Marketers Shape Consumer Needs and Wants
With the collection of excess amounts of data on consumers, it is easy today for marketers to suggest the needs and wants to people. It has not always been true because of the lack of information and communication facilities in the 20th century. It gave the public the freedom to buy only the goods they needed. Quite the opposite is happening today because of the broad range of tools at marketers’ disposal, which they will utilize to gain profit for the companies.
Global consumer culture has a role in shaping consumer decision-making (De Mooij, 2019). The emergence of this culture is primarily due to mass media programming, which facilitates the creation and sharing of consumption symbols (De Mooij, 2019).
Such culture leads to the consumption of goods that are not conventionally bought in the local culture, causing homogenization of certain habits. For instance, Coca-Cola is sold in almost every country of this world, even though one cannot certainly tell that everybody needs Coca-Cola.
Constant exposure to societal needs at the micro-level via the means of mass media also causes people to think they have the same needs and wants as a society (De Mooij, 2019). An excellent example of this is healthy food and green product advertisements. Individuals might get encouraged to buy healthy products only because that is where society is trending.
Modern marketers are in a strong position in shaping the decisions of consumers because the technologies and data of today allow them to do so. Intricate techniques which advertisers use when promoting their products also weaken an individual’s freedom to choose. This, in aggregate, forces people to buy commodities they do not need.
Marketing Myopia: Downfall of Nokia
Theodore Levitt believed any innovation should be customer-centric and not tied exclusively to a product. One prominent company which suffered from neglecting Levitt’s ideas is Nokia. Once a large company with billions of dollars in revenue came to a quick decline with the emergence of mobile products from Apple and Google (Vuori & Huy, 2016). Failure to foresee future needs and wants of customers led Nokia to lose market share and eventually be bought by Microsoft in 2014.
The rapid downfall of Nokia was the result of focusing on short-term product improvements. The 3G was emerging in the industry, which promised faster speeds when accessing the Internet. Radio technology was the only thing that differentiated most products from each other (Vuori & Huy, 2016). Everything changed when Apple introduced the iPhone, which mainly focused on software. Companies that were influential in software development, such as Google and Apple, enjoyed a growth opportunity from this shift (Vuori & Huy, 2016). Nokia, however, continued making improvements to its proprietary OS, but since these improvements were only short-term focused, they did not get much attention from the public.
Another reason why Nokia failed is the lack of transparent communication between the managers (Vuori & Huy, 2016). According to the study by Vuori and Huy (2016), managers had shared fears that harmed both the smartphone innovation process and its outcome. Senior managers were too optimistic about the technological capabilities of the organization because middle managers were reluctant to share negative information with them (Vuori & Huy, 2016). The result of these communicational issues was the neglect of long-term investments in developing innovation.
Motorola, Blackberry, and others failed to some extent after the technological revolution, and Samsung seems to be the only surviving company with a significant market share today. Nokia should have taken the same route as Samsung, which decided to switch its focus on Android OS, which was easier both for users and developers to interact. The decision to stick with the proprietary OS, which, according to Vuori and Huy (2016), did not account for usability and the speed of development, cost Nokia its future. The brand name and how successful a company was in the past seem not to matter in the long run if the company neglects customers’ changing needs.
Mergers as a Strategic Move
When a business reaches a certain level of development, the question arises on increasing assets and the subsequent expansion of operations. Some of the most popular ways to achieve further enlargement are through Mergers and Acquisitions (M&As) (Sherman, 2018). Such procedures are carried out to obtain benefits from joint activities (Sherman, 2018). It is rather challenging to predict the progress of a company after the change, even though the management has high expectations for the project. Based on the experience of previous cases, however, it is appropriate to say that such strategies are generally successful.
M&As, when structured and executed correctly, can provide tangible benefits. When a firm acquires or joins another company, its market share is instantly combined. The corporation might also experience an increase in productivity due to enlarged human capital (Sherman, 2018). Businesses are often interested in M&As because they promise accelerated growth, which, of course, comes with significant amounts of risk. A recent example of an M&A is the 21st Century Fox’s acquisition by Disney.
This M&A will allow the latter to access a new pool of human resources to develop original content quicker and with more quality. Despite being early to assess the success of this deal, it can be proposed that Disney will increase sales and pull away some of Netflix’s customers. According to AlphaHQ, however, only 15% of Netflix subscribers stated that they would cancel their subscriptions if Disney pulls out all its movies (McAlone, 2018). This small number means that Netflix will be a strong competitor, and it may be challenging for Disney to get its first customers because people may be reluctant to pay both for Netflix and Disney’s streaming service. In the face of the potentially high profits, however, this risk is justified.
Many examples prove that M&As can be very successful. These examples include Apple’s acquisition of Next and Disney’s purchase of Pixar. An excellent example of a financially successful M&A is Facebook’s acquisition of WhatsApp and Instagram. Before the deal, Facebook was making 3 billion dollars in revenue per year, and today, its revenue is estimated at 56 billion dollars (Facebook, 2019). Not every M&A turns out to be the right decision, so it is always subject to proper examination.
Improving Walmart’s CSI Rank
Customer service is one of the main components of any marketing strategy (Salesforce, 2019). A few years ago, such a statement would be the source of many contradictions and questions. Today, however, when customer satisfaction and unique consumer experience are the foundation of a successful business, one can hardly argue with that. Despite being among the most successful retailers, Walmart has been consistently ranking low on the American Customer Satisfaction Index (ACSI). Incompetent employees and poor customer service are the primary contributors to this adverse achievement.
When an employee loves his job and is proud of the brand and the company’s reputation, he or she will be attentive to all the details that make up the notion of quality service. Such a strategy requires considerable effort and investment, but it is necessary to understand that these are essential expenditures. Employees should be able to provide feedback about their experiences within the company to identify improvable areas. Managers should continuously share their appreciation with their subordinates to motivate the employees. A better management system where executives are sincerely concerned with the experiences of employees must be established.
Employees are only able to provide excellent customer experience when they know what concerns customers most (Salesforce, 2019). Employee competency and knowledge of customers comprise two sides of this challenge. Workers must be committed to self-development, and the company must provide opportunities for continuous learning and growth. To fully grasp the expectations of the clients, the company must conduct surveys that are both entertaining and convenient to answer. Employees that are equipped with the required field knowledge and information on customer expectations will be able to provide better customer service.
In a highly competitive environment today, trustful relationships with customers are a decisive factor that contributes to the long-term success of any company. High standards of service strategies allow businesses to generate more revenue and keep customers loyal. A high level of service is possible only when everything necessary is done within the company to form loyal employees. A business must understand what customers want and must work on improving employee comfort and development.
Corporate Environmentalism
Corporate environmentalism is a trend towards recognition of the necessity to integrate environmental measures into organizations’ strategic plans. The investor community is generally not considered to be among the ones interested in ecological issues in the context of business. Today, however, the Dow Jones Index lists sustainability as a performance indicator, and there are at least three reasons why investors should consider this factor when making decisions. Climate change and environmental degradation may lead to material risks (Ranganathan, 2014). Damaging the environment may harm the company’s reputation in the eyes of customers, thus impacting sales (Ranganathan, 2014). The last reason is that corporate environmentalism is considered to be a competitive advantage (Ranganathan, 2014). Market entities must take these points into account before concluding.
Environmental risks are not only related to ecology but also impact business operations. While the different business sectors may be affected differently, risks exist for all industries (Ranganathan, 2014). Climate change may leave the food industry vulnerable as droughts have negative impacts on crops (Ranganathan, 2014). The oil industry is also at risk because half of the reserves are in water-stressed areas (Ranganathan, 2014). Modern technologies put non-governmental organizations at an advantage. Remote sensors that are being used to collect information on the environment may provide insights into how companies’ operations are affecting the ecology (Ranganathan, 2014). Irresponsible organizations may have their image spoiled, which could further influence profits and reputation in the eyes of both clients and investors.
Sustainability is seen as a source of competitive advantage. As the times pass, only sustainable technologies will be able to provide quality operations and further ensure business growth. Natural resources are scarce, and only those companies which invest in alternative sources of energy and develop environmentally-aware strategies will be able to cope with changing demands and new challenges. Investors are becoming more aware of this fact and starting to consider the notion of corporate environmentalism when making decisions.
Negative Word of Mouth and Customer Defection
Reputational crises experienced by businesses can be exacerbated by social media. Indeed, social media has been viewed as one of the mechanisms for the easy and fast distribution of negative word of mouth (now), which can be a major factor for customer defection (Chiosa & Anastasiei, 2017). An example is the 2017 United Airlines incident, in which a passenger was removed from his seat against his will to free the place for another person (Kesslen, 2019). The case was recorded and spread using social media, eliciting a negative response from potential customers (Lim & Tucker, 2019). This situation illustrates the fact that even a large company should not ignore nWOM and needs to respond to its reputational crises in a timely and appropriate manner.
The analysis of the case suggests that there were multiple mistakes committed by the company. The event itself was problematic: aside from the fact that the staff failed to negotiate the issue and resorted to police violence, the passenger was physically harmed in the process (Kesslen, 2019). Moreover, the company’s initial response to the event was not in favor of the passenger. As reported by Kesslen (2019), United Airlines defended the staff’s actions and described the passenger as disruptive in his behavior, even though he was trying to secure a flight he had purchased. The company’s initial and subsequent actions were actively spread by social media users who suggested a boycott (Lim & Tucker, 2019). From this perspective, it is apparent that the case illustrates nWOM leading to customer defection and indicates that certain responses to the crisis could have been improved.
While it could be argued that a large company like United Airlines could not be boycotted by all its customers, the incident had significant repercussions. Among other things, the organization saw a decrease in its stock price (Lim & Tucker, 2019). Therefore, being concerned about such crises is reasonable, and the company could have benefited from acting differently by modifying the messages that it was sending to its potential customers (Chiosa & Anastasiei, 2017). Specifically, public apologies, the recognition of the fact that the staff had mismanaged the situation, and media coverage of steps taken to prevent similar events in the future could help. Such actions would demonstrate that United Airlines was learning from its mistakes and should have secured the loyalty of its customers.
Google and Search History Tracking: The Ethics of Online Behavioral Advertising
Online Behavioral Advertising (OBA) consists of utilizing the information about a user’s online behavior (for example, Google searches) to determine what advertisements might be of interest to them. This approach can be beneficial since it provides useful information, but it requires the tracking and exchange of rather personal data. A recent case of Google agreeing to facilitate the application of OBA to YouTube advertising demonstrates that OBA is likely to remain a fact of the modern market; therefore, it is necessary to find the means of doing it ethically. It can be argued that when OBA is ethical, it is justified (Boerman, Kruikemeier, & Borgesius, 2017). Google’s approach can be considered ethical and defensible because it does not rely on users remaining unaware of their data being shared, but the company could work harder to improve its users’ understanding of OBA.
As reported by Sloane (2017), Google highlights the positive aspects of OBA, suggesting that it delivers helpful information about products that users might want to acquire. However, Google used to resist OBA before the pressure from competitors made it too attractive (Sloane, 2017).
Therefore, Google recognized the shortcomings of OBA but had to employ it because OBA is becoming an important advertising method (Boerman et al., 2017; Sloane, 2017). To compensate, Google has taken steps to address OBA privacy concerns. For instance, the company offers the opportunity to disable one’s personalized advertising. Furthermore, Google’s willingness to report its OBA intentions through media can be viewed as an example of its attempts to achieve OBA transparency, which is a major aspect of ethical OBA (Boerman et al., 2017). It would not be justifiable to track and exchange the data of users without trying to inform them about it, but Google avoids doing that. However, a recent study by Boerman et al. (2017) suggests that users are likely to have little understanding of OBA, which means that Google’s actions might not be enough.
To summarize, Google can be justified in applying OBA since it takes noticeable steps to increase OBA awareness in its users, but the company could do more. For instance, Google can send its users a newsletter with an explicit and honest discussion of OBA. Still, since Google works to inform its users about its approach to OBA, Google’s application of OBA is defensible even now.
References
- Boerman, S., Kruikemeier, S., & Borgesius, F. (2017). Online behavioral advertising: A literature review and research agenda. Journal of Advertising, 46(3), 363-376.
- Chiosa, A., & Anastasiei, B. (2017). Negative word-of-mouth: Exploring the impact of adverse messages on consumers’ reactions on Facebook. Review of Economic and Business Studies, 10(2), 157-173.
- De Mooij, M. (2004). Consumer behavior and culture: Consequences for global marketing and advertising (2nd ed.). Thousand Oaks, CA: SAGE Publications Limited.
- Facebook (2019). Annual Reports.
- Kesslen, B. (2019). Doctor dragged off United Airlines flight speaks out on two-year anniversary of the viral incident. Web.
- Lim, S., & Tucker, C. (2019). Mining Twitter data for causal links between tweets and real-world outcomes. Expert Systems with Applications: X, 3, 1-17.
- McAlone, N. (2018). Most Netflix subscribers with young kids have no idea Disney content will get pulled off the service. Web.
- Ranganathan, J. (2014). Three reasons investors are beginning to take sustainability seriously. Web.
- Salesforce (2019). How to improve customer satisfaction. Web.
- Sherman, A. (2018). Mergers and Acquisitions from A to Z (4th ed.). New York, NY: Amacom.
- Sloane, G. (2017). Advertisers can now target YouTube ads based on people’s Google search histories. Web.
- Vuori, T. O., & Huy, Q. N. (2016). Distributed attention and shared emotions in the innovation process: How Nokia lost the smartphone battle. Administrative Science Quarterly, 61(1), 9-51.