CRM, CLV, and Hotel Living

Which came first, the chicken or the egg? The customer or the strategy? 

In marketing, the customers are arguably more important than the strategy, and as such are the true value of your business. With this methodology as their mantra many companies have leveraged new technologies to develop a Customer Relationship Management system. Not only has the technology to track this information changed but so has the methods each company uses to obtain it. Companies such as Kroger has initiated customer loyalty programs that offer price discounts for the exchange of information about their purchases. It seems companies finally discovered trends in their customer's purchases and utilized this information to effectively price their goods, offer discounts, and market to the most profitable customer segments. 

Enter CLV analysis, a tool used by a vast amount of companies to determine the presumed profitability of each consumer over their lifetime. While the benefits of this methodology are quite vast, the method itself caused me to question the validity of this analysis. How are the retaining probabilities determined? How are customers assessed a yearly level of business? What's the margin for error of each of the estimates present int he CLV equation? All these uncertainties culminated in a feeling that CLV is quite variable and volatile. While it may weed out some unprofitable customer segments I would be hesitant to rely upon this analysis to solely identify a profitable customer segment. I would assimilate the uncertainty in the assumptions made to predict future customer interaction to that of forecasting. While it is an educated guess, it is still a guess, and as such caution needs to be taken when relying upon CLV. 

I felt this point was missing in our analysis of Rosewood. While the individual profitability of each customer was not specifically addressed, CLV was still utilized to determine the best move for the resort chain. While the corporate branding strategy was the ultimate decision of my team, I believe that CLV for this case was arbitrary in that there are plenty of ways this branding strategy could be achieved without tarnishing the prestige of each property. These varieties of options within the branding strategy appeared to have no effect on CLV analysis. Herein lies my take away from the week, while the numbers hint that the branding strategy would increase CLV there is more than the numbers to consider in such a game changing decision.  

S.T.D.P. Not the things people warn you about coming back from Vegas with..

Who would have thought that the day back from a holiday that praises the dismantling of segmentation in our society would be spent discussing the important of segmentation. The good doctor preached equality among all peoples past present and future but in the classroom we begin to realize that not all consumers are created equal and by segmenting we can tailor to those most profitable for our business.

Segmenting nowadays is not so black and white, no pun intended. I previously thought that S.T.D.P. was much more simple and less research intensive than what we discussed in class. In fact it is quite involved and segmenting effectively could be the difference between a home run of a marketing campaign and a triple play that sends your team reeling back to the bench.  The entire S.T.D.P. process can be viewed in a parallel to a financial instrument in that you want the most return for each dollar spent marketing. The only difference here is that marketing's return is entirely based upon how effective you are at addressing the customer's needs and how your product matches them.

 Perhaps the Largest misconception I had about S.T.D.P. was the nearly infinite amount of attributes, characteristics, and demographics that a marketing team can segment their customer pool by. This could be overload unless you focus on those segments you believe are most profitable, or fit best with your overall strategy. By effectively using the S.T.D.P. process the company is enabled to better address customer needs and concerns through their marketing efforts. In addition by clearly stating what differences in tastes and preferences each consumer group has the company can tailor a product that addresses the difference in needs for each group. Companies typically version their products to address the needs of each group. A good example is the iPod.

Apple has effectively used the S.T.D.P. process to not pool their customers into groups based upon needs and preferences but also translated this knowledge into products for each of these groups. Take for example the athlete that doesn't want to pay a high premium to listen to music during their workouts, nor do they want to fiddle with the contraption a midst handling weights or intense cardio exercises.  Enter the iPod shuffle, a portable device with no selection screen that is small enough to keep from hindering the athlete during their routine. Another example of a customer group would be musicians, entertainment employees, and music aficionados. These consumers value large amount of memory on their device, easy navigation through their vast library, while still valuing portability and an aesthetically pleasing product. Enter the iPod Classic. This version of the iPod can pack up to 160GB of your favorite music, seasons of your favorite tv shows, audition tapes, anything you would need for an entertainment inclined individual. In addition it makes use of Apple's scroll technology and menus to make navigation easy and personalized. By Using S.T.D.P. and creating various product lines to address the consumer groups discovered through this process not only has  Apple been able to better appeal to consumers than their competitors but it has also allowed Apple to version even further to address subgroups within customer segments.

Marketing Myopia

Marketing Myopia presents Marketing is a much more involved way that the typical perception of the word. Many view marketing as an after the development stage process which Levitt would disagree with. Instead as I read through the article I quickly found that Levitt viewed Marketing as the beginning of any products life cycle. He did so by showing that without customer needs for a product, no sales will ever occur. Instead of making a new product, a firm should focus on the customer needs their product fulfills. This was somewhat backwards to me at first as I always considered Marketing to be the funny ads we see through various Media outlets. Levitt's view of Marketing turned my previous notions upside down in that Marketing is the egg that hatches the chicken. In other words based your business around a specific customer need, and then design your product to better address that need. 

Levitt additionally points out that industries that use to have promising growth potential became stagnant due to the notion that selling builds revenues rather than marketing. Selling according to Levitt is not the same as Marketing in that the latter addresses customer needs while the former merely attempts to persuade customers to exchange cash for your goods. Previously I assumed Marketing and Selling were one in the same, as effect marketing usually leads to effective selling. However, Levitt presents the two words as vastly different in both meaning and approach. 


Levitt also stresses that effective Marketing and examination of customer satisfaction are key to sustained growth in any industry, not merely using cheap gimmicks to increase your revenues. By addressing changes in customer needs, not only does your company develop a better value offering, but it also could lead to new opportunities for growth that mere selling may have blinded a firm from. By clearly establishing the needs of the customer in your industry, and matching those needs to the value offering of your product it seems that Levitt believes you well placed for large growth potential and on going innovation.