Week 12: Social Media

We have reached the end of the marketing course and this will be my last post of this quarter. This is my first educational experience in marketing and I really enjoy it. This course has been very fun and enlightening to get a good foundation on marketing. The course is so well aligned in every way. Looking through my learning journal and the marketing plan we have worked together throughout this course, I am proud of what we have accomplished within such a short period.  Thank you for a great quarter!

Marketing is all about creating, communicating, delivering, and exchanging offerings that provide value. This final week completes the marketing course with idea that effective marketing requires constant innovation – everyday is day one! We study the role of emerging technology for marketing communications such as social media.

We begin this course with Zappos, the company that prospers from effective marketing. Let me complete this journal with the same company. Zappos is known for the enormous emphasis it puts on creating real relationships with the customers. I think the messages that Zappos uses in Social media gives a good example of those that work best. “Let’s be in a Like-Like relationship” is not only enticing but also shows a great strategic mind behind it. Their catchy message encourages users to “Like” their page. Once users opt in, Zappos then asks them to join mailing list and interact with other activities. This emphasizes Zappos’ reputation of the customers first while enabling Zappos to learn about their customers.

Zappos “Fan of the Week” contest is also one of my favorites. I think it gives a great example of social media marketing strategy. Social media marketing is about drawing people in and keeping them engaged. “Fan of the Week” contest encourages Zappos fans to send out their photos with the Zappos box and other fans get to vote on the best photo of the week. The more Zappos spotlights its fans on the social media, the more the fans will engage and come back for more – a great way to build relationship and gain repeat customers.

Another effective use of social media I like is Ford’s. During my work on the marketing plan, I have researched how automotive competitors are communicating with our target audience. All competitors use social media marketing and they have attractive website and interactive communications. Of those automotive companies, Ford impresses me most. It focuses on creating the social experience – which I think is the crucial element for competitive advantage in today’s social media world. “Share the love, grab a badge” is a catchy social media message for their “Ford Social”. Ford’s blog, “The Ford Story” is a great way to keep customers interaction and enable Ford to involve its fans and customers into the company growth.

Ford also leverages social media for their new vehicle launches. It successfully generates sustainable buzz using the element of surprise and focusing on customer interaction. Ford makes its 2011 Ford Explorer Facebook page launch an event in itself. Ford actually focused on generating initial buzz for its Facebook page than for the vehicle itself. (See http://www.headlightblog.com/2010/09/bentley-tries-its-hand-at-digitally-revealing-its-redesigned-continental-gt/)

My company does not use social media. Currently the majority of our customers are our owners, and they do not encourage much of the marketing communication effort.

I don’t think that social media will make other marketing communication forms obsolete. It definitely changes the way people, especially younger generations, connect with traditional media. Because of the Internet, people read print news less and spend less time reading magazines and less time watching TV. Nevertheless, research shows that people still rely on newspapers and magazines as their source of information. They are also highly amenable to out-of-home advertising, such as ads on billboards and public transportation and commercials in movies. (See Generational Market Research Bundle: Baby Boomers, Gen X and Gen Y, Packaged Facts)

Week 11: Rosewood Case

“A company’s value is the sum of discounted cash contribution of its current and future customers”

 www.managementconsultingnews.com/interviews/peppers_rogers_interview.php

Rosewood business is going well but it lacks a cohesive brand image to optimize the customer profitability and lifetime value. The majority of Rosewood customers do not know that they are staying at a Rosewood hotel or even recognize the Rosewood brand.  To increase the company’s value, Rosewood needs to increase the profitability of the current and future customers. It needs to develop a way to enable consumers to get more knowledge on the fact that they can enjoy “A Sense of Place” Rosewood type of experience in different parts of the world.

Creating Rosewood brand awareness would provide a platform for encouraging Rosewood customers who stay at one of Rosewood property to stay at some of the others. It would not only increase cross property use and attract new customers, but also increase joint marketing activities and ability to build new properties and grow. Nevertheless, corporate branding undercuts the distinctiveness of each individual branded hotel and potentially decreases the property value.

Evaluating the customer lifetime value (CLTV) for six years, I find that the new marketing plan with corporate branding strategy would increase CLTV per customer by $82.60. This leads to an increase in profit of Rosewood from new brand strategy of about $9.5M (or increase in Rosewood revenue of $29.68M).

Thus, I recommend the management of Rosewood to adopt the corporate branding strategy. Even though it proceeds with the new brand strategy, Rosewood should still emphasize on the uniqueness of each property and their “Sense of Place” strategy to keep its distinctiveness from other hotel chains.

CLTV Calculation With No Changes to Brand Strategy
Year	2003	2004	2005	2006	2007	2008	2009
Number of Nights per Stay		2.0	2.0	2.0	2.0	2.0	2.0
Number of Stays per guest (assuming they are retained)		1.2	1.2	1.2	1.2	1.2	1.2
Revenue Per Night		$795.00	$842.70	$893.26	$946.86	$1,003.67	$1,063.89
Revenue per Customer		$1,908.00	$2,022.48	$2,143.83	$2,272.46	$2,408.81	$2,553.33
Gross Profit per Customer		$610.56	$647.19	$686.03	$727.19	$770.82	$817.07
Less Cost to Acquire Customer	($150.00)
Less Annual Marketing Cost per Customer		($133.90)	($137.92)	($142.05)	($146.32)	($150.71)	($155.23)
Cash Flow from Customer if Retained	($150.00)	$476.66	$509.28	$543.97	$580.87	$620.11	$661.84
Probability of Being Retained	1.00	1.00	0.17	0.03	0.00	0.00	0.00
Expected Cash Flow from Customer	($150.00)	$476.66	$84.90	$15.12	$2.69	$0.48	$0.09
Discount Factor	1.000	1.080	1.166	1.260	1.360	1.469	1.587
NPV of Expected Cash Flow from Customer	($150.00)	$441.35	$72.78	$12.00	$1.98	$0.33	$0.05
Total NPV of CLTV	$378.49

CLTV Calculation With New Brand Strategy
Year	2003	2004	2005	2006	2007	2008	2009
Number of Nights per Stay		2.0	2.0	2.0	2.0	2.0	2.0
Number of Stays per guest (assuming they are retained)		1.3	1.3	1.3	1.3	1.3	1.3
Revenue Per Night		$795.00	$842.70	$893.26	$946.86	$1,003.67	$1,063.89
Revenue per Customer		$2,067.00	$2,191.02	$2,322.48	$2,461.83	$2,609.54	$2,766.11
Gross Profit per Customer		$661.44	$701.13	$743.19	$787.79	$835.05	$885.16
Less Cost to Acquire Customer	($150.00)
Less Annual Marketing Cost per Customer		($133.90)	($137.92)	($142.05)	($146.32)	($150.71)	($155.23)
Less Additional Marketing Cost per Customerb		($8.96)	($9.23)	($9.50)	($9.79)	($10.08)	($10.38)
Cash Flow from Customer if Retained	($150.00)	$518.58	$553.98	$591.64	$631.68	$674.27	$719.55
Probability of Being Retained	1.00	1.00	0.22	0.05	0.01	0.00	0.00
Expected Cash Flow from Customer	($150.00)	$518.58	$120.04	$27.78	$6.43	$1.49	$0.34
Discount Factor	1.000	1.080	1.166	1.260	1.360	1.469	1.587
NPV of Expected Cash Flow from Customer	($150.00)	$480.17	$102.92	$22.05	$4.72	$1.01	$0.22
Total NPV of CLTV	$461.09