Bronner Slosberg Humphrey Case Analysis – Mkt 642 Presented by: Michael Miyagishima Peter Atmali

Bronner Slosberg Humphrey Founded in 1980 as Eastern Exclusives Distributing coupon books Early customers: American Express and AT&T Provides relationship marketing services Mission Statement: “Enable and assist clients to maximize the value of their customer base, and return on their customer base investments, across all points of contact”

Bronner Slosberg Humphrey Small client roster 80-20 rule Strategic Interactive Group (SIG) Wholly owned separate entity Internet capabilities Ways to grow - add customers, add capabilities, both? Now known as Digitas

Eastern Exclusives Direct marketing Bring companies together to create value American Express & local establishments AT&T & GE, American Air, JC Penney Measurements based on response rates Segmenting customers by value Profitable customers

Behavior Optimization Behavior gap analysis Customer’s actual behavior Desired behavior Economic value of closing gap Focus on market communications Relied on database management & modeling, teleservices, and creative advertising

Customer Base Management Evolved from Behavior Optimization Includes all sales and service interactions Client may have to undergo structural changes Example: FedEx

Bronner’s Contribution to FedEx FedEx’s Problems Weak market Increased competition Stagnant growth Information overload Little understanding of customers FedEx’s Marketing Strategy Mass marketing – list rate structure Solution: Construct a more comprehensive database

Bronner’s Contribution to FedEx What Bronner learned: Dual account Volumes & classes of service with other shippers Service requirements Who values on-time delivery vs. fast shipment Early delivery options Greater use of computers

Bronner’s Contribution to FedEx Pilot test: different prices and services to some customers Segmenting the market Cost: less than $5 million ROI: $50 million in incremental revenue

Reducing Behavior Gap Assigning segment managers responsibilities Implement customer base management procedure Learning from experience Placing high value on FedEx’s best customers Deepened customer loyalty

Would All Companies Benefit? Segmenting and targeting customers is important to all companies Need to have resources available to implement this approach organizational support customer information Packaged or soft goods may be difficult

Would All Companies Benefit? Need to have direct channels of communication direct mail Internet Teleservices Bronner needs international capabilities Conclusion: Not all companies would benefit

Wal-Mart Would Not Benefit Bargain Efficient – Retail Link, no excess, no shortages Economies of Scale Speed 70% of its merchandise is rung up at the register before the company has paid for it Point: Suppliers are doing the behavior gap analysis

Wal-Mart Would Not Benefit Mass Appeal 60% of ad budgets go to retailers for in-store promotions One-Stop Shop Economies of Scope Rotating Seasonal Items Most Product Categories Point: Market segmentation not crucial

Wal-Mart Would Not Benefit MASS MARKETING DIRECT MARKETING Average 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 Coca-Cola - Background 1984 – Coca-Cola was losing market share Pepsi Challenge Studies on possible launch of “New Coke”

“New Coke” Findings Behavior Gap: Coca-Cola had a place in the heart, not refrigerator Consumers don’t mind line extensions Consumers were never told about “New Coke”

“New Coke” Blunder Coca-Cola executives wanted to make Coca-Cola #1 Even at the cost of Coke loyalists (11%) Lesson: Coca-Cola is more than a soft-drink icon Coca-Cola stood for traditional values

Bronner’s Contribution to Coca-Cola Can Bronner come up with this conclusion using their methods? Customer Database Questionaires and Interviews Metaphors

Next Step Segment the market Target the market segments Coke loyalists “Dual” drinkers Non-drinkers Target the market segments Trigger the love for the brand Line extensions Brand extensions

Questions?