Erin Steffes

Social ties and online word of mouth

Purpose – The power of word of mouth (WOM) communication and its influence on consumer decision making is well established in academic literature. The recent adoption of online communication by many consumers has facilitated a fundamental change to the structure of many WOM interactions by exposing consumers to electronic WOM (eWOM) from virtual strangers. The current study seeks to uncover whether traditional findings on social ties and WOM communication hold for eWOM information.Design/methodology/approach – Data were collected from 482 college students with varying levels of expertise with eWOM forums, specifically RateMyProfessors.com in the USA. Participants completed a 20‐question survey related to university professor and class choice.Findings – The study finds that students seeking information on which professor to take weight the information they obtain from eWOM forums to be equally influential in their decision as their own primary experience with the professor. Furthermore, the information gai...

Internal Marketing at Continental Airlines: Convincing Employees that Management Knows Best

Maintaining a high level of customer service quality is necessary for success, particularly for firms in service industries, but employees need to be motivated to provide it. Management can provide the motivation through the use of compensation schemes and internal marketing. In this paper we examine profit sharing compensation schemes that reward employees for achieving customer service objectives. We discuss how such schemes should be implemented, and explain why management needs to convince employees through internal marketing programs about the benefits of its scheme. We obtain the optimal amount of profit that the firm should share with employees, and the optimal effort it should spend on internal marketing. Finally, we relate the analysis to a successful scheme implemented by Continental Airlines.

Developing a measure of risk adjusted revenue (RAR) in credit cards market: Implications for customer relationship management

Current models of customer lifetime value (CLV) consider the discounted value of profits that a customer generates over an expected lifetime of relationship with the firm. This practice can be misleading in the financial services markets because it ignores the risk posed by the customer (such as delinquency and default). Specifically, in the credit card market, the correlation between revenue and risk is positive. Therefore, firms need to adjust a customer’s profits for the associated risk before developing a measure of customer lifetime value. We propose a new measure, risk adjusted revenue (RAR), that can incorporate multiple sources of risk and demonstrate the usefulness of the proposed measure in correctly assessing the value of a customer in the credit card market. The model can be extended to compute risk adjusted lifetime value (RALTV). We use the RAR metric to understand the effectiveness of different modes of acquisition, and of retention strategies such as affinity cards and reward cards. We find that both reward- and affinity-cardholders generate higher RAR than non-reward and non-affinity cardholders respectively. The ordering of different modes of acquisition with respect to RAR (in decreasing order) is as follows: Internet, direct mail, telesales, and direct selling.

Role-Playing in a Consumption Context: An Experiential Learning Activity Focused on the Consumer Decision-Making Process.

Instructors are faced with the challenge of teaching a significant amount of material covering a wide variety of topics in a Principles of Marketing course. In order to present the critical consumer decision-making process concept in a meaningful way while remaining mindful of time constraints, we propose a semi-structured classroom activity that facilitates experiential learning. We provide detailed instructions on how to implement a unique role-play activity that demonstrates the various factors that impact the consumer decision-making process along with empirical evidence suggesting that students perceive this activity to be both engaging and effective at enhancing learning.

DESCRIPTION AND EVALUATION OF AN INNOVATIVE SEGMENTATION, TARGETING, AND POSITIONING ACTIVITY USING STUDENT PERCEIVED LEARNING AND ACTUAL STUDENT LEARNING

An innovative segmentation, targeting, and positioning (STP) activity is described and evaluated using two learning outcomes: student perception of learning and actual student learning. The results indicate that the activity is effective in generating classroom engagement in a principles of marketing course with a diverse student population. Further, an empirical study shows favorable outcomes for both measures of learning, which validates the effectiveness of the activity as an educational tool. Interestingly, students’ perceived and actual learning show no correlation, and thus we advocate for the need to evaluate learning through both direct (i.e., actual) and indirect (i.e., perceived) assessments.