It isn’t only Google and Facebook that tracks customers for advertising purposes…

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Online music streaming service Spotify believes that it can someday become one of the advertising powerhouses. But like its rivals in the advertising business, Google and Facebook, the company needs to collect and analyze lots of data on its customers. Spotify knows more than just what its customers are listening to, it also knows what they are doing and what you are going through.

The Spotify app can gather data from customers’ phones’ including accelerometer, gyroscope, and location data. This might be analyzed to find out if and when a customer works out or walks their dog.

And “Spotify (also) knows that you started playing Lizzo’s “Truth Hurts” at 23:03, listened to it for one minute, then searched for “break up” and listened to the entire four hours and 52 minutes of the “ANGRY BREAKUP PLAYLIST” without any pauses. Spotify might know to serve this listener ads about ice cream or (maybe a few weeks later) ads for online dating services.

Right now, Spotify is investing a lot in data science to figure out what all that data it collects can be used for. Privacy? Read more in “All the Ways Spotify Tracks You – and How to Stop It,” Wired.

Why is Panera selling coffee subscriptions for $9 a month?

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This short article in Fast Company (February 27, 2020) describes a new business model being used by Panera, “Panera debuts $9/month unlimited coffee and tea subscription.” While short, the article offers an interesting example that can be applied across many topics:

  • Customer lifetime value and customer equity (Chapter 2) — Panera found that subscription customers visited the stores 3 times as often and purchased 70% more add-on items.
  • Subscription pricing model (Chapter 17) — Our new edition of Essentials of Marketing delves a bit more deeply into subscription pricing as many products now utilize the business model.
  • Marketing research (Chapter 7) — the article describes some of the findings from a test market Panera used before launching the new subscription pricing model.

Internet of Things: Comfort vs Privacy in a Connected World

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The Internet of Things (IOT), which we cover in one of our What’s Next? boxes (see Chapter 8) offers some promising consumer benefits. IOT connects devices (your sprinkler system, coffee pot, thermostat, and more) to the Internet. From there, the devices get smart — so for example, your sprinkler system sees there is a 90% chance of rain today and so it doesn’t water the lawn for the next three days. Yet there are tradeoffs as consumers lose privacy. This short (less than 3 minute) Bloomberg video can be assigned to students or shown in class to stimulate discussion. It might work well with Chapter 8 as you discuss Product or in Chapters 7 or 19 where we dig more deeply into privacy.

Jeff Bezos: ‘Market Research Doesn’t Help’

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Yahoo Finance recently ran the article titled “Jeff Bezos: ‘Market Research Doesn’t Help“.  The catchy title makes it look like Bezos doesn’t believe in the value of market research but that’s not actually what he’s saying.  Bezos’s claim is that market research isn’t always the best source for innovative product design.  When talking about the development of the Amazon Echo family of devices, Bezos said, “If you had gone to a customer in 2013 and said ‘Would you like a black, always-on cylinder in your kitchen about the size of a Pringles can that you can talk to and ask questions, that also turns on your lights and plays music?’ I guarantee you they’d have looked at you strangely and said ‘No, thank you.’”

The article is a short one but it’s point is well taken.  Consumers are generally great improvers but terrible innovators.  If Apple had asked cell phone users in 2007 what they wanted to see in a new phone design they would have described something very similar to the existing models from RIM, Nokia, and others.  Nobody would have suggested a device lets you make calls but also lets you fling brightly colored birds into a pig-infested structure.  With that understanding, ask your students why bother with market research if consumers aren’t good at innovating?  Maybe it’s product research that’s not valid but other forms of market research have value?  Could product research still have value given the issues mentioned?  The answer is yes and it depends a great deal on the process.  Rather than ask people what they want or need, good product researchers will study how people use existing products, what problems they experience, and what opportunities are yet to be addressed.

Utilizing Marketing Personas

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Marketers have a challenging job.  We have to develop goods and services and then communicate the benefits and awareness of those products to a diverse customer base.  We use tools like segmentation and target marketing to help narrow our focus but ultimately we have to wrestle with the fact that no two customers are identical and if we segment too much we run into diminishing marginal returns.  This is also a challenge when conducting research to learn about the needs and motivations of potential customers.  The use of personas is a common way of trying to personify our target segments but challenges and pitfalls still exist.  This Marketoonist cartoon and the associated article talks about the author’s experience working with a client who was drowning in customer data and unsure how to use that data effectively.  The persona creation process ultimately gave them the clarity they needed.  The article includes some additional great persona cartoons as well.