I came across this nice video where a few thought leaders like Jeremiah Owyang discuss how enterprises use social media. It’s made by social dashboard Hootsuite.
We started the second trimester today at ESSEC’s Singapore campus. I am teaching Marketing Analytics (Engineering) to two sections of 50 students each. In my first lecture I introduced the fundamental problem in front of marketers – how to justify their decisions to others who control the budget. Gone are the days when people could simply use experience, gut feel, intuition, etc. as valid criteria for selecting marketing strategies. Now nobody wants to bet even $1 on speculative marketing managers. Data driven marketing is the new norm. My course is an introduction to this new reality. In any marketing course, ‘brand positioning’, ‘segmentation’, ‘targeting’, ‘media planning’, etc. are common terminologies. Professors and students know what these concepts mean. Yet, given a real life business situation how many students will be able to actually come up with a strategic solution? Very few indeed.
Over the next five weeks, we will take a two-step approach. First, we will clarify a certain marketing concept, for e.g., positioning. We will then understand what type of information needs to be collected to plot a perceptual map showing the brand positioning on 2 or 3 dimensional space. Next we will use SPSS to do the data analysis using statistical techniques such as factor analysis. Finally, based on the perceptual maps, students will recommend actions. There will be hard numbers involved. For example, when the students suggest launching a new brand to exploit potential gap in the market, they will need to justify that by projecting the changes in the market shares. They will have to account for cannibalization of any existing brands from the same company that is supposed to launch a new brand. This will be a complex but fun exercise!
The other topics include decisions on segmentation using probability models, salesforce allocation, and conjoint analysis. As we started working with SPSS today, I used a dataset consisting of accounting information on several US firms over 2010 and 2011. The students’ first task is to build a sales response model and test it using the data. To what extent do the sales respond to advertising? The response model will not be very complicated yet we may end up using a logit-type curve (ADBUDG model), who knows?
I believe that modeling the data is not the most important thing. It’s just a small component of decision making. The critical parts are to read the analysis, interpret it, and then recommend a decision path. I don’t like blind data mining of millions of data points to come up with patterns that everyone believes are true. Unfortunately this is exactly what’s happening in the analytics area. Data mining coupled with intelligent experiments is the way to go. (More on this later). Bringing intuition to this party is like inviting Michael Lohan to speak at a conference on responsible parenting!
I am quite lazy when it comes to updating my blogs. Turns out that even after writing just 12 blog posts this year, I still attracted 5,000+ readers. Here is a summary of this year.
The WordPress.com stats helper monkeys prepared a 2012 annual report for this blog.
Here’s an excerpt:
600 people reached the top of Mt. Everest in 2012. This blog got about 5,300 views in 2012. If every person who reached the top of Mt. Everest viewed this blog, it would have taken 9 years to get that many views.
This post doesn’t list my opinions. Instead check out the embedded video below where Tracy Yaverbaun, Director of Retail, Luxury & Fashion Partnerships at Facebook shares her experiences. Start watching from 4 minutes mark.
Update: Watch it from 18 minutes mark for more relevant discussion on luxury and fashion
In my earlier post on social media use by luxury brands, I highlighted the dilemma faced by such brands. Exclusivity is one of the key aspects of luxury while social media are open to everyone. Many luxury brands are unsure about whether the costs of social media outweigh their benefits.
In this post, I am going to argue that luxury brands should use social media only when they are dealing with a certain type of customers. Social media presence dilutes brand equity of luxury brands among certain consumers by making the brand more accessible to everyone. As such luxury brands are likely to lose their perceived exclusivity and lose those customers. However, another segment of luxury consumers desire the increased awareness of luxury brands.
I organize the discussion around the categorization of consumers based on wealth and need for status (Han, Nunes, and Dreze 2010). The diagram below shows the four groups of consumers, out of which I will use only the two depicted in the top row: Patricians and Parvenus. (Ignore the black and white arrows.)
Patricians are consumers who are rich, perhaps for multiple generations, and who exhibit low need for status. They use brands that are not over the top. Only the other Patricians truly understand their worth and thus, Patricians signal their status only to each other. I believe that this has been the traditional target consumer segment of luxury brands. From the original paper, here is the description of a Patrician –
Ms. K lives in Boston. She is a lawyer and partner at a firm begun by her great grandfather. She cut her hair short after she became tired of the knots and tangles caused by driving with the top down in her convertible. She likes to take ski vacations whenever she gets a chance and owns a chalet in Aspen. Her favorite brand is Chanel and her favorite purse is the iconic Chanel 2.55 bag, which was introduced in 1955. She collects modern art and sits on the board of directors for several museums and galleries. She finds ostentatious products that have the brand plastered on them offensive and the nouveaux riches completely gauche.
Parvenus are also rich like Patricians. However, in contrast to Patricians they exhibit a high need for status. They want to use expensive brands with loud design, which clearly conveys everyone around them Parvenus are rich. These are the people who like to use the leather bags with big (and ugly!) ‘LV’ signage on them. Parvenus are also known as ‘nouveau riche.’ From the original paper Parvenus are like this –
Ms. A owns a family-run restaurant in Chicago. She started as a prep cook at a small local restaurant and worked as a waitress, bartender, and manager. With her experience in local restaurants, she started up her own contract catering business, which was a big success and led to opening her own restaurant. She now lives in Oak Park, Illinois, where she remodeled her house to look as if it were designed by Frank Lloyd Wright. She often shops at Bloomingdale’s and drives a Lexus ES. She loves Prada but only wishes the emblems on the products were bigger so everyone could see she wears Prada.
Traditionally, Patricians are more concentrated in the European countries as these nations have been wealthy for some time now (in comparison with Asian nations, where European countries set up their colonies and extracted much of their wealth). In the last 3-4 decades, the wealth levels in Asia have risen dramatically, creating several multimillionnaires in countries like China, India, Malaysia, and Indonesia. These newly rich people in Asia are more likely to be Parvenus flaunting their wealth to people around them (I know I’m speculating so please write your comments below). Five years ago whereas luxury brands generated most of their revenues from Europe and the US, many of these brands are now growing at a tremendous pace in Asia, and in particular China. For many luxury brands, the revenue from Asia-Pacific regions may exceed those from other markets. As such, Parvenus are now at least as much critical to luxury brands as Patricians.
When a luxury brand increases its presence on social media, garnering millions of Facebook fans, Twitter followers, and YouTube views, very few of these people are likely to be their target consumers. By making the luxury brand more accessible to these people, who are most likely ‘have-nots,’ luxury brands face the risk of alienating Patricians, who prefer subtle signals. Yet, by not being on social media and keeping a low level of awareness among have-nots, luxury brands risk alienating Parvenus. Recall that Parvenus want to show off to the people around them, irrespective of whether they are haves or have-nots. Therefore, smaller the number of people who are aware of an expensive brand, lower is the value that Parvenus derive from consuming those brands. As such, luxury brands should be on social media in order to create a high level of awareness among have-nots.
Luckily for luxury brands, Patricians and Parvenus are currently concentrated in different geographies. Therefore, they can selectively use social media in different markets. Even better, in China the social media platforms are entirely different from the rest of the world. Thus, there is likely to be no spillover from luxury brand’s social media presence in China to Europe and the US.
Ayojak Website - http://ayojak.com/
Ayojak Blog - http://ayojak.com/blog/
Ayojak Facebook Page - https://www.facebook.com/ayojak
Ayojak Twitter - https://twitter.com/ayojak
EventAvenue - https://www.eventavenue.com/
MeraEvents - http://www.meraevents.com/
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Bookmyshow - http://in.bookmyshow.com/
Bookmyshow iPhone App - http://itunes.apple.com/in/app/bookmyshow-com/id405894842?mt=8
Social technographics - http://empowered.forrester.com/ladder2010/
Social technographic profile tool - http://empowered.forrester.com/tool_consumer.html
In the first half of today’s class, we had Wall Street Journal‘s business and technology journalist Lora Kolodny speaking with us on Skype from San Francisco. I know Lora because I subscribe to her Facebook updates and sometime participate in the discussion. Considering that she has written for big names as New York Times, Fast Company, Inc, and TechCrunch, it is a great surprise that she is so approachable!
I invited Lora to speak with our students on primarily two topics–the social media start-up scenario and advice on starting your own business. The call went on for about an hour so I won’t be able to cover everything we spoke about. However, here are a few takeaways from her talk-
1) Although social media companies are getting a beating in the stock market, VC interest in social media start-ups remains high.
2) Any new platform, service, etc. must have a clear mobile strategy.
3) Social media adoption in Asia is growing rapidly.
4) For new start-ups, it is essential to evaluate whether they need large investment. Further, creating a personal brand is critical to reach out to potential investors. She suggested joining newer platforms early to create a significant following. Lora has more than 110,000 subscribers on Facebook!
5) She suggested using services like YouNoodle to connect to other entrepreneurs.
My students could add more to this.
The second half of the session was devoted to discussing the ‘Honeycomb Framework’ for selecting and managing various social media channels. The paper is available for download from here and a case study from Australia is available here. Ian MacCarthy, one of the authors of this paper explains what they propose -
“We explain how a firm can recognize and understand its social media landscape, using the honeycomb framework; develop strategies that are congruent with, or suited to, different social media functionalities and the goals of the firm; develop curating strategies for their own social media interactions and content; and finally use the honeycomb structure as a tool to evaluate the constantly changing social media activity.”
Honeycomb framework identifies seven components of social media – identity, sharing, conversations, presence, relationships, reputation, and groups. The diagram below shows what each component means.
The framework give clear guidance to selecting a social media channel. As a business you need to decide what your community is doing and what the community members’ inherent motivations are. Accordingly, one can select the social media channel. For example, LinkedIn has ‘Identity’ as its clear functionality. I know there are a few users on LinkedIn who are anonymous! Yeah, I keep on getting add requests from such people. But what’s the chance that I will ever accept such a request? If one doesn’t reveal one’s identity on LinkedIn, it defeats the whole purpose of that social network!
Social networks may have multiple functionalities. Consider Twitter. Originally, Twitter was used for broadcasting the message–sharing on the go. Therefore, ‘Sharing’ was its core functionality. However, these days Twitter also acts as a very common conversational tool. Therefore, ‘Conversations’ is an added core functionality to Twitter. The readers should think about other channels such as Facebook, FourSquare, Pinterest, blogs, etc. to see how they fit into this framework.
Once a business identifies the channel, it can use the following diagram to operationalize the channel management. The implications can be different based on the functionality a channel offers. For example, for reputation management, one needs to do a lot of monitoring using tools such as Klout scores.
Overall, honeycomb framework is great for channel selection and community management.
In the last leg of the session, I tried to answer the question “why do people share?” I used ‘Unselfish Gene‘ article to show one perspective. We know for a long time that the classic game ‘prisoner’s dilemma‘ doesn’t always end up with everyone choosing the game-theoretical solution. In other words people don’t like to betray others easily. Reputational concerns aside, human values are equally important in sharing something for the community’s good. Unselfish Gene tries to bring home that point.