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6 Companies that track your actions – Predictive Analytics

By | Marketing, Startups, Technology

From the time you wake up in your Nest operated home or apartment until Sundown, you have probably made a number of Google searches on your iPhone, used any number of messaging applications, or maybe purchased a few things from Amazon, unaware that they are all compiling data from you. But wait, maybe you just went brick and mortar instead and went for a walk downtown, amongst all the cameras watching you. You may have wandered into a Macy’s store where there is an array of iBeacons tracking your every move. Regardless, in a world of data tracking, it is clear that being anonymous has become an incredibly difficult task. 

It is not difficult to understand why we have seen this explosion of data tracking. This data has become very valuable to companies and brands. We explained in our previous article, “Has the quest for marketing data gone too far?” how Target has the ability to know when a girl has become pregnant well before her family. Brands want to know everything about their customers. They want to know what they want, when they want it and how much they can use of it. Very simply, the accumulation of more and intrusive data translates into knowledge and knowledge translates into sales which translates into the holy grail, “greater profits.”

We identified 6 companies who are working with the latest in artificial intelligence technology to learn more about everything you do and feel. 

Real Eyes

Real Eyes believes that emotions drive behaviour. Understand a consumer’s emotional state and you will be able to better understand their behaviour. Using webcams and the latest computer vision and machine-learning technologies, they measure how people feel as they watch video content online. Their emotional intelligence enables brands, agencies and media companies to confidently target optimized content to the right audiences. You may never watch a video in quite the same way again!

Aura Vision Labs

Aura Vision wants to help brands discover why shoppers buy. They have a deep learning technology that seamlessly captures powerful, anonymous insights from any camera. They want to help companies harness their existing video systems or easily deploy low-cost cameras, in-store or on-street. They promise to reveal product performance with precise behavioural intelligence, from entrance to checkout. They are deploying solutions for brands, retailers, market research agencies, and commercial real estate. Smile when you look up at those cameras!

iInside.com 

This company provides both predictive and historical queue information at security checkpoints and immigration. Their predictive queuing solutions, utilized in several of the world’s largest airports, are regarded among the most accurate in the world. With lane detection capabilities, they also provide lane open recommendations by hour and day to improve passenger flow through security. In addition to airports he company uses Bluetooth on mobile phones to tell big box stores, and grocers about consumers movements — where they go and how long they spend there.  Companies are very interested in this kind of data so get in line!

Invoca

Invoca helps the modern marketer optimize for the most important step in the customer journey: the phone call. They believe that the key to driving revenue is a set of insights into phone calls and conversation that are highly actionable, relevant to a business, and available in real-time. With Invoca’s Voice Marketing Cloud, marketers can get granular campaign attribution to understand why customers are calling, gain real-time intelligence about who’s calling and analyze what’s being said in conversations. Their product consist of a signal intelligence engine. Signal taps into hundreds of data points and uses marketer friendly tools and the power of machine learning to help you understand not only where calls are coming from, the outcome of those calls, and new insights into the customer journey. Next time you call customer service think about who else may be listening!

Affectiva

Affectiva was spun out of MIT Labs. They believe that in order to improve road safety and to offer a stellar transportation experience, there must be a deep understanding of driver and occupant emotions, cognitive states, and reactions to the driving experience. Affectiva Automotive AI unobtrusively measures, in real time, complex and nuanced emotional and cognitive states from face and voice. This next generation in-cabin software enables OEMs and Tier 1s to monitor driver state and measure occupant mood and reactions.  Although they don’t mention it, as a standard technology in every car you could imagine how the police force would be very interested in having realtime technology understanding who is reacting irratically in an automobile. 

BehaviourMatrix

As in the case of Real Eyes, BehaviorMatrix is a behavioural analytics firm founded on the principle that human behaviour is driven by emotion. Their approach is built on proprietary technology, which allows BehaviorMatrix℠ to delve deeper in the data mines of human perception and emotion, to deliver actionable data that a brand or company needs to be successful. Being able to find the emotional drivers and track them over time gives BehaviorMatrix the most comprehensive information in the field of behavioral analytics.

These are only 6 examples of how companies are diving deeper into data tracking with the use of artificial intelligence. Although the debate is only getting started, there is never any mention of who this data belongs to or if compiling the data requires some sort of consent. As Facebook founder Mark Zuckerberg stated clearly before his presentation before congress, “users own their own data” and essentially sign off to allow Facebook to make use of it. Providing data is one thing but this debate will only get more complex when we start to think about companies tracking and selling data based on your emotions and behavior. Stay tuned. The Future is here. 

The Hutch Report

Process Audit: How to Prepare Your Team for AI

By | Marketing, Technology

(This article first appeared on Tenfold.)

Today, it is no longer a question of adopting AI or not. Instead, ask yourself if you and your sales team are ready for the inevitable. Artificial intelligence for business is a reality. If your goal is to forge ahead and lead in your field, then you need to adapt to a workplace where AI plays a crucial role.

As J.J. Kardwell, founder and CEO of predictive marketing software company EverString, puts it: “Growth-focused sales organizations of every size and stage cannot afford to ignore the benefits of AI-assisted sales.”

Where is AI for Business Today

“Artificial Intelligence heralds dramatic potential for growth for both the economy and for humans.”—Accenture Institute of High Performance Managing Director-Economic Research, Mark Purdy.

According to research done by Accenture, artificial intelligence is projected to improve labor productivity by as much as 40 percent. Likewise, the growth of major global economies hinges on AI, with projections at 100% economic growth by 2035.

It is no surprise that investment in artificial intelligence has increased to $14.9 billion, as of 2014, according to a study conducted by the Bank of America Merrill Lynch. This is projected to increase further by at least 50 percent per year. The same study claims that the innate limitations of humans will make AI the core technology of the so-called “internet of things.”

The benefits of AI are apparent and we’re starting to fully embrace and leverage its advantages. With AI, you can count on fewer errors, faster response times, improved management of resources, and better use of legacy data. Businesses have experienced the difference, and adoption has moved faster across all industries.

Examples of AI Applications for Business

HANA (High-performance Analytic Appliance) by SAP: HANA is a database management application from SAP, a German multinational software company. Whether implemented from the cloud or through in-house servers, HANA is able to process massive RAM-stored data, allowing for fast real-time data-backed decision-making, transaction analyses, variance analyses, and process/ resource consolidation. It is used by big operations, such as Walmart; but, the application can also be retrofitted for small and medium-sized operations.

Avanade by Microsoft and Accenture: This Microsoft and Accenture venture makes use of the Cortana Intelligence Suite and its related solutions to provide business with data-based predictive analytics and insight. Businesses, such as Pacific Specialty Insurance Company, have used the service to build company-exclusive analytics platforms. In Pacific Specialty’s case, they use Avanade to see and understand trends in policyholder behavior.

Cogito: Cogito is an AI service co-founded by Joshua Feast and Dr. Sandy Pentland. It makes use of behavioral science and machine learning to provide real-time insight to support reps, in order to improve caller interaction.

Amazon.com’s Artificial Intelligence on AWS: Amazon is one of the leading proponents of machine learning, and they’ve been at it for 20 years. From its recommendation engine to Alexa, Prime Air and the company’s supply chain, capacity planning and forecasting systems, Amazon’s use of AI is nothing less than amazing. The technology is available to data scientists and developers through AWS’s AI stack, which is already used by high-profile companies like Netflix, C-SPAN, and Liberty Mutual.

AI For Sales and Marketing

Artificial intelligence has also made headway in the fields of sales and marketing.

Chatbots: Chatbots have come a long way, from basic AI applications to more advanced iterations that are capable of providing actual support. Today’s powered-up chatbots can handle mid-level queries, leaving only the more complex ones to their human counterparts.

Conversica by CenturyLink: CenturyLink is one of the United States’ top telecommunications services providers. In 2016, it invested in the Conversica AI, which helps sort through millions of leads to find hot ones; and then engages with these leads via email, sets appointments with human salespersons, and finally passes the leads.

AI for Business Dashboards by DOMO: DOMO is a software company that has developed an AI-powered cloud-based dashboard to help businesses make decisions. The DOMO AI makes use of more than 400 software connectors to pull data from applications, such as Shopify, Salesforce and Facebook. This gives businesses a comprehensive collection of data and, of course, an AI capable of processing it; which has helped managers track real-time trends in sales, product inventory and customers.

The DOMO team has recently added Mr. Roboto to the platform. Mr. Roboto is the collective name for new features, touted to help executives make better decisions with the help of machine learning and predictive analytics.

DOMO’s AI dashboards are currently being used by high profile companies, such as SAB Miller, MasterCard, eBay, Univision and the Honest Co. Univision’s VP and General Manager for Programmatic Revenue and Operations David Katz claims that their first quarter yield has increased by 80 percent when they started using DOMO to collect and process data from their Facebook, Google Analytics and Adobe Analytics.

Apptus’ AI for Sales Enablement: The Apptus eSales AI is an application that specializes in the path between the buyer’s intention to purchase and the company’s revenue. It features predictive sales and marketing functions, such as merchandising automation through customer behavior trends.

Companies, such as Bokus.com, a digital bookstore based in Sweden, use Apptus eSales to improve conversion rates. In Bokus’ experience, Apptus has helped keep their employee count low while achieving a 100 percent customer turnover rate for each opened personalized (through AI) recommendations newsletter.

The General Apprehension with AI

Unfortunately, even with all of the amazing applications that come from AI, the human labor force has not caught up. In terms of training and acceptance, this is perhaps the root of the general apprehension that surrounds AI and job automation.

The projections are worrisome:

Prepare Your Sales Team for AI

Assess your sales and marketing processes.

One of the key steps in preparing for and integrating with AI technologies is to evaluate what you currently work with in your organization. Outline the processes implemented in each department. Within sales and marketing alone, you’ll notice a number of tedious tasks that are best automated and left to the machines.

Ask your team:

What aspects of your job are low-value and best offloaded?

What repeated tasks consume a lot of time?

The answers here will give you valuable insight on the many AI integration opportunities within various departments. AI doesn’t spell the end for salespeople and it’s vital that team leaders convey that message. A huge part of sales still depends on human interaction and personal engagement. Being able to offload repetitive tasks to artificial intelligence, you can look forward to an increase in sales productivity.

Talk about the impact of automation.

Like all advancements, there are tangible positives and negatives, and AI is no different.

A business will necessarily go through some form of restructuring in order to effectively integrate artificial intelligence into its sales and marketing tasks. This might result in reassignments or layoffs. Let your team know what to expect, especially if their jobs are in danger.

Of course, it’s not all bad news for employees. AI is a big help with mundane tasks, and its integration can result in improved work performance and sales production. For instance, with an application like Conversica, leads are already ranked and qualified before they reach a sales team. Once received, salespeople can focus on prospect engagement, overcoming sales barriers, and work towards closing a deal.

Think about redefining roles within your team.

Expect automation to cut down tedious tasks and redundant positions, which ideally will make your team more effective and productive.

Make the most of this by taking a look at the make-up of your team. Assess individual competencies and contributions to the team’s goals. Once you see where your strengths and weaknesses lie, you can redefine and reassign the workload.

Provide opportunities for learning.

One of the best team responses to a faster and more efficient AI future is to become faster and more knowledgeable too. So, alongside your investment in artificial intelligence, also give importance to employee development.

Create learning opportunities through flexible policies and investment in ongoing education. There are several online courses, as well as part-time advanced degree programs, available in the fields of sales and marketing. On-site workshops and training sessions are also good options, especially since you can tailor these training programs to suit your business’ specific requirements.

Improve team (and AI) collaboration.

Collaboration is key to a seamless AI integration. This means working as a team to adapt with the changes, and move forward. It means department-wide and organization-wide cooperation towards a smooth transition and a successful adoption.

Likewise, it also means collaborating with your AI machines. Remember that AI works for you, and it can only do so much. It takes what you give so encourage the team to provide input, especially when it comes to customers and the sales process. The more accurate data your AI platform has, the more it can learn and be of true help to your business.

Optimize Your Data Use

Data is one of the crucial elements in guaranteeing that AI adds to your operations. Remember the old adage: “garbage in, garbage out.”

So, make sure that your AI platform is able to collect the right kind of data. A good part of this depends on your team. For instance, current CRM systems require the agent’s input after calls or other prospect engagements. Make sure they do their part. This might seem small, or even ignorable, at first. But, it becomes part of your big data, which would eventually help you make better decisions.

The Fuqua School of Business at Duke University asked several Chief Marketing Officers regarding their data use. On a five-point scale, they scored an average of 3.2 when it comes to their organization’s ability to use customer data. Then on a seven-point scale, they scored an average of 3.4 for their ability to integrate data across different channels, in order to make better business decisions.

Monitor, Measure, Repeat.

Remember that artificial intelligence is not your wardrobe pathway to Narnia. Success with AI does not happen through magic. It takes consistent work – and repeated monitoring and measuring.

AI will introduce new processes and functions to your team. You can’t expect to perfect your implementation or use of your AI platform on your first – even your nth – try. So, keep at it. Focus on your key metrics and observe, with AI’s help, what factors into these key performance determinants. And, then tweak where necessary.

Look to an AI Future

One thing that we know for sure is that artificial intelligence is the future of business. While the field is still in its infancy stage, you can expect it to mature and become critical cogs in how your business and industry operates. AI will change you, your team and your organization. Jobs and business processes will necessarily evolve.

You can look forward to exciting years ahead. Prepare early and arm yourself with ample AI integration know-how.

The Hutch Report

Has the quest for marketing data gone too far?

By | Law, Marketing

As consumers we love to purchase goods. We purchase basic needs and necessities and we purchase any item that renders our lives more comfortable or interesting. Companies love to sell us these goods and profit from it. To sell as much as they can, they want to know as much as they can about their customers, so they compile masses of data about them. However, there is a point when we need to ask, “Is all this marketing data eroding the right to privacy?”

Consumerism is defined as a social and economic order and ideology that encourages the acquisition of goods and services in ever-increasing amounts. It states that a progressively greater level of consumption is beneficial to consumers.

It was during the Industrial Revolution in the 1800s that allowed products to be available in large quantities for the first time in history. Because of the decreased cost of production and lower prices, products became available to all. This has led to an ever increasing rate of consumption among the masses, or better known as the era of mass consumption.

This era has also seen the psychology of the consumer shift over the years and a change behind the motivation of purchasing decisions. Although they may believe they are thinking independently when making a purchasing decision, consumers have been greatly influenced by the producers of the products they buy. The manner in which companies manipulate consumers has changed over the years and continues to become more and more sophisticated.

Companies have employed a number of strategies over the years in order to provoke consumers to purchase in greater and greater quantities. They design products so that people will need or want to throw them out soon after they buy them, also known as planned obsolescense. They make use of advertisements and newer models with additional gadgets to convince customers that he/she needs an updated product, even though his/her existing product is working well, also known as perceived obsolescence. The evolution of the iPhone is an excellent example. Slight changes in the newest models has driven the almost fanatical Apple evangelists to rush out and replace their current perfectly functioning iPhone for those few additional functions. They have even done their best to market “water” in every way imaginable. All for the sake of the purchasing thirst of the consumer.

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The marketing tactics used on consumers have been even more diverse. We have seen the development of database marketing, CRM (customer relationship management), telemarketing, the emergence of computer oriented spam (see here), viral marketing, and the overall emergence of social media and a connected world like we have never seen before. The common denominator underlying all these tactics and strategies has been that of information. Information about the consumer. The more a company knows about a consumer the greater control they have over the consumer’s purchasing decision.

The chain store Target provides an excellent example. Target assigns every customer a Guest ID number, tied to their credit card, name, or email address. This information makes up a database that stores a history of everything that the customer has purchased. It stores any demographic information Target has collected from them or bought from other sources. To understand how it is used, Target’s data science team looked at the historical buying data for all the ladies who had signed up for Target baby registries in the past and correlated them with information in their present database of ladies consumption habits.

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From Charles Duhigg’s article in the NYT:

“[Pole] ran test after test, analyzing the data, and before long some useful patterns emerged. Lotions, for example. Lots of people buy lotion, but one of Pole’s colleagues noticed that women on the baby registry were buying larger quantities of unscented lotion around the beginning of their second trimester. Another analyst noted that sometime in the first 20 weeks, pregnant women loaded up on supplements like calcium, magnesium and zinc. Many shoppers purchase soap and cotton balls, but when someone suddenly starts buying lots of scent-free soap and extra-big bags of cotton balls, in addition to hand sanitizers and washcloths, it signals they could be getting close to their delivery date.”

Once Target has this information in hand, they are able to deliver advertisements that address the exact needs of that consumer at that particular time. They are more likely to know that someone is pregnant before anybody else in their family becomes aware of it!

These huge databases know a lot about us, more than we are aware of. Companies reason that they want to know as much as possible about their client base in order to service them in the best and most efficient manner. However, should this information fall into the wrong hands, it could provide a large number of opportunities for the innovative criminal.

As we have seen time and time again, the information is not always as secure as you would think in spite of tougher and tougher security measures. The following chart illustrates the largest data breaches of the 21st century (it does not include the most recent Facebook database breach).

(Source: CSOOnline.com)

The lure of greater and greater profits is driving companies to dig deeper and deeper into our habits, daily lives and psyches in order to know what we want and what they can sell us. Their motivation is clear. On the other hand, having such a large repository of information on a nations consumers in itself has huge value also, as companies such as Google, Amazon and Facebook have shown. It is no wonder these information repositories are the target of criminals.

As consumers we may be enjoying the luxury of more refined products that provide us value in all different ways throughout our daily lives and at lower costs. Yet what we are often unaware of is to what extent we are sacrificing our independence and privacy as individuals in order to have it.

Stay tuned! We will soon highlight 5 companies that are using new powerful artificial intelligence technology in order to know everything about you!

The Hutch Report

The Fear of Choosing

By | Economics, Marketing, Psychology

I moved to Europe years ago from Canada and although I made the move to embrace the change and experience another way of life, the first thing I noticed was the stores closed at 6pm. There was no 24 hour convenience that would provide me some peace of mind should I run out of milk at 8pm. I also noticed that restaurants closed at 2h30 pm, once the lunch crowd was served. If I happened to get hungry at that time I was out of luck, the kitchen staff had all left.

The supermarkets, at the time, were far from the super that I knew.  Although they had all the necessities, they didn’t have all the necessities in different sizes, colours, shapes and flavors. Something that I was accustomed to.

Regardless, over time I found myself adapting to the rhythm of this world and stopped trying to fight it. I couldn’t find my beloved peanut butter so I did without and eventually found other products that were just as good and fun to experience. I discovered the joy of having fresh bread everyday, as was the custom, rather than having that loaf of Wonder Bread that would last two weeks before mold started to set in.

On a visit back to Canada I had the chance to show my new Swiss in-laws the city that I grew up in, along with many of the aspects of North American living that they only knew from movies.

In order to accommodate them I wanted to make sure that they had everything they needed to make their stay comfortable. This included their much desired morning coffee. We had instant coffee at the time and they preferred fresh brewed so no problem, I said, “Let’s go over to the supermarket and I will show you an incredible assortment of coffee to choose from.”

We arrived at the supermarket and made our way over to the coffee isle. In front of us were rows of shelves of every kind of coffee you could imagine. I said to my mother-in-law proudly “look, we are here, you can find any kind of coffee you want.” There was deep roasted, light roasted, medium roasted, french roast, instant, ground, finely ground, whole bean, and decaf. There was Mexican coffee, Ethiopian, Colombian, and Ecuadorian. Then there were the different brands. There was Folgers, Maxwell House, Juan Valdez, Nabob, Nescafé, Tully’s, Tim Horton, Van Houtte and others.

I turned to my mother-in-law and asked, “So, what kind of coffee do you want?” In a state of anguish, she replied, “I just want coffee, just regular coffee, Espresso, Espresso.” So we found the regular espresso in the regular packaging and the regular size and left the store. I then found myself actually disappointed by her reaction. I thought it would be one of amazement, such as, “wow, I can find every kind of coffee I can imagine here.” Instead, what I found was that this myriad of choice that she was presented with, in fact, complicated things for her.

I spent years in University studying all aspects of Marketing and it never occurred to me that more choice could be a problem for somebody, until I saw my mother-in-law’s reaction. In addition, it forced me to reflect on my years in Europe doing without all that choice and I actually found daily life to be easier. I gained an appreciation for basic things that we often take for granted. So, I looked a bit deeper into this choice dilemma to see why it would cause such psychological reactions in us.

We can, in fact, go back to the 14th century, where we find an analysis of the condition with the illustration of Buridan’s ass. There’s an ass (donkey) and it’s very hungry and thirsty. But because someone is very cruel, the ass has been placed at equal distances between a pail of water and a stack of hay. The donkey would try to relieve its desire for food or drink, with the choice between those depending on which is closer. But since they’re equally spaced, the donkey is paralyzed. So it stands there, and sits, and ultimately dies.

In her book “The Art of Choosing,” Professor Sheena Iyengar, S.T. Lee Professor of Business in the Management Division at Columbia Business School researched this phenomenon. A grocery store presented customers with two different sampling stations: one with 24 flavours of jam and the other with only six options. The results of the study revealed that the availability of six options resulted in 30% of consumers purchasing at least one jar of jam, while the sampling station with 24 flavors had a conversion rate of only 3%. While the larger selection attracted more onlookers, the smaller selection actually generated more sales.

When we are presented with many options, we usually fear making the wrong decision. This can be translated mathematically. When there are only two options, we have a 50% chance of choosing the right one. But when there are five options, our chances suddenly decrease to 20%. Matters become even more complicated when there are twenty options or more. Human cognitive ability cannot efficiently compare more than five options, so most of us will start looking at the first few options and then stop.

According to classical studies the consumer goes through 5 stages in the decision making process:

Image result for 5 steps decision making process

The problems begin in the Search for information and Evaluation of alternatives stage. Most consumers do not feel particularly confident, which has the potential to trigger strong emotions like frustration, confusion or annoyance. Frustrated shoppers who are unable to choose will most likely postpone their purchase, whereas confused shoppers may rush themselves only to get over with it quickly, and choose something they will regret later. Annoyed shoppers are quick to leave the store and head straight to a competitor, swearing to never ever return.

In his book, “The Paradox of Choice” (HarperCollins, 2003), author and psychology professor at Swarthmore College, Barry Schwartz said, “Consumers have always had choices, but today options have exploded beyond all reason.” “It’s the ethos of American society; the idea that freedom is good, more is better, and you enhance those ideas by offering choice. Logically, you can’t hurt anyone by adding options. It makes no one worse off, and some better. That’s the theory, but in practicality it’s not true.”

Schwartz argues that even if we do make a choice, “We end up less satisfied with the result of the choice than we would be if we had fewer options to choose from”. Increased choice, can make us miserable because of regret, self-blame and opportunity costs. Worse, increased choice has created a new problem: the escalation in expectations. Greater expectations will drive companies to increase the number of choices they offer, which will in turn make it harder for the consumer to make a choice. A vicious cycle.

What consumers have been confronted with is “Choice Overload”, a term that was first introduced by Alvin Toffler in his 1970 book, Future Shock. Toffler noted that as the choice turns to over-choice, “freedom of more choices” ironically becomes the opposite—the “unfreedom.” This choice overload has become even more evident in the new economy with the likes of super online stores such as Amazon and Alibaba.

In the end, according to Professor Sheena Iyengar, when faced with a complex multitude of options, consumers tend to disregard sound reasoning and pick a product based on what’s easiest to evaluate, not what’s most important. She says that, “We stick to the familiar or go by price because we don’t want to deal with so many choices and scrutinize label claims or nutrition information.”

Between 1975 and 2008, the number of products in the average supermarket swelled from an average of 8,948 to almost 47,000, according to the trade group, Food Marketing Institute. The business point of view, most new items are generated because manufacturers are under pressure to increase growth, even if those items are an extension of an existing product as opposed to something innovative. Yet, in spite of this point of view companies usually see just 20 percent of products accounting for 80 percent of total sales.

Tesco chief executive Dave Lewis, in 2015, decided to scrap 30,000 of the 90,000 products from Tesco’s shelves. This was, in part, a response to the growing market shares of Aldi and Lidl, which only offer between 2,000 and 3,000 lines. This has enabled Aldi and Lidl to be more competitive on price which has in turn helped them to gain market share.

Although we have highlighted supermarkets, choice overload is apparent across many industries and if more companies don’t take the same actions as Tesco then the onus is ultimately upon the consumer to deal with the myriad of choices before them. But how?

There is an overwhelming amount of studies on what makes consumers decide, how to force consumers into decisions, how to manipulate a consumers buying process and on and on. What is less available is information related to helping consumers fend off this barrage of marketing and choice overload, which would make sense since companies are making money from consumers and not vice versa, but there are solutions.

In a 2003 JPSP paper (Vol. 85, No. 1), it was reported that the bigger the assortment, the harder it is for people to choose, “except” under one condition: when they enter with an articulated preference. Nobel Laureate Herb Simon, PhD, first referred to this as a “satisficing” option: the first decent choice that fits their preference as opposed to exhaustively scanning all options until finding the perfect, or “maximising” one.

Essentially, the best thing that a consumer can do is to know as close as possible what he wants to purchase before he goes searching for it, no matter what the product is. Simplify it as much as you can. In addition, it may be wise to lower one’s standards when making a buying decision.

“Any customer can have a car painted any colour that he wants so long as it is black.” — Henry Ford

The next time you purchase coffee, define as close as possible what you want before you even think about choices or enter a store. Next, lower your standards and accept the fact that it may not rank as the best coffee in the world, then you reduce the chance of regretting your choice.

Do this and you will feel better about your decision and at which time you will have made the ultimate choice you can make!

The Hutch Report

The Dark Side of Email

By | Marketing, Technology

The invention of e-mail created huge efficiencies in the world. Messages that used to take weeks to receive now arrive instantaneously. However, with every great step foreword there always seems to be a portion of the population that embraces the dark side of innovation.

Mail promotions at one point used to be expensive. Even if a company did have a large address list, they still needed to print out their flyers, pay for postage to have them delivered or pay someone to deliver them. After that, there was no easy way to judge the success of the mailing campaign. It was not a viable marketing strategy for many businesses to embrace.  E-mail changed all that. It became easy to send out hundreds of thousands of emails to strangers, not once but as many times as desired at next to no cost.

As hard as I have tried to filter spam, as it has become to be known, still infiltrates my inbox. No filters have been strong enough to eliminate all of them. Spam is not a simple problem, and the chances that we are able to eliminate it completely one day are quite low. It is a cat and mouse game whereby for every measure taken to eliminate spam there is a counter measure taken by spammers to increase their distribution efficacy. Unfortunately, spammers have only begun to explore the range of options and techniques open to them, and this digital waste is inevitable in any open system of communication.

On May 3, 1978, Gary Thuerk, a marketer for the Digital Equipment Corporation, sent out his message to 393 of the 2600 people on ARPAnet, the DARPA-funded so-called “first Internet.” His motivation was effectively to sell something. He was selling Computers, or more specifically, information about open houses where people could check out the computers. By taking this action he annoyed a lot of people but worst, he also had some success. Although not many, but a few recipients were interested in what he was promoting. That was enough to validate the action.

On April 12, 1994, husband and wife team of lawyers, Laurence Canter and Martha Siegel sent out what became known as “The famed Green Card Spam incident.”  They bulk posted, on Usenet newsgroups, advertisements for immigration law services.  The couple defended their actions citing free speech rights.  They later wrote a book titled “How to Make a Fortune on the Information Superhighway“, which encouraged and demonstrated to people how to quickly and freely reach over 30 million users on the Internet. This incident is noteworthy as it marked the beginning of the flood of spam.

These two incidents have been well documented but it is to merely to impress upon you how long the problem has been around. Today,  statistics show, as of the most recently reported period, spam messages have accounted for 59.56 percent of e-mail traffic worldwide. According to statista.com, in 2016, the United States accounted for the majority of unsolicited spam e-mails with 12.08 percent of global spam volume. The most common types of spam e-mail were healthcare and dating spam.

Initially, I thought that I could avoid a large part of unwanted e-mails by creating a dedicated e-mail address that I would use solely for reputable services that I sign up for.  Then, strangely enough, this email seemed to be showing up in my inbox but attached to a number of services and products that I never signed up for.

So how did they get my email?  Not surprisingly, spammers are very resourceful and have come up with a variety of ways over the past 20 years which include the following methods but not limited to:

Buying illegal lists – There have been an increasing number of high profile hacking events where millions of emails have been stolen from company servers and ISPs.  In addition, there have also been incidents where dishonest employees of ISP’s will sometimes download information directly from their work servers. These e-mail lists then find there way onto the open market where they are sold to spammers.

Harvesting programs – Also known as “crawl and scrape” programs, are also commonplace. Any text on a web page that contains “@” character is fair game for these programs, and lists of thousands of addresses can be harvested within an hour via these robotic harvesting tools. While harvesting requires a lot of bandwidth, it is simple: Simply download the right pages from select Web sites and extract the e-mail addresses that are available. There are a variety of these programs available that may be employed:

  • Web spiders: Spammers employ Web crawlers and spiders that harvest e-mail addresses from Web sites. It’s common for Web sites to include mailto: URLs as well as unlinked user@domain addresses. These Web spiders are not unlike the spiders and Web crawlers used by Yahoo, Google, and others that scan the Internet’s Web sites in order to keep Web search indexes fresh. If your e-mail address if visible on your website then you are a target.
  • Newsgroups: This is simply extracting e-mail addresses from Usenet newsgroups with a simple shell or Perl script.
  • Groups, blogs, and discussion boards: Yahoo! and Google have their groups and mailing lists, many of which make their members’ e-mail addresses available. There are thousands of blogs and discussion boards that contain easily acquired e-mail addresses.

Test messages – In this method, spammers send test e-mails to recipients whose addresses they simply guess.  They conclude that if they do not receive a nondelivery receipts (NDRs) back from the domain that the e-mail address must be legitimate. However, more servers are now opting out of sending NDRs to avoid this.

Unsubscribe links – Many spam messages include an opt-out or unsubscribe link so that the recipient can request not to receive more spam. However, often the real purpose of unsubscribe links is to confirm a valid, active e-mail address. If a company has purchased your e-mail you could still unsubscribe and take yourself off the list, however, if the company is not legitimate then you are simply confirming to them that your e-mail is valid.

Malware – Spammers sometimes use Trojan horses, viruses, and worms to extract e-mail addresses from individual user’s computers.

Dictionary programs – These products will generate alphabetic/numeric combinations of addresses in sequence. While many of the results are incorrect, these dictionary programs can create hundreds of thousands of addresses per hour, guaranteeing that at least some will work as targets for spam.

Curiously, in my inbox, I often find legitimate companies advertising their services. Therefore, these companies have either purchased a stolen or harvested list. So that gets me thinking about the company that purchases such a list. Do they have a marketing department that has actually promoted such a strategy?

According to a study conducted in 2008 by researchers at the University of California, Berkeley and UC, San Diego, it was found that spammers were getting a response just once for every 12.5 million emails they were sending — a response rate of 0.000008% (Despite that, though, spammers were still able to turn a profit). That’s a miserable response rate, and well below the 2.15% rate that legitimate direct mail companies report. However, spam is still considered cheaper than legitimate marketing when working at the spammers scale, and can apparently still be effective at generating profits. Therefore, many companies still attempt to employ these strategies.

In this New Economy, too many companies are focusing on promoting “digital marketing” strategies that will hopefully get as many people to their storefront as possible. Yet there is obviously too much focus on “digital” and not enough on “marketing”. You can see it in your mailbox daily. Products and services that don’t apply to me still target me. It is purely a carpet bomb approach.

These companies should start asking different questions if they want to remain viable. Instead of asking, “How can we push as many people as possible towards our storefront,” they should be asking,  “what is the customer’s problem and how can we add value towards helping solve it?”

Great products and services that add value will always get noticed. This will breed a force of fanatical users and fanatical users are the best sales force any company can have, and more effective than any spamming campaign could ever hope to be. Just ask a company like Apple.

The Hutch Report

The Digital Marketing Mix

By | Marketing

The new economy and our increasing digitised world seems to have outmoded many classical business concepts. What seemed logical from a business standpoint in the traditional sense now seems less logical from the digital point of view. Should businesses be thinking about tossing out all these old concepts that make less sense and start thinking fresh from a digital sense? Then again, has the digital hype become so great that we forget that most of the world’s economy still runs in a traditional sense and that we should merely be thinking about adapting concepts to digital models instead of having them replaced?

A real digital economy is one that is purely digital, such as information that is produced digitally, marketed digitally,  distributed digitally and sold digitally. With this definition we are able to quantify what percentage of the economy is in fact digital, which is in fact still a small portion. We know that the greater economy does not function in pure digital form, although the hype would lead you to believe this is so. If you purchase a bar of soap through a website, it may have been marketed and sold through the website but the bar of soap is still a physical object. This means that it must be produced in a factory, stored in a warehouse, and distributed to the end customer by physical means. So what we have is essentially a hybrid where the digital tools have replaced certain traditional means of doing business but not all (I don’t think you will ever see the day where we wash ourselves with digital soap).

With this in mind, businesses should be thinking about which digital processes occupy their activity chains and determine how traditional concepts can be modified to suit them, instead of rethinking the wheel and replacing them completely. As an example, we looked at effective marketing strategies in the traditional sense to see how they can be modified to accommodate the digital extension of business.

We start by looking at traditional marketing and the obvious place to begin when thinking about effective marketing strategies is the consumer. Every company’s reason for being is based on satisfying the customers wants and needs with the firm’s products and services in order to generate profits (we will not consider non-profit organisations here).

Consumers tastes vary greatly, which makes it extremely difficult for any one company to serve everybody (although Amazon is sure giving it a good try). In order to make sense of all the consumer variablities in the market, the first task at hand is to separate the market in to homogeneous segments. This way companies can better identify and analyze what really makes them tick. They will do this by asking such questions as what problems are the potential customers having that we may be able to solve better than others? Who else is experiencing these kinds of problems?

Once this is done then the company will attempt to align what it is offering with what the consumer wants or needs. Hopefully they do that properly and the segment becomes profitable for them.

In order to do that, they position four classic strategies in a way that will address the consumers wants and needs correctly and convert that into profitable sales. These classic strategies have come to be known as the “Marketing Mix” and they include: Product strategy, Pricing strategy, Distribution strategy and Promotional strategy.

Product strategy: This includes decisions about the product and its uses, packaging, branding, trademarks, as a few examples.

Pricing strategy: This includes the challenge of setting a justified and profitable price point.

Distribution strategy: This includes the selection and management of marketing distribution channels and the physical movement of goods from manufacturing to the end consumer.

Promotional strategy: This includes personal selling, advertising, publicity and sales promotion tools such as brochures.

In order to provide a simple example of this mix we will take a look at Ferrari Cars. Product strategy – they are a luxury item, therefore they are branded as such. Details of the product are all of the highest quality. The name represents luxury and automobile craftsmanship at its finest. Pricing strategy – because the product is represented as high quality and requires expensive quality materials to produce, the price point represents this fact and retails from between $188,000 and $400,000. Distribution strategy – Ferrari cars will only be sold in exclusive dealerships seeing that they cater to a very select market, and such a luxury goods consumer would accept the fact that there is not a Ferrari dealership on every street corner. Promotional strategy – their promotional strategy has to represent their product so you won’t find any flyers in your mailbox advertising “20% off if you purchase a Ferrari before Friday.”

So now, in the hybrid digital world what has drastically changed for Ferrari? The product is still a luxury car. The pricing strategy hasn’t changed to reflect that. That is to say, you are not going to get 20% off of a Ferrari if you purchase it online. The distribution strategy doesn’t change because the physical object still goes through the distributor channel to the end consumer. Essentially, we can say that the promotional strategy has changed. Instead of a nice glossy brochure (which they still have) you can get all the information you need online. The website looks high end but today you can have a luxurious looking website and sell inexpensive chocolate bars. Communication has not changed much although you get the advantage of more means of communication but so does everybody. In any case if you are going to purchase a car for $200,000 you probably want to speak directly to the seller.

What about the pure digital world? This is where the modifications have to take place because the lines become blurred.

Product strategy – This becomes a content strategy which means we are speaking about a digital good such as a book, piece of software, application etc. Product strategy can now become a bit more difficult, especially if you are thinking of branding yourself as a luxury digital product. Does this category even exist?

Pricing strategy – Because of the digital world businesses have now gained efficiencies and are given additional margin to work with so they can play with price a bit more depending on who they are selling to and what their competitors are doing.

Distribution strategy – In digital form we have the whole world at our doorstep. The strategy becomes which distribution channel to use, YouTube? Website? Instragram? or simply email?

Promotional stategy – The digital promotional strategy can still employ traditional tools such as radio/podcasts, Television, Billboards, Magazines etc. or it can be purely digital using such tools as Twitter, a myriad of websites to advertise on, Facebook, Google adwords, Instagram, YouTube or simply your own website. However, here we see that the lines can become blurred because now your distribution channel also doubles as your promotional channel.

Therefore, businesses have to take special care in thinking about how they position themselves in the new economy and what strategies they use. The most important aspect, which many businesses forget is the customer. If your segment market is 50 – 60 year olds then you have to communicate to them in the proper way and through the proper channels. This segment is not a big user of Snap Chat or Instagram so you have to change accordingly.

So, regardless of whether your product is physical or digital, there are some fundamental questions that businesses should not forget to ask;

Who are my customers? (How old are they? What is their profession? etc.)

Where are they located? (in the digital world, an Italian may be visiting your site, are you selling to them? If you are there are a number of cultural issues to consider).

What need, want or problem are we solving for them? (So many companies are in the “build it and they will come” frame of mind. A nice to have product is very difficult to sell).

Providing something of value that somebody is willing to pay for has not changed for thousands of years. The new economy and digital world does not change that fact. There are numerous articles outlining all kinds of traditional marketing strategies and digital strategies which are valid, however, many often still forget the reason for being in business and that is to satisfy a need. If your business concentrates on the end customer and how his or her needs are being fulfilled by your business, and work backward from there, the chances of success will increase regardless of if your product/service is physical or digital.

The “Follow Back” Button on Twitter – Who Benefits?

By | Marketing, Psychology

John Harper lives in Pine Village, Indiana.  It is a beautiful little town with lots of friendly folk who are always willing to help their neighbors or visitors in need. The population is only 217 so John knows just about everybody in town and everybody knows John.

John works at a local factory and although he enjoys his job and being with his fellow workers John has always had dreams of having a bit more. He has always had the desire to be an entrepreneur and reap the financial rewards of being his own boss. After years of being at the factory, one day the opportunity presented itself. John jumped at the chance, left his job and set his plan to put his dreams in action.

John took his savings and started a small business selling jean jackets. John stated, “I mean, everybody wears them around here, what better business to start!” He opened his shop on the main street of town. Soon everybody knew about John’s shop and was stopping by to say hello. They, of course, wanted to help out the best they could so they purchased something from John. Right off the bat, the shop was doing great sales. Jean jackets were popular in Indiana since there were a lot of farmers and that is what they like to wear. Most people in the town could be seen wearing John’s jean jackets.

After a few weeks, sales suddenly slowed to a drip. After a quick analysis of the situation John suddenly realized the problem. The main reason was that jean jackets are quite durable. Once you purchase one you can wear if for quite a while before it wears out and needs replacing. Remember the population of Pine Village was only 217 so John quickly realised he needed to go outside of Pine Village and even Indiana if he wanted to seize the chance of selling more jean jackets and grow his business.

John came to the brilliant idea of sending out a flyer with a bold message saying, “I will come to see your shop, if you come and see mine.” John thought that if these shop owners came to visit they would see the quality of John’s Jean Jackets and want to buy them. John sent this out to jewellery stores, grocery stores, hobby stores, banks, lawyers offices etc. He sent the flyers out to every business he could think of.

After a few days some replys came trickling in. “Sure John, come and check out our shop and we will come and check out yours.” You see, these stores were thinking, “If John comes to visit our shop he is going to see our quality products and services and buy from us.” Soon John was spending most of his time visiting fish stores, furniture stores, gift shops etc. In return, these people came to visit John’s shop.  There was one big problem. John didn’t need any furniture or gifts so he never purchased anything from the shops that he visited.

John’s shop in return got lots of visitors from the fish guy, the bank clerk, the grocery clerk etc. However, there was another problem. None of the visitors bought anything from John’s shop. They liked it, and sometimes complimented him on it but there were no purchases. John began to get worried because in spite of the shop being so popular and having people come and go all day long, there were no sales. Eventually John did get a couple of sales from a few farmers that lived a few hours away in another county but nothing that could help sustain the business.

After a year, John’s store had thousands and thousands of followers but no sales. John didn’t purchase from anybody else because he had no money left seeing that his business was not doing well.

After wasting all his time and effort visiting other stores outside of town and entertaining those that came to visit him John eventually went into bankruptcy. The store was hugely popular but couldn’t make a dime. John ended back at the factory.

A few months later, all the guys at the factory started opening up Twitter accounts, as Twitter started to become hugely popular, so John did the same so he could stay in contact with all his pals. As he read his Twitter feed from day to day he decided to follow a few other accounts of people that he admired in addition to some news feeds that he found interesting.

Then one day a strange thing happened. John began to have a bunch of people follow him with the request that John follow them back. John shut down his computer and began to laugh. He realised his time might be better spent hanging with the local town folk.

The Hutch Report

Perfection Marketing

By | Marketing

Our digital economy along with the proliferation of social media has brought about some very powerful channels of communication. In spite of all of the benefits of these channels they have also managed to magnify a darkside.  There is a form of marketing that we like to call “Perfection Marketing.” This applies to presenting your product or service to be something that it is not, or otherwise said marketing perfection.  The whole foundation of marketing is how to take your product and present it to the consuming public in the best way possible, in the hopes they will purchase it.  Although the presentation of perfection has existed for some time, the platform of social media has expanded its reach and speed of delivery. Not only do companies fight to claim their positions of perfection, but so do many of the participants in social media.

Companies use perfection marketing strategies in various ways. One way is through “puffery.” Puffery is characterized by exaggeration and hyperbole. “The best hamburger in the world” is an example of an exagerrated claim that would not be taken seriously by any reasonable individual. Advertisers use exaggeration and hyperbole to get people’s attention and make their message memorable. Because the claims in puffery are obviously exaggerated, and because exaggeration works to get people’s attention, puffery is an accepted advertising technique. These claims are subjective and a matter of opinion, therefore, they can’t be measured, so they are not challenged. Claims such as “The Best,” “The Tastiest,” “The Freshest,” “The Fastest,” or “The Smartest,” are used freely. These superlatives project the idea of perfection. Sometimes companies may push the boundary of puffery, which leads to deception. This is illegal and can be challenged. Irregardless, the intention remains the same, to position the product or service as something much greater than it is.

“If you look for perfection, you’ll never be content.” — Leo Tolstoy

In addition to descriptions and messages, it is very apparent in illustrations and photos. Very rarely do products represent in real life what we have been lead to believe from photos in magazines. Restaurants and Cosmetics companies are probably the biggest perpetrators of this strategy.  Along with the tagline “The Perfect Cup of Coffee,” you will be presented an image of what somebody believes to be a perfect cup of coffee (and before you have even tasted it, the idea as been imprinted upon your brain). Cosmetics companies reinforce this idea of flawlesness and perfection with the publication of every beauty magazine.  So much so that in 2016, Americans spent more than 15 billion dollars on combined surgical and nonsurgical procedures for the first time ever.

Just about everything we see in the media is in some way fake: Photos of bodies, women’s, men’s or other, packs of gum, new cars, cell phones, bottles of beer, bread, apples, iPhones, everything. There is constant societal pressure to adhere to this idea of perfection. Any advertising product that appears in the media has been meticulously lit, retouched, and airbrushed. Have you EVER ordered a McDonald’s Big Mac and received anything that ever came close to resembling what you have seen in their advertisements? That hamburger does not exist; it’s a fake, idealized, made-up image of someone’s imagined idea of the perfect hamburger.

However, this manipulation seems to work, because perfection somehow lies in the human character and we tend to try and move towards it. So we get sucked into thinking we can be perfect, which unfortunately for many ends up causing great disillusionment and pain.  Social media has exacerbated this by providing a greater distribution platform and tools that allow anybody to photoshop anything, including themselves and present to the world. In addition, they use it as a weapon against others.

The idea of perfection has in fact become the image of a sad world.  The more I think about it the more I start to dislike the idea of perfection. Stop and think about what it would really mean to be perfect. The idea of perfection insinuates that there is nothing better.  There will be no more improvement or discovery. It is the best that you will ever get. It is the be-all and end-all. It is the example that everything else in its class is to be compared against.  Nothing will ever surpass it.  After all, how could you surpass perfection?  If you could, it would imply that perfection didn’t exist in the first place.  It sounds pretty sad, knowing that nothing would ever be better again than what you know now.

The truth is that perfection is essentially a myth. No one has ever seen perfection in any form, and if they think they have, it would be very difficult to prove its validity. In reality perfection can never exist. For something to be truly perfect, the whole world would have to agree on that fact and every other competitor would have to be accounted for.  I doubt you could even get everybody to agree that the sun will come up tomorrow.  There will always be someone that will disagree. We all see things differently; therefore, one person’s idea of imagined perfection would only be their own, and just that, imagined. It is therefore a MYTH.  This is the main reason companies can get away with puffery.

So what does a perfectionist even look like? To start, being defensive is a trait of perfection.  If you are criticized and you don’t like it, it is because criticism means imperfection on some level.  So you naturally defend against it. Are you obsessed with failure? Do you always focus on what is not working? Are you all or nothing? Meaning, if something doesn’t work for you then you quit it immediately. We are, in fact, conditioned to be perfect. Think about our society.  Who has ever rewarded failure? We always reward the results. We never reward the journey, the attempt to at least try something new.

The signs of this conditioning and constant manipulation are everywhere in society and are having detrimental effects. Psychologically, it is self-destructive trying to measure up to what others see as perfection.   This is particularly apparent in Woman’s magazine ads. It is all or nothing, either I look like that or I am inferior. It is not surprising that one falls into a spiral of self doubt and depression when they come to the realization of how far off they are from the mark.

Is there a way out of this downward spiral? Yes, there is. The first step is accepting the idea of perfection as a myth. We are not perfect and never will be. But rest assured, nobody else on this planet will be perfect either and it is that diversity that makes it a great place to be. Stop focusing on the ends and more on the means. Be an individual, unique from everyone else, as everyone is. Being unique is your greatest asset. Nobody else in the world is like you. Show it and use it to your advantage.

The second step is to focus on excellence rather than the idea of perfection. Excellence is the quality of being outstanding or extremely good. Someone who strives for excellence and not perfection is someone who is open and welcoming to suggestions.  A person working towards excellence enjoys the process of moving forward, including the failures that come with the journey.  They are constantly learning and getting better by way of those failures. You can always be better tomorrow than you were today. That alone is an uplifting thought. A person striving for excellence is realistic and understands what reality really looks like, including the hamburger, and they certainly don’t give up on the journey, because the journey is the greatest part of the experience that last a lifetime!

The Hutch Report

The Rational Price

By | Marketing, Psychology

Price is all around us and our contemporary society has managed to come up with a myriad of ways to refer to price over the years.  You pay rent for your apartment, a tuition for your education or a fee for your dentist. Airlines, railways, taxis and bus companies all charge you a fare. Local utilitiy companies talk about the rate they charge you and your bank will charge you interest for the money you borrow. The price for taking your car on to the ferry or the price you have to pay to use a highway or a bridge is called a toll. The company that insures your car will charge you a premium. Clubs or societies to which you belong may make a special assessment to pay unusual expenses. Your lawyer will ask you for a retainer to cover his/her services. The price of an management executive is considered a salary, unless you are a salesman, then it may be a commission. A worker will recieve a wage. Finally, income taxes are what we pay for the right to earn money, hence the name tax on income, (although an economist would probably disagree).

Everything that we pay a price for has some kind of utility, or something that will be useful to us. The importance, worth, or usefulness of that something is also considered value (the terms utility and value and used differently among economist so to simplify things I will just refer to value). The price of something is a mechanism that allows us as consumers to make a decision.

Price is probably the most influencing factor for buying because consumers are rational. What makes them rational is the fact that they have limited income as well as a limited budget. An irrational consumer that spends beyond his or her means are quickly pushed into insolvency. Although there are an increasing amount, it can be agreed that the majority still act in a rational manner.

Making a decision on price, however, is not always the easiest thing to do for consumers. Price is not only the amount that customers pay for utilizing a product or having a service. There are a number of psychological factors that impact how they feel.

Companies can sustain themselves in the market if and only if they can make a profit, which totally depends on price. When a company is going to determine the price of a product or service they need to first understand their cost of the product/service offered. No company that prices a product for $5 but cost $10 to produce can survive for long. They need also to think about the rationality of pricing; that might include the product’s quality, availability of the alternatives in the market, types of products and the category of entry into the market. A company’s pricing determination can be incredibly complex and not in the scope of this article.

We want to look at what a consumer is confronted with when making a purchasing decision and how they can improve their ability to make the best decisions with the information available to them. Dan Ariely described how what may seem a simple purchasing decision, is not always so simple for the consumer to make.

“Consider the following situation as an example: You are thirsty, tired, and annoyed and just want a cup of coffee. You see two coffee shops across the street from each another. One is a specialty coffee shop that sells handcrafted, designer coffee and the other is Dunkin’ Donuts which sells standard, decent coffee. The price difference between the two options is $1.75 for your cup-a-joe. Now, how do you decide if the benefit of the handcrafted coffee drink is worth the additional $1.75? What you should do (if you wanted to be rational about it) is consider all of the things that you could buy with that $1.75, now as well as in the future, and decide to buy the expensive coffee only if the difference between the two coffees is more valuable than all of those other possibilities. But of course this computation would take hours, it is incredibly complex, and who even knows all the possible options to consider?”

So what does one do to make the decision? Dan Ariely states that in place of making decisions “correctly” we adopt simple rules or what academics call “heuristics” (heuristics are simple, efficient rules, learned or hard-coded by evolutionary processes, that have been proposed to explain how people make decisions, come to judgments, and solve problems typically when facing complex problems or incomplete information.) Simply put, we will decide what we have always decided. If you have purchased designer coffee in the past and have been content to pay the additional price then you may well do it again, whereby it becomes a habit. However, if your financial situation changes then your purchasing habits will most likely change. It may become a better option to go for the Dunkin` Donut’s coffee and pay a bit less.

By examining these habits, and quitting them when it makes sense to do so, we might actually discover ways in which we could reduce our spending on a long-term basis. Or more to the point, we may discover where we are paying more for less value received or paying less for more value received.

In addition to analysing your current purchasing habits in this way you may want to do some deeper research and discover your true motives for purchasing a service or product in order to establish some better buying habits from this point on.

We make our purchase decisions from a rational point of view or an emotional point of view. However, Professor Baba Shiv of the Graduate School of Stanford Business points out that 90 to 95% of our decisions are made by our emotional brain, even if we think we are being rational the emotional side will always win out. (Clotaire Rapaille goes deeper into this analysis in his brilliant book, “The Culture Code.”)

Below are a few examples of rational purchasing decsions vs. emotional purchasing decisions. You also have to keep in mind that your decisions may be based on a combination of both. However, when you are analyzing the emotional side, it is much more difficult to quantify the value. Companies understand this so they often market to your emotional side. This is why they pay athletes and celebrities millions of dollars to represent their brands. If I purchase a Nike product then it means emotionally I may be in the same class as Roger Federer, but how can I possibly value that emotion? I may have paid $40 too much!!

The price you pay for any product/service all comes down to the individual’s choice. Take a bit of extra time during your next purchase, regardless of the price, and try and discover your true motivation for making the purchase, and if emotional, what value does that mean to you. You may discover something new!

The Hutch Report

Faulty Marketing Strategies – Follow You, Follow Me!

By | Marketing, Technology

Follow You, Follow Me

This phrase used to have impact as the title of a classic Genesis song, but it has morphed into something much more banal since the advent of social media.

It has now become a marketing strategy that has no real influence and no real purpose, aside from stroking the human ego, yet many in Twitter and elsewhere have adopted it. These kinds of people are easy to find on Twitter. They have 15,000 followers and are usually following about 15,000 (just to name a number). Here is a clip from a blogger’s post on their strategy for gaining more followers on Twitter:

After about three days to give people a chance to follow me back, I go back and unfollow people who have not chosen to follow me – remember the goal of all this is to have a large, engaged following. So: If you have been followed by me you have something interesting in your profile or recent tweet. If you follow me I will continue to follow you. If you don’t follow me I will unfollow you after about three days. 

Unfortunately the title of this blog post was not “My strategy of contradictions,” or “Proof that I know nothing about marketing.”

Firstly, the author says his goal is to have a large “engaged” following. To have an engaged following means that people have followed you because they have found that you have something interesting to communicate. Something that fills a need. You are providing value to them in a way that others are not. Having people follow you just because you have followed them is far from the notion of being engaged.

Just for discussion sake, we could argue that there is an element of exchange, which is the foundation of marketing, whereby one side gets a new follow and the other side recieves a new follow. The big difference here is that in this type of situation there is no production surplus. If you are a plumber and I am an electrician, I will turn on your lights for you if you will install my toilet. We have exchanged our expertise returning value to both of us. Follow you, follow me can be equated to you put in my toilet and I will put in your toilet.

The author writes, “So, if you have been followed by me you have someting interesting in your profile or recent tweet,” and even though he says he has found something interesting, he promises to unfollow that person if they do not recipricate. Translation: In the end, I really don’t care who you are or what you have to say, if you don’t follow me back you are worthless to me. Another interesting thing about the post in question is that the author is talking about a Twitter marketing strategy yet he does not even think to post his Twitter handle in the article so that he may get a few more follows!

So, if I am only concerned that you follow me because I follow you then where is the value proposition? This is like a consumer going into a pen shop to sell the owner a pen. Is it not a contradiction to say that “I have followed you because I found a recent tweet interesting,” yet I am going to unfollow you because you didn’t do what I wanted?”

All organizations and people must create utility if they are to survive. The design and marketing of want-satisfying products, services, and ideas is the foundation for the creation of utility. So, what is utility? Utility is “the state or quality of being useful; usefulness,” something useful; a useful thing. The word has a long history and goes back to its latin roots from the word “Utilis.” Therefore, a properly oriented marketing system will provide utility that reflects consumer and societal needs.

Instead of “expecting” somebody to follow you back just because you followed them, you shoud be asking yourself the question “what value am I providing to this person?” Are they even your target market? This is where robots fail, because many people will do a search of key words and phrases to identify people on Twitter to follow, yet these descriptions don’t describe in any way what the real needs of this person are. To discover this requires more reserach and a greater level of effort on behalf of the curator.

Follow you, follow me is not a marketing strategy, it is a great classic song by Genesis!