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18 posts from January 2006

Best Buy Begins to Supply Customers, not Store Shelves

060129Best Buy is discovering that "big box" idea has run its course as a competitive advantage, so it's pushing supply chain management further into the selling process. Instead of minimizing costs, maximizing customer access to products has become the focus.

HBS Working Knowledge Best Buy's Supply Chain Transformation by Ken Cotrill

The strategy, dubbed "customer-centricity," entails seeing the customer experience from the consumer's perspective and investing in new store formats that are tailored to the buying intentions of the demographic segments—affluent professionals, active younger males, family men, and busy suburban moms, to name a few. ...

The decisions that are at the heart of customer-centricity, such as where to place products and displays, are increasingly being made by Best Buy's frontline employees.

As retailers learn more about the buyer's decision-making process, we can expect to see them pull away from the "mass merchant" approach.

Dunkin' Donuts Catches a Ride on JetBlue

060126 JetBlue will start serving Dunkin' Donuts coffee (not donuts) on its flights. Most people see this as a boost for JetBlue, but as a devoted coffee drinker who prefers their taste, I think this is a coup for Dunkin' Donuts. Many, many more people from outside Dunkin' Donuts current market areas will discover the smooth brew. JetBlue to serve Dunkin' Donuts coffee, AP story by Lauren Villagran (via ExtraTexture)

A recent survey of passengers by JetBlue found that roughly one-third considered the coffee served on airlines worse than their daily cup, and most named coffee as the drink they'd most like to improve, JetBlue said.

Some analysts believe that offering DirecTV, XM satellite radio _ or a cup of name-brand coffee _ can draw passengers. Kent Grayson, an associate marketing professor at Northwestern University's Kellogg School of Management who has studied the airline industry, said a traveler's choice of airline centers on three things: schedule, price and brand. "If JetBlue associates itself with well-known partners whose brand image has some redundancy with theirs, at the margin, a customer may choose JetBlue over another airline whose brand is not as strong," he said. "On an abstract level, it makes people think JetBlue is a better brand."

JetBlue and Dunkin' Donuts aren't the first to create such a partnership. United Airlines parent UAL Corp. has had a similar deal for years with Starbucks Corp., a relationship that was recently extended for another three years.

News Corp Plans Commerce Tools for MySpace

060125 Ross Levinsohn is in charge of marketing the advertising space at all the News Corp. web sites. In an interview in the Wall Street Journal, he describes a very interesting idea to enable mulit-level marketing at Myspace. It's just an idea that's 'out there,' but one that could greatly increase the power and loyalty of their users. IF it works! - Questions for … Ross Levinsohn by Julia Angwin (subscription required)

The home pages people are creating today on are really the center of their universes. They are very engaged with it and we should be able to give them the tools to do anything from those pages.

Maybe it's a cross between eBay and Amway. If somebody downloads a clip of "The Simpsons" and posts it and I go to that site and see that my friend has downloaded it, I should be able to buy it right from that page without going to the video store. In addition, if you want to sell me a bicycle, we should be able to transact that as well.

To do this, we need communications tools. We need a commerce engine. We need a credit-card processing engine. We need the ability to sell and serve targeted advertising. And we need a next-generation system that makes it easier for people to post items and slide things around. Those are all things we're working on.

Avoid Betraying your Customers

060124 Over at ClickZ, Pete Blackshaw has a great article which puts a recently published book into context. I've always been skeptical of "easy answers," but Fred Reichheld says the Ultimate Question is all you need to measure success. Pete Blackshaw compares this with his experience collecting customer feedback, and agrees with Reichheld that companies need to watch carefully and catch practices that leave customers feeling betrayed.

Oh, and by the way, the Ultimate Question is "How likely is it that you would recommend this company to a friend or colleague?"

ClickZ: Are You Asking the Ultimate Marketing Question? by Pete Blackshaw

In the course of collecting and analyzing over a million letters and comments, I learned companies that received the highest percentage of love letters trend favorably in the marketplace. In contrast, the companies and brands that served as magnets for negative feedback not only suffered from high rates of negative word of mouth but also were disproportionately vulnerable to regulatory oversight or hostile media scrutiny.

What also jumped from the data is the most intense viral complaints typically emanated from incidents in which companies sought to claim (vs. create) value from their customers. Billing practices in ... telecommunications ..., for example, triggered astonishing levels of consumer hostility and virality. Consumers always felt companies were sneaking in extra "bogus" fees or hiding behind "fine print." Shoppers became viral terrorists over impenetrably bureaucratic rebate programs....

... Reichheld... calls these "bad profits."

An Advertising Experience to Reflect the Consumption

060123 The best advertising gives the audience a taste of the consumption experience. Austin-based advertising agency T3 created a special web site (or micro site) for Marriott to show off the innovations it's developed for business travelers:

iMedia Connection: Experience Wanted by Gay Warren Gaddis of T3

Developing required more than a little fortitude on Marriott's part-- and the result has been nothing short of incredible. I truly believe they've reinvented the online room tour by their willingness to invest in the staff, time and budget it took to test, develop, track and analyze something that had never been done before. We have seen dramatic shifts in overall perceptions and purchase intent. In addition, we have been monitoring the "buzz factor" and have seen a lot of coverage in blogs and organic PR both nationally and globally

A Commercial to Keep and Share?

060120b While some advertisers are promoting the fact they have a Super Bowl commercial before it actually airs, Burger King is betting that after their commercial airs, the audience will want to capture and share it with friends.

USATODAY: Burger King to send extended ad to customers of Sprint phone video by Theresa Howard

Within 30 minutes of the ad airing, those who've opted to receive text messages from Sprint will get a note saying the extended ad is available on a dedicated Sprint TV channel on their handset. Sprint has 45 million subscribers but would not say how many buy video services. "If they want to see this commercial, they can get it," says Sprint spokeswoman Angela Read. "People are looking online for commercials. This is another way to do it."