Managing buzz

We model the incentives of individuals to engage in word of mouth (or buzz) about a product, and how a firm may strategically influence this process through its information release and advertising strategies. Individuals receive utility by improving how others perceive them. A firm restricts access to information, advertising may crowd out word of mouth, and a credible commitment not to engage in advertising is valuable for a firm.     

Six dangerous myths about pay

Every day, executives make decisions about pay, and they do so in a landscape that's shifting. As more and more companies base less of their compensation on straight salary and look to other financial options, managers are bombarded with advice about the best approaches to take. Unfortunately, much of that advice is wrong. Indeed, much of the conventional wisdom and public discussion about pay today is misleading, incorrect, or both. The result is that business people are adopting wrongheaded notions about how to pay people and why. In particular, they are subscribing to six dangerous myths about pay. Myth #1: labor rates are the same as labor costs. Myth #2: cutting labor rates will lower labor costs. Myth #3: labor costs represent a large portion of a company's total costs. Myth #4: keeping labor costs low creates a potent and sustainable competitive edge. Myth #5: individual incentive pay improves performance. Myth #6: people work primarily for the money. The author explains why these myths are so pervasive, shows where they go wrong, and suggests how leaders might think more productively about compensation. With increasing frequency, the author says, he sees managers harming their organizations by buying into--and acting on--these myths. Those that do, he warns, are probably doomed to endless tinkering with pay that at the end of the day will accomplish little but cost a lot.     

Marketing is everything

Technology is creating customer choice, and choice is altering the marketplace. Gone are the days of the marketer as salesperson. Gone as well is marketing that tries to trick the customer into buying whatever the company makes. There is a new paradigm for marketing, a model that depends on the marketer's knowledge, experience, and ability to integrate the customer and the company. Six principles are at the heart of the new marketing. The first, "Marketing is everything and everything is marketing," suggests that marketing is like quality. It is not a function but an all-pervasive way of doing business. The second, "The goal of marketing is to own the market, not just to sell the product," is a remedy for companies that adopt a limiting "market-share mentality." When you own a market, you lead the market. The third principle says that "marketing evolves as technology evolves." Programmable technology means that companies can promise customers "any thing, any way, any time." Now marketing is evolving to deliver on that promise. The fourth principle, "Marketing moves from monologue to dialogue," argues that advertising is obsolete. Talking at customers is no longer useful. The new marketing requires a feedback loop--a dialogue between company and customer. The fifth principle says that "marketing a product is marketing a service is marketing a product." The line between the categories is fast eroding: the best manufacturing companies provide great service, the best service companies think of themselves as offering high-quality products. The sixth principle, "Technology markets technology," points out the inevitable marriage of marketing and technology and predicts the emergence of marketing workstations, a marketing counterpart to engineers' CAD/CAM systems.     

Smart customers, dumb companies

Customers today are being bombarded with an overwhelming array of choices. To alleviate customer frustration, say Steven Cristol and Peter Sealey in Simplicity Marketing, companies should stop creating new brands and product extensions. Better to consolidate product and service functions by following a four R approach: replace, repackage, reposition, and replenish. That's an outmoded, dictatorial view of markets, says Christopher Locke. Far from being stymied by choices, customers are rapidly becoming smarter than the companies that pretend to serve them. In this networked economy, people are talking among themselves, and that changes everything. Locke predicts we'll see a growing number of well-defined micromarkets--groups of customers converging in real time around entertaining and knowledgeable voices--such as NPR's car guys and the Motley Fool investment site. "Micromedia" Web sites will replace traditional advertising because they'll provide credible user-supplied news about products and services. Locke contends that an open exchange of information solves the "problem" of choice much better than manipulative strategies like simplicity or even permission marketing. Companies can participate in micromarkets through what Locke dubs "gonzo marketing." If Ford, for example, discovers that a subset of its employees are organic gardeners, it may offer support to a big independent organic-gardening Web site with donations and employee volunteers. This marketing effort would be driven not by advertising managers but by people with genuine interest in each micromarket, so it would have credibility with customers. With gonzo marketing, both companies and their markets will benefit.     

If brands are built over years, why are they managed over quarters?

Brands are on the wane. Many consumer-goods companies blame the big-box discount retailers, but the Wharton School's Leonard Lodish and the Fuqua School's Carl Mela have a different explanation. Their research suggests that companies have damaged their brands by investing too much in short-term price promotions and too little in long-term brand building. To rescue their brands and increase profitability, corporate managers must arm themselves with long-term measures of brand performance and use them to make smarter marketing decisions. Several factors explain the short-sightedness of brand management: the increased availability of weekly, or even hourly, scanner data, which show a clear link between discounts and immediate boosts in sales; the relative difficulty of measuring the effects of advertising, new-product development, and distribution--all of which can contribute to a brand's long-term health; the short tenure of most brand managers; and the near-term orientation of Wall Street analysts. Although discounts do increase sales in the short-term, they ultimately lower profit margins. If a product is often discounted, consumers learn to buy it only when it's on sale. Moreover, when one firm increases its discounts, others usually follow suit, lowering everyone's margins. Executives can monitor a brand's long-term performance by watching a dashboard of measures. Only after examining such measures, for example, did managers at Clorox discover that the company's heavy discounting and decreased advertising had caused a steady decline in overall bleach sales and profit margins. In response, Clorox reduced discounting and increased television advertising, moves that ultimately strengthened the brand and reversed the firm's downward trends.     

Strategy and the Internet

Many of the pioneers of Internet business, both dot-coms and established companies, have competed in ways that violate nearly every precept of good strategy. Rather than focus on profits, they have chased customers indiscriminately through discounting, channel incentives, and advertising. Rather than concentrate on delivering value that earns an attractive price from customers, they have pursued indirect revenues such as advertising and click-through fees. Rather than make trade-offs, they have rushed to offer every conceivable product or service. It did not have to be this way--and it does not have to be in the future. When it comes to reinforcing a distinctive strategy, Michael Porter argues, the Internet provides a better technological platform than previous generations of IT. Gaining competitive advantage does not require a radically new approach to business; it requires building on the proven principles of effective strategy. Porter argues that, contrary to recent thought, the Internet is not disruptive to most existing industries and established companies. It rarely nullifies important sources of competitive advantage in an industry; it often makes them even more valuable. And as all companies embrace Internet technology, the Internet itself will be neutralized as a source of advantage. Robust competitive advantages will arise instead from traditional strengths such as unique products, proprietary content, and distinctive physical activities. Internet technology may be able to fortify those advantages, but it is unlikely to supplant them. Porter debunks such Internet myths as first-mover advantage, the power of virtual companies, and the multiplying rewards of network effects. He disentangles the distorted signals from the marketplace, explains why the Internet complements rather than cannibalizes existing ways of doing business, and outlines strategic imperatives for dot-coms and traditional companies.     

绿色产品与广告诉求匹配效应的理论分析与实证检验

绿色产品与广告诉求之间的匹配关系成为当前绿色营销课题中的核心问题。理论分析得出,对于自利型绿色产品,理性诉求对消费者的广告态度和购买意愿的影响更为积极,而对于利他型绿色产品,情感诉求表现的更为积极。实验结果充分证明了两个理论假设。     

ESG Integration in Investment Management: Myths and Realities

The number of public companies reporting ESG information grew from fewer than 20 in the early 1990s to 8,500 by 2014. Moreover, by the end of 2014, over 1,400 institutional investors that manage some $60 trillion in assets had signed the UN Principles for Responsible Investment (UNPRI). Nevertheless, companies with high ESG “scores” have continued to be viewed by mainstream investors as unlikely to produce competitive shareholder returns, in part because of the findings of older studies showing low returns from the social responsibility investing of the 1990s. But studies of more recent periods suggest that companies with significant ESG programs have actually outperformed their competitors in a number of important ways. The authors’ aim in this article is to set the record straight on the financial performance of sustainable investing while also correcting a number of other widespread misconceptions about this rapidly growing set of principles and methods: Myth Number 1: ESG programs reduce returns on capital and long‐run shareholder value. Reality: Companies committed to ESG are finding competitive advantages in product, labor, and capital markets; and portfolios that have integrated “material” ESG metrics have provided average returns to their investors that are superior to those of conventional portfolios, while exhibiting lower risk. Myth Number 2: ESG is already well integrated into mainstream investment management. Reality: The UNPRI signatories have committed themselves only to adhering to a set of principles for responsible investment, a standard that falls well short of integrating ESG considerations into their investment decisions. Myth Number 3: Companies cannot influence the kind of shareholders who buy their shares, and corporate managers must often sacrifice sustainability goals to meet the quarterly earnings targets of increasingly short‐term‐oriented investors. Reality: Companies that pursue major sustainability initiatives, and publicize them in integrated reports and other communications with investors, have also generally succeeded in attracting disproportionate numbers of longer‐term shareholders. Myth Number 4: ESG data for fundamental analysis is scarce and unreliable. Reality: Thanks to the efforts of reporting and investor organizations such as SASB and Ceres, and of CDP data providers like Bloomberg and MSCI, much more “value‐relevant” ESG data on companies has become available in the past ten years. Myth Number 5: ESG adds value almost entirely by limiting risks. Reality: Along with lower risk and a lower cost of capital, companies with high ESG scores have also experienced increases in operating efficiency and expansions into new markets. Myth Number 6: Consideration of ESG factors might create a conflict with fiduciary duty for some investors. Reality: Many ESG factors have been shown to have positive correlations with corporate financial performance and value, prompting ERISA in 2015 to reverse its earlier instructions to pension funds about the legitimacy of taking account of “non‐financial” considerations when investing in companies.     

社交网络营销在中国(英文)

随着网络越来越深入中国人的日常生活中,社交网络的崛起,正改变着公司的营销策略与方式。进入Web2.0时代,传统的网络营销手段,诸如搜索引擎竞价排名,门户网站广告等方式所起到的营销效果已经大不如前。随着Facebook、twitter等国外的社交网络媒体在网络营销上的优势日益体现,以及社交网络媒体在中国的蓬勃发展,越来越多的中国企业,看到了SNS营销的潜力,意识到了利用了SNS网站进行营销的重要性。SNS在中国起步较晚,近几年却发展迅速,对于中国企业,如何利用SNS达到期望营销效果,已经成为重要的话题。本文希望,通过参考国内外成功的SNS营销案例,借助菲利普·科特勒的市场营销模型,为中国企业的SNS营销方式提供参考。     

EVA AND THE "NEW ECONOMY"

Some have observed that the new economy means the end of the EVA performance measurement and incentive compensation system. They claim that although the EVA system is useful for oldline companies with heavy investments in fixed assets, the efficient management of investor capital is no longer an imperative for newage firms that operate largely without buildings and machinery–and, in some cases, with negative working capital. This article argues that EVA is not only suitable for the emerging companies that lead the new economy, but even more important for such firms than for their “rust belt” predecessors. While there may be a new economy in terms of trade in new products and services, there is no new economics– the principles of economic valuation remain the same. As in the past, companies will create value in the future only insofar as they promise to produce returns on investor capital that exceed the cost of capital. It has made for sensational journalism to speak of companies with high valuations and no earnings, but this is in large part the result of an accounting framework that is systematically flawed. New economy companies spend much of their capital on R&D, marketing, and advertising. By treating these outlays as expenses against current profits, GAAP accounting presents a grossly distorted picture of both current and future profitability. By contrast, an EVA system capitalizes such investments and amortizes them over their expected useful life. For new economy companies, the effect of such adjustments on profitability can be significant. For example, in applying EVA accounting to Real Networks, Inc., the author shows that although the company reported increasing losses in recent years, its EVA has been steadily rising–a pattern of profitability that corresponds much more directly to the change in the company's market value over the same period. Thus, for stock analysts that follow new economy companies, the use of EVA will get you closer to current market values than GAAP accounting. And for companies intent on ensuring the right level of investment in intangibles– neither too much nor too little– EVA is likely to send the right message to managers and employees. The recent decline in the Nasdaq suggests that stock market investors are starting to look for the kind of capital efficiency encouraged by an EVA system.     

Are the strategic stars aligned for your corporate brand?

In recent years, companies have increasingly seen the benefits of creating a corporate brand. Rather than spend marketing dollars on branding individual products, giants like Disney and Microsoft promote a single umbrella image that casts one glow over all their products. A company must align three interdependent elements--call them strategic stars--to create a strong corporate brand: vision, culture, and image. Aligning the stars takes concentrated managerial skill and will, the authors say, because each element is driven by a different constituency: management, employees, or stakeholders. To effectively build a corporate brand, executives must identify where their strategic stars fall out of line. The authors offer a series of diagnostic questions designed to reveal misalignments in corporate vision, culture, and image. The first set of questions looks for gaps between vision and culture; for example, when management establishes a vision that is too ambitious for the organization to implement. The second set addresses culture and image, uncovering possible gaps between the attitudes of employees and the perceptions of the outside world. The last set of questions explores the vision-image gap--is management taking the company in a direction that its stake-holders support? The authors discuss the benefits of a corporate brand, such as reducing marketing costs and building a sense of community among customers. But they also point to cases in which a corporate brand doesn't make sense--for instance, if you are a product incubator, if you've recently experienced M&A activity, or if you are expecting fallout from risky ventures.     

Preventing the premature death of relationship marketing

Relationship marketing is in vogue. And why not? The new, increasingly efficient ways that companies have of understanding and responding to customers' needs and preferences seemingly allow them to build more meaningful connections with consumers than ever before. These connections promise to benefit the bottom line by reducing costs and increasing revenue. Unfortunately, a close look suggests that the relationships between companies and customers are troubled ones, at best. Companies may delight in learning more about their customers and in being able to provide features and services to please every possible palate. But customers delight in neither. In fact, customer satisfaction rates in the United States are at an all-time low, while complaints, boycotts, and other expressions of consumer discontent are on the rise. This mounting wave of unhappiness has yet to reach the bottom line. Sooner or later, however, corporate performance will suffer unless relationship marketing becomes what it is supposed to be--the epitome of customer orientation. Ironically, the very things that marketers are doing to build relationships with customers are often the things that are destroying those relationships. Relationship marketing is powerful in theory but troubled in practice. To prevent its premature death, marketers need to take the time to figure out how and why they are undermining their own best efforts, as well as how they can get things back on track.     

How global brands compete

It's time to rethink global branding. More than two decades ago, Harvard Business School professor Theodore Levitt argued that corporations should grow by selling standardized products all over the world. But consumers in most countries had trouble relating to generic products, so executives instead strove for global scale on backstage activities such as production while customizing product features and selling techniques to local tastes. Such "glocal" strategies now rule marketing. Global branding has lost more luster recently because transnational companies have been under siege, with brands like Coca-Cola and Nike becoming lightning rods for antiglobalization protests. The instinctive reaction of most transnational companies has been to try to fly below the radar. But global brands can't escape notice. In fact, most transnational corporations don't realize that because of their power and pervasiveness, people view them differently than they do other firms. In a research project involving 3,300 consumers in 41 countries, the authors found that most people choose one global brand over another because of differences in the brands'global qualities. Ratherthan ignore the global characteristics of their brands, firms must learn to manage those characteristics. That's critical, because future growth for most companies will likely come from foreign markets. Consumers base preferences on three dimensions of global brands--quality (signaled by a company's global stature); the cultural myths that brands author; and firms' efforts to address social problems. The authors also found that it didn't matter to consumers whether the brands they bought were American--a remarkable finding considering that the study was conducted when anti-American sentiment in many nations was on the rise.     

国有股减持与资本市场的均衡发展

均衡发展是资本市场运行的最佳状态，然而我国上市公司的国有股份比重过大且不能流通却严重影响了资本市场的均衡发展。国有股减持是一个复杂的系统工程，关系到国家、公司和投资者的利益，影响到资本市场资金、股票的供求平衡，影响到股价的波动，最张影响到资本市场的均衡发展。国外在国有股减持过程中，很重视资本市场上各市场关系的均衡。我们有必要在国有股减持的程序高度、减持步骤及价格的确定等方面体现市场均衡的精神。     

What becomes an icon most?

Some brands become icons. Think of Nike, Apple, Harley-Davidson: They're the brands every marketer regards with awe. But they are not built according to the principles of conventional marketing, says Harvard Business School marketing professor Douglas Holt. Iconic brands beat the competition not just by delivering innovative benefits, services, or technologies but by forging a deep connection with the culture. A brand becomes an icon when it offers a compelling myth, a story that can help people resolve tensions in their lives. The deepest source of tension in modern society is the disparity between national ideology and the average citizen's reality. When ideologies shift, myths become even more important, and in America, the most potent myths are depictions of rebels. Mountain Dew has long offered a rebel myth in ads showing exciting, vital men who are far from the ideological model of success. Loyal customers drink the beverage to consume the myth. But Mountain Dew's greatest achievement is that it has retained its iconic power by creating fresh rebel myths to suit the tensions of each era: first the hillbilly, who stood in stark contrast to the organization man of the 1950s and 1960s; then the redneck, who rebelled against the investment bankers and consultants of the 1970s and 1980s; and most recently the slacker, who rejects the values and behaviors that, for the past decade, have marked the successful executive. Holt says marketers can learn from Mountain Dew and other iconic brands if they are willing to move beyond conventional brand management and acquire knowledge and skills they may not have. They must learn to target national contradictions instead of just consumer segments, create myths that make sense of confusing societal changes, and speak with a rebel's voice.     

The sales force as an information transfer mechanism for new service development in the Thai insurance industry

New service development (NSD) is becoming increasingly important as the insurance industry in many countries opens up and becomes more competitive. This paper examines how customer views are integrated into the NSD process in the Thai insurance industry. The qualitative research was conducted using in-depth interviews with top officers, sales managers, senior vice-presidents of marketing and actuary managers in a number of leading life insurance and non-life insurance companies. The interviews investigated how NSD works in the Thai industry, focusing on how customer views enter the process. The results showed that the NSD process in Thailand is not oriented towards developing truly innovative products, but there is much NSD for adaptation of products from other markets. Sales agents act as a main information transfer mechanism, bringing in customer views through the sales managers, who play a role in NSD. Lack of cross-functional teamwork can cause failure in developing new products and services.     

Predicting the unpredictable

The collective behavior of people in crowds, markets, and organizations has long been a mystery. Why, for instance, do employee bonuses sometimes lead to decreases in productivity? Why do some products generate tremendous buzz, seemingly out of nowhere, while others languish despite multimillion-dollar marketing campaigns? How could a simple clerical error snowball into a catastrophic loss that bankrupts a financial institution? Traditional approaches like spreadsheet and regression analyses have failed to explain such "emergent phenomena," says Eric Bonabeau, because they work from the top down, trying to apply global equations and frameworks to a particular situation. But the behavior of emergent phenomena, contends Bonabeau, is formed from the bottom up--starting with the local interactions of individuals who alter their actions in response to other participants. Together, the myriad interactions result in a group behavior that can easily elude any top-down analysis. But now, thanks to "agent-based modeling," some companies are finding ways to analyze--and even predict--emergent phenomena. Macy's, for instance, has used the technology to investigate better ways to design its department stores. Hewlett-Packard has run agent-based simulations to anticipate how changes in its hiring strategy would affect its corporate culture. And Société Générale has used the technology to determine the operational risk of its asset management group. This article discusses emergent phenomena in detail and explains why they have become more prevalent in recent years. In addition to providing real-world examples of companies that have improved their business practices through agent-based modeling, Bonabeau also examines the future of this technology and points to several fields that may be revolutionized by its use.     

Targeting in advertising markets: implications for offline versus online media

We develop a model with many advertisers (products) and many advertising markets (media). Each advertiser sells to a different segment of consumers, and each medium is targeting a different audience. We characterize the competitive equilibrium in the advertising markets and evaluate the implications of targeting. An increase in targeting leads to an increase in the total number of consumer‐product matches, and hence in the social value of advertising. Yet, targeting also increases the concentration of firms advertising in each market. Surprisingly, we then find that the equilibrium price of advertisements is first increasing, then decreasing, in the targeting capacity. We trace out the implications of targeting for competing media. We distinguish offline and online media by their targeting ability: low versus high. As consumers’ relative exposure to online media increases, the revenues of offline media decrease, even though the price of advertising might increase.     

The Effects of Advertising on Mutual Fund Flows: Results from a New Database

We examine 471,000 mutual fund company advertisements from 1997 to 2003 to study advertising's effect on fund inflows. We find advertising is generally ineffective in attracting inflows but was more effective during the bear market despite smaller advertising expenditures during this time. The top 10 advertisers in our sample were most successful in capturing inflows. These companies generated inflows with mutual fund ads; other companies succeeded when advertising their other products and their brand image. Within a fund family, advertising affects the flagship fund differently than the other funds. Sample firms appeared unable to choose correctly between print and TV ads.     

Get inside the lives of your customers

Many companies have become adept at the art of customer relationship management. They've collected mountains of data on preferences and behavior, divided buyers into ever-finer segments, and refined their products, services, and marketing pitches. But all too often those efforts are too narrow--they concentrate only on the points where the customer comes into contact with the company. Few businesses have bothered to look at what the author calls the customer scenario--the broad context in which customers select, buy, and use products and services. As a result, consultant Patricia Seybold maintains, they've routinely missed chances to deepen loyalty and expand sales. In this article, the author shows how effective three very different companies have been at using customer scenarios as the centerpiece of their marketing plans. Chip maker National Semiconductor looked beyond the purchasing agents that buy in bulk to find ways to make it easier for engineers to design National's components into their specifications for mobile telephones. Each time they do so, it translates into millions of dollars in orders. By developing a customer scenario that describes how people actually shop for groceries, Tesco learned the importance of decentralizing its Web shopping site and how the extra costs of decentralization could be outweighed by the higher profit margins on-line customers generate. And Buzzsaw.com used customer scenarios as the basis for its entire business. It has used the Web to create a better way for the dozens of participants in a construction project to share their drawings and manage their projects. Seybold lays out the steps managers can take to develop their own customer scenarios. By thinking broadly about the challenges your customers face, she suggests, you can almost always find ways to make their lives easier--and thus earn their loyalty.