Carl Lewis wore Nikes at the 1984 Summer Games, and pairs like the one pictured above at the subsequent three Olympics in which he competed.

What was the official shoe of the 1984 Los Angeles Olympic Games? No, not Nike, Adidas or even the then-startup Reebok. The official shoe of those Games was Converse, which paid nearly $4 million to be a sponsor. If you were in Los Angeles at the time, you may have thought otherwise. Nike spent aggressively on what has come to be known as “ambush marketing.” For sporting event planners and corporate sponsors, protection of this contracted association is a top intellectual-property issue. The United Kingdom is taking legislative steps to bar ambush marketing at its upcoming Games.

The key focus is clarity on contractual rights, including obligations to work against ambushers proactively.

Ambush marketing has multiple “victims.” The first is the party that paid for the official relationship: e.g., Converse.

In a forthcoming sports law casebook, my co-authors and I define ambush marketing as “a creative advertising practice by a business other than an official sponsor that seeks to create an association with a sports event without using the event’s name, trademarks or logos.” Another casebook (Steve McKelvey and John Grady’s “Ambush Marketing: The Legal Battleground for Sports Marketers”) takes that definition further , stating that ambush marketing also includes “a company’s intentional efforts to weaken its competitor’s official association with a sport organization, which has been acquired through the payment of sponsorship fees” and seeks “to capitalize on the goodwill, reputation and popularity of a particular sport or event by creating an association without the authorization or consent of the necessary parties.”

Also harmed is the event rights-holder that sold the sponsorship. Theories abound about the legal issues, including breach of contract for not policing or seeking to enjoin the ambusher from using the rights that it held out to be exclusive.

London prepares for the torch to arrive. Photo credit: London 2012.

Where this “free-riding” is allowed to occur, the harm comes to the rights-holder through potential reduced value in future sponsorship sales. Such was the assertion in United States Olympic Comm. v. American Media Inc., where the plaintiff argued that the ambusher’s problematic act also encouraged other entities to act similarly, lessening the value of sponsorship dollars that might be received to fund Olympic participation.

Under current U.S. law, ambush marketing appears only to be illegal if it creates a likelihood of consumer confusion. In Federation Internationale de Football v. Nike Inc., the focus was on proving the impact on and the confusion of the consumer.

London 2012 now has to deal with this challenge. We cannot predict what ambush-type activities will take place, but it is a safe bet that activity will occur. British legislative activity is seeking to regulate many of the past bad acts. The legislation might even be interpreted to bar clothing at venues seeks to deliver an advertising message. Budweiser was the official beer of the 2010 FIFA World Cup in South Africa, for instance, but Dutch brewing company Bavaria clothed attractive models in their corporate color and successfully got the attention of the live audience as well as broadcast and print media—prior to the arrest of the group. They performed a similar stunt at the 1996 World Cup in Germany with branded lederhosen.

It is important to acknowledge that, even with legislation in place, the ambush and impact may occur before action can be taken.

When you sell bath products, you don’t expect consumers to believe you are selling a dangerous drug linked to a vicious zombie-like attack in Miami. However, this unlikely scenario recently played out for a number of bath-salt manufacturers, thanks to the notoriety surrounding the drug with the street name of “bath salts.”

This is a perfect illustration of an external force wreaking havoc. Most people face a similar scenario in the course of a career (often many times). You are the top performer, but your whole department gets downsized. You’re forced to spend time and money defending yourself against a frivolous lawsuit. Or your perfectly safe product inherits a connotation that ensures that no mother will put your bath salts in her daughter’s birthday gift basket.

In these situations, it is easy to feel like a victim of circumstance. However, this attitude won’t allow you to regain the upper hand. Though you can’t control external forces, you can control how you react to them.

I often see this play out with the MBA candidates I work with. In this video, I discuss a client who had her heart set on the promotion she deserved, only to find out that her company was freezing all promotions for the calendar year. At first she believed that her whole MBA application hinged on that promotion. However, we discussed the many ways she could take control of the situation: learning new skills, managing a new project and many other strategies that would demonstrate career growth. She soon came to the conclusion that the situation was still very much within her control.

And what about our bath-salt manufacturers? In the days after the May 26 Miami attack, Lee Williamson, whose San Francisco Bath Salt Co. used to show up at the top of web searches for bath salts, noticed his ranking falling as people began searching for drug-related information. While some manufacturers might have lamented the potential lost business, Williamson went to work.

His company sent out press releases explaining the difference between his product and the drugs with the same name, not only educating the public but keeping his company in their minds as well. In short, he took control of a situation that at first glance seemed out of his control.

To do the same the next time life throws you a curveball, keep the following advice in mind:

• Don’t panic. A level head will help you figure out your next steps.

• Consult your brain trust. It’s hard to see clearly when you’re in the middle of a problem. Discuss the situation with trusted friends and colleagues to gain additional perspective and entertain possible solutions.

• Act as swiftly as possible. While we might hope things will blow over on their own, they rarely do. As Lee Williamson’s story demonstrates, turning a situation to your advantage depends on whether you can influence the course of the conversation. You won’t do this by keeping your mouth shut.

With more and more companies and products showing up online, it is hard to figure out who’s who, and whom to trust. Am I buying from someone selling out of his garage? Does this organization even warehouse any of the products? Is he a fifth-tier seller and am I paying a hefty premium? If I call customer service, am I going to have to wait until the business owner gets home from his day job to respond to me? What are other people saying about this business?

When I co-founded Minimus.biz in 2004, people were finally trusting putting their credit card information online and actually buying real products. But people were wary of who was on the other end of the transaction. I came up with a simple idea to address this a couple of years into the business. It wasn’t the security seal on the website (everybody has one now), or the “About Us” story that gave people a personal connection, or the Better Business Bureau rating. I decided to list our major press mentions on our home page. Business increased immediately. The third-party validation of the press gave people the trust they needed.

Soon thereafter, product and company reviews started to become extremely popular. Sites like Yelp helped people pick new restaurants. That works when the public is more savvy than the business owner. Then business owners learned the value of these reviews and began seeding these reviews with friends and family. It has now gotten to the point where a majority of review sites cannot be trusted, or at least need to be viewed skeptically.

Is a seal of approval worth anything anymore?

Last year, I got a phone call that fascinated me. It was from a company called StellaService.com. They had “mystery shopped” our website without our knowledge, and then returned their order. Apparently, they tried to give us as hard a time as they could, and used various communication methods and tactics. They measured our response. Their whole reason for being was to counteract the “seeding” of review sites on the web and create an unbiased review portal. They were answering the need for additional measures of trust in e-commerce.

Many online companies skip over the idea that they need to have a “trust strategy” to make sure that customers are comfortable with shopping on their website. You can do all the marketing in the world, and have great prices, but if people don’t trust shopping on your website, you might be throwing time and money away.

Twitter is the weapon of choice in the social-media battleground for Andrew Brandt. He relishes the “140-character bombs” that he can tweet at will. He knows that his followers—and soon-to-be-followers—will respond if he has relevant and unique knowledge and perspective to share. More importantly, it is the “way to build your brand,” and a tool that he believes will only get bigger.

Brandt, a full-time lecturer in sports business at Wharton, shared his views on social media with high-school students during the NFL-Wharton Prep Leadership Program, a leadership and achievement recognition program for a select group of male and female athletes.

Perhaps it helps to listen to someone adept at building his own brand, and then rebranding it, and rebranding it. Before Wharton, Brandt served as vice president of the Green Bay Packers and worked as a player agent at ProServ and Woolf Associates. Now, besides his teaching work, he also is president and writer at the National Football Post website and frequent commentator on ESPN outlets.

Brandt gave a heavy dose of admonition to balance his enthusiasm for Twitter. He held up NFL running backs Arian Foster and Rashard Mendenhall, who posted about a hamstring injury and Bin Laden, respectively, and found themselves in hot water for doing so.

The urge is to “just tweet it out” and promote yourself through this powerful and direct communication tool, but Brandt suggested to the students that they always reread and edit each tweet, considering it more like an old-fashioned letter or email. Yet a tweet is bigger; it’s “universal,” he warned.

“Everyone can see it,” he said, even if you delete it five seconds after you send it.

The attendees at the NFL-Wharton Prep Leadership Program also ought to remember that they do not just represent themselves on social media; they represent their parents, schools and, when they’re older, their employers.

Thirty-six students participated in the NFL-Wharton Prep Leadership Program on Wharton’s Philadelphia campus from June 25 to 27. Organized by the Wharton Sports Business Initiative, the workshop provided leadership training and instruction from Wharton professors, current and former student athletes, and NFL executives.

When I was a little kid and all my friends were selling lemonade on the sidewalks outside our houses in Brooklyn, I set up shop to sell my old toys and trinkets. My stuff was more differentiated, and the margins were better. I didn’t have quite the language to express it at the time, but there seemed to be “inelasticity of demand” for my products, and I had good pricing power. When I could sense the extent of my customer’s need for that shiny brass whistle keychain, I could negotiate from strength. I learned over time to take very good care of my customers, to understand what was really important to them and to work with them to help them find it.

These days, as life and the world have gotten rather more complex, it seems easy for a salespeople (or giant multinational corporations) to lose their way. Closing a deal right away, without regard to long-term opportunities, might take precedence over anything. In some industries, we hear terms like “counterparty” instead of customer, “target” instead of new client prospect or “punter” rather than patron. To me, these terms are counter to the long-term viability of the relationship. There is a philosophical cynicism, combativeness and danger in this terminology.

I simply don’t believe that this is the best we can do. Although it might be naïve to think that everyone can take the time to strive for perfect satisfaction on the part of his customers or “guests,” it is an incredibly good investment to try. Pretty much every company in the world needs to recognize the value of long-term, durable, resilient, trusting client relationships. A good way to build these relationships is to understand your clients better. What is driving them? What are their needs and priorities?  How can you help them conduct and grow their own businesses?

From my standpoint, and from my own IBM sales heritage, that’s a much more sustainable approach to selling. That’s the way to truly empathize with customers and become a provider of solutions to them. Solving business problems is core to the mission of so many of the world’s leading corporations.

Yet, in some industries, client-facing professionals may not take the principles of “sustainable selling” to heart. They may not know how to leverage the full breadth of their resources on behalf of their customers. They may not fully listen to, recognize and deal with objections that arise over the course of the sales cycle. They may end up trading the potential of the future for a smaller and less important near-term “win.”

Better to think more broadly as it relates to the full range of “corporate sustainability” opportunities, encompassing all aspects of environmental, social and governance (ESG) performance. Happier, healthier societies and communities, composed of prosperous thriving people, make for terrific end-market demand for the goods and services of the world’s companies.

The Direct Marketing Association (DMA) is dropping potentially mixed messages on marketers. In their 2012 Response Rate Report, they state that on average, direct mail generates stronger response rates than email: 4.4 percent for direct mail and 0.12 percent for email. But this news was shortly followed by the Q1 2012 North America Email Trends and Benchmarks report, a joint study between Epsilon and the DMA, which shows that while email volume has increased, average open rates have increased as well.

This data may leave marketers wondering what they should do: How can I reach my potential customer and, at the same time, use my marketing budget efficiently?

The answer is to stop thinking of traditional and digital tactics as siloed channels. Instead, integrate.

Direct Mail Gone Digital

Direct mail shouldn’t be overlooked because it’s a legacy channel. Creatively designed mailers stand out. Plus, fewer marketers are using direct mail, so there’s less clutter to cut through, improving the chances that you’ll get the response rate you desire.

But if you really want to extend your direct mail’s impact, take it digital.

Include quick response (QR) codes or personalized URLs (PURLs) on every direct-mail piece. These QR codes and PURLs should link your lead to a landing page with content that reiterates your original offer and provides a way to act on that offer. PURLs, QR codes and their associated landing pages help your message resonate with your lead. And because each landing page is unique, you can easily track response rates to directly attribute marketing to ROI.

Pick up the Phone

Telemarketing has a tenuous relationship with the public. It’s generally seen as intrusive, unwanted and outdated marketing. But when used in conjunction with direct mail and email, it can be very effective.

First, warm up your leads with a direct mail, email or display-ad offer. If your lead gives you contact information, call. If they’re already aware of your brand and offer, it will be less intrusive and ultimately generate better results.

If you don’t believe me, the same 2012 Response Rate Report shows that 13 percent of customers in a house database have responded to a marketing offer over the telephone.

Multichannel Campaigns

Multichannel campaigns are a very effective way to market your product. Here’s an example. By using behavioral tracking technology, you can target leads with highly relevant offers through email messages and display ads. If the lead clicks through the offer (which your analytics will tell you), follow up with a direct-mail piece that outlines your product in more detail (don’t forget the QR code or PURL so you can continue to track engagement), and then contact the lead directly with a phone call.

By connecting with your lead at multiple touch-points, delivering added value with each touch, you’ll build a strong brand impression and improve the likelihood that your lead will purchase your product.

One item that’s easily overlooked in digital marketing is customer permission and privacy. Don’t contact leads that haven’t given you permission to do so.

There will never be a shortage of dumb mistakes. Fortune magazine once compiled a list of the “101 Dumbest Moments in Business” that included Merrill Lynch’s investment in subprime mortgages just before the market meltdown in 2008, Mattel’s recall of 20 million toys treated with lead paint in China and the fines a Rhode Island hospital faced for operating on the wrong side of a patient’s head for the third time in less than a year.

Let us concentrate on mistakes of the more fruitful kind. The following framework can assist you in distinguishing different types of mistakes using simple cost-benefit analysis. This allows us to group mistakes into four types, with some illustrative examples:

Clearly, tragic mistakes (A), which exact a high price with little personal benefit, are to be wholly avoided. Serious mistakes (B) also have a high cost, but with the potential of a high benefit. These mistakes can provide tremendous lessons and may be valuable in retrospect, but we need to be careful about inviting them into our lives. You shouldn’t get divorced to see what you will learn; you don’t drive your business into the ground to taste the lessons of failure. A third class, trivial mistakes (C), represent low cost and low reward. The results are not tragic, but the lessons learned are inconsequential or obvious—along the lines of “put more money in the meter” or “leave for the airport a bit earlier.”

Distinguishing between these types allows us to arrive at a more tangible definition of the truly brilliant mistakes (D)—those that offer high benefits at a relatively low cost. The high benefits of brilliant mistakes typically accrue over the long run rather than being conferred at the instant of the error. This is part of what makes them difficult to distinguish from trivial, or even serious, errors. It would be tempting to look at this chart and determine, “Well, I guess I’ll try to make only brilliant mistakes, then!” The real lesson, however, is that these distinctions are often clear only in retrospect.

For example, some major flops in business only later turned into big successes, such as McDonald’s Hula Burger (1962), Apple’s Lisa (1983), Coca Cola’s New Coke (1985) or Corning’s DNA Microarray (1998). While it’s important to live and work within the boundaries of good sense (none of us wants to end up immortalized as the next Darwin Award winner), it’s also true that striving to eliminate all mistakes in our lives means that we risk sacrificing valuable ones as well. We need to allow some of the bad errors into our lives in order to have a decent chance of creating some brilliant mistakes as well. That is the challenge: how best to manage this trade-off based on your ambition and risk tolerance.

Editor’s Note: This post is adapted from Brilliant Mistakes: Finding Success on the Far Side of Failure, from Wharton Digital Press.

A television commercial shows a group of young people, each trailed by an animated set of vertical bars, indicating the strength of the person’s cell phone signal. The ad reminds me of when I first left medicine and entered the business world. I could have used a similar device—error bars hovering above anyone pitching an investment or deal, signaling the probability that the person is telling the truth.

As anyone who voiced skepticism of the amyloid hypothesis—the only “acceptable” area of research into Alzheimer’s disease for many neuroscientists a few years ago—knows, science, and biomedical science in particular, is less than a beacon of absolute truth. Even so, the believability of information is still a great dividing line between the scientific and business worlds.

Scientific and medical data do reflect the biases and inaccurate assumptions of the researchers involved; not every p-value greater than 0.05 (a frequent cut-off for statistical significance in the life sciences) reflects absolute truth. But the evidence basis of science—the need for reproducibility of experiments and the consistency of units of measurement—accounts for relatively high confidence in data quality.

Not so in the business world: We rely on anecdotes, retrospective data and data mining in ways that would be considered unacceptable at a medical conference or scientific meeting. The resulting conclusions can be highly inaccurate, and the inaccuracies are then magnified by the corporate investor roadshows and sales calls from investment bankers using these “proofs of concept” as evidence of value creation.

Those naive enough to accept these data as fact make costly mistakes.

To some extent this phenomenon is inevitable; reproducible experiments under controlled conditions are possible in the laboratory, but the isolation and study of individual variables in the economy, stock market or product market is impossible. And while statistical methods can correct for some of the variability from one sampling to another, isolating only the most meaningful factors—comparing, say, the economies of 1929 and 2007, or making accurate assumptions about the real effects of a drug being developed by a resource-constrained small company based on a small phase II trial—are at best compromises in truth.

More importantly, the business world is a sales culture, filled with zero-sum interactions where each participant recognizes that his or her counterpart will try to exploit any possible edge to gain an advantage. The unsuspecting scientist who ventures into this environment quickly learns not to overestimate the reliability of the data that he or she encounters, even scientific data. While some of the inaccuracies are unintentional byproducts of a less disciplined process of peer review, many are misleading or even fraudulent, including an impressive separation of Kaplan-Meier curves (which show a treatment effect over time versus an alternate treatment or a placebo) that are grossly exaggerated by misleading of the y-axis or a video showing a mouse “cured” of its spasticity after an instantly fatal injection of an experimental drug.

Most businessmen and women are honest and honorable (and not all scientists are). Even so, a good dose of scientific rigor and discipline is a better tool for diligence than hovering animated error bars.

It takes a brave soul to try and shake up the department store business. More so if the company has a history of seeing ups and downs in business cycles for 110 years and still staying afloat. One would think that creating the most profitable retail business in country (per square foot) would qualify as a solid credential. And so it was that seven months ago, Ron Johnson, the CEO of J.C. Penney, undertook a massive pricing revamp to convert J.C. Penney to an every-day low-prices (EDLP) vendor rather than a high-low (HILO) vendor with multiple sales through the months.

If you have the time, watching the launch video of this announcement is pretty fascinating. Ron Johnson was joined on stage by Michael Francis, who had performed well as the marketing guru at Target. In 90 minutes, they laid out a detailed plan of why their current strategy was flawed, why the consumer still on average paid the same price over the years even though the list price in retail for apparel kept going up, and how they want to help the consumer. Ron also spoke at length about adding higher value brands in the store and got Martha Stewart to make a quick appearance. Michael Francis spoke about the need to change their logo and branding and launched their new ad campaign, Ellen DeGeneres in tow.

What is the result? The stock is down 35 percent since the start of the year. Michael Francis left in a hurry as announced last month. The word “sale” is making its way back into the J.C. Penney marketing materials, despite being flogged mercilessly a scant seven months ago at the launch event.

What happened here? Many theories abound, centered around the basic premise that customers want to see that they are getting value out of their purchases and crave sales. J.C. Penney needed to communicate this better through an honest and direct marketing campaign and not the usual feel-good bland fluff. Maybe that explains Michael’s hasty exit. This reminds me of the early work of David Bell, Wharton’s Xinmei Zhang and Yongge Dai Professor and professor of marketing, around the trade-offs between EDLP pricing and HILO pricing. Though this was done in a grocery store context, his work tried to point out that among large-basket shoppers (those that buy several different things at the store), having an EDLP messaging would allow the retailer to achieve the same average price per item as a HILO store but at the same time increase its total revenues since now it is able to attract these larger basket shoppers through the EDLP messaging.

This works well in stores like Walmart that have managed to convince customers of its low-price street-cred over the years. The question is whether a department store like J.C. Penney can accomplish the same. More importantly, can it accomplish the same when not being necessarily perceived as a low-price leader? How does a loss-averse customer whose behavior has been conditioned by years of HILO strategy in the department store world deal with this new signaling from a vendor that wishes to differentiate itself from the crowd? If Ron was able to invent the Apple retail experience and silence the naysayers, can he work magic a second time in a much more price sensitive domain with a lot less differentiated market? Only time can tell. But one’s got to give it to the man for trying to keep the business honest through what appeared to be a wonderful strategy at talking straight to the consumer and wishing on their behalf that the era of random price markups was over. Alas, that remains to be seen.

When I bought lunch yesterday, the sign below was posted at the front of the queue at a nearby restaurant. Of course I found it interesting, and I’m probably the only who did. Everyone else seemed to be going about their business as usual, and I heard no complaints or comments.

It’s rare to see this type of announcement, let alone one as blunt as this sign. If you consider your dining-out excursions, I presume that you, like me, can recall very few instances of restaurants broadcasting the fact that prices have gone up. If I were operating a restaurant or a chain of hundreds or thousands of them, I know I’d waver about this decision. Won’t customers figure it out on their own? If they wouldn’t notice, why should we bother to mention it?

The best answer I can give is this: If you think it’s the right thing to do, then do it; if you think it’s not, then don’t. Both approaches have justification, as we can observe in everyday dining out.

Other industries don’t necessarily serve as helpful role models. Retailers wouldn’t disclose price increases. I’ve never seen Macy’s do this, for example, though they abundantly communicate discounts. Grocers rarely communicate increases, except in the case of drought-related temporary price hikes, when they post signs in the produce department. Some service providers, such as hair stylists, tend to give notice that prices will increase, hoping to avoid unpleasant surprises for patrons. As a service provider myself, I am obligated to discuss my fees and any increase to clients or risk alienating them.

The sign in question.

Though it’s hard to find a good comparison in other industries, the nature of the purchase is key. The dollar amount and frequency of purchase are important to keep in mind, and a good guideline is that if there is going to be an inconvenience or surprise to your guests, you should carefully consider how to best handle it.

The restaurant I visited had an interesting message. I felt almost worried that if I didn’t accept the price hike, they would go under. Consultants and marketing types typically recommend a spin such as: “To continue to provide you with the same high-quality experience we have always offered, we must increase our prices effective immediately. We appreciate your business and look forward to continuing to serve you.” This restaurant generally conveyed that. Overall, avoiding too much detail and being honest and straightforward are the best pieces of advice. Although a bit more finesse may have been nice, and proper punctuation helps too.

In the end with the bill in hand, I didn’t perceive that the price of my usual order had changed (and I notice this stuff). I will continue to patronize the restaurant. I certainly appreciate the restaurant’s need to make adjustments to stay in business. Judging by the other patrons, I could tell others feel the same way. So in the end, was the sign necessary? I have no difference of opinion about the establishment, other than maybe respecting management’s honesty and directness.

Courtesy: International Olympic Committee

This was my first volleyball-focused Olympics. Actually, it is the first Olympics I’ve attended live since the 1984 Los Angeles Games. I worked at those and intentionally avoided the Games ever since. I knew that feeling could not be replicated. My involvement in 1984 was like being on a team or winning a political campaign.

I go to a lot of global sporting events, from World Cups to Super Bowls. Now on the board of USA Volleyball, and with my focus on sport and development and the proximity of London, I was back.

Like many, my schedule was tight.I tried to squeeze in all that I could. Like many around the world, I watched the opening on television. The best descriptor of the Opening Ceremonies?  The New York Times review captured it with, “A sixth-grade play meets Bollywood.”

The next morning, my wife and I walked along Hyde Park to Buckingham Palace, the London Bridge and all of the London postcard settings. Olympic design was everywhere. The color theme was reminiscent of the “festive federalism” pallet of the Los Angeles Games.  In the evening we circled back to Horse Guards Parade. We had the opportunity to see American men and women win at one of the best settings in London.

I know temporary structures and “pipe and drape.” This was very solid construction. The economy of thinking in these terms instead of building multiple new, permanent structures is striking.

Like many, I posted a photo and “USA Wins” on Facebook and some friends irately referred to me as “the spoiler.” This was my first clue that NBC, even with live-streaming, was heading toward criticism.

On day three, Sunday, we headed to Earls Court for indoor Volleyball.  We took the Tube from our hotel. In a word?  Easy. The night before, on another Tube ride, we met some young girls who said they were cheerleaders.  There they were on the floor. It was a good result again with the U.S. men winning.

The traffic fears, as in L.A., were nonexistent. At least during the opening weekend, the warnings to use public transport were heeded.  We ended with a smooth trip to the airport and a surprise upgrade to business-class back home, just in time to watch the remainder of the Games from our living room.

I am looking forward to Rio.

How do retailers and CPG companies apply insights about consumer psychology in today’s marketing strategies? Here are some examples from retail startups that presented at our research center’s conference on the latest industry developments, co-organized with the Marketing Science Institute and Fashion Institute of Technology.

Rent the Runway, an online designer dress and accessories rental company, mainly caters to women that want a Cinderella experience wearing brands that they usually don’t wear. To share this experience with their social circles, many customers post pictures of themselves in their rented dress, along with their event story. The company markets to these emotions and aspirations (“access your dream closet”).

Lot18 was founded on the insight that many people feel intimidated by buying wine because they lack expertise. Lot18 gives people confidence by offering a limited selection of hand-picked quality wines at a good price and educating customers about the wines. Even the wording of promotional prices—“trial” prices—speaks to people’s mindset of exploring while not making quality wines sound cheap.

JOYUS, an online video retailer of a carefully curated assortment of apparel, beauty and lifestyle items, entices consumers with content and visual presentation. The unique merchandise and the frequent addition of new items keep shoppers engaged. Its short, high-quality video clips feature product explanations and usage suggestions, given by the JOYUS curators, providing a rich, entertaining shopping experience.

Traditional companies also consider consumer psychology in their marketing. J.C. Penney is bringing sales back after customers responded poorly to the recently launched three-tier pricing strategy implementing everyday low pricing. Shoppers didn’t see their savings and missed the bargain hunt. This fall, Honest Tea is replacing cane sugar with fruit juice in its successful Honest Kids line because parents perceive fruit juice as healthier although it is the same nutritionally. Last year, Honest Tea changed a lower-waste bottle back to the original because customers perceived less content in the new bottle.

Justice, an apparel and accessories brand for 7- to 14-year-old girls, understands its young customers, and their moms, very well. The merchandise, store experience and advertising are specifically designed for girls, who tend not to want to look like their mothers, like to play and enjoy sensory overload. Larger sizes are placed in the regular section to make girls of any size feel comfortable. Magazine-like catalogs are addressed to the girl shoppers and are often their only mail. They also enable mom and daughter pre-store shopping, which is important since the mother is the ultimate buyer.

While quantitative analyses are powerful in verifying intuitions about consumer behavior, qualitative methods are valuable sources to discover behavioral patterns and customer needs. That was my thought when I saw a man contently reading a magazine in the comfortable seating area at Athleta’s Philadelphia store while waiting for his significant other to try on items. Clearly, Athleta understands how to make everyone happy.

The Facebook “want” button is gaining celebrity status before it even makes an official debut. That’s because the implications of this little button are far-reaching and could point to a new revenue stream for Facebook—that is, if Facebook can learn to capitalize on the intent-to-buy data collected by this button. But the real value will come when Facebook can identify intent-to-buy data and then determine whether the Facebook user is qualified to make that purchase.

Part of what makes Facebook a marketer’s dream is its ability to collect self-reported data. Users willingly reveal all sorts of personal information on their Facebook pages, from family information, to music preferences, to vacation plans and so much more. As soon as it is posted, it’s common knowledge, creating a massive web of interconnected data that is highly desirable to marketers.

But how can Facebook generate revenue on all this data without creating potential privacy issues?

Facebook’s first attempt began with the “fan” page. Companies could send special offers to their most loyal fan base, thereby boosting sales and customer engagement. Unfortunately, while retail outlets and celebrities are “liked” regularly, B2B businesses are left out in the cold. Who “likes” North Pacific Crane Company, for example?

Facebook moved on to banner ads, also known as social marketing ads, which appear alongside a user’s wall posts or messaging conversation. What Facebook failed to realize was that no one wants to mix online shopping with social time. Who wants to see an ad for skinny jeans while flipping through family photos?

Cue the “want” button.

Similar to “liking,” if you “want” something, your friends can see and comment on it. Fun? Certainly. But the commercial implications are far more significant. For example, upon “wanting” a Lexus, Facebook can then share that information with Lexus, as well as with other luxury car brands. Then, all these brands can compete for the Facebook user’s dollar.

In essence, with the “want” button, consumers volunteer intent-to-buy data to Facebook. Of course, if the Facebook user that “wants” a Lexus is a starving student, barely able to afford his $150 Principles of Microeconomics book, he certainly can’t afford a Lexus.

Will you spend your hard-earned snack dollars on this?

Between a fast-food quarter-pounder and a pint of the first luscious cherries of the season, which would you consider a delicacy? You may not care for cherries that much, but I think most of you will stutter before calling a quarter-pounder a “delicacy.” Most of us would label the cherries as awfully expensive at $4 a pint, while we might order a similarly priced hamburger without a thought.

A similar dilemma unfolds every March and April in India, when the king of fruit, the Indian Alphonso Mangoes, appears on shelves. In India, they are more than a delicacy; they are revered as a holy tree in Hindu rituals. No other fruit enjoys such exalted status. Special roadside stalls are put up to sell nothing but mangoes.

Yet everyone laments the initial “astronomical” prices of mangoes. At about INR 100 ($1.80) this year, though, a premium mango costs as much as a chicken burger (with cheese) and half as much as a personal pizza.

Why do people select the fast food over the fruit? I have many theories:

1. Too-New-To-Crib: Burgers and pizzas are a recent introduction to India and enjoy a novelty advantage. But then how would you explain Americans complaining about the prices of cherries?

2. Headless-Chicken: Maybe when prices are dictated by big and powerful fast-food brands, we behave like headless chickens before their menus.

3. Relative-Price-Inflation: In the last 30 years, mango prices have increased 50 times. Maybe our brains perceive price over history.

4. Bananas-to-Mangos: It could be wrong to compare mangos and burgers. Maybe we perceive expensiveness of something only with respect to its ilk. After all, a banana is sold for INR 2-3.

5. Expected-Intra-Season-Deflation: Mango prices invariably drop toward the end of the season, as they did this year—by more than 150 percent.

Or will you buy one of these (and complain about the price)?

6. Tummy-Full: Maybe nobody eats just a burger. Everyone eats a combo, which fills you up for a marginal price increase.

7. Forget-the-Farmer: Do we understand big-company overheads and rationalize their prices, but not that of produce and producers?

8. High-Price-Justification: Probably we all understand and accept that delicacy has to be priced high. By crying about the expense, we actually emphasize that mangoes are indeed a delicacy.

9. Status-Symbol: By complaining about price while devouring them, we fell two mangoes with one stone: declare our capacity to afford them and show false empathy to those who cannot.

I can go on and on, like a good conspiracy theorist, but the truth is I seriously don’t know the answer. If any behavioral economists do know, please let me know. Not that it’s going to matter much.  When next year’s mangoes arrive, I will be in the streets waving flags of thousand-rupee notes. Until then, I only hope I don’t blow away all my cash eating expensive nondelicacies at fast-food outlets.

If you are CEO of a venture capitalist-funded company, you didn’t get to this point by blending in, by standing still or by being mediocre. Therefore, your personal brand should be anything but ordinary.

Your personal brand as CEO matters. Like any great brand, yours must stand out. You can create magnetic appeal to your startup by elevating your personal brand. If you don’t take the time to build your brand, your market will define your brand for you. If you are skeptical, take it from Tony Hsieh, CEO of Zappos: “Your brand is what people say about you when you’re not in the room.”

Great brands consistently share the same message, and so should you. As CEO, you should find your unique way to exude a combination of great attributes, while being just as calculated in how exactly you are standing out.

From 2001 to 2010, “CEO vision” rose from the seventh most important factor to the fourth most important factor that VCs look for in their portfolio company leadership, according to a 2010 study by Spencer Stuart and the National Venture Capital Association. Accordingly, inspire your stakeholders with a big and aspirational vision of the future.

The same study found that ethics and integrity were the first factor that VCs look for in their portfolio company CEOs. People respect leaders who have a purpose and genuinely care about their organization’s mission and vision. Set a mission and key values for your organization. Your public face needs to be encouraging even in the face of great obstacles; passion is contagious.

“The number of tools you need to be a successful CEO has expanded,” according to Stephen Bloch, general partner at Canaan Partners.

VCs also prefer experienced and proven venture-backed CEOs with experience in unrelated sectors to promising entrepreneurs with strong sector and technical knowledge but no prior CEO experience. Thus, make sure you are branded by your track record of past successes and the key skills that helped you attain those successes.

You should focus on a few key attributes that the startup community should use to describe you. For example, you can be known as a source of innovation, a fearless leader, a doer or the winner who leads the team to victory regardless of the challenges.

Execute on tactics to prove your message. If you want to be known as the source of innovation, for instance, establish yourself as a specialized expert in the media and at industry conferences. Inspire and teach other entrepreneurs by presenting at universities, incubators and other entrepreneurial hotbeds.

As CEO, your bottom line matters, but a great personal brand will give you greater flexibility to manage and lead; others will have greater trust and confidence in you. Take your vision, passion, energy and world-class skills and build your CEO brand. Be inspired, be innovative and be disruptive.

In the words of marketing guru Seth Godin, “As our society gets more complex and our people get more complacent, the role of the jester is more vital than ever before. Please stop sitting around. We need you to make a ruckus!”

Professor David Bell presents at the L.A. stop of the Knowledge for Action Lifelong Learning Tour.

During the next 18 months, Wharton faculty will travel worldwide on the Knowledge for Action Lifelong Learning Tour—from San Francisco to Munich and beyond—to connect with alumni and deliver rich content of a caliber only Wharton can provide. At the first event in Los Angeles on September 11, more than 75 alumni joined Wharton’s David Bell, the Xinmei Zhang and Yongge Dai Professor, for an interactive discussion about digital marketing.

“There is a rich culture and tradition that all Wharton students are part of on campus, and Lifelong Learning programming allows us to be the students and innovators we’ve all wanted to continue to be,” says Evan Eneman, W’99, and president of the Wharton Club of Southern California, who attended the event.

“I do find that my desire to apply, thankfully be accepted and ultimately enroll in the Wharton School at the University of Pennsylvania was intended to extend well beyond my four years in Philadelphia, and this programming allows me to re-engage not only with the intellectual power that stems from the School, but also the wealth of alumni that it has graduated,” he continues.

Eneman is not the only Wharton graduate who has expressed the desire to continue a knowledge-building relationship with Wharton and his fellow alumni. During the past 18 months, the Wharton Lifelong Learning staff has conducted numerous interviews with graduates from around the world, who represent all Wharton degree programs and are at various career stages. The goal is to discover ways to build upon existing alumni programming. The result: Lifelong Learning initiatives that help Wharton graduates develop as professionals and enable them to learn about topics and issues that are relevant in business today, such as management, soft skills, innovation, entrepreneurship and beyond.

Karl Ulrich, Wharton vice dean of innovation and professor, talks with alumni after the Seattle event.

Lifelong Learning’s growing repertoire of opportunities extends to online resources, webinars, on-campus events, Global Alumni Forums and more; the tour is just one avenue through which alumni can access rich Lifelong Learning content. Like all Lifelong Learning programming, its content is shaped by alumni feedback. Lifelong Learning collects information from alumni surveys, focus groups, interviews and interactive online Topic Tournaments to determine what subjects truly impact alumni in a region. Together, this data shapes the information delivered during each event.

The Knowledge for Action Lifelong Learning Tour lecture in Los Angeles was followed by a Seattle event on September 13 about innovation, presented by Karl Ulrich, vice dean of innovation and CIBC Professor of Entrepreneurship and eCommerce.

Editor’s note: Visit www.lifelonglearningtour.com for a list of upcoming events; more locations and dates for the tour will be added soon.

Talk about drive.

In its aggressive marketing push for 2012, BMW is trying to accelerate its image beyond the “ultimate” in “ultimate driving machine.” The company wants to sell car buyers (investors, employees and the public) on the idea that one of the world’s top brands means more than you think and is more than a driving experience. Journalists and marketers took notice.

As a loyal Bimmer driver, I’m ready to believe. As I look around me, I see that Bimmer fanatics are ready to genuflect.

But believe what? What car brand needs to promise—and deliver—more than great engineering, speed, safety and a major fun factor—not to mention status?

As a leadership consultant, here’s my answer: BMW wants iconic. I haven’t seen the company use the word, but I rank “let’s get to iconic”—ambition plus execution—as the single best strategy to survive and thrive right now. And I read “iconic” when its ads say, “There’s nothing like owning a BMW,” or when Ian Robertson, its global sales and marketing chief, talks about transforming the automotive retail experience or setting new standards for dynamic performance.

We know iconic when we see it: the Beatles, Apple and the U.S. Constitution.

It means creating and keeping a reputation that’s near bulletproof and capturing the market with product after product (or service or invention) that proves it. An iconic company isn’t just “best in class.” It defines and redefines best in class before others start looking for it.

Though that was never easy, it’s harder now. It’s the rare company—or CEO—that can settle into a Blue Chip slot in the Dow Jones 30 and assume a lifetime membership. The Dow 30 might not even be the club you want to join these days. In this economy, old icons (Kodak) and new ones (Avon, RIM) can be booted off anybody’s short list in no time.

That’s why my first advice to leaders, even those who are already thinking innovatively, is to sit down and unpack the idea of iconic. Then you can apply it where it counts—inside the organization and on the outside with consumers, investors, policymakers, the community and people who have no obvious stake in your business.

But it’s the journey to that place—and the continuous focus to stay iconic—that really counts. Becoming iconic requires an obsessive commitment to giving the customer more than he wants or asks for. It requires every department to truly believe that “iconic,” however defined, is what the company does. It means making a difference beyond a market or industry, just as BMW lent its wind-tunnel facility to test the Olympic torch for the London games.

For more commentary on BMW, check out CNBC’s documentary on BMW, “BMW: The Driving Obsession.”

What company now strikes you as iconic?

Professor Kevin Werbach discusses gamification at the recent Knowledge for Action Lifelong Learning Tour lecture.

“Seventy percent—according to a number of studies—of people say they’re not really motivated at work,” Kevin Werbach, an associate professor of legal studies and business ethics at Wharton, told a crowd of Wharton alumni at the latest stop on the Knowledge for Action Lifelong Learning Tour.

This lack of motivation has huge ramifications for businesses across every industry. Motivating employees can lead to increased productivity, and motivating external audiences can lead to larger profits. Werbach has conducted intense research on one method of doing this: gamification.

People love to play games. The tradition of gaming stretches throughout history to every known human civilization. Games are pervasive in today’s society. The online game Angry Birds has been downloaded 1 billion times, users of Xbox Live are on the online version of the system for 2 billion hours a month, users spent 9 billion hours in 2003 playing Windows Solitaire, and 97 percent of American teenagers play video games.

“Games motivate people,” Werbach said.

That’s why researchers like Werbach study gamification, or “building game-like elements into existing processes or activities.” Gamification entails the use of game elements and game design techniques in non-game contexts.

Gamification of established processes can make a significant impact. Microsoft used gamification to motivate its employees to review dialogue boxes in languages and dialects other than English. The tech giant launched a competition among its field offices to review the dialogue boxes in Windows 7. Employees were so eager to win that they reviewed more than 500,000 dialogue boxes during their spare time.

Gamification can also be used to motivate external audiences. Club Psych, the website of USA Network’s television show Psych,  is using gamification to raise the level of engagement with fans. Since this implementation, overall traffic to the USA Network site is up 30 percent, page views are up 130 percent, and online merchandise sales are up 50 percent.

Werbach explains that psychology’s theory of self-determination underscores why games are a powerful motivational tool. This theory suggests that intrinsic motivation is based on three principles: competence, autonomy and relatedness. A process that is properly gamified should touch on all three principles.

With the potential power of games, it’s important to understand the rules of gamification before diving in. Better yet, Werbach told attendees, it’s better to be the game’s designer.

“Be the one who makes the rules.”

Editor’s note: Visit the Knowledge for Action Lifelong Learning Tour website for future tour dates and registration information.  

Things are still alive and well on the West Coast, but I’m going to suspend my update of all things S.F. until at least a few days from now, in part because I’m about to disappear into the Poconos where I hope to emerge successful—the metric here is completion—from a triathlon. Nevertheless, I thought it prudent to repurpose a recent homework assignment for your reading pleasure.

One of my favorite features of the Semester in San Francisco program is our weekly regional seminar, where we host a range of speakers who highlight topics of interest to our cohort. Thus far, we’ve covered mobile growth, entrepreneurship in big tech, an inside look at incubators/accelerators and last week’s topic—how VCs vet and select entrepreneurs for their investments. The official title of the session, according to our syllabus, was “From Great Entrepreneurs Come Great Companies: What We Look For,” which was fitting given our speaker’s prior experience as a successful entrepreneur and her recommendation that founders work with VCs whose partners have had firsthand experience founding companies. For our class, we’re required to submit a couple of reflections on this speaker series, and so without further ado, I give you mine.

Amy Errett, WG ’88

Amy Errett, WG ’88, partner at Maveron LLC [and Wharton Blog Network contributor], rather immediately grabbed my attention when she mentioned that she prefers to invest in first-time entrepreneurs, rather than serial founders. I wasn’t the only one who noticed that this does not seem to be accepted as a best practice for VCs. The other day in Professor Wessels’ class [David Wessel, adjunct assistant professor of finance], we surveyed the room as to whether we would prefer to invest in a company with a successful serial entrepreneur or with an entrepreneur who has industry expertise but no experience starting a company. We nearly unanimously chose the former. Even though I was delighted to hear this sort of optimism about inexperienced but nevertheless passionate founders—because I hope to be in this group someday—I was still somewhat skeptical. I had to wonder if part of this stemmed from a fact that I held onto from our “Managing People at Work” class last year: that one of the best predictors of future job success is previous job performance or some successful completion of a real-life “work task,” as opposed to the behavioral interviews to which we are all so accustomed.

In a way, an entrepreneur’s pitch is like a behavioral interview in that the audience leaves with some notion of the founder’s interests, qualifications and passion but has little sense of what it’s actually like to work with them and what they will achieve.

Even so, I admit to being rather convinced that a green founder has merits over a seasoned one—with a newbie, complacency has no role and absolute hunger and passion prevails—or so I’d hope. There is probably also something to be said for getting scrappy and creative to make things work, which is often necessitated by first-time entrepreneurs pouring every last cent of their previous and current income streams into their venture. Risking that much without any assured outcomes would seem excellent motivate for an incredible work ethic and focus—pretty good qualities if you ask me.

More than causing a stir with this particular point of view, though, Amy’s talk left an impression on me because I was able to actively connect it to so much of what we are learning at Wharton. Amy has three criteria for investing in early stage firms: people, market and product.

Hearing Amy elaborate on why she abides by “people first” and refuses to back anyone she doesn’t believe in, I was reminded of some core principles from our pre-term class on leadership and teamwork, particularly with respect to the importance of culture. Even though entrepreneurs are not direct employees of venture capital firms, cultural fit is nonetheless hugely important. I’m guessing that the average VC firm would not confidently proclaim, “I don’t like to back anyone who hasn’t fallen on their behind,” or that they value founders who are irrationally and blindly optimistic. I certainly didn’t hear those things in conferences and presentations I attended last year.

But there’s a reason that Amy and Maveron care about those attributes: if you fail, you’ve had to deal with adversity and resiliently recover, and if you’re irrationally optimistic, you’re also probably very passionate about your venture. She also highlighted the importance of an entrepreneur evaluating a VC; several hours later that day, Professor Wessels echoed her view that “capital is a commodity” and underscored the importance of understanding the incentive structure and experience of VCs, in addition to term-sheet clauses.

Amy also spoke of “agility, not flexibility,” and while she mentioned this with respect to a founding team’s personal attributes, I found it quite relevant to the needs assessment exercise we just completed for “Development of Web-Based Products and Services,” where we interviewed different types of potential users to understand their key issues and uses of products and services related to those that we are building for our new ventures. I interpreted Amy’s comment to mean that it’s important to keep our eyes and ears open for opportunities to make our product or overall business more effective—but to change on a whim due to popular sentiment or isolated feedback would be a mistake. Maintaining focus around our value proposition and business priorities is important, but there are things that we may learn along the way that cause us to rethink and shift to deliver an ever better need-solution match for customers. I felt this sentiment during our needs assessment, as there were new things I learned about how people view the travel-planning process that led me to think about additional attributes and ways to package our overall product to make it even more effective for our target audience.

Lastly, on the “market” front, it was refreshing to hear that Amy believes that deeply understanding and serving a niche/affinity group trumps getting a small chunk of a bigger pie. I’m aligned with this perspective, particularly as niche strategies allow for a targeted value proposition and customer base. Amy added that “marketing is more than branding, curation and positioning … if you can’t play in user acquisition, retention and engagement, then you’ll never win.”

Having spent the larger part of my summer internship focused on that latter piece, I couldn’t agree more. It’s one thing to have a compelling brand that reels people in, but having good analytics to measure their behaviors and preferences allows for better segmentation and innovation around new products and services, thus a greater lifetime value.

I learned a lot from Amy and appreciated her perspective, which was confident, unpretentious and provocative. She might agree with me when I say that there’s no great algorithm to predict chutzpah, but if you are irrationally optimistic and try to make one and then fall flat on your face, then that experience will in time make you a more appealing candidate to VCs.

Editor’s note: This post first appeared on the Wharton MBA Program’s Student Diarist blog on Sept. 28, 2012. We will continue to feature updates from Jennifer and her classmates, who are the first full-time Wharton MBAs to spend a semester at Wharton | San Francisco.

Professor Eric Bradlow presents at the London stop of the Lifelong Learning Tour.

Whilst you’d be forgiven for expecting a finance lecture at the Lifelong Learning Tour event in London on November 14, you’d be wrong. When alumni were given a vote, marketing was the topic winner. Peter Yordan, WG’11, observed, “I get enough finance at work. I wanted to hear something different from what I could learn in my day job.”

This view was shared by those at the other end of the graduate spectrum.

“Definitely a good use of time,” remarked Peter Woolsey, WG’66. “I’ve gotten many ideas, and it is clear to see how Wharton’s pioneering research can benefit European businesses operating with so many different cultures.”

After all, who wouldn’t want to predict accurately, at an individual level, what specific customers were likely to buy, in what quantities, and rate the risk of them defecting to competition? Regardless of industry, this would generate tremendous advantage. It’s also precisely where the School is pioneering the way with its Wharton Customer Analytics Initiative (WCAI) started by Eric Bradlow, the K.P. Chao Professor, and Peter Fader, the Frances and Pei-Yuan Chia Professor, in 2011 and discussed at the event. No other business school comes close in this sphere.

To learn more, you can see the video for the London session, as well as similar events in other cities, via http://lifelonglearning.wharton.upenn.edu/videos. Or you can visit www.wharton.upenn.edu/wcai, where not only can you sign up for the newsletter, but also you can explore opportunities to partner with the WCAI to solve your most difficult problems.

For example, as explained by Elea Feit, executive director of the WCAI, most recently Hertz delivered a data set including employee engagement surveys, transactions of rental cars in those locations along with the customer satisfaction surveys for those transactions. The end goal for Hertz is to understand and predict customer loyalty and the effect of employee engagement on this.

Whilst I’m still mulling over how to leverage this myself, I’ll definitely be telling at least two fellow alumni they need to learn more about WCAI as it seems ideally suited to address their business challenges. I’m not the only one referring it on.

“I came out of personal interest and didn’t expect to learn much relevant to banking,” begins Winson Dam, ENG’97. “How wrong I was. My bank could definitely benefit from the analytics methods described, and I will be ensuring the right people know about it.”

As Bradlow pointed out, “Most of what Wharton taught you in marketing is becoming less and less relevant.”

In his talk, “The Golden Age of Marketing … Is Always in the Future,” Bradlow outlined how, over time, access to better data has continually moved the goalposts but never so much so as now.

“Today’s rapid pace of change is making marketing one of the hardest, yet most interesting, departments to be in,” he said.

As he pointed out, “Technological advances have entirely changed the face of marketing and what you can now measure is immense.”

Entirely new topics have had to be added to the curriculum, including sentiment analysis, Web scraping and adaptive experiments. The change is so profound that Bradlow expects that within five years students will be able to major entirely in customer analytics.

The main premise of Lifelong Learning is to blur the line between student and graduate. Vice Dean Sam Lundquist introduced the session saying the goal was for us to leave hungry for more, and Wharton certainly delivered. Until this lecture I was convinced I was done with academia. Now I’ll be keeping an eye out for the day Wharton introduces an executive course on customer analytics which I can fit around my work schedule. I’m sure others left the event feeling exactly the same way.

—Susan Marinakis

Susan Marinakis, WG’05, is senior product manager, ACUVUE_® Brand Contact Lenses, for Johnson & Johnson Vision Care. She was kind enough to write this report for the Wharton Blog Network on behalf of the Wharton Club of the United Kingdom.