Last night, 50 Wharton alums gathered in downtown Boston to hear Professor Peter Fader speak about “The Paradoxes of Interactive Media”. Of special interest were Dr. Fader’s comments on how target marketing has changed. His message: when profiling your most promising prospects, focus on differences in behavior rather than demographics.
To illustrate his point, Dr. Fader looked at the data underlying a study that concluded that Hispanics were more likely to purchase DVDs than Caucasians. He began by acknowledging that the conclusion was accurate–but not particularly useful.
Lies, Damned Lies, and Statistics
First he called our attention to the difference in purchases between the two demographic groups which, although statistically significant, was only separated by a couple percentage points. A difference that he said would not yield enough revenue to justify unique marketing campaigns.
Then he presented a second graph which showed side-by-side comparisons of the two groups’ purchasing behavior. The curves were identically shaped bell curves–although the level of the curve representing Hispanics’ purchases of DVDs was slightly higher.
In short, the differences within each group–which recorded purchases under varying circumstances–trumped the differences between the two demographic groups.
Data you can use
His point? In the old days, our only option was to segment markets by visible (i.e. demographic) differences. Today, however, we have access to behavioral data–which is often far more useful–thanks to the web.
His suggestion? Follow the clickstream to learn how your buyers behave, especially the ones that purchase, and plan your marketing campaigns accordingly. Rather than grouping those in similar demographic categories, group those with similar behavior (e.g. the order in which they do things, the events that trigger action)
The catch? Fader says that other studies show that you can’t predict the behavior of individual participants, only populations, so you’ll need a lot of data to gather enough information to segment your market in a meaningful way.
Takeaway? The principles underlying Marketing 101 remain the same, the execution is constantly evolving. That’s what keeps marketers awake at night…
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What can businesses learn from the recent Massachusetts US Senatorial Race?
Monday, January 25th, 2010Thanks to Dave Cobosco for the following post.
Winners never lose sight of whom they serve.
For those of you not familiar with what happened in Massachusetts on January 19, there was a special election to fill the US Senatorial seat vacated by the death of Ted Kennedy. Kennedy had been in office for the past 46 years.
Since Kennedy was a Democrat, initially most people felt another Democrat would fill the seat. The Democratic Party must have felt the same way. They ran a campaign full of endorsements from high-powered Democrats, while the Republican candidate drove his pick-up truck from one end of the state to the other meeting with the people who he would represent if elected.
The Republican won. This not only surprised Democrats in Massachusetts, but sent shockwaves to Democrats in Washington DC.
The Corporate Challenge
Any CEO knows his/her company must stay in touch with its customers and the market. In these economic times, however, many companies are not seeing top line growth; so CEOs focus on what they can control which are costs.
From my experience this means:
While all of these initiatives are important to running a profitable company, in my experience they can lead companies, especially the product organizations, to focus too much attention internally and therefore lose touch with the customers and market.
So what can companies do?
Plenty. Product organizations should:
I’m sure none of the above are new to you, but how many of you can honestly say your companies are doing them? If you are, congratulations. If not, the risk is another company could be focused on understanding your customers better than you are. And, as the U.S. Senatorial race in Massachusetts showed, the people served determine the winner.
If you run a company you should expect your product organization to be doing what’s listed above, but from my experience, however, very few product organizations have operationalized these critical activities in their organizations. If your company lacks this product marketing discipline, I can provide it.
Dave Cobosco (dcobosco@yahoo.com) specializes in applying product marketing best practices to enable companies to expand the market penetration of its products. Dave has applied these best practices as an individual contributor and in leadership roles where he built highly respected and effective product marketing teams focused on driving the business and is looking for his next opportunity to do so again.
Tags: costs, customer, customer interaction, headcount, market, new product development, online forums, operating expenses, operational efficiencies, product marketing discipline, product organizations, profitable company, recent deals, top line growth, understanding your customers, unfavorable comments, won and lost
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