Marketing

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.

Media coverage is a key factor in creating a company's reputation, which has been shown to influence both operational and financial performance. Scorecard rankings are a popular form of determining corporate reputations vis-_-vis competitors, yet many executives justifiably consider opinion-poll-style scorecards to be little more than beauty contests. This article discusses two techniques for assessing media coverage in a way that can inform management action: profiling media communication about a company's actions and its products and services, and then examining the various facets of an organization's media reputation profile. Media profiling is an analysis of the specific words and phrases that people and journalists use to describe and evaluate a company. The authors illustrate the use of media profiling results in three exhibits that visually reflect important aspects of corporate reputation at a glance: "media salience," which shows the prominence of a company's media image, and "media tone" and "coverage breakout," which outline different aspects of company reputation. Using the example of Apple Inc., the authors show how media profiling immediately creates a discussion that informs management action. It does so by unpacking "message macrothemes," such as profitability or service, into microthemes that a journalist uses to discuss them. Focusing on microthemes quickly moves the discussion to an expansive language about corporate reputation. Executives and public relations managers can then prioritize their responses to various reputation scenarios. First, they should try to protect and enhance the company's good message themes, then address negative message themes head-on. For mixed message themes, managers should seek to understand both sides of the story.

Recent evidence shows that some discounts and sales can be detrimental.

To measure brand health -- and, contrary to conventional wisdom, the authors contend, it can be measured -- is to obtain a 360-degree view of a brand in its marketplace, a wide-angle view of consumers and competitors. What is required, they say, is isolating underlying elements that matter, measuring them and linking them to business performance. Based upon quantitative survey data collected in 2007 from consumers in large sectors of the U.S. economy -- food and grocery, wireless services and banking -- drawn from major geographic markets nationwide, the authors offer a statistically reliable set of brand-health elements for companies to measure and to use as leading indicators of sales risk and potential: brand leadership, attractiveness, distinctiveness, satisfaction and liabilities. They then map those elements to four revenue-related expressions of customer commitment: current customer spending, risk of sales loss, revenue momentum and likelihood of referrals. The resulting framework allows marketers and investors to "connect the dots" between key elements of brand health and business performance and to reconcile previously separate notions: brand and operations, the short term and the long term, investment and return. In the research, the number of companies consumers named as having strong brands was surprisingly small. Fifteen companies accounted for fully 50% of the mentions and only three companies -- Apple, Coca-Cola and Microsoft -- accounted for 25% of mentions. The authors conclude with a set of best practices that are implied by the brand-health framework and also characterize companies that are perceived as having the strongest brands.

Consumer dissatisfaction can be far more potent than satisfaction.

Consumer preference is determined by how their options are presented.

Dynamic pricing, in which prices respond to supply and demand pressures in real time or near-real time, has long been used by airlines and hotels. Now dynamic pricing is making inroads in many different sectors including apparel, automobiles, consumer electronics, personal services, telecommunications and second- hand goods. These companies are making use of new findings on dynamic pricing and of increases in data-processing power to raise their average realized prices, thereby increasing revenues and profits. There are two mechanisms for dynamic pricing: posted prices that customers can see; and price-discovery mechanisms, in which customers determine prices through their own actions. These two mechanisms are employed in seven different forms: yield management (commonly used by airlines), demandbased pricing, three types of auctions, group buying and negotiations. The article describes eight situations for using the various forms of dynamic pricing. An important constraint in employing dynamic pricing is consumers' Latitude of Price Acceptance, which varies for different products and situations and which can be discovered through observation, surveys or analysis of demand elasticities. Customer participation in the pricing process decreases the chances of a consumer backlash. Customers also tend to embrace dynamic pricing in the following situations: where the price reflects intensity of demand for the product, there is communication between the seller and the consumer, and the price difference is explained by a difference in perceived value across channels through which the transaction occurred. The more the seller understands the buying cycles and habits of the customer, the more he is able to manage price margins to the rhythm of the customer's shopping, to segment customers and to develop price discrimination.

Managing returns, structuring the physical distribution network and deploying product inventories are all key.

Most companies segment their markets by customer demographics or product characteristics and differentiate their offerings by adding features and functions. But the consumer has a different view of the marketplace. He simply has a job to be done and is seeking to & #x201C;hire” the best product or service to do it. Marketers must adopt that perspective.

Faster time to market and shorter product life cycles are pushing companies to introduce new products more frequently. While new products can offer tremendous value, product introductions and transitions pose enormous challenges to managers. In studying product introductions, the authors found that a common handicap was the lack of a formal process to guide managerial decisions. Drawing from research at Intel and examples from General Motors and Cisco Systems, the article develops a process to facilitate decision making during new product transitions. The proposed process analyzes the risks impacting a transition, identifies a set of factors across departments tracking those risks, monitors the evolution of these factors over time, and develops playbook mapping scenarios of risks and responses. The process helps level expectations across the organization, lessens the chance and impact of unanticipated outcomes, and helps synchronize responses among different departments. It assists managers in designing and implementing appropriate policies to ramp up sales for new products and ramp down sales for existing products, balancing the supply and the demand for both so that combined sales can grow smoothly.