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The Science Behind Modern Marketing and Modern Logistics

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  1. The Science Behind Modern Marketing and Modern Logistics

  2. Seminal Consultants (c. 1900) • In 1900 companies were simple: • Factories produced goods • Retailers marketed those goods • The two seminal researchers in making production and marketing were: • Fredrick Winslow Taylor, author of Scientific Management(1912) and • Claude C. Hopkins, author of Scientific Marketing (1923)

  3. Scientific Management + Marketing • Today these traditional fields correspond to: • Science of Capabilities = Assets + Competences • Science of Innovation = Invention + Marketing

  4. Scientific management • Foundation of industrial engineering and management theory: • analysis; • empiricism; • work ethic; • efficiency and elimination of waste; • standardization of best practices;. • Demanded a high level of managerial control over employee work practices • Necessitated a higher ratio of managerial workers to laborers than previous management methods.

  5. Progeny of Scientific Management • During the 1940s and 1950s, the body of knowledge for doing scientific management evolved into operations management, operations research, and management cybernetics. • In the 1980s total quality management became widely popular, and • in the 1990s "re-engineering” • Today's it’s Six Sigma, ‘knowledge management’ and lean manufacturing

  6. Roots of Scientific Marketing Consider a Laboratory Experiment

  7. How to Train a Rat(or a Consumer)Consider a Laboratory Experiment • Consider a maze (with a chocolate reward) where a rat was put behind a partition that opened whenever a loud click sounded. • Here is what happened: • Initially, the rat wandered the aisle, smelled the chocolate, but couldn’t figure out how to find it. • When it reached the top of the T, it often turned to the right, away from the chocolate, and then wandered left, sometimes pausing for no obvious reason. • Eventually, most animals discovered the reward. But there was no discernible pattern in their meanderings. It seemed as if each rat was taking a leisurely, unthinking stroll.

  8. Mental Activity Early on the Learning Curve • Probes in the rats’ heads told a different story. • While each animal wandered through the maze, its brain—and in particular, its basal ganglia—worked furiously. • Each time a rat sniffed the air or scratched a wall, its brain exploded with activity, as if analyzing each new scent, sight, and sound. • The rat was processing information the entire time it meandered.

  9. Mental Activity Later on the Learning Curve – Encouraging Habitual Behavior • Over time, a series of shifts slowly emerged. • The rats stopped sniffing corners and making wrong turns. Instead, they zipped through the maze faster and faster. • As each rat learned how to navigate the maze, its mental activity decreased. A • As the route became more and more automatic, each rat started thinking less and less. • All it had to do was recall the quickest path to the chocolate.

  10. Cue-Routine-Reward

  11. Claude C. Hopkins (1866–1932) created campaigns from 1900-1920 for • Bissell Carpet Sweeper Company, • Quaker Oats, • Goodyear tires • Swift & Company and • Dr. Shoop's patent medicine company • one of the most prominent quack medicine factories of the early 20th century, out of Racine WI • Hopkins insisted copywriters research their clients' products and produce "reason-why" copy • To track the results of his advertising, he used key coded coupons and then tested headlines, offers and propositions against one another. • He used the analysis of these measurements to continually improve his ad results, driving responses and the cost effectiveness of his clients' advertising spend. • His classic book, "Scientific Advertising," was published in 1923

  12. The Birth of Branding / Marketing • Hopkins was the man who: • convinced Americans to buy Schlitz beer by boasting that the company cleaned their bottles “with live steam,” • while neglecting to mention that every other company used the exact same method. • seduced millions of women into purchasing Palmolive soap by proclaiming that Cleopatra had washed with it, • despite the skepticism of historians. • made Puffed Wheat famous by saying that it was “shot from guns” until the grains puffed “to eight times normal size.”

  13. A StoryPepsodent • Hopkins was approached by an old friend to • design a national promotional campaign • for a minty, frothy toothpaste concoction called “Pepsodent.” • It was no secret that the health of Americans’ teeth was in steep decline. • As the nation had become wealthier, people had started buying larger amounts of sugary, processed foods. • When the government started drafting men for World War I, so many recruits had rotting teeth that officials said poor dental hygiene was a national security risk.

  14. The Problem • There was already an army of door-to-door salesmen hawking dubious tooth powders and elixirs, most of them going broke. • The problem was that hardly anyone bought toothpaste because, despite the nation’s dental problems, hardly anyone brushed their teeth.

  15. Claude Hopkins created rules to develop consumer habits • Within five years Hopkins turned Pepsodent into one of the best-known products • in the process, helped create a toothbrushing habit across America • everyone from Shirley Temple to Clark Gable was bragging about their “Pepsodent smile.” • By 1930, Pepsodent was sold in China, South Africa, Brazil, Germany, and almost anywhere else Hopkins could buy ads • Hopkins helped establish toothbrushing as a daily activity.

  16. Crave Reviews • Hopkins found: • a certain kind of cue and • reward that fueled a particular habit • Even today the basic principles are still used video game designers, food companies, hospitals, etc. • He created a craving • This craving is what makes cues and rewards work • … and powers the habit loop.

  17. Mucinplaques • Hopkins needed a trigger that would justify tetoothpaste’s daily use • mucinplaques on teeth, later just called ‘the film.’ • Note: the same film has always covered people’s teeth and hadn’t seemed to bother anyone. The film is a naturally occurring membrane that builds up on teeth regardless of what you eat or how often you brush • That was a cue that could trigger a habit • Pepsodent ads read: “Just run your tongue across your teeth,” read one. “You’ll feel a film—that’s what makes your teeth look ‘off color’ and invites decay.”

  18. The Craving • Before Pepsodent appeared, • only 7 percent of Americans had a tube of toothpaste in their medicine chests • A decade after Hopkins’s ad campaign went nationwide, • that number had jumped to 65 percent. • By the end of World War II, • the military downgraded concerns about recruits’ teeth because so many soldiers were brushing every day.

  19. One more factor: The Reminder • After Pepsodent succeeded • researchers at competing companies found that customers said that if they forgot to use Pepsodent, • they realized their mistake because they missed the cool, tingling sensation in their mouths • They expected—they craved—that slight irritation • If it wasn’t there, their mouths didn’t feel clean.

  20. Take-away

  21. This is Why we are Concerned about Web Usability & Structure!

  22. Cues, Rewards, Cravings • Where and when people look • Establishes the formation of habits • And cravings

  23. On any platform …

  24. Global Innovation Management E-Commerce Site Implementation: Decisions, Decisions, and more Decisions

  25. E-Commerce ImplementationAnswer the Questions • Why: Objective (profit, survival, expansion, social, etc.) • What: Is your innovation (product, market, distribution, etc.) • Who: Customers (with a new set of Q’s where, when, …) • Where: Will you host, will you keep inventory, run production, etc. • When: Does this need to be implemented • How: Will you control costs (production, advertising, after-market)

  26. Why & What • Why do you want an e-business? (objective) • What will you sell to achieve this objective? (service, product, idea) • The most important new sites today are selling ideas • • • • • Why would anyone buy your ‘product’? • What will you do to sell your ‘product’? (build a website)

  27. Who The customers and consumption chain • Why: these particular customers (cost effective, profitable, etc.) • What: do they do that requires your ‘product’ • Where: are they? Do you compete locally or globally or in specific geographical areas? Where are the forums and interest groups of these customers? • When: do you want to reach them? • How: Will you make a profit from them (cross-selling, up-selling, complements, after market services)

  28. Where & How • Where: Will you host, will you keep inventory, run production, etc. • How: Will you implement the Internet portion of your business • Servers, Internet pipes and Traffic Management (hosting) • Website language / templates • Integrated development environment • Content management • Database management • Advertising (organic/sponsored search, media, eWOM) • Analytics (conversion cone, cross/up-selling)

  29. Servers, Internet Pipes and Traffic Management

  30. BrandingLet’s look at Twitter

  31. Graphics Editors • Pixelmator • Fast and powerful image editing software for the Mac operating system • Inkscape • Open source vector graphics editor; web standards compliant Scalable Vector Graphics (SVG) under W3C’s specifications. • Fireworks • Adobe’s image editing software for the web designers. • GIMP • Stands for the GNU Image Manipulation Program – open source image editor (Linux, Mac, and Windows) • Photoshop • Most popular with most features

  32. Website Languages

  33. Website Graphics / Layout • • • • • Custom design typical cost breakdown: •

  34. Integrated development environment • Website (HTML / CSS / Flash, Javascript, ASP, etc.) • Adobe Dreamweaver/Creative Suite • McRabbit Espresso • Coffee Cup • Captive Multilanguage • Visual Studio (MS); Xcode(Apple) • X-platform Multilanguage • Eclipse; NetBeans; ActiveState Komodo; IntelliJ IDEA; Oracle Jdeveloper

  35. Content Management Systems(Free-PHP) • WordPress • Strengths: Huge developer community; Free and paid plugins and specialized themes; User-friendly dashboard for managing content • Weaknesses: lot of security issues, and is very vulnerable to attack without additional security measures • Joomla! • Strengths: User authentication can be done with OpenID, Google, and LDAP, among others; Very active user community and tons of documentation available • Weaknesses: Back-end isn’t as user-friendly as some CMSs; Lack of high-quality themes • Drupal • Strengths: Robust community support, including IRC channels and face-to-face meetups; highly extensible; A large number of companies offering commercial support for Drupal • Weaknesses: A lack of really high-quality free and commercial themes (there are some, but not nearly as many as there are for some CMSs); Theming system is fairly complicated

  36. Advertising • Types • Organic/sponsored search, • Old-school media • Word-of-mouth • Places • Google Adwords/Adsense • • • Facebook • • Tumblr • • Twitter •

  37. Web Analytics • Measurement, collection, analysis and reporting of internet data for purposes of understanding and optimizing web usage • System / tool for measuring: • web traffic • business and market performance and trends, cross-sell, etc. • assess and improve the effectiveness (for a specific objective) of a web site • measure the results of traditional print or broadcast advertising campaigns • estimate how traffic to a website changes after the launch of a new advertising campaign • information about the number of visitors to a website and the number of page views • helps gauge traffic and popularity trends which is useful for market research.