Thursday, November 3, 2016

What do products and politicians have in common? Customers!



 politicians products customers election 2016 1politicians products customers election 2016
Image source: https://www.flickr.com/photos/donkeyhotey/

Politicians and Products: Strategies for Getting Consumer Support
By Sandra Bravo, Babson College

What do politicians and products have in common?  Both are brands seeking your dollars (and in the case of politicians, your vote, too).  The marketing textbooks of the 1980s and 1990s pushed for a customer (or market) orientation heavily relying on marketing research to find out what customers really want in a product and then deliver it.  More recently, however, a product orientation has been touted for success, and suggests that creative product development will be embraced by consumers.  Dr. Anjali Bal and her co-authors studied these approaches as they apply not only to products, but to politicians as “brands” as well in a recent article entitled “How customer and product orientations shape political brands” in the Journal of Product & Brand Management.

The central question for political marketers is whether politicians are successful by using research to figure out the needs of their constituents and address them accordingly, or if politicians should shape the preferences of voters through strong and persuasive communication efforts.  The former approach is a consumer, or market, orientation heavily dependent upon market research.  The latter approach is a product orientation which requires creative product development and then a strong communications campaign.  As the founder of Apple, Steve Jobs, once said, “You can’t just ask customers what they want then try to give that to them.  By the time you get it built, they’ll want something new.”

Bal and her co-authors discuss four strategic orientation archetypes in a quadrant using the degree of customer orientation as one axis, and the degree of product orientation as the other.   

Figure 1: Strategic orientation archetypes

Customer Orientation
High
Follower
Interact
Low
Isolate
Shaper
High
Low
Product Orientation
Source: (modified from Berthon et al., 1999)

In political terms, each of these groups relies on a different approach.  Followers focus on and react to customer needs and the public’s concerns.  Shapers influence and “mold the opinions” of the electorate.  Interacts seek to combine the two approaches, listening to but also shaping through conversation the beliefs of voters.  Finally, Isolates are inherent in monarchies and therefore would not be applicable to a democratic political system.

Political strategists will do well to realize that no one approach is best.  The political marketplace is constantly evolving and a change in stance, depending upon the environmental conditions, may be appropriate.  What do the authors suggest?  “It is proposed that influence in political endeavors happens in a bi-directional manner where both politicians are influenced by voter sentiment and voters are influenced by politicians.  Using a careful analysis of the changing environment, political brands can better manage this relationship.”

Article citation:
Alessandro Bigi Emily Treen Anjali Bal , (2016),"How customer and product orientations shape political brands." Journal of Product & Brand Management, Vol. 25 Iss. 4 pp. 365 – 372.




Tuesday, October 4, 2016

Intensively Entertaining Commercials Ain’t All That

by Lauren Nohelty, Student at Babson College



In today’s advertising world, marketers are faced with the challenge of maximizing the effectiveness of television commercials, especially since the birth of the DVR, Netflix, Hulu and other TV tools. Audiences are no longer forced to watch ads in between segments of programming, which is great for viewers but bad for marketers. To combat this problem, advertisers have tried to make commercials more high energy and engaging in order to retain viewership. In fact, over 80% of television ads are classified as high energy. You know these commercials -- the ones that are bright, action-packed and typically upbeat. However, recent findings revealed that all these attempts to capture the audience, may in fact be turning them away.

Research conducted by Nancy Puccinelli (Oxford University), Keith Wilcox (Colombia University), and Dhruv Grewal (Babson College), has shown that the way consumers respond to advertisements is more closely related to the energy level of the media they are watching than previously considered. So what does this mean for the marketing industry and why should we care? The researchers performed five different studies on the relationship between the energy content of media and the energy level of the ads paired with them. Their conclusions are as follows.

Energy matters more than nature

Researchers found that it’s not the positive or negative nature of the show that impacts the consumers’ response, but instead the energy level. High energy TV programs like action movies or sitcoms activate your brain, so after watching a movie like the Avengers you will be more mentally alert. However, after watching low energy programming such as House of Cards, high energy commercials can be difficult for consumers to watch so they will actually spend less time paying attention to the commercials.

Consumers Have Lower Recall When the Energy Does Not Match

Commercials become difficult to process for your brain when the level of activation induced by the media content is highly discrepant with the energy in the commercial. So consumers that are in a somber state after watching House of Cards will have lower brand recall if they watch a Capital One ad afterwards. The reasoning behind this is because people have a harder time processing information when they transition from a task that is easy to process to one that is more difficult. Considering that the goal of advertising is often to increase brand awareness, it seems that these ads might not be hitting the mark.

Making Sure the Fit Is Right

Here’s the problem -- with streaming, viewers can now opt out of commercials, which is why advertisers tend to gravitate toward creating high energy commercials that are funny and engaging in order to keep their audience’s attention. However, research shows that this is only effective for roughly 60% of media that falls into the high energy category. The goal is to find a way to target the other 40% of media and deliver a message that works. Marketers are undermining themselves with this approach if the only goal is to catch the viewer’s attention through high energy presentations. Marketers need to consider the energy level, in addition to target demographics, because a person watching House of Cards is less likely to pay attention to an Axe commercial aired immediately after. 
Therefore, in order to maximize the effectiveness of TV ads, marketers need to selectively place their commercials. High energy commercials should be shown during high energy programming, such as sit-coms like Modern Family. Marketers should air moderate or low energy commercials during other types of shows, such as nature programs or news shows. All marketers should be taking this into consideration, especially since consumers have changed the way they watch television.


Article Citation:

Puccinelli, Nancy, Keith L. Wilcox and Dhruv Grewal (2015), “Consumers’ Response to Commercials: When the Energy Level in the Commercial Conflicts with the Media Context,” Journal of Marketing, 79 (March), 1-18.

Thursday, September 1, 2016

Double trouble: family members as business partners

by Lauren Nohelty, Student at Babson College



Family businesses are the epitome of the American Dream. An individual starts a business, watches it grow and thrive, and then hands it down to future generations. However, without succession planning, the conflict and drama can result in losses into the billions of dollars, which is what happened in 2014 to Market Basket, a premier New England family-owned grocery chain.Victoria Crittenden and her colleagues explored this case in a recent article in Industrial Management.

The Market Basket dynasty started when a husband and wife, both Greek immigrants, captured the American dream by opening a neighborhood food store. In 1954 the two Demoulas brothers (second generation) bought the business from their parents. However, when one of the brothers died suddenly, his share of the company was left to his children. The remaining brother took control of the company, but court battles determined that the deceased brother’s heirs would control 51 percent of the business. In 2014, the battle erupted when one heir (who was initially loyal to her uncle) switched sides and helped to oust the family leadership. This decision sparked massive protests and employee strikes resulting in a loss of $10 million dollars per day. This situation is an example of what can happen when family businesses do not have succession planning. The authors of “Family Business: When You Can’t Choose Your Partners” studied family businesses and offer the following recommendations.

Succession Planning is Key

A lot of family businesses avoid succession planning because the leader does not want to choose between heirs or family members when deciding who will take over after they are gone. However, without a succession plan companies are subject to uncertainty and instability. So even though this may create conflict among family members, it is important that as the leader, you ask questions such as:
 “How will the business transition to the next generation?”
“What are the future roles for family and nonfamily members?”
“Is the next generation expected to invest financially or will family members inherit ownership?”
Without answers to these questions, the transition between generations may become chaotic, as it did with Market Basket, and potentially destroy the company.

Strategic Planning: Integral for Firm Growth

Strategic planning is essential for innovation, firm growth, and survival. Market Basket, despite their family feud, had a strategic plan that allowed them to grow in the market. One of the problems with a family business is that some leaders become emotionally attached to previous strategies developed by their predecessors. Reluctance to change stifles growth and can potentially destroy a business. This is why it is important that the current leader develops a strategy to promote long-term viability.

Establish an Organizational Structure

An organizational structure provides the framework for control and power in all organizations. With family businesses, it is important to establish roles for each individual family member because politics can affect the day-to-day operations of the firm.  This structure may change depending on the generation of the leadership. The first generation is the founding generation which means they are the controlling owner and manager. The second generation can be a sibling partnership (like Market Basket) and the third generation is more likely to be a cousin consortium in which members manage the business. No matter what structure is in place, there needs to be a strong managerial leader who is able to garner and maintain support from all family members.

Choose a Leader with Affective Commitment

Affective commitment highlights an individual’s emotional bond to the organization and the obligation he or she feels to reciprocate positive feelings toward the company. Family businesses need managerial leadership that prepares for the transition in order to ensure that the succession plan motivates others to grow the firm.

Plan by Generation

The first generation should establish the succession plan and strategic planning in order to achieve growth. This is an important step because a succession plan will help these leaders continue their legacy while a strategic plan will help the company respond to marketplace demands. The second generation typically has slower growth than the first generation. It is important that the right successor is chosen from this generation -- someone who is capable of handling family politics particularly as siblings work together. Strategic planning becomes less important because too much involvement in this by the second generation can cause tension and impede growth. Finally, third and later generation without a strategic plan have, perhaps surprisingly, shown more growth. This is because they benefit from the vision and goals outlined by previous generations. The key here is succession planning because there are numerous family members involved in the business, each of whom needs a defined role and should be led by the strongest and most established leaders.

In sum, the best advice for family businesses according to the authors of the article, “We recommend that family businesses engage, more or less, in both types of planning as appropriate for their generation.”

Article citation:

Crittenden, Victoria L., William F. Crittenden, Kimberly A. Eddleston, Franz W. Kellermanns, and Steven W. Floyd (2015). “Family Business: When you can’t choose your Partners,” Industrial Management, September/October, pp. 12-17.