Social Media in Business-to-Business: A Slow Start but Gaining Momentum

Social media content is overwhelmingly created and distributed by consumers. It is very popular among consumers and business-to-consumer (B2C) organizations but the same is not true for business-to-business (B2B) firms. Social media has been defined by (Kaplan and Haenlein 2010) as “a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of user-generated content.” Why is it that B2B organizations have been slow to use this powerful medium? There have been a number of studies that suggest that industrial marketers do not know how they will benefit from its use and social media does not research B2B customers. Social media has also been slow as an aid to an organization’s selling function. The main barriers to utilizing social media in a B2B organization are that it is not of importance within the industry the organization operates in and has not been used in the past; uncertainty whether or how social media could help their brand; unfamiliarity of staff with social media; the perceived big investment in time required; in some cases competitors don’t use social media; and importantly, a lack of social media knowledge and technical skills by the organization's staff.

This been said, there is some evidence that there is some change in B2B use of social media. Thirty-three percent of B2B buyers reported they researched at least 90 percent of products online before purchasing, up from 22 percent in 2013. Forty-four percent of respondents had researched company products on a smartphone or tablet in 2014 compared with 41 percent in 2013 (Acccenture, 2014). Although an increasing trend, social media use in B2B is much lower than in B2C.

B2B markets are different from B2C markets. Turka and Sasan (2015) noted that organizational buying behavior is much more complex than consumer buying behavior. They identified five key differences between organizational buying and consumer buying: First, negotiations are a key element involved in the organizational buying process. Second, relationships are more important in the B2B environment than in B2C. Third, there are fewer organizational buyers when compared to consumers. Fourth, organizations are more rational when purchasing compared to consumers. Last, the organizational buying centre is typically more knowledgeable with respect to the purchase than a consumer buyer.
 

Customer Ownership? Understanding the True Value of the Relationship

In the rapidly changing landscape of B2B sales, technology, competitive intensity and rising sales support costs oblige greater attention to customer relationships. “Many companies that have an enterprise focus struggle with the concept of “owning the customer” (Weeks 2016). Given that customers are buying in different ways, firms are driven to engage customers differently. According to Cooper (2016), “customer ownership is all about creating, delivering and communicating compelling value”. In nurturing and developing customers through the B2B life cycle, multiple departments and functional units in the firm are entwined in customer relationship management (CRM). The complexity of CRM and dynamism in customers’ relationship expectations require that sales, marketing, service and support work together through the customer buying and fulfillment process. ‘The diffusion of tasks and responsibilities exposes a fundamental CRM gap: who truly owns the customer? A recent AMA Marketing News article referred to customer ownership as “the age-old battle between marketing and sales” (Qaqish 2018). The idea of who ‘owns’ the customer relationship may become ambiguous.  So, what does it mean to own a customer relationship?

Customer ownership is defined as building a level of rapport, commitment, and trust with a customer that increases dependency. The question becomes “does this dependency by the customer reside with the salesperson who they deal with regularly or with the company they purchase from?” Anecdotally consider this situation, the salesperson who you normally deal with leaves to go to another company with similar and substitutable products. Do you continue buying the same product from a different salesperson or do you buy a different product from the same salesperson you have always dealt with?

In B2B channels, most firms entrust front-line responsibilities to salespeople. Thus, the majority of customer interface occurs between salespeople and the customer which enhances the salesperson-customer bond. A convergence of personal and social forces emanates from the salesperson as well as the firm, so who owns the customer relationship, the firm or the salesperson? Gaining clarity on who owns the customer relationship is critical to maximizing customer satisfaction and the firms’ ability to develop and execute a growth strategy with the customer.

References

Cooper, D. (2016, November 22). Customer 'ownership? is about delivering 3 kinds of Value. - The Donald Cooper Corporation. Retrieved from https://www.donaldcooper.com/customer-ownership-delivering-3-kinds-value/
Qaqish, D. (2018, April 17). Who Owns the Customer Journey? AMA Marketing News. Medium. Retrieved from https://medium.com/ama-marketing-news/who-owns-the-customer-journey-53a2f271de25
Weeks, T. (2016, October 11). The Question of Customer Ownership. Retrieved from https://www.linkedin.com/pulse/question-customer-ownership-tom-weeks/

 

Photoshop and Consumer Skepticism

The use of retouched, altered, or “doctored” photos in advertisements has long been an issue in marketing. However, today it seems to be even more pertinent, especially with the advent of high quality, powerful editing programs such as Photoshop. The use of these altered images in advertising has led to an increase in consumer skepticism and in some cases increased governmental regulation. For instance, starting in fall 2017, in France, any commercial image that has been digitally altered to make a model look thinner will have a cigarette-packet style warning on it. The warning will say "photographie retouchée", which translates to "edited photograph" (Eggert, 2017). Anyone breaking the new rule could be fined 37,500 euros or 30% of the cost of creating the ad. Even the United States had attempts to intervene with the proposed Truth in Advertising Bill in 2016 (Saxena, 2016). In the UK, ever since 2011 ads that were deemed “over-Photoshopped” were banned, including ones with celebrities such as Julia Roberts. Some ad campaigns, such as Dove’s Evolution, even underline natural beauty and the negative use of Photoshop, while others  such as Snickers, have taken opportunities to poke fun of the practice.

In this context, aspects such as advertising believability and trust are key issues to attain positive consumer attitudinal and behavioral responses and it’s not surprising that a wide majority of consumers tend to disbelieve advertisements. In acknowledging the importance of avoiding misleading images, some companies use advertising disclaimers to highlight potentially deceptive features of their ads. Some brands recently decided to launch “Photoshop-free campaigns”, which inform consumers that their advertisements do not use digital photo processing software. Research has shown the benefits of retouch-free disclaimers of digital images on attitudinal and purchasing behaviors.

In a research study, we found that ad believability and attitude towards the ad significantly influence consumers’ intentions to purchase the advertised product. Credibility seems to carry a lot of weight in consumers' decisions to try a product, which underlines the importance of an ad's believability and the credibility of its claims in the sales outcome. Therefore, a company can differentiate and affirm its trustworthiness and care for its consumers through its emphasis on truth and transparency in its advertising practices.

References:
Eggert, Nalina (2017). Is she Photoshopped? In France, they now have to tell you. Retrieved from http://www.bbc.com/news/world-europe-41443027
Saxena, Jaya. (2016). New advertising bill wants to put an end to Photoshop — and the way we shop. Retrieved from https://www.dailydot.com/irl/truth-in-advertising/

 

Influencer Marketing, Rewards and Challenges

Influencer marketing is a word-of-mouth marketing technique that rewards connected social media participants who have the credibility and motivation to drive positive word-of-mouth to a broader and noticeable segment of the market. It usually includes consumer-to-consumer campaigns in which the identified influencer receives incentives to post positive messages about a brand so that it permeates throughout their valuable network via electronic word-of-mouth.

Influencer marketing is not without challenges. Brands might find it difficult to identify, recruit, and retain high-value influencers. Incentives are a necessary component of an influencer marketing campaign because only a small fraction of social media influencers will write a review without even the smallest incentive, which may include both money and product samples. Moreover, it is difficult to constantly maintain a high level of motivation and activity from the influencers, even with incentives. For influencers, it is tough to self-identify, join, stay motivated and maintain a long-term commitment to brands, as incentives are constantly needed and real-life consumption is expected to be aligned with influencer communication.

Despite the efforts of businesses to justifiably engage in influencer marketing, the level of integrity and unethical conduct in fake reviews is still a problem. Amazon has filed in 2015 a lawsuit against more than 1,000 unidentified individuals who were allegedly selling fake reviews on Fiverr.com for products sold on Amazon. Businesses have started campaigns to incentivize buyers with a variety of discounts and promotions for posting positive recommendations. However, some companies still have disguised business-generated reviews as consumer recommendations in the anonymity of the Internet.

In a research study, we found that incentivized campaigns lead to more positive reviews, because influencers receive benefits from posting reviews and potential further incentives and campaigns. Consequently, the influencer can contribute to a lasting increase in the number of reviews with a more positive sentiment and with the potential to lead to higher sales. Overall, incentivized campaigns result in increased positive word-of-mouth, increased consumer interest, and higher purchase potential.

To read more about this topic:
Petrescu, Maria, Bay O’Leary, Deborah Goldring and Selima Ben Mrad (2017). Incentivized reviews: Promising the moon for a few stars. Journal of Retailing and Consumer Services, in print.
http://www.sciencedirect.com/science/article/pii/S0969698916306397

 

Using Mobile Devices in the Retail Store

Use of mobile devices has become commonplace for contemporary retail shoppers.  At their fingertips, consumers can easily obtain lots of information to aid their shopping efforts and decisions. This phenomenon has been a challenge for some marketers; for others, a benefit.  For instance, brick-and-mortar retailers have announced store closings (e.g., Macy’s in 2016 and early 2017), dissolution (e.g., Limited’s elimination of its store format in 2016 ), or corporate layoffs (e.g., WalMart in 2017), as their financial metrics are upended through e-commerce. At the same time, e-tailers have parlayed their technological competencies to embrace technologically-savvy buyers. Witness Alibaba’s acute aspirations to become a worldwide e-marketer and Amazon’s tremendous expansion of the breadth and depth of its offerings as well as recent establishment of its own global delivery service.

Retail salespeople have traditionally been providers of information for customers. Indeed, until the advent and enormous growth of the internet and e-commerce, sales personnel tended to be the primary purveyors of information in selling.  As noted above, however, the retailing dynamic has changed markedly. Many retail customers now turn increasingly to marshaling information from alternative sources—particularly from mobile devices. In fact, consumers seem to be replacing traditional retail salesperson functions—such as collecting information, comparing prices, and securing the order—with mobile devices. This situation may well foreshadow a decline in the importance of salespersons in buyer-seller interactions.

Interestingly, a consumer’s mobile device is somewhat similar to retail salesperson input in that it mimics the personal nature of selling. Accordingly, many of today’s consumers tend to consult their smartphone rather than interact with retail sales personnel. Indeed, 73% of shoppers would rather use their phones than deal with the salesperson. 

With increasing consumer preference for mobile devices for both hedonic and utilitarian reasons and avoidance of the retail salesperson, we did a study to explore the consumer’s information search behavior vis-à-vis the salesperson’s selling behavior so as to enhance understanding of how retail salespeople can influence mobile dependent shoppers.

We found that the more searching consumers do on their phones, the more they experience increases in perceived control, which fosters their purchase intention. These findings suggest that retailers should create an environment that facilitates feelings of perceived control because that construct is closely connected to the pathway between search and purchase intention. For example, providing consumers with easy access to free wi-fi in stores is one technique to help create a shopping environment that nurtures mobile phone searching. Retailers might also adopt a selling philosophy that helps consumers in their role as search agents to perceive that they are controlling the interaction with the salesperson (e.g., “Come to our store and be the boss,” “We don’t push you; you are in charge”). Because the mobile phone seems to increase feelings of control, retailers should also assist consumers to stay connected to their phone so that they can continue to search in the store. Furthermore, salespeople should be trained to be search assistants for the customers rather than assume the traditional role of “pushing the sale.” In this context, retail salespeople could assist consumers in their search activities by providing comparison websites, review sites, and alternative search terms. In a similar way, companies can create apps for the mobile phone to engage consumers while in the store, and salespeople can direct them to download these applications. 

* This post is based on a journal article recently published  in Psychology & Marketing titled, “Under the sway of a mobile device during an in-store shopping experience”. To read more about this study, findings and implications, contact Dr. Weisfeld-Spolter sw887@nova.edu

How to Emotionalize Content for Social Media Influence

A growing body of research is supporting the need for content to strike an emotional chord if it’s to go viral. Studies are now revealing what types of emotional content garner the most views, likes, shares and comments in social media.

Our own examination of YouTube recast commercials discovered the following eight types of emotional content to perform the best.

1. Sentimentalism
2. Humor
3. Inspiration
4. Public spontaneity
5. Pride
6. Incredulity
7. Nostalgia
8. Generosity

SENTIMENTALISM: Touching Hearts with Tenderness, Compassion and Nostalgia
A recurrent theme among the examined social videos involve the tearful joy stemming from tender moments.  Pfizer captures this well in their heartwarming scenes of family members expressing their appreciation for each other.

These emotions are also aroused when feelings of compassion tug at our hearts. The success of social videos like  Bangkok's Thai Life video and Sarah McLachlan's ASPCA video are largely based on their compassionate pleas and gestures.

In a similar vein, much of the imagery reaching the highest engagement in social media involves innocence. The scenes of toddlers, animals, young romance and other cute arousals allow us to live vicariously through a kinder and more promising world.

HUMOR: Tickling Hearts with Social Order Deviancy, Comic Wit and Malicious Joy
Another way to spark emotional connections from content is through humor. Accounting for the vast majority of viral YouTube videos, laughter is produced when we see something out of sorts (comic wit), enjoy others’ misfortunes (malicious joy) or release ourselves from inhibitions (social order deviancy).

INSPIRATION: Restoring Hope through Bolstered Confidence and Pushing Limits                                       The past few years have witnessed a dramatic rise in inspirational content often centered around pumping us up. Consider how  P&G and Nike spots routinely post videos of young adults encouraged to push their limits or never give up. The videos often involve handicapped role models, outstanding athletes or parents motivating them to realize their potential.

PUBLIC SPONTANEITY: Disrupting through Flash Mobs, Pranks or Surprise Routines
In almost all cases, content that goes viral has an element of surprise to trigger attention. This “element of surprise” often happens as an unexpected twist revealed toward the end of a content piece. In perhaps its most effective setting, the element of surprise is cast in a monotonous public setting that challenges crowd routines with a “let loose” spontaneity.

Dozens of flash mob videos garnered millions of views when cast in unsuspected public settings including malls, train stations, airports, public squares and universities. A similar jolt to our hearts can happen when publicly displayed pranks widely disrupt our otherwise peaceful settings. Another effective element of surprise involves an unexpected change of routine. Virgin Atlantic's #VXsafetydance video likely sparked attention from many bored passengers enjoying the break from monotonous safety instructions.

PRIDE: Stirring Hearts through Team Winning, Family News and Solidarity
Of the examined videos, many involved feelings of exhilaration experienced from the winning.  Nike spots have had great success capturing the thrills of proud communities from winning championships, spectacular comebacks or retiring great players. A more sobering heartfelt feeling of pride can be aroused from hero salutes like those used in Hill Holiday's spots for Anheuser-Busch.

This stirring of emotions from community solidarity is an effective theme for brand storytelling. Chrysler rekindled American pride with a piece dedicated to the motor city. In a similar fashion, brands like VaynerMedia's Dove spots and TBWA's production for Apple have been highly effective in stirring family pride with pregnancy announcements or unexpected family achievements.

INCREDULITY: Dazzling People with Beauty, Craftsmanship and the Human Potential
Feelings are often aroused through a shock and awe after experiencing the wonders of nature, ingenuity or what our bodies and minds can achieve.  Dove  astonishes us with their extreme makeovers much like Honda's "Cog" dazzles us with their incredible attention to fine detail and masterful craftsmanship. Heart pumping sensations can be aroused when we explore the depths of natural beauty or witness dare devil feats and the extremes of human potential.

NOSTALGIA: Warming Hearts with Fond Memories of Family and Better Days
Nostalgic storylines stir our hearts from reflections on what means the most to us.  Apple and MetLife , for example, portray the importance of family in healing emotional scars or restoring the sense of security we feel in the surroundings of loved ones.

Combining the sadness of loss with the joy of accomplishment is especially effective in garnering likes and shares. These scenes of tearful joy often include fathers letting go of their daughters when they first drive a car, go off to college or get married.

GENEROSITY: Touching Hearts with Kindness
Though not as commonly created as other forms of emotionalized content, videos displaying random acts of kindness, community benevolence or thankful gift giving often reach tens of millions of views. Consider the effectiveness of Everlast  in their portrayal of a young boy who sacrifices his own pride to support the hungry.

Brands like Westjet reached 42M views from their Christmas Miracle video produced by Mosaic. In this case, the brand showed its generosity in surprise passengers with Christmas gifts coming down the carousal. This strikes an emotional chord similar to the generosity displayed in Cossette's spot produced for Duracell as they warmed up bus passengers waiting in the cold.

Conclusion
So with the alarming levels of content hitting the internet, it is clear that content marketers must find a way to distinguish themselves by emotionally amplifying their content. This will likely shift the bulk of content formats from one of instruction and information to one of entertainment and inspiration.

And to do this effectively, brands and small firms have to show their true colors while surprising us with playful content, awe inspiring imagery, sentimental pleas or passionate performances. Add stories of generosity or triumph; and you may find the key to establishing emotional connections that get your content to go viral.

So what other ways do you think content can strike an emotional chord with targeted audiences?

 

Call it a Comeback: Nostalgia Marketing and the Relaunch of Old Favorites

It seems that lately companies have been engaging in a lot of nostalgia marketing, which involves tapping into consumers’ positive memories from the past. We can see this through the recent reintroductions of a number of previously discontinued products. For example, Crystal Pepsi, a clear cola soft drink, was brought back last summer for a limited promotional 8-week stint, which was successful enough to end up garnering a permanent relaunch. The soda was originally introduced in 1992 and was heavily marketed at the time through Super Bowl commercials and other marketing initiatives: www.youtube.com/watch?v=KPvyq_KmXhc.  However, the soda never caught on back then and even became the butt of many jokes, being parodied on Saturday Night Live and elsewhere: www.nbc.com/saturday-night-live/video/crystal-gravy/n10459. Crystal Pepsi was seen as one of the biggest new product failures in PepsiCo’s company history and the soda was discontinued in 1993. Nonetheless, over the years a cult like following developed for the product, especially in many social media forums on Facebook and Twitter, with fans petitioning Pepsi to bring it back. Eventually the company agreed and promoted the soda’s initial relaunch by pairing it with some additional nostalgia, in the form of an online game it dubbed “The Crystal Pepsi Trail”, which was inspired by the iconic old computer game The Oregon Trail.  

Another discontinued soft drink Surge, was brought back by Coca-Cola in late 2014 after a swell of consumer requests on social media. The product’s reintroduction was limited to only being sold on Amazon.com. However, very successful sales there prompted the company to relaunch Surge nationwide in 2015.

In addition to the soft drink industry, this rise in nostalgia can be seen elsewhere such as Kia’s television ad campaign which features the classic 1990’s football video game Techmo Bowl and football great Bo Jackson, who was considered to be the video game’s best and most unstoppable player. In the ad, Bo can be seen driving a Kia Sorento on the football field within the video game itself: https://www.youtube.com/watch?v=f2aG7oa53Eo. Finally, Nintendo also got into the act, launching its Nintendo Entertainment System: NES Classic Edition, which is a replica of the original NES, that comes preloaded with 30 classic Nintendo games and uses an HDMI TV connection: www.nintendo.com/nes-classic. Demand for that system was so great, that it prompted the company to also release the Super NES Classic Edition.

It seems that with this rise in nostalgia marketing, companies are realizing that even in an age of ever-changing advanced technologies, consumers still have an affinity for beloved products of the past, and are willing to purchase from firms who appreciate that. Time will indeed tell if this trend continues, and what other old favorites might be making a comeback down the road. In the meantime, what are your thoughts on this new trend? Are there any other previously discontinued products that you’ve noticed being reintroduced? Any others that you would like to see brought back? Please share your thoughts in the comments section below.

Negative Word-of-Mouth, Threat and Opportunity

Consumers’ negative word-of-mouth is a process of problem-solving when they experience a service failure or feelings of injustice towards a company. Negative word-of-mouth usually presents information about an unsatisfactory service, a product complaint and is more dominant among WOM behaviors. Due to the viral capacities of social media communications, it is very easy for negative word-of-mouth to become viral and have a significant impact on a company.

For example, negative perceptions of United Airlines' corporate reputation increased 500 percent after the event regarding the forcible removal of a ticketed passenger on April 9th, 2017, a video that became viral and traveled the world first-class through social media (The Harris Poll 2017). United Airlines’ public problems did not stop there, and only a couple of weeks later Simon, the estimated future record-breaking rabbit as the biggest bunny in the world, died in the same airline's custody. These incidents and the way they were handled publicly have placed the company and other organizations in a cloudy situation.

In a research study, we found that consumers’ online discussions in this viral negative campaign focused on people and customer service, but also on the company’s reaction after the incident. Any negative incident or failure in customer service represents a threat to a company’s image, due to the diffusion potential of any negative messages and especially images from consumers on social media. However, this also represents an opportunity for businesses to show their care for consumers and provide a solution to deal with the crisis.

It is essential to consider the importance of an organization’s brand equity, its customer lifetime value and retention. A better focus on the online brand community can provide an opportunity for an organization to be proactive and manage in a positive manner a negative viral campaign situation.

Reference
The Harris Poll (2017). Equitrend rankings for the airlines industry, http://www.theharrispoll.com/equitrend-rankings/2017 accessed on June 15th 2017.

From Customer Focus to Customer Obsession

[There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else. Sam Walton]

The above quote by Walmart’s founder said it best – business strategy is all about the customer! The customer-first message has spread to the workforce. During a recent one-week period, I was pleasantly surprised to hear three Millennials call me “boss” during routine transactions at the Fresh Market, Office Depot and Subway. The same week, I also got a “hey, chief” and “I appreciate you”. Yes, the word is getting out – the customer is in charge! Value-creating organizations demonstrate that they value their customers’ business.   

Customer orientation ascribes to David Packard’s (HP’s co-founder) philosophy that marketing is too important to be left to the marketing department. It is the responsibility of everyone in the organization. A customer orientation is a service organization practicing Japanese style marketing - putting the customer first. In fact, the Japanese word okyaku-sama literally means “honored customer” or the “customer is God.”  Is the customer really king in the U.S.? When leaving an American restaurant, sometimes one is barely acknowledged; in contrast, it is not uncommon at a Japanese dining establishment to have several parties graciously bow farewell in thanks for the customer’s patronage.    

 “We must be more customer focused, we need to create new market opportunities!” Undoubtedly, you have heard this management mantra or a variant of this theme recently. Executives use terms such as customer (or market) centric/driven/focused/ oriented and so forth to motivate their people to do a better job relating and responding to customers. While the idea is sound, too often it’s just lip service rather than a major investment to improve all facets of the organization. A true customer orientation changes the business culture to create and maximize customer value which in turn leads to an improved bottom line.

 Customer Commitment > Culture > Customer Value > Business Performance         

The healthcare market is fast growing and projected to be the largest employer in the services-producing economy in the United States. Globally, health care is a major challenge and vital industrial sector, as well. Many healthcare organizations, however, are slow adopters in creating superior value for customers. Successful healthcare organizations have embraced a customer-centered philosophy in the now economy – it’s not just about the care offered, but about the caring offered by service providers (physicians, nurses, technicians, front-desk personnel, and so forth.) 

Walk-in clinics or urgent care facilities are a relative new innovation in the industry as most consumers would prefer to not have to visit a hospital emergency room for a sprained wrist, flu shots, skin rash, common cold symptoms, or other minor maladies. Yet, some of these so-called urgent care centers may be viewed as semi-urgent, at best. They may be closed after 9 p.m. and on Sundays, their website says to call but no one answers the telephone, they have long waits for service, or are even ill-prepared to assist with basic medical issues since they are staffed by nurse-practitioners instead of seasoned physicians. In contrast, the Baptist Health System (17 centers in Miami-Dade and Broward counties) pioneered urgent care in South Florida more than 15 years ago and is all about the healthcare experience [www.GetTreatedBetter.com/]. Patients may call or e-mail ahead for appointments and have reserved free parking. Amenities include comfortable waiting rooms with large flat-screen televisions, wireless internet, and freshly brewed coffee and tea. An efficient expert team of highly skilled and compassionate doctors, nurses and technologists is readily available, and full service imaging services are provided, as needed.

Are You Obsessed about Your Customers?

Great companies such as Amazon and Apple are totally obsessed about their customers. Their CEOs, CMOs (Chief Marketing Officers), CCOs (Chief Customer Officers) and CXOs (Chief Experience Officers) stay awake at night strategizing how to improve the customer experience. They are masterful at creating and delivering value to their highly satisfied, loyal client base. Consider these examples: Federal Express changed its name and repainted its trucks to read FedEx, as that is what customers called them (“let’s FedEx this package to Zurich”).  Nordstrom’s sales associates have been known to buy products from a major competitor, Macy’s, to satisfy an unfulfilled customer’s request. Zappos, an online shoe and accessories retailer and an Amazon company, gives their customers a full year to return their product.

According to the 2017 Global Customer Experience Benchmarking Report by Dimension Data, 81% of companies stated that customer experience is their top competitive differentiator. Yet, only 13% of respondents acknowledged that their company’s level of service was excellent. Also surprising was the fact that more than 30% of organizations do not have anyone in charge of the design and delivery of the customer experience.

Forrester identified four levels of customer-centricity. These are: 1) customer-naïve companies, 2) customer aware companies, 3) customer committed companies, and 4) customer obsessed companies. Based on their research, two-thirds of the firms are customer naïve or customer aware (only 10% were customer obsessed). Therefore, a majority of businesses should restructure to implement customer-obsessed operations. Organizations will need to build a culture to mobilize around customers, high performing teams, developing technologies, processes, and metrics.  Forrester adds that customer-obsessed organizations such as Coca-Cola, HSN, and the Lego Group follow four guiding principles. They are customer-led, insights driven, fast, and connected. They define a customer-obsessed enterprise as, “one that focuses its strategy, operations, and budget to enhance its knowledge of and engagement with customers.” 

Realize that greatness in marketing and customer service is a function of attitude, not resources. Here’s how a local dry cleaner delivers exceptional value. I pulled up in front of the store in a South Florida rainstorm and the owner jogged out with a large umbrella to greet me and my clothes for drop-off. He stated, “I can afford to get wet, but not you!” Another time when I visited there for a pick-up, the store clerk quickly hung up the telephone when I entered. She said, “I was only talking to my boss, customers are way more important.” How’s that for mastering customer value thinking?

Other companies do not do a very good job in customer service - you probably can identify many of these firms. We have all been put on hold endlessly when calling for technical support, been ignored or treated indifferently when visiting a retail site, and sold inferior goods or services upon occasion. While second-rate firms may survive in the short term, they will not last in business unless they become value-creating for customers.

So, is your company truly obsessed about its customers? If not, WHY NOT? How can your organization design and deliver outstanding value to your customers in the now economy?

This blog post is the second in a series extracted from Superior Customer Value – Finding and Keeping Customers in the “Now” Economy, 4th Ed. (2018 forthcoming, Routledge Publishing/ Taylor & Francis). For further information, contact Art Weinstein at art@nova.edu, www.artweinstein.com/, 954-309-0901 .

 

 

Misconceptions about Store Brands

National or manufacturer brands have been for a while the choice of consumers and a signal for quality. Consumers usually trust manufacturers’ brands and associate them with a certain level of quality. However, this is not the case for store brands. US consumers still lack the knowledge about private label and avoid buying them unless the product does not generate any risk. Private-label brands success is strongest in commodity driven, high-purchase categories and products where consumers perceive very little differentiation (Nielsen 2014) . While, store brands or private label market share keeps growing in many European countries counting sometimes even half of brands' market share, this is not the case in the United States. Indeed, the market share in several European countries is more than 30% with UK , Spain, and Switzerland having the highest market share among European countries. (PLMA’s International Private Label, 2017). The United States private label market share has been lower than its counterparts in Europe and it is only lately that this trend has been changing.  Today, the market share of store brands has reached nearly 25% of unit sales in the U.S. and is expanding faster than national brands (PLMA 2017).
 

So What is Private Brand or Store Brand?
Private brand is any brand that comprises the retailers’ name or any name created by the retailer (PLMA 2017). Target, Wal-Mart, CVS pharmacy, Walgreens market their own brands. For instance, Target has a store brand “up and up” in their household product line that is much diversified. Some retailers, such as Wal-Mart, see private label as part of the road to their future success. Indeed, Doug McMillon, president and CEO of Walmart, when speaking at the Bank of America Merrill Lynch 2017 Consumer & Retail Technology Conference in New York stated that “The widespread availability of name-brand products online will compress the margins of private brands over time.” He also added that "having a private brand from a margin mix point of view has always been important, but it is even more important now.”  Therefore, it is important to educate customers about private brands. Indeed there are some misconceptios about store brands:
1. They are of  lower quality than manufacturer brands
2. They are manufactured by the retailer
3. There is only one category of store brands
4. They have low prices
5. They generate high risk

 The truth about store brands is that they are indeed similar to manufacturers’ brands and sometimes even of better quality. Here are some clarifications about store brands:
 

Who Manufactures Store Brands?
According to PLMA (2017), there are different ways that store brands are manufactured. They can be produced by:
• Large manufacturers who produce both their own brands and private label products.
• Small and medium size manufacturers that specialize in particular product lines and concentrate on producing private label almost exclusively.
• Major retailers and wholesalers that operate their own manufacturing plants and provide private label products for their own stores.
 

Categories of Store Brands
Private label brands are classified into generic brands, standard brands or copycat brands or flagship brands, premium brands, and value innovators.
1. Generic brands are usually cheap, inferior products. Usually they do not carry the name of the retailer on the package , but simply the name of the product, such as ‘milk’ or ‘butter’, in plain script . They usually use very cheap packaging .
2. Copycats or flagship brands or standard brands. They usually carry the name of the retailer and tend to copy the main manufacturer within that category, they have packaging and price points very similar to the main manufacturer.
3. Premium store brands are usually of higher quality than the manufacturer brand  and compete directly against the manufacturer’s  brand. Kumar and Steenkamp (2007) define two types of premium brands: the premium private label which is exclusive, higher in price, and superior in quality to competing brands; and the premium-lite store brand which is promoted as being equal or better in quality to the competing brands, while being cheaper.
4. The fourth category is value innovators which consists mainly retailers cutting down costs and processes to simplify the production and marketing of product ranges, so that a good quality product can be offered at very low prices. They are usually limited in number.
 

Benefits of Store Brands
Store brands provide retailers with some benefits. It gives them exclusivity to offer their customers special products, which make consumers loyal to them. In addition, store brands create a unique brand image and generate more retailer brand recall and recognition. Finally, store brands increase retailers’ revenues and have higher profit margin.
 

Attitude Towards Store Brands
The positive or negative attitude towards store brands has been attributed to several causes. Consumers evaluate store brands based on price/value of those brands, the products’ attributes, on the perceived risk and on their own self-perception (smart shopper). Consumers who buy store brands realize that when they are indeed purchasing store brands they are paying for certain “marketing” practices for  manufacturers’ brands, which is not the case of retailers brands.

References:
Hamstra M (20017) “Walmart CEO cites growing importance of private label Store brands seen as driver of margins, loyalty” www://www.supermarketnews.com/walmart/walmart-ceo-cites-growing-importance-private-label
Kumar, N  and J.B  E.M. Steenkamp, ‘Private Label Strategy’, Harvard Business School Press, 2007. 
Nielsen (2014) https://www.nielsen.com/content/dam/nielsenglobal/kr/docs/global-report/2014/Nielsen%20Global%20Private%20Label%20Report%20November%202014.pdf
PLMA (2017) ; http://www.plmainternational.com/in

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