TRC

Rice / TRC 2009 Conference Summary

On April 3rd, Rice Univ ersity’ Jones School Marketing Club and marketing faculty hosted the “Understanding Customers, Enhancing Profits” symposium in collaboration with TRC and AMA Houston. The partnership encouraged local marketing professionals, MBA students and faculty to exchange ideas and explore cutting-edge research in the industry.

Session 1: Database Marketing for Enhanced Customer Insights
Professor Seethu Seetharaman, Rice University

Seethu spoke about the evolution of database marketing and the importance of using available database variables for marketing. Specific examples were used to show how database marketing has changed over the last few decades. Early efforts were aimed at simply identifying high revenue customers, while later efforts have taken a more comprehensive view. In particular, scanner basket data collected by Nielsen provides specific opportunities such as identifying complementarities between products in order to help retailers. Using database analysis large companies like Amazon can perform like mom and pop outlets by offering customized products. The conclusion was that rich information is available in company databases and not utilizing it will lead to sub-optimal performance. Seethu also recommended two books for those interested in improving brand equity.

Session 2: Understanding Consumer Preferences – What Works, What Doesn’t
Rajan Sambandam, Chief Research Officer, TRC

Several techniques for understanding consumer preferences were presented by Rajan. They varied from very straightforward ones like Importance scales to much more complex ones like conjoint analysis. The discussion focused on the high usage of importance scales and why that is not prudent. Several comparative methods that perform better than importance scales were discussed with examples. Among the less common methods discussed were Max-Diff and Kano. The usefulness of conjoint in studying whole product preference and brand equity was explained with examples. Rajan reiterated the point that several methods are available for measuring consumer preferences and fixating on importance scales can lead to lower quality data. Comparative methods can provide especially good information.

Session 3: Marketing Research 2.0
Professor Paul Dholakia, Rice University

In a session filled with examples, Paul drew an analogy between Web 1.0 – 2.0 and Marketing Research 1.0 – 2.0. He traced the evolution of the web from a static information filled interface to a social network-oriented second generation, where the emphasis is on connections between people and the joint and equal participation of consumers and producers. Similarly, he theorized, marketing research was evolving from a static first generation to a more dynamic and interactive second generation. Paul provided some examples that showed that the carrots and sticks approach to marketing was failing and needed to be replaced by a more intelligent approach to devising incentives. There was general agreement that new ways of firm-customer interaction were indeed opening up, but considerable uncertainty reigned about how to actually tap into it in a practically useful manner.

Session 4: Maximizing Customer Lifetime Value
Professor Siddharth Singh, Rice University

Customers have value for firms beyond today. How to measure that properly in order to identify those with the best long term value was the subject of this discussion. Siddharth traced the origin of CLV modeling to simple backward looking approaches of the past that relied on measures such as tenure and dollar spending and explained their deficiencies. He introduced the idea of forward looking models, and using his own research showed how such an approach can provide significantly better models compared to state of the art approaches. Some of the current issues in CLV modeling that he discussed were inclusion of acquisition costs and network effects such as word of mouth. The more carefully one models the factors involved in CLV the more one is able to accurately identify the customers who provide the most long term value for the firm.