AMAZON: a Leader and Disrupter of Retail

No doubt that Amazon has seriously impacted on and transformed retail and online shopping in general for more than 20 years. I follow this company since the 90s and I was one of those wondering if Amazon would survive the dot.com disaster of the beginning of the 20th century. They indeed survived it based on a strategy of (mainly) diversification as I described in my 2004 article "Strategies for surviving the Internet meltdown: The case of two Internet incumbents". They still go strong and keep disrupting, if not always without controversy: see the Black Friday strikes of Amazon personnel in Europe. 

Master Class Behavioral Targeting on Oct. 2

The Master Class Behavioral Targeting (see previous post) seems to be very popular since more than 90 participants are registered already. https://www.facebook.com/events/1433086260061874 Considering our target of 75 participants we are quite happy that we were wrong!
The registration is now closed and we keep a waiting list https://www.utwente.nl/en/bms/nikos/education/masterclass-behavioral-targeting/#introduction in case of cancellations.
Given the overwhelming interest also form colleagues and contacts abroad we will livestream the event.
The morning session (09:30 - 12:30) will be live in our Smart Marketing Facebook Group https://www.facebook.com/groups/1674296056130955/ , the afternoon session and the panel discussion (13:30 - 16:45) will be livestreamed in the UT USTREAM channel http://www.ustream.tv/channel/universityoftwente

For those interested the program of the day below

Why do we need 50 milliseconds to evaluate the quality of a web site?

In 2006 a group of Canadian researchers (Lindgaard, Fernandes, Dudek and Brown)

published an article called "Attention web designers: You have 50 milliseconds to make a good first impression" in the Behaviour & Information Technology journal. Lindgaard and his team found that a 50 millisecond exposure to a web site is enough to form a perception about the quality of a web site.

Building on this study, together with my Spanish colleagues Carlota

Lorenzo and MCarmen Alarcón del Amo, we published a paper in the Journal of Internet Commerce in 2013 called "Web Aesthetics Effects on User Decisions: Impact of Exposure Length on Website Quality Perceptions and Buying Intentions" where we looked to the effect of short (1 second) exposure on buying intentions.

Both studies relate short exposures to effects but they do not

explain why this is happening. What is of course interesting here is why the short exposure to an object (and a web site for that matter) can shape people's behavior; 50 milliseconds is so short that we actually do not see much of the object.

We will try to give an answer to this question together with my PhD intern Letizia Alvino and one of our Master students using neuromarketing techniques. Hope to publish the results but I will keep you posted anyway.

Digital Marketing as educational topic in the University of Twente

It is some time ago that this blog was updated but last year has been a rally busy one. New courses, new challenges and new research lines together with my colleagues in the University of Twente and abroad. I will try to update the readers on the activities of the last year and keep them up-to-date on the future developments.

This year we offered for the first time to our 2nd year undergraduates of International Business Administration (IBA) the possibility to follow the elective module (15 ECs) Digital Marketing for Networked Businesses. The module proved to be very popular among students, we got 100 students, double number than we had hoped for. The module was including  a wide range of topics: "traditional" E-Marketing topics, Social Media Marketing, Big-Data and Big Data driven Marketing, Social Monitoring tools, online reputation management but also rather unique topics for a university curriculum like Internet of Things and Neuromarketing.

Sanne Heerink of Social Inc during her guest lecture

An important innovative element of the module was one of the group assignments, namely participation in the Google Online Marketing Challenge. This unique project of Google where around 3.000 groups of students from all over the world take part gets the students in touch with the practice of SEM / SEA: They have to develop a real AdWords campaign for a real business or non-profit organization with a budget of US $ 250 made available by Google. This is to my knowledge the first time that students from a Dutch research university took part in the project. The project ended with a Symposium (photo below) in the Classroom of the Future of the University of Twente where our groups presented the results of their work. The final evaluation of the campaigns was done by Google.

The Module has been quite successful if I judge from the student evaluations and the comments we received. A very big part of this success is because of all the efforts of my colleagues in the faculty and our student assistants but also due to the great presentations and help of our guest lecturers. I would like to thank all of companies who contributed lectures for their great and inspiring presentations: Team Nijhuis, Social Inc, Greenberry and Noldus.

In the meantime the results of the Google Online Marketing Challenge are known: Our groups have performed particularly well. Six groups received the STRONG and seven the GOOD ratings, not bad for a first time participation by the school.

The plans for next year are also interesting for those interested in education in Digital Marketing on Master level. Next to the existing undergraduate module Digital Marketing for Networked Business, for the first time we will offer the elective (Advanced Topics of) Digital Marketing as part of our Business Administration MSc profile Marketing and Strategy. With these courses and some more developments that are under way (I will talk about these in another post) we hope to realize our ambition to make the University of Twente the place to be for those interested for a career in Digital Marketing. We already cover with these two educational units most digital marketing skills in demand, as these are identified in a recent report of Marketing Profs.  

Customer motives as online co-creation partners: a research paper

The discussion about innovation engaging the customer as co-creator (often described by terms like co-innovation, crowdsourcing, peer production customer, crowd-based outsourcing etc) is not new to many of us. One of the new and interesting aspects of co-creation is engaging customers in co-creation process using online tools (and social media in particular) as interaction platforms. There are several issues to be addressed here, one of them is finding the best persons / customers and get them on board. Motivations of customers to engaged in such processes are of vital importance. This was the topic of our latest research paper (co-authored by Carlota Lorenzo-Romero and Leonine Brünink) titled "Customer Motives and Benefits for Participating in Online Co-Creation Activities". The article that was accepted and will be published soon in the International Journal of Internet Marketing and advertising  attempts to give an answer to this issue. Based on a survey conducted among 239 young Internet users in Holland and Germany the factors described in the Uses and Gratifications Theory (and tested earlier by Nambisan, S., & Baron, R. A. (2009) for "traditional co-creation). We tested whether the benefits described int the Uses and Gratifications Theory (i.e. Personal Integrative Benefits, Hedonic Benefits, Social Integrative Benefits and Learning Benefits) are motivators for online co-creation and this seems to be the case. We  found out that about 28% of the participants have taken part in co-creation activities with businesses online, something in line with findings of our previous research.  We also identified two profiles of online co-innovators and found that males and Dutch are in general more motivated than females and Germans to participate in such activities. The differences based on ethnicity might have to do with the fact (and this is a personal observation) that in the Netherlands there are more opportunities for online co-creation activities than in Germany. With some caution for generalizations due to the sampling method we think that this study provides some
For those interested the abstract of the paper below:

Abstract

The widespread adoption of Web 2.0 applications, commonly known as Social Media, has brought about a new generation of empowered customers. Empowered customers are well-informed, knowledgeable and certain about their specific product and service needs; they are often willing to share their experiences, product knowledge and innovative ideas with producers, providing input for new product designs and enhancements. Such customer attitudes often labelled as co-creation, are forcing many companies to step away from the traditional firm-centric view of innovation and take a more customer-centric view by actively integrating customers’ ideas and knowledge in their new product and service development processes. Co-creation presents businesses with an interesting challenge: how to identify and recruit the innovative customers who willing to cooperate and share their knowledge as the basis for successful online co-creation activities.

This study identifies the various motivators for customers to participate in online co-creation. Based on the uses and gratification approach a pilot questionnaire is employed and its practical applicability is tested. The results indicate that customer participation in co-creation projects is motivated by four distinct types of benefits and  that co-creators differ in their motivational level. Finally, recommendations on how to adapt the questionnaire for future research and suggestions for further research issues are provided. 

References

Nambisan, S., & Baron, R. A. (2009). Virtual customer environments: Testing a model of voluntary participation in value co-creation activities, Journal of Product Innovation Management, 26(4), 388–406.

Constantinides E., Brünink L., Lorenzo-Romero C., 2014, Customers Motives and Benefits for Participating in Online Co-Creation Activities, International Journal of Internet Marketing and Advertising (forthcoming).

How to deal with the empowered customers when they misuse their power

I usually start my talks on Social Media marketing with showing to the audience a list of questions marketing practitioners have on the impact of technology on their business, markets and marketing practice.
One question of my list is "How to deal with the empowered consumer". I am especially interested for this question because customer empowerment is one of the most important (side-) effects of the internet and social media boom, a phenomenon that will shape the marketing thought and practice in the coming years: as academics and practitioners already realize the market power migration will change not only the rules of the marketing (from pushing to collaborating, from broadcasting to engaging, from talking to listening to name some important ones) but also the focus of it. One of the new focus areas will be reputation management and preventing customer  attacks. If you want to know more about this I suggest the book of Gillin and Gianforte "Attack of the Customers".
During my talk last week in the E-Travel Summit I had again the opportunity to talk about such issues. After the speech I was approached by the management group of a hotel who wanted to have my opinion on how to deal with customers who make a (discounted) non-refundable booking in the hotel and do not show up or cancel the booking and ask their money back because there was a "serious" reason that they cancelled their booking.
While some of these customers are persuaded by talking that what they ask is not possible some insist to have their money back otherwise they will wreck  the reputation of the hotel in the social media.
Of course no business that has invest to good service and reputation is happy about such a possibility; the people I spoke were really concerned about the  issue and eager to have some advice.
What is the right strategy in such cases? Should the business give up to threats to protect its reputation or keep a firm position and face the possibility of a reputation damage?

I told them that there are different levels where one should deal with such practices in this particular case.
The first level is during the booking process: In this stage it is important to be absolutely open and transparent with the customer.
How can you do that? Be sure for example that the customers before pressing the button for closing the deal see a last screen or pop-up reminding  them that they buy a non-refundable ticket and mentioning their options: To accept that there is no possibility to have the booking refunded for any reason, to buy a travel insurance covering refund in case of unexpected events or buy a refundable booking. If the customer clicks that he is aware of these facts and still prefers the non-refundable option, be sure to inform them with a confirmation email about their option again and possibly offer the possibility to change the booking within 24 hours to a refundable one.
Such an open yet water-proof attitude and deprives customers from much ammunition when they change their mind.
But what should you do with customers who despite such clear and binding agreements still threaten with reputation damage? The next step is to engage in a direct discussion with the customer outside the social media space: by phone, email or personally if necessary. Most customers will give up in this stage if you show that you are interested and take the customers seriously but also remind them their own commitments.
For the few that despite all this will insist and threaten I have another piece of advice: Ignore them if they are irrelevant or invisible in the social media: you do not need to worry about someone without any presence at all in the social media or someone with 20 Facebook followers. If the person has a serious social media presence then you have two options: either try to make him/her forget the issue by offering something as compensations (like a discount in the following booking) or follow closely their posts on the social media and respond professionally, being prepared at the same time to spend some time on the case. I do not think that giving up to threats is an option, maybe another option is to scrap the discounted non-refundable options altogether.
Is there, despite all these measures, any guarantee of avoiding such problems completely? I am afraid  the answer is no. Consumers are now aware of their power and some of them will be eager to misuse it. We must not be surprised by this, this is in human nature and businesses have done this often in the past (and still do it in some cases). The issue is that reputation management will be a topic in the next years, not only for large multinationals but also for any business big or small.

En route to Social Media 2.0?

On 2007 I wrote an article co-authored by my Master student Stefan Fountain* (published in 2008 in the Journal of Direct, Data and Digital Marketing Practice) arguing that businesses could use efficiently the Social Media (the term Web 2.0 was more popular at that time) as Marketing tools. As you might remember at that time businesses were looking puzzled and helpless to the alarming signs of growing customer empowerment through the Social Media Revolution. For me and those following the developments closely at that time, was clear that the Social Media will be the next big thing in the Internet evolution and the next frontier for business strategists.
Today, just four years later, the Web 2.0 / Social Media movement (described as Groundswell by Charlene Li and Josh Bernhoff) has been firmly embedded in the minds and hearts of online users and business strategists alike. The Social Media have also become substantial channels of political expression and tools of citizen empowerment beyond the control of states or regimes.   The online users using social media as part of their daily routines has reached the hundreds of millions. With more than 50% of consumers using “smartphones, social networks and other emerging tools” McKinsey talks in a recent report about the customer becoming a media junkie. On the other hand the staggering adoption rates of social media platforms like Twitter, Facebook, Flickr, YouTube and LinkedIn by businesses has created a gold rush atmosphere reminding the dot.com age. In a recent report published here in Holland presenting the results of a survey about the adoption of the social media by businesses (Social Media Monitor, 2011) we read that by now 90% of the top 100 brands in Holland have now adopted the Social Media as part of their strategy, up from 67% last year;  48% of them has already a Social Media Manager in place. This has happened for more businesses very swiftly: only 5 from the brands that participated in the survey were active in social media longer than three years while the majority (56%) was active between six months and two years in social media.
While the picture looks encouraging we could ask ourselves whether the social media as marketing strategy is reaching its maturity stage and more importantly what will be the next step. I am afraid that soon we will detect the first signals of saturation: Any marketing tool when adopted by everyone is losing its effectiveness and uniqueness. The same I would expect to happen with the Social Media soon, mainly as a result of the unbalanced focus of businesses in 4-5 social media platforms and the very limited use of the social media as tools for promoting innovation, co-creation and mass customization. In the above mentioned Social Media Monitor we can clearly see that social networks are hardly used for R&D purposes. Furthermore there is little attention on the identification of Brand Promoters or Super Promoters as customer influencers while the social media domain is underutilized by most SMEs as (free) source of market intelligence.

Al in all a mixed picture on the status of social media as strategic marketing tools. On one hand the threat of saturation due to one-sided focus, on the other hand opportunities hardly utilized. Time for the Social Media 2.0 era?
* Constantinides E., Fountain S., 2008, Web 2.0: Conceptual foundations and Marketing Issues, Journal of Direct, Data and Digital Marketing Practice, vol 9, nr 3, pp. 231 – 244

The airline cookie conspiracy: The myth investigated

In 2000 Amazon outraged some of its customers when it was revealed that different prices were charged for the same DVDs to customers with different shopping habits. This was the first widely discussed case of online price discrimination by web retailers depending on customer profiling. Since then online shops were often accused of using cookies in order to identify customers and charge them various prices. The discussion reached quite often the mass media where several cases of such practices have been revealed. The issue has been often become the subject of blogs: the airline industry, hotels and travel web sites in particular have been often accused of price discrimination based on customer cookie-based profiling. It is interesting that except Amazon who back in 2000 blamed a price test for the price discrimination and another case of a UK hotel that blamed a mistake in 2009 no online vendor has ever admitted in public that customer cookie-based profiling affects prices offered online.
Despite the mounting anecdotal evidence on the cookie conspiracy I was surprised to find out that no serious scientific research has been ever done on the issue. This while almost everyone of us can talk about an incident of unexplained differences in the price of an airline ticket that we bought online and found out that the neighbor who was flying with us in the same flight had to pay another price: no other explanation than profiling based priced discrimination is usually to blame.
The cookie conspiracy has become one of the web's urban legends and some time ago a consumer advocacy program of the Dutch TV asked me for help to investigate the issue. I am glad to say that together with a PhD student we did a moth-long study to find out whether the myth is true or not, at least in the airline world. Those interested in the answer (and speak Dutch) can see our findings in the TV program TROS Radar next Monday (20:30, May 9) in NL1. Those who will miss the program (or do not speak Dutch) but are interested in the answer must read my next blog post and the research paper we will write about the study.

NEW!! Around the end of May 2013) there will be a working paper available describing the study and the results in detail. If you are interested for a copy send me an email in e.constantinides@utwente.nl 

Is Social Media Marketing interesting for B2B?

This is a standard question I get every time I talk about Social Media Marketing to audiences including people from the B2B domain. For many social media is strongly associated with B2C marketing while industrial marketers seem to be quite enthusiastic about it. A recent post in BtoB Magazine gives some nice examples of B2B applications of Social Media; for those interested in some stats I suggest to look to the E-Marketer  and this post of Brian Solis. An older report of Marketing Sherpa also indicates that B2B marketers are enthousiastic about social media as part of their marketing strategy. (see table below)

Conclusion is that there is enough talk and evidence about B2B and social media marketing and it seems that industrial marketers are equally (if not more) excited about it than their B2C counterparts. Let's wait for the first scientific evidence on this, I will keep you up-to-date here.

KLM Surprise

As past KLM colleague (I worked for this company in the 80s) I was glad to follow their latest social media campaign combining several tools and innovative ideas. With this video you can get a good idea of the campaign. Goed gedaan KLM.

Social Media Marketing in Practice Case 1: WePay

Winning mindshare and market share in the online payment domain is notoriously difficult. I remember the hundreds of online payment dot.coms that appeared and disappeared during the Internet boom in the 90s , all trying to become the standard of the online payments. The online payments business is for all intents and purposes dominated today by PayPal, the powerful credit cards, Google checkouts and a few

local successful online payment formulas like the Dutch iDeal.
WePay is a newcomer in the field with a somehow different value proposition; they opened their offensive against PayPal by a very simple and "cool" guerilla action that attracted the attention of mainstream media, of The New Influencers and created a substantial buzz in the blogsphere and Twitter: By Icing PayPal.
Taking the opportunity of some negative publicity around PayPal's freezing of customer accounts the WePay guys dropped a block of ice filled with frozen money on the sidewalk in front of the PayPal head office. A textbook Social Media marketing action following the Social Media marketing strategies matrix (below).
Let's see what blocks of the Social Media Strategies Matrix are relevant to this action.
Looking to the different options I would argue that the most important elements of their Social Media strategy include creating buzz around their brand with PR and Direct Marketing (column 3) using their web site blog , a YouTube film (communities) and Twitter (Social Networks) and also Reaching the New Influencers (column 4) with high caliber blogs like TechCrunch posting on the action.

Social Media Marketing Strategies 

Source: http://www.springerlink.com/content/k851316514746338/

From Brands to Frands

"Social media is no longer an experiment. It has arrived as an important media category deserving of a major role in marketing plans targeting mainstream and leading consumers alike. Social media is powerful because users are blurring the distinction between they relate to friends and brands, creating powerful new opportunities for brands to create uniquely close relationships with those how buy them.The era of consuming is over. The era of sharing had begun in earnest. Social media is the new mainstream."

Source: OgivlyOne: Frands: Friends, Brands and Social Media in China

Reccommended summer reading for colleagues and practitioners who want to know more about the marketing of the future. Frand is a brand in the friends list of the social networking site. Increasingly important to have your brands in such lists:
How else do Chinese consumers (and for all intents and purposes all consumers) interact with their Frands? According to the above report:

- 71% are watching commercials on video sharing sites
- 51% are downloading branded applications to their phones
- 33% post product or brand reviews
- 21% are making and sharing videos about products or brands.

Academics wake up: The practitioner is again showing us the way in Social Media Marketing

In my previous post I made the point that marketing strategies based on social media actually work (something I keep saying to my students for more than four years). As another confirmation of this I suggest my readers to have a look in the way Domino's Pizza is using the Social media and how this strategy has resulted in higher brand preference but more importantly to higher sales. Ben & Jerry's story is similar: in this case the switch from email marketing (that I never personally found such a great idea as an example of push marketing) to social media marketing was something that their customers actually demanded! The bottom line in both cases is that the modern marketer can not afford any more to ignore the social media as an increasingly important area of activity. This goes hand in hand with the realization that some serious work and investment is required here (something very obvious if you read just these two cases).
For me these developments are very welcome as well as expected and I feel that the research efforts of my Spanish colleagues and myself as well as our Social Media Research Center initiative on pursuing academic underpinning of the social media marketing are proved to be in the right direction. This is sometimes at odds with the ideas of colleagues who review some of our article submissions: Recently one of them saw nothing new in a study identifying customer segments among social networking sites users. As far as I know there is no word about this in any marketing textbook and academic contributions in this subject can be counted in the fingers of one hand. Anyway the practitioners are showing us once more the way, something regrettable since it should be actually the other way around. The good thing is that slowly but surely the number of students and even PhD's interested in social media marketing is growing. This blog that started in December of 2007 is a modest contribution to this direction but still supports the view (expressed in the very first post) that Web 2.0 and Social media is something worth attention and scholarship

Sosial Media Marketing: YouTube as damage control channel

During the recent strikes that crippled British Airways the company engaged successfully the YouTube as channel of communication with stranded passengers. The BA CEO Willie Walsh addressed the problem in a number of videos that have been made as part of a BA contingency plan. According to the Marketing Magazine the campaign has been very successful, a good example of engaging Social Media as PR tools;

Crowdsourcing: What is this?

My attention on the potential of crowds as business asset dates back to 2005 when I read the book of James Surowiecki "The Wisdom of Crowds" . (Visitors of this blog have also read about this subject here.) My interest in Crowdsourcing has been increasing ever since and Crowdsourcing has become one of the standard elements of my model (where I describe it as "Tapping Customer Crestivity) outlining the role of the Social Media as marketing tools. One of my recent research projects is an effort to understand the origins and limits of Crowdsourcing by means of a thorough literature review in cooperation with one of my graduating students. A working paper will be hopefully available in spring.
For those who would like to have a taste of what crowdsourcing is all about I advise the Crowdsourcing Examples blog and an introductory video by Jeff Howe, journalist of the WIRED Magazine, and author of the book Crowdsourcing: Why the Power of the Crowd Is Driving the Future of Business

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