For B2B companies, the use of social network for building communities is a key part of the social marketing strategy. A company hosted community for users of its product provides an excellent way for a company to engage its customers, monitor the conversation, receive feedback and learn from its customers. The information that a company learns about its own product, how it is used, and customer requirements through online communities allows the company to make incremental improvements and design better products in the future.
Online communities are a faster and more efficient means of communicating with customers than traditional user group meetings, trade shows and conferences. The use of communities should be a key component of customer relationship management (CRM) because it engages the customers, present a platform for them to provide feedback, and monitors customer satisfaction, all key components of CRM. Although it is difficult to quantify some of the communications and feedbacks received through online communities, or calculate ROI of online communites, the relationship that are build up with customers are invaluable for future sales and marketing.
It is also interesting to note that companies who are afraid of reviews and open communications in communities fail to realize that a larger percentage of communications and reviews tend to be positive rather than negative. Also some negative communications increase trust in the forum and users will not feel that it is just another marketing channel for the company. The build up of trust in an online community is critical if active discussion of issues is desired. Furthermore, only an active and real discussion forum can provide honest feedback and learning opportunities for the company.
Tuesday, December 6, 2011
Ethics and Social Marketing
Social Marketing to the Business Customer is a book written by Paul Gillin and Eric Schwartzman about how to best utilize social marketing in the B2B market. One interesting topic that the book discusses is how companies should draft their social media policies and the many specific issues that may come up when companies and employees engage in social media in the public. The list of issues that may arise include privacy issues, employee right to free speech, use of disclaimers, potentail conflict of interest, compensation for bloggers or any other party for endoring products, confidentiality and copyright issues.
The list of potential problems raises a host of red flags and potential legal issues for allowing all employees to engage freely in social media without providing adequate training. Although employees have the right to free speech, a company policy encouraging employees to engage in social media marketing and communicating with the customers should not be implemented without significant investment in time and energy training the employees.
It also does not make sense to encourage all employees to participate freely in social marketing since it is impossible to control all communications and provide adequate training for such a large group. Instead, it make sense for companies to designate a select number of people with different expertise to advocate, communicate, monitor and engage in the social media arena. Social media policy and training can be provided to these employees so that their communications will engage the customers without causing legal, privacy and other issues for the company.
The list of potential problems raises a host of red flags and potential legal issues for allowing all employees to engage freely in social media without providing adequate training. Although employees have the right to free speech, a company policy encouraging employees to engage in social media marketing and communicating with the customers should not be implemented without significant investment in time and energy training the employees.
It also does not make sense to encourage all employees to participate freely in social marketing since it is impossible to control all communications and provide adequate training for such a large group. Instead, it make sense for companies to designate a select number of people with different expertise to advocate, communicate, monitor and engage in the social media arena. Social media policy and training can be provided to these employees so that their communications will engage the customers without causing legal, privacy and other issues for the company.
Monday, December 5, 2011
Personalized Website by Visual Appeal - A New Trend?
Studies have shown that different generation may have different criteria for judging the visual appeal of web pages. The study Generation Y, web design, and eye tracking, published in the International Journal of Human-Computer Studies showed that Generation Y (age 18-31 in the U.S.) prefers web pages that include a main large image, images of celebrities, little text, and a search feature.
http://users.wpi.edu/~djamasbi/2008-Djamasbi%20et%20al-AMCIS.pdf
Marketers and online retailers targeting this particular demographics should attempt to design their website with a main large image that takes up at least 40% of the web page, images of celebrities endorsers, large main text and an easily located search box. Detailed text and lists should be hidden from view unless a user clicks to a link or hovers over the particular function. A large static list of products with images and text should not appear on the main page. Instead features that include rotating images and scrolling features should be used to display larger images of products and allow the shopper to scroll through them. Actual lists should only be accessed through clicking on a link.
This study also highlight the limitless possibilities for the next level of website personalization by visual appeal and layout. Amazon.com is one of the recognized online retail leader in creating personalized shopping web page by recommended products, previous purchases, and browsing history. The use of personalized website by visual appeal and feature would further enhance the level of customization and provide a more visually appealing website for each user based on demographic and personal data. The web page would then be configured to fit the profile of each user - including more text and reviews for shoppers that may be more inclined to read specs and do research, less text for younger generation, quick visual graphically product comparison instead of a side by side technical spec comparison and more larger images for Generation Y. The web page visual design would evolve based on the click tracking and features used by each individual shopper. The next level of web page customization could be just around the corner.
http://users.wpi.edu/~djamasbi/2008-Djamasbi%20et%20al-AMCIS.pdf
Marketers and online retailers targeting this particular demographics should attempt to design their website with a main large image that takes up at least 40% of the web page, images of celebrities endorsers, large main text and an easily located search box. Detailed text and lists should be hidden from view unless a user clicks to a link or hovers over the particular function. A large static list of products with images and text should not appear on the main page. Instead features that include rotating images and scrolling features should be used to display larger images of products and allow the shopper to scroll through them. Actual lists should only be accessed through clicking on a link.
This study also highlight the limitless possibilities for the next level of website personalization by visual appeal and layout. Amazon.com is one of the recognized online retail leader in creating personalized shopping web page by recommended products, previous purchases, and browsing history. The use of personalized website by visual appeal and feature would further enhance the level of customization and provide a more visually appealing website for each user based on demographic and personal data. The web page would then be configured to fit the profile of each user - including more text and reviews for shoppers that may be more inclined to read specs and do research, less text for younger generation, quick visual graphically product comparison instead of a side by side technical spec comparison and more larger images for Generation Y. The web page visual design would evolve based on the click tracking and features used by each individual shopper. The next level of web page customization could be just around the corner.
Generation Y Web Preferences
The international journal of human-computer studies published a study in 2010 on how to make webpages appealing to Generation Y, the demographics encompassing ages 18-31 in the United States.
http://users.wpi.edu/~djamasbi/2008-Djamasbi%20et%20al-AMCIS.pdf
The conclusion was that pages that have main large image, images of celebrities, little text and a search feature are especially appealing to Generation Y, who grew up with technology and are internet savvy.
The study however does not address potential differences in website appeal to different generation of internet users. As recent data have shown, website use by other age groups have increased dramaticaly in the last few years, and the average age of internet users and social network users have both increased as the older population jump online. Half all all new internet users in the United States will be aged 45 and older according to a recent estimate.
U.S Internet Users by 2014
TOTAL: 250.7 million (77.8%), up from 221.0 million in 2010 (71.2%)
- 3-11: 24.9 million (64.1%) / 18.6 million (49.8%)
- 12-17: 24.5 million (96.6%) / 23.8 million (94.6%)
- 18-24: 29.0 million (93.0%), 27.9 million (91.0%)
- 25-34: 39.6 million (90.0%), 36.5 million (87.4%)
- 35-44: 36.7 million (89.0%), 34.5 million (83.5%)
- 45-54: 37.9 million (87.0%), 35.1 million (78.6%)
- 55.64: 31.7 million (79.8%), 26.0 million (71.7%)
- 65+: 26.4 million (54.0%), 18.6 million (43.2%)
It is important for academia and marketing professionals to understand this trend and determine if there is a real difference in website visual appeal preferences between Generation Y and Generation X/Baby Boomers. The questions that should be addressed is whether the same website visual appeal applies to Generation X/Baby Boomers and if there is a convergence in appeal when it comes to website design. Although Generation X and Baby Boomers may be more used to traditional marketing media format that are largely text based - example magazines, newspaper and direct mail marketing, it is possible that that they will not judge the website appeal based on what appealed to them in the past. The study seems to imply that more text and a more static and list based website might appeal more to the non Generation Y demographics. A future study should be conducted to find out if a real difference exist among Generation Y, Generation X and Baby Boomers especially since going online have become a way of life even for the older generations.
http://users.wpi.edu/~djamasbi/2008-Djamasbi%20et%20al-AMCIS.pdf
The conclusion was that pages that have main large image, images of celebrities, little text and a search feature are especially appealing to Generation Y, who grew up with technology and are internet savvy.
The study however does not address potential differences in website appeal to different generation of internet users. As recent data have shown, website use by other age groups have increased dramaticaly in the last few years, and the average age of internet users and social network users have both increased as the older population jump online. Half all all new internet users in the United States will be aged 45 and older according to a recent estimate.
U.S Internet Users by 2014
TOTAL: 250.7 million (77.8%), up from 221.0 million in 2010 (71.2%)
- 3-11: 24.9 million (64.1%) / 18.6 million (49.8%)
- 12-17: 24.5 million (96.6%) / 23.8 million (94.6%)
- 18-24: 29.0 million (93.0%), 27.9 million (91.0%)
- 25-34: 39.6 million (90.0%), 36.5 million (87.4%)
- 35-44: 36.7 million (89.0%), 34.5 million (83.5%)
- 45-54: 37.9 million (87.0%), 35.1 million (78.6%)
- 55.64: 31.7 million (79.8%), 26.0 million (71.7%)
- 65+: 26.4 million (54.0%), 18.6 million (43.2%)
It is important for academia and marketing professionals to understand this trend and determine if there is a real difference in website visual appeal preferences between Generation Y and Generation X/Baby Boomers. The questions that should be addressed is whether the same website visual appeal applies to Generation X/Baby Boomers and if there is a convergence in appeal when it comes to website design. Although Generation X and Baby Boomers may be more used to traditional marketing media format that are largely text based - example magazines, newspaper and direct mail marketing, it is possible that that they will not judge the website appeal based on what appealed to them in the past. The study seems to imply that more text and a more static and list based website might appeal more to the non Generation Y demographics. A future study should be conducted to find out if a real difference exist among Generation Y, Generation X and Baby Boomers especially since going online have become a way of life even for the older generations.
Tuesday, November 15, 2011
Predicting the future of LinkedIn
What does the future hold for LinkedIn? The market has been pondering this question since LinkedIn's IPO this year. LinkedIn has thrived under the current economic conditions, with high unemployment rates and a surge in the number of people looking for jobs. The networking and job search features on LinkedIn are essential to anyone who is looking for a job in the current economic conditions. As new people sign up, they often spend additional time building up their profile, updating their experience, building up their network and simply finding out what LinkedIn has to offer.
Over time, the key to LinkedIn is to keep people coming back even when they are not unemployed, graduaing from college or looking for a career transition. To this end, LinkedIn has been rapidly expanding the professional networking and features on its website, in order to expand the value proposition it offers to its users. The expanding number of professional groups on LinkedIn is expanding the possibility for LinkedIn to become the center of future online professional exchange and seminars. This expands the role of LinkedIn beyond just networking for jobs. It provide a forum for ideas, solutions, information exchange and discussions. In addition, LinkedIn has started incroporating business news and industry news into the user home page to provide relevant and interesting news based on user profile.
LinkedIn members can also integrate their LinkedIn accounts with other applications or networks that can be used to benefit LinkedIn member's profile. This includes links to twitter accounts, word press blogs, huddle online workplace collaboration, project management tools, slideshare presentation tools, e-bookshelf, box.net for online file storage, and portfolio display. These tools add to the value to LinkedIn accounts and can eventually provide opportunities to do work collaboration and discussion online in a professional context. The goal is to increase the amount of time users spend on LinkedIn for non job search and networking related functions.
Lastly, LinkedIn also provides premium accounts for users. These premium accounts provide additional networking functionality and visibility. It also provides premium accounts for recruiters and companies who use LinkedIn for human resource recruiting purposes. These premium accounts provide additional revenues for LinkedIn to supplement advertising revenue. The business model of LinkedIn based on job search and networking also has the potential for generating a higher percentage of premium accounts compared to free accounts than other companies using the freemium model because it provides a potential direct financial benefit for the user - finding a new job or finding the right workers.
Over time, the key to LinkedIn is to keep people coming back even when they are not unemployed, graduaing from college or looking for a career transition. To this end, LinkedIn has been rapidly expanding the professional networking and features on its website, in order to expand the value proposition it offers to its users. The expanding number of professional groups on LinkedIn is expanding the possibility for LinkedIn to become the center of future online professional exchange and seminars. This expands the role of LinkedIn beyond just networking for jobs. It provide a forum for ideas, solutions, information exchange and discussions. In addition, LinkedIn has started incroporating business news and industry news into the user home page to provide relevant and interesting news based on user profile.
LinkedIn members can also integrate their LinkedIn accounts with other applications or networks that can be used to benefit LinkedIn member's profile. This includes links to twitter accounts, word press blogs, huddle online workplace collaboration, project management tools, slideshare presentation tools, e-bookshelf, box.net for online file storage, and portfolio display. These tools add to the value to LinkedIn accounts and can eventually provide opportunities to do work collaboration and discussion online in a professional context. The goal is to increase the amount of time users spend on LinkedIn for non job search and networking related functions.
Lastly, LinkedIn also provides premium accounts for users. These premium accounts provide additional networking functionality and visibility. It also provides premium accounts for recruiters and companies who use LinkedIn for human resource recruiting purposes. These premium accounts provide additional revenues for LinkedIn to supplement advertising revenue. The business model of LinkedIn based on job search and networking also has the potential for generating a higher percentage of premium accounts compared to free accounts than other companies using the freemium model because it provides a potential direct financial benefit for the user - finding a new job or finding the right workers.
Friday, November 11, 2011
ZMOT and Online Retailing
Google recently published a free e-book title ZMOT Winning the Zero Moment of Truth. In the book, ZMOT is described as "the moment when you grab your laptop, mobile phone or some other wired device and start learning about a product or service you're thinking about trying or buying. Putting it simply, it includes the online research, product comparisions, price comparisons, use reviews, coupon code search, online shopping, store availability checks that all internet users are all so familiar with. ZMOT occurs before the traditional FMOT (first moment of truth) which tradtionally occurs when the potential customer encounters the product in the store shelf.
Online retailers have the additional advantage of combining the ZMOT and FMOT into an integrated shopping experience so that consumers are researching and "seeing" the products at the same time. Amazon.com website provides a good example in that product information, pictures, video, description, reviews, ratings, competitive products and price information are all presented together on one product page. Consumers now instantly have a large amount of information at their disposal for evaluating the product and making a decision. Amazon.com's one click purchase option also make buying on their site easier than any other purchasing method and also increases spur of the moment or impulse purchase through one single click. The disavantage of online retailers is the limited ways of enhancing the FMOT experience since shoppers cannot actually see and feel the product in their hand. This has hampered the growth of online retailing in certain product categories and services. At the same time, the increasing acceptance of online shopping and fact that online retailers have made returns easier, make it more likely that consumers will use ZMOT online experience to make their purchase decision and bypasss the traditional FMOT in the store. In this regard, Amazon.com is constantly enhancing their platform and have made it relatively easy for consumers to return products if it did not make consumers' expectation due to lack of FMOT experience.
Online retailers have the additional advantage of combining the ZMOT and FMOT into an integrated shopping experience so that consumers are researching and "seeing" the products at the same time. Amazon.com website provides a good example in that product information, pictures, video, description, reviews, ratings, competitive products and price information are all presented together on one product page. Consumers now instantly have a large amount of information at their disposal for evaluating the product and making a decision. Amazon.com's one click purchase option also make buying on their site easier than any other purchasing method and also increases spur of the moment or impulse purchase through one single click. The disavantage of online retailers is the limited ways of enhancing the FMOT experience since shoppers cannot actually see and feel the product in their hand. This has hampered the growth of online retailing in certain product categories and services. At the same time, the increasing acceptance of online shopping and fact that online retailers have made returns easier, make it more likely that consumers will use ZMOT online experience to make their purchase decision and bypasss the traditional FMOT in the store. In this regard, Amazon.com is constantly enhancing their platform and have made it relatively easy for consumers to return products if it did not make consumers' expectation due to lack of FMOT experience.
New Ideas from E-Marketing Presentation
Attended an extraordinary student e-marketing presentation where the business models and marketing strategies of leading social networks and online startups in both China and the United States were analyzed and dissected.
It is interesting to note that advertising and freemium business models dominate among social media companies and online startups in both China and the United States. This is the predominant revenue source for most of these companies. This highlight the extreme difficultly of generating revenues through charging for content or membership fees in the online world where information is still seen as free. For each exclusive membership site, there are multiple other sites that offer the same information for free, making it extremely difficult for content membership sites to gain market share and build up a large enough audience. Only the very premium or prestigious content provider can charge membership or subscription fees and often only for exclusive contents while most of the articles are provided for free. A potential future business model, is to charge a negligible fee for each use or access while depending on volume of users to drive revenues. A small almost negligible fee is likely to be more acceptable to online users compared to an annual or monthly membership fee.
It is interesting to note that advertising and freemium business models dominate among social media companies and online startups in both China and the United States. This is the predominant revenue source for most of these companies. This highlight the extreme difficultly of generating revenues through charging for content or membership fees in the online world where information is still seen as free. For each exclusive membership site, there are multiple other sites that offer the same information for free, making it extremely difficult for content membership sites to gain market share and build up a large enough audience. Only the very premium or prestigious content provider can charge membership or subscription fees and often only for exclusive contents while most of the articles are provided for free. A potential future business model, is to charge a negligible fee for each use or access while depending on volume of users to drive revenues. A small almost negligible fee is likely to be more acceptable to online users compared to an annual or monthly membership fee.
Innovative Startups Ideas to Learn From
Business insiders published a list of the twenty most innovative online tech startups recently. With the imminent launch our online auto repair marketplace business for online auto repair quotes and repair shop ratings, some of the ideas that was presented have direct application to our business.
Zocdoc is a online doctor appointment booking service where people can easily book doctor appointments online. Revenues come from the $250 listing fee for doctors. The online service is free for users of the site. A similar model can be applied to scheduling routine auto repair maintenance. This could be extremely attractive for independent repair shop and local dealer service department who may not have want to maintain their own online auto repair scheduling service. The site also provides another additional source of customers for their business, many of whom may not otherwise hear about them.
Quora is a Q&A online query website where questions are answered by experts instead of the average Joe. For an auto repair quote and information website, this business model could be used to provide valuable and reliable information to help drivers identify potential problems before using the online auto repair quote service to request repair estimates.
Skillshare is an online class website where experts in any field can teach their topic of expertise to anyone who is interested. This can be customized for the auto repair field where experts technicians could post auto repair tutorials or white papers to help drivers understand what goes into each repair and how it is actually done. The use of expert tutorials and white papers can help drive traffic to the site, build up trust in the site among users and increase the value of the site to advertisers. Using professionally generated content will also increase the percentage of website visitors who may eventually use the site to request actual auto repair quotes and schedule appointments.
An analysis of the funding sources for these 20 innovative startup shows that most of the initial funding still comes from venture capitalists that support startups, with additional funding coming from wealthy individuals.
Zocdoc is a online doctor appointment booking service where people can easily book doctor appointments online. Revenues come from the $250 listing fee for doctors. The online service is free for users of the site. A similar model can be applied to scheduling routine auto repair maintenance. This could be extremely attractive for independent repair shop and local dealer service department who may not have want to maintain their own online auto repair scheduling service. The site also provides another additional source of customers for their business, many of whom may not otherwise hear about them.
Quora is a Q&A online query website where questions are answered by experts instead of the average Joe. For an auto repair quote and information website, this business model could be used to provide valuable and reliable information to help drivers identify potential problems before using the online auto repair quote service to request repair estimates.
Skillshare is an online class website where experts in any field can teach their topic of expertise to anyone who is interested. This can be customized for the auto repair field where experts technicians could post auto repair tutorials or white papers to help drivers understand what goes into each repair and how it is actually done. The use of expert tutorials and white papers can help drive traffic to the site, build up trust in the site among users and increase the value of the site to advertisers. Using professionally generated content will also increase the percentage of website visitors who may eventually use the site to request actual auto repair quotes and schedule appointments.
An analysis of the funding sources for these 20 innovative startup shows that most of the initial funding still comes from venture capitalists that support startups, with additional funding coming from wealthy individuals.
Wednesday, October 12, 2011
How to attract customers to U.S. Private High School School Admissions and Relocation Services
Compelling offers can be used to attract customers to the U.S. Private High School Admissions and Relocation Services. The compelling offer must provide value to potential customers. In this case the target customers are parents looking to send their children to the United States for private high school. The value propositions include admissions to top private high school, excellent test scores and worry free relocation. To this end, compelling offers that will attract potential customers include the following:
1) Money back guarantee if student do not gain admission to one of their top three choices.
2) Discount for bundle services that include all three phases - admission package preperation, test prep and relocation services.
3) Group discounts for multiple siblings.
4) Referral fee for bringing in new customers.
5) Volume discount for groups with multiple applicants using the service (e.g. middle school or tutoring schools)
6) Free U.S. travel and cultural guide book for potential customers.
7) Free basic seminars regarding issues facing younger students in the U.S.
8) Free online meeting with potential host and relocation guide.
1) Money back guarantee if student do not gain admission to one of their top three choices.
2) Discount for bundle services that include all three phases - admission package preperation, test prep and relocation services.
3) Group discounts for multiple siblings.
4) Referral fee for bringing in new customers.
5) Volume discount for groups with multiple applicants using the service (e.g. middle school or tutoring schools)
6) Free U.S. travel and cultural guide book for potential customers.
7) Free basic seminars regarding issues facing younger students in the U.S.
8) Free online meeting with potential host and relocation guide.
Outbound Marketing and Customer Relationship Management
Outbound marketing should also be integrated with customer relationship management (CRM) once a customer has purchased a product from the company. Continuous updates on product upgrades and new products should be part of the CRM process, in addition to customer service and support. The total CRM process involves all employees of the company as part of a team that identifies future potential customer needs and recommends upgrades and new product to the customer. This plays a more prominent role especially since trade magazines, trade shows and telemarketing have declined in popularity and effectiveness with the move towards the internet and social media.
Outbound marketing should be fine tuned so that when they provide actual value and solution to the customer, instead of being just an interuption of the customers time. This requires fostering a long term relationship with the customer so that the company has an in depth understanding of the customers' needs and requirements.
Outbound marketing should be fine tuned so that when they provide actual value and solution to the customer, instead of being just an interuption of the customers time. This requires fostering a long term relationship with the customer so that the company has an in depth understanding of the customers' needs and requirements.
Tuesday, October 11, 2011
Inbound versus Outbound Marketing
As more companies migrate to inbound marketing, the role of outbound marketing continues to evolve and adapt to the changing landscape. Outbound marketing 2.0 is a more targeted and effective way of targeted outbound marketing. It leverages the information gained from inbound marketing and combine it with traditional knowledge and customer relationship building.
Outbound marketing places a key role in many B2B industries including heavy equipment, capital equipment, manufacturing tools, defense and commercial aircraft. These transactions and purchases involve a significant amount of capital investment and the decision making is drawn out and involve a whole group of key people. Outbound marketing provide more direct contact and exchange of information with the potential customer and offer the chance to build up relationship and trust.
In many engineering electronics and design firms, marketing engineers play a key role in working with potential customers to define their needs and requirements and help garner design wins for the company products. Products are often designed or modified with one particular large vertical customer in mind and outbound marketing plays a key role in identifying the need of the customer and the key person for making the decision to use your part in the final product.
Even in consumer markets, targeted outbound marketing can be used to reach out to customers who opt in to the direct email campaign in order to receive news on deals and products. Outbound marketing can also be effective in industries where the consumers may not always be actively thinking about the particular products. A well crafted outbound marketing campaign can help a consumer realize the advantages of acting and start thinking of your product. Some examples include Geico in auto insurance, offering lower rates than other insurers, mortgage refinancing, when a quick notice from a trusted mortgage broker can help the consumer realized that it is time to refinance again.
At the same time, many small businesses survive solely on inbound marketing in the age of the internet. The use of inbound marketing has made it easier for consumers to locate small businesses that they may not have been able to find or locate in the past. It also opens up the market beyond the local market for some small businesses.
Outbound marketing places a key role in many B2B industries including heavy equipment, capital equipment, manufacturing tools, defense and commercial aircraft. These transactions and purchases involve a significant amount of capital investment and the decision making is drawn out and involve a whole group of key people. Outbound marketing provide more direct contact and exchange of information with the potential customer and offer the chance to build up relationship and trust.
In many engineering electronics and design firms, marketing engineers play a key role in working with potential customers to define their needs and requirements and help garner design wins for the company products. Products are often designed or modified with one particular large vertical customer in mind and outbound marketing plays a key role in identifying the need of the customer and the key person for making the decision to use your part in the final product.
Even in consumer markets, targeted outbound marketing can be used to reach out to customers who opt in to the direct email campaign in order to receive news on deals and products. Outbound marketing can also be effective in industries where the consumers may not always be actively thinking about the particular products. A well crafted outbound marketing campaign can help a consumer realize the advantages of acting and start thinking of your product. Some examples include Geico in auto insurance, offering lower rates than other insurers, mortgage refinancing, when a quick notice from a trusted mortgage broker can help the consumer realized that it is time to refinance again.
At the same time, many small businesses survive solely on inbound marketing in the age of the internet. The use of inbound marketing has made it easier for consumers to locate small businesses that they may not have been able to find or locate in the past. It also opens up the market beyond the local market for some small businesses.
Friday, September 30, 2011
The Ongoing Deconstruction and Reinvention of Netflix and Amazon
Both Netflix and Amazon have been in the news recently. Netflix received lots of negative feedback and press for their decision to split up their business into two separate units, Qwikster which will continue the traditional DVD by mail service, and Netflix, which will now solely be a streaming video business. Amazon just unveiled their new Kindle Fire tablet for $199 and three new Kindles to leverage its industry leading position in electronic books and challenge Apple and Netflix in the digital music and video download industry. Despite some worries about how the $199 price for the Kindle Fire will impact Amazon’s profit margin, Amazon has generally gotten good press for this decision. Some analysts even claim that Amazon is the only company that can challenge Apple in the digital platform and content download market segment and rumors are flying that Netflix decision to split the digital and mail units is a prelude to Amazon buying the Netflix digital streaming business. Amazon has also started offering free video streaming of select titles for its Amazon Prime members who are paying $79 annual fee for free two day shipping.
The Darwin
In real life, most companies are not one product companies and hence would need to balance the need to innovate and create new product with the need to maintain legacy products and processes. This is clearly demonstrated in the case of Netflix. The DVD by mail business is clearly in the main street declining market development life cycle while the video streaming side of the business is in the main stream early part of the market development life cycle. Faced with a legacy product and a growing video streaming business, Netflix decided to radically restructure the company into two units, and prepare for the eventual spin-off of the legacy DVD by mail business into a game over scenario and milk the remaining free cash flow. At the same time, this free up resources for the Netflix video streaming business unit to continue to grow in the face of formidable competitions from Apple, Amazon and cable, phone and wireless service providers.
On the other hand, Amazon provides an amazing case study of how it has continued to modify and enhance its website platform to continue to expand into multiple areas. Starting from its historical root of selling books, cds and dvds, Amazon has expanded into a full fledged online retail outlet for almost all products, platform provider for small businesses, e-books, digital music, digital video, cloud computing and hosting, e-book readers and now tablets with the new Kindle Fire. In the process it has continue to innovate while managing to sell its legacy products – physical books, cds and dvds. No radical restructuring and announcement was necessary as it continued to add new innovative offerings to its products while maintaining its traditional business model as an online retailer. Internally, resources at Amazon must be directed at creating these new innovative offerings, but externally we hardly notice as it transitions from legacy products to new digital offerings.
The two case studies demonstrate that the transition from legacy to innovative products require the company to juggle resources internally so that the right innovation is directed at the right products. At the same time, radical external business model restructuring may or may not be necessary as demonstrated by Netflix and Amazon. My view is that Netflix had to pursue a more radical restructuring because it is much less diversified than Amazon and is essentially a one product video delivery company whereas Amazon can continue to add features and products while quietly allowing its legacy products to decline without impacting its overall performance.
At the same time, it is interesting to analyze the introduction of the Amazon Kindle Fire and other Kindles in this context. It is Amazon’s attempt to develop a new business model and platform for delivering digital content. As customers migrate away from desktops and laptops to tablets and smartphones, Amazon needed to innovate its platform from one solely based on its website, to a tablet and eventually smartphone based platform with apps that can direct users to purchase digital contents directly from Amazon. It cannot afford to allow Apple IPAD and Iphone to completely dominate the tablet and smartphone market without risking an impact on future online digital content sales and even its traditional online retail business. The Amazon Kindle Fire is a new process, experiential and marketing innovation that will help maintain Amazon’s leading online retailer position and allow Amazon to grow its online digital content business beyond e-books to digital music and video. No wonder speculations are rampant that Amazon will buy Netflix’s streaming movie video business!
Friday, September 23, 2011
Ethics in Marketing
The American Marketing Association (AMA) Statement of Ethics preamble contains this statement "As marketers, we recognize that we not only serve our organizations but also act as stewards of society in creating, facilitating and executing the transactions that are part of the greater economy. In this role, marketers are expected to embrace the highest professional ethical norms and the ethical values implied by our responsibility toward multiple stakeholders (e.g., customers, employees, investors, peers, channel members, regulators and the host community)."
The statement clearly demonstrates that as marketers, we do not only serve our own organization. but have a responsibility towards numerous other stakeholders listed above. In this regard, we need to treat these stakeholders using the ethical norms expected of marketers. The AMA further discusses the three ethical norms which consist of the following:
1) Do no harm
2) Foster trust in the marketing system
3) Embracing the ethical values of honesty, responsibility, fairness, respect, transparency and citizenship.
An example of a company making unethical marketing claims was seen in the case of Career Education Corporation, a for-profit university that was investigated by the Securities Exchange Commission (SEC) and the California State education oversight bureau for making fraudulent claims back in 2005. These include overstating the income of students who have graduated from its colleges and the number of them who found jobs. Other unethical marketing include overstating the career placement service available to students. In this case, the marketers did not fulfill its responsiblity to multiple stakeholders. The customers (students) were lured into debt with false promises of high potential future income. The employees were hurt when some campuses were closed down. The investors (stockholders) were hurt by the relevation and lost significant value in their investment. Its peer (other for profit universities) were hurt because they had to compete against false marketing by Career Education. Regulars (California bureau) had to get involved to investigate the claims. Lastly, the host community was hurt when mutliple Career Education campuses had to be closed down eventually due to poor profits. The action of Career Education resulted in harm to multiple stakeholders, lack of trust in marketing by for-profit universities and a failure to adhere to ethical values.
http://www.nytimes.com/2005/07/24/business/yourmoney/24gret.html?pagewanted=1&ref=careereducationcorporation
The statement clearly demonstrates that as marketers, we do not only serve our own organization. but have a responsibility towards numerous other stakeholders listed above. In this regard, we need to treat these stakeholders using the ethical norms expected of marketers. The AMA further discusses the three ethical norms which consist of the following:
1) Do no harm
2) Foster trust in the marketing system
3) Embracing the ethical values of honesty, responsibility, fairness, respect, transparency and citizenship.
An example of a company making unethical marketing claims was seen in the case of Career Education Corporation, a for-profit university that was investigated by the Securities Exchange Commission (SEC) and the California State education oversight bureau for making fraudulent claims back in 2005. These include overstating the income of students who have graduated from its colleges and the number of them who found jobs. Other unethical marketing include overstating the career placement service available to students. In this case, the marketers did not fulfill its responsiblity to multiple stakeholders. The customers (students) were lured into debt with false promises of high potential future income. The employees were hurt when some campuses were closed down. The investors (stockholders) were hurt by the relevation and lost significant value in their investment. Its peer (other for profit universities) were hurt because they had to compete against false marketing by Career Education. Regulars (California bureau) had to get involved to investigate the claims. Lastly, the host community was hurt when mutliple Career Education campuses had to be closed down eventually due to poor profits. The action of Career Education resulted in harm to multiple stakeholders, lack of trust in marketing by for-profit universities and a failure to adhere to ethical values.
http://www.nytimes.com/2005/07/24/business/yourmoney/24gret.html?pagewanted=1&ref=careereducationcorporation
Thursday, September 15, 2011
Click and Mortar - Do They Work Together Like Brick and Mortar?
Click and mortar businesses have a decision to make regarding whether to setup their online sales unit as an independent unit or to run the unit as a part of its regular business division. This decision can have a significant impact on the efficiency of the online unit and is also influence by the online and overall strategy that the firm is pursuing.
A case study to understand this decision can be found in the announcment in Jan, 2010 that Walmart is establishing a new global e-commerce unit, Global.com that is responsible for online growth in both new and existing markets. The decision was driven by the strategic initiative to create a single global e-commerce platform that could be used in every global market with minor adaptation. This initiative is part of Walmart's strategy of becoming the top online retailer and overtake Amazon.com in this space.
The establishment of a separate online global e-commerce unit, allows Walmart to focus on the rapidly growing online retail market without being influenced by the brick and mortar stores that still dominates its revenues and profits. Synergies are certainly possible between online and brick and mortar stores, as demonstrated through Walmart's site to store free delivery program and the ability of customers to return items bought online at physical stores.
The Walmart Global.com business unit that focuses solely on online sales allows it to expand in markets where Walmart does not have a physical retail presence. The global e-commerce platform allows Walmart to expand its online presence with some local adaptation regarding language, product offerings, fulfillment and delivery. The online platform can be setup without consideration of how it will work with physical stores in countries where Walmart has brick and mortar operations. This allow the ideal online retail platform that is not customized and compromised in order to cater to the local brick and mortar stores. This enhanced shopping experience is essential for Walmart in order for it to catch up with Amazon.com in the online retail space.
A separate unit also allows Walmart to more easily track and monitor the performance of its online business unit and provide more accountablity for the unit in driving its own revenue and profit growth.
The independent unit also allows Walmart to establish a global online brand that is consistent with its global strategy of growth in both existing and new markets and compete with the Amazon.com brand. Independence from the brick and mortar side of Walmart's retail business provide more flexibility and opportunities for pursuing building an online brand that is not necessarily tied to the brand image of Walmart stores.
A case study to understand this decision can be found in the announcment in Jan, 2010 that Walmart is establishing a new global e-commerce unit, Global.com that is responsible for online growth in both new and existing markets. The decision was driven by the strategic initiative to create a single global e-commerce platform that could be used in every global market with minor adaptation. This initiative is part of Walmart's strategy of becoming the top online retailer and overtake Amazon.com in this space.
The establishment of a separate online global e-commerce unit, allows Walmart to focus on the rapidly growing online retail market without being influenced by the brick and mortar stores that still dominates its revenues and profits. Synergies are certainly possible between online and brick and mortar stores, as demonstrated through Walmart's site to store free delivery program and the ability of customers to return items bought online at physical stores.
The Walmart Global.com business unit that focuses solely on online sales allows it to expand in markets where Walmart does not have a physical retail presence. The global e-commerce platform allows Walmart to expand its online presence with some local adaptation regarding language, product offerings, fulfillment and delivery. The online platform can be setup without consideration of how it will work with physical stores in countries where Walmart has brick and mortar operations. This allow the ideal online retail platform that is not customized and compromised in order to cater to the local brick and mortar stores. This enhanced shopping experience is essential for Walmart in order for it to catch up with Amazon.com in the online retail space.
A separate unit also allows Walmart to more easily track and monitor the performance of its online business unit and provide more accountablity for the unit in driving its own revenue and profit growth.
The independent unit also allows Walmart to establish a global online brand that is consistent with its global strategy of growth in both existing and new markets and compete with the Amazon.com brand. Independence from the brick and mortar side of Walmart's retail business provide more flexibility and opportunities for pursuing building an online brand that is not necessarily tied to the brand image of Walmart stores.
The Art (Science) of Persuasion!
The Harvard Business Review article "Harnessing the Science of Persuation" by Robert B. Cialdini makes the argument that persuation is a skill that can be taught, learned and applied. He presents six different principles of persuation and how that can be applied to the fields of general management and organizational behavior.
The field of marketing can be seen as the art or science of persuading consumers to consider your products and convincing them to eventually purchase it. As such, several of the same principles used for persuation in management can be easily adapted and applied to the field of marketing.
The principle of liking and the principle of social proof are both readily adapted for marketing purposes and offers essentially the same application. For a company trying to sell a product or service, the strategy when developed involves connecting potential customers to people they like or trust, while providing the context and means for them to market to each other in subtle ways. The advent of the internet and social networking also provides additional means for the company to build the context for this interaction and actually participate interactively in the communication process.
The two principles when combined together mean that people like to hang out with people they like both online and offline, and are more likely to follow each others recommendation on purchases rather than recommendations that come from strangers provided by the company.
Traditionally this is accomplished through word of mouth advertising. The advent of social media worldwide mean that people are in constant communication with each other. Experience has shown that people share their interest. product purchases, and recommendations freely with their friends through social media. The challenge for companies is to figure out a way to direct, promote and enhance the communcations that are positive for its own products. Many companies have already provided direct links to social networks for people to share product information and recommendations. This provide an easy way for someone to share products they are interested in with their friends. In addition, companies are also directly involved in social media sites and broadcast information via their twitter and facebook accounts to people who follow them. Another creative way for companies to provide the context for interaction is through online fanclubs and forums in social media sties for custemers who use and love its products. Promotional offers can encourage customers to join and post on the site. This allows a company to put together a group of people who like similar products and through their interactions with each other, help market and sell the company's products to their friends.
The direct implication is that word of mouth marketing has a much broader market reach than before and can also instantly reach a large number of people who can easily be persuaded. A company that harnesses this power will gain an advantage over competitors in marketing its product. At the same time, a negative recommendation can also reach a large audience quickly and companies need to monitor and manage the online communication regarding its product so that they can respond quickly to negative or incorrect information regarding its products.
The field of marketing can be seen as the art or science of persuading consumers to consider your products and convincing them to eventually purchase it. As such, several of the same principles used for persuation in management can be easily adapted and applied to the field of marketing.
The principle of liking and the principle of social proof are both readily adapted for marketing purposes and offers essentially the same application. For a company trying to sell a product or service, the strategy when developed involves connecting potential customers to people they like or trust, while providing the context and means for them to market to each other in subtle ways. The advent of the internet and social networking also provides additional means for the company to build the context for this interaction and actually participate interactively in the communication process.
The two principles when combined together mean that people like to hang out with people they like both online and offline, and are more likely to follow each others recommendation on purchases rather than recommendations that come from strangers provided by the company.
Traditionally this is accomplished through word of mouth advertising. The advent of social media worldwide mean that people are in constant communication with each other. Experience has shown that people share their interest. product purchases, and recommendations freely with their friends through social media. The challenge for companies is to figure out a way to direct, promote and enhance the communcations that are positive for its own products. Many companies have already provided direct links to social networks for people to share product information and recommendations. This provide an easy way for someone to share products they are interested in with their friends. In addition, companies are also directly involved in social media sites and broadcast information via their twitter and facebook accounts to people who follow them. Another creative way for companies to provide the context for interaction is through online fanclubs and forums in social media sties for custemers who use and love its products. Promotional offers can encourage customers to join and post on the site. This allows a company to put together a group of people who like similar products and through their interactions with each other, help market and sell the company's products to their friends.
The direct implication is that word of mouth marketing has a much broader market reach than before and can also instantly reach a large number of people who can easily be persuaded. A company that harnesses this power will gain an advantage over competitors in marketing its product. At the same time, a negative recommendation can also reach a large audience quickly and companies need to monitor and manage the online communication regarding its product so that they can respond quickly to negative or incorrect information regarding its products.
The Use of the Case Study Method in Business Education
The use of the case study method for learning in business education was first pioneered by Harvard Business School in the 1920s. Since then, it has become the prevalent method for experiential learning in business courses.
Over the years I have read hundreds of cases and performed analysis on many of them. In the course of studying these cases, I have also found excellent cases and poorly written ones. The quality of the case construction impacts the amount of learning that a student can get from analyzing the case. In many cases, studying short brief cases that only provide limited public information often results in superficial analysis with limited opportunity to explore different solutions. A good case provide a wealth of information, relevant data, in depth interviews and analysis from management and employees at the company. Such cases provide a wealth of learning opportunity for students and allow the students to truly experience experiential learning.
In the article "Learning by the Case Method in Marketing" published by the Harvard business school, an interesting comparison is made between the use of case study in the fields of medical and business education. This comparision, although valid at some levels, also highlights a significant difference in the process of educating doctors versus business leaders. Medical students use case studies to learn about different scenarios and situations they will face, but are then required to undergo a rigorous 3-4 years residency period where experiential learning is the fundamental means of gaining experience and training. No such rigorous training system exist for business leaders other than the typical final graduation project or one term co-op type assignment available to business students. Most of the instructions for business leaders are done solely through the case study method. An argument can be made for raising the level of M.B.A. programs to that of a professional degree similar to law and medical degrees. Business leaders play an important role in private and public companies, as well as other important government and non-profit institutions in the world. Raising the level of professionalism in business degrees, with build in experiential learning experiences at institutions and companies, will help produce more ethical, competent and experienced professional business leaders for the future.
In a future post, I will share some more thoughts on how the case analysis process is currently used in business education and how it can be enhanced with more emphasis on other branches of the experiential tree.
Over the years I have read hundreds of cases and performed analysis on many of them. In the course of studying these cases, I have also found excellent cases and poorly written ones. The quality of the case construction impacts the amount of learning that a student can get from analyzing the case. In many cases, studying short brief cases that only provide limited public information often results in superficial analysis with limited opportunity to explore different solutions. A good case provide a wealth of information, relevant data, in depth interviews and analysis from management and employees at the company. Such cases provide a wealth of learning opportunity for students and allow the students to truly experience experiential learning.
In the article "Learning by the Case Method in Marketing" published by the Harvard business school, an interesting comparison is made between the use of case study in the fields of medical and business education. This comparision, although valid at some levels, also highlights a significant difference in the process of educating doctors versus business leaders. Medical students use case studies to learn about different scenarios and situations they will face, but are then required to undergo a rigorous 3-4 years residency period where experiential learning is the fundamental means of gaining experience and training. No such rigorous training system exist for business leaders other than the typical final graduation project or one term co-op type assignment available to business students. Most of the instructions for business leaders are done solely through the case study method. An argument can be made for raising the level of M.B.A. programs to that of a professional degree similar to law and medical degrees. Business leaders play an important role in private and public companies, as well as other important government and non-profit institutions in the world. Raising the level of professionalism in business degrees, with build in experiential learning experiences at institutions and companies, will help produce more ethical, competent and experienced professional business leaders for the future.
In a future post, I will share some more thoughts on how the case analysis process is currently used in business education and how it can be enhanced with more emphasis on other branches of the experiential tree.
Friday, September 9, 2011
Should both large companies and small businesses use internet marketing?
Marketing can be thought of as everything that is done to get a product into the hands of the customer, and getting them to pay for it. Using this definition, then every company should use Internet marketing if it helps to get its customer to select and purchase its product. In addition the cost of Internet marketing needs to be weighed against the benefits.
For large companies, there is little doubt that Internet marketing is essential in all four primary phases of the consumer decision journey: initial consideration; active evaluation, closure; and post-purchase. Depending on the products, the company can use Internet marketing to build brand awareness, improve brand image, understand customer needs, assist consumers in making comparison, provide information when requested, follow up survey and even to provide post sales support. B2C firms can also use the Internet to sell directly to the consumers, bypassing middlemen and retail outlets and provide an alternative distribution channel.
For small business, the use of the Internet marketing need to be evaluated more carefully in order to understand its effectiveness in reaching customers. Internet marketing has enabled many small businesses that sell product and services to reach an audience much larger than its local neighborhood and town. Through online sale via its own website or through third party websites like Amazon and Ebay, small businesses have been able to expand their geographic scope and reach customers in the rest of the country and even worldwide. At the same time, small businesses that provide good and services that must be consumed locally benefit less from Internet marketing. These include small businesses like local restaurants, laundromat, convenience store and salons. There is less potential for Internet marketing in these businesses other than to provide basic information, location, direction, basic communication, feedback and some promotion. For small businesses, there is more value to Internet marketing for the businesses that provide more differentiated products, for example local restaurants, than for businesses that provide generic products and services, like laundromat and convenience store. At the same time, with the fast growth in mobile advertising and location based marketing, there is additional potential for small businesses to creatively reach out to its customers through both marketer driven and buyer driven marketing. Services like Google mobile location based advertisment can provide a platform to advertise directly to customers when they are in the vicinity, while Zaarly.com provides a platform for small businesses to respond to request initiated by potential customers.
For large companies, there is little doubt that Internet marketing is essential in all four primary phases of the consumer decision journey: initial consideration; active evaluation, closure; and post-purchase. Depending on the products, the company can use Internet marketing to build brand awareness, improve brand image, understand customer needs, assist consumers in making comparison, provide information when requested, follow up survey and even to provide post sales support. B2C firms can also use the Internet to sell directly to the consumers, bypassing middlemen and retail outlets and provide an alternative distribution channel.
For small business, the use of the Internet marketing need to be evaluated more carefully in order to understand its effectiveness in reaching customers. Internet marketing has enabled many small businesses that sell product and services to reach an audience much larger than its local neighborhood and town. Through online sale via its own website or through third party websites like Amazon and Ebay, small businesses have been able to expand their geographic scope and reach customers in the rest of the country and even worldwide. At the same time, small businesses that provide good and services that must be consumed locally benefit less from Internet marketing. These include small businesses like local restaurants, laundromat, convenience store and salons. There is less potential for Internet marketing in these businesses other than to provide basic information, location, direction, basic communication, feedback and some promotion. For small businesses, there is more value to Internet marketing for the businesses that provide more differentiated products, for example local restaurants, than for businesses that provide generic products and services, like laundromat and convenience store. At the same time, with the fast growth in mobile advertising and location based marketing, there is additional potential for small businesses to creatively reach out to its customers through both marketer driven and buyer driven marketing. Services like Google mobile location based advertisment can provide a platform to advertise directly to customers when they are in the vicinity, while Zaarly.com provides a platform for small businesses to respond to request initiated by potential customers.
Thursday, September 8, 2011
Engaging the Consumer at Multiple Touch Points
The article "The consumer decision journey" published in the McKinsey Quarterly presents the consumer decision making process as a circular journey rather than the traditional funnel approach. The consumer decision journey approach focuses attention on reaching the consumer at key moments or touch points, when marketing can most effectively influence the consumer's decision and choice. The traditional funnel approach uses push marketing to ensure that the marketer's brand is included in the initial set of brands under consideration, then continue to market to the consumer until the final choice is made.
The implication of this change is that the marketer must understand their own industry and which touch points provide the best opportunity to influence the consumer. Since two-thirds of touch points are now initiated by consumers when they "pull" information, the marketers need to make sure that they are available to interact with their consumers and provide the necessary product and marketing information whenever the consumers initiate the contact. The ability to influence the consumer purchase decision at each touch point varies greatly by industry. For example, for skin care and consumer electronics, the decision is often postponed until the consumer walks into the store. The consumer can still be influenced at this stage by the sales pitch, packaging or product characteristic, despite the research and evaluation already done ahead of time. On the other hand, for automobiles, the battle is waged at the initial-consideration stage and post-purchase phase rather than during the active-evaluation and moment-of-purchase phases.
Marketers must now engage the consumers at the right place and time, and tailor their communication message to each consumer based on the information they requested through consumer initiated touch points. This together with traditional brand building and post-purchase support help win new customers and build loyal buyers.
For internet marketing and e-commerce, the consumer decision journey approach provides the perfect convergence of consumer needs with the technology available through the internet in order to track and engage the consumer. The internet provides the means for marketer to know when the consumer is ready to purchase and actively engage and influence them at this critical decision point. On the other hand, traditional marketing and brand building can increase exposure to the product and brand, but provide more limited and lagging information as to when the consumer is ready to make a purchase. Customer's search, browsing, purchase and inquiry history can all be tracked and monitored so that targeted marketing and advertising can be pushed at the right moment. Information and technical expertise can also be provided at the right time when the consumer initiates a consumer-driven marketing activity. Through the internet, consumer recommendations and product evaluations are cheaper and easier for the marketers to gather and analyze, and used to better understand their customers and their preferences.
The implication of this change is that the marketer must understand their own industry and which touch points provide the best opportunity to influence the consumer. Since two-thirds of touch points are now initiated by consumers when they "pull" information, the marketers need to make sure that they are available to interact with their consumers and provide the necessary product and marketing information whenever the consumers initiate the contact. The ability to influence the consumer purchase decision at each touch point varies greatly by industry. For example, for skin care and consumer electronics, the decision is often postponed until the consumer walks into the store. The consumer can still be influenced at this stage by the sales pitch, packaging or product characteristic, despite the research and evaluation already done ahead of time. On the other hand, for automobiles, the battle is waged at the initial-consideration stage and post-purchase phase rather than during the active-evaluation and moment-of-purchase phases.
Marketers must now engage the consumers at the right place and time, and tailor their communication message to each consumer based on the information they requested through consumer initiated touch points. This together with traditional brand building and post-purchase support help win new customers and build loyal buyers.
For internet marketing and e-commerce, the consumer decision journey approach provides the perfect convergence of consumer needs with the technology available through the internet in order to track and engage the consumer. The internet provides the means for marketer to know when the consumer is ready to purchase and actively engage and influence them at this critical decision point. On the other hand, traditional marketing and brand building can increase exposure to the product and brand, but provide more limited and lagging information as to when the consumer is ready to make a purchase. Customer's search, browsing, purchase and inquiry history can all be tracked and monitored so that targeted marketing and advertising can be pushed at the right moment. Information and technical expertise can also be provided at the right time when the consumer initiates a consumer-driven marketing activity. Through the internet, consumer recommendations and product evaluations are cheaper and easier for the marketers to gather and analyze, and used to better understand their customers and their preferences.
Thursday, September 1, 2011
Kibu, We Hardly Knew Ye
Inside the cult of Kibu is an article published in an edition of Industry Standard back in 2000. I had never heard of Kibu until I first came across the company in a marketing class several years ago, then I promptly forgot about it until it popped up again in another marketing class. Now if an article appears twice in two different marketing class, there must be some marketing lessons we can take away from what happened to Kibu.
Without going into too much detail, Kibu is one of hundreds of dot.com companies that folded when the dot.com bubble burst in the later part of 2000. Kibu was founded on the concept of being a "digital hangout" for teen girls. Multiple channels on its website would be run by a "Face" and given names like Face of Fashion, Face of Advice and Face of Horoscopes. Like most of the dot.com companies during that time, Kibu was striving to drive traffic to its website, but had no business plan on how to generate revenue, let alone profit.
So what is marketing and what lessons can we learn from Kibu? Marketing can be thought of as everything that is done to get a product into the hands of the customer, and getting them to pay for it. One of the challenges during the dot.com boom was figuring out how to generate revenues and profits. For companies like Kibu that produces online contents instead of selling a physical product, the challenge is even more difficult because contents had always been free online. Even now more than 10 years later, the business strategy of charging for online contents have only achieved limited success in a few rare instances, while most content sites gravitate towards the online advertising business strategy for generating revenues.
The first mover advantage also proved to be non-existence for most of the dot.com companies since the idea and technology for online ad placement was not mature yet. In addition, other companies were not ready to devote significant portions of their advertising budget to online ads 10 years ago during the dot.com boom, even if the technology existed to place them.
Lastly, reading about Kibu made me think of the herd mentality that often drives human behavior. The herd mentality can also lead to irrational exuberance and bubbles as seen in the dot.com bubble and the recent financial crisis caused by the real estates bubble. In the field of marketing, the use of social media and instant communications provide the perfect vehicle to take advantage of this herd mentality. A quick search turned up two books already written about herd marketing. More on herd marketing in the future.
http://www.amazon.co.uk/Herd-Change-Behaviour-Harnessing-Nature/dp/0470060360
http://www.amazon.com/Nature-Marketing-Swarm-well-Herd/dp/0230203361
Without going into too much detail, Kibu is one of hundreds of dot.com companies that folded when the dot.com bubble burst in the later part of 2000. Kibu was founded on the concept of being a "digital hangout" for teen girls. Multiple channels on its website would be run by a "Face" and given names like Face of Fashion, Face of Advice and Face of Horoscopes. Like most of the dot.com companies during that time, Kibu was striving to drive traffic to its website, but had no business plan on how to generate revenue, let alone profit.
So what is marketing and what lessons can we learn from Kibu? Marketing can be thought of as everything that is done to get a product into the hands of the customer, and getting them to pay for it. One of the challenges during the dot.com boom was figuring out how to generate revenues and profits. For companies like Kibu that produces online contents instead of selling a physical product, the challenge is even more difficult because contents had always been free online. Even now more than 10 years later, the business strategy of charging for online contents have only achieved limited success in a few rare instances, while most content sites gravitate towards the online advertising business strategy for generating revenues.
The first mover advantage also proved to be non-existence for most of the dot.com companies since the idea and technology for online ad placement was not mature yet. In addition, other companies were not ready to devote significant portions of their advertising budget to online ads 10 years ago during the dot.com boom, even if the technology existed to place them.
Lastly, reading about Kibu made me think of the herd mentality that often drives human behavior. The herd mentality can also lead to irrational exuberance and bubbles as seen in the dot.com bubble and the recent financial crisis caused by the real estates bubble. In the field of marketing, the use of social media and instant communications provide the perfect vehicle to take advantage of this herd mentality. A quick search turned up two books already written about herd marketing. More on herd marketing in the future.
http://www.amazon.co.uk/Herd-Change-Behaviour-Harnessing-Nature/dp/0470060360
http://www.amazon.com/Nature-Marketing-Swarm-well-Herd/dp/0230203361
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