teachthe4ps.com - For instructors of marketing.

The business side of online games is quite fascinating.  In our text book, the segmentation chapter opens with a case highlighting how Nintendo grew the gaming market by designing products for new gamers.  The easy-to-use Nintendo DS hand-held and the Wii console targeted girls and senior citizens with easy to learn, fun games.  Zynga did Nintendo one better when it developed online games for Facebook.  Its FarmVille soared in popularity with 10% of all Facebook users growing virtual crops online.

This example is a bit complicated, but it demonstrates a number of important marketing concepts:

• Price and the freemium business model.  Freemium refers to a business model where most customers use a product for free, while a few power users cover costs.  More than 95% of Zynga’s 150 million monthly visitors pay nothing to play its games.  The other 5% pay hundreds and even thousands a year for virtual products that enhance their gaming experience.  For example, $5 might get you a chicken in FarmVille, a skyscraper in CityVille, or an anglerfish in FishVille.  Of course they love to sell these low cost virtual products…
• Fixed and variable costs.  There are minimal fixed costs for creating a new anglerfish, but the variable cost of producing hundreds of thousands of them is very small.  Almost no variable cost.Segmentation and targeting.  In this post at TechCruch (“Who Spends The Most Money In Freemium Games?” September 8, 2011), you can see by age group, who uses mobile freemium games — and who “spends”.  Not surprisingly, while more than half of users are under age 24 — this younger market contributes just 21% of the spending.  Consequently, most of the action in online games targets an older demographic.  And of course a little analytics can identify what products encourage spending…
• Marketing research.   In “Virtual Products, Real Profits,” (Wall Street Journal, September 9, 2011, non-subscribers click here), Zynga’s president of data-analytics says, “We’re an analytics company masquerading as a games company.”  Zynga analyzes game player behavior and adapts the game to get players to play longer or spend more.  For example, after finding that FishVille players bought the translucent anglerfish much more often than other sea creatures, they created more variations on the anglerfish.

I don’t play these games — but I have Facebook friends who love them.  Some of your students might relate to these examples.  Also posted at Learn the 4 Ps.

That (see title) is the goal of neuromarketing research firms.  These market research providers use MRIs and EEGs to check out how your brain responds to various stimuli — like different olive oil labels.   The research firm NeuroFocus claims to see things consumers don’t even know about themselves.  For example, did you know that snackers “enjoy” a “sense of giddy subversion” when they have that orange dust from Cheetos on our fingers?  I didn’t know that either.   NeuroFocus looked at how women responded to Baked Lays — and the results influenced the subsequent advertising campaign and the introduction of single-serving packages.

The article, “NeuroFocus Uses Neuromarketing To Hack Your Brain” (Fast Company, August 8, 2011) is very long, but it includes lots of details and examples.  The article mostly advocates the practice — though a few critics are quoted.  I don’t think there is a lot of empirical evidence supporting (or refuting) its reliability and validity as a research method.  Time will tell — in the meantime, it is interesting.  For a related story, see a T4Ps previous post “New Product Development — For Pop Songs?“

Many U.S. grocer stores use multi-unit price promotions — for example, 4 12-packs of any Coca Cola product for $12.  This article, “At Stores, Making 5 for $5 a Bigger Draw Than 1 for $1” (New York Times, July 17, 2011) describes the practice with a variety of good examples and some interviews with managers.  While most stores allow consumers to buy fewer items at the fractional price (one 12 pack of Coke for $3 in the previous example), the promotions typically encourage consumers to stock up.  So it provides an example of how marketers can influence consumer behavior.

I also found it interesting how much retailers monitor and tweak the strategy — looking very closely at which combinations bump sales the most.  That provides a different type of example of marketing research and consumer behavior — and of course this example can also be used in pricing or sales promotion.

This might be a fun comic to show when you cover marketing research — or cross-functional interaction.  Remember, to bring this into your classroom, you can place your cursor over the strip, right click – “copy image”, and then “paste” it into your PowerPoint.

Brain researchers at Emory University have found that brain scans can help predict the future success of new music.  Oh what is the world coming to?  This would be fun to show as an example of market research or new product development.  It might be fun to ask students what they think of the approach?  The article “Songs Stick in Teens’ Heads” (Wall Street Journal, June 13, 2011, non-subscribers click here) and companion video should be of interest to our student — many of whom have an interest (if only as consumers) in the music industry. We have also posted this over at Learn the 4 Ps.

We have previously posted about Ace Metrix’s method for measuring advertising.  Sometimes it is nice to show students ads that score well on some objective measurement criteria (see the Ace score components here)– then use the example as a segue to a discuss the challenges of measuring advertising.  That connection could be made using Google’s recent “Dear Sophie” ad (1:32) when you talk about market research or advertising.

Social media is getting less confusing.  Best practices are emerging.  Marketing managers are better understanding how which marketing objectives might be best addressed with social media.  This article, “Are You Talking to Me?” (Wall Street Journal, April 25, 2011, non-subscribers click here) suggests five best practices used by companies with some success in social media.  Many of the lessons come from “listening” closely to customers via social media.  The early heavy users of social media are listening, learning, and adapting.  Anyway, the article has some good examples of using Facebook and Twitter that you can bring to a class discussion about Promotion, social media, and market research.  Also posted at Learn the 4 Ps.

Here is a great case study.  This article provides the basis for a nice story to tell in class or reading to assign.  What happens when the company that holds 40% of the carrot market brings in a former Coca Cola marketer to run the company?  Well, he conducts research and then brings on big name ad agency Crispin Porter + Bogusky.  Together they go after new ways to increase our consumption of the orange veggie — and not promoting its healthiness.   An interesting marketing tale is told in “How Carrots Became the New Junk Food” (Fast Company, March 22, 2011).  And the story is still being written — we don’t yet know if this strategy will work and sell more carrots.

The article will allow you to talk about consumer behavior, market research, positioning, branding, packaging, promotion, and advertising.  Good stuff — and a fun example, too.  Also posted at Learn the 4 Ps.

Here at T4Ps, we are always looking for interesting B2B cases.  Unfortunately, they are much less common than B2C.   But here is a good article “Deere Enhances Focus on Russia” (Wall Street Journal, March 25, 2011 — non-subscribers click here) featuring one of our favorite companies Deere.  We feature Deere in the opening case scenario in our chapter on Business and Organizational Customers in our text books.  Deere’s stretch goal of doubling sales in the next 8 years will not happen in the slow growth construction and farm equipment markets in North America.  So Deere needs to look at international opportunities.  This is not unlike the situation many of our students will likely be facing in the coming years.  It provides a nice opportunity to discuss the challenges and opportunities in international markets.

The article is light on details related to the competition in Russia — or the needs of the Russian customer.  Russia is also a risky market.  So you could ask students what kind of marketing research they might want to have before developing a marketing strategy.  Combining this article with some student research at Michigan State’s great globalEDGE website might be a nice assignment.  Also posted at Learn the 4 Ps.

One of our favorite companies here at T4Ps is Zappos.  We also feature them in our text book.  The online retailer is always innovating.  Now they are using their own employees in online videos — they have produced 58,000 short videos of employees (not professional models) showing off its shoes and other apparel.  The use of employees can build trust — and seeing someone actually using a product can increase its appeal. Zappos also conducted an experiment – showing the same products with and without a video.  They found sales averaged 10% higher when a video accompanied the item.  Check out “A New Sales Model:  Employees” (Wall Street Journal, March 17, 2011 – non-subscribers may have to click here).

This example would be helpful when talking about marketing research, retail, or promotion.  Also posted at Learn the 4 Ps.