Components: Customers and the Business Model

The Science Behind
Modern Marketing
and Modern Logistics
Global Innovation Management
Seminal Consultants (c. 1900)
• In 1900 companies were simple:
– Factories produced goods
– Retailers marketed those goods
• The two seminal researchers in making
production and marketing were:
– Fredrick Winslow Taylor, author of Scientific
Management (1912) and
– Claude C. Hopkins, author of Scientific Marketing
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Scientific Management + Marketing
• Today these traditional fields correspond to:
1. Science of Capabilities = Assets + Competences
2. Science of Innovation = Invention + Marketing
Global Innovation Management
Scientific management
• Foundation of industrial engineering and management
work ethic;
efficiency and elimination of waste;
standardization of best practices;.
• Demanded a high level of managerial control over
employee work practices
• Necessitated a higher ratio of managerial workers to
laborers than previous management methods.
Global Innovation Management
Progeny of Scientific Management
• During the 1940s and 1950s, the body of knowledge for
doing scientific management evolved into operations
management, operations research, and management
• In the 1980s total quality management became widely
popular, and
• in the 1990s "re-engineering”
• Today's it’s Six Sigma, ‘knowledge management’ and
lean manufacturing
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Roots of Scientific Marketing
Consider a Laboratory Experiment
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How to Train a Rat (or a Consumer)
Consider a Laboratory Experiment
• Consider a maze (with a chocolate
reward) where a rat was put behind a
partition that opened whenever a
loud click sounded.
• Here is what happened:
Initially, the rat wandered the aisle, smelled the
chocolate, but couldn’t figure out how to find it.
When it reached the top of the T, it often turned
to the right, away from the chocolate, and then
wandered left, sometimes pausing for no obvious
Eventually, most animals discovered the reward.
But there was no discernible pattern in their
meanderings. It seemed as if each rat was taking
a leisurely, unthinking stroll.
Global Innovation Management
Mental Activity Early on the
Learning Curve
Probes in the rats’ heads told a different
While each animal wandered through the
maze, its brain—and in particular, its basal
ganglia—worked furiously.
Each time a rat sniffed the air or scratched
a wall, its brain exploded with activity, as if
analyzing each new scent, sight, and
The rat was processing information the
entire time it meandered.
Global Innovation Management
Mental Activity Later on the Learning
Curve – Encouraging Habitual Behavior
Over time, a series of shifts slowly
The rats stopped sniffing corners and
making wrong turns. Instead, they zipped
through the maze faster and faster.
As each rat learned how to navigate the
maze, its mental activity decreased. A
As the route became more and more
automatic, each rat started thinking less
and less.
All it had to do was recall the quickest
path to the chocolate.
Global Innovation Management
Global Innovation Management
Claude C. Hopkins (1866–1932) created campaigns from 1900-1920 for
Bissell Carpet Sweeper Company,
Quaker Oats,
Goodyear tires
Swift & Company and
Dr. Shoop's patent medicine company
one of the most prominent quack medicine factories of the early 20th century, out of Racine WI
Hopkins insisted copywriters research their clients' products and produce "reasonwhy" copy
To track the results of his advertising, he used key coded coupons and then tested
headlines, offers and propositions against one another.
He used the analysis of these measurements to continually improve his ad results,
driving responses and the cost effectiveness of his clients' advertising spend.
His classic book, "Scientific Advertising," was published in 1923
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The Birth of Branding / Marketing
• Hopkins was the man who:
– convinced Americans to buy Schlitz beer by boasting that the
company cleaned their bottles “with live steam,”
• while neglecting to mention that every other company used the exact same
– seduced millions of women into purchasing Palmolive soap by
proclaiming that Cleopatra had washed with it,
• despite the skepticism of historians.
– made Puffed Wheat famous by saying that it was “shot from
guns” until the grains puffed “to eight times normal size.”
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A Story
• Hopkins was approached by an old friend to
– design a national promotional campaign
– for a minty, frothy toothpaste concoction called “Pepsodent.”
• It was no secret that the health of Americans’ teeth was
in steep decline.
– As the nation had become wealthier, people had started buying
larger amounts of sugary, processed foods.
• When the government started drafting men for World
War I, so many recruits had rotting teeth that officials
said poor dental hygiene was a national security risk.
Global Innovation Management
The Problem
• There was already an army of door-to-door
salesmen hawking dubious tooth powders and
elixirs, most of them going broke.
– The problem was that hardly anyone bought toothpaste
because, despite the nation’s dental problems, hardly anyone
brushed their teeth.
Global Innovation Management
Claude Hopkins created rules to
develop consumer habits
• Within five years Hopkins turned Pepsodent into one of
the best-known products
– in the process, helped create a toothbrushing habit across America
– everyone from Shirley Temple to Clark Gable was bragging about their
“Pepsodent smile.”
– By 1930, Pepsodent was sold in China, South Africa, Brazil, Germany,
and almost anywhere else Hopkins could buy ads
• Hopkins helped establish toothbrushing as a daily
Global Innovation Management
Crave Reviews
• Hopkins found:
– a certain kind of cue and
– reward that fueled a particular habit
– Even today the basic principles are still used video game
designers, food companies, hospitals, etc.
• He created a craving
• This craving is what makes cues and rewards work
– … and powers the habit loop.
Global Innovation Management
Mucin plaques
• Hopkins needed a trigger that would justify te
toothpaste’s daily use
– mucin plaques on teeth, later just called ‘the film.’
» Note: the same film has always covered people’s teeth and hadn’t
seemed to bother anyone. The film is a naturally occurring
membrane that builds up on teeth regardless of what you eat or
how often you brush
– That was a cue that could trigger a habit
• Pepsodent ads read:
“Just run your tongue
across your teeth,” read one. “You’ll feel a film—
that’s what makes your teeth look ‘off color’ and
invites decay.”
Global Innovation Management
Global Innovation Management
The Craving
• Before Pepsodent appeared,
– only 7 percent of Americans had a tube of toothpaste in their
medicine chests
• A decade after Hopkins’s ad campaign went nationwide,
– that number had jumped to 65 percent.
• By the end of World War II,
– the military downgraded concerns about recruits’ teeth because
so many soldiers were brushing every day.
Global Innovation Management
One more factor: The Reminder
• After Pepsodent succeeded
– researchers at competing companies found that customers said
that if they forgot to use Pepsodent,
– they realized their mistake because they missed the cool,
tingling sensation in their mouths
• They expected—they craved—that slight irritation
– If it wasn’t there, their mouths didn’t feel clean.
Global Innovation Management
Global Innovation Management
This is Why we are Concerned
about Web Usability & Structure!
Global Innovation Management
Cues, Rewards, Cravings
• Where and when
people look
– Establishes the
formation of habits
– And cravings
Global Innovation Management
On any platform …
Global Innovation Management
Global Innovation
E-Commerce Site
Decisions, Decisions, and more
Global Innovation Management
E-Commerce Implementation
Answer the Questions
• Why: Objective (profit, survival, expansion, social, etc.)
• What: Is your innovation (product, market, distribution,
• Who: Customers (with a new set of Q’s where, when,
• Where: Will you host, will you keep inventory, run
production, etc.
• When: Does this need to be implemented
• How: Will you control costs (production, advertising,
Global Innovation Management
Why & What
• Why do you want an e-business? (objective)
• What will you sell to achieve this objective? (service,
product, idea)
– The most important new sites today are selling ideas
• Why would anyone buy your ‘product’?
• What will you do to sell your ‘product’? (build a website)
Global Innovation Management
The customers and consumption chain
• Why: these particular customers (cost effective,
profitable, etc.)
• What: do they do that requires your ‘product’
• Where: are they? Do you compete locally or globally
or in specific geographical areas? Where are the forums
and interest groups of these customers?
• When: do you want to reach them?
• How: Will you make a profit from them (cross-selling,
up-selling, complements, after market services)
Global Innovation Management
Where & How
• Where: Will you host, will you keep inventory, run
production, etc.
• How: Will you implement the Internet portion of your
Servers, Internet pipes and Traffic Management (hosting)
Website language / templates
Integrated development environment
Content management
Database management
Advertising (organic/sponsored search, media, eWOM)
Analytics (conversion cone, cross/up-selling)
Global Innovation Management
Servers, Internet
Pipes and Traffic
Global Innovation Management
Let’s look at Twitter
Global Innovation Management
Graphics Editors
• Pixelmator
– Fast and powerful image editing software for the Mac operating
• Inkscape
– Open source vector graphics editor; web standards compliant
Scalable Vector Graphics (SVG) under W3C’s specifications.
• Fireworks
– Adobe’s image editing software for the web designers.
– Stands for the GNU Image Manipulation Program – open source
image editor (Linux, Mac, and Windows)
• Photoshop
– Most popular with most features
Global Innovation Management
Daily Visitors
1,000,000,000 JavaScript
C, C++, Go, Java, Python
PHP, C++, Java, Python,
FBML,Erlang, D,Xhp
SQL Server
SQL Server
SQL Server
880,000,000 JavaScript
800,000,000 JavaScript
590,000,000 JavaScript
490,000,000 JavaScript
440,000,000 JavaScript
410,000,000 JavaScript
340,000,000 JavaScript
230,000,000 JavaScript
160,000,000 JavaScript
C++, Java, Scala, Ruby on
130,000,000 JavaScript
110,000,000 JavaScript
Java, J2EE, C++, Perl
88,000,000 JavaScript
80,000,000 JavaScript
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C, Python, Java
Java, Scala
Website Graphics / Layout
• Custom design typical cost breakdown:
Global Innovation Management
Integrated development
• Website (HTML / CSS / Flash, Javascript, ASP, etc.)
– Adobe Dreamweaver/Creative Suite
– McRabbit Espresso
– Coffee Cup
• Captive Multilanguage
– Visual Studio (MS); Xcode (Apple)
• X-platform Multilanguage
– Eclipse; NetBeans; ActiveState Komodo; IntelliJ IDEA; Oracle
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Content Management Systems
Strengths: Huge developer community; Free and paid plugins and specialized themes; User-friendly
dashboard for managing content
Weaknesses: lot of security issues, and is very vulnerable to attack without additional security measures
Strengths: User authentication can be done with OpenID, Google, and LDAP, among others; Very active
user community and tons of documentation available
Weaknesses: Back-end isn’t as user-friendly as some CMSs; Lack of high-quality themes
Strengths: Robust community support, including IRC channels and face-to-face meetups; highly extensible;
A large number of companies offering commercial support for Drupal
Weaknesses: A lack of really high-quality free and commercial themes (there are some, but not nearly as
many as there are for some CMSs); Theming system is fairly complicated
Global Innovation Management
• Types
– Organic/sponsored search,
– Old-school media
– Word-of-mouth
• Places
– Google Adwords/Adsense
– Facebook
– Tumblr
– Twitter
Global Innovation Management
Web Analytics
Measurement, collection, analysis and reporting of internet data for
purposes of understanding and optimizing web usage
System / tool for measuring:
• web traffic
• business and market performance and trends, cross-sell, etc.
• assess and improve the effectiveness (for a specific objective) of a
web site
• measure the results of traditional print or broadcast advertising
• estimate how traffic to a website changes after the launch of a new
advertising campaign
• information about the number of visitors to a website and the
number of page views
• helps gauge traffic and popularity trends which is useful for market
Global Innovation Management

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