Archive for the ‘Marketers’ tag
Knowledge is Power
As I finish my “SDA Application Portfolio” series I think about the utility of the knowledge gained in this class. It was one of those classes where you are not taught how financial instruments work, how brand management is done, nor how profitability is calculated. There were no formulas to memorize, no equations to be remembered. It did not go into the world of marketers or traders, it did not made me analyze a country’s economic growth, it did not teach me how to increase ROI. Yet, it taught me all that and more.
You may ask – What was this course? How does it fit into the MBA curriculum? How will it help you in the long run? Answers will follow.
This course was called “Strategic Decision Analysis”. It was a course that harnessed the power of analysis and thinking in order to take decisions and increase your chances of success. The course introduced many concepts such as Negotiations, Prisoner’s Dilemma, Voting, and Auctions, among others. But more than that, this course provided insight into how a human mind works and what it thinks. You don’t need to be a CFA, a Six Sigma black belt holder, or a Statistics major to understand all this. All you need is common sense thinking and more importantly what the other person is thinking.
It fits well into an MBA curriculum because it is expected of us to go out and take decisions. Difficult decisions. Decisions that will affect companies, people, nations. Decisions that will alter the way you live, you eat, you sleep, and all that in between. How can you take such decisions and maximize your chances to take the right kind of decisions? Note that when you are taking the decisions there is always someone else taking a similar type of decision. You have one goal – to win in this duel of decision making. Because if you don’t win, somebody else takes all the glory or the pain associated with the decision. This course, in part, was about maximizing your chances to win.
With knowledge comes great power. But also comes with it the “curse of knowledge”. It is dangerous and can be applied dangerously. An incomplete assessment of your own understanding of the knowledge can actually lead to disaster. So it becomes important that we become competent in the use of this powerful knowledge and how we apply it.
The reason I am stressing this is because the knowledge is not just limited to the world of business. Your understanding of six sigma will not make you a great husband, a great father. But this knowledge is different. It spans our daily life and our relationships. Thus it becomes more important to understand the subject matter closely and intimately. The most important piece of this knowledge is – knowing what the other person is thinking. Not what you know and think. Bluntly speaking – you need to drop your ego from the equation to apply this knowledge. You have to stop force fitting because there are ample opportunities to do so. One formula to apply this knowledge is this –> First, you need to drop what you know. Second, know what the other person knows. Third, apply what you know and what the other person does not know. What you know is what you have learnt from this course, from your observations, and from the uncommon common sense that has been bestowed upon you.
Final thought – Always remember – Cooperation is better than defection! It will become all too apparent for you to defect with this knowledge. With this toolkit in hand, you will take decisions that go against the grain of this thought, that of cooperation. Recognize such tendencies, observe your thought process, re-evaluate the knowledge, and then apply it again.
“Pricing and Marketing Productivity” Reading List
As part of our “Pricing and Marketing Productivity” class, we had to prepare a reading list from the articles that we referenced in order to get a good understanding of the subject matter. Many of these articles have been immensely helpful in learning about the various material we have covered. Though this is a formal submission, I am also releasing this to the blog so that it benefits its readers also.
Marketing productivity analysis
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With social media exploding in the past few years, many companies are entering this channel in order to reach its consumers. But one complex issue that arises with this is how to measure your ROI. This article talks about one such idea.
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Similar to the article above. It mentions that marketing is slowly transitioning from the domain of just art to a combination of art and science. Given this fact, the C-level executives are interested in knowing exactly how the ad revenue translates into tangible sales of their company’s products and services.
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An interesting twist to the thought process. The author of this article argues that ROI is really a ‘trailing’ indicator and not a ‘leading’ indicator. So should new strategies be first justified and thus constrained in its creativity? Leave the marketers alone.
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Market response models
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I haven’t read this thesis completely because of it is actually a complete book in itself. But I have often referred to it in absence of a true textbook whenever I have to understand certain types of models. This document has helped me get familiar with many models not discussed in class but handy and useful.
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This article talks about building a market response model. The interesting thing about this was the ideas in this document matched very closely with the data we used most of the semester. Very helpful article. There are some portions that involve higher knowledge of mathematics but apart from that, very good.
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Functional forms, Estimating competitive effects
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Mid semester module course material – Syndicated Data Analysis for Brand Scientists by Prof. Doug Bowman
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This is not a link because the material was provided in hard copy by one of our other professor. I always have this deck handy because it is easy to read and clearly explains various functional forms and methods of estimating competitive effects. It starts from the very basic and slowly builds in the concepts.
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Costs, Customers, Competition, and Pricing
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Games of Strategy – THE book on game theory
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This book is a required material on one of my other subjects – Strategic Decision Analysis. A lot of the concepts we study in pricing involves understanding competition, their actions, and consumer’s willingness to pay. This book is a great resource to learn about concepts like the prisoner’s dilemma and other games that are helpful in maximizing marketing dollars.
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A basic presentation on willingness to pay – covers basic economic concepts and the ever elusive consumer surplus
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White paper on Value based pricing model. This model speaks about an approach a specific company takes in measuring the true value to consumer. Interesting approach.
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Value based pricing vs. cost based pricing
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An interesting insight from one of my favorite sites about what actually determines our willingness to pay. Are we objective or subjective? But the real question is how can marketers exploit this sweet spot to sell their product.
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Psychological aspects
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Influence: Science and Practice – A seminal reading – Read review here.
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Wikipedia provides this interesting article on psychological pricing for e.g. why do prices of most items end in 99? The article talks about similar pricing mechanism in order to lure the customer into purchasing.
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Segmentation, and pricing
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A fresher’s guide to the importance of customer segmentation – probably one of the most important step before any marketing can actually be done.
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Segementation and pricing at its best. This paper by a Goizueta professor was not only an interesting read but also very informative. Given the right strategy and right method to segment customers, Harrah’s Cherokee Casino truly knows which customer to give their rooms and what to charge them.
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Read Cluster Analysis concepts
Was Greenspan wrong?
We recently had a class assignment – Analyze Alan Greenspan’s decision to keep the interest low for a long time and raising it very slowly. Many say this policy along with a lackluster regulatory policy led to the current housing led credit crisis.
It was a very interesting exercise and though I wasn’t able to reach the “right” conclusion, I felt that the he did indeed keep the interests low for a longer time than needed. This conclusion came based on my analysis of the GDP gap as perceived (based on Taylor rule and then data) by Greenspan vs. my own estimate of the GDP gap. The increasing natural rate of unemployment also provided some direction towards my conclusion. I cannot exactly share my data, charts, and analysis here because … it was an assignment that may be given next year also and I don’t yet know my grades on the assignment 
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What I want to discuss here is one of the statements made during the class – The economists have not yet build a model that can capture the true relationship between Alan Greenspan’s decisions and the housing crisis. My question is – Can such a model be built? Can it be predictive in nature, and not just retrospective? Lets start by asking a more fundamental question…
Can consumer behavior be modeled? To some extent, yes. Marketers tend to model behaviors all the time in order to sell consumers exactly what they want, and do not want, in the most (un)appropriate times. Numerati (Stephen Baker’s book) talks about various such models and how it is revolutionizing the industry. But this behavior is always predicted based on certain other behavioral patterns and not on demographics, access to cash, and spending power (Note that such models also do exist but may not be the right way to segment consumers).
How can you predict what a consumer will do when he is given easy access to large amount of cash? We look for patterns. We look around ourselves and see what do people do in such cases. When a person gets a great job that comes with large salary incentives, what does he purchase first? When a new generation enters the workforce, what do parent recommend them they do with the money earned? When somebody wins a lottery, what is the one thing he invests in? Does ‘buying a house’ answer all the questions above to some extent? Probably yes.
How can we test this hypothesis? Can this pattern be quantified in an equation? Can it lead to building a model that can actually prove that Greenspan is the root cause of this disaster? Thoughts?
Numerati – Stephen Baker: A brief review
During my first semester here at Goizueta, I took a class on Statistics taught by Prof. Steve Stuk. Not only did I enjoy the class immensely, my interest in the subject was greatly enhanced. Prof. Stuk showed us numerous real world examples where statistical analysis is used and how it impacts our day to day lives. During the same time, my marketing teacher, Prof. Sundar Bharadwaj, referred me to a book – The Numerati
I recently finished reading the book and I have to say, I am greatly impressed. Stephen starts with asking everyone of us as to how much in our opinion do we leave a trail of data ‘explaining’ our tastes and behavior. Our clicks on the humble IE/Firefox/et all are getting captured and monitored by numerous numerati (number crunchers) to understand and gain information about us. He then goes on to mention how marketers are using the same data to provide us with targetted, contextual advertisement to get our business.
Then the author takes us on a journey – as a patient, blogger, lover, and even a terrorist. How the different companies and agencies are tracking information that we unconciously and willfully give to clearly identify us. Clearly many of the applications and systems designed are going to be for our own benefits. But an ethical question is also raised – Do we really want someone to process the information and join the dots to know a private ‘us’?
The digital age is changing the way businesses evaluate the needs of their customers. With the advent of Google and other data rich companies, a completely new discipline that intermixes core skills such as statistical analysis, anthropology, psychology, et cetra is taking birth. What this sector is creating and what impact will it have on our lives is the basic premise of the book. The book is organized very well and provides for an easy read.
