4.12 4.13 ETHICS IN MARKETING RESEARCH: MINI-CASE STUDIES
courtesy of Mr. Hicks PART 1: Read the 4 mini-cases below. For TWO of the following 4 cases,answer the following questionson a separate sheet of paper: 1.
What are the relevant Facts? 2.
What are the ethical Issues? 3.
Offer your opinion on what actions should be taken (at least 2-3 paragraphs)
Case Study 1 Incredible Shrinking Potato Chip Package
Cost vs. price vs. value issues
Julie, Brand Manager for potato chips at a regional salty snacks manufacturer Dave, Marketing Director for the regional salty snacks manufacturer Julie has been concerned about the profitability of the various items in her line of potato chips. According to her potato suppliers, the recent drought caused a 35 percent reduction in the potato crop compared to
one year ago, resulting in a 25 percent hike in potato prices to large buyers like Julie’s company. Potatoes
accounted for almost all of the content of her chips (which also consisted of vegetable oil, one of three different flavoring spices, and salt), plus there were packaging costs. To hold the line on margins, which of late had been slim at only about 5 percent due to fierce competition from several other local and regional brands, Julie would need to raise potato chip prices about 15 percent. On her most popular 7.5 oz. size, which had a price spot of $1.59 on the package, this would require a price hike of $.24, bringing the price up to $1.83. Julie wondered what would be the appropriate strategy to deal with this unfortunate circumstance. She was very reluctant to raise the price to maintain the margin. First, she feared incurring the bad will of her
loyal customers; it wouldn’t be
perceived as fair by them. Moreover, she was worried about competitive responses; her other larger competitors might be willing to incur a loss in the short-run to keep their customer bases and to attract price-
hiking rivals’ customers. Julie couldn’t aff
ord such a strategy since she was evaluated solely on the basis of monthly net profits. Historical data in this industry revealed another possible competitive maneuver in the face of rising ingredient costs: hold the line on prices and package size while reducing the net weight of the package. Julie was concerned that this might be a deceptive practice. She recalled from a Consumer Behavior course she had taken in college a concept known as the
“just noticeable difference.” This said that relatively small c
hanges in a stimulus (such as a price hike or content shrinkage) go unnoticed by consumers. Julie felt intuitively that the price increase necessary to maintain margins would be noticed, given the price sensitivity of buyers for snack foods. However, the past industry data suggested that perhaps buyers might not notice the package size reduction needed to sustain profits, which in this case would be 1.1 ounces. Julie asked her boss, Dave, the Marketing Director, about the advisability of reducing the net weight of
the potato chips. Dave said that this was a practice known variously as “downsizing” and “package shorting.” It was a very common practice among packaged goods manufacturers. For instance, he said,
candy bar manufacturers are subject to constantly fluctuating ingredient prices, and because there are
expected (“fair” or “reference”) prices for candy bars, package sizes are frequently adjusted without
The value of real-time location data is often summed up with one mantra: "Reach the right consumer with the right message at the right time." But in practice, marketers using location data to find audiences and measure their campaigns are increasingly uncovering insights they didn't anticipate, and realizing that "the right message at the right time" only skims the surface.
Take the word of three separate marketers for it.
Brown-Forman's premium tequila brand Herradura worked with Foursquare to reach both premium liquor drinkers and people who were spotted near or in establishments that sell the tequila. The company discovered that people who appear to like the brand may be as complex as its Anejo variety.
STX Entertainment and mobile location ad firm Placed realized that the female audience STX expected to go to see its comedy "Bad Moms" in the theater were indeed its core consumers. But it turned out that the film-going women who helped make it a $180 million breakout were younger than the typical mom demographic.
And the city of Asheville, N.C., worked with Arrivalist, which helps destinations and municipalities gauge who visits and where they're from. The hipster mecca-turned-hot tourist destination (it ranks No. 1 on Lonely Planet's list of best destinations in the U.S. for 2017) discovered which ad vendors were most effective at coaxing travelers to visit the Thomas Wolfe Memorial or munch on local favorites like spicy hot chicken.
Brand: Herradura Tequila
Location Data Partner: Foursquare
Who drinks high-end tequila? Brown-Forman, maker of Herradura, partnered with Foursquare to let premium booze drinkers know where the boutique tequila brand is available, and along the way learned some unexpected things about who they might be.
The brand's "Luck Is Earned" campaign, introduced nationally in September, highlights young people working toward success through diligence and perseverance. "There are no shortcuts to greatness," the brand suggests in videos and other content featuring people including a young rapper, a chef and a drummer. It was that message Brown-Forman wanted to get in front of people who might be more likely to drink Herradura. Foursquare, which has done work for Brown-Forman since 2014, set out to deliver it and measure the impact. Spirits marketers don't have the benefit of direct relationships with their consumers, said Joanna Darst, director-global integrated communications for tequilas at Brown-Forman.
"It's a little difficult for some of us to get data on the ground," she said.
What It Did
During the 2016 holiday season, Foursquare used Brown-Forman's list of "accounts" where the brand is sold to target programmatic mobile and desktop display and video ads for Herradura to people whose mobile devices were found near those shops, bars or restaurants, or had been seen there in the past. The brand also aimed ads toward people deemed likely to drink premium liquor.
October, November and December is "a big selling season for us," said Ms. Darst, noting that, in addition to holiday gift-giving and partying season, the Day of the Dead, the Mexican holiday that has bled into Halloween celebrations, is another popular time for tequila drinking.
Foursquare lets advertisers target and measure ads across apps and publishers using the data that Foursquare gathers directly from check-ins at physical locations by people with the Foursquare app, as well as location data gathered passively about places they visit even when they don't check in.
As Brown-Forman tested the ads, which surfaced a map marking spots near consumers where they could purchase Herradura, the firm began to see increased foot traffic to those locations, and prioritized some media buys based on that information.
Compared with a control group, the Foursquare ads resulted in 23% incremental lift in visits to places selling Herradura among people who were exposed. While Brown-Forman could not tell whether the ads led people to actually buy the tequila brand, the data got it close to the point of consumption, said Leah Malone, senior director of brand partnerships at Foursquare. "Visits are a proxy to sales."
What It Learned
The results also offered a glimpse into the habits of Foursquare users who engaged with the Herradura ads, based on other types of places they visited. According to Foursquare, they also went to juice bars, organic food markets and SoulCycle locations. The data helped paint a more complete picture of the Herradura drinker. "Those insights we can then use for targeting on other platforms," Ms. Darst said.
Brand: STX Entertainment's 'Bad Moms'
Location Data Partner: Placed
The film industry is a powerful marketing force, but it could use better insight into what works to drive ticket sales. "It's one of the few industries that doesn't have a full attribution model," said Amy Elkins, senior VP-media and marketing innovation at STX Entertainment, noting that movie studios often don't know how much to spend and on what platforms to reach moviegoers and convert them to ticket buyers.
"Because you're creating a pop-cultural moment in a very limited window, it's hard to isolate effectiveness by media type," she said.
What It Did
STX Entertainment, in conjunction with its media agency Horizon, aimed to measure the impact of digital ads on ticket sales for "Bad Moms," a summer comedy featuring Mila Kunis, Kristen Bell and Christina Applegate. The raunchy flick opened July 29, up against "Jason Bourne," the latest in the CIA thriller series starring Matt Damon, among other rivals.
The studio ran mobile, display, audio and video ads on a dozen publisher platforms including social sites. STX targeted the ads mainly to women aged 18 and over, but broadened its target as time went on. Then Placed stepped in. The mobile location-based ad firm tracked whether people exposed to the advertising were seen at movie theaters showing "Bad Moms." To measure desktop web ads, the company works with partners that can connect users across devices.
Of course, those theatergoers could have seen any of the films being shown, so STX used a survey feature that Placed often employs for its advertiser clients. Placed gathers location data from people who use its own Panel app or others such as Give2Charity, which provide premium in-app features, gift cards or charity donations in exchange for tracking and survey participation. After people's devices were spotted in the theater, Placed sent them a push notification asking them which movie they saw.
Women who were exposed to the ads were 22% more likely to have gone to see "Bad Moms" in the theater, and STX saw incremental ticket sales of over 428,000 more tickets for "Bad Moms." In addition, the campaign turned every $1 spent on digital advertising into $2.31 in incremental ticket sales.
What It Learned
The attribution measurement, which provided demographic data, validated that "Bad Moms" was an especially big hit among female moviegoers, but particularly 18-to-24-year-olds. That's useful for promoting the sequel, out Nov. 3. "We can target that group a little more for 'Bad Moms 2' and drive more opportunistic dollars," said Ms. Elkins, adding, "Understanding who is convertible—that's when you can change your box office in the millions."
Brand: Asheville, N.C.
Location Data Partner: Arrivalist
Measurement has become an important goal for brands using mobile location data. And for Asheville, a river city that sits near the western border of North Carolina, gauging which ad vendors and platforms perform best for inspiring people to visit is a primary mission.
"For a destination organization like ours, it's really difficult to be able to have that endpoint of e-commerce that many websites are able to use to create some understanding of ROI," said Marla Tambellini, VP-marketing and deputy director for the Asheville Convention and Visitors Bureau.
While the bureau has a booking widget on its website, many people driven to the site by ads from the city may go on to book travel to Asheville through other means.
Working with location-based ad measurement firm Arrivalist, Ms. Tambellini and her team try to tell which vendors are most effective when delivering messages like the city's "Let the Magic Find You" slogan and touting its top ranking by Lonely Planet. The city has just begun delving deeply into the results of various programs it's run over the past year or so. "What we need to do is kind of step back and look holistically at which mediums and which sources are proving most effective for us," she said.
What It Did
The idea is to track which markets visitors come from, plus whether ads influenced the decision. The city, which boasts a tourism budget larger than that of the state of North Carolina, ran a variety of ads on TV, in streaming video and on desktop and mobile platforms.
Asheville advertises almost year-round, in early spring, then again before autumn during August and September—what the city calls its "harvest" campaign. Ads start up again for holiday time and then in winter from January through March, which Asheville has begun calling its "undiscovered season."
A campaign that ran last spring was used by the city to evaluate vendors for the first time, said Ms. Tambellini. Arrivalist determines mobile ad effectiveness by measuring mobile devices that are present in specific locales and whether those same devices were served tourism ads for that city. Reports also show where visitors originated, top cities of origin and the number of days between first ad exposures and visits.
Asheville looks at how quickly ad vendors and partners motivate travel to the city, and seeks signs of softness in markets where additional advertising might spur more visits.
Ads purchased through one vendor drove an arrival rate of 0.52 arrivals per 1,000 ad exposures compared with an average of 0.17 arrivals per 1,000 exposures from all paid media. And, when Asheville aimed ads to residents of nearby Raleigh, N.C., between January and September 2016, the percentage who arrived within seven days was 16.8% higher than the average of all other markets during the same period.
What It Learned
Having determined that one vendor's services worked best in digital display for prospecting and retargeting on its spring 2016 campaign, the city decided to work with that firm again in the fall. (It declined to name the vendor.)
Data showing how vendors perform "is an indicator as we start our strategic planning," said Ms. Tambellini, adding that along with other research, "This becomes a significant filter or overlay."
Asheville, which aims to become a destination for travelers from across the country and not just the southeast, also plans to use the data to determine whether ads in new markets have a positive effect on awareness.