The Spillover Effects of Online Marketing Channels

Marketing is a main source of income generation as firms seek to attract web visitors and convert those web visitors into paying customers. Firms consistently rely on a few marketing methods and overstate the importance of those methods without understanding how they work together to convert purchasing behavior. Research by Li & Kannan (2014) helps companies understand online channels, historical visits using these channels, and how spillover effects convert visitors into paying customers. They propose a new model that helps conceptualize the concept. 

Even though some companies rely on specific channels it is the combination of advertising channels that create the marketing mix. It is difficult for firms to determine which channels work well and which channels do not effectively contribute to customer conversion rates. Online marketing will move from $15 billion to $24 billion by 2016 (eMarketer, 2012). The growth in marketing expenditures will require better analysis of benefits in terms of attracting the right kinds of customers. 

Consumers in the online world may click and browse a number of different sites before actually visiting a webpage and making a purchase. Initial exposure and activities are regularly discounted according to conventional practices such as the last-click analysis. Consumers exposed at one time to a company or product may not make a purchase until some other point in time leaving previous exposures uncovered as a source of marketing. 

The authors designed a model that helps to analyze the spillover effects of marketing. Based upon individual-level path data of customers’ touches their purchase decision hierarchy finds 1) heterogeneity across customer’s channel use to visit sites, 2) the carryover and spillover impact of prior marketing interventions that lead to visits, and 3) the conversion of visits to purchases. The overall approach helps to highlight how online purchases that use multiple channels mesh together to lead consumers to a particular site to encourage purchasing behavior. 

The model is in alignment with other research focused on Internet marketing. According to Wiesel, et. al. (2011) there are three stages to a purchase that include the consideration stage, visit stage, and purchase stage.  In the consideration stage the customer determines his needs and utilizes different channels to find information, in the visit stage they visit a website based upon channel information, and in the purchase stage the customer makes a purchase.

As you can see from the figure the consumer moves through the consideration, visit and purchase stage by using customer initiated or firm initiated channels. Customer initiated methods could be direct, referral, or search engine. Firm initiated methods include things like display ads and email advertisements that are pushed on the customer. Each of the effects contributes in a spillover effects that translate into total attractiveness of making a purchase. 

The researchers found that both firm and customer initiated advertising channels contributes to purchasing behavior in some ways. The model helps companies determine where their advertising dollars are likely to receive the highest returns on investment. Paid search engine position is less effective than originally thought and using emails in combination with other organic methods helps consumers find the website and subsequently make a purchase. Understanding how customers find particular products/services and converts them to make a purchase furthers effective spending of revenue budgets on those channels that make the best marketing mix.  

eMarketer (2012). U.S. Digital Ad Spending to Top $37 Billion in 2012 as Market Consolidates. Retrieved June 8^th, 2014 from  http://www.emarketer.com/newsroom/index.php/digital-ad-spending-top-37-billion-2012-market-consolidates/

Li, H. &Kannan, P. (2014). Attributing conversions in a multichannel online marketing environment: an empirical model and a field experiment. Journal of Marketing Research, 51 (1). 

Wiesel, T. et. al. (2011). Marketing’s Profit Impact: Quantifying Online and Off-Line Funnel Progression. Marketing Science, 30 (4), 604–611.

Does Brand Image Keep Rockin Baja..."Rockin"?

Rockin Baja in Old Town San Diego offers a full menu of Mexican Baja food. Known for its food, drinks and entertainment it has positive reviews from customers. The atmosphere is unique offering lots of knick knacks to gain your attention throughout the restaurant. Fountains, wall hangings, authentic décor, and plant life dot the well-designed floor space. It is one of those places where so much lively entertainment, bright décor and spicy food enhance your mood.

Live entertainment is a big attraction for Rockin Baja. Patrons come to toast to good times and listen to the singers while they order a bucketful of authentic Baja food. Lobster, fish tacos, and other zesty Mexican style plates are on the menu. Originally started in the sleepy fishing village of Puerto Nuevo its brand has been franchised to a couple of locations around San Diego. 

Using identifiable food types, décor, music and a unique location image helps to create a strong brand from the multiple pieces that help people formulate an image of the restaurant. Customers are willing to pay more for brand-image based upon dimensions of image associations (Sonnier & Ainslie, 2011). When the music, food, décor, and image associations align with each other they create better mental recall and higher value to customers. 

A few of their specialties include the Big Baja Bucket with Seasoned Lobster Tails, Baja Style Shrimp, Carne Asada & Grilled Chicken. Includes “All You Can Eat” Ranchero Beans, Mexican Rice, Flour Tortillas, Honey Chili Butter and Fresh Salsas. You can also try the Lobster Tacos del Patron which has Battered fried Maine Lobster topped with shredded cabbage, crema fresca, tomato, onion, fresh sliced avocado and cilantro ranch dressing. Served on warm flour tortillas. 

The food follows the Baja tradition in its taste and style. Baja is a region of Northwestern Mexico that includes well known locations such as Tijuana, Ensenada and La Paz. There is also a place called Baja California that is actually part of Mexico that is somewhat cut off from the mainland by the Sea of Cortes and contains many of the same cultural characteristics (1). The area is known for its spicy seafood and hot and rugged landscape. Few Pintos and electric cars there.

Rockin Baja is a place that you won’t easily forget. Many of the patrons come back frequently throughout the year. Tourists like to visit the historical offerings of Old Town and then make their way over to Rockin Baja less than a block away. Heavy foot traffic, a few blocks from public transportation and right in the vicinity of a major attraction helps Rockin Baja keep on “Rockin”. 

Rockin Baja

3890 Twiggs St

San Diego, CA 92110 

http://rockinbaja.com/#   

Sonnier, G. & Ainslie, A. (2011). Estimating the value of brand-image associations: the role of general and specific brand image. Journal of Marketing Research, 48 (3).

Eating Breakfast Doesn't Lead to Weight Loss

Eating breakfast has been associated with weight loss for years. Conventional wisdom is that by eating breakfast you are boosting your metabolism and this in turn encourages greater weight loss throughout the day. Recent research published in the American Journal of Clinical Nutrition thwarts that concept by showing that skipping or eating breakfast has no noticeable effect on weight loss. 

Previous studies found more correlation than causation. Correlation indicates that two variables are associated but doesn’t really say in depth how associated they are. Causation helps to show that variable A causes variable B. In science causation is a stronger connection and level of analysis than a correlation. Without causation it is possible that other compound factors are involved in the findings.

A total of 283 participants engaged in a 16-week program. Participants were healthy overweight or obese and were between the ages of 20-65 years old. Depending on the overall group, the participants were assigned to either skip breakfast or eat breakfast. The researchers hoped to find a change that resulted in weight loss. 

Instead researchers found that there was no noticeable difference between those who ate breakfast and those who didn’t.  Those who skipped breakfast lost −0.71 while those who did not lost −0.53. Statistically these are so similar that it doesn’t make much of a difference. Skipping or eating breakfast doesn’t really make much of a difference in weight loss. 

This doesn’t mean skipping breakfast is something we should do. It only means that it doesn’t contribute significantly to weight loss. The lower calorie consumption may have a difference in total weight loss and it is important to reduce bad calories while increasing good calories. Good calories come from fruit, vegetables, nuts, fish, and various kinds of meat. 

Fitness enthusiasts are still left with the total calorie count. According to the Mayo clinic it takes approximately 3,500 calories to lose a pound so cutting 500 calories a day out of your diet will help you lose around a pound a week (1). Losing weight and getting in shape are two different but associated things. Go ahead and reduce portions, swap high calorie/low nutrition foods for low calorie/high nutrition foods, and eat a variety of foods for nutrients.

Dhurandhar, E. et. al. (2014). The effectiveness of breakfast recommendations on weight loss: a randomized controlled trial. The American Journal of Clinical Nutrition. Retrieved June 6^th, 2014 from http://ajcn.nutrition.org/content/early/2014/06/04/ajcn.114.089573.abstract

Book Review: Buffett: the making of an American Capitalist

Rarely do we get a glimpse of the life of the successful and famous.  To many in the business world Warren Buffett is more like a god than a man. In his book Buffett: the making of an American Capitalist you won’t be receiving insider investment tips but you will come to know a little of the man that has been an inspiration to business students and investment gurus for a number of decades. You will learn what made him the man he is today. Sometimes, it is those little things in life that put on us on unique paths.

Of particular interest is the information about Buffett’s life and his formation as a leading investor. He started as an odd but liked child who seemed more like a fish out of water than the confident billionaire he is today. A little socially awkward people came to accept him as he was. He watched the stocks while other boys made modeled airplanes. A boy who loved to play sports, talk of financial success, and attract other boys to him. 

He loved to read and apply those concepts to his paper route, pinball business, and future enterprises with passion. Warren was always learning and applying and made a life out of this process. With a few good mentors he became the investor magnet he is today. It was a long process of learning, adapting, and applying that seemed to meet with the right personality. Something business students should consider as they learn new knowledge and have a chance to use it.

When Warren met the professor Benjamin Graham he was able to use his native talents in a systematic way based upon the principles and philosophies of his mentor. The philosophy, “For stock speculation is largely a matter of A trying to decide what B,C, and D are likely to think-with B,C and D trying to do the same” seemed to stick. The precocious student learned quickly and developed his own methodologies. 

Much of the rest of the book talks of Warren Buffett’s life, loves, and business successes. It is more than a story of an emerging wealthy person but the way of thinking of the boy who grew to be a man that made it all possible. It is a story of financial strategy and pure diligence of a person that became known as the Oracle of Omaha. 

Warren’s story doesn’t end with this book. It is only a snap shot into his process of development and growth that led to great fortune. As recently as March of 2014 Warren is encouraging groups to become more engage in social causes that help those in need. It is these philanthropic adventures that help others to remember that wealth is not a source of happiness in and of itself. Wealth is a tool that places greater responsibilities on the owner to use money to enhance life. 

Lowenstein, R. (2008). Buffett: the making of an American Capitalist. NY: Random House