Data Analytics and Private Equity

From the Wharton Customer Analytics Conference.

In Knowledge@Wharton:

Data Analytics Is (Slowly) Transforming Private Equity
Jul 08, 2019 North America 

Data analytics is one of the hottest areas in business these days. Companies are increasingly adopting it to transform human resources, sales and marketing, business development, operations and other areas, across a wide spectrum of industries. The approach holds the promise of more objective decision-making and a stronger bottom line.

But when it comes to the world of private equity it’s a different story, according to Sajjad Jaffer, co-founder of the advisory and investment firm Two Six Capital. He said that when he and Ian Picache started their analytics-based firm in 2013, there had been “no technological innovation in private equity since the invention of the Excel spreadsheet.”

Jaffer and Picache noted that Two Six Capital has pioneered the use of data science in private equity, and to date has been involved in over $27 billion worth of closed private equity transactions. They think of their company as “launching the next wave around data-powered investing.”

They delivered the keynote, “Pardon the Disruption: How Data Analytics Is Revolutionizing Private Equity,” at a recent Wharton Customer Analytics conference at Wharton San Francisco. Their talk was followed by a panel discussion by veteran private equity professionals from both general partner and limited partner firms. .... " 

Consumers Breaking with Legacy Brands

Still nostalgia equity is a powerful thing for many brands.

Nostalgia Is Not Enough: Why Consumers Abandon Legacy Brands
Mar 25, 2019 Strategic Management  North America

Earlier this month, Sears ended a nine-decade presence in Lincoln, Nebraska, when it closed its store at the Gateway Mall. So it was, too, at Park City Center in Lancaster, Pennsylvania, where that town’s Sears store was one of dozens shuttered nationally in yet another wave of contraction by the once-mighty retailer.

The closings set off the expected misty-eyed recollections about the legacy brand and the cherished place it occupied in hearts across the country. In Colorado, where Sears closed two stores in Colorado Springs and one in Pueblo, a columnist for the Gazette mourned the loss. But she also admitted that her February visit to report on the closing was the first time she had been to Sears in a decade. “I left empty-handed, and a little heavier-hearted,” wrote Stephanie Earls.

Among legacy brands, Sears is in similar, troubled company. Payless ShoeSource is liquidating its 2,100 U.S. stores. Toys “R” Us — where many a young American parent remembers buying his or her first Transformer or Super Soaker – closed its 730 locations last year and is struggling to come back in some form post-bankruptcy.

You might have expected that the pull of nostalgia would have protected these brands from the retail re-sorting underway. Customers have emotional connections to certain stores — places where their parents brought them as children and where they did their first Christmas shopping, and developed certain buying habits and loyalties.

So what was the breaking point for customers? Price? Experience? Convenience? Why, in the end, are customers abandoning their shopping heritage and breaking up with brands? ... '

Consumer Loyalty and Amazon Dominance

Hmm, quote something to worry about for big CPG.    All that money they have spent over the years in establishing loyalty can be overridden, depending on product category?  Meaning of band equity?

How Amazon’s dominance in consumer packaged goods can help score brand loyalty  By Tomi Kilgore in MarketWatch

Consumers are most loyal about laundry and diaper brands, least loyal about trash bags and paper towels  ...  

Amazon.com Inc.’s dominance in the consumer packaged goods space can teach Wall Street a lot about brand loyalty in a e-commerce world, with search trends suggesting consumers tend to stick with their favorite laundry, diapers and adult continence brands, according to AllianceBernstein.

Where consumers are least loyal, is when they look to buy trash bags, paper towels and cat litter.
Amazon’s AMZN, -0.05% retail platform in the U.S. is estimated to have driven about 80% of online consumer packaged goods growth. With that in mind, analyst Ali Dibadj said Bernstein firm developed a way, using some outside sources -- “and an excellent millennial summer associate” -- to track search volume of keywords and brands. A “Relative Search Volume” score was created, he said, to gauge how important a specific brand is to shoppers in a broader category. .... "

AI as the Face of Your Brand

A useful informed survey.   We attempted to use AI as brand equity.  When does it work?  Particularly in the case of assistants, we often anthropomorphize.  Why or why not?

When AI Becomes the New Face of Your Brand
H. James Wilson,Paul Daugherty, Nicola Morini Bianzino  in the HBR

In the world of marketing, brand anthropomorphism can be a powerful mechanism for connecting with consumers. It’s the tactic of giving brand symbols people-like characteristics: Think of Tony the Tiger and the Michelin Man. Today some companies are taking brand anthropomorphism to a whole new level with sophisticated AI technologies.

Consider advanced chatbots, like Apple’s Siri, Amazon’s Alexa, and Microsoft’s Cortana. Thanks to the simplicity of their conversational interfaces, it’s quite possible that customers will spend increasingly more time engaged with a company’s AI than with any other interface, including the firm’s own employees. And over time Siri, Alexa, and Cortana, and their individual “personalities,” could become even more famous than their parent companies.

The implications are numerous. As chatbots and other AI technologies increasingly become the face of many brands, those companies will need to employ people with new types of expertise to ensure that the brands continue to reflect the firm’s desired qualities and values. Executives should also be wary of how AI increases the dangers of brand disintermediation. As brands assume more and more AI functionality, businesses must proactively manage any potential ethical and legal concerns.

To study those issues and others, we surveyed how AI is being implemented at more than 1,000 global companies. We found that many of those firms are already using (or have been experimenting with) AI to orchestrate the brand experience across a number of business processes. These include customer service (39% of companies), marketing and sales (35%), and even the managing of noncustomer external relationships (28%) where brand power is key, such as in attracting top talent into the organization’s recruiting pipeline. Studying those deployments led to several insights around three new types of decisions executives face at the intersection of technology, personality, and strategy. .... " 

Mr Clean's New Backstory

My colleague Larry Paul points me to a new backstory of Mr Clean brand equity character published for the Superbowl ad.  This is amusingly far different from the backstory we used when we worked on the brand  (See below for more variants on this equity bending theme) .  And of course, you adjust the character to the times.

An Iconic Brand Turns 50

Gatorade was my earliest exposure to the iconic brand.  Unexpectedly I ended up at an enterprise that held many such classic brands.  How do you create iconic magic? Was involved with projects that aimed to use future technology to revive fading brands.  Studied some unsupported claims that brain activity could indicate spiritual (iconic?) vibes.  You have to be careful before you dispose of that kind of embedded equity.

Community Managers and Equity

In Word of Mouth Marketing Blog:  A resource I have just started to cover, some good thoughts about being a content and community manager. Reminds me of conversations I had with (unofficial) brand equity managers in the enterprise.    Seems to be an interesting conversation starting.  Links to the documents mentioned in the full article.    " ... social media practitioners from an array of organizations came together for two and a half hours to create one document: The Community Manager Manifesto. The goal of this first ever summit meeting was to create a document that would exist as an aspirational set of ideals for community managers. The resulting six-theme manifesto reveals a common aspiration across all its declaratives: As a community manager, it’s time to become a much more strategic asset to your organization at the highest levels. “Marketing” as a theme was not included. Should it be? .. "