Session 01 - DTC Brands
● DTC - direct to consumer: companies that sell directly to consumer - without any third parties
(no wholesalers, retailers or distributers) -> many are online brands
● Personalization aspect of these brands
As brands shift to DTC models, they’re cutting out the wholesale- and retail-store middlemen, and
instead selling directly to the end customer.
DTC means selling your own products to the customer yourself instead of selling through a
platform like Amazon or a retailer like Nordstrom.
Here’s how wholesale and DTC retail models differ:
● Traditional wholesale/retail model: manufacturer > wholesaler > distributor > retailer > end
consumer
● DTC model: manufacturer > advertising/website > end customer
Sell products directly to end users through their own e-commerce sites, cutting the middleman out of
the traditional retail process
● DTC brands managing their own product stock levels. When customers place orders, the
brand is in charge of sorting, packaging, and shipping the product.
● Not needing to rely on third parties to source or deliver the goods.
● DTC brands communicate with customers directly and are in control of the fulfillment
experience.
Often subscription services that are personalized
Ask questions to get to know the consumer and its needs
To reach a more targeted customer base, DTC often involves monitoring customer preferences over
time.
Popped up in the last 7 to 5 years
Boom during the pandemic - reason: At the height of the pandemic, 10 years of ecommerce growth
happened in just 90 days. Eighty-four percent of consumers shopped online since the start of the
pandemic
Why do consumers like DTC brands?
Alignment in values
Consumers feel heard, special, seen and part of a community
Direct conversation with the brand
Fosters brand loyalty, connection, and relationship
Consumer feels that they can impact the brand and help it (feel part of something)
Eliminates several steps of the buying cycle and often provides a more efficient customer experience.
Reasons:
● Price
, ● Access
● Variety
● Costumer service
● Relationship with the brand
● Sense of impact
Positive aspects about DTC (company point of view)
● More control over the prices
● The company is more independent (Control the customer journey, overall experience
and brand story)
● Better margins (More money for other marketing levers -> e.g.superior customer
service)
● Improve customer engagement
● Expand your reach (offer broader product assortment)
● Access to data (understand your customer better; access feedback)
● Rely less on retailers (take control of your destiny)
Negative aspects about DTC
● The operation might actually cost a lot because the owner does everything (end to
end)
● Harder to find an audience (acquiring customers is hard and costly)
● Harder to build trust on a new company (spend a lot of money to convince people to
buy)
● Spend money on ads, promos
● How to deal with customer service? Return policy for example. Harder to resell a
product that has been returned when it is customized
● Hard to scale up the business
● Compete against big players
● Hard to keep prices low
How did DTC brands become successful?
Customer Insights -> R&D and Product Design -> Production -> Marketing & Distribution ->
Customer Experience
The rise of DTC brands can be attributed to at least 3 major shifts:
1. Legacy players used to have a strong hold on retail channels and it was impossible
for a new product to get shelf space. Rise of e-commerce and direct distribution
significantly reduced this barrier
2. Democratized marketing where smaller players can reach and capture the attention
of consumers with much lower budgets
3. Each part of the value chain has become modular and many third-party players have
emerged to take of production, warehousing, logistics, web hosting, and distribution.
These services are often on-demand and flexible. So, young entrepreneurs can
launch new products at minimal costs
Example: Casper
, - Only sold online, shipped to customers
- No retail locations
- Minimal ads (mostly podcast)
- Predominantly WOM
How to make casper grow and become the nike of sleep?
● SEO: brand awareness on google/search (trust, reputation on the brand that is #1 on
google)
● Ad with a celebrity - restfulness
● Sleep ads that grade your sleep with average people
● 100 days return policy
● Habit creation with first time buyers
● Collect data from conduct analysis: learn which features are important for a customer
(offer free matress to create a sample and study this group preferences)
● Pop up stores for trial, show unique features, target new customer groups
What casper did:
● Increased the amount of ads they spend
● Opened physical stores
Takeaways:
● Marketing has undergone a dramatic shift in the last decade (e.g. new distribution
and media channels to build new brands and stronger relationship with customers)
● Unmet customers needs, not technology, are often the cause of disruption: don’t lose
sight of your customer and their needs as the consumer experience drives business
● Customer centricity aims to manage how individual customer, not products or brands,
create profitability
● Just because a product is really good does not mean that people will buy it
Session 02 - Understanding Consumers
DMU - Decision Making Unit
DMP - Decision Making Process
Utilitarian product DMP
● Triggers may be based on (basic) needs
● Shorter research process, maybe not a key decision (low price)
● Deliberation process is short / nonexistent
● Repeat purchases shorten the process
● Based on emotions
● It depends on the need, context, convenience
AIDAR Funnel
1. Awareness
2. Interest
3. Desire
, 4. Action
5. Repeat
There are more than one touch-point where marketers can impact consumers -> on every stage of the
funnel
Awareness stage can be seen as to expose consumers problems so that they are aware of it, not only
aware of the company itself, but the problem that the company solves
Ego-expensive products:
● Long decision-making process (e.g. time, search)
● You take other people’s opinion into consideration
○ they might know better
○ might have had relevant experience
○ ego validated
● Take into consideration alternatives
● Consider opportunity cost
Cross Model
High involvement
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Utilitarian ———— Ego expressive
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Low involvement
Why segment the market?
People have different preferences - heterogeneity
Benefits of segmentation
● Segmentation aims at dividing the market into subsets of customers
● Members are different between segments, but similar within
All consumers -> Descriptions -> Behaviors -> Motivations
Benefits to the firm:
- Identification of valuable customers (higher CLV)
- More targeted promotions & marketing communications
= Sustainable profit growth
To the customers:
- Customized products & services
- Personalized experience
= Satisfaction & Loyalty
Segmentation Base (descriptor) = similar characteristics help identify segments
