Co-Marketing: Customers as Strategic Allies

One of the important contributions of the Internet and especially of the Web 2.0 to modern management is without doubt the fact that these technologies gave voice to the previously passive customer/consumer. This sound like a curse in disguise: While this form of customer empowerment is sometimes seen by marketers as a threat, it has in fact created new opportunities and new ways to establish competitive advantages and enhance customer loyalty. One of these ways is to create "Customer Strategic Alliances" making the customer part of the Marketing process.
Although the term Co-Marketing is not new I use this term to describe something different namely the active cooperation between a firm and its final customer utilizing the best of the collective wisdom in different ways: Co-creation of new products and services or Co-creation of advertising concepts. In all cases involving the motivated and eager customer is the key. I am collecting at the moment literature on the issue as the first step for a review article about this new form of strategic alliances. I will keep my blog followers updated (about the article and the findings).

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.

Crowdsourcing: utilize the customer's creativity

Taping the Customer Creativity (also known as Crowdsourcing) is one of the elements of my model outlining the main ways that marketers can engage the Social Media as Marketing tools.

Many examples of such initiatives are already known to those who follow what happens in the Social Media space. Most applications ( RedisignMe, Dell, Nokia, Samsung, TomTom, HP, Talpa, Google Android KLM, Starbucks, P&G, Robeco, threadless, LEGO, SAP, Kodak and many others) are focused on utilizing the customer wisdom in order to innovate. Another way to utilize the customer creativity is to ask customers to design advertisements for you or even commercials. A pioneer in this area is Current where amateur videos that appear on TV win money. Here in Holland we have also some interesting examples. A few months ago Nespresso tested two commercials as to the viewers' opinions before one of them appeared on TV (Source: MarketingFacts.nl)

Another nice example of using customer creativity is the Battle of Concepts , a Dutch (at least till this moment) platform allowing companies to organize competitions (mostly among creative business students) for solving real business problems. The site is getting very popular among students who can win up to 5.000 Euro but also among lecturers who can find there real case studies for their students! (I think to try this next year). Last but not least a new site called Creatad offers creative amateurs the possibility to make money by designing advertisements (printed or videos). I wonder if the American Marketing Association will be obliged to come soon with a new Marketing Definition taking into consideration the interactive nature of Marketing today as well as the way the New Marketing is creating value for the customer who becomes slowly marketer himself!

Web 2.0 definition

With so much talk about Social Media / Web 2.0 I would like to give the readers of this blog my personal view on what Web 2.0 is. This is summarized in the Web 2.0 definition that appears in the article I published together with Stephan Fountain titled
Web 2.0: Conceptual foundations and Marketing Issues, in the Journal of Direct, Data and Digital Marketing Practice, vol 9, nr 3, pp. 231 – 244

The definition is the following:
Web 2.0 is a collection of open-source, interactive and user-controlled online applications expanding the experiences, knowledge and market power of the users as participants in business and social processes. Web 2.0 applications support the creation of informal users' networks facilitating the flow of ideas and knowledge by allowing the efficient generation, dissemination, sharing and editing/refining of informational content.


Comments are welcome

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!

When the Old Media Meet the New

It is encouraging to see that slowly the old media, one of the main victims of the Web, learn to turn the Web and more specifically the Social Media threat into a strategic opportunity by endorsing them as part of their marketing toolbox. Those who follow my publications and blog posts know that this is what my recent research is all about. I am glad to say that talking to either colleagues or practitioners I see that this issue is steadily gaining interest.
The New York Times is good example of an old media business that uses the Social Media very successfully as part of its campaign to increase brand awareness and customers. Their recent Facebook venture is a big success according to the Nieman Journalism Lab. I found very interesting that the NYT concluded that the campaign netted “4,3 times the value of the spend” while it quadrupled the NYT fan figures.

Hopefully those still skeptical about the New Marketing will think again

Ex student and co-author turns the theory into practice

I was glad to find out that my old student and co-author of my paper Web 2.0: Conceptual foundations and Marketing Issues Stefan Fountain is progressing in the cyberspace.
Stefan is the brain behind soocial.com an online content management tool enabling users to synchronize contacts between computers mobile phones and web applications. He seems to be lately very busy giving keynote speeches and as a good Web 2.0-era marketer puts the theory to practice by promoting his company via heavyweight online influencers like TechCrunch who writes quite nice words about it.
Stefan, lots of success, keep up with the good work

Internet and the Red Queen Effect: Google Insights

In my article titled "Strategies for Surviving the Internet meltdown: The Case of Two Internet Incumbents" published in 2004 in the Management Decision * I studied the secret of survival and success of two top online firms of the first web generation: Amazon and ETrade. These firms not only outlived the 2000 Internet meltdown but are still thriving online. My conclusion was that the strategy of these firms was quite similar and inspired by the Red Queen Principle: continuous transformation and expansion in new markets, new products or both.
It seems that the same principle is still the basis of the strategy of many successful new web firms and firms of the Web 2.0 era. A good example is Google: a recent development of Google (in beta) called Insights helps tracing the number of searches performed for any term, phrase or name worldwide or in any countries and in different time periods (up to 4 years). Very useful for those who want to optimize the findability of their site or simply want to know whether more or less users are searching for their brand or product than last year or if their brand / product is more popular search term than the brand / product of their competitors.

* Constantinides E., 2004, Strategies for Surviving the Internet meltdown: The Case of Two Internet Incumbents, Management Decision Journal, vol 42, nr 1, pp 89-107

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.

Social Media as Marketing Tools

The nominations for the 2008 Forrester Groundswell Awards is a very good collection of interesting and innovative ways of engaging Social Media as marketing tools. The admissions in the contest were classified according to the Groundswell methodology in 7 categories depending on the objective pursued: Listening, Talking, Energizing, Supporting, Embracing, Managing, Social Impact

American elections 2008: A victory of change (in politics and marketing)

The overwhelming victory of Barack Obama in the US elections yesterday encapsulates the desire of the American people for change in their country, sharing the opinion of the whole world. The personal charisma of Obama, his message of change both in internal and external politics and his promise to make Americans proud to be Americans again gave him the victory over McCain who focused on what he would not do rather on what he would do if elected, gambling on conservatives’ fear for change as one of his main assets.
Next to the factors I mentioned as main contributors to the victory of Obama we should not forget his impeccable campaign strategy that could become a marketing textbook case; anyone who questions the change taking place in the marketing world should study this case carefully. This campaign made a very strong case for what some of us call New Marketing with the individual customer, the Internet and the Social Media playing the central role. Those who doubt about it can read a lot in the press or simply have a look to the online proposition of the Democratic Party as long as it is online. It is a state of the art example of how the New Marketing approach (combined with the perfect “product”) can attract, mobilize and motivate many people and particularly the new generation that for the first time in the American history played such a decisive role in presidential elections.

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

Manufacture on Demand (or Have It Your Way)

People who asked me ten years ago if the Web is the suitable channel for selling fast moving consumer goods (FMCG) like bread, butter, beer, candy, soft drinks and tomato ketchup got a categorical no for answer. But things are changing. If you ask me the same thing today I will answer to you: Of course!
What has changed is that we moved from Web 1.0 to the Web 2.0 era. The new online challenge is to manufacture and deliver customized products of all kinds to customers who are not satisfied with what they find in the supermarket or high-street shop, looking for something very personal.
The revolutionary approach of Dell Computers allowing online customizing and ordering of PCs in the 90s is becoming a routine today for an increasing number of products including FMCGs. Today you can customize (or even design ) online your T-Shirt, sport shoes, soft drinks, paper tissues, candy, tomato ketchup and beer. These products can be ordered and delivered at your doorstep, in many cases becoming available to other customers on line. The amazing capabilities of Web 2.0 applications combined with the explosive growth of broadband made this possible.
The list of customized products in the Web is growing every day and although some of them are not yet available everywhere it seems that the dream of Mass Customization is quickly becoming a reality. Print-on-Demand revolutionized the printing business but the Manufacture-on-Demand will most probably revolutionize FMCG production and retailing pushing the frontiers of branding and product innovation to new directions. The Long Tail can celebrate, it is taken now really seriously.

Misusing the Social Media

The misuse of online forums or weblogs by advertisers and marketers posing as online consumers enthusiastically talking about brands or products is nothing new. Walmarting is a term often used to describe efforts to plant advertisement into public online forums disguised as honest opinion of people. The Dutch television program Radar paid recently attention to the phenomenon by presenting the results of their investigation to the origin of some over-enthusiastic posts in blogs and forums.
The whole practice is naive if not stupid. Many such cases of fraud have been traced by vigilant web users in the past and reached publicity that in the end was damaging for the reputation and credibility of the firms involved. On the other hand the practice undermines the web neutrality and the very nature of the social Media as platforms of open dialog.
Is there any solution to the problem? Not an easy one I am afraid. The anonymity of the web makes such practices easy and very tempting. Screening of comments in blogs and forums by experienced moderators could reduce the number of fake posts. A filter that could stop such posts by adding their creators to a black list of a Hall of Shame would maybe help. Using clever data mining techniques identifying and blocking such silly practices could also be a part of the solution. For sure the best solution would be the obligation of participants in online discussions to register and fully disclose their personal data. This would also reduce the volume of posts that sometimes are just disturbing, offensive or pure nonsense but this is the most difficult to be accepted and applied solution. Maybe the best weapon is to be critical to very enthusiastic or very repulsive online comments.

Will it blend?

A bit extreme some times yet interesting way to create viral buzz around your product making use of online video in combination with blogging and cause marketing. Tom Dickson CEO of Blendtec, manufacturer of home blenders has persuaded everyone about the quality of his product by blending anything you can imagine in his blenders. From mobile telephones to athletic shoes! In the site Will it Blend you will see a imaginative (yet not suitable for every product) way to use the web as communication and customer retention tool. The cause marketing element? Auctioning the blended products in eBay and give the money to charities.

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

Advertising Challenges

Back from vacation, I wish to everybody a good new start after the summer.
Accenture published a very interesting article about the disruption facing advertisers and advertising agencies due to developments around the Social Media and mobile technologies

Online Creative Destruction: Music Blues Part 2

Quick Summary: The developments around the social media / Web 2.0 are a clear and present danger for the traditional music industry.

How the music industry should handle these issues is a subject of debate. There are some who even argue that the amateur culture, as a dominant factor of the Web 2.0 developments, and the alleged violation of intellectual rights will put an end to professional creativity and eventually drive the mainstream music industry out of business. Others take a more moderate position arguing that the music industry will finally adapt to the new reality and differentiate its approach.
The industry’s response to the threat has so far been fragmented and weak. Despite some earlier success like closing down Napster and a few other of the early file sharing sites, the phenomenon of illegal downloading is for all intents and purposes by now beyond any control. Paradoxically, in spite of the fact that iTunes and other subscription-based sites have shown that there is a promising market for legally downloaded music, many of the industry main players are still looking to these developments with suspicion. Another worry, fuelled also from the success of YouTube and other video sharing sites, is that the next victim of the social media will most probably be the film industry but also any other form of information-based industry (games, publishing etc).
The best these industries can do is to start working on the problem putting it in its proper perspective and forgetting the success formulas of the 60s and 70s. The objective should be to try to understand the new market landscape and develop ideas that will allow them to use the new technology to their advantage. An important issue here is to find new ways of communicating with the virtual customer by applying some new forms of marketing aiming at reaching the new centers of market influence (bloggers, podcasters, online communities etc.) as well as the online Long Tail. This means that those involved understand and accept the fact that the days of the very fat cows are over. Minimizing their development and distribution costs - maybe starting by bringing back to normal levels the exuberant fees they pay to both talented and untalented artists – will allow them to compensate for the reduced revenues.

Online Creative Destruction: Music Blues Part 1

When it comes to new technologies the law of creative destruction is merciless. One of the latest victims of the new generation of Internet applications - commonly referred to as contextual Internet, Social Media or (more often) Web 2.0 - is the music business. The industry’s picture is gloomy: sales and revenues are in a tailspin and there is a general feeling that the good old trusted music marketing knacks simply do not work as they used to. A clear symptom of this is the steady decrease of hit albums since the year 2000: only one music album released in the new millennium is found in the Top 20 list of hit albums of all times http://www.rockonthenet.com/xtra/toplps2.htm

Industry insiders, stockholders and even academics try hard to figure the best course of action. The main causes of the problem are known: File sharing, illegal downloads and the decreasing power / lack of effectiveness of mass communication are mostly blamed. Less people seem to realize that another source of troubles is the explosion of the special interest micro-markets that have switched a large part of demand for music from the hit album to the “Long Tail” at the cost of the official labels that have dominated the music scene for the last forty years. As a result a steadily increasing chunk of the demand for music is shifting towards remixes and amateur online music, circulating through blogs, podcasts and other Web 2.0 type web sites. Music amateurs and enthusiasts have access to freely available, open source software that turns them into composers, performers, producers and distributors of remixes or other shorts of “garage” music, that is further virally distributed among funs. In other words the music industry does not seem to be the victim of technology only but also of the victim of changing consumer predilections.