978-0134292663 Chapter 5 Solution Manual

Chapter 5: Marketing Analytics: Welcome to the Era of Big Data!

Chapter Questions and Activities

CONCEPTS: TEST YOUR KNOWLEDGE

5-1 What is CRM? How do firms practice CRM?

Customer Relationship Management are programs that allow companies to talk to the

individual customers and adjust elements of their marketing programs in light of how each

customer reacts to elements of the marketing mix. Firms practice CRM by communicating

with customers and customers being able to communicate with the company one-to-one.

5-2 Explain the concepts of share of customer, lifetime value of a customer, customer equity, and

customer prioritization.

5-3 How would you describe Big Data? What are some of the most significant sources of

competitive advantage that Big Data offers?

Chapter 5: Marketing Analytics: Welcome to the Era of Big Data!

Big Data is the popular term to describe the exponential growth of data—both structured and

unstructured—in massive amounts that are hard or impossible to process using traditional

database techniques.

5-4 Describe the various sources of Big Data for marketers.

The millions of pieces of information that make up Big Data originate from both direct and

indirect paths. Big Data can come from many sources within and outside of the organization

and created and compiled from different groups:

 Corporate information technology sources

Government and nongovernmental organization sources

Commercial entity sources

Partner database sources

5-5 What is data mining? For marketers, what are some of the most important applications?

Chapter 5: Marketing Analytics: Welcome to the Era of Big Data!

5-6 What is the difference between structured and unstructured data? What are some examples

of each?

5-7 What are marketing analytics, and what kinds of insights are enabled by today’s marketing

analytics solutions? What are predictive analytics?

5-8 What is the difference between purchasing digital advertisements with a cost-per-impression

structure versus a cost-per-click structure? Is one better than the other?

5-9 Define marketing metrics. How can marketing metrics help marketers understand the

performance of different marketing initiatives and provide greater control?

Chapter 5: Marketing Analytics: Welcome to the Era of Big Data!

5.10 What is a click-through rate, and how is it calculated?

5-11 What is a conversion? What are some examples of conversions on an e-commerce website?

5-12 What is a cost-per-order? What kind of information do marketers gain from this

ACTIVITIES: APPLY WHAT YOU’VE LEARNED

5-13 Further Research (Individual) For this assignment you are going to act as a manual

version of a software program that conducts sentiment analysis. Select a sample of

comments (between three and five that do not contain any explicit words or expressions)

created by users in response to a specific brand’s post on Facebook page. Copy the

comments down and categorize the sentiment within each comment as “positive,”

“negative,” or “neutral.”

Include what specific elements of each comment most clearly support your categorization

of it (e.g., use of punctuation, context, inclusion of specific words, use of slang). What

Chapter 5: Marketing Analytics: Welcome to the Era of Big Data!

insights should a marketing manager responsible for the related brand take away from these

comments?

5-14 Creative Homework/Short Project Imagine that you are building your own e-commerce

site. Having a keen understanding of the importance of defining and putting in place a set

of conversions and metrics in advance of launching the site, you have incorporated the

definitions and development of specific conversions for tracking into the planning of the

website. List which actions on the site would indicate a conversion for tracking purposes

and how they would align with the goals of your business. Since this is your website, feel

free to assume the inclusion of any sorts of features or elements (conventional or

unconventional) that you believe would be valuable in terms of the website’s look and feel

that would enable better tracking and analysis of marketing performance.

5-15 Creative Homework/Short Project Consider that you are in charge of all paid search

advertising through Google for your company. One of your colleagues is in charge of

Instagram advertising. Your boss is in the process of putting together the marketing budget

and has asked you to weigh in on how much should be allotted for Facebook advertising. He

tells you that he feels that the organization’s funds would be better put toward increasing

spending on Instagram as opposed to Google paid search advertisements. He says, “Pictures

on Instagram are just more compelling than little blocks of text in a search engine’s results.”

You couldn’t agree less with that sentiment, and you have the data to back it up.

a. How would you go about making the argument that Google paid search

advertisements should receive more of the marketing budget compared to

Instagram advertisements? What factors in your boss’s statement above are

potentially not taking this into consideration?

b. What metrics would you use to help make your case, and how would you

explain their relevance and importance?

5-16 In Class, 10–25 Minutes for Teams As an admissions manager for a college or university,

Chapter 5: Marketing Analytics: Welcome to the Era of Big Data!

you are interested in exploring the use of predictive analytics within the admissions

process to bring in students with a higher likelihood of graduating from the school and

achieving greater levels of success both during and after their studies. With another

student who is acting as your boss the admissions director, discuss the specific reasons that

predictive analytics might be of value to making admissions decisions on students. Be sure

to discuss any areas where you might need to proceed with caution.

APPLY MARKETING METRICS

In the chapter discussion about CRM, you read about four key characteristics of CRM: share

of customer, lifetime value of a customer, customer equity, and customer prioritization. Each

of these elements is discussed in the context of monitoring and assessing the effectiveness of a

CRM initiative. Consider JC Penney’s loyalty program, JCP Rewards. Go to their website

www.jcprewards.com and review the information about their reward program.

5-17 In what ways could JC Penney expect to measure the four elements of CRM above within the

context of a reward program such as this?

The chapter provides the following information regarding the four key CRM characteristics:

5-18 How would data be collected for each element, and how might management at JC

Penney utilize that data to provide loyal customers with a very strong relationship with the

firm?

Chapter 5: Marketing Analytics: Welcome to the Era of Big Data!

Customer equity: JC Penny must compare the investments they make to acquire

Customer prioritization: JC Penny can use CRM systems to generate a profile of each

CHOICES: WHAT DO YOU THINK?

5-19 Ethics CRM relies on data collected from customers to create customized or one-to-one

experiences for those customers. Data are collected at various touchpoints—places in

which the customer interfaces with the firm to provide information, such as at a checkout

lane, on the phone, on the website, and so on. Do firms have an obligation to explain to

customers that they are collecting information from them to populate and drive their CRM

initiative, or is it inherently obvious in today’s world that such practices are routine? In

general, what is your personal viewpoint of database-driven positioning strategies? What

are the potential pros and cons to the company and to the customer?

5-20 Critical Thinking Are there any potential challenges that could arise related to the use of

customer lifetime value (CLV) as a means of determining the allocation of resources to

current or potential customer groups? If so, what might these challenges be?

This question would make a good small-group exercise. Students could present the pros

and cons of CLV as a means of allocation of resources.

5-21 Ethics The Internet of Things means the increased proliferation of devices that are

connected to the Internet and that in turn can be connected to each other. While there are a

number of benefits to this level of connectivity for both society and businesses, there are

also a number of risks and ethical issues. What are some of the risks and ethical issues that

stem from this? Do the benefits outweigh the costs? What physical objects would you

consider not allowing to be connected through the Internet, and why?

Chapter 5: Marketing Analytics: Welcome to the Era of Big Data!

MyMarketingLab for answers to Assisted Graded Questions.

5-22 Ethics Many technology applications (such as social media platforms) are able to remain

free in part because they are able to monetize the data of those individuals who use the

technologies. Do you believe that there is a limit to what these companies should be

allowed to do with the data that they collect? If so, what specific uses of data should be off

limits?

Students can have a lively debate on privacy issues raised by the use of data.

5-23 Critical Thinking Spending on digital marketing has trended upward in recent years,

and with so many individuals using the Internet for extended periods of time, it is easy to

understand why. In some cases, some organizations spend more than half of their budget on

digital marketing. How do you think they justify committing more than half of their budget

to marketing to digital efforts? Do you believe that more companies should invest primarily

in digital marketing? What groups or factors would indicate to you that digital marketing

does not make sense as an investment?

MyMarketingLab for answers to Assisted Graded Questions.

5-24 Critical Thinking A study conducted by Adobe found that 77 percent of marketers surveyed

believe that data on customer purchase histories can improve marketing performance, yet

only 21 percent actually use it. Similarly, 88 percent believe that behavioral data can have a

similar impact, but only 20 percent use it. These statistics highlight a contradiction between

the perception of marketing analytics’ value and the actual frequency of execution of

marketing analytics. Why do you think this is? If you were in charge of implementing

marketing analytics into an organization, what hurdles would you expect to encounter and

from whom, and how would you overcome them?

5-25 Critical Thinking if a company of which you are a customer suffered a data breach (in

which some of the data customers created or shared by customers with the company were

compromised), would your perceptions of that company change and if so, why? Would it

matter what type of data was compromised? Are there other factors that would lessen or

heighten your view of the severity of the event? If so, what might they include?

Using the Internet, students can find current examples of data breaches. Examples might

include WikiLeaks, files from the Democratic Party, and Wells Fargo. Having researched

Chapter 5: Marketing Analytics: Welcome to the Era of Big Data!

current data breaches, students can discuss the questions above.

5-26 Ethics Do you believe it is right for companies to target a higher (or lower) cost service to

typically associated with a willingness to spend more (or less) money on the related

vice? Does this constitute a form of discrimination that would make you uncomfortable

a marketer who is exploring the possibility of employing this strategy? What about if you

were the consumer on the receiving end of it?

Whether intentionally or not, some marketers do violate their bond of trust with consumers,

and unfortunately the “dark side” of marketing often is the subject of harsh criticism. In

the context of this question, students can review Chapter 1, p. 22—the dark side of

marketing.

MINI-PROJECT: LEARNING BY DOING

Different types of businesses use different approaches to engaging with both current and

potential consumers online. A company’s website is usually a key source of information for

potential and current customers. The purpose of this project is to gain a deeper understanding

of how marketing analytics can be implemented in order to gain greater insights into and

enable more effective control of marketing efforts.

a. Select three company websites. These should include one ecommerce site (e.g., Amazon),

one consulting company (e.g., IBM), and one consumer packaged goods company (e.g.,

Tide).

b. For each company’s website, list what you believe the objectives of the organization are

as communicated through the website and identify specific conversion actions on the

website that would most closely align with these goals. For example, customer

acquisition might be supported and ultimately achieved by getting users to sign up for an

e-mail newsletter, which would be defined as a conversion action.

5-27 Rank the conversion actions in order of importance and include an explanation of why

you have ordered them as such. Identify whether they are short-term oriented as they relate to

the organization’s objectives or long term-oriented (or, in some cases, both) and why.

Answers will vary in terms of ranking conversion actions:

Chapter 5: Marketing Analytics: Welcome to the Era of Big Data!

5-28 If you could choose only two marketing metrics (remember metrics, not conversions) to track

for each of these websites, identify which two you would select for each website and explain

why.

Answers will vary.

Share of customer: the percentage of an individual customer’s purchase of a product that

Lifetime value of a customer: the potential profit a single customer’s purchase of a

5-29 Some of the websites visited should have a request-for-information form on them. Often,

this is one of the ways that marketers begin to collect information on a customer to place

within their CRM system. Locate this form and identify what information it is asking for.

Write down the different potential uses of this information for the organization and in what

ways it might be used by marketers to further engage with the customer. What are some

creative ways that you would recommend leveraging these data for each website analyzed in

terms of future communications?

Using the Internet, students can gather information from websites and identify the

information being sought. They can offer creative ways to use the data for each website.

V. MARKETING IN ACTION CASE: REAL CHOICES AT

NOVARTIS

Summary of Case

Novartis wants to collect information in the cloud whenever someone uses its Breezhaler inhaler.

The company has entered into an agreement with Qualcomm Life, Inc. to create an inhaler with

Internet connectivity that will transmit information when patients use the Breezhaler. The device

delivers chronic obstructive pulmonary disease (COPD) treatments. The companies will be able

to accumulate data concerning the user’s medical condition, the efficacy of the drug, and the

Chapter 5: Marketing Analytics: Welcome to the Era of Big Data!

device itself from a huge number of patients. The collaboration may lead to broad healthcare

benefits, but patient confidentiality will be an important issue. When patients use the product, it

will send tracking information on their smartphones or tablets. Patient statistics transmit

wirelessly to a Novartis COPD mobile application, which then transmits the data to the cloud.

Despite the potential benefits, the collection of large amounts of patient data comes with

significant risk. This data creates an attractive opportunity for criminals to steal information.

Stolen medical data is handy to create fake IDs, buy medical equipment, or acquire drugs. In

addition, the criminals who hack the information systems can use the data to threaten the lives of

patients and blackmail the manufacturer.

Suggestions for Presentation

This case could be assigned for various online or in-class discussion activities.

Online

Research Novartis via their website. Identify their current strategy and describe how they have

implemented it.

Evaluate if there are expansion opportunities for the pharmaceutical market.

In-Class

Companies with competing interests in this market include Pfizer and Medtronic. Evaluate each

of their strengths and weaknesses.

Discuss how a CRM program could help retain customers.

Conduct a brainstorming session to identify the key characteristics of potential customers that

would use the Breezhaler.

You Make the Call

5-30 What is the decision facing Novartis?

5-31 What factors are important in understanding this decision situation?

Chapter 5: Marketing Analytics: Welcome to the Era of Big Data!

5-32 What are the alternatives?

Students might recommend a variety of different marketing strategies. Some possibilities

are:

5-33 What decision(s) do you recommend?

5-34 What are some ways to implement your recommendation?

MY MARKETING LAB

Go to mymktlab.com for Auto-graded writing questions as well as the following

Assisted-graded writing questions:

5-35 Creative Homework/Short Project. Assume that a firm hires you as marketing manager for a

chain of retail bookstores. You believe that the firm should develop a CRM strategy. Outline

the steps you would take in developing that strategy.

5-36 Creative Homework/Short Project. Your boss has been hearing about the importance of Big

Data and data mining to marketers. Write a memo to your boss that describes the various

applications that data mining has for marketers in order to convince him that the company should

explore this topic.