Category Archives: Articles

Youtube is thinking of a different ad strategy


Hey,

I remember, some weeks ago,  there was a lot of discussion in class about advertising in social media. What are the types, how each type work and if these types are profitable. I found an article about youtube, which is redefining its advertisment strategy. It is a move to interest both audiences and businesses. As youtube’s Vice president of sales and marketing says:  “imagine if [the site] could help a company think through user behavior and create campaigns that leverage search, social capabilities and YouTube. . . . Everything will be more integrated.” I attach the link for the article and I hope you will find it interesting.

http://www.fileplaza.com/news/internet/youtube_is_redefining_its_advertisement_strategy/Cheers,

George Panagos

Co-Creation trend or a new standard?


The last guest lecture was really interesting and informative. She talked about the evolution in the means of advertisement and the value of co-creation. When I asked her to answer my question  “Is co-creation a trend or a new standard” without a second thought she replied “Definitely, a new standard”. However, among the examples that she present from companies that successfully use co-creation, like Nike and Fiat there were examples of companies with great success which they scorn this new trend, like Apple (!) and Ford.

So if co-creation is a new standard how these companies manage not only to survive but also to be at the top without using it????

The words of Steve Jobs  “You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new” and also Henry Ford who  said “If I had asked my customers what they wanted they would have said a faster horse” puzzled me a lot. The truth must be somewhere in the middle I thought.

After having read the article Co-creation: a new source of value, by Ajit Kambil, G.Bruce Friesen and Arul Sundaram I realized that co-creation will be a new standard if it used properly so as to increase profits and loyalty.

There are a lot of ways for companies and customers to build the trust to effectively co-create.     Continue reading Co-Creation trend or a new standard?

Staying in touch


Last week during our mini case presentation we showed you some examples that we think  relate to the theory.

The first example relates to the Dutch railway company, NS. A student came up with a Facebook page called “De smoezen van de NS” (The excuses of the NS).

What is cool about this, is that it’s initiated by a “consumer” with bad experiences. Sharing the twitter messages about the NS managed to gain already more than 3,000 likes.

Another example we showed is that of a viral initiated by Heineken. The movie is very self-explanatory.

A term that we think combines the three articles is “social CRM.” Paul Greenberg, who is considered to be THE social CRM guru, defines it as follows:

Continue reading Staying in touch

Past, Present & Future of Co-Creation


The following presentation offers a very nice overview of the recent history of co-creation within business environments, from its foundations to its prospectful future!! It clearly shows that the need to involve consumers was there, just the means had to be improved. Well, the future is definitely technology dependent. But all the signs indicate that consumers will become more and more active in the business processes…that is the future of competition.

Dimitris T.

Customer centricity


Based on the article of Shah et al “The path to customer centricity”, I found this really interesting video of Ranjay Gulati, professor of Harvard Business School and author of “Reorganize for Resilience: Putting Customers at the Center of Your Business“. In this video he discusses on some points of customer centricity mentioning that you need to identify your customers and the issues that they have to deal with, in order for your business to be regarded as customer centric. He explains that what you are supposed to care mostly is to solve your customers’ problems.

He also mentions that you are not considered customer centered if you look at your customers just through the lens of your products!

Last but not least, he suggests that you should align yourself in a fundamental way around customers’ problems trying to address those problems!

I hope you will find it interesting!

Enjoy..

Fay Panagopoulou

How a company can be at the top ?


Inspired by Harrah’s case I realized that what makes leader companies to be at the top except of the products quality is customer satisfaction. Sometimes satisfaction may be more important than product’s quality. Employees should also be satisfied in order to attribute in their best way. If employees and customers are satisfied then this will reflect to company’s outcomes as well.  That is the reason that some companies stand out while others don’t. The combination of quality and satisfaction can be highly promising for a company’s future…

Experience Economy


The experience economy actually consists of companies that provide and sell experiences to their customers. But, what are these experiences?

Let us first start with some theory which Pine and Gilmore discuss in their 1998 article “Welcome to the experience economy.” There are couple of things we think are most interesting from the article, the first one being one sentence which describes the economic value of an experience;

Commodities are fungible, goods tangible, services intangible and experiences are memorable.

Meaning that an experience occurs, and we’re quoting the article now, when a company intentionally uses services as the stage, and goods as props to engage individual customers in a way that creates a memorable event.

Furthermore the article discusses two main dimension experiences have. The first one being customer participation, from passive to active. The other one is connection with the experience. From absorption to immersion. Take a look at the graph.

Continue reading Experience Economy

Demand-driven supply chains: Jeans VS. Electronics


During the presentation two articles were discussed. The first one was ‘Customizing Customization‘ and the second article was named ‘Models for Supply Chains in E-Business‘. In this post we will discuss the examples we used to support the theory from the lecture and articles.

Customizing Customization                                                                                             This article describes different company strategies from aggregation to individualization. Instead of choosing one of these extremes, most companies shift towards the middle.   We used two jeans companies as examples of different types of customization strategies.

MakeYourOwnJeans

This company offers you the opportunity to ‘design’ your own jeans online. There is also an option to clone jeans that you already posses. Next to jeans you can also design pants, shirts,  shorts, jackets, coats and suits. Online you can choose from different types of fabrics, colors and fits. The next step is to fill in your measurements, on the website their are guidelines how to measure. The products are produced in India and shipped throughout the world.  The strategy this company follows can be considered as Tailored Customization.

Continue reading Demand-driven supply chains: Jeans VS. Electronics

Cases of Individualized distribution of digitized goods


Hi everybody!!!

Our minicase was about the Individualized distribution of digitized goods. First of all, what are the consumer costs-benefits of P2P sharing? Benefits of Digitization are: (a) Product access, (b) Wide range and newer products, (c) Low price distribution and (d) Fun to share. The Costs are (a) Risk of sharing process (e.g., computer virus) and (b) Relatively complex process – effort. The companies we selected were Marktplaats and Bol.com.

Some facts about Marktplaats:

The website was founded in 1999 by René Mullem. Every day, more than 1.3 million people visit Marktplaats, buy and sell a large variety of new and used products and services. Every day an average of 300,000 new ads on the website. Marktplaats contains at any time more than 7 million ads. On November 10, 2004, the site was sold for an amount of 225 million euros to the American Internet auction house eBay. Marktplaats is located in Amsterdam and is the tenth most visited site in the Netherlands.

How does Marktplaats work for sellers?

Continue reading Cases of Individualized distribution of digitized goods

“The Right Customers”


In today’s session, we saw the importance of focusing on the right customer. In the article of Reinartz, Werner and Kumar, you can read three claims about customer loyalty which the authors then contradict:

1. It costs less to serve loyal customers
* While in fact customers know their value to the company and often exploit it to get premium service or price discounts… They expect something in return for their loyalty!
2. Loyal customers pay higher prices for the same bundle of goods
* While Kumar shows us that customers regularly guarantee greater frequency of purchase in return for lower prices: a loyal customer is in fact more price sensitive than an occasional one…
3. Loyal customers market the company
* This only is true for certain kind of customers. Most companies measure loyalty purely on the basis of purchasing behavior: but they might buy a product due to inertia or convenience…

The third point points out the fact that a company should indicate what kind of customer a specific person is.
“The Right Customers” (Harvard business essentials) article stresses that not all customers are of equal economic value to a company. What one group creates in profits is frittered away in trying to serve another. Differences in profitability are a function of several factors: total revenues, profit margin on those revenues, the duration of the customer relationship, and the cost of acquiring, serving and retaining particular customers.

A problem is compounded when marketers spend more money trying to retain low-value customers: they confuse loyalty with profitability. So they spend too much money on activities aimed at retaining customers who contribute little to company profits. The economic value of an individual customer is the present value of the stream of cash flow generated by that individual minus the initial cost of acquiring that customer. The customer equity is the difference between the revenues a customer produces minus the costs of acquisition, retaining and developing that customer. The acquisition costs might be high, but if the company then retains the customer over many years, it might be rewarded. But some customers will generate a negative cash flow for a long time or even forever. This underscores the disparity of economic value among customers and the importance of knowing which ones provide the greatest and least value.

A company’s customer base is likely to follow a normal distribution around an average customer value. I used the article to show to a company what it can do to improve:

1. Stop doing business with people who persistently generate losses
* At some point, you must face the fact that some of the customers will not become profitable.  First investigate the customer’s situation. If the problem is financial incapacity (so a small size of the wallet according to Kumar), drop the customer.
But if the problem is that you are not getting enough share of the wallet, you need to make the relationship worthwhile:

2. Develop an economically sound plan for moving modestly profitable customers into the high-profit sector.
* Once you understand what customers want and are willing to pay for, you can create an offer they will find more attractive, perhaps by redesigning your current product or service. Another approach to work with marginally profitable customers is to work the cost side of the customer equity equation: find less costly ways to acquire and serve these customers.

3. Create a plan for retaining customers in the profitable sectors and developing their economic value even further
* You have to use some of the cash saves by eliminating uneconomic customers to cement and expand your relationship with profitable ones; they are the jewels in the crown.
Some further tips about the last improvement point (3):

Retention
1.) Quantify Defection
Estimate the rate of customer defection = turnover. (so count the number of customer defections (so customer you lose) over a period of time)
2.) Locate the epicenter of Defection
3.) Learn from Defectors and the Dissatisfied (so obtain feedback to help you when making choices about e.g. pricing, product, delivery etc).
4.) Neutralize the causes of Defection: this means eliminate reasons for customers to look elsewhere:
* Do not disappoint (keep it consistent and at expectations)
* Keep price reasonable
* Maintain a dialogue with customers (reward feedback)
* Keep looking for ways to surprise and delight your customers

Development
Development means: expand the amount of profitable business you can conduct with current customers = expand your share of the wallet.
1) What customer information would you need to have before addressing new parts of the value chain?
2) How are customers currently handling those links, and through whom? Are they satisfied, or are they open to alternatives?
3) Do we currently have the competencies to serve those links? If not, would acquiring them be feasible and worth the costs?

So “The Right Customers” article also expresses some mismanagement of customer loyalty: a lot of managers are focusing on the wrong customers because they confuse loyalty with profitability. Using this article, a company will focus only on the right customer in the future!

 

Consumers as sellers


Starting with the first paper (Cheema et al.), this paper was focused on consumers who participate in auctions. They researched which factors affect the behavior of consumers during auctions. Their conclusion was that there are indeed several factors which affect the consumer. These are divided in economic, social and psychological factors.

The second paper discusses the topic social commerce network. Social commerce is an emerging trend where sellers are connected in online social networks. Furthermore, in these networks, sellers are individuals instead of firms.  The paper discusses the differences between social commerce and the regular bricks-and-mortars shops. An example would be that the traveling costs are lower when shopping online.

Another important factor in this paper was the fact that these networks can create economic value. By linking shops together, the customers can easily browse between shops. This improves the accessibility of the network’s shop. The more a shop is connected by other shops, the more it improves its accessibility. However, the sellers should aim to get as much links going to their shop instead of leaving their shop.  In the end, the shops which benefit the most from social commerce are the ones whose accessibility is most enhanced by the network.

Continue reading Consumers as sellers

Customer Loyalty & Virtual Communities


The relationship between profitability and loyalty seems to be much weaker than expected and also weaker than the proponents of customer loyalty programs claim(‘The Mismanagement of Customer Loyalty’ (2002). According to this paper of Reinartz, Werner and V. Kumar, there’s is no evidence to suggest that loyal customers necessarily are cheaper to serve, less price sensitive or are effective in bringing in new business. So, in light of their findings many companies have to reevaluate the way they manage customer loyalty programs. Companies have to find ways to measure the relationship between loyalty and profitability. Hereafter the company can place their customers into the Choosing a Loyalty Strategy Matrix, to apply strategies to the different segments.

Concluding the article, there is no one right way to make loyalty profitable! An example of a company that is tries to achieve loyal and profitable customers in a good way, we think, is Agradi(www.agradi.nl).

Continue reading Customer Loyalty & Virtual Communities

Great Experiences


More and more companies go one step further than just delivering a service by staging experiences. In other words, “an experience occurs when a company intentionally uses services as the stage, and goods as props, to engage individual customers in a way that creates a memorable event”. Moreover, an experience is, first, inherently personal existing only in the mind of an individual, secondly, no two people can have the same experience, and lastly, it is interacting between the staged event and the individual’s state of mind.

The Four Realms of an Experience

Case: First Crush

The video above bring us to the next point, which is the four realms of an experience. The First Crush Winery combines all four realms. They give their customers the opportunity to taste the wine (entertainment), to visit the winery (esthetic), to learn more about winery (educational), and to participate in the winemaking process (Escapist). First Crush uses all four realms of an experience bringing them at the sweet spot, which means the customer engage as well as in passive as in active participation, but also, absorption and immersion of information (theme) takes place.

Principles of Designing Memorable Experience

Part of the experience economy are the five principles of designing memorable experience. Since all customers perceive experience in a different way, designing an experience can be tricky. However, the following principle can give companies guidelines how to come close to a positive and memorable experience for their customers.

Continue reading Great Experiences

Risky to give power to consumers? Yes.


Another example of how giving power to its consumers can turn against the company shows the recent failure of Mc Donalds twitter campaign. Mc Donalds run simultaneously two campaigns on twitter, the #MeetTheFarmers and #McDstories. Both campaigns aimed to raise awareness for the brand. #MeetTheFarmers main goal was to acknowledge the freshly produced food (SO provocative in my opinion!), while #McDstories aimed to share experiences among the Mc Donald lovers (a sense of community? sharing consumption experience etc). The campaigns though, did not work out, as twitter users started to bombard Mc Donald’s twitter dashboard with many not very flattering stories related to Mc Donalds and their consumption experiences! Actually, this initiative turned out to have the opposite result than what Mc Donalds wanted to achieve. I wont go deeper to the comments, but you can enjoy by your own in a relative article of The Daily Mail.

http://www.dailymail.co.uk/news/article-2090862/McDstories-McDonalds-Twitter-promotion-backfires-users-share-fast-food-horror-stories.html

Kind regards,

Christos Makris

Executive brand leadership


Executive-Brand-Leadership

I think this article gives a good explenation of the way CEO’s have to work when it comes to brand leadership. CEO’s have a lot of different aspects to manage. One of them is Brand leadership. It’s not possible to be an expert on all the aspects, so if they know the
key elements of each aspect and more importantly, when they know the right questions to ask, CEO’s can be succesfull.

The five key tenets of brand leadership, given in the article, are the same points students learnt in the first block of this year in the class of Branding & Advertising. So I can do nothing than agree that these key tenets are important.

In my opinion, some brands are succesfull thanks to a combination of two aspects. In the Netherlands we say, a good product sells itself. And that’s true. Take as example the Iphone. It is not because of the good advertising apple became that strong, but because of the good products and everyone was talking about it. Word of mouth in combination with a good product is the key to succes in my opinion.

(Un) Collaborative filtering


Hi guys,

One of the topics discussed in session 2 was “collaborative filtering”. Collaborative filtering is the process of filtering for information that customers help to make the right choice on a website based on previous user experience.

The system has benefits and also drawbacks. Some consumers appreciate the fact that they can order products others recommend, others get the feeling they are getting tracked.

A website that has collaborative filtering integrated is not hard to notice. There are lots of websites that don’t let you notice that they are tracking you. The most used system  is the “cookie system”. Simply it means that every website leaves a “cookie” on your computer that tracks all action you do on the web. Also it registers when you are returning to their website.

What most users don’t know is that tracking starts with the startup of Google. Almost 19.1 billion search queries are entered yearly, in the Netherlands only. All of them are getting tracked.

With the combination of Google + and a Gmail account every ad on Google.com and their partner websites is based on the content of the mail, page visits, and clicked ad content.

Below you find an example of a Google tracking partner website link. It is a news article about a falling crane.

I see an advertisement below that has an advertisement for hiring a crane (webpage content based). But I also see an advertisement about hiring an apartment in Rotterdam (search preference based). The system let every user see a different ad, based on their previous internet behavior.

http://www.telegraaf.nl/binnenland/11360844/__Veel_files_door_bouwkraan__.html

Google + initially started with the idea of having friends recommend other pages so that Google can show the results recommended by your friends at the top of the page. ( collaborative filtering with Google search results ).

Below you find an article about how consumers turn against tracking behavior. It was in the USA Today. The article also shows the tracking behavior Facebook uses. It also tells you how to avoid tracking. The writer concludes that people will accept tracking if it becomes really beneficial instead of annoying.

http://www.usatoday.com/tech/news/story/2011-12-29/internet-privacy/52274608/1

And if you always thought that you only used Google as an online search engine and I didn’t affect you online consumer behavior. Please watch the following link:

Still thinking the same?

Written by Shrikesh Sheorajpanday

Online vs. Print Ad-spending, some expectations.


According to a study by eMarketer in 2012, for the first time in US history, the ad spendings on online advertisement will surpass the spendings on printed ads in magazines and newspapers. Since we had a slight discussion during the UnMe Jeans roleplaying part in class about different media types to use as promotional tool I thought it might be interesting to share some of this study’s findings with you all, my dear companions.

Expected for 2012 $39.5 billion will be spent on online ads, which is an 23,3% increase compared to the spendings in 2011 ($32 billion). This while spendings on printed ads are expected to be $33.8 billion, according to the great analysts over at eMarketer. A +23,3% change in online ad spenditure is quite a lot, especially because the fact that a year before (2010 vs. 2011) the same rate was calculated at +23%. Looking at the upcoming years eMarketer expects the online advertisement spendings to keep growing up to $62 billion in 2016.

US Online Ad Spending, 2011-2016

Taking a look at the printed ad spendings, the study expects a 10,3% downfall by 2016 compared to 2011. While in 2011 these spendings were $36 billion in 2016 they’re expected to be $32.3 billion. Compared to the online growth, i think this decline isn’t that bad actually. Reading the article i expected much more. Here’s the graph..

Continue reading Online vs. Print Ad-spending, some expectations.

Product Recommendations: bol.com & Bridge cameras


To buy new products, a lot of consumers do not go to the shop anymore but buy products on the internet. To sell more products, companies offer different approaches on recommendation techniques, because in general, product recommendation leads to more sales.

The first approach is Rule based non compensatory, which can be based on Elimination by aspects (EBA)and lexicographic. Rules based non compensatory on Elimination by aspects is showed through the red lines in the picture of bol.com.

Consumers first make a choice between different products and then make a choice in the product category. In this example consumers first choose books (instead of DVD’s, toys, games etc.) and then which languages, like English, Spanish or French. Rule based non compensatory on lexicographic is showed through the red lines in the other picture. It is the same as elimination by aspects but in this case people can fill in what they think is most important. So if they think a low price is important they get camera’s with low prices.

Drawbacks for non-compensatory technique are that it makes it complex for more options, because consumers has eliminated a lot things to come where the want to be. It’s easy to imitate for other companies and it passively provides information, which mean that inexperienced consumers don’t know what to with it. As example the pixels from the camera, what are 6.5 pixels?

Continue reading Product Recommendations: bol.com & Bridge cameras

Social media & ads


Nowadays it has become more important for companies to be in touch with their customers. We already learned that the social media is a perfect channel to interact with your companies customers, you can exchange ideas and get usefull feedback through social media like Facebook and Twitter.
But what are the key factors that determine the succes of a well organized page for a company?
It’s important to create a sufficient profile page, the following link(.pdf) illustrates how to structure and use a Facebook-profile to get your customers involved with your company. It could be usefull for later.

http://ads.ak.facebook.com/ads/FacebookAds/FB_PagesGuide_MediaKit_051611.pdf

And look at this little girl, surely a marketing talent:)

Regards,
Ahmet