Well, first of the Marketing Strategy classes by Erik in morning today, began with a metaphorical picture of some people trying to build a bridge and reach the end labeled 'Customer'.
What began with the question 'what do you see when you look at this picture?' eventually landed up on 'Does it bridge to reach customer ever completes? Can business ever build that perfect and long lasting bridge?'
That is where the discussion actually got philosophical.
Anyways, to stress the importance of Customer from Marketing Strategy point of view, Erik gave us an example of Dave. Dave Carrol, a small time country musician, whose custom guitar was broken while it was checked it in united airlines and who struggled to get a compensation for this 2000 dollar guitar from the airlines, created a song and posted it on Youtube. Song was titled 'United breaks guitar' - and this relatively low budget video, went viral with current hits reaching 13.5 million. The company itself suffered a 10% drop in its share price on fourth day this video was out, and caused a market cap loss of 180 million dollar.
While it is also a case for Social CRM, the lesson this example provides is that events like this with small probability and very high impact cannot be ignored and in today's world of internet and mobile phones, every single customer matters :-)
While we were still pondering over our discussion in this class, in came Carlos for the Corporate finance session. His lesson for today turned out to be the same - while forecasting, we cannot just rely on most likely scenarios - and this is especially important in cases where the outliers with small probability but high impact create a downside risk - well, he did state that risk is better understood and quantified if we look at it as variability between the expected outcome and the most likely outcome. So, if an event with small probability and huge impact is present on both sides of the expected outcome, probably nothing with change much - but if the risk is only on down side, at least the expected return and cash flows will change and we have to factor them into our model.
And then, depending on the variance of expected value, we can determine the risks involved and also the premium we can pay for the risk.
Interesting lesson, yet counter-intuitive to think that while a down side risk will definitely impact the expected return, it may not necessarily impact the risk involved and hence the discount rate associated.
It is this counter-intuitive nature of this argument which invited so many queries and doubts from many in the class today and Carlos ended up answering these queries for a long time even after the class was over.
While we suddenly have a lot to decide as a group now - for marketing strategy report and for talent management presentation, and spent an hour doing so, the day only concluded after an over-stretched session of career strategy by an head hunter lady. I don't really remember her name, but she spent almost two hours giving us tips and tricks of the trade.
Spent time post-lunch to do the readings for tomorrow, and now I am thinking of also completing the readings for Friday, as I have some dinner plans for tomorrow :-)
What began with the question 'what do you see when you look at this picture?' eventually landed up on 'Does it bridge to reach customer ever completes? Can business ever build that perfect and long lasting bridge?'
That is where the discussion actually got philosophical.
Anyways, to stress the importance of Customer from Marketing Strategy point of view, Erik gave us an example of Dave. Dave Carrol, a small time country musician, whose custom guitar was broken while it was checked it in united airlines and who struggled to get a compensation for this 2000 dollar guitar from the airlines, created a song and posted it on Youtube. Song was titled 'United breaks guitar' - and this relatively low budget video, went viral with current hits reaching 13.5 million. The company itself suffered a 10% drop in its share price on fourth day this video was out, and caused a market cap loss of 180 million dollar.
While it is also a case for Social CRM, the lesson this example provides is that events like this with small probability and very high impact cannot be ignored and in today's world of internet and mobile phones, every single customer matters :-)
While we were still pondering over our discussion in this class, in came Carlos for the Corporate finance session. His lesson for today turned out to be the same - while forecasting, we cannot just rely on most likely scenarios - and this is especially important in cases where the outliers with small probability but high impact create a downside risk - well, he did state that risk is better understood and quantified if we look at it as variability between the expected outcome and the most likely outcome. So, if an event with small probability and huge impact is present on both sides of the expected outcome, probably nothing with change much - but if the risk is only on down side, at least the expected return and cash flows will change and we have to factor them into our model.
And then, depending on the variance of expected value, we can determine the risks involved and also the premium we can pay for the risk.
Interesting lesson, yet counter-intuitive to think that while a down side risk will definitely impact the expected return, it may not necessarily impact the risk involved and hence the discount rate associated.
It is this counter-intuitive nature of this argument which invited so many queries and doubts from many in the class today and Carlos ended up answering these queries for a long time even after the class was over.
While we suddenly have a lot to decide as a group now - for marketing strategy report and for talent management presentation, and spent an hour doing so, the day only concluded after an over-stretched session of career strategy by an head hunter lady. I don't really remember her name, but she spent almost two hours giving us tips and tricks of the trade.
Spent time post-lunch to do the readings for tomorrow, and now I am thinking of also completing the readings for Friday, as I have some dinner plans for tomorrow :-)
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