Marketing

What happens when user communities—connected by the Internet—start to create their own brands?

Historically, neither the creators nor the distributors of cultural products such as books or movies have used analytics & #8212; data, statistics, predictive modeling & #8212; to determine the likely success of their offerings. Instead, companies relied on the brilliance of tastemakers to predict and shape what people would buy. Creative judgment and expertise will always play a vital role in the creation, shaping and marketing of cultural products. But the balance between art and science is shifting. Today companies have unprecedented access to data and sophisticated technology that allows even the best-known experts to weigh factors and consider evidence that was unobtainable just a few years ago. And with increased cost and risk associated with the creation of cultural products, it has never been more important to get these decisions right. In this article, the authors describe the results of a study of prediction and recommendation efforts for a variety of cultural products. They discuss different approaches used to make predictions, the contexts in which these predictions are applied and the barriers to more extensive use, including the problem of decision making pre-creation. They then discuss two aspects of the prediction market. First, the need for better prediction for distributors of cultural products, and second, the potential for business models around prediction techniques.

Service companies shouldn’t worry about teaching their customers too much.

New technology tools are offering insights into the power of ancient forms of human communication that Pentland calls honest signals. In this excerpt from his new book Honest Signals: How They Shape Our World (MIT Press, October 2008), Pentland describes how he and other researchers have been using a device called a sociometer to gain a new perspective on human behavior. (The sociometer is a wearable badgelike device equipped with sensors; it measures factors such as body movement and the amount of time people spend talking face-to-face.) Studies using data from sociometers show that certain types of subtle social signals affect outcomes significantly in a variety of settings, from business plan presentations to salary negotiations. Pentland focuses on four types of honest signals: influence, mimicry, activity and consistency. Influence, in this context, refers to the degree to which one person’s speech patterns in a conversation influence the other party’s. Mimicry is the extent to which one person copies another’s gestures and movements & #8212; such as head nodding or smiles & #8212; during an interaction. The activity variable reflects humans’ tendency to show increased activity levels when interested, and consistency in speech or movement may be a sign of focus, as well as of less openness to others’ influence. Such social signals are surprisingly powerful. For example, Pentland describes a study conducted by researchers Jeremy Bailenson and Nick Yee at Stanford University, in which students were shown a three-minute video encouraging them to carry their student identification card. Some students were shown a standard animated video, whereas others saw a video in which the animated figure mimicked their gestures four seconds later. Simply adding the mimicry feature caused the sales pitch for the ID card to be 20% more effective. Understanding the power of these nonverbal forms of communication can enable us to better design organizations, Pentland concludes. However, it is an open question whether we will use the new insights this type of research provides for good or for ill. Article 50118. The MIT SMR article was excerpted and adapted from Honest Signals: How They Shape Our World by Alex (Sandy) Pentland, published October 2008 by The MIT Press. Copyright in the name of The Massachusetts Institute of Technology. All rights reserved.

Recent research suggests that consumers' state of mind affects their openness to new products affiliated with existing brands.

Seven strategies that can make marketing both relevant and rigorous in today's world.

For many teenagers and young adults, cell phones, personal digital assistants and other handheld devices have become a necessity of everyday life. That fact has not escaped the attention of companies that have had great difficulty reaching young consumers through traditional marketing approaches. In theory, the mobile platform provides the perfect mechanism for reaching young consumers. A large retailer might, for example, send a group of teenagers who are at a shopping mall various electronic coupons on their phones to promote special discounts. Many global corporations, including Burger King, MTV, Procter & Gamble and Ford, have initiated programs that enable consumers to search for the nearest restaurant location using their cell phones, receive electronic coupons or participate in other mobile marketing activities. Such campaigns have generated click-through rates up to 10 times those of traditional Internet banner ads, and recent forecasts for global mobile marketing spending range from $9 billion to $19 billion by 2011. That said, several brands, including Budweiser, ESPN, Sprite and adidas, have launched mobile marketing efforts only to see some successes amidst an equal number of disappointments. To investigate what truly influences whether young consumers will participate in mobile marketing activities, the authors recently conducted a survey in the United States and Pakistan. The study looked at the relative importance of a number of factors, including consumers' personal attachment to their cell phones, their concerns for privacy and their willingness to "opt in" and accept permission-based marketing. An analysis of the results uncovered important insights in consumer behavior. For instance, people who are personally attached to their cell phones are neither more nor less inclined to participate in mobile marketing activities. And the data also revealed differences between markets: In general, young Pakistanis are more amenable to receiving -- and even may desire -- mobile marketing communications, whereas their American counterparts' willingness depends on a greater number of factors. Such results hold a number of important implications for companies developing mobile advertising campaigns across global markets.

Executives’ perceptions of the motives of pirates and purchasers vary by country.

Eager to grow through innovation, companies are looking to customers to guide them toward unmet needs. But these entities often end up with vague, unusable -- or even misleading -- customer input. Why? The authors studied 10,000 customer need statements from many industries and discovered that companies have not even established a definition of what a customer need is or how user input should be standardized in terms of structure and format. Too often, companies ask customers to react to potential solutions, rather than zeroing in on their expertise: the "job" they need to accomplish with the product or service, and at which steps that experience could use improvement. By deconstructing the job, companies can identify opportunities that are universal and long-standing. In addition, the authors say, companies can collect data that fits their innovation strategy. What the authors propose is a disciplined process for gathering customer requirements that will then be addressed by innovative ideas. They outline the six characteristics that a useful customer statement must possess, including measuring value strictly from a user's perspective -- and not from the factors the company believes should form the basis for the customer's evaluation. The most helpful statements also prompt a clear course of action, specifying what dimensions of the "job" need improvement, such as its sluggish pace or inconsistent quality. The authors set forth six rules for eliciting feedback that will yield the right raw data to craft customer statements that resonate across company functions, so that departments can unite around a single growth strategy. Finally, they define the two broad categories of customer requirements -- job statements and desired-outcome statements -- and link which type works best for different innovation strategies. For CEOs, the authors' message is forthright: Successful innovation is about process, not just the result of brainstorming good ideas.

Thanks to a variety of online social applications -- including blogs, social networking sites like MySpace, user-generated content sites like YouTube and countless communities across the Web -- people are increasingly connecting with and drawing power from one other. In fact, customers are now beginning to define their own perspective on companies and brands, a view that's often at odds with the image a business wants to project. But organizations need not be on the defensive. Indeed, some savvy executives have already been turning this groundswell of customer power to their advantage. To investigate how, the authors interviewed managers and employees at more than 100 companies that were rolling out social applications. From this research, they developed a strategic framework that businesses can use to implement social applications in a number of departments, including research and development, marketing, sales, customer support and operations. The potential benefits are numerous: Social applications can generate research insights, extend the reach of marketing, energize sales efforts, cut support costs and stoke the innovation process. (And for companies that tap into employee groundswells, the result can be increased opportunities for collaboration across departments and geographical locations, as well as greater productivity and decreased inefficiencies.) But the greatest benefit might be cultural, because social applications help weave two-way customer communications into the fabric of an organization. But anything that changes culture tends to face resistance, and this is especially true of social applications, because they require managers to embrace an unknown communications channel, one that responds poorly to attempts to control it. Based on an analysis of companies that succeeded or failed in deploying social applications, the authors have derived a number of key managerial recommendations for any organization attempting to harness the power of the groundswell.