Adding value through marketing

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Adding value through marketing

  1. 1. Adding Value through Marketing 7BSP0419 (Semester B 2010-11)❶Cova (1996) argues that thepostmodern individual in thelight of shifting markets andadvances in technology ‘is bothisolated and in virtual contactwith the whole worldelectronically. Postmoderndaily life is characterised byego concentration encouragedby the spread of computers’. With reference to examples discuss theopportunities for organisations to develop new products for thischanging world. ❷‘Sustainability is a tendentious catch-all term with a certain political flavour and its own contradictions’ – Hutchinson and Young (2005). Evaluate the extent to which a sustainable and green approach to marketing can add positively to the bottom line in an age of consumer confusion and possible indifference. ❸References Deniz Kurugollu 10283502 MSc Marketing 9th May 2011
  2. 2. ❶‘Postmodern individual in the light of shifting markets and advances in technologyis both isolated and in virtual contact with the whole world electronically’ (Cova,1996). In this respect, postmodern consumer daily life has been shown to changedramatically. This brings with new opportunities for new product and servicedevelopment so as to meet those postmodern consumers’ demands. This essay willaddress to the postmodern consumer life and the respective product or servicedevelopments. It follows the structure shown in Table 1. Table 1: The post modern consumerPost modern consumer life New product and service developmentsHyper-reality Planet CalypsoIndividualism 3D printing, Mini Cooper, NikeCustomization RSS (Really Simple Syndication)Right here, right now Virtual bankingProsumer Twitter, Facebook, Foursquare → Google AnalyticOne of the emerging concepts that postmodernism has brought to our glossary is‘hyper-reality’. Hyper-reality is characterized by image, illusion, and simulationwhere we know something to be false but feel it to be true (Cova, 1996). In thiscontext, Elliott and Percy (2007) point out that rationality is not strong enough tostop us enjoying ourselves. As a result, postmodern consumers favour simulation toreality, and prefer to experience their consumption activities in a virtual way (Cova,1996). In this respect, hyper-reality receives significant support from the internet andcomputer technologies as providing consumers with virtual experiences. Thisconsequently leads to new product developments. For example, ‘Planet Calypso’owned by the company MindArk is an entertainment and business platform whichenables players and organizations to build, design and trade their own virtual planetsonline. To a devoted ‘postmodern’ consumer it seems that hyper-reality is suchserious that he bought a virtual property for $6 million (Trendhunter, 2011a).
  3. 3. Post-modernity has brought about ‘individuals’ who make use of the market offeringsin a way that they create their own consumption patterns. They want to be involved inthe process as a producer of experiences, not as a target of final goods and services(Cova, 1996). In this regard, many brands now offer customers to personalize theirconsumption objects in line with their own tastes and preferences. For example, TheMini Cooper allows consumers to customize their cars on website before it goes topersonalized production process (Mini, 2011). Likewise, Nike and many others allowcustomers to design their own shoes (Nike, 2011). The most significant developmentin this area can be seen in recently emerging technology ‘3D printing’. Thistechnology can be regarded as the latest manifestation of customization (BBC, 2011).It does not only provide large variety of usage area such as health, fashion, and evenfood but also, enables to produce them at lower cost (Trendhunter, 2011b). It seemsthat 3D printer will become a casual item in the postmodern consumer’s house in thenear future.Rapp and Collins (1990) defines marketing in the era of customization as ‘anextremely personal form of marketing that recognize, acknowledges, appreciates, andserves the interests and needs of consumers whose personal identities and marketingprofiles become known to the marketers’. In this sense, RSS (Really SimpleSyndication), a free internet service which sends to subscribers electronically whatthey want to read, watch, and listen can be taken as a good example of new servicedevelopment for postmodern consumers. On the other hand, some businesses alsouse this new service to organize their business operations at lower cost. For example,Union Bank of California’s use targeted RSS feeds based on job description andlocation to send memos instead of using broadcast emails, which in turn acceleratesthe operations and saves time. Consequently the bank is expected to save $750.000(Beizer, 2007).Firat and Shultz (1997) indicate that the postmodern consumer has a ‘right here, rightnow’ attitude. In other words, consumers of today are seeking immediate gratificationin return for their consumption. Hence, this requires instant, ubiquitous marketing inorder to meet the expectations of those postmodern consumers. In this respect,‘virtual corporation’ and ‘virtual marketing’ has been shown to take place inpostmodern daily life (Aijo, 1996). For example, virtual banking has emerged as a
  4. 4. new service development practised by several banks such as ING, HSBC, Citibank,and so on (CR, 2009). By using web ready devices such as smart phones, customersof these banks can carry out all financial transactions anytime, anywhere.Finally, the internet and web-integrated devices such as smart phones provideconsumers with opportunities to be virtually in touch with the whole world (Cova andPace, 2006). This significant development in web technologies has morphedconsumers into ‘prosumers’ (Gerhardt, 2008). Prosumer stands for the combinationof ‘producer and consumer’. Prosumers are keen adopters of web technologies to stayconnected to outside world whenever and wherever they want. The term ‘self-exposure’ can be used to explain this group. They are inclined to share everythingfrom their current location and time (e.g. Foursquare), likes and dislikes (e.g. Twitter,Facebook) to even their private lives (e.g. blogs). In this context, there is an enormousopportunity for marketers to understand their customers’ insights since prosumersexpose considerable amount of information about themselves. As a matter of fact,new product and service developments such as Google Analytics appear in the marketto capture prosumer insight and allow marketers to customize their offerings to suitindividual needs and wants in real time (Derrick, 2006; Google, 2011).
  5. 5. ❷Sustainability has been shown to become an important topic in the companies’board room recently. It has also started to take place on the management hierarchy asa separate discipline, now companies have a ‘Chief Sustainability Officer’. Thereseems to be a lack of understanding about the terminology. In general, sustainabilityis referred to environmental issues only or it is used to mention about philanthropicefforts. However, Werbach (2009) propose four equal dimensions for truesustainability; Social, Economic, Environmental, and Cultural (see Figure 1). It cantherefore be suggested that sustainability is a holistic approach for organizations toconsider in a wider context. Figure 1: True sustainability Adapted from: Werbach, 2009It is evident that playing ‘the sustainable’ creates positive buzz and PR for the sake ofcompanies by empowering the brand image in the mind of consumers. Sustainableefforts also help businesses to save their operating costs, to attract new customers,and even to build new brands. Consequently, it adds to the bottom line. Pinault (inBourne, 2011) states that ‘sustainability is as much to do with the bottom line as itdoes with the environment’. For example, P&G declared its 2012 goals to generate$20 billion in sales from green brands (Sherwin, 2008). On the other hand, talkingabout sustainability without really making some good practices and tangible effortsare deemed to blame for ‘greenwashing’ (Davis, 2009). According to the research(Havas Media, 2010), confusion, lack of clarity and perceived higher prices preventresponsible purchasing.
  6. 6. In the light of foregoing, this essay will address to the given benefits of sustainableefforts and the unlikely events of being classified under ‘greenwashing’ by using theexamples from real organizations. It follows the structure illustrated in figure 2. Benefits Challenges portfolio cost saving contradictions reputation & the nature of credibility business branding disparity opportunities Figure 2: Benefits & ChallengesCost savingIt can be suggested that sustainable efforts ought to be considered as investment tocut operational costs in the longer term rather than expenditure. For example, Macy’sannounced to install energy saving LED light bulbs in its stores in America. Althoughthis new energy savvy attempt will require initial outlay for the company, it isplanned to cut energy consumption (i.e. cost) by 73 per cent in the longer term(Bourne, 2011). Similarly, Levi’s has introduced Water-Less jeans, which require anaverage of 28% and as much as 96% less water to produce. The company is expectedto cut cost equivalent to 16 million litres of water in only three month period (Bourne,2011).
  7. 7. Reputation & CredibilitySilverstein (2010) states that corporate sustainability does not directly affect brandpurchase decision, but the ‘meaningfulness’ of the brand in the mind of consumers.Davis (2009) claims that consumers concern what companies are doing to contributeglobal issues and expect them to show their environmental and social commitmentsto those problems. Research (Jobber, 2010) reveals that consumers are ready to payprice premium and also more forgiving of businesses if they believe that the companyis socially and environmentally responsible. In this respect, it can be suggested thatcommitment to sustainability can be used as a signal for reputation management andbrand credibility, which in turn is followed by positive word-of-mouth and attractingnew customers; consequently, it positively effects to the bottom-line.BrandingSustainability programmes have recently been shown to become sub-brands of themain company or a brand on its own. For example, Plan A by M&S, Virgin Unite byVirgin, and Ecomagination by GE can be classified under the sustainabilityprogramme as brands (Sherwin, 2008). This implies that there is an opportunity forcompanies to differentiate their brands in terms of sustainability. However, it shouldbe noted that integrity is the key for those sustainable activities to be meaningful inthe eye of consumers (Havas Media, 2010).Portfolio contradictionThe key challenge for marketing managers is to integrate sustainability with overallbusiness strategy and consumer insights (Davis, 2009). In this respect, portfolioinconsistency may put sustainable efforts under criticism. An example of this can betaken from Virgin Group. Despite of investing great amounts in sustainable issuessuch as biofuels and carbon reducing technologies, the company also has VirginGalactic (taking consumers on trips to space) in its portfolio (Sherwin, 2008). Thelatter seems paradoxical to the former efforts on the basis of wasting resources.
  8. 8. The nature of businessSometimes the business itself may become a challenge in acting sustainably, inparticular socially responsible. For example, tobacco companies can be classifiedunder this circumstance. Considering the social dimension of Werbach (see figure 1),public health can be regarded as a conflicting issue for those companies. For instance,although Philip Morris (2011), under its charitable giving program, focuses on areassuch as hunger, poverty, rural living conditions, education, and so on; the dominanthealth-related facts of cigarette may prevent consumers from matching the companywith socially responsible activities.Disparity between ‘said’ and ‘done’There is a delicate balance between being sustainable and greenwashing. Even atrivial disparity between what companies claim and what they actually implementmay attach a negative label to the brand name. As previously mentioned, sustainableefforts have significant power to create buzz and PR. However, this may worknegatively as well. For example, clothing brands like Primark and Nike still carry thenegative image resulted from their operations in supply chain (Harrison and Scorse,2010). Again, it should be noted that integrity is vital in terms of sustainable efforts toadd true value at the end of the day.
  9. 9. ❸ReferencesAijo, S. T. (1996) ‘The theoretical and philosophical underpinnings of relationship marketing:environmental factors behind the changing marketing paradigm’. European Journal ofMarketing. 30 (2) pp. 8-18.BBC (2011) ‘3D printing offers ability to print physical objects’. Available at:http://www.bbc.co.uk/news/technology-11834044 [Accessed 9th May 2011]Beizer, D. (2007) ‘E-mail is dead’. Available at:http://www.fastcompany.com/magazine/117/next-tech-email-is-dead.html [Accessed 9thMay 2011]Bourne, L. (2011) ‘Fashion companies go green, cut costs’. Available at:http://www.nbcnewyork.com/blogs/threadny/THREAD--120714254.html [Accessed 9thMay 2011]Cova, B. (1996) ‘The postmodern explained to managers: implication for marketing’.Business Horizons, pp. 15-23.Cova, B. and Pace, S. (2006) ‘Brand community of convenience products: new forms ofcustomer empowerment – the case ‘My Nutella the Community’. European Journal ofMarketing. 40 (9) pp. 1087-105.CR (2009) ‘Best online banking options’. Available at:http://www.consumerreports.org/cro/money/credit-loan/online-banking/overview/index.htm [Accessed 9th May 2011]Davis, M. (2009) ‘A new sustainable language for business’. Available at:http://www.brandchannel.com/brand_speak.asp?bs_id=227 [Accessed 9th May 2011]Derrick, S. (2006) ‘The revolution masterclass on interpreting web data’. Revolution. March,pp. 78-81.Elliott, R. and Percy, L. (2007) Strategic Brand Management. 1st ed. New York: OxfordUniversity Press.Flrat, A.F. and Shultz, C.J. (1997) ‘From segmentation to fragmentation: markets andmarketing strategy in the postmodern era’. European Journal of Marketing. 31 (4) pp. 183-207.GE (2011) ‘Ecomagination’. Available at: http://www.ecomagination.com/ [Accessed 9thMay 2011]Gerhardt, W. (2008) ‘Prosumers: A new growth opportunity’. Available at:http://www.cisco.com/web/about/ac79/docs/wp/Prosumer_VS2_POV_0404_FINAL.pdf[Accessed 9th May 2011]Google (2011) ‘Google Analytics’. Available at: http://www.google.com/intl/en_uk/analytics/[Accessed 9th May 2011]Harrison, A. and Scorse, J. (2010) ‘Multinationals and anti-sweatshop activism’. TheAmerican Economic Review. 100 (1) pp. 247-273.
  10. 10. Havas Media (2010) ‘Brand Sustainable Futures’. Available at:http://www.havasmedia.com/#/en/MediaAndPressRoom/BrandSustainableFutures[Accessed 9th May 2011]Jobber, D. (2010) Principles and Practice of Marketing. 6th ed. Berkshire: McGraw HillM&S (2011) ‘Plan A’. Available at: http://plana.marksandspencer.com/ [Accessed 9th May2011]Mini (2011) ‘Design your Mini’. Available at: http://www.mini.co.uk/html/ecom/ecom.html[Accessed 9th May 2011]Nike (2011) ‘NikeID’. Available at: http://store.nike.com/gb/en_gb/?l=shop,pwp,c-300/hf-4294967255/f-787/t-Men%27s_NIKEiD&sitesrc=GBLP_IDNS#l=shop,pwp,c-300/hf-4294967255/f-787/t-Mens_NIKEiD [Accessed 9th May 2011]Philip Morris (2011) ‘Our charitable giving programme’. Available at:http://www.pmi.com/eng/about_us/charitable_giving/pages/charitable_giving.aspx[Accessed 9th May 2011]Pinault, H., in Bourne, L. (2011) ‘Fashion companies go green, cut costs’. Available at:http://www.nbcnewyork.com/blogs/threadny/THREAD--120714254.html [Accessed 9thMay 2011]Rapp, S. and Collins, T. (1990) The Great Marketing Turn Around: The Age of TheIndividual and How To Profit From It. New Jersey: Prentice-HallSilverstein, B. (2010) ‘Consumers Rank Ikea, LOreal, Home Depot High in CorporateSustainability’. Available at: http://www.brandchannel.com/home/post/2010/10/22/Brand-Sustainable-Futures-2010.aspx [Accessed 9th May 2011]Sherwin, C. (2008) ‘Brand green: ten features for success’. Forum for the future. Available at:http://www.forumforthefuture.org.uk/ [Accessed 9th May 2011]Trendhunter (2011a) ‘Planet Calypso’. Available at:http://www.trendhunter.com/trends/planet-calypso#!/photos/109836/8 [Accessed 9th May2011]Trendhunter (2011b) ‘3D printing’. Available at: http://www.trendhunter.com/trends/3d-food-printer [Accessed 9th May 2011]Virgin (2011) ‘Virgin Unite’. Available at: http://www.virgin.com/company/virgin-unite[Accessed 9th May 2011]Werbach, A. (2009) Strategy for Sustainability: A Business Manifesto. Massachusetts:Harvard Business Press

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