–12, 110–11 relationship theory 252–4 relationships historical changes 161–2 lifecycle stages 263–5, 264, 270, 272 as SCA source 156–7, 251–6, 252–3, 256 relative advantage 238–9, 240 repositioning 61, 61, 75, 231–3, 334 resource slack 26, 287–8, 313 resource trade-offs anchoring and adjusting heuristics 297–8, 313 attribution approach 298–305, 300, 302, 304, 311, 313–14, 336, 337 case exercise 321–3 customer-centric approach 64 definition 285

First Principles xxxv, 26–30, 28 historical developments 294–7, 295, 330 input–output framework 28–30, 29, 307–10, 308, 310 integration 313, 337–9, 338, 349 management process 310–13, 312 market disintegration 292–3

Marketing Principles xxix–xxx, 31, 31, 33 metrics 309–10, 310, 311, 335–6, 349 overview 285–6, 287 problems and solutions overview 335–6, 337, 349 product design 241 profit function 311–12, 312 sources 287–8, 289, 290–1, 290 stage-gate development process 231 summary 313–14 targeted marketing 50–1 resource trade-offs case study, BRT

Tribune allocation decisions 319–20, 319 data and response model results 318–19, 319 data set description 320, 320 problem background 316–18, 317 problem statement 318 solution findings 320 response models analytical technique 306–7, 306, 342 attribution approach 302–5, 304, 311, 313–14

BRT Tribune, case study 318–20, 319 retention stage

AER approach 106–7, 113, 122, 126

AER approach example 126–7

CLV approach 116, 117 Reynolds International Pen 155 RFM (recency, frequency, and monetary) variables 118 Ringling Bros. 159, 233 risk 263, 269 Ritz-Carlton Hotels 264, 266 Rocket Internet 156 Rogers, Everett 238–9 Rogers, Martha 49 Royal Bank of Canada (RBC) 62, 63, 117 Royal Crown Cola 155 Rue La La 9 Ryanair 232

S

Sainsburys 64 sales promotion 207, 208 sales revenue, chain ratio 8–9, 8 Samsung 60, 90, 194, 228, 305 Samwer Brothers 21 Schick 339 Sears, Roebuck & Company 39–40, 43 SeaWorld 208 segmenting analysis methods 53–4 customer dynamics 20, 105–13, 105, 110, 121, 329 customer dynamics, process 122–4, 126–8, 127–8 customer heterogeneity 12–13, 13, 14 definition 51 industry 65 offering launches 237–8, 241 process 51–4, 65–6, 66, 71–3, 72, 331 resource trade-offs 292 sustainable competitive advantage (SCA) 25 Segway 151, 236 self-identity 41, 42, 42, 76, 107, 199, 206 seller expertise 257–8, 261 Sephora 270 service sector 163, 178, 252, 262 7-Eleven 43 Shopperception 296 Siemens 194, 198, 209 similarity 258 simulation software xxvii–xxix, 32, 129, 129 situation analysis 15, 66, 67–8 “skunk works” 231 Skype 158, 235 smartwatch market, case study 90–2 Smith’s Snackfood Company 290 social exchange theory 252–3, 277 social media 209 social RM programs 267–8, 334 socioeconomic trends 25 software 129, 129, 342–3 Sony 90, 203, 210 South African Breweries (SAB) 199, 200 spillover awareness 9, 203 Spotify Technology 50 spurious loyalty 199 stage-gate development process 229–31, 229, 240, 245 Stance 24 Standard Bank 251 Starbucks 43, 45, 158, 222–3 Starwood Hotels & Resorts Worldwide,

Inc. 268 Statistical Analysis Software (SAS) xxii–xxiii status quo bias 235 Steinhafel, Gregg 95 Stengel, James R. 47

STP (segmentation, targeting, positioning) analysis company strategy examples 44–6 customer-centric approach comparison 64 customer-centric combinations 14, 76, 77 customer heterogeneity 14–16, 15, 62, 348 historical developments 47, 51 offerings 232, 241 overview 76–7, 331, 332 positioning process 56–7, 60–3, 61, 69, 74–5, 331 resource trade-offs 26, 29, 288 segmenting process 51–4, 71–3, 72, 331 simplicity 71 sustainable competitive advantage (SCA) 24, 25, 173 targeting process 55–6, 56, 73–4, 74, 331 structural RM programs 268, 334 Stuart, John 8, 154 sub-branding strategy 203 Sun Tzu 69, 149 sustainable competitive advantage case study, Exteriors Inc. (EINC)

BOR strategy modifications 187 case overview 181 dataset description 188, 188 problem background 181–2 problem statement 183–4 solution findings 187–8 survey data, analysis and results 184–7, 184–7 sustainable competitive advantage (SCA) case exercises 189–92, 220–1, 247–8, 280–1 competitor displacement factors 158–60 definition 22 environmental changes 159–60

First Principles xxxv, 21–5, 22 historical developments 161–4, 162, 178, 330 input–output framework 24, 24–5, 172–5, 172, 178 integration 337–9, 338, 349 management process 175–7, 178–9

Marketing Principles xxix–xxx, 31, 31, 33 marketing strategy 174 overview 149–50, 178–9 problems and solutions overview 333–4, 335, 349 resource trade-offs 26, 27, 30, 285–6, 290, 311

sources 22–3, 152–7, 152, 194 strategy developments 4 success criteria 150–1 technological innovation 158 sustaining technologies 233–4, 234, 245 SWOT analysis 15, 66, 67, 67–8 synergies 305

T

takeaway summaries benefits xxxii–xxxiii customer dynamics 131–2 customer heterogeneity 77–8

First Principles 34–5

Marketing Principles 350 resource trade-offs 314 sustainable competitive advantage (SCA) 179, 218, 245–6, 278 Target 95 targeting see STP (segmentation, targeting, positioning) analysis taste perceptions 198 Taylor, Andy 64 technology trends customer dynamics 16–18, 97, 100–1, 103 customer targeting 43, 49–51, 106 data capabilities 341 global economic effects 288 innovation strategies 233–5, 236, 245 internet based marketing 50 online sales and services 155, 157, 176 relationship marketing (RM) 252, 252 resource trade-offs 296–7 sustainable competitive advantage (SCA) 21, 25, 158, 160, 163, 173–4 television advertising 47, 48, 49, 305, 325 Telstra 44, 267 temporal precedence check 301 Tencent 160 Tesco 150 test marketing 241, 242 “think-feel-act” model 210–11 3Cs 15, 16, 55, 66, 69 Tiffany & Co. 166 TiVo 152 TomTom 158, 228, 235 Toshiba 90 Toyota 45, 194 trade barriers 7 trialability 239 Tripadvisor.com 264–5 true loyalty 199, 200, 206 trust 252–3, 254, 255, 263–4, 277 Turkish Airlines 210 Tylenol 290

U

Uber 44, 101, 151 uncertainty 261 undifferentiated marketing see mass marketing unfairness 257, 259–60, 264, 266 Unilever 47, 168, 194 United Airlines 260 US economy trends 149

V

validity, experiments 301–2 Vanguard 266 vertical extensions 205, 217 “viral” strategy 11 VoIP technology 234–5 Volvo 43

W

Walmart 46, 346 Wang, Xiaochu 121 Wardah 154 water, bottled 39, 43 Weibo 155–6 Western Electric 44 word of mouth (WOM) acquisition strategy 176, 198 marketing strategy 209 negative reaction 107 online benefits 209, 228 positive referrals 9, 10, 198, 206, 255–6, 272–3 product lifecycle 97, 102

X

Xero 238 Xiaohongshu app 291 Xiaomi 156

Y

Yahoo! 235 Youku Tudou 155 Young & Rubicam 216 Your World Rewards 268

Z

Zappos 266 Zara 27