沃顿商学院全套笔记-十一-

沃顿商学院全套笔记（十一）

沃顿商学院《商务基础》｜Business Foundations Specialization｜（中英字幕） - P151：8_信誉和评论14 38.zh_en - GPT中英字幕课程资源 - BV1R34y1c74c

[ Music ]。

So welcome again everybody。 Today we're going to talk about something really cool and really interesting which is。

the whole idea of reviews and how they affect our behavior both online and offline， part。

of our omni-channel discussion。 So how are we going to do that？

Let me just give a quick overview of where we're going to go。

We're going to start with some motivation for why review information is important and。

affects behavior and markets。 Then I'm going to give you a little bit of economic theory which I think is really fascinating。

based on some research that was done by a colleague out in Los Angeles a few years ago。

I think you'll enjoy that。 And then finally I'll follow up some other examples of Amazon versus Barnes and Noble。

on the internet and then Expedia versus TripAdvisor。 I'll explain those as we get through。

So here's the first motivation for reviews and use of reviews。

You'll notice there on the slide the statistic could even be higher。

I think I've been quite conservative here that about 60% of us at least in the United。

States but I'm sure around the world read reviews before we make purchase decisions。

And secondly positive reviews whether they're for books， restaurants， movies， jeans， whatever。

it is that we're buying are seen to influence people's behavior。

So bringing this information into the market is very， very critical。

You might remember from one of our previous discussions that one of the frictions that。

we often experience in a market is we don't really know how good a restaurant is， how。

good a product is， how good a movie is。 And now that information is being made available much more easily and much more efficiently。

often by people who are complete strangers but the information is still useful for our。

purchase decisions。 Also since we're here in Philadelphia or at least I am I wanted to put in a couple of。

quotes that I think speak to the importance of reviews for merchants and probably even。

for individuals。 So Ben Franklin said it takes many good deeds to build a reputation only one bad one to。

lose it。 So that might be interesting to think if you write a book and you're selling it on Amazon。

and you're getting mainly five-star reviews and suddenly a one-star review comes along。

I wonder if that would affect your sales？ Well we'll answer that question as we go through the discussion a little further。

William Shakespeare perhaps because of his British heritage I guess I'm partly from。

that area coming from New Zealand。 He's a little more cynical and what he said in the quote there is that reputation is an。

idle and most false imposition。 Often got without merit and often without deserving。

So what he's saying is sometimes people can build fake or phony reputations and that's。

certainly true today in 2013。 In fact many of the reviews apparently that we see on places like Amazon and TripAdvisor。

and Yelp may in fact not be legitimate。

We'll get to that later on as well。 So just for your interest what I've done here is I've shown a bunch of links that you。

can go and check out if you want to see how people review airlines， people review recipes。

people review doctors and so forth and what you'll see here is a flavor of how reviews。

are presented whether visually with stars， whether they show the average， the deviation。

whether there's content。 So just you may already be using some of these things but just go and take a look to。

get a sense of how this information is presented before I now give you some of the theory。

So before we get into the theory I just want to share with you a very interesting anecdote。

that I found on Chris Dixon's blog。 So this is a story about a startup that raised as you can see on the slide about $4 million。

in venture funding。 It was eventually solved and then roughly at the time of us preparing these videos in。

Philadelphia was a publicly traded company worth over $6 billion。

So who is this company？ This company actually is TripAdvisor originally purchased by Expedia for $210 million and now。

has grown into a huge company that's really a company primarily putting information into。

the market， information that's contributed by people like you and I。

So for the budding entrepreneurs out there watching this sometimes you can build a great。

business just by bringing information into a market and helping people make better decisions。

and better choices。 So let's begin with a little bit of theory。

Sometimes it's helpful to know this to ground what we're thinking about。

So economic theory would suggest that more information to consumers is almost always， better。

The more light that's brought to bear on a market it's usually better for certainly the。

end users people like you and I。 In addition an economist might tell us that if information is provided into a market it。

may change the behavior not only of the buyers and who they decide to buy from but also the。

behavior of the sellers maybe they'll be more motivated to provide better quality products。

and services。 So to examine this there was a very interesting study done by two co-authors Jin and Leslie。

I've provided the reference for the paper in the notes if you want to read the original。

paper who looked at what happened to the market for food， restaurant food in Los Angeles after。

inspections were done of the restaurants there。

So what I've shown in the slide are the actual photographs of ratings of restaurants that。

appear in the windows of restaurants in Los Angeles。

In the United States you also see them now in New York and probably other places too。

Perhaps in your home country you have something similar。

So the way this works is a health inspector visits a restaurant。

The health inspector goes through many many things in terms of the hygiene of the restaurant。

gives it a score out of 100。 If the score is more than 90 then that restaurant places a sign in the window that says that。

this is an A hygiene grade。 B is a lower grade and C of course is a lower grade down still。

And so the co-authors Jin and Leslie wanted to figure out whether or not providing this。

information into the market would change the behavior of the consumers that were there。

And what did they find？ Well what they found was the demand at restaurants that got an A went up quite substantially about。

5 to 6 percent。 And at restaurants that got a B actually went up hardly perceptibly less than 1 percent。

and demand at restaurants that got a C of course went down。

So once the information was in the market people as you might imagine wanted to go to。

restaurants that had better hygiene and better quality food。

So that was a buyer explanation or that was an effect on demand。

But there's also an effect of information on supply which I think is at least as interesting。

perhaps even more so。 So what did the provision of that information in the market due to the salads？

Well it caused them actually to increase the quality of what they were offering because。

now there's more of a benefit to be known as an A restaurant。

So to check this out what the researchers did was something very clever。

They looked at the number of people that got sent to hospital for food related illnesses。

and what they found was in markets where the signs were in place that went down substantially。

about 13 percent whereas in other parts of California that didn't have the system the。

number of people going to hospital for food borne illness was actually going up。

So again that's a pretty clever test that shows this was also affecting the behavior of。

the salads as well as the behavior of the buyers。

So what do we learn from this？ Here's the key principle is that reviews and review systems definitely change behavior。

Both of buyers and also of salads。 But the most important thing knowing that is that reviews ideally should be objective。

and verifiable but this is not always the case。 So let's look at a couple of research examples。

The first one was a very clever study that was done by two professors at Yale that examined。

whether or not reviews for books help ramp up sales。

And they looked at two different websites Amazon。com and Barnes and Noble。com and what。

they found is most of the people who write reviews are in fact fairly generous。

There are five possible stars that you could give for a book at Amazon and the average。

rating at the time of the study was about 4。1。 On Barnes and Noble for whatever reason people are even more generous the average rating was。

about 4。5。 One star reviews are pretty rare that's the lowest review。

So one star reviews would show up about 7 percent of the time on Amazon and about 3。

percent of the time on Barnes and Noble。 So did all of this reviewing have any impact on sales？

Yeah you better did。 So what the authors found is if you got more positive reviews sales of your book went up。

And they also found if you got more negative reviews one star reviews then sales of your。

book went down。 And in addition there was kind of a subtle effect of this negative information such that。

if I got a negative review on a book that I'd written a one star review that seemed in。

some sense to also slow down the rate of positive reviews that were coming along subsequently。

So again a very very interesting study showing that reviews are affecting sales。

Now of course this might motivate people who are selling books to review their own books。

if they know that it's going to have a positive effect。

So what I'm showing here and you can read the articles and the links is a picture of。

a very interesting lady Harriet who has reviewed over 25，000 books on Amazon。

So I'm not suggesting that she hasn't but it's just interesting to notice that one person。

can generate so many reviews。 Now in addition to our friend Harriet there was another fellow who was doing something。

perhaps a little more devious but in some ways quite clever。

So there's a fellow called Mr Rutherford you can read the article I've provided a link， for it。

What he decided to do was to offer himself as a review writing service for authors。

So if you just written a book he might be willing to write 20 reviews for you for some。

of money let's say $100 or $500 completely of course fake reviews。

And what was interesting about this is Mr Rutherford was making about $28，000 not a year。

but a month by doing these fake reviews。 So what does this tell us？

It tells us that information is powerful and it also tells us that sellers might want to。

manipulate the information that's offered。 So you might be sitting there scratching your head as I was when I first read that story。

Somebody making almost $30，000 a month providing fake reviews。

So clearly this is a bit of a problem and it's come to the attention of many other writers。

and kind of experts and so how might one address this problem of fake information being out。

there affecting people's behavior。

Well on the next slide I'm showing a story you can read the full story in the New York。

Times about a gentleman who's an expert in something called data mining。

So what he would do is he would go through all of the text of reviews and try and figure。

out what reviews are real and what reviews are fake and so on。

Now even though that's a pretty sophisticated technique it turns out that it's actually。

difficult for a computer to figure out what's really true and what's not under certain kinds。

of circumstances。 So it would be difficult for example for a data mining algorithm to figure out if I was。

saying something sarcastically for example。 So those nuances of language might be quite difficult。

So to look at this question from a different perspective， Deena Maislin who's a professor。

now at USC she was one of the original authors on the other study I mentioned about looking。

at the effect of reviews on Barnes and Noble and Amazon decided to tackle this problem。

in a very very interesting way。 So let me illustrate that for you。

What she did is she wanted to compare ratings on TripAdvisor versus ratings on Expedia for。

the same property。 Well let's choose a property so we can all be clear about what we're talking about。

So it turns out there's a share of no-tell on the corner of 36th and Chestnut Street here。

in Philadelphia。 So Deena and her co-authors were curious as to whether the reviews of that property were。

the same on TripAdvisor as they were on Expedia。 So most of you have probably been to those websites and you'll notice again it's a 5-star。

review system and you get a histogram of reviews。 So some number of 1-star reviews， 2-star reviews。

3-star reviews， 4-star reviews and 5-star reviews。

Now if both of those sites are providing the same objective information those histograms。

should be identically matched。 So that was the test that she wanted to see were the histograms different for the same。

property。 And what she found was on TripAdvisor there were slightly more 1-star reviews for certain。

properties and also slightly more 5-star reviews。 And when she dug in a little bit more what she found was if you were operating that hotel。

the Sheridan Hotel at 36th and Chestnut Street and located quite close to you was a competitor。

a competitor who perhaps just owned their own little hotel。 Let's call it Chris' Hotel。

Chris our friendly videographer and Chris' hotel is competing。

with the Sheridan and because he's a one-man shop not really accountable to a big organisation。

as I would be if I were a manager at the Sheridan he would be more likely to write a。

one-star review and try and knock his competitor， the Sheridan at 36th and he would be more likely。

to write a 5-star review and to praise his own property。

That's what Dina and her colleagues found。 So again it's very very interesting to think about whether review information is valid。

because certainly people are acting on the basis of review information。

So this is a good point for me to now summarise the key idea if you were to introduce reviews。

into a market what you'd want to do is to make sure those reviews are objective and verifiable。

And so what Dina did in her study is she made an assumption that reviews on Expedia are。

more objective than reviews on TripAdvisor。 So I'll let you think about that for a moment as to what the reason might be if you've looked。

at both of those sites。 I use both myself when I'm deciding where to stay。

TripAdvisor was less objective than Expedia for the following reason。

In order to be able to post a review on Expedia you have to have stayed at that property within。

the last six months。 So Expedia will send you an email and they'll know from your credit card receipt that you。

actually booked and you stayed there。 Whereas at TripAdvisor you are supposed to have stayed there but that need not be the。

case。 I could go and write a review for a property that I had not stayed at。

So again I think this is a fascinating area of online offline competition and again I'd。

like to challenge and encourage those of you out there who are thinking about starting。

your own business if you can start a business that brings information into a market。

That can be something very very powerful if you think about the story of how TripAdvisor。

has grown into a multi-billion dollar company that's essentially just gathering and processing。

and providing review information that's generated by all of us。

[MUSIC]。

沃顿商学院《商务基础》｜Business Foundations Specialization｜（中英字幕） - P152：9_产品生命周期3 29.zh_en - GPT中英字幕课程资源 - BV1R34y1c74c

[MUSIC]。

So welcome again everyone。 Now we're getting into Module 2。 Module 2， I think。

is going to be really fascinating。 It's all about how to try and find those lead users。

those special people who are really going to engage with our brand。

It's going to be about how they connect to each other and various networks。

how influence spreads and all of those good and kind of interesting things。

But just to establish our platform， I want to share with you one of the most， I think。

fundamental things that we think about in a marketing course or in a marketing sense。

This is the notion of the product life cycle。 So the product life cycle says that every product goes through at least four stages。

First of all， the product is introduced， then it goes into a growth phase， then it matures。

and then eventually the product declines。 And of course， at the very beginning。

there has to be some research and， development done to bring the product to life。

So as you can see on the screen， the sales kind of take off， peak。

and then they peter out at the end。 Now of course， underlying that。

that's the result for the product， are the people themselves who are driving the process。

And what we want to do is to try and figure out how to get that process going as quickly as possible。

and to identify the people on the left of the curve who are really the innovative ones。

who are going to spread word of their mouth and bring other people into the fold。 So again。

this is an old idea from Everett Rogers who is a professor who came up with。

this theory of diffusion of innovation。 And he said， you know。

there are kind of five sorts of people out there。 And maybe you can think about what group you fit into for what kinds of products。

So first of all， there are innovators。 Those people are the people who just run out and buy new products on their own without any。

need to talk to other people。 And they're thought to account for about 2。5% of the population。

The next group are the so-called early adopters。 They account for about 13。5% of the population。

Going on from those people are the early majority。

They are another 34% so now we're at 50% of the curve。

Now we're going to move over to the right side。 The next 34% of the so-called late majority。

And then finally， this is probably my favorite group are the laggards。

These are the people who come to the party last。 Now it's quite possible that you could be an early adopter when it comes to cell phone technology。

You're one of the first people to get the Samsung or the iPhone。

But you're a laggard in some other area。

You're a laggard when it comes to televisions。 You don't really care about having the latest TV。

So what we're going to be talking about over the next few sessions are how do we really。

focus on those innovative people？ How do we understand their networks？

And how do we understand how information flows？ This is also a very foundational concept for part number three or week three。

Because when we think about doing advertising or setting prices or sending products through。

a channel， in many ways we need to think about the stage of development that the product， is in。

So we may price differently at the beginning of the product lifecycle compared to the end。

We may use different kinds of advertising messages。

And certainly we will have different sorts of distribution channels for the product。

So again， this is a good one to internalize。 It's somewhat controversial sometimes。

but I think it's still a great way to get our， minds around how products pick up。

take off and eventually go into decline。

[MUSIC]。

沃顿商学院《商务基础》｜Business Foundations Specialization｜（中英字幕） - P153：10_更多影响力案例8 42.zh_en - GPT中英字幕课程资源 - BV1R34y1c74c

So we've just completed study number one。 Study number one was looking at the。

spreading of lead users through neighborhoods。 Now what we're going to do。

in study number two is we're going to look not at neighborhoods directly we're。

going to look at actual individuals influencing each other in a social， networking site。

This study was conducted by some colleagues at UCLA and also at。

the University of Maryland。 So let me go through the problems or the challenges。

first that these authors faced in trying to do this study。 First challenge they。

face is if you're a friend of someone on a social network that could be a very。

strong tire or it could be a very weak tire。 That friend could be your best friend。

that you grew up with and you've known since five years of age or it could just。

be somebody that you met at a function and you exchanged business cards and。

became connected as friends on Facebook。 So the first challenge that they faced。

and looking at these social networking sites is what the friend actually means。

for some people it could mean a very very strong thing for others it could be， very very weak。

So they didn't want to necessarily look at connections among。

friends per se。 The second thing that was kind of challenging is these。

databases are huge and the number of connections is very very large so they。

had to think of some simple statistical way of trying to get at that。 And the goal。

of the study was to try and understand who's influential for whom。 So if Chris and I。

connected on a social networking site am I influencing him or is he influencing。

me that was the goal of the study。 So for those of you who enjoy a little bit of。

history I did some digging around and it turns out that the very first social。

networking site at least in the United States was one called classmate。com。 Since。

then at least in the US we've seen many come and go there's been friends to。

there's been my space and of course now there's Facebook and who knows。

Facebook seems here to stay with over a billion people currently part of that。

community。 So the researchers wanted to understand who in the network is， influential for whom。

So what they decided to do since the measure of just pure， friendship is not that diagnostic。

A friend could be someone that I barely， know or a friend could be someone that I've known for 20 years。

So the way they， measured influence was quite clever。 What they did was try to figure out if my。

activity in the social network was influenced by somebody else meaning after。

they did something I also started to follow their activity as well。 So to go。

back to the example of Chris and I let's say being connected on Facebook he's。

going to be influential for me。 If after he starts posting content and photos and。

videos I start going to his site and start looking at it。 I'm not influential for。

him if I'm doing those activities but that's not affecting his activity at all。

In simple terms that's what the authors were doing here with this study。 So what， did they find？

Well they wanted to try and figure out who was going to be。

important and who was not going to be important and on average how much。

influence goes on in a social networking site。 Now if you think back to some of the。

terms that Pete mentioned in his part of the course probably the word that he， mentioned the most。

Knowing Pete I haven't done the exact count as the word， heterogeneity。

Heterogeneity is one of our great buzzwords in the marketing， Coursera course。

It just means people are different and we have to understand the， extent of those differences。

So there was huge variation they found in the level， of influence that was going on。

Some people were highly influential， some people， were not influential at all。

others were highly susceptible to influence， others。

were not influenced by people at all。 So what are those numbers kind of look， like？

Well here's the bottom line from the study。 The authors found that on。

average you are influenced about by about 20% or one-fifth of your friends on。

Facebook or LinkedIn or whatever other social network you're active in。 About。

one-fifth of them are influencing you and the other 80% or so are not really。

having much sway over your behavior at all。 Now if we turn the problem around。

this statistic to me is also very very interesting。 They found that about one。

third of the people in the social networking site were not influenced by， anyone。

These are kind of the maverick people who just do their own thing and。

they don't worry too much about who's posting what and other things that are。

going on in the social networking site。 So you're influenced by 20% of your， friends。

about 30% of you out there are not influenced by anybody。 Now let's sort。

of dig under the hood a little bit and try to understand the extent of。

variation and influence and what causes influence in a social networking site。 So。

let me now explain the blue histogram that you see in front of you。 This is just a。

histogram taken from the original article。 What it's showing is the amount of。

influence that framed F has on user U。 And what you can see towards the left。

hand side of the chart is there are many people whose influence factor if you。

like is very very small close to zero。 And in the right hand side it's a little。

bit like a long tail diagram again。 In the right hand side at the extreme level。

there are some people a smaller number who are hugely influential。 And on average。

about 20% of the social network people in the social networking space are， influencing other people。

So what you can see on the screen now is another chart。

from the paper and I'm just going to explain the key results here。 I think。

these results actually are very interesting。 Actually fascinating results。

and things I think that we could not only use but maybe also relate a little bit， to our intuition。

So the first thing the authors found was someone who's been in a。

social networking site for a longer period of time on average is more。

influential than somebody who's just joined。 I think that makes sense。 That's a。

nice statistically significant effect。 The second effect which I think speaks。

to cultural background as well as ethnicity is that people who are from。

the same ethnic or cultural background on average have more influence over。

each other than just random people。 This is again partly due I think to。

homophily。 So I'm more likely to be influenced by somebody who's from the。

Australia New Zealand kind of part of the world than somebody who's just coming at。

random。 The next thing that they looked at was gender， influence。

Now this one I find particularly fascinating。 So of course there are two。

genders and four possibilities for influence。 Men could influence woman， men could influence men。

woman could influence woman， or woman could influence men。 Out of those four possible combinations。

there was only one statistically significant path of influence。

The guys and the girls out there can probably relate to this。 Girls were。

influential over guys but not the converse。 And again think about what the。

definition of influence is in this case。 The definition is。

when somebody is engaging in activity in the social networking site posting。

commenting and so on other people are checking that out and following along。

So when females do that males follow along but not the converse。

So there's actually a lot of interesting research that's being done in the area。

of gender segmentation on the internet and I think this is just another finding。

that plays right into that。 The final result that they found。

is to do not with who you are as a person or how long you've been on the side。

but what it is that you talk about and what you say when you get there。

and how you present yourself。 So we've already discussed reputation and review。

This is a little bit of your personal reputation。 It turns out if you're on a。

social networking site and you're indicating that you're looking to date。

other people that significantly reduces your influence。

So maybe think about that before you start posting too much。

Okay what are the implications of this if we want to advertise。

on social networks or we want to run social networks and so on。

There's really three things there that I put on the slide but let me just go， through them。

First of all simple counts of who is， a friend with whom are not really sufficient to understand influence。

because sometimes a friend can mean a really really close friend。

other times it's a person you've just met。 There's really too much variation。 So we。

need different ways to measure who's influential， on a social networking site。

Secondly the authors found when they did some， simulations if you take the very best people out of a social networking site。

that dramatically reduces the value。 So just like in the real world。

there are some special people who have disproportionate influence， over others。

That's very very important to keep in mind。 And then the final point that's related to the one that I just made。

is if you want to advertise on a social networking site or you want to use a。

social networking site to promote the products and services that you may be。

wanting to offer to people most of the payoff you get。

is from identifying the very best and most influential people。

Since many many people are uninfluential at all there's great returns to figuring。

out those who are the best in this environment。

[MUSIC]。

沃顿商学院《商务基础》｜Business Foundations Specialization｜（中英字幕） - P154：11_更多影响力案例(二)12 34.zh_en - GPT中英字幕课程资源 - BV1R34y1c74c

So now just to recap we've done two studies that I think to show some very very interesting。

findings about spreading contagion and influential users。 We've looked at demandfinnetgrossa。

com spreading through neighborhoods throughout the United， States。

We've also looked at who's influential for whom in social networking sites。

So we've been in the real world and in the virtual world now let's flip back to the real。

world again。 So one area that gets looked out a lot for influence and contagion is among professionals。

particularly professionals who are in the medical community。

So what I'm showing you here is a diagram that's coming from a paper that was written。

by two of my colleagues here at the Wharton School and also one of their colleagues out。

at the University of Southern California。 This is a network you might recognize this kind of diagram from the very first thing that。

we looked at when we started this discussion about networks and neighborhoods that YouTube。

linked that I gave you to show the spreading of obesity that controversial study throughout。

Boston and the United States。 This is the same thing here。

What this is showing is among 174 physicians in the Los Angeles area who is connected to。

whom and the size of the circle is also indicating some degree of influence。 So what the firm。

the medical firm and the researchers wanted to understand is who in。

this network is influential for whom and by how much。

So again to go back to my all purpose friend Chris who's now going to wear the hat of， a doctor。

Chris is a physician in LA and I'm also a physician。

If he starts prescribing a certain drug to his patients， maybe I'm going to follow along。

and do the same thing。 Now of course if the drug company knows which doctors are influential。

that's very important。

for targeting purposes。 So what the colleagues did is they used the methodology very。

very similar to what I showed， you earlier。 Remember we had the four zip codes Z1， Z2， Z3， Z4。

In this case it's the same idea but instead of zip codes they're doctors。

So they looked at which doctors were connected to whom。

That's the first piece of information and then secondly which doctors had already prescribed。

the drug and which doctors had yet to do so。 So remember when we study contagion processes we need to know two things。

Who's connected to whom and who's done what up until the current point in time。

Now they found a couple of really interesting things let me give you the highlights。

They measured influence and contagion in two very different ways。

One way was to just ask people on a self-reported basis， "Hey are you influential？"。

On a scale of one to ten。 And it turns out if people say they're influential it's not too bad but it's actually a relatively。

weak predictor compared to an indirect measure of measuring influence which is whether or。

not I'm citing Chris's work as a doctor。 I'm referring to his scientific study。

So instead of looking at a measure of influence that is self-reported what they did is they。

had another measure of influence that was in some sense more objective。

Were doctors referring to each other's work and each other's scientific studies and they。

found the second one was more important in predicting the way these drugs were going to， diffuse。

So now let me give you the main takeaways from the study which I think was really really。

fascinating。 So first of all the firm found it was really helpful for them to try and understand the。

network structure of their customers in this case the doctors。

And also in understanding this network structure they were able to identify that it could。

be a contagion process was at work and the contagion process was driven by these influential。

people。

Now what's really interesting about this is some of the interests the influential people。

weren't necessarily the people who put their hands up and said hey I'm influential but they。

were the people that they figured out indirectly were influential that is the doctors to whom。

others referred in terms of scientific studies and citations and so on。

And there are also some quite special people who had their feet in different camps as it， were。

So in the study they found that there were certain Asian American doctors who both were。

influential for other Asian Americans but also for people outside of that ethnic group。

as well。 So very very interesting it tells us that understanding the network structure is important。

Number two that contagion occurs through the network and number three in all networks there。

are certain special people who are more influential than others and our job as marketers is to。

try and understand who those are。 So now let's turn to our fourth and final study so we've just finished a study of physicians。

in the real world we've looked at some other things in the virtual world and now we're going。

to go back to the virtual world again but with a real world twist。

The company that we looked at in this case is a company called Benobo's has been around。

since about 2007。 Selling means clothing online also selling through traditional retailers and I think I。

mentioned them a little bit earlier in the piece as well。

So this resulted in a paper that my colleague and friend Jay Young and I wrote about something。

called neighborhood social capital and online sales so let's look in and see what that's。

talking about。 So now I'm just showing you a screenshot of the company Benobo so you can see that they're。

selling to men the target is male's age roughly 20 to 45 who are somewhat fashioned forward。

and looking for affordable fashionable clothing。 So what we wanted to do in this case is we wanted to try and understand whether or not。

there was real world interaction that was increasing the virtual world sales of this， company。

So what I mean by that is that my friend Chris and I， so Chris is back in the picture。

this time he's just a regular friend who wants a pair of pants。 He's not a doctor anymore。

So Chris and I are friends and if Chris happens to buy some items of clothing from Benobo's。

dot com and I see him wearing them and he tells me about them is that going to lead me。

to then increase the chance that I buy from the same website。

That's what we wanted to look at whether or not interaction in the real world was going。

to lead to additional sales in the virtual world or at the website of the company。

That was the first piece。

Now the second piece again here it's on the slide we wanted to see whether or not there。

was an effect of something called social capital。 Social capital is a really fascinating concept and it's one that was really coined I believe。

by a fellow at the Harvard University's Kennedy School of Government， a gentleman by the name。

of Robert Putnam who wrote a book called Bowling Alone。 Think of Bowling Tenpin， Bowling in America。

The metaphor is Bowling Alone that people are maybe somewhat less social than they used， to be。

Maybe we're spending all of our time online we're disconnected from other people。

And so what he wanted to do is he wanted to understand in local neighbourhoods how connected。

people were to others。 Did they participate in churches and tennis clubs and get together with each other and。

so on。 And what he did is he did a huge survey called the social capital community benchmark survey。

where he and his team literally went around to about 30，000 different zip codes within。

the United States and they asked people like my friend Chris， "Hey Chris， do you like your。

neighbours？ Do you trust your neighbours？ Do you interact with your neighbours？"。

And so some very interesting data was collected about trust and interaction。

So neighbourhoods with more trust and interaction and neighbourhoods that have higher social。

capital we wanted to see whether in neighbourhoods with more social capital there would be more。

sharing， more efficient sharing of information。 Now I just want to draw your attention to one other thing about this particular website。

There are three conditions related to the product that are particularly important for， our study。

The first is that items of clothing like the sweater that I'm wearing have what are called。

non-digital attributes。 What does that mean？ Well a non-digital attribute is something that's very hard to represent perfectly over。

the internet。 So price is a digital attribute。 If I go to Amazon and I see a book is costing $20。

I know it's $20。 It's easy to communicate price information over the internet just as it would be if it。

were positioned in a store。 However， to try and communicate how this fits and feels is actually quite difficult。

So in that case transmission of information from one customer to another in the real offline。

environment could be very very important。 Secondly in our study we wanted to focus on those customers who hadn't yet bought anything。

from the website。 This was going to be their first time purchase。 Why is that？

Well because once you've bought something from a website and you've tried on the sweater。

you have your own judgment。 You don't necessarily need the opinion of other people unless it's about the overall。

fashionability。 And then finally this is a product that's socially visible so it might be one that actually。

generates a conversation。 So I might see Chris and say hey Chris。

look very well dressed today where'd you get those。

pants and then a conversation ensues。 So I just wanted to reiterate that this is a product category that's a little bit different。

to most of the products that we've been talking about that are being sold by our friends at。

QuizZ places like soap。com and diapers。com。 Those products have primarily digital attributes。

There's no real surprise if you order some tied detergent and it shows up at your house。

you know exactly what you're going to get。 There's no problem of communicating that through the internet。

So this time we wanted to look at a business that was a little bit different。

There was a fashion business that had these other properties。

So let me show you what the raw data look like。 These are just the sales data for the company over the first I think 42 months or 3。

5 years， of operations。 You can see that over time the number of new customers coming in is going up。

You can also see with the blue arrows that in neighborhoods where there's more trust。

and interaction the sales are higher than in neighborhoods where there's less trust and。

interaction。 So what does this all mean？ Well Jay and I put together a statistical model to try and understand this in more detail。

And what do we find？

And the findings are here shown on the screen but let me explain what's going on here。

We found that about the 6，000 trials that we looked at at least half of them were influenced。

by what we call social learning meaning the evidence from the statistical analysis suggested。

that some of these new customers became customers because someone in their local neighborhood。

told them about it。 So that's a pretty important effect half of all the sales of this company。

Secondly related to that we found that the customers who came later on were the ones that。

were most influenced by the social interaction。 This ties back to some of the themes that we've talked about earlier。

The people who do things right in the beginning they don't usually need to rely so much on。

the opinions of others they just like to go out and do stuff。

The people who come in later they require more social information typically and that。

was also confirmed in our study。 The second thing that we found that was really I think the most interesting finding to us。

was the following。 In neighborhoods where there's more trust and interaction。

more social capital there's， not necessarily higher sales so it's not that just neighborhoods with trust and interaction。

have people who buy more stuff but what happens is in those neighborhoods when information。

gets transmitted it's more believable and it's more trustworthy and it's more efficient。

So if Chris and I live in a neighborhood where we trust each other and like each other a。

feed tells me something I put more weight on it。 That's the result that was coming through here。

So how could the firm or no-post。com or any firm kind of use this information？

Well when we did our analysis we were a little bit restricted to only the zip codes where。

the social capital survey measures had been collected so there were many many zip codes。

in the United States for which those measures were not collected。

Now earlier I think I said that Mr。 Putnam went out and he measured 30，000 zip codes actually。

just to be clear he measured 30，000 people who were living in about 1000 zip codes。

So if a firm really wanted to use this clearly only knowing about 1000 zip codes is not quite。

enough。 So here's a question I want to put to you all out there and then I'll give you the answer。

If you could think of a proxy that means some other variable other than the true measure。

of social capital that would indicate that males aged roughly 20 to 45 were socializing。

together and had some level of social capital what might it be？

The number of hospitals per zip code， number of churches maybe， number of rugby clubs。

okay you're going in the right direction turned out that the number of bars and liquor stores。

per capita was a very nice predictor of the efficient diffusion of information among this。

group。 Why am I telling you this because I want you to be creative and to think a little bit expansively。

when you start to use these concepts and you start to think about gee how could I use this。

idea for my own business that I'm working on or the company that I'm working at now。

So that brings the conclusion to this piece of our discussion。

I hope you enjoyed those four studies。 Number one the netgrosser。com。

number two the social networking side of influence， number。

three looking at diffusion of drug prescribing behavior by physicians and finally how offline。

interaction is affecting people's sales of products on the internet for the notos。com。

[Music]， [Music]。

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沃顿商学院《商务基础》｜Business Foundations Specialization｜（中英字幕） - P155：12_定价策略3 心理因素9 47.zh_en - GPT中英字幕课程资源 - BV1R34y1c74c

So let me introduce the concept of "men'sal accounting" which I think is really fascinating。

for pricing。 And here's the example I want to give as I mentioned was developed by Richard Thaler。

who's a professor at the University of Chicago。 And he presented people with the following scenario。

He said， "Imagine an individual that's called him Mr。 A， and Mr。 A has just won two tickets。

in lotteries。"， It's kind of a lucky guy。 He won one ticket for $50 and another ticket for $75。

So he's won two separate lotteries valued at $75 together。 Mr。 B， let's call him Mr。 Brown。

he also is pretty lucky。 He won a ticket for $75。 So from a strictly economic point of view。

both of these gentlemen have had their wealth， go up by $75。

So if we believe that people are completely rational， then the fact that both of these。

gentlemen increased their wealth by $75， they should be equally happy。

But when he presented this to individuals like you and I in an experiment and asked us to， say。

"Who do we think's happier？"， Mr。 A or Mr。 B， "We all think Mr。 A is happier。"。

And the reason we think that is when you get good news， like windfall gains， it's better。

for that good news to be spread around。

So think about if you had for your wife or husband or someone else in your family， sons。

or daughters， you wanted to buy them gifts for Christmas and you bought them three gifts。

for Christmas。 Would you wrap them all in one big box or would you separate them out？

I think we all know again， at least in Western culture， we'd rather separate them out。

So when news is good， you want to spread it all around。

Okay， so let's continue with this example。 What about if news is bad？ So in this case， Mr。

A in the experiment received two unfortunate letters from two different， tax authorities。

The federal government in the United States says， "Sorry， Mr。 A， you owe an extra $100。

on your taxes。"， The state of Pennsylvania also sent him a letter saying， "Sir。

you owe $50 on your taxes。"， So the poor guy has to cough up $150 to the tax authorities。 Now Mr。

B also received some bad news。 He owes $150 in tax， but only to the federal government。 So again。

we have two individuals who've both been given the same negative information。 They have to pay $150。

But because， again， Mr。 A has received two negative hits， people like you and I in the。

experiment think that Mr。 A is going to be less happy。 So this is exactly the opposite inference。

When you've got bad news， you should lump it all together。 Good news should be separated around。

So what does this mean for pricing？ Well， imagine that your company and your charging customers a lot of different things。

three， or four different things。 You might be better off trying to give that price information just as one overall price。

rather than itemizing the entire thing。 And again， if we think back to the financial crisis。

there was an interesting example of， this on a large scale。

You might remember that the federal government in the United States bailed out various banks。

and so on to the tune of about $750 billion。 That's a lot of negative information。 That's a big hit。

But I think people became especially annoyed about this when they saw that $50 billion was。

going to bank $100 billion to this bank。 And so listing things that are negative creates a disproportionate negative effect。

So if you've got bad news， what you should do is you should integrate it all together。

Now what about if news is mixed？ This is interesting things for pricing。 So again。

imagine my friend Amy here at the Wharton School。 She likes to come to school by bike。

And even though crime never happens in Philadelphia for the sake of argument， let's imagine that。

it does， and poor Amy's bike is stolen。 It's going to cost her $180 to replace it。

Chris as well again， perhaps it's the same thief who knows。 He has a bike， slightly better bike。

a $200 bike。 His bike is also stolen。 But Chris， on the way to get his lunch in the cafe and Huntsman Hall。

he notices on the， ground a $20 bill。 So Amy is out $180。 Chris is out $200 but he found $20。

But he's also out $180。 Well， who's happier？ It turns out that Chris is actually happier because of something called the silver lining。

principle。 Yeah， he got negative $200 but the plus $20 sort of makes him feel better。

So how will we translate this into pricing？ Well， if I'm trying to sell you a car for $20，000。

instead of charging you $20，000， I， might be better off charging you $22。

000 but let me give you a $2，000 rebate。

So I'm sure you can see how that principle kind of works。

So now I'm just going to spend a couple of minutes introducing a very， very important。

psychological theory called prospect theory that has interesting implications for pricing。

I'd encourage you if you're more interested in theory than just beyond what we're talking。

about to just have a search for on Google。 So prospect theory was developed by two psychologists。

The first of whom is Professor Daniel Kahneman who still teaches at Princeton University and。

has written a number of other influential things in the area of human psychology and decision。

making。 So the co-author was Professor Amos Tversky who unfortunately passed away who was a professor。

at Stanford University and the two of them received the Nobel Prize for this idea。

So it's a pretty good idea。 Let's see how it applies to pricing。

So in standard economics as you might imagine， you and I are supposed to be indifferent between。

outcomes that have the same expected value。 What do I mean by that？ Well。

let me give you a simple example。 So let's imagine my friend Amy offers to give me a $100 bill。

She says， "Okay David， you can have a $100 bill or you can take the following gamble。"。

And the gamble is I'm going to toss a coin， a fair coin。 If the coin comes up heads。

I'm going to give you $200。 And if it comes up tails， I'm going to give you nothing。

So if I think about that， getting $100 for sure， that's $100。

The gamble also has an expected value of $100 because 0。5 times 200 plus 0。5 times zero。

is also 100。 So the expected gain I'm going to get from these two things is exactly the same。

So if I'm a completely rational calculating person， then I should be indifferent between。

these two options。 But maybe you have a preference。 I would certainly have a preference。

I'd take the $100 for sure。 So what Professor Kahneman and Diversky found is when options were offered as a sure thing。

and that were positive options， like receiving money for example， people would rather have。

the sure thing than the gamble， even though the expected value was the same。

Counter to what we would learn in traditional economics。

So they developed a new theory called prospect theory that has three really important points。

to it that are missing from most other standard theories。

The first one is that people have an internal reference point where they expect certain。

things from a stimuli like price。 And I'll explain this with an example in a moment。

The second thing is people respond differently to deviations from the reference point whether。

they're positive or whether they're negative。 And then thirdly。

there's something called diminishing sensitivity that's a little bit， more complex。 I'll let you。

those of you out there who are very interested in this theory to look that， up on your own。

But let me give an example of how it works for pricing。

So imagine I go to my local Starbucks to buy a cup of coffee and I'm expecting to pay a。

dollar for the coffee。 That's my internal reference point。 When I get there。

the coffee is selling for 75 cents。 So I've just encountered a gain or a positive deviation from the reference point。

Paying 75 cents is better than paying a dollar。 So because of that gain of 75 cents on the x-axis here。

my happiness is going up by some， amount。 I'm happy from that gain of 75 cents。

But what's happened because of that transaction？ My reference point has now shifted from a dollar to 75 cents。

It's been affected by the experience that I've just had。

And then I go back to the Starbucks a day later expecting to pay 75 cents。 But lo and behold。

the price has gone up to a dollar。 So now what's happened from my reference point of 75 cents。

I've encountered a loss of， 25 cents。 The loss is the same size as the gain was before。

But the loss causes me to feel very， very unhappy。

So there's a phenomenon called loss aversion that for the same deviation， 25 cents in either。

direction。 The pain of the loss might be twice as much as the pleasure of the gain。 Again。

I'll let you go into this in more detail on your own。

But the idea is if you promote your product too often， then you try to raise it back to。

the regular price。 You've already driven somebody's reference point down。

And then when you raise the price back to the regular price， you're setting them a loss。

that they will react negatively to。 That's an important implication of this theory。 Okay。

so let me summarize what we've done in this module about pricing to value。 First and foremost。

the thing to keep in mind is the framework for inputs to the pricing， process。 First of all。

what's my marginal cost？ I do not want to price below that。 That's the floor。 Second of all。

what is the customer's willingness to pay is determined by their price sensitivity。

That's the ceiling。 Thirdly， by how much will I have to reduce the price because of competitive pressures。

And fourthly， by how much will I have to raise the final price to the consumer just to give。

my distributor or my partner some margin to play with， those are the four things that。

determine price。 That's the framework。 The second thing that we spent a lot of time on was the notion of customer price sensitivity。

and how it could be measured。 And then finally， pricing wouldn't be as much fun and wouldn't be as complicated and。

as intricate without thinking about all of the aspects of human psychology that come into， play。

Things like prospect theory， things like mental accounting， the endowment effect， and so on。

[MUSIC]。

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沃顿商学院《商务基础》｜Business Foundations Specialization｜（中英字幕） - P156：13_分销策略1 简介13 38.zh_en - GPT中英字幕课程资源 - BV1R34y1c74c

[MUSIC]。

So welcome back everybody， we're continuing with Go to Market Strategies。

And this time we're going to talk about customer access and distribution。

So the fourth P place distribution。 So let me just run through how we're going to address place as we go through。

There's really just going to be two key themes。 The first theme is how do channels of distribution develop the structure that they do。

So who is doing what， who's getting the product to the end consumer。 And then secondly。

how do channels get coordinated？ Because channels of distribution are often places full of conflict。

So for example， I'm Procter and Gamble。 I'd love it if all Walmart did， it was only sell tied。

But of course， Walmart wants to have a lot of variety on the shelf。 Why is that？

Because not everyone wants to buy tied， people want choice。

And so oftentimes in a channel of distribution， there is inherent conflict。

So we're going to look at the structure of channels and。

also how channels get coordinated。 So let me begin with some interesting things I think about distribution or place。

We call place sometimes the final frontier， the final P。

Oftentimes people don't think about distribution as a way to innovate。

But I think they really should， and here's some reasons why。

So distribution can really be an important source of sustainable competitive advantage。

So think about the kind of advantage that a company like Apple has developed。

through the fact that it owns its own stores and it owns the experience with the customer。

Secondly， distribution can provide increasing returns to scale。

What do I mean by that？ If I'm a large brand like Coca-Cola and I'm distributed by every single outlet in。

the state of Pennsylvania， I may get a disproportionate return to market share。

just because I'm everywhere。 And then the third thing to think about is distribution decisions can be sort of。

long lived and difficult ones。 If you build physical distribution。

it's going to cost you some money to do so， so you need to really be sure about the return that you're going to get。

Now， as I said earlier， I think distribution is often overlooked， but。

also it's a place where there could be tremendous value unlocked in terms of new， business ideas。

new services and new products coming into play。 So think about the way that you can change the nature of the distribution。

channel by taking a hard good and turning it into a soft good。 Let me give you an example of that。

So when money is money and only cash， there are certain things you can do with it。

But when money becomes credit or when money becomes available on your mobile， phone。

that really frees up the way people can transact。 If you think about a movie。

when a movie can only be watched in a fear that's very。

different than being able to stream a movie onto your mobile phone。

So anytime a good is a hard good and can be changed into a soft good through an。

innovation and distribution， that can really change the nature of markets。

Even what we're doing now through our Coursera class is kind of an example of， this。 Normally。

the Coursera course， or the marketing course that Barbara and， Pete and I teach together。

would be taught in a physical facility at the Wharton。

School to a limited audience in a particular time。 Now， of course。

it can be taught to a much broader audience and， we're really happy about that。

And also， it can be taught at any time。 You guys can be watching these videos as many times as you like。

So the first thing we're going to do in customer access and distribution is。

think about the structure of the channel and who the key players are。

And the most basic thing to think about here is whether a channel is direct。

meaning that the provider of the good or service is going straight to the end user。

or whether or not there are some intermediaries or layers involved。

And let's look at this example on the slide of the American Hospital Supply。

Company to kind of illustrate why sometimes it can be efficient to place。

an intermediary between the producer of a good or service and the end user。

So let's imagine we have a market with three manufacturers on the left hand side， the three squares。

and three consumers indicated by the three circles。 Now。

if every manufacturer had to sell individually to every consumer。

that would be a possibility of three by three or nine different。

combinations of buying and selling or， transacting occurring。

as Barbara spoke about in the very first sessions。 On the other side。

imagine now that a distributor or， middle person comes into this market。

there are still three manufacturers and， three consumers。

but now the three manufacturers just sell their product to。

the distributor and the three consumers just visit the distributor or the retailer。

So now there are only six possible interactions。 So by adding a distributor to a channel。

creating an indirect channel， I dramatically reduced the number of transactions。 Well。

probably not dramatically in this example， but if you look below the line， it's certainly dramatic。

So American hospital supply found that it could reduce the total number of。

transactions that will be needed in this market from 850 million by aggregating。

down to only about 100，000。 It's still a lot， but it's a huge reduction。

So that's the economic theory of why an indirect channel is sometimes preferred。

over a direct channel because it reduces the total number of transactions that are required。

So again， there are some efficiency advantages of having an indirect channel， over a direct channel。

However， there are other advantages of going direct。 What might some of those reasons be？ Well。

if I go direct to the end customer， I might create a special kind of barrier。

to entry for others in that market。 So now for example。

that Apple as a manufacturer goes direct to its end customers， through its own retail store。

makes it difficult for other sellers of hardware and。

related software to do the same thing or to do it just as well。

Another reason for going direct is you get sometimes much better feedback from， the market。

If you have to rely on some intermediary to tell you what customers really like。

what variety and what prices， they may be unwilling to do so。 So by going direct。

you can kind of go around or cut out the middleman。

The third thing that you can do is you can sometimes bundle other goods or。

services more efficiently， higher margin products。 So if I go into the Apple store to buy an iPhone。

maybe they can also sell me a laptop， and some other devices while I'm in there because now the manufacturer is。

controlling that channel and going direct to the end consumer。

So what I'm showing here now is a diagram that kind of explains in graphical form。

all of the things that happen in a channel of distribution， all of the various flows。

that have to take place。 This is a pretty long channel of distribution， as you can see。

going all the， way from the supplier of the good and service on one side， all the way to the end。

customer on the other side。 So here are the five things that have to happen。

And this is an interesting diagram because it also helps you understand how this flow。

can be disrupted。 So first of all， physical product has to move from the supplier all the way down。

to the end user。 Secondly， sometimes there's a flow of title or ownership。

Of course there's a flow of payment， sometimes how the end user has to send。

the payment back to the supplier。 And then of course there is information and promotional flows as well。

So what I want us to think about here is in a channel of distribution。

there are players who are responsible for the flow of both goods and information。

So as you look at this chart， I'd encourage you in your own time to think about how。

the channel of distribution could be disrupted in a way that's very， very innovative that。

might lead to a new business。 So let's look at the one on the top。

which is the physical flow of goods and services。 And let's relate that back to our course case。

quidsee。com。 So how do quidsee change or disrupt this existing channel of distribution？ Well。

in the prequidsee days， if I wanted to buy some detergent， I had to go to a supermarket。

who'd received that product from a manufacturer via warehouses and distributors。

pick it up myself and take it home。 What quidsee did is innovating on the delivery to end customers by sending that product via。

Federal Express or UPS directly to my home。 We're seeing of course increased innovation in this area too。

as companies like eBay， Google， Amazon and so on， are figuring out ways to either send things directly to a home。

if they're physical goods and services， or perhaps send them to intermediary places。

like existing stores where there are lockboxes and we can then go and pick them up。

The same thing also applies for services， not just for physical products。

Think about the process whereby in the old days you might want to book a hotel if you。

were going to New York City for a vacation。 You might have to call a travel agency or even go to the hotel website and find out if the。

product was available or call somebody。 Now of course that's been disrupted by apps such as Hotel Tonight。

You can just go onto an app。 You can see all of the hotels in New York City where you can stay for one night at whatever。

the rate is for a single night and you can just book directly on your mobile phone。

So again， this is a very， very interesting chart because I'm sure as you go through you。

can think of ways that this system can be disrupted either for information or for physical goods。

or for title and so on。 One other example I think is an old one but very， very instructive。

If you go back to what Michael Dowled did way back in the 1990s， he realized that there。

was a physical flow of computers where the manufacturers like Hewlett Packard and IBM。

and so on sold into distributors and the product eventually ended up on the shelf and computer。

stores where Chris， my friend and I would go shopping and we would talk to a sales person。

Amy who would tell us what we needed and so on。 So a very long complicated channel involving people handling inventory and everything else。

At a certain point Michael Dowled realized well people know enough about computers now。

to order them directly on their own。 They can call 1-800-DOWL。

We can make it and customize it and ship it directly。

So I can't really stress enough that distribution is a tremendous source of advantage of new。

business ideas and also of leverage。 I'll just give one more example just so you can think about this in simple terms。

To complement the previous chart， think about distribution channels as providing flows for。

physical things and for information things。 So what do I mean by this？

So the distribution channel might be required to establish an assortment。

It might be required to deliver things， to do installation and repair。

Those are all physical things that need to be done。

The distribution channel also needs to provide information to understand what customers want。

generate leads， procure market feedback and so forth。

So almost everything that's done in a distribution channel is some combination of a physical flow。

and also an information flow。

So now what I'd like to do is to share with you a very useful tool or a very useful framework。

for understanding how a distribution channel actually functions in terms of the activities。

that need to be done。 It's called a hybrid grid。 A hybrid grid is just simply a matrix。

I know you learned a lot about various matrices from Pete。

This is the same idea in a different context。 So the columns of our matrix are going to be the activities that need to be performed。

everything， from generating initial leads all the way through to the sale of the product or service。

and then potentially even after sale。 The rows are going to be the individuals or entities who will be responsible for performing。

these various tasks。 And the idea is you want to construct a system of distribution that's optimized for the customers。

that you're trying to reach。 You want the exact right person to be performing the exact right customer such that the channel。

operates efficiently and smoothly。

So the example I'm going to give is interesting products。

It's actually a business-to-business product sold to farmers。 It's called BGH。

It's a bovine growth hormone。 I'm not suggesting that you should buy any of this but I'm going to show you how it works。

in terms of the hybrid grid。 So the marketing challenges for the company Monsanto who produced this product were multiple。

In particular they had four things they really had to worry about。

So how could they educate farmers that this was a good thing to use on their herd？

How could they assure quality？ How could they make sure that the farmers were using it correctly？

And then also how could they recycle and take care of use syringes and so on。

So the question was who on earth is going to do what？ So now let me show you this by way of a chart。

Again you can see from the left to the right in the columns are all of the activities that。

need to be performed。 Everything from generating awareness all the way through to monitoring that the vets and。

the farmers are actually using the product appropriately。 On the columns。

sorry on the rows we see all of the entities or individuals who are responsible。

for various activities。 And where I blued in the square the idea is this is the optimal combination of activity。

and person who's performing it。

And the way you figure out the optimal combination is to figure out two things。

First of all who's best at doing this from a customer point of view and secondly who。

is going to get the compensation or the rewards for doing so。

So if we start for example with generating awareness and interest that is a task that。

was going to fall to the agency， outbound telemarketing and also Monsanto sales people。

That's not something that local vets are probably going to be motivated to do unless they're。

going to be somehow compensated for doing that。 So the idea is it's the personal entity that's best at doing it and also the personal entity。

who is going to receive the benefit from actually undertaking the effort to engage in that activity。

So again if you wanted to apply this I would encourage you to take your existing business。

or business idea if you're an entrepreneur and try to figure out what needs to be done。

activities and then who should actually be doing these activities from the point of view。

of optimizing the design of the channel。 [Music]。

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So in addition to figuring out what activities have to be done and who is going to do them。

we need to make some other important decisions about the design of our distribution channel。

And one framework that's often helpful for doing this for us is to think about the intensity of distribution。

What do I mean by that？ The intensity I mean is how many outlets or how many channels of distribution do we have serving us in a particular market？

So if we have an exclusive distribution channel， that means in a particular market， Philadelphia。

Los Angeles， Tokyo， wherever it is， we just have one individual or one distributor or one entity who's bringing our product to market。

If on the other hand we have intensive distribution， that means there are many。

many providers of the product or service in a given market。 Obviously if there are many of them。

this may be creating some competition between them。

So what are some rules of thumb that we need to think about in determining whether or not we want to go with intensive distribution。

versus exclusive distribution or the midpoint which is selective distribution？

So intensive distribution might be a good thing when we don't really need any selling support。

If it's a product like Coca-Cola， we might want it in every store， every vending machine。

every place possible just so it's made available， in order to minimize the consumers cost of accessing or obtaining the product。

On the other hand， exclusive distribution might be really。

really important if we want to try to find the strongest provider and somehow reward them。

This is often used in the automobile market。 If I'm selling expensive cars like Ferrari。

I don't want somebody right next door doing the same thing。

I might want the rights to have an exclusive territory。

So that's the reason for having exclusive distribution is to protect the reseller and give them a chance to make a better margin。

In the middle is selective distribution where neither of those other two extremes really seem to fit。

The customers need to get access to the product but there's also some consultative selling that's required in order to encourage the end consumer to buy the product。

So now I'd like to reintroduce something that we talked about earlier and something that we're familiar with from our discussion of how to generate those lead users and expand the market beyond the early customers all the way to the larger target base。

Here I'm showing the product life cycle。 As you may remember， it goes through four phases。

Phase one is the introduction phase， then there's a growth phase， a maturity phase。 And finally。

most products or services at some point or brands at least enter into a decline phase。

So let me give you an example with a very， very simple product or service。

a piece of home equipment for an entertainment system for showing movies and things in your own home。

When the products first introduced， let's imagine it's initially introduced in a very kind of selective way with home video specialists。

As the product gets into a growth phase and we want it to be more widely available。

then maybe it goes into a larger distributor like a best buy or something like that if we're talking about the United States。

Finally， as the product gets into maturity， we might expand to other channels such as Walmart。

And then finally， as it goes into decline， the product may end up being sold on eBay or other kinds of secondhand markets。

So what you can see is the product goes through the life cycle。

The amount of information that's required to sell it goes down because people are familiar with the product or service。

But the intensity of the distribution tends to go up。

We want the product available almost everywhere。 And because of that。

the logistical needs also kind of increase。

So again， hopefully what you're seeing from this is when we're accessing customers。

the access to customers is also related to how the product is going through its own life cycle from introduction to growth to maturity and then to decline。

So let's continue with this idea of the hybrid grid。

namely that there are certain entities doing certain activities in sort of an optimal way。

So what are the implications of this view or using a tool like the hybrid grid to understand your own customer access plan。

your own channel of distribution？ So the first thing to keep in mind is that the kinds of activities that get done really depend on the complexity of your product。

If you have a very， very complex product like that Bovine growth hormone that I mentioned in the example。

there may be many， many things that need to be done from education to awareness to retrieval of the product to after sale service and so on。

And so that's the first thing， how complex is my product or service that will determine the list of activities。

The second thing to keep in mind is activities， once you've decided what needs to be done。

cannot be eliminated。 Once you've figured out the columns， they are what they are。

You cannot change those。 You can't suddenly decide not to provide after sale service typically or suddenly decide not to generate new leads。

What you can do however is you can change who is performing what activity and that often leads to some very。

very interesting innovations。 So let me give you three examples。

So you could think about the notion of a forward shift in function and that would be IKEA for example who used to in the early days do their own delivery and installation decided at a certain point。

You know what， we can't really do that。 We're going to let some third party do it。

So that's sort of farming off an activity to another entity who's able to do it better。

You might also think about a backwards integration as well。

This would be the case of Apple taking over some of the function of selling the goods and services themselves and their own stores as opposed to having independent retailers do it for them。

And then thirdly， we could think of a sideways shift。

This would be Amazon using a parallel company like FedEx or UPS to do the delivery of its goods and services rather than doing it themselves。

So this is a very， very important implication。 You cannot eliminate activities。

but you can change or eliminate certain players。

And often that's a vital source of innovation like the Michael Dell innovation， for example。

diapers。com。 Many， many innovative businesses don't eliminate activities。

But what they do do is they change who's doing them。

The important thing of course to keep in mind is that anyone who's performing an activity needs to be compensated usually in the form of some kind of channel margin for doing that。

Otherwise they're going to stop that。 And this is sort of a nice segue for us now into thinking about the next thing on our list after the structure of the channel and the design of the channel。

which is how does one keep a channel coordinated。

So now let's get to our third piece on the discussion of access to customers and channels of distribution。

This is kind of a fun one。 This is the idea of coordinating a channel。

And when a channel often has conflict， this can be kind of a tricky thing to do。

So let me just illustrate again by way of a chart what can go on in a distribution channel。

So you may have a manufacturer on one side saying， "Hey。

why aren't you taking my entire range of products？" And the distributor or the retailer says， "Hey。

I don't want all the dogs。 I just want the best products。 I only want the three series BMW。

I don't want the one series， but the manufacturer wants all of them to be taken。"。

The manufacturer may say， "We'd like some more information about who's coming into your store or your channel and buying our products and service。

"， And the retailer might say， "Well， we don't keep any of that information。 And even if we did。

we're not going to give it to you。"， The manufacturers and retailers might also argue over margins。

So the manufacturer might say， "Gee， you're taking too much margin。"， And the retailer says， "Well。

your wholesale price is too high。" So what we have here typically in a channel of distribution are independent businesses that sometimes might be opposing。

And we want to try and figure out what are some solutions to all of this conflict。

So let's go through some of that。 The first thing is that having some level of conflict is good。

It keeps everybody on their toes。 You don't necessarily want all of the channel -- sorry。

all of the conflict in the channel to be completely eliminated。

You want some there just to sort of keep things fresh and to keep things interesting。

So let's look at a diagram that explains the two main different types of conflict that occur in a distribution channel and how we can actually resolve these。

So in the blue there， we have a manufacturer who's distributing a product to three different retailers。

A， B and C。 And it could be the case that the manufacturer has a conflictual situation with one or all of the retailers。

And I'll show you some examples of that in a moment。 Secondly。

there's also a notion of horizontal conflict。 Horizontal conflict。

retailer B and C is somehow competing with each other or something unfortunate is happening in that relationship。

So let's start with vertical conflict。 So here's a fairly famous case of vertical conflict that I'd encourage you again to look up a little bit on the internet。

We have a manufacturer， Nike， who got into a conflictual relationship with its main distributor Footlocker。

Footlocker wasn't necessarily interested in selling and promoting every single SKU。

start keeping unit of shoes and so on that Nike was selling。 Nike， of course。

wanted Footlocker to make it a prominent brand and to give it a lot of support in the retail store。

So there was an inherent conflict between these two entities that was a vertical conflict。

So how could one resolve vertical conflict in a relationship like this？ Well， you could integrate。

So Nike could decide， you know what， we're going to have our own stores and that's where we'll sell the product。

In fact， Nike does have some flagship stores in various places around the world。

including the United States。 So there's a flagship store in Chicago， San Francisco and other places。

That will be one solution to eliminate in the conflict。 One of the players just decides。

you know what， I'm going to do the whole thing myself。

The second thing that could be done to eliminate conflicts is we could change the relationship and we could have franchised stores。

So a lot of companies in the gasoline industry do this。

There are franchises for ExxonMobil gasoline， Fast Food。

there's franchises for McDonald's and Dunkin' Donuts。

So that's also a way of minimizing conflict by bringing everybody under the same kind of umbrella。

Those are both fairly legal or structural ways of doing things。

You can also minimize conflict by being a little bit more subtle in the way that you do it by monitoring what's going on with a downstream player。

So another way to minimize conflict would be to have mystery shoppers go into the various footlocker stores and see in earth what's going on there。

And then report back to the other corporate entities and then negotiate if something was a mess。

So those are various ways， both implicit and explicit， that vertical conflict could be removed。

Another way you could do it if you were the manufacturer is you could say， you know what。

I'll minimize vertical conflict by only giving the top performing retailers my hot products or my best tellers。

I'll sort of use a carrot and stick approach to get rid of some of the conflict over who is getting what in the relationship。

So that's vertical conflict。 So now let's move on to horizontal conflict。

Horizontal conflict is really fascinating and in many ways more subtle in the notion of vertical conflict。

So by horizontal conflict we mean conflict between players at the same level of the channel。

So conflict between retailers A， B and C in my example。

So why does this horizontal conflict occur？ Well， unless those retailers are literally carbon copies of each other in terms of the level of service of prices that they provide。

there's the potential for something called horizontal free writing。

which is actually the behavior of you and I。

So let me explain that。 So imagine that there are low price low sell low service retailers and high price high service retailers。

And let's take a simple example of consumer electronics。 And for argument sake。

let's imagine that there's a high price high service retailer in my local neighborhood。

Let's call that Chris's high-fry store。 And also there's a lower price retailer in the same neighborhood。

Let's call it let Amy's discount store。 So there's a high price seller high service and a low price seller that's offering less service。

So what might I do as a consumer？ Well， I might go to Chris's store。

I might spend an hour engaging with a sales person learning about exactly the right kind of color TV。

sound system and so on to put into my home。 And then instead of buying it。

what I do is I walk across the street to Amy's store and I get the lower price。

So what I've done is I've taken something that's been provided by Chris。

not compensated him for it and in fact got a lower price from Amy。

This is called horizontal free writing and in its most extreme form we see it in terms of the phenomenon showrooming。

Where I go into a store， I engage with a sales person。 I look at all the variety。

I touch and feel the sweater to make sure it's the one that I want。 And then I go to sweaters。

com or Amazon。com and buy it at a lower price。 So how could we possibly get around that sort of situation？

Well， let's start with traditional horizontal free writing before we go into the phenomenon of showroom。

So what we could do is we could reduce the number of retailers per territory to separate Chris's store from Amy's store。

We could try and make those stores more uniform through something like franchising。 But in general。

what we could do is we could create more like selective or exclusive distribution that would minimize the chance of horizontal free writing。

It's a little bit more difficult though when we get to the internet。

So we'll look at some statistics on that in a moment。

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沃顿商学院《商务基础》｜Business Foundations Specialization｜（中英字幕） - P158：15_水平冲突12 46.zh_en - GPT中英字幕课程资源 - BV1R34y1c74c

So， let's dig a little bit more into this notion of showrooming， which is an extreme。

form of horizontal freerating。 For better or for worse。

the showrooming is really facilitated by technology， both mobile。

technology and other internet technologies， even our laptops and our desktops。

So the data I'm showing you here is data that's going through 2011 and it shows the fraction。

of consumers actually even increased through 2012 and 2013 of people who actually used。

their device， their mobile device to find a better price while shopping in a store。

Many of you may have done this yourself。 You've been in a local store。

you've been gathering information， doing a little bit。

of horizontal freerating and then you've picked out your mobile phone and you've gone。

to Amazon or another supplier to buy it。

So let's look at some additional data that kind of gets under the hood a little bit and。

sees what happens here。

So if you're someone who wants to do this， who's prone to do it， who's looking at mobile。

phone information and prices and so forth while shopping， the good news is that some of these。

people actually will buy from the website of the store that they're currently in。

But notice also about 25% of these individuals end up buying from somebody else， Amazon or。

a competitor。 So the question becomes for the traditional retailer。

what can be done to sort of push， back or fight back against this practice？

Now you'll see as we go through these statistics， it relates back to some of our early discussion。

about why omnichannel retailing now makes sense and you need to touch customers both。

in the physical world and the virtual world as well。

Again， here's some more data on the kinds of product categories that are most susceptible。

to showrooming。 Right at the top there is consumer electronics and then it declines a little bit through apparel。

and clothing and so on。 My own hypothesis about why consumer electronics are at the top is this is a product category。

where we like to be fairly well informed before we make a purchase so we may want to actually。

interact with a salesperson but because it's a pretty big ticket item， what ends up happening。

is we may then be persuaded or we may be inclined to after having figured out from the sales。

person or the physical store the best product to buy to then go online and do it at a much。

cheaper price just simply because of the value of the items involved。

So how good manufacturers and retailers fight back against this practice？

One thing that's happening now is literally the same TV produced by a big manufacturer。

like a Sony or a Sony or somebody else may end up having a slightly different model name。

for different suppliers。 So then it becomes more difficult for me to compare the price and to buy one electronically。

as opposed to buying it in the store where I end up shopping。

There are however some good news for retailers and physical stores about how they can push。

back against this practice of showrooming。 So the chart that I'm showing you now is the purchase intentions of individuals who are。

engaging in the showrooming behavior namely being in a physical store then taking out。

friendly mobile phone and looking for information in the virtual world and then thinking about。

buying it。 So a third of them always plans to buy the product online。

These are kind of the hardcore horizontal free riders。 I'm going to go into Chris's high-five store。

learn everything I can and then just buy it， at the cheapest possible online website。

However the other 60 odd percent actually planned to buy it in store but something happened。

that caused them to end up buying it online instead。

So let me say a little bit more about that opportunity represented by the 56 or close。

to 60 percent of individuals who say you know what I would have bought the product in the。

store but I ended up buying it online instead。 So my two colleagues Tony Moreno at the Caloog School of Management and Santiago Galano。

they're at the tuck school investigated this through something they called BOPS buy online。

pick up in store as a way for traditional retailers to fight back against this phenomenon of show。

rooming。 So the idea of buy online pick up in store is the following。

I can go to the website of a large retailer and Tony and Santiago looked at a large retailer。

operating both within the United States and Canada that had about 80 or 100 stores in this。

analysis and the retailer implemented a program where you could buy the product online then。

go to the store and pick it up BOPS buy online pick up in store。

And so what they found was the following you might hope actually that sales at the websites。

would then go up because now as a consumer I can go on to the website I can see that this。

coffee maker that I'm interested in is in stock and then I can buy it online and go to。

the store on the way home and pick it up。 So the hope was that by offering consumers this option that the sales at the website would。

increase and I should mention that the retailer in question I cannot disclose the name but。

the retailer in question was mainly selling products that are for your home so betting， towels。

coffee makers those kinds of things and this is very important for the explanation。

that comes later on。 Now what Tony and Santiago found is instead of sales at the website going up sales at。

the website actually went down doesn't sound too good but there's a silver lining they。

found after this BOPS was implemented sales in the stores went up。 So what was happening？

So imagine myself as a consumer I want to buy a coffee machine from this particular retailer。

I go to the website I see that the product is in stock and the price is good but because。

it's a coffee machine I'd still like to perhaps taste the coffee or touch the sweeter。

or try out the betting。 So because most of what this retailer was selling was products that required some physical inspection。

by the customer to make them feel comfortable what the customers were doing were going online。

to make sure the product was there then going into the store and actually purchasing in。

the store right down in there。 So offering that option was very valuable and actually led to an overall increase in sales。

at that retailer so much so that the new acronym instead of BOPS buy online pick up in store。

Tony and Santiago referred to this as ROPO ROPO research online purchase offline。

So again those of you who are facing these kind of omni channel problems and horizontal。

free writing show rooming for your own business this shows that this potentially clever ways。

out by really understanding what the consumers want。

They want information first but they want to touch and feel the product and if you can。

deliver them that package you can get yourself out of some of these traps。

Now let me just summarize what we've talked about in terms of horizontal free writing and。

how this can be illuminated。 There's essentially free broad strategies that can be put into place in a particular。

market to try and eliminate this problem between Chris and Amy where Chris is the high price。

the high service seller and the customer goes to his store to get the information and then。

goes to Amy store to get the lower price。 The first thing that you could do is you could make sure that in different territories different。

products are available so give Chris some of the product line and give Amy something else。

so there's not direct competition between them。 Related to that you might need to think carefully about the appropriate level of distribution。

intensity。 If a lot of horizontal free writing is going on you might want to make your distribution。

intensity a little bit lower and be more exclusive or more selective meaning that local retailers。

have kind of a local monopoly。 And then finally the other thing that you could do is you could introduce different brands。

for different retailers。 So literally just call the product different names so Chris's product has a slightly different。

label on it than Amy's does and this again works against the problem of direct comparison。

which is an important component of horizontal free writing。

So now let me summarize everything that we've been talking about so far in this module with。

respect to conflict。 Here's three rules of thumb that have been discovered through academic research and to。

just generally what causes more conflict in a channel of distribution or a system of distribution。

So three things we're going to look at first of all are the length of the channel。

So how many players are there between the person who provides the product initially or creates。

it and the person who ends up buying it。 Secondly how much autonomy is there in the channel are all of the channel members owned。

by the corporate entity so they're all stores owned by Starbucks。

Are they mainly franchise so McDonald's might have franchisees or are they all completely。

independent agents and then thirdly how much density is there in the channel。

Is there only one retailer or distributor in a particular market are there two or are。

there multiple。 So this is what the researchers found with respect to these three important factors。

So generally as the channel gets longer and longer there is just more potential for conflict。

and there's one really fundamental reason for this。

This is a term that was developed by a French economist many centuries ago and it's called。

double marginalization。 It's a fancy term it's a simple idea。

It says every time you add someone between the producer and the end consumer you're adding。

a markup and a layer of margin。 So if you have one retailer between the customer and the end user there'll be two levels of。

markup from the manufacturer to the retailer and then the retailer to the customer。

If you have two intermediaries there will be three levels of markup。

Manufacturer to the distributor， distributor to the retailer， retailer to the customer。

So as you lengthen the channel you're always adding an additional markup to the margin。

and you're adding more people so there's more potential for conflict that's fairly unambiguous。

Secondly， if you look at the level of autonomy from having completely owned distributors to。

franchise distributors to completely independent again as people become independent there's more。

and more conflict the conflict increases。

So those two I think are fairly intuitive and fairly obvious。

The last one is less so until you hear the story and this is why I think it's interesting。

So the researchers who looked at this issue also looked at the density of a channel。

Now you have a fairly low level of conflict if there's just one exclusive outlet per territory。

Of course as you increase to two the conflict goes up because now I'm in competition with。

that store in the territory next door he's stealing some of my customers I'm stealing some， of his。

However what the researchers notice is kind of interesting is the level of competition。

or conflict starts to decrease when density gets really really large。

Why is that？ Well it's because there's now an attribution problem if I see my market shares going down。

and I have eight different competitors in my local area that I'm competing against I。

don't really know which one of those guys is taking my market share so paradoxically when。

you have more density of retailers in a given location sometimes the overall conflict can。

go down。 Okay the last little task I'd like you all to think about as you're working through this。

material and you're thinking about what it means both how channels get created in terms。

of who is doing what the hybrid grid the other elements of design like intensive versus exclusive。

versus selective distribution and finally this whole area of minimizing conflict I think to。

bring it all together would be good to have an exercise to kind of percolate on。

What I'd like you to do is to try and think about a company that really innovated in the。

area of distribution either they took over some existing activity they eliminated activity。

they turned hard good into a soft good they completely changed the way customers procured。

the product and in so doing really developed an advantage over their competitors。

So try and think about that because I think a lot of the really interesting innovations。

that are going to occur in markets are going to be innovations around the area of distribution。

and access to products and services particularly as I've said many times but it bears repeating。

that there's about a billion of us running around on the planet it'll be more than that。

soon who are carrying computers in their pockets that can have all kinds of things distributed。

to us and things that we can also respond to。

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