The Dominos Pizza Effect

In case you missed the story: Two Dominos Pizza employees in N. Carolina decided to claim their "15 minutes of fame" (according to the famous aphorism of Andy Warhol) inspired obviously by JackAss. They filmed a few videos showing them doing some pretty disgusting things in the Dominos kitchen while preparing products meant for customers. The films were quickly spotted by the blog Good As You, that published the story and alerted Dominos management. In the web page of the blog you can follow the line of the events including the exchange of emails between the Communication executive of Dominos Tim McIntyre and the blog and the video statement of the Dominos President P. Doyle apologizing to the customers for the incident and announcing the actions taken against the two employees (they were fired and face prosecution for damaging the brand). A written statement of Kristi, one of the two involved in the incident, posted yesterday explaining that the video was just a prank is not anymore in the site. As it is usual in these cases other blogs and online news sites published details of the story. In the site of the blog The Consumerist and many other blogs you can follow the colorful comments of the blog readers on the case. The blog swarm of this case is already about 35.000 blog and Twitter references in Google Blog Search! From the original videos posted only one is still on YouTube, the most disturbing ones were removed early on from the site.
Hopefully the damage control measures taken by Dominos management will put an end to this story and prevent it from reaching the mass media. The fact that the people behing Good As You warned the company is a signal of citizen responsibility and indicative of the positive role blogs can play.

Two remarks from my perspective:
1. This incident outlines once more how important is for businesses to "Listen" to what people (customers, competitors or personnel) say, write or in any other way communicate online about their firms, brands, products or people. This is what I call the Passive Way of using the Social Media as part of the marketing strategy in the model describing ways Web 2.0 applications can be used as marketing tools.
2. The incident once more underlines the need to draft company guidelines of employee usage of Social Media as means of personal expression. Considering the increasing number of people seeking fame online I think that lack of organizational guidelines spells problems for companies that see their products and brands suffering because of the irresponsible behavior of some of their employees. It spells also problems to many idiots who cannot think of the consequences of their actions putting themselves and their employers in trouble.

Distributed co-creation: the next step in Innovation

In a number of my recent research papers, my lectures and also posts in this blog I have tried to underline the importance of using Web 2.0 applications as means for taping into the customer creativity also known as crowdsourcing. This option has two variants, either using the customer creativity in order to create advertising concepts or participate as innovator. An interesting article by professors S. Read and D. Robertson titled " What is the next big Innovation in Innovation ?" was published some time ago in the IMD web site.

The New Innovation Wisdom

An interesting article (also in videocast) from Google's chief economist Hal Varian in the McKinsey Quarterly. Varian explains the many effects the web has on industries and calls managers to re-think of conventional thinking. Useful note for everyone involved in innovation today

Ici Paris II: Social Media as Marketing tools

Participating in the 8th International Congress Marketing Trends in Paris last week I had the opportunity to follow many interesting presentations during the Strategic Marketing Forum that was held the first day of the Congress. (See my post of 15 Jan 2009). During the presentations and also at the coffee and lunch breaks I spoke with several of the executives who participated in the proceedings asking them about the extend of using Social Media as marketing tools, namely in "listening to customer voice", allowing product customization or engaging the customer as innovation agent. The answers were in general on the positive side. This proves once more that the Web 2.0 issue is a hot item for many marketing executives who despite their "back to basics" attitude realize how important it is to get the customer as much as possible involved in their business. A really optimistic attitude and for me the confirmation that more research in this area is needed.

An airline's digital transformation

As an old KLM employee myself I am always interested in developments in the airline industry and this company. While KLM was by no means not one of the pioneers of E-Commerce in the airline world they have shown a remarkable progress in this field during the recent years. An interesting article about the digital transformation of this company that expects now to earn 40% of its revenues online published by Accenture recently. The term of co-sourcing is introduced and explained also in this article; interesting for those allergic to rampant outsourcing.

Manufacture on Demand (or Have It Your Way) II

Manufacture on Demand is an activity made possible by technologies in the Web 2.0 /Social Media domain. In a model I have developed presenting a classification of the Social Media as marketing tools the Manufacture on Demand appears in the 5th column: Social media as means of personalizing the customer experience. * The theoretical basis of the manufacture-on-demand principle is the (contradictory) concept of Mass Customization. The tool used in all these application is called Configurator. In the site Configurator Database you can explore the world of configurators. Prof. Frank Piller is one of the researchers with rich contributions in the subject.

* A working paper about using the Social media as marketing tools is available to those interested. Just send me an email in e.constantinides@utwente.nl

Technographics Segmentation

The traditional segmentation methods are not always helpful in the Social Media era. One of the popular ideas is the Social Technographics segmentation of Forrester

Social Technographics Explained

Online Marketing in four simple steps

STEP 4 SYSTEM: The Technology

The main areas where the System-related decisions are to be made are:
Web site administration, maintenance and service. Availability of technical and service personnel on a 24-hour, 7 days a week basis is the basic requirement for a reliable site.
Web server hosting and choice of the Internet Service Provider. External hosting is a popular option mainly for small and medium-size organisations.
Site construction. Constructing an above the average, transactional E-Commerce site requires a substantial initial investment. Outsourcing this activity is usual, there are however many editing tools available for low-budget solutions. Presentation quality, user friendliness, easy navigation, browser independence and speed are important success factors determining the choice of programming and development tools.
Content management. Important elements of content management are the frequent reviewing and updating of the content in response to constantly changing customer needs, market conditions, competitive strategies and market trends as well as the decentralisation of the Web site updating procedures. The later requires training and empowerment of employees of different departments in managing the site data under their responsibility and is needed for avoiding bureaucratic procedures harmful for the content quality.
Site security. Protection against any forms of malicious attacks as well as transaction and customer data safety are paramount concerns of E-Commerce managers and online customers alike. Identifying the proper security level for each content category is a sensitive issue since increasing security levels usually result in reduced functionality or diminishing user friendliness. A good approach is customising security levels on the different site elements therefore avoiding unnecessary safety overdoses while the sensitive data is adequately protected with minimum functionality sacrifice.
Transaction functionality. The main elements here are the construction of communication interfaces, the choice of the transaction and payment technology, the testing and administration of the system.
Collection, processing and dissemination of the Web site traffic and transaction data. This type of data fulfils, next to its administrative significance, an important commercial role as the vital input for evaluating the site performance, testing new ideas or assessing the effect of promotional activities.
System backup. A sound back-up mechanism is vital for Internet organisations expected to be operational on an around-the-clock availability basis. Technical problems and system failures must be quickly addressed with the minimum operational disruption.
Finally the site technical management must regularly and in collaboration with the commercial management identify and evaluate new technologies and new available products that could upgrade the site performance, enhance the customer experience and effectuate operational economies.

Questions: you can always email me in e.constantinides@utwente.nl

The Original 4S Web Marketing Mix paper

Online Marketing in four simple steps

STEP 3
SYNERGY: The Organizational Integration

Creating an online presence is one thing but making this part of your organization and its network is another. These are the issues that the Synergy in the Web Marketing Mix model is dealing with.
Integration into the organizational processes, value chain and network is a process often underestimated by web designers and site operators. Yet this can make the difference between functional and dysfunctional web sites, between online success and failure.
What is exactly the Synergy and what are the main issues underpinning the integration of the online and the offline organization? Synergy is the integrating processes necessary for realising the virtual organisation’s objectives. Synergies can develop between the virtual and the physical organisation as well as between the virtual organisation and third parties. This Synergy factor embraces a wide range of issues divided into three categories of integration: The Front Office, the Back Office and the Third Parties.

a. The Front Office Integration. Refers to integration of the company web presence with the conventional above the line marketing activities i.e. the corporate communication and product distribution. That means the full integration of the Web operation into the company’s communication plan (advertisement, promotions, PR) as well as the existing channel structures.
It makes a lot of sense to integrate the online presence part of the marketing program by assimilating for example the promotion of the virtual activities into the current promotional plan. The effort must be focused on utilising existing communication strategies, brands, tools and channels in order to promote and support the Web operation during the introduction stage. The objective of this communication is to inform existing as well as potential customers about the firm’s Web activities and communicate to target markets the advantages of doing business online.
In addition to the promotional integration the web operation must become an integral part of the existing distribution structures. Depending on the type of the firm distribution structure this integration can face different degrees of difficulty. The easiest case manifests itself when existing distribution models can accommodate the online distribution requirements without serious changes and disruption of existing operations. Mail-order or telephone sales firms had no difficulty whatsoever to use the existing distribution structures for virtual operations.

b. The Back Office Integration. The second type of synergy refers to integration of the web activities into the value-adding organizational activities like production, fulfilment, logistics and Total Quality Management. Often firms underestimate the effects of online operations on their operations, something resulting in bottlenecks and unhappy customers. The web forces many firms to review their traditional methods and find ways to improve their efficiency: Online customers require customize rather than mass products and the disintermediation of the Internet means that organizations must be able to respond directly to changes in demand levels without the luxury of the dealer’s buffer inventory; firms are forced to introduce lean and clean production and logistics structures.
Other organizational integration issues often overlooked are the assimilation of the web activity into the legacy TQM and control systems, ERP Systems and Databases. While these types of integration seem trivial they often become the reason of major bottlenecks and source of customer dissatisfaction.

c. Third party Integration. Until last year when I was referring to this type of integration I was talking about integrating the web activities into the organizational value chain by finding how to create win-win situations with channel partners and avoid channel conflicts. Another form of third party integration refers to finding other parties and co-operate with them in order to increase your online exposure and attract more customers. In this sense search engine optimization and affiliate marketing can be very useful tools.
However the last years another form of third party integration emerges. With the advent of the Web 2.0 and the Social Media, online firms and traditional companies must explore the available options to utilize such media as part of their online networks but also as means of informing their customers, listening to their wishes or complaints and influencing their buying behavior. Using the social media as marketing tools is a very interesting yet complicated issue but worthwhile to look at: according to a recent study of Deloitte Touche in the USA 62% of the US consumers read consumer-generated online reviews and 98% of them find these reviews reliable enough while 80% of these consumers say that reading reviews has affected their buying intentions. Engaging the social media as means to influence consumers is the secret of the tremendous success of companies like Amazon.com and it is also the dream of every direct marketer.


Next week: The Technology Issues (SYSTEM)
Details: The 4S Web Marketing Mix paper

Online Marketing in four simple steps

STEP 2
SITE: The Web Experience

The second S of the Web Marketing Mix model refers to the operational issues involved in creating the proper online or Web Experience. The corporate web site is the main source of customer experience and therefore a lot of attention must be given to this element of E-Commerce. Important questions to be asked here are:

- What do customers expect in the site?
- Why customers will make use of the site?
- What motivates customers to come back?

The web site plays a multiple role: it is the virtual product display, promotional material, price catalogue and sales/distribution point. The site is therefore the functional platform of communication, interaction and transaction with the online customer.
The prime mission of the web site is to attract traffic, establish contact with the online target markets and brand the online organisation. Next to this “generic” mission and depending on the type of the online firm, the web site can be assigned a mix of commercial and non-commercial objectives and tasks. These will be defined in the Scope step as you remember.

Some of the common site objectives and tasks are:
- Communicating and promoting the E-business image, labels and products/services.
- Providing company information to customers and stakeholders
- Effectively communicating the firm physical or virtual promotional activities
- Providing customer service and helpdesk functionality in order to enhance the customer loyalty and retention
- Providing sales leads and customer /market data.
- Allowing customers to communicate and interact with the company as well as creating online content.
- Allowing direct sales and facilitating online payments (transactional sites)
Trying to achieve all or some of these objectives results in what the web customer experiences when visiting the site, what is commonly referred to as the online experience.
The quality of online (or Web) Experience is very important. There are studies indicating that a site visitor needs only 50 milliseconds in order to form a positive or negative opinion about a web site[1]. An important question here is: What are the components of Web Experience and what is the importance of these for the customer’s choice?

The buying behavior of online consumers is an area where a lot of scientific research takes place. Part of the research has been focused on the identification of factors influencing the online consumer, in other words on the identification of the Web Experience components. A few years ago I published a paper where – based on about 50 different academic studies - I classified these factors in five categories:

USABILITY, INTERACTIVITY, TRUST, AESTHETICS and MARKETING MIX

Next to that my colleagues and I try to identify what of these factors are really important influencers for customers searching for and buying products online.
Our first findings (published in 2005) are that in the case of transactional sites the Usability is by far the most important factor, followed by the Trust and the Marketing Mix elements. To our surprise we have found that the effects of the aesthetics of online shops do not influence the customer’s choice as much as one would expect (having in mind the effects of aesthetics of physical shops) To our surprise in our experiment here in Holland we found that Interactivity can even have a negative effect to online customers who obviously do not appreciate loosing time in interaction when they shop online!
In any case this is an area we have for some time now focused our attention here in Twente and in Spain in cooperation with colleagues from the University of Castillia La Mancha. At this moment we analyze the data of a new experiment meant to identify the exact effects of online shop aesthetics on buying behavior. More news about this soon.

[1] Lindgaard G., Fernandes G., Dudek C., Brown J., (2006), Attention web designers: you have 50 milliseconds to make a good first impression. Business & Information technology, vol 25, nr. 2. pp 115 - 126

Next week: The Organizational Issues (SYNERGY)

Details: The 4S Web Marketing Mix paper

Online Marketing in four simple steps

STEP 1
SCOPE: The Strategy

What’s the use of running if you are not on the right road? (German Proverb)

Every marketing plan is (or should be) part of a strategy with clear vision, mission and objectives. In the case of E-Marketing there is no difference: a clear and well-defined strategy is the basis of a successful online presence.
This sounds quite logical to most people yet there is a difference between the strategy formulation and content in traditional marketing contexts and e-marketing. In traditional settings the strategy formulation is a top-down process, taking place in boardrooms, in regular mostly yearly strategic sessions, by and large focused on the long term. In the case of E-Marketing the strategic context is different: Market conditions change very rapidly, good strategies are relatively easy to be copied and maintaining competitive advantages in the long run is difficult, something recognized also by M. Porter.
Under such circumstances successful online corporations are those able to adapt quickly their online strategy to new conditions, constantly innovate and build / maintain short-term rather than long-term competitive advantages. This is a strategy I described in a 2004 research paper , consequently followed by the most successful online firms since the 90's.
It is obvious that the online strategic process is essentially different than the traditional strategic process: Short-term oriented, subject to continuous review and appraisal, frequently updated and in very close proximity to operations. This is the reason that SCOPE makes part of the Web Marketing Mix model as the first and basic component of it. In simple terms Scope refers to Strategy and Strategic Objectives online. The online strategy is (or should be for that matter) part of the total corporate strategy, if we deal with traditional companies operating also online.


Next to the “operational” nature of the online strategic process a legitimate question is what are the components of the online strategy? In a sense not much different than what we are used to as strategists (components 1 and 2) yet there is something new here (components 3 and 4) . The main issues to be addressed are:
1. Market Analysis: In what type of market we operate online? Main issues to be analyzed: Competition basis, competitors, market potential, market forecast and market trends
2. Potential Customer: Who is our potential customer? Main issues: Profile(s), motivation, (online) behavior, needs/desires and current way to fulfill the, priorities
3. Internal Analysis: To what degree is our organization ready for the web? Main Issues: Internal resources, processes and values. Is the Internet a sustaining or disruptive technology for our firm?
4. Strategic role of Web activities: What do we expect the Internet to do for us? Main Issue is the identification of the role of the web as part of our total marketing program. Generic roles are: Informational, Educational, Relational, Promotional, Transactional. In practice most firms engage the web in a combination of the generic functions.

Golden Rule: The Scope is subject to continuous review. The Online Strategy is a short-term Strategy

The four components in combination form the basis of the Internet presence i.e. the platform for creating a web site and the organization behind it.
Next week: The Internet Presence (SITE)

Details: The 4S Web Marketing Mix paper

Online Marketing in four simple steps Part I

Introduction

One of the most common issues keeping many strategists and marketing executives busy is how to optimize their Internet presence and make the most out of the web as a communication and distribution channel. These concerns are logical considering that the Internet has become the nr.1 information source for consumers and businesses, the nr. 2 retailing channel in many countries and according to different estimations by 2010 the Internet retailing will be between 10% and 13% of the total retailing volume in the US. Understanding the mechanisms of online marketing and finding a proper way to teach this subject is also a problem that many academics and other educators have. For some people belonging to the above categories a way out could be the 4S Web Marketing Mix model I describe in a paper published in 2002. Next to scientific citations I come occasionally across references to this paper in different blogs , online forums or even web sites of business consultants. This paper has been consistently among the 25 most downloaded articles of the journal from its publication until today, reaching even the first position in the list. I have the feeling that the paper is mostly download by colleagues/teachers but very often by practitioners as well. The inclusion of the model in the popular 123manage site for management models must be one reason for that.

The 4S Web Marketing Mix model is meant to guide businesses in designing and building their online presence. It can be used also as a way to evaluate an existing online presentation with the objective to improve it. In the following 4 posts I will explain briefly the principles of this model and I will explain the additional knowledge build up since the publication of this paper by means of research conducted by my colleagues and myself.

As a first step I would like to say a few things about this model in general. The idea behind it is that in order to build and maintain a successful online presence it is necessary to address four different issues – that for the sake of simplicity I illustrate with four terms starting with the letter S - in a integral and comprehensive manner:

SCOPE : The Strategy

SITE: The customer Online (or Web-) Experience, the “operational” issues.

SYNERGY: The integration of the online presence into the organization and its network: the “organizational” issues

SYSTEM: The technologies necessary to realize the above

The model looks therefore like this:

Next week's post: The Scope

Peer-to-Peer (P2P) banking: After mergers and acquisitions one more headache for Bankers ? PART 2

Short Summary of last week posting (Part 1): A new generation of Peer-to-Peer (or Citizen-) Banking web sites appear to attract enough attention of the public. Should traditional bankers worry?

Part 2

Is it possible that the incumbent banks will share the fait of the travel agencies, music industry, telephone operators and the newspaper classified adds who experienced a sudden and substantial loss of business to online competitors before they even understand what’s going on? The scenario is not unlikely at all; the past experiences has shown that many of the revolutionary Internet ideas tend to expand as a virtual pandemic after reaching a users’ critical mass. Take the examples of SecondLife, Google, Wikipedia, MySpace, Digg, Flickr, Skype and YouTube to name some of the familiar names. These are brands that have attracted millions of followers in very short time and without any promotion. I dare to predict that the same will happen with the Peer-to-Peer (P2P) banking sites, provided that they reach the critical mass of users that will put them in the radar of giants like Google, eBay, Yahoo or Microsoft (and why not of Amazone or WallMart) who constantly look for interesting ways to expand their online business. Experience from recent high-profile acquisitions of Internet businesses points to the fact that the industry giants have no problem spending billions of dollars in order to further strengthen their online position and expand their market reach. Having said that it is not so difficult to imagine what will happen if Google or Yahoo add zapa.com, Boober.nl or any other similar online Peer-to-Peer bank to their assortment: from small and local these names will become overnight big and global and most probably fierce direct competitors of the traditional banking by offering to hundreds of millions web users an interesting virtual banking alternative. The worst case scenario for the traditional bankers is that most probably the citizen banks will expand their assortment to more categories of financial services and products. Do banking CEOs and strategists need to worry? After all banking is not like every other industry since reliance (based on personal contact and interaction) is a core banking value that the Internet cannot provide. Moreover banking is an economic activity meticulously regulated and followed by governments and financial authorities. Can these and other possible problems stand in the way of citizen banks? Again looking to the Internet history I would argue that online concepts embraced by users develop their own momentum and can expand beyond the reach and control of industries, governments or any kind of watchdogs.The important question to my opinion is whether the banking world has noticed these developments and has given any thought to this threat, provided that they consider this as a threat at all. One would expect that guided by past experience banking executives and strategists should seriously consider making the first step, ahead of the Internet giants. The online P2P banks are still cheap and therefore easy to acquire, while the risks are relatively low.Will the banking world try to preempt? Looking again to the past this sounds very unlikely. Experience shows that incumbents are very slow to react to the fast and often uncontrollable developments in the cyberspace. If this is the case here, it is interesting to wait for the next chapter of the Online Citizen Banking story