1.

2B: Introduction to the course

Sridhar Moorthy
Rotman School of Management
University of Toronto

RSM 8522 Analytics for Marketing Strategy

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 How much did a 30-second commercial on the recent Super Bowl cost?

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 What is the point of spending so much money on these ads?

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 Super Bowl ads are an example of product-centric mass marketing

• “Mass marketing” because you are really marketing to “everyone.”

• So you naturally focus on the product

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 Modern marketing is more targeted and customer-centric

• It is based on the idea of “customer equity”: treating customers as “equity”—an asset

― “If we don’t keep the customer for several years, we don’t make money … We need a long-term
payback for the expense of coming up with a buyer.”
– William End (CEO Land’s End quoted in Blattberg and Deighton 1996)
― “The general rule is that it is easier to get a current customer to use more often than it is to get a
new customer.”
– A senior executive at McDonald’s (quoted in Blattberg and Deighton 1996)

• In other words, it is not just about acquiring more customers; it is also about retaining
them and “developing” them.

• Instead of asking whether a new marketing initiative will increase sales, we ask whether
the new marketing initiative will grow our customer equity.
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 RSM 8522 is about how to do marketing that increases your customer
equity. You will learn three things:

1. Customer analytics, i.e., how to segment customers in your database in order to identify
the best
― acquisition targets
― development targets
― retention targets

2. How to design marketing programs to acquire, develop, and retain different market
segments.

3. In the process of doing (1) and (2) above, learn how to use various data-analytic techniques
to support marketing decisions.

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 We will build on previous course-work

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 RSM 8901 (from me)

• Market segmentation, targeting and positioning (STP)

• The 4 Ps

• Measuring advertising effectiveness

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 RSM 8512 (from Ryan Webb)

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 Here you will learn how to apply the tools from RSM 8512 in a marketing context

Learning by doing

You will get your hands dirty working on real data.

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 The emphasis will not be on teaching you how to code in R.

In fact, we are agnostic about “how you get your results.”

Rather, the emphasis will be on how to interpret the results and what
marketing insights you can gain from them.

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