Question

Answer these questions for the case study: Purple Innovation, Inc.: The Online to Offline Marketing Challenge

(a) Delineate what marketing data analytics and metrics were used by Purple

Innovation, Inc to assess the effectiveness of their marketing actions and marketing

campaigns. (There are many.) Within your answer, provide the type of analytics and /or

metrics and for each one, and, for each one, an example of specific dollars, numbers,

percentages that were provided in the case. (Be sure to include in your in-text citation the

case study’s page number, and paragraph number, or Exhibit number, for each separate

metric.)

(b)Explain in detail the value of analyzing this data for Purple Innovation, Inc’s Place’s channel management.

(c) Explain in detail the value of analyzing this data for Purple Innovations Inc’s Promotion’s management.

Case Study:

In the last few years, we have witnessed the emergence of numerous direct-to-consumer (DTC)
companies across a range of categories, from consumer packaged goods to meal kits to insurance. Many
of these startups have found success by offering novel products and services, a convenient and fast
buying experience, and often lower prices. The internet, digital devices, and consumers’ comfort with
online and mobile shopping have all played a role in enabling this business trend. Notwithstanding,
another critical factor propelling the growth of these upstarts has been robust digital platforms, such
as Google and Facebook, that provided a cost-effective way to find and acquire relevant customers.
However, after a euphoric initial growth period, DTC brands often encountered the predicament of
maintaining their momentum in the face of intense competition, having exhausted their easy-to-
convert customer pool, and rising digital advertising costs. In other words, while the barriers to entry
were low, the barriers to scale were proving to be quite high. This forced many of them to explore new
markets and customer segments, launch new products and services, and sometimes venture into new
distribution channels (often giving up their “pure DTC status”). Moreover, they had to re-think or at
least refresh their marketing approach – figure out how to keep producing innovative, effective, and
efficient digital ad campaigns, while examining traditional media outlets as well. This case presents
the story of one such company, Purple Innovation, Inc., that encountered a similar scaling situation.
The Purple Challenge
Several years after Purple Mattress had joined an explosion of disruptors who offered mattresses
with a DTC online selling model, the innovative comfort company wanted to encourage consumers to
get up and go into stores to buy its products.
The Lehi, Utah-based brand, which touted patented comfort technology that took decades to
perfect, had primarily relied on the Internet to drive its success: there was the early Kickstarter
crowdfunding campaign that far exceeded sales goals, an easy online shipping model that let
customers skip the trip to a mattress store and instead conduct a 100-night, risk-free test of the unique
mattress in the comfort of their own home, and, perhaps most importantly, the brand’s quirky, viral social media marketing campaigns that had drawn millions of eyes and generated $123 million in sales
in the first 18 months after the company’s launch.
But as the DTC mattress space swelled, with at least 150 online-only companies 1 looking to compete
with established mattress players with storefronts, disruptors like Purple sought new ways to grow
and attract additional customers. Overall DTC sales were on the rise, but still only accounted for a 12%
slice of the $16.5 billion U.S. mattress industry in 2018. 2 Consequently, Purple saw an opportunity to
reach customers who still preferred to shop for mattresses in stores. More importantly, the number one
question asked by potential customers was how they could feel Purple’s unique mattress before they
bought. But that created a new challenge: how does a company, which had heavily relied on digital
tools, get customers to shop for its products in offline outlets?
The aim was to grow sales overall and reach a 70% to 30% ratio of online to in-store sales, fully
recognizing that sales in each of these channels might come from a different set of customers. As 2018
was coming to a close, Purple’s marketing team wondered whether they could continue to leverage the
digital marketing approaches that helped propel the company to become a major DTC player to now
drive customers to stores. There was more money to spend on marketing than in the early founding
days, but should the mix mainly include digital or were more traditional vehicles called for?
Creating a Superior Sleep Technology
Purple was no stranger to having to rethink its business model to maximize growth. Long before
the co-founders ever created a mattress, Tony and Terry Pearce invented products that would make
them experts in the world of cushioning. The brothers, a rocket scientist and engineer respectively,
started a business in 1989 producing high-tech sporting goods and other equipment. 3 But feedback
from customers who tested the products made them realize a bigger need: padding to make their
wheelchairs more comfortable.
Over the next two decades, the Pearces would test and iterate comfort technology that eventually
evolved into the signature product they sell today, the Purple® Mattress. First there was FloamTM, a
liquid cushion material that secured several patents and was used to create an array of products, from
footwear to seat cushions to ballet cushions and ankle braces. The brothers licensed the material to
retail giants, including Nike and Johnson & Johnson, but it was expensive to produce, so they set out
to create a lower cost option. In 1996, the Pearces launched a hollow buckling column, gel-like material
that boasted a more comfortable surface thanks to a design that alleviated pressure by redistributing
it, as well as stretch 15-fold its resting state. This innovation spawned many new patents and a new
wave of products at several big brands. However, in 2013 the inventors decided to use their novel
material to create their own product and chose to focus on mattresses.
Yet another invention, a mattress producing machine called The Mattress MaxTM that was designed
and built entirely in-house, allowed the brothers to manufacture at scale and opened the door for a
viable consumer business. In 2015, Purple was officially born – drawing its name from the color of the
Pearces prized innovative material that had been decades in the making.
The Journey to Capitalizing on Comfort
Armed with a product that they dubbed the “World’s First No PressureTM Mattress,” the co-
founders believed they could revolutionize the industry, particularly amid other DTC rivals who had
only made modifications to pre-existing mattress materials, including coils, memory foam, and latex. Purple found a way to compress and roll its mattress so that the company could ship the Purple®
Mattress at scale to the doorstep of customers using traditional carriers. Moreover, the company added
signature packaging: rather than using a box like many of the early DTC competitors, Purple shipped
its product in a translucent purple bag, which showed off its rolled-up mattress. Once the mattress was
taken out of the bag and unpacked, it would expand and reach its intended size. With the technology,
production capabilities, and shipping resolved, the Pearces were ready to sell the first original Purple
mattresses at a much lower price compared to traditional mattress competitors like Serta or Sealy – for
example, a queen-sized product from Purple would sell for $999 vs. the $4,000 average price of other
luxury mattresses. But the budding company needed a way to generate brand awareness and attract
customers first.
The company gauged demand for the new product in 2015 with three mattress sizes, available for
pre-ordered purchase via a crowdfunding campaign on Kickstarter. To drive the campaign, the
entrepreneurs utilized an in-house, $6,500 video production that highlighted their mattress technology
and durability. Of the backers on Kickstarter, 73 ordered the king-sized Purple mattress with a $999
donation (the king-sized Purple® Mattress retails for $1,399 today). For an $899 donation, 61 backers
received a queen-sized mattress. A $599 donation got 8 backers the extra-long twin size mattress. “Early
bird” buyers got two free Purple® Seat Cushions to sweeten the deal, though pledgers could also buy
a cushion by itself (for $75). Backers who tried the products and didn’t like them were guaranteed a
full refund. The goal was to raise $25,000, yet the campaign managed to successfully raise almost seven
times this amount. 4 In addition to testing out the public’s appetite for Purple mattresses, the campaign
also provided the company with the capital needed to move to full production and prepare for a
national launch.
Following the Kickstarter campaign, in 2016 the Pearces tapped The Harmon Brothers, a Utah-based
social media creative agency, to help them market the first iteration of their Purple® Mattress.

Answer 1

a) The way Purple checked their marketing effectiveness was to understand the sales through offline and online channels. When it was seen that the products were sold 70% online and the sales had seen an increase, it could be understood that the marketing campaign had succeeded. Hence, sales were the threshold to check marketing analytics data.
b) By understanding the maximum used channel for sales of the mattress, the brand could redirect its resources there. If the sales were still high through offline channels, the brand will have to open the stores to reach out to more customers. But if the online sales were increasing, Purple will have to bring onboard more logistics partners for smooth delivery processes.
c) It was also necessary to analyze the sales post the new promotion of 100 free days and easy delivery to understand whether this was the promotion technique that increased the sales or not. The brand has to understand the relevant areas and promotional techniques which might have led to an increase in the sales of the business.