Talking Digital Marketing with Google and the higher education teachers

An interesting meeting with lecturers teaching digital marketing in universities of applied sciences and the University of Twente as only research university, organized by Goolge NL in their head office in Amsterdam. Interesting discussions about improving and coordinating education in digital marketing and also great view (despite the fog) from the 21st floor of the Google offices. In the discussion was clear the enormous demand of talents / graduates of higher education in The Netherlands with skills and knowledge on digital marketing. Google attempts to help closing this gap

Potential and problems with Big and Smart Data

An interesting post in the MIT Sloan web site about the problems around Big Data. Needed: a new generation of executives who can work with Big Data and extract relevance from it. http://sloanreview.mit.edu/article/better-decisions-with-smarter-data/?utm_source=WhatCounts+Publicaster+Edition&utm_medium=email&utm_campaign=DA+Enews+Feb+25+2014&utm_content=Read+more

EuroTrip 2013: What are the effects of the Euro crisis on Greek businesses

With a group of 22  of our 2nd and 3rd year students we start from Monday the EuroTrip 2013, a study trip that is part of our Business Administration curriculum on the University of Twente organised by the study association STESS. A busy program with one lecture in the Athens University of Economics and Business and 7 business visits the students will try to figure out what are the effects of the crisis in the country worst hit by it on their strategy and marketing activities.
It promises to be a very interesting and educational trip

Details in my Twitter and this blog the most interesting news from the trip.

A piece of advice to CEOs (and everyone else interested): The Social Media is not the silver bullet

The response of businesses to the Social Media as marketing tools is overwhelming. It is getting hard to find any company home pages that do not display proudly Twitter, Facebook, YouTube, RSS and other social links. To many managers the Social Media hype has triggered euphoric expectations and the illusion that jumping on the Web 2.0 bandwagon will magically solve all their problems and give them “competitive advantage”.

The countless Social Media aficionados and self-proclaimed “gurus”, “experts”, “evangelists”, “specialists”, and “prophets” I wrote about earlier are also contributing to the confusion; a very similar picture to the dot.com frenzy that some of us still remember but obviously many of us have already forgotten.

One of the big management fallacies (shared and distributed by most of the ignorant “experts”) is that the logos of the trendy apps on the web site will make customers believe that things have suddenly changed: our products got better, the customer service works, we listen to the customer. Some serious research is of course necessary here to see whether these management perceptions have anything to do with reality and whether the introduction of Social Media is really by itself leading to any improvements.

Until such evidence is available I would rather advice some cautiousness: the Social Media is not the silver bullet. I consistently explain to those who follow my lectures on the subject that the Social Media is only part of the solution. Other parts are the Customer Advocacy and the of course the Marketing strategy on different levels. I explain them that you should not start investing (or rather throwing) money in social Media strategies if you do not first address the issues in the (E)-Marketing Strategy Pyramid.

Borrowed from the well-known Hierarchy of Needs Maslow model my pyramid simply says that in order to be able to apply any Web 2.0 / Social Media strategies you should consistently address ALL lower levels of the model. In simple words you can not have Social Media ambitions with lousy products and customer service, a marketing organization in a permanent state of winter sleep and a dysfunctional web site that was last updated in the previous century.
Anecdotal evidence indicates that indeed such situations are not the exception. I recently read the post of Tom Davenport and the post of Umair Haque in the HBR blog that discuss the problem from different angles.
For those who want to address effectively some of the issues arising I have a few simple advices. Before you start talking about Social Media Marketing:

- Place yourself in the place of your customer
- Try to listen (and hear) the real customer voice
- If you have outsourced your customer service to a Call Center break today the contract with them (if possible). If you do not do this you can never apply the first two advices
- Look to your organization carefully and without bias (or maybe let someone else to look to it).
- Have you ever heard the terms CRM (not the software packages that are called so) and Customer Advocacy? If not go to Google (or maybe in an old fashion library) and try to find out something about them.

New Marketing and a new generation of Marketers

While this use to be quite an exception until 2 years ago more and more often I supervise BA and MSc graduation assignments of Business Administration Students in our faculty related to the role of the New Media (and recently increasingly of the Social Media / Web 2.0). More and more business realize that marketing is changing and this is reflected in assignments they offer to marketing students. The development is very positive indicating that businesses begin to take the Internet and E-Marketing seriously. One example of such a MSc graduation thesis was the one written by my student Rene Borggreve (left in the photo with me in the middle and my colleague Dr. Mehmet Aydin right in the lobby of Harvard Business School in Boston during the faculty study trip to the US in 2005) who recently graduated on a thesis dealing with the subject of using Web 2.0 as marketing tool in launching a product of a big multinational (where Rene already works). It was en excellent piece of work that made me proud for the quality of students our faculty delivers. Rene and an increasing number of his colleagues represent a new generation of marketers that understand the role of the New Media as part of the marketing strategy and will shape the way marketing is applied in practice.

Marketers: Back to basics (but what basics?)

MarketingCharts: “Marketing executives are going back to basics this year, putting renewed focus on satisfying and retaining customers and investing in research and insights, but they are “sick” of hearing about Web 2.0, according to a survey from Anderson Analytics conducted for the Marketing Executives Networking Group (MENG).”

It sounds too good to be true: “Shareholder Value”, “Outsourcing”, “Value for Money” (sometimes an euphemism for marketing cheap crap made in China), Tactics instead of Strategy and other mantras that have distorted the marketing thought and practice during the last 20 years seem to lose their glitter. Light at the end of the tunnel?

I am afraid not! Going back to “Basics” (like satisfying and retaining customers and investing in research and insights) is a tedious undertaking for most marketers today; the customer is not what it used to be, the market parameters and conditions have changed, the market power has migrated from the marketers to people and last but not least the image of marketing and peoples’ trust in Marketing has never been lower.

Marketing practitioners but also Marketing Academics have their share of blame for the marginalization of Marketing and its loss of focus. Professor Frederick E. Webster Jr. wrote in the Journal of Marketing (vol 62, October 2005): “ For the past two or three decades, the tactical dimension has dominated, with an emphasis on operational (i.e., input-level) marketing decision variables and short-term business performance results, especially sales volume and market share. Methodological rigor has been emphasized over problem importance … Data and Methodology have dominated academic research at the expense of both theory development and practical relevance, retarding the progress of the marketing discipline in a rapidly changing market environment”.

Back to the survey revealing the Top Five Trends for marketers. I can’t help to comment on the findings.
“#1. Insight and Innovation Key: Insight and innovation are seen as key to combat slumped economic and business cycles. Some 72% of respondents said innovation efforts would stay the same or increase, while 39% say their use of market research will increase this year. This is significant, given that most marketing experts agree it's imperative to innovate and mine insights during a recession”

While I fully agree that insight and innovation are vital I have a piece of advice for these marketers: Instead of getting sick of Web 2.0 (#4) they better try to find out what Web 2.0 really is. Social Media can be a low cost (handy in cases of “slumped economic and business cycles”) and very effective tool for tapping customer voice and creativity: the best basis of innovation! The Web (2.0) has already become the nr 2 news information channel and for most people is already the nr 1 marketing information channel.

“#2. Customers at Top of List: Basic customer satisfaction and retention remain the top two concepts of interest to marketers, followed by marketing ROI, brand loyalty and segmentation. Together, these represent a move back to the core principles of marketing”.

If “basic customer satisfaction” is really the top priority for marketers they have to sell the idea first to greedy shareholders! As to customer satisfaction and retention they must come up with some new ideas next to low cost. A piece of advice: they better realize that Web 2.0 is the place they have to be in order to find out if their customers are satisfied or what will make them satisfied.

“#3. Green Marketing, Global Warming Lose Importance: The topic of global warming showed the largest decrease in importance (dropping 14 places in the rankings), while green marketing showed a statistically significant 5% drop”.

If this is true I am afraid that marketers are once more out of touch with the new realities further marginalizing Marketing as a corporate function. You can’t blame marketers entirely though for such attitudes when the departing Bush administration has been the good example by consistently undermining these issues. Bad news for these marketers: A recent survey indicated that 85% of consumers having to chose between a product related to a cause and one not related to any cause would prefer the first one. Advice: read once more the new AMA definition of Marketing and ask yourself why it replaced the previous one in just 3 years!

“ #4. Marketers "Sick" of Web 2.0: Twice as many marketers are "sick" of hearing about Web 2.0 and related buzzwords such as "blogs" and "social networking," compared with last year's survey. However, marketers still admit they don’t know enough about it. This was evident in results from a November 2008 MENG social media study showing 67% of executive marketers consider themselves beginners when it comes to using social media for marketing purposes”.

This is my favorite: Marketers are sick of Web 2.0 but admit that they don’t know enough about it!! A statement that could come straight from Dilbert. No Comments.

“#5. Most Opportunity in China and among Boomers: China ranks as the #1 greatest area of opportunity (53%) for marketers with international responsibility, while India is a distant second, with votes from 17% of respondents. In terms of the best opportunity for customer targeting, execs still feel Boomers hold the most promise. But the perceived importance of Generation X and Generation Y grew significantly, compared with 2008 survey results”.

While I would agree about the Boomers and possibly about the X / Y generations I would be much more careful ranking China as #1 opportunity area. The effects of the financial crunch are already dramatic for China: sweetshops and all kinds of low labor cost outsourcing facilities (see #3 above) are closing. The low cost, export-based model seems unsustainable for developing the Chinese econoly in the long run. Western customers are cutting on spending and the reputation of Chinese products is deteriorating (see the latest milk scandal). Many draw a parallel between China today and Japan in the 70’s and 80’s but don’t forget that China is not Japan! I am afraid we have not seen the worst yet.

Conclusion: Marketing practitioners have realized that they drive in a dead-end road and try to turn back. They could better start the process of rehabilitation by first making some effort to understand the real world (and not to forget the Web) around them, keeping in mind that now the customer is the dominant party. Back to basics sounds good, only the basics have dramatically changed. The sooner they recognize this, the better the chances to survive in a world that is not any more what it used to be.

Detroit Blues

General Motors surprised the Internet world when some years ago became a forerunner on Customer Advocacy by sponsoring the Auto Choice Advisor web site (that evolved in the mean time to the MyProductAdvisor.com).
The Auto Choice Advisor (see the original web site above) was an exceptionally advanced for the time (2003) online tool (coming close to the Web 2.0 domain) meant to help customers obtain the best possible information needed in order to make the right choice when buying a new car.
The Auto Choice Advisor in its original and also present form is supposed to be a very powerful marketing tool. According to Harvey Bell Executive Director, Global Advanced Vehicle Development at GM. “The system provides the Advanced Vehicle Development group at GM with an unprecedented and timely view of consumer preferences as well as accurate market performance simulations for projected new products. It has guided many major product design and development decisions by allowing us to move directly from consumer research to product design. It is now widely used throughout the corporation". I use this online advisor as an example of how a corporation can help its customers to become successful and at the same time improve its image. The system is a very valuable source of customer voice that if properly used can provide marketers with very valuable information on consumer preferences and trends.

Despite the availability of such an advanced customer acquisition, retention and market research tool GM, together with the rest of the Detroit Automakers, are fighting for survival at the moment. And while the Auto Choice Advisor was supposed to give GM a clear competitive advantage it seems that no one there bothered to look to what customers were looking for when considering buying a new car. And not only this: despite the use of advanced tools meant to win the customer trust GM recently acknowledged that in fact it has violated the customer trust!!!
All the discussion at this moment is focused on the problems of GM and the other two American car manufacturers and on whether the US government will bail them out. With the discussion still going on today I was glad to read the post of John Quelch on the Harvard Business Review blog of 11 December explaining the background of the GM demise. Interesting for marketers as a case of anti-marketing!
Conclusion: Even the best Internet concepts can not compensate for bad marketing!

New AMA Marketing Definition: Back to Basics

Searching some familiar sites I was surprised to see that the American Marketing Association without much fanfare adopted again a new definition of the term Marketing, only three years after the previous revision. Since some of my readers are possibly not aware of this development I copy the text presenting the new and old definitions and the raison d'être for the change as one can find it in the web site of the AMA:

“New Definition of Marketing (est. in 2007)

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

Previous Definition (est. in 2004)

Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

The new definition takes into account input from a broad cross-section of the Association membership. Marketing is regarded as an 'activity' instead of a 'function' and positions marketing as a broader activity in a company/organization, and not just a department. The new definition also positions marketing as providing long term value rather than narrowly as an exchange of money (short-term) for the benefit of the shareholder/organization.”

Source: http://www.marketingpower.com/Community/ARC/Pages/Additional/Definition/default.aspx

I am glad with the new definition if only for one reason: The new focus of the on “providing long term value rather than (positioning marketing) narrowly as an exchange of money (short-term) for the benefit of the shareholder/organization”, as AMA explains.
As you possibly remember sometime ago I criticized the almost religious emphasis of the contemporary management on short-term results and “shareholder value” as a strategy mantra that has caused and keeps causing substantial damage to corporations, the economy and the society in general. The colleagues of the AMA seem to worry also about the impact of the short-termism and “shareholder value” and decided to take action by pronouncing the “transparency, broad participation and continuity” as the basic tenets of the new definition while restating the client/customer and the society as beneficiaries of the marketing.
Interestingly the new definition came about with feedback provided by the industry that clearly was in favor of a new definition rather than a revision of the old one. Possibly the endless stream of corporate scandals and several examples of top (mis)managers often rewarded with hundreds of millions of dollars in stock options have contributed in this attitude. I also suspect that the increasing recognition by marketers of the new role of the customer and the customer empowerment have played also some role here.
I hope that the new definition of the Marketing will help the corporate management to correct its course and re-focus to their customers than the shareholders. It should also help marketers to better understand their mission and give to the marketing the position it deserves as corporate activity.

Shareholder Value vs. Customer Value: could a bit of marketing theory have prevented the Sub-Prime meltdown?

The relentless corporate chase of the new strategy mantra, the "Shareholder Value" (i.e. strategy is anything that will raise the stock price and the value of the management stock options) reached its apotheosis during the recent months when one of its upshots, the infamous Sub-Prime Mortgages market, collapsed. Sub-Prime Mortgage is a populist social policy in the US: sub-prime mortgages so everyone can buy a house, even those without any income to pay back. In fact sub-prime is nothing than a euphemism for customer acquisition i.e. more production by entering a new market segment, more profit and more “Shareholder Value”. The meltdown of this market sent the international financial markets in a tailspin and has brought the world economy at the edge of recession.
The quality of corporate governance and the strategic choices of important institutions should become again an issue of political scrutiny and hopefully an issue of research. Like most crises of the last 15 years financial institutions, the shadow banking system of speculative traders and some rating agencies (rating bonds of questionable quality with AAA) seem to have played also a decisive role here; in a funny way though financial institutions were again the first victims of the crisis.
With the equity markets in a state of paranoia, big caliber players in the red, hedge funds evaporating, property prices crushing and the world economy in crisis the 7 G officials decided finally to “call for more bank regulation to prevent global slump”. No one would disagree that more regulation is necessary so that some financial institutions stop behaving like gamblers out of control. What would help also would be if bankers – and other financial institutions - were reminded from time to time that since it is their customer’s money they risk with their speculations and irresponsible “investments” (who could imagine that so many brains would invest so much in sub-prime) it is maybe the Customer Value they have to rediscover again as their new business paradigm. If they do not know what the term means I would advice them to open the Marketing textbook they have kept from their student years.

Advertising ethics and the demise of marketing

The question whether Marketing as a vital corporate discipline is losing ground is not new. Marketers are more and more seen as tacticians and specialists and the influence of marketing as strategic tool is weakening. An additional problem for marketers is that the influence of marketing (at least of old-style mass marketing) on customers is also diminishing. While less people look to television advertising or base their choices on what companies say about their products or services some creative advertisers try to reverse the tide using every trick in the book including using very provocative advertisements or commercials aiming at attracting attention by means of extreme visuals or use of street language. A nice example combining both these approaches is the pizza advertisement TV spots we see here in Holland these days and you can also enjoy in YouTube. I am really curious abut the effect of these provocative commercials on the product and the brand but judging from some of the reactions and comments of YouTube viewers I am glad that there are more people who are annoyed by them. Hopefully the spot creators will take the trouble to read some of these comments and draw their conclusions before it is too late.Rather than try to be provocative marketers should try to understand what is going on around them and find some better way to try to attract peoples’ attention.

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