Effective marketing as a condition for successful innovation management

An innovation is ultimately considered to be successful when it has been adopted by the consumers and the products are meeting the performance timelines set. Innovation is an important element in effective strategic management and its success must be emphasised for the overall competitiveness of the organisation. But innovations are often not successful with the majority of product launches resulting in catastrophic failures. A report by the research firm Nielsen, indicates that less than 1% of new products launched in the South-East Asian region are successful. This was in a study conducted in Indonesia, Philippines, Thailand, Malaysia, and Vietnam. Out of the 12,920 product launches surveyed, only 10 were considered to have met the threshold for successful innovations.

The main reason cited for the poor performance of the innovations was failure to effectively market these new products. Marketing is very crucial in strategic management as the organisation must not only communicate the value it offers to the market but also entice the consumers to come forth and purchase these products. Most companies are observed to spend substantially in coming up with hyped and expensive product launch events but failing to sustain these campaigns through consistent marketing after these launches. Innovation is not simply about coming up with great products: it is also about ensuring that the value of these products is articulated accurately in the market. The consumer will not know about a product unless they are consistently communicated to. Marketing requires consistency and it is the effectiveness of the marketing exercises that eventually determines the success of the innovations.

Some of the successful innovators such as Rexona Invisible Dry in Indonesia have been very good with long term engagement with customers. This demonstrates the fact that innovation is first and foremost about the consumer. Insufficient engagement with consumers means that such consumers are unaware of the innovations when they are launched and when they are introduced into the market. The most effective approach to customer engagement is where the customers are involved in providing suggestions on the most appropriate innovations to introduce. This can be important in strategic innovation management as the consumers get to express their desires as well as helping the organisation to understand how these preferences can be met effectively. In addition to this, customer engagement generates interest and an emotional attachment. The customers are of course interested in seeing whether the organisation has understood them correctly and accurately translated their thoughts and contributions into the resultant product.

Customer engagement and marketing effectiveness therefore play an important role in making innovations successful. The customers need to feel that they are part of the process. They also need to be communicated to effectively. They need to be made to understand what the newly launched product provides and why they should consume it. Marketing also helps to shape expectations where it informs the customers on what they should expect to get when they buy the products. This helps to manage expectations and increase the level of satisfaction. This is because customer satisfaction is a function of expectation. If the expectations are higher than the new products can meet, they become dissatisfied and stop purchasing the product. But when they are satisfied, they not only keep purchasing but also grant it the positive word-of-mouth needed to get others to purchase it. 

Strategic management opportunities in India’s social media landscape

India’s social media provides a number of strategic management opportunities for organisations in China and internationally. This is in line with the prediction that more than 200million women in India will be active social media users by 2020. This is a population that is greater than the whole population of the UK. A further prediction indicates that half of these 200million women will be shopping online. This portrays the social media as an important source of opportunities for brands in India and other international bodies wishing to sell their products within India. The advantage of the online platforms is that organisations can comfortably trade with consumers in different countries. In this case, the Indian market is just as accessible to the organisations outside India.

Another important insight that can be used to refine strategic management plans is the finding that the women are strongly inclined to be part of online communities. Online communities are groups of people who come together as unified by their mutual interests or common characteristics. They can range from a few hundreds to hundreds of thousands and the members of these groups often tend to influence each other. The online communities give members a sense of belonging. As social media users get used to using these platforms, they naturally seek to be part of bigger courses and groups. But what happens in these groups is what tends to be most significant. The dynamics of peer influence and group think exists in groups. In some cases, it is possible for consumption decisions to be influenced just because members want to express their belonging to such groups.

Instead of taking days and perhaps weeks to ask for friends who know about a brand, consumers can get answers in record time by simply enquiring on their profiles and the social media groups they belong to. Referral just got easier because of the social media. The interesting thing about referrals is that they are a very trusted source of product information. Persons who have no interest in exaggerating are seen as a safe bet when it comes to sharing product information. With other platforms for chatting like WhatsApp being more common, strategic managers have to be awake to the reality of online product information search and seek to use it to their benefit.

Online communities based on brands have also been found to be increasingly active and influential in influencing purchase decisions. Research studies have indicated that the customer value tends to be higher among online members of a brand community than those who are not members. This is because continuous interaction and a sense of attachment get the customers to purchase more from the brand. The tendency by consumers to have polygamous brand loyalty is such that they will always have a range of brands to choose from whenever they need to make a purchase. When they actively interact with a brand online, or where the online community they belong to strongly favours the brand, such a brand becomes their preferred choice whenever they need to make a purchase. Strategic management teams in organisations must therefore get familiar with the concept of online communities and position themselves to tap into its projected growing influence in India. 

Strategies for building credibility: the brand as a teacher

One of the ways through which brands can enhance their credibility is by attending to the information needs of their consumers. We are in the information era and consumers like to be provided with as much information as possible. This information must, however, be presented in a manner that enables quick understanding and spotting of the main highlights. As more information filters online, consumers have to process large volumes of knowledge within a short time. This has generated lower attention spans as well as a general sense of impatience as consumers want to grasp the whole essence of a message at a glance. Brands that are able to sift through the information and retrieve what is most credible and relevant to consumers tend to gain credibility. The impact of this can be explained as follows.

Firstly, the brand is able to demonstrate its understanding of the products and services it is dealing with. Consumers do not like to deal with amateurs. They want to be convinced that the persons they have given their trust to know what they are doing and are willing to share their knowledge. Having a wide knowledge about a field gives the consumer the confidence that the brand is well-suited to deal with any issues that could be arising in the course of their operations.

Secondly, it demonstrates trust in the ability of the consumer to understand and assimilate the knowledge being shared. The typical relationship between a teacher and a student is one of trust: the teacher trusts in the students’ ability to learn and assimilate the knowledge being shared. The student honours this trust by doing what is expected by the teacher.

Thirdly, information sharing creates an exciting platform for engagement between the brand and the consumers. The relationship could grow boring and eventually fizzle out in cases where the organisation and the consumer can only discuss the products being bought. At some point, such conversations become monotonous and consumers become more inclined to ignore. But when the subject of discussion is informational, engagement, questions, and presentation of competing viewpoints becomes possible. This helps to not only build credibility but also increase the bond as the understanding between the consumer and the brand is enhanced.

Some of the firms that have implemented this include United Healthcare and Cambria. The two organisations allied to create a programme dubbed ‘the big know’ where they have been creating online courses on topics related to their brands. This collaboration helps the brands educate consumers on insurance packages, risk management, and issues related to kitchen equipment and safety of use. With this approach, the consumers are supposed to gain the confidence that the brands have trust in them and wish to inform them as much as possible. Such brands become more credible. With credibility comes trust and with trust comes an emotional bond between the consumer and the brand. This in turn translates into increased value per customer and growth. 

Strategic productions management: is local sourcing a solution?

In its renewed investment strategy for India, Ferrero has opted to source for its raw materials locally to a tune of 90%. This has, however, come with the commitment that the company will work with local suppliers to enable them improve the quality of their supplies. It brings to the fore the trade-off between international and local sourcing and implications for strategic management. Local sourcing has a number of merits, main among them being that the products acquire the image of local products.

Research into consumer trends around the world indicate that demand for local products is on the rise. The only time the consumer will prefer a foreign product is when there are few local alternatives that measure up to the quality and consumption experience derived from it. The tendency of the consumer to see their own as being beautiful and equal to the international standards tends to be high. This is especially so among countries with a high level of national pride such as India and China. For organisations that opt to maintain their global brands, the alternative approach is to source for raw materials locally. They can then use this argument to appeal to the consumers and emphasise on their products being local.

The second merit of local sourcing is the benefit of gaining access to the existing business networks for these suppliers. In countries such as China where networking is an important element of business success, gaining access to such networks is essential. This strengthens the local positioning of these international brands; enabling them to negotiate and gain affordable access to the existing distribution networks among other advantages. The cost merits can also play an important role. Where an organisation is operating in a low-income country, the cost of raw materials is likely to be much lower. Its presence in the market enables such a company to bypass brokers and deal directly with the primary producers. This saves on the cost of supplies.

On the other hand, local sourcing makes it difficult for the organisations to obtain the best quality supplies. This can be a major challenge in strategic management; especially where product quality is considered to be one of the main strategic elements of the products. If product quality cannot be assured, the organisation becomes less competitive. As can be seen in the case of Ferrero, the decision to source for supplies locally was implemented together with a quality development programme aimed at enabling suppliers improve on the quality of the products. The cost of such a programme must be diagnosed to be less costly than the benefits derived from it. Strategic managers should be able to compare the benefits of local sourcing to the costs and determine whether or not to pursue this strategy.

In Ferrero’s case, the decision was to invest in improving the quality of the milk producers and source for 90% of its raw materials locally. On whether this strategy will work in favour of Ferrero in India, the performance of the company will tell. 

Advert metrics and the media pricing debate

In determining the marketing priorities of the organisations, strategic management teams are concerned with the prospect of realising returns on the investments. There is the general expectation that funds used in marketing will be brought back through increased sales and marketing. These returns are determined by a number of factors including the reach of the marketing messages and the extent to which such messages reach the right target audience. The media owners are aware of these considerations and have often exaggerated the reach and their ability to appeal to the target audience.

It is also not uncommon for per-click marketing platforms to engage in unethical conduct by getting web users to unnecessarily click on advertisements. This can be a challenge for the strategic managers as they’d be paying for services not consumed. The result is reduced returns on investment made in marketing. The other form of unethical conduct is the tendency of media platforms to exaggerate their reach. For instance, websites with thousands of subscribers will quote the large numbers while failing to provide information on the actual number of regular visitors that could be much lower. The advertisements are accordingly priced based on the unrealistically large number while the reality is certainly bound to be much lower.

Metrics for determining the probable returns on investment are therefore a challenge for strategic marketers. In fact, many have clear strategies for marketing medium management where they can determine which of the marketing approaches have worked best. The difficulty is relatively expected because a significant volume of consumers will not purchase from the organisation immediately after encountering advertising messages. They will instead often have such messages in their mind to activate them when the need for such products is encountered.

The other challenge is one experienced by television advertisers. During prime times, the media owners are pressed for time and tend to cut out some of the narratives for the adverts to display what they consider as the core of the message. These punchlines are impossible to understand unless they are being viewed by a consumer who has watched the whole clip before. Besides, the whole narrative tends to be developed strategically to not only attract the audience’s attention but to shape their understanding of the adverts. If these narratives are cut off, the essence of the whole advert is lost. This places advertisers due to a disadvantage.

The dynamics of media pricing and exaggeration of statistics on their impact leads to the need for an objective verifier. Such verifiers would play the role of checking into the claims made by media owners to ascertain that they are accurate. The verifiers would also look into online platforms to ensure that advertisers are not unfairly charged through false clicks on the adverts displayed. Such verifiers help to standardise the landscape and facilitate more effective planning among strategic management teams. Such teams would be able to allocate their marketing budgets with a fairer level of certainty on the returns that can be expected. 

Incorporating culture in strategic management: lessons from Mattel

Mattel is the company that is renowned for its Barbie image. These are dolls reflecting on ladies who are slim and red haired. It has become the enduring and singular image of the brand until recently. And the market seemed to be experiencing brand fatigue; a factor that is believed to have led to a 10-quarter decline in the sales of the company. This image was so strongly associated with the company that it was considered sacred. Mattel can provide examples of effective strategic brand management; especially when it comes to recognising change and accommodating it.

The main thing to appreciate in change management is that it comes with certain levels of uncertainty. Strategic managers ought to be able to foresee these uncertainties and take contingency measures. More importantly, brand managers ought to be bold enough to take risks from time to time. This was the gamble taken by Mattel. Barbie was doll reflecting of a slim, tall, white, red-haired lady. It had been this way for decades and the consumers had literally associated this sole image with the brand. But in seeking to change this image, Mattel opted to accommodate the reality of the socio-cultural diversity in different sections of the world.

Manifestations of beauty differ in different sections of the society and the white slim red haired figure is largely seen as one accommodating one particular cultural reality. As awareness on cultural diversity increases, sections of the society begin seeking affiliation with what they can identify with. This is what was done in the case of Barbie. The doll was redone to accommodate different body shapes, heights, skin colours, hair colours, and eye colours. This was viewed as being more reflective of a real multicultural setting. In other words, Mattel opted to exploit its understanding of culture to become one with the society.

The effect of this strategic change was as immediate as any strategic management team would hope for. Mattel was able to end its 10-quarter decline and begun to record an increase in sales. In 2016, the company recorded year-on-year sales increase of 23% and 16% for the 2^nd and 3^rd quarters respectively. This was an example of a great risk that ended up coming with great rewards. The company recognised a growing appreciation of cultural diversity and sought to attract consumers by accommodating these consumers.

In contrast, Kodak appeared to have undergone what most would describe as perception inertia. They failed to understand the need to completely embrace the digital wave and maintain their lead in the film industry. As opposed to Mattel which declared that there would be ‘nothing sacred’, the film remained sacred to Kodak. The cultural inertia within the organisation became so serious that the top management was unable to get the rest of the organisation to embrace the technology and facilitate its adoption.

But as for Mattel, the challenge can be said to be much greater because it had specifically been associated with the Barbie image. This association was so strong that Mattel was essentially Barbie. Changing this Barbie image translated into the company letting go of everything it has been known to be and instead focus on building a new image. With great risks often comes great rewards as can be learnt from Mattel. 

Influencers and effective social media marketing

Brands that try to forcefully display their logos online often fail to realise the desired results. Brands need to avoid impersonal brand messages and also avoid turning the online influencers into copycats that exclusively share the marketing messages as received. This is not strategic because the social media is a high context environment in which users evaluate not only the message but also the manner in which it has been projected. This technically means that the organisation will not be best placed to understand how to tailor branding messages to suit the brand.

Use of influencers in strategic management works best when they are allowed to assimilate the branding message then translate it into information that their followers would readily accept. Besides, the followers of such influencers are not keen on getting what the brands have to say. Instead, they want to get the influencer’s opinion of the brand and the products it represents. This means that use of influencers is intricate and needs to be carefully considered. One of the factors that ought to be considered is the past preference of such an influencer.

An influencer that has in the past been a champion of a rival brand is unlikely to be effective when marketing. The followers will have associated them with the brand and to some extent attributed its brand personality to their character and personality. If such an influencer turns around to market a different brand, they come out as inconsistent and the commercial intent in their endorsement is exposed more strongly. This robs them of the credibility threshold that is expected to apply to them. Influencers wield their influence from the presumption that they give an honest opinion about products and brands and that they have not been unduly influenced to exaggerate in favour of the paymaster. If an influencer endorses rival brands, it becomes obvious that they have been influenced and this reduced their influence on their followers.

The online user is a peculiar consumer in that they make an effort to distinguish between staged and real situations. If there is any reason to suspect that a message or a scenario has been staged, such messages are shunned. The influencer strategy must therefore be designed carefully to ensure that consumers can believe them and not read through the mutual commercial interests of the brand and the influencers.

More importantly, the influencer ought to be authentic. The authenticity should apply to both their general online activities and the positions taken on various issues. This endears them to a certain niche or group of persons with similar likes, preferences, and conduct. The authenticity makes it possible for the organisation to identify influencers based on the type of consumers they have for followers. Observations are that influencers with a small following but that has maintained a high level of authenticity tend to be more credible and influential. The social media marketer must therefore understand the psychology and history of these influencers and also understand how the influencers are likely to get to the. 

Online as a new market entry platform: The daigou phenomenon

Daigou is an emerging Chinese consumer trend that is literally translated as ‘buying on behalf of’. It works by consumer asking others to buy for them overseas what they cannot access locally. A consumer finds friends and relatives overseas and requests them to attend to their shopping list. They would normally pay a deposit before the actual shopping and the final payment made after shopping has been done and the products are ready for shipping. Daigou can be adopted as a good market entry strategy by brands. In fact, Australian brands are known to exploit daigou as a means of entry into China.

Under normal circumstances, the diaigou arrangement is private and among friends and relatives already known to each other. But as the trend develops, there is a growing presence of private resellers who purchase products needed in China and resells them online to the end consumers. For the foreign brands, this is a cost-effective way of expanding into a new market. These private resellers would be marketing the brands to their respective niches. The consumers could then get accustomed to these brands and seek to contact them directly. This is an opportunity for cost-effective market entry of foreign brands into the Chinese market.

An example of a product exploited by daigous is Weet-Bix. While it retails in Australia for only A$5; the daigous were asking for up to A$50. The disparity in prices is such that the end consumer is likely to seek making direct contact with the manufacturer instead of depending on these resellers. This means that as these private sellers get consumers accustomed to the brands, the foreign companies have the opportunity of identifying a niche and attracting it by offering much lower prices for products they have already become accustomed to consuming. But this approach could also be counter-productive.

The consumer landscape in China is such that trust plays an important role in determining what consumers buy. This is one of the lessons that have resulted in many strategic management failures. The daigous are persons who are trusted by their circles of customers. This trust is so strong that it is possible for them to advise that certain brands be purchased and others be avoided. Since consumers listen to them, it means that seeking to edge them out by trying to reach the market directly could be counter-productive. This leads to the recommendation that a collaborative approach be adopted where brands seek to work closely with these daigous.

But the diagou trend is not without challenges. It is a newly developing area that is yet to be properly regulated or streamlined. This makes it prone to rogue traders and con artists. There may therefore be need to review the structure of this daigou communities to safeguard the end consumer. Online intermediaries such as Alibaba could play an important role in streamlining where the private sellers could be listed on the platforms as sellers. With safe payment provisions available in such online platforms, the dangers of an unregulated daigou community can be minimised. 

Amazon’s music streaming offer to catch the untapped market segments

Before Amazon’s entry into the music-streaming service in the US, the consumers had only two options: to use the free music streaming platforms such as YouTube, or to pay $10 per month. This left a large untapped market of persons who’d want to pay for improved streaming services but be able to pay lower for it. Amazon comes in with an offer for the US consumers where they can get improved music streaming services at only $3.99 per month with premium customers paying $7.99 per month. To understand the possible impact of this strategy, the psychology of price in strategic management needs to be explored.

Under normal circumstances, customers attach value to price where expensive products are often viewed as being of a higher quality while the lower prices are believed to signify low quality. This is what often leads customers to be willing to pay a price even where the same service can be accessed for free. With live streaming services like YouTube being free, one would understand why companies charging $10 per month can attract the high demand levels that they do. The answer is in the perception of value. Those who want the best are often willing to pay a much higher price than the rest of the consumers. But while this may be the general psychology, there is also the question of perceived value and the appropriate price for the services or products.

There has been a general shift in culture with consumers apparently attaching less value to creative content such as music. A significant proportion of the population desires to consume music for free and this explains why free streaming services have become so popular. But as the free streaming platforms become clogged with content, they begin to desire more specialised streaming services that help to customise content and provide them with what they are inclined to like. For this, they want to pay a price; but not a very high price. This is why Amazon’s pricing of $3.99 is likely to be successful. But for this success to be realised, Amazon needs to demonstrate value that justifies the price as opposed to consumers going for the free streaming services.

In strategic management, the organisation identifies its capabilities and competitive strengths. These are exploited for purposes of getting the organisation to beat competitors and succeed in the market. Recent studies have shown that Amazon has overtaken search engines in terms of queries for product information. This success has been attributed to its success in using algorithms where previous search results are used to display results that the consumer is likely to be interested in. This makes search queries highly relevant to every consumer.

This competence can be used by Amazon to improve on the music streaming and making more relevant to individual consumers than is currently used by consumers. For example, YouTube uses general usage data to provide consumers with music options. This is based on what most consumers of the music played tend to watch next. The personalisation is often limited. But Amazon is set to refine this and improve on the level of customisation. With enhanced consumer experience per customer, Amazon hopes to attract and retain most users of live-streamed music in the US and beyond.