Bounded Rationality

Karl Weick (1979, p 20) discusses the concept of bounded rationality, a concept that is applicable to communications and to information systems. Bounded rationality means that all of us have perceptual and information processing limits. We may always intend to act fully rational but usually we act on easy to get to knowledge, use undemanding rules to search for a conclusion, and take shortcuts whenever possible.

This implies that we need to assume that the decision makers in our communications or information systems may use limited rationality. They form attitudes and opinions, or make decisions in terms of familiar facts and abbreviated analyses.

Weick’s discussion of Bounded Rationality extends earlier work done by Simon (1960). Simon (pp 80-84) analyzes the limits of rationality. He finds that behavior is not objectively rational for three reasons:

1. Rationality requires complete knowledge including the anticipated consequences
2. Consequences are future events so impacts can only be imperfectly anticipated
3. Even if all possible alternatives are known, it is unlikely the decision maker would be able to recall all of them in the decision making process

The needed abilities for objective rationality are at odds with the usual reality of fragmented knowledge. Objective rationality also runs counter to the devious consequences of indirect influences in a casual map. Finally, it is not reasonable to assume that all possible alternatives could be considered in a reasonable timeframe, even if they are known.

Simon concludes (p 108) that

“Human rationality operates, then, within the limits of a psychological environment. This environment imposes on the individual as ‘givens’ a selection of factors upon which he must make a decision.”

The implication of this, according to Simon, is that a deliberate control of the psychological environment can manipulate even “rational” choice or decision.

References
Simon, H.A. (1960). Administrative Behavior: A Study of Decision-Making Processes in Administrative Organization. Macmillan.

Weick, Karl (1979). The Social Psychology of Organizing, 2nd Edition. McGraw-Hill.

Three Media Acceptance Models

There are several models for analyzing the diffusion of new ideas in a culture. Fishbein and Azjen proposed the Theory of Reasoned Action (TRA) to explain the phenomenon. This model has been widely adapted and discussed but its essence is that someone performs a behavior because of his or her own attitude toward performing the behavior and his or her subjective norm regarding the behavior. The attitude for performing a behavior is an expected value assessment done by the individual (Fishbein, 1976, p 492) based on the returns they see in the behavior. On the other hand, the subjective norm is the influence that significant others have on an individual. Fishbein (p 493) notes

"most people who are important to me think I should (or should not) engage in the behavior would influence intentions…”

Their endorsements of a behavior, or criticism, would affect an individual’s intent to perform. The fusion of both factors, individual attitude and subjective norm determines if the behavior is enacted.

Another widely used model is the Technology Acceptance Model (TAM) proposed by Davis. This is an instantiation of the TRA model. The behavior is specifically technology adoption and the beliefs and norms are perceived usefulness and perceived ease of use. If both these beliefs are positive then the likelihood of accepting new technology is positive.

Peters, Amato and Hollenbeck (p 130) review these two models in a study to understand acceptance of wireless advertising messages. However, they opted to apply a third model, the venerable Media Uses and Gratifications Theory developed by Katz in the 1950s. Katz hypothesized that people use media to satisfy certain needs or gratifications. The audience actively exposes itself to new media contents based on these needs or gratifications.

Peters, Amato and Hollenbeck (pp 143-5) include a useful questionnaire they prepared to understand the acceptability of wireless advertising messages by consumers with mobile form factors. These questions were used in a participatory inquiry with a selected group of “informants” who represent their audience at large. The questions are categorized along functional use or technology feature. They are general and open-ended so that interviewers can conduct “conversational probing to elicit greater elaboration from the informants.”

Their approach (p 131) is based on Clark Moustakas’ protocol for phenomenology. Hiles (2008, p1) notes the “pivotal role” Michael Polanyi’s Personal Knowledge had in Moustakas form of participatory inquiry. Polanyi (1974, p 18) criticized the naïve objectivism of most scientific inquiry as “a delusion and in fact a false ideal.” To Polanyi, the test of knowledge is not complete objectivity, which cannot be obtained, but the presence of a commitment to share the knowledge for review by peers. This commitment tempers the subjectivity opposed by objectivism. It’s refreshing to see Peters, Amato and Hollenbeck use a post-critical approach that incorporates personal knowledge into the process.

References

Fishbein, Martin (1976). Extending the Extended Model: Some Comments. Advances in Consumer Research.

Hiles, David (May 16, 2008). Putting Heidegger Polanyi Popper in the same frame. Missouri Western University. Retrieved on September 21, 2008 from http://www.missouriwestern.edu/orgs/polanyi/Loyola08/Loy08Abst/Hiles-abs.pdf

Peters, Cara and Christie Amato and Candice Hollenbeck (Winter 2007). An Exploratory Investigation of Consumers’ Perceptions of Wireless Advertising. Journal of Advertising.

Polanyi, M. (1974). Personal knowledge: towards a post-critical philosophy. University Of Chicago Press.

Camouflage the ordinary with glamour, or at least history

My favorite magazine is the Smithsonian, published by the distinguished Smithsonian Institution. History, geography and anthropology are all article topics, all written with attractive eloquence. Interestingly, most of the advertisements are direct response, and from companies with superlative quality.

The magazine has seven million monthly readers (see Smithsonian Magazine ) so has quite a reach and began production in 1970 with Edward K Thompson, who left his post as editor at Life magazine. The creative strategy for the magazine is to “stir curiosity in already receptive minds.” The clientele are already interested in history, travel, geography, anthropology, archeology and the other fun sciences and subjects. The advertisements, not surprisingly are about these themes also.

The Stauer company places direct response advertisements in the Smithsonian magazine. They have been doing so for at least three years. My wife throws away old magazines so I only have issues back to 2006. But there is the Stauer ad, 2006, 2007, and 2008. The ad must be working to keep it for nearly three years.

Stauer is a watchmaker (see their Web site) that specializes in historic designs from the golden age of watchmaking. They are also jewelers and sell coins and other collectibles but the ad in question is for a watch. Not just any watch though, they are remaking long forgotten designs using modern materials.

Spiller and Baier say (2005, p 125) that the headline is “possibly the most important element of a direct response print advertisement.” The headline for Stauer’s ad is “World’s most valuable timepiece disappears.” There are other headlines in different issues but they capture this theme: We are losing part of our history when a culture’s plastic arts disappear, including metal work, leather work and watch design. Stauer includes lengthy copy in the full-page ad describing the history of the watch they are now remaking.

According to the Elaboration Likelihood Model this is central route processing. The greater our communication engagement with the other party the more likely that party will use what the model calls central route processing, which is to say a great deal of message related thinking. Media appropriate for in-depth thinking and evaluation of the message is used in such a case. Cacioppo and Petty (1986, p 673) state that when:

“the elaboration likelihood is said to be high. This means that people are likely to: (a) attend to the appeal; (b) attempt to access relevant associations, images, and experiences from memory; (c) scrutinize and elaborate upon the externally provided message arguments in light of the associations available from memory: (d) draw inferences about the merits of the arguments for a recommendation based upon their analyses of the data extracted from the appeal and accessed from memory; and (e) consequently derive an overall evaluation of, or attitude toward, the recommendation.”

This bodes well for the selling of these watches. The body copy can tell the story completely and Spiller and Baier (p 124) note that is an essential aspect of successful print advertising for direct response. Stauer has complete text copy describing the Graves watch, which recently auctioned for $11,000,000, including its interesting history. Finally, Spiller and Baier (p 126) note that the time eventually comes to “ask for action.” Stauer does this after the interesting body copy. Here are the offer details:

• 2 year warranty
• 30 day free trial period
• Not available in stores
• Three payments of $33
• 
• 800-859-1736
• Promotional code GRV378-04
• Address of company if you wish to order by postal mail

There is a rational deftness to the offer, the product and the medium. A receptive audience is given detail of a glamorous history about the original watch. So Stauer engages them in central route processing. “Free trial” is used as recommended by Spiller and Baier (2005, p 126). The offer should showcase the benefit. Here the headline and copy emphasize the historical interest and exacting craftsmanship to what is really an ordinary replication of the original work of art. This whole direct response ad is characterized by facility and skill.

References

Cacioppo, John and Richard Petty (1986.) THE ELABORATION LIKELIHOOD MODEL OF PERSUASION. Retrieved on September 19, 2008 from the EBSCOHost database.

Spiller, L and M Baier (2005). Contemporary Direct Marketing. Pearson/Prentice-Hall.

Txt2Win and Short Codes

In their Darwinian struggle for attention, marketing agencies are creatively employing advanced technology, including mobile form factors such as cell phones, iPhones and Blackberries with text messaging (SMS) or multimedia messaging (MMS) communication tactics. MobileMarketing (2007, p 1) considers TXT2WIN one of the most effective ways to collect mobile phone numbers. Prospects or customers participate in a contest, which has a meaningful reward or accolade, by using the text function on their mobile phones. Say and Southwell (2006, p 265) relate how successful they were in their use of Txt2Win for not only capturing mobile phone numbers but also for increasing “new Internet banking registrations” by 576%.

Often used in conjunction with Txt2Win are short codes, and Say and Southwell used those in their campaigns as well (p 265). The Common Short Code Administration (2007, p1) manages short codes in the United States. They are 3, 5 or 6 digit, easy to remember numbers that are associated with the longer 10 digit numbers. The 3 digit numbers are only usable within your own wireless provider, while the 5 or 6 digit numbers are inter-carrier. Short codes can only work with mobile communications technology because with mobile, the phone number is collected on the client and then sent all at once to the carrier. With the Plain Old Telephone System (POTS), it could not work because telephone numbers are sent one digit at a time to the carrier.

Becker and Hanley (2006, p 3) say their case studies show that mobile is the preferred channel for certain segments including youth and ethnic groups. MMAGlobal (September 22, 2006, p 1) cites research that indicates Hispanics are more comfortable using their cell phones in more advanced applications. They also report that mobile was pivotal in a creative marketing campaign conducted by Tylenol and it “provided a unique communication mechanism connecting Tylenol with Hispanic football fans anytime, anywhere.”

A winning concept used by ELLE magazine here in the United States was based on mobile phones and MMS. MMAGlobal (2006a, pp1-3) explain the case study and its great success. This offer for was based on a sweepstakes. It used cross channel media, advertising in the magazine, and a direct response using mobile messaging. The sweepstakes had readers spotting advertisements in the magazines, and replying to a short code with a picture they snapped using their camera phone.


References
Becker, Michael and Michael Hanley (August 18, 2006). Engaging the “Connected Customer.” Retrieved on September 2, 2008 at http://mmaglobal.com/modules/article/view.article.php/535


Common Short Code Administration (2007). The Market for Common Short Codes. Retrieved on September 1, 2008 from http://www.usshortcodes.com/csc_about.html

Duncan, Tom (2005). Principles of Advertising and IMC. New York: McGraw-Hill Irwin.

MMAGlobal (September 22, 2006). Tylenol tackles Hispanic football fans (The Hyperfactory). Retrieved on September 2, 2008 at http://mmaglobal.com/modules/article/view.article.php/549

MMAGlobal (May 21, 2006a). ELLEgirl Magazine (Mobot). Retrieved on September 6, 2008 at http://mmaglobal.com/modules/wfsection/article.php?articleid=406

MobileMarketing.Net (2007). Mobivity TXT2WIN. Retrieved on September 1, 2008 from http://www.mobilemarketing.net/txt2win.aspx

Say, P. and J. Southwell (Jan-Mar 2006). Beep, beep, beep, beep, that’ll be the bank then – Driving sales through mobile marketing. Journal of Direct, Data and Digital Marketing Practice.
Spiller, L. and M. Baier (2005). Contemporary Direct Marketing. Pearson/Prentice

Getting too Personal

White and Zahay (2008, p 41) caution about getting too personal in our communications with publics, "extending beyond friendly recognition to suggest an inappropriate level of familiarity." If we over-tailor our messages, those messages may be perceived as manipulative (p 42). Can we personalize our message and how? The research by White and Zahay (p 48) suggests that explicit justification should accompany personalized messages.

"In contrast, when highly distinctive messages are unavoidable or otherwise compelling from the firm’s perspective in initial exchanges, our results caution against sending these messages in the absence of an explicit justification."

Another problem with personalization deals with customer knowledge of their own preferences. Simonson (2005, p33) relates that including personalized options in the offer can result in up-selling, but this depends on the stability of customer preferences and their insight into those preferences.

What Simonson labels Category 3 customers, those having stable preferences but lacking insight into those preferences, can be problematic regarding personalization. Such a customer profile, according to Simonson (p 34) is prone to misunderstand customized offerings leading to dissatisfaction.

Even with substantial and correct demographic and psychographic data, customized offers can backfire with Category 3, as Simonson notes:

“Consequently, these customers may mistakenly accept customized offers or choice
criteria that do not really fit their preferences, which leads to dissatisfaction.”

References

White, TB and D. Zahay (2008). Getting too personal: Reactance to highly personalized email solicitations. Springer.

Simonson, I (January 2005). Determinants of Customers’ Responses to Customized Offers:Conceptual Framework and Research Propositions. Journal of Marketing

Personal Software Process

Statistical analysis is an integral part of marketing communications. Statistics is also used in bid proposals for software engineering projects, and more generally in software development process management. The Software Engineering Institute has a rigorous course called the Personal Software Process. It is based on the book “A Discipline for Software Engineering” by Watts S. Humphrey and is part of the SEI Series in Software Engineering. The purpose is for students in the course to understand the process of software development while developing statistical tools for documenting and analyzing this process.

During the course, ten programs are developed at a rigorous pace. Estimates are made on the time it will take to go through the various phases to develop the program. Actual times for each step in the process are compared and statistical analysis done on the differences and the trends. The program assignments themselves are to develop the statistical tools used to do this analysis.

Additionally, bugs that were encountered are recorded and explained along with strategies for avoiding them in future. A report is prepared for each program, PSP1 through PSP10. I used C++ for the programming language and used Visual Studio 6 as the IDE.

Here are the solution reports, with C++ source code, and statistical analysis that I developed in the course.

PSP1
PSP2
PSP3
PSP4
PSP5
PSP6
PSP7
PSP8
PSP9
PSP10

Benefit Description Strategy in Use

The Linens 'N Things brand name is a benefit description strategy, having the desired result in the name itself. There may also be association going on as well. To me the apostrophe means something missing. Curiously, a new trademark, Linens-n-Things, has been added to the original. This was done in 2001 according to TESS (2008, p1). The original trademark was granted in 1970.

The Internet may have impact on brand names, especially because of naming guidelines by mega websites and also for search engine selectivity. An example is Wikipedia (2008, 1). It discourages the use of apostrophes. Also, when I do a search on Yahoo for Linens ‘N Things I get over five million hits whereas when I search for Linens-n-Things I get 500 thousand.

On a more personal level, just my opinion, the use of an apostrophe as in Linens ‘n Things leaves me with a sense in the back of my mind that the wording is hastily thrown together. Linens-n-Things conveys completeness like A-Z, this through that.

There is also a benefit description strategy in play with Land Rover. It says this is a product to roam over the land – road or no. It is an association for travelers. The Land Rover models have also all been Royal Navy warships: HMS Defender, HMS Freelander, HMS Discovery, and HMS Rover/HMS Ranger (Range Rover.) The names may also conjure associations with the successful history of the British Navy. They are all also “indubitably” British. To me these venerable names reinforce the original brand motif , ruggedness. This is an integral theme in the advertising of the vehicles as well. On Yahoo I typed in “Land Rover” rugged, and 636,000 return pages had that combination. (see Land Rover UK)

However, the U.S. models have a different naming convention – LR2, LR3, LRX using the initials of Land Rover. The warship names do not convey upscale to me, rugged yes, upscale no. Perhaps there is a move at Land Rover USA away from the rugged off-roader that proved itself in Africa to a more upscale and profitable SUV that would sell well where people know little of British history. (see Land Rover USA)

There is a multi-tier brand here, the corporate brand name is Land Rover, and a product brand name is Defender or LR2. Duncan (2005, p 82) says that as companies grow and add product lines, they extend their brands to these new products. Here the Land Rover corporate and product brand names convey the overall theme – traveling where you want to go. The British model brand names add to the theme with ruggedness and the success of the British navy. The models are named after ships that roam the seven seas, consistency with the corporate and product brand - rover, traveling where you want to go. The U.S. brand names may be adding to ruggedness the association of upscale.


References
Duncan, Tom (2005). Principles of Advertising and IMC. New York: McGraw-Hill Irwin.

Tess (2008). Trademark Electronic Search System. U.S. Patent and Trademark Office. Retrieved on May 23, 2008 from
http://tess2.uspto.gov/bin/gate.exe?f=searchss&state=7lm57p.1.1

Wikipedia Name (2008). Wikipedia Naming Conventions. Wikipedia The Free Encyclopedia. Retrieved on May 23, 2008 from http://en.wikipedia.org/wiki/Wikipedia:NAME

Yahoo. Search Retrieved on January 23, 2008 from http://search.yahoo.com/search;_ylt=A0geu94is5dH0mkAQk9XNyoA?p=%22Land+Rover%22+rugged&y=Search&fr=yfp-t-501&ei=UTF-8

Applying the Elaboration Likelihood Model to Clif Bar

Duncan also discusses the Elaboration Likelihood Model (2005, p 144-5), and notes there are two possible routes to elaboration: central and peripheral. Clif Bar is a low involvement product choice, and so the peripheral elaboration route would be the mechanism explaining communication processing. He also cautions that most decision making involves both paths, but in the case of Clif Bar I would think it is primarily peripheral.

The peripheral route is more often passive messages that are responses to lifestyles. I think organic and environmental fits into a person’s lifestyle and so appeals to them for a low involvement product would be better as image messages with association cues, associating Clif Bar with health, social causes, and the environment.

References
Baskin, Merry (April 2001). What is Account Planning? Retrieved on September 10, 2008 from http://freespace.virgin.net/andrew.steventon/Content/Downloads/WhatIsAcPlanning2001.htm.

Duncan, Tom (2005). Principles of Advertising and IMC. New York: McGraw-Hill Irwin.

Data Warehouse Support in Crisis Management

Duncan (2005, pp 562-3) recommends a crisis management plan be in place before a critical event strikes so the company is not improvising while the media and public are expecting a well-reasoned response. He says the plan should address the following elements:

• Internal notification list
• Roles and responsibilities
• Who is assigned to address communications with each separate public
• Who is authorized to talk to the press
• General guidelines on what to say
• Examples of discussion that has legal implications
• General actions for different scenarios

Adelman (2003, p 16) describes the very beneficial use of data warehouses and business intelligence during crisis or issue management. Data warehouses can help upper management answer questions related to the crisis or issue. Too many times they are put on the spot, and end up doing a song-and-dance in front of the press instead of dealing with facts. Without a data warehouse it is more difficult to find information on the background and/or to justify a course of action.

It’s important to investors, to employees, to customers, and the other relevant publics that management acts in an informed manner. Too often they appear unaware of the situation. Here IT can help.

A prime example of successfully handling a crisis is the well-known Diet Pepsi case (see crisispublicrelations blog for background). Diet Pepsi ran into trouble when consumers began “finding” foreign objects in cans of Diet Pepsi. A variety of different objects were found including a syringe, a bullet, and even a crack cocaine vial. The corporation knew that there was no possible way for these objects to be inserted during the bottling process. As a result, Diet Pepsi used a defensive strategy claiming its innocence. They communicated openly with the public, attacked the accusers, and allowed their bottling process to be shown on the news. Temporary damage had been done to Diet Pepsi, but they quickly rebounded from the situation.

The high-speed nature of modern bottling plants makes such strange events almost impossible. Mansky (2003, pp1-3) explains Pepsi’s public relations strategy. Pepsi used a defensive strategy, touting its innocence. They attacked the questionable accusers, communicated openly and truthfully with the public, worked with the FDA (who later became an intervening public for them) and published a video news release of their bottling plants.

Many believe the “victims” tried hoodwinking their way to prosperity.

According to Mansky,

“Because Pepsi took immediate action to create a crisis communications plan that involved several departments and focused on four key principles, it was able to resolve the crisis while defending its position and upholding its reputation. Pepsi’s plan included specific goals and objectives, targeted four precise publics and was the result of valuable research, all which helped it to be successful. The support of the FDA as an intervening public was also crucial for Pepsi’s success in this case.”

References

Adelman, Sid (2003). Measuring Data Warehouse Return on Investment. Retrieved on April 16, 2008 from http://www.teradata.com/t/pdf.aspx?a=83673&b=86833

Duncan, Tom (2005). Principles of Advertising and IMC. New York: McGraw-Hill Irwin.

Mansky, Amy (2003). There’s a Syringe in my Pepsi Can. Retrieved on April 17, 2008 from http://www.unc.edu/~mansky/J131casebrief2.pdf

Taxonomic Particularizing

What's in a name? Twitchell ( 1996, pp 205-207 ), Professor Emeritus of English and author of Adcult USA, reviewed the rising use (from no use before the 1930s to significant use today) of brand names in cultural art such as plays, novels, songs, and concluded "[the brand name is not] the illusion of reality; it is reality. The names, not the objects are what we know." The practice of replacing generic phrases such as "high powered motor car" with brand names like "Aston Martin" is known as taxonomic particularizing. Not only do marketeers use cultural art to create a brand image around a brand name, but cultural artists take advantage of the brand communication surrounding the brand name in the art they create.

Taxonomic particularizing is an interest area for linguistic analysis. Hubbard (1995, paragraph 8 ) makes the argument that the practice "challenges traditional aesthetic theories by turning the everyday and banal into art." Martyn Tipping (see Hein, 2007) said marketeers chose everyday words so the brand name explains itself. However, brand names and of course brand images backing them up have become postmodern art. Hubbard (see Postmodern)goes on to say: "Particularizing gives postmodernism a pronounced interest in linguistics insofar as it studies acts of communication and the play of language--the linguistic turn."

The brand names in Hein's ( 2007, p. 1 ) article such as Spykes, Belle Air, Tailwind, all exude the play of language. In my mind these "linguistic turns" that creative strategists conjure are the centerpiece for what Schultz (2001, p 1-2) believes is the purpose of marketing:"[to] create value for customers and prospects; for companies, channels and distributors; for shareholders; and for economies, societies and, yes, even governments and trading partners."

I believe this creation of value comes from the management of meaning in the communication process surrounding all IMC activities. Mission, corporate credibility, product, packaging, merchandizing, audience, theme, message, media, choice of promotional function, and the collection from and use of data in direct marketing must all have consistency and referential integrity. Further, these communications are placed in a social context so stakeholder feedback must be sought out to verify how the messages are decoded, to use the communication model in Duncan (2005, pp 106-7 ).


References
Duncan, Tom (2005). Principles of Advertising and IMC. New York: McGraw-Hill Irwin.

Hein. Kenneth (June 25, 2007). What's In a Name? Study Toasts Top New Brands. BrandWeek. Retrieved on September 5, 2008 from http://www.brandweek.com/bw/news/packaged/article_display.jsp?vnu_content_id=1003602879

Hubbard, Taylor E. (9/22/1995). Bibliographic instruction and postmodern pedagogy. The Free Library. Retrieved on September 5, 2008 from http://www.thefreelibrary.com/Bibliographic+instruction+and+postmodern+pedagogy-a017726356

Schultz, Don (October 22, 2001). It's now time to change marketing's name: Integrated Marketing. Marketing News.

Twithcell, James B. (1996). Adcult USA. New York: Columbia University Press.

The Unlearning Organization

Creativity is a way of thinking that can be learned. Sherwood (2000, p 31-40) describes an organizational climate that will encourage and reward the necessary risk-taking behavior required for creativity. He calls it an Unlearning Organization and relates the key characteristics:

1. They make time for thinking, exploration, and innovation.
2. They are always searching for better ways of doing things.
3. Rules are made to be broken.
4. "Negligence" (the deliberate departure from an agreed policy) is considered failure but "learning (what happens when an outcome differs from expectations) is not and is not penalized.
5. They listen, internally and externally. Everyone uses their ears more than their mouths.
6. They share – information, resources and Risk. Nothing is mine, everything is ours.
7. They say "yes" more than they say "no"
8. They only evaluate ideas when there is a full and well-balanced view.
9. They do not shoot from the hip, or jerk from the knee.
10. They recognize that innovation is all about managing risk.
11. They don't expect every innovation to succeed, nor do they place any foolhardy bets.
12. Their performance measures support innovation, rather than discourage it, such ass measuring inputs (like hours spent on idea generation) rather than outputs (number of ideas put into the suggestion box).
13. Managing the line and managing projects exist easily side-by-side; being assigned to an innovation project is symbol of regard; and risk-taking is rewarded.
14. They don't force closure on innovative, open-ended and exploratory tasks.

Unpleasant surprises are the penalty and cost of creative ideas that do not work as expected or intended. Salerno (2003, p 1) says that “When possible, getting buy-in from employees on the front line is a great approach. When [gurus] keep their creative under lock and key they risk leaving employees feeling resentful, confused or disassociated from their [work].”

References

Salerno, Robert (Septemer 8, 2003). 'We Try Harder:' An Ad Creates a Brand. BrandWeek. Retrieved on September 3, 2008 from EBSCOHOST.

Sherwood, Dennis (2000). The Unlearning Organization. Business Strategy Review, 2000, Volume 11 Issue 3.

Say and Southwell

In their article Driving Sales through Mobile Marketing, authors, Say and Southwell (2006, p262) imply that mobile direct marketing, especially text messaging can be ruinous because “the mobile phone is almost certainly the most personal electronic consumer device.” In support of this warning, another researcher Alan Chappell (2006, p1) cites a study that found 80% of cell phone users would consider ‘mobile spam’ a reason for switching carriers. Direct Marketers who fall short with mobile etiquette risk bad public relations, hardship in the mobile media, and Say and Southwell believe that ultimately it can degrade a brand (p 262).

On the other hand, de Lussanet (2003, p1) in a Forrester Study, reports solid growth in SMS marketing in Europe. Even in the U.S., Unwired Appeal in the SMS marketing section of their Web site reports on numerous, wide-ranging and successful SMS campaigns. The Say and Southwell article is a study and report about their experiences as pioneers in text message direct marketing for financial services in the United Kingdom. There is real potential in direct marketing text messaging and the article dispels the myth that customers always resent text-based marketing to their mobile form factors. Three case studies of work by their organization demonstrate the application of key success factors in the real business world.

Ultimately, with their approach they avoided the pitfalls inherent with text-messaging marketing and they proved quite successful using the new medium. For a complete review, see Driving Sales at Redmond Review

Reference
Chappell, A (March 19, 2006). Mobile Marketing & Opt-In (Chapell & Associates). Retrieved on August 28, 2008 at http://mmaglobal.com/modules/article/view.article.php/352

Say, P. and J. Southwell (Jan-Mar 2006). Beep, beep, beep, beep, that’ll be the bank then – Driving sales through mobile marketing. Journal of Direct, Data and Digital Marketing Practice.

My Coke Rewards

There has always been a rolling might to Coca Cola marketing and they are now stealing a march with the My Coke Rewards loyalty program as well. The enormous success of the program (see Promo) has created an equivalently enormous data store chock full of useful information. In awarding it the 2007 Interactive Marketing Award for "Best Loyalty Marketing,” Promo.com also noted that Coke has unleashed advanced technology to exploit this new information.

"Coke has invested in the collection and mining of consumer information. This data is already fueling customization on the site, and is also being used for e-mail and mobile promotions and other types of communication."

Coke is using Enterprise Decision Management (EDM) software with its new data store to automate operational decisions concerning promotional activities. Radan and Taylor (2008, ¶ 3) describe EDM as a new approach, that integrates Business Intelligence data analysis with business processes, combining operational and analytical processing. This is in contrast to the separation of data from business process inherent in data warehousing.

EDM is avant-garde and Coke is being applauded for its vision and mastery (see EDM Blog). Taylor (2007, ¶ 2) notes that data generated from loyalty programs can be infused with energy from an EDM “to improve marketing, store-layout and many other decisions.” One example he gives is its application to decide what rewards or rebates actually result in a change in customer behavior.

References
Radan, N. and J. Taylor (June 2008). Enterprise decision management uses BI to power up operational systems. Teradata Magazine. Retrieved on September 3, 2008 at (http://www.teradata.com/tdmo/v08n02/Viewpoints/EnterpriseView/Choices.aspx

Taylor, J (July 26, 2007). Growing your business with decision management. Retrieved on September 3, 2008 at http://edm.findtechblogs.com/default.asp?item=656748

Fan Traps and Chasm Traps

When consolidating numerous data sources, including databases and lists, care must be taken to issues besides finding proper keys or, alternatively, match codes. That is pretty daunting on its own. Worse comes, Chasm traps and Fan traps. They can mislead us into very wrongful and wasteful action in our direct marketing even if we have organized the database properly.

In many consolidated, operational data stores, we typically end up with a core record in a “fact” table that is associated with multiple “dimension” tables with characteristics for each record in the fact table. For example, a university Alumni table as our “fact”/core table, a Donations table and a Financial Aid table, among others that tell us more about the person in the fact table.

Someone in the Alumni table may have made 0, 1 or many donations and so have 0 to many associated records in the Donations table. Likewise, someone in the Alumni table may have received 0, 1 or many scholarships or loans to attend college. Many of our data associations in this type of consolidated customer database will have this 1 to many or 1-M quality.





This can result in very subtle errors and very misleading interpretations in the analysis we do on the database or in the more mundane operations such as mailings. Let’s say we want to test the hypothesis that Alumni who received financial aid are more likely to donate money than those who did not, a propensity to donate. The correct way to accomplish this is to run two queries, one a list of alumni and the sum of all amounts they donated, and the other a list of alumni and the sum of all financial aid they received. Then we merge the two results sets.

It is tempting instead to run one query that reads our alumni table and simultaneously sums both donations and financial aid in the related tables. In a SQL database we have just stepped into a chasm trap. Such a query will disproportionally count both the donations and the financial aid for those friends who have made more than 1 donation AND received more than 1 loans or scholarships. (see Business Intelligence Blog, p 1 or IDS, pp 1-3 or http://db.grussell.org/resources/pdf/co22001%20notes.pdf

References
International Documentation Solution (April 14, 2000). Recognizing and resolving Chasm and Fan traps when designing. Retrieved on August 28, 2008 from http://www.eagle.co.nz/businessobjects/pdfs/ttchasm.pdf

Napier University (August 2002). Database SystemsStudent Notes. Retrieved on August 28, 2008 from http://db.grussell.org/resources/pdf/co22001%20notes.pdf

Best Buy Reward Zone Loyalty Program

Researching the Best Buy Reward Zone program was informative. AllianceData published an article on the one year anniversary of Reward Zone (see Alliance). The Director of Relationship Marketing at Best Buy, Karen Maurice said that the loyalty program originated from recommendations by focus groups of customers four years prior to its launch in July 2002. Best Buy spent four years doing research, modeling how it would work and preparing a business case. Relationship marketing was able to make a case for “a rather large investment and said, ‘let’s pilot it.’”

Their approach was test based. The first release was to 50 stores in California. The results were impressive so they decided to rollout nationally. At that time the program was fee based, costing $9.99 per year. Even after the national rollout and especially during the first year’s renewal, Maurice says they were testing multiple approaches to see which had the most impact.

According to the Associated Press, (see wcco) in September 2006 Best Buy dropped the $9.99 fee and extended the program with an associated credit card. The customer earns more points and Best Buy can better understand their customer buying patterns. The credit card can also be considered part of the loyalty program. The popular Reward Zone was trusted enough to extend into other areas of the customer life style.

References
Associated Press (September 27, 2006). Best Buy Drops 'Reward Zone' Fee. Retrieved on September 3, 2008 at http://wcco.com/local/Best.Buy.Reward.2.361946.html.

Fergeson, R (2004). Happy Birthday, Reward Zone. AllianceData. Retrieved on September 3, 2008 at http://www.alliancedata.com/downloads/FMI%20Happy%20Birthday%20Reward%20Zone.pdf

Hallmark Crown Rewards

Duncan (2004, p 226) says that Hallmark does not rely much on demographics in its marketing analysis but instead “places much more emphasis on psychographics.” An artist with Hallmark explained that the relationship rather than the age is the essential element in their work. A program like Crown Rewards can help build an informative database of customer attributes and behavior patterns and add supersonic energy to their creative work, marketing communications, and strategic planning. It can even keep the company's market share intact, like it did for a Hallmark that was troubled in the early 90s.

They were hurting in the 1990s (see Hallmark History) because the world had changed and caught them unawares. They “had fallen victim to changing buying patterns in particular among women, who still bought 90 percent of all cards sold.”

Since implementing the program in 1994, the company has avoided the dire decline. Hallmark gains twice the revenue from Crown Rewards members than from general customers. Here is an internal study by Phillip Morris on Hallmark and its use of the consumer database and the uplifting effect the Crown Rewards program had on the Hallmark company (see Phillip Morris on Crown Rewards Database).

In addition to helping Hallmark, the Crown Rewards consumer database also supports the marketing efforts by Hallmark retail franchise stores, such as Mark’s Hallmark Stores (see iPass Case Study). Besides access to the Crown Rewards database, Hallmark also sells access to its high-speed data communications network named Hallmark/iPass. It is also useful for Hallmark subsidiaries such as Crayola.

When we are creating an account for the Crown Rewards Program, Hallmark asks if its affiliated companies can e-mail about special offers (see Hallmark Registration). This extends the psychographic profiling capabilities of Hallmark to companies such as Crayola, which probably could not afford to maintain such sophisticated data analytics functionality on their own. (see Crayola History)

Hallmark is a great study because it shows a hidden motive – the data motive- in loyalty programs.


References
Duncan, Tom (2005). Principles of Advertising and IMC. New York: McGraw-Hill Irwin.

CVS ExtraCare Loyalty Program

The CVS ExtraCare® program was introduced in 2001 to obtain advantage over competition (see Highbeam). Many praise the program (for example, Stocks blog), but I’m afraid someone let an 800 pound gorilla into the room that had been occupied by the more genteel Walgreens, the struggling Rite-Aid and CVS.

Walmart is now the third largest pharmacy chain behind CVS and Walgreens (see Rubins) and it is methodically attacking the revenue base of its competitors. The Associated press reports (see TulsaWorld) that Walmart is showing strong results. Bill Simon, CEO at Walmart reports that results at the end of each “phase” on the onslaught have been "exceeding our expectations."

One of its first attacks was on the cross-subsidizing actions of its competitors (reported by Larry Abrams), where these competitors charged more for certain generics to cover price competitions with other, popular drugs. Walmart offers $4 prescriptions on generic (see Retail Wire).

CVS alone was comfortable enough to stand pat. This may unwind. Walmart also offers three percent below cost on prescriptions (see Google) and over time this is pressuring already thin margins. Facing this kind of well orchestrated brutality will put CVS and its loyalty program to the test.

On a happier note, CVS gives a commitment to protect privacy of data collected - see CVS FAQ - showing the other important aspect of loyalty programs, information.

A Public Relations Plan for Microsoft

Microsoft must respond to the open source movement, both the formal initiative and the growing number of adherents in the corporate and government worlds. Open Source Software is the most serious threat to current and future Microsoft revenues and is the theme for this proposed public relations campaign. Open Source Linux and Apache are taking leadership positions in computer centers. What is more worrisome is that Linux may become the operating system of choice in corporate client devices in the near future. If certain publics become strategic buyers of Linux, it is probable that Windows will be driven from the market. This is the conclusion of Casadesus-Masanell and Ghemawat (2005, p 3), two Harvard Business School professors.

Microsoft must establish effective communication channels with key publics to exchange understandings about Windows and Open Source. It must make sure, in honest discussion, that those publics are aware of the capability of both Windows and Open Source to fulfill needs and interests. If Microsoft does not do this, misconceptions or mistrust may influence decisions that result in the disastrous scenario of that Harvard study.

The main barrier to Microsoft for effectively communicating messages about open source, and managing the growing crisis is the lack of integration across the different public relations firms and 5,000 bloggers. Additionally, it is not apparent that Microsoft has organized its thinking about open source according to integrated marketing communication principles. The result is isolated messages about open source that are not targeted to specific publics. The isolated message do not use a strategy and tactics appropriate for each public. Wilson and Ogden (2004, p 138) say that targeting specific publics, and using a strategy and tactics appropriate for each public is the hallmark of strategic public relations planning.

Here is a link to the proposed PR plan: Microsoft Public Relations Plan

References
Casadesus-Masanell, R. and P. Ghemawat (June 6, 2005). Microsoft vs. Open Source: Who Will Win? Retrieved on March 31, 2008 from http://hbswk.hbs.edu/item/4834.html

Wilson, Laurie and Ogden, Joseph (2004). Strategic Communications Planning, 4th Ed. Kendall/Hunt Publishing Company.

Integrated Marketing Communications Plan for Clif Bar

The Clif Bar & Company (their Web site) frames its mission statement as the 5 Aspirations and these are published on their World Wide Web site. There is also a capsule summary on its product packaging: Better tasting energy bar; take care of our people, our community and our environment. The 5 Aspirations are:

• Sustain our planet: Have a small impact on the environment, even with growth
• Sustain our community: Be good neighbors – give back
• Sustain our people: Empowering work environment so employees live life to its fullest
• Sustain our business: Take time to grow properly to attain a longer corporate life span
• Sustain our Brands: Make what people need and never compromise quality

Products

Clif Bar produces 100% natural, 70% to 100% organic, high quality energy foods. These include both bars and drinks. They are designed by a competitive athlete to avoid the poor quality he had experienced with energy bars available in the late 1980s and early 1990s. Bad taste and sugar spiking were problems and still are with many competitive products.

The complete line of energy bars and drinks can be found at the following location (see Lineup ). Some of the more popular products are the Clif Bar, Luna Bar, zBar, and CLIF SHOT Electrolyte Replacement Drink.

Integrated Marketing Communication Plan

I firmly believe that expanding operations into the Hispanic market will provide tremendous growth for Clif Bar, and that is the premise of this marketing plan proposal. Advancing into new marketing territory in this case the U. S. Hispanic segment is consistent with Clif Bar & Company, ground breaking and a calculated risk.

The goal is to drive awareness and trial in an affulential segment of the Hispanic community. The following three overall communication objectives will provide the framework for all subsidiary marketing function goals.

Objective One: Cognitive path

To increase Clif Bar recognition to 90% of targeted affluential Hispanic segment

Objective Two: Affective Path

To create a brand personality for Clif Bar that is appealing to the targeted affluential Hispanic segment, one that is as upscale, high quality, healthy, and part of their lifestyle.

Objective Three: Behavioral path

To inspire 10,000 trials in the targeted Hispanic segment. Increase purchases of Clif Bar products by the targeted segment.

The grand strategy is to coordinate our Public Relations activities with Advertising, Sales and Trade Promotions, Direct Marketing and Media Planning so that they compliment and reinforce each other to create awareness. They will drive site visits to the Clif Bar interactive web presence for comprehensive relationship building with the customer. The proposal recommends utilizing print and Internet one-way media to create awareness and drive site visits to the interactive web site.

Finally, a master schedule ensures that all tasks are synchronized and that they do not interfere with or counteract one another.

More details on our strategies are provided in the complete proposal for an Integrated Marketing Communications Plan at Clif Bar Proposal.

American Airlines AAdvantage

The grandpappy of all frequent flier programs, AAdvantage was designed to keep American Airlines most frequent customers on the right airplanes, American’s. According to Lalas (TCS_White_Papers) the first frequent flier programs in the 1980s had the intended benefit of better understanding the popular airline routes.

Of course, AAdvantage increases customer retention with the promotional currency of a free airline ticket. Furthermore, Thomaselli (2005, p 2) reports that

“There's not a lot of expense to the airlines. It might sound like it's a big thing, giving away a free ticket to someone who has accumulated enough points. The reality is, very few seats are given away at the expense of a revenue passenger."

More than a defensive mechanism to keep customers, it was a reconnaissance to better understand its routes and customers. This enables more effective yield management on routes to predict sales patterns and ticket pricing strategies to fill up planes while optimizing revenue. Of course, there is also personalized marketing. Jackson (2007, p 31) reveals that American used its AAdvantage database to more effectively personalize its web site.

During these desperate financial times, Financial Week (on AA) reports on another advantage of the AAdvantage loyalty program. The informative database has tremendous value and American is considering selling it to raise cash to stay alive, reflecting its legless frailty and incapacity.

American has already been using the loyalty program database for its retail web site (see Retailing for Miles ). It incents members to buy products from it with the inducement of earning frequent flier miles.

Solheim (2008, p 1) says that American also profits by selling miles to other marketing organizations.

“Airlines discovered that they could make more money by selling miles to ‘partners’ than by selling seats.”

AAdvantage has almost 1,200 partners who buy miles at 1¢ to 2¢ per mile.

Reference

Jackson, Tyrone (2007). Personalisation and CRM. Database Marketing and Customer Strategy Management. Retrieved from EBSCOHOST on August 31, 2008.

Solheim, Mark (January 2008). What You Need to Know About Travel Reward Programs. Kiplinger Personal Finance. Retrieved from EBSCOHOST on August 31, 2008.

Thomaselli, Rich (June 20, 2005). Who really reaps mileage rewards? Advertising Age. Retrieved from EBSCOHOST on August 31, 2008.

Ethos, Themes and Values

Understanding our target audiences and targeting content to them is a fundamental aspect of web design. Scott (2007, p 33) advises us to identify and articulate each target audience and develop content specific to each. He recommends creating a persona for each target audience.

What information do we need for content to appeal to each persona? In his book, Culture and Persoanlity, Wallace (1963, p 101) recommends knowing the themes, values and ethos of a group to prepare appealing content. A theme is how the group sees the world. Wallace suggests a good way of discerning this is a review of the literature or theatre the group patronizes. What books or movies are their favorites?

He catalogs several themes in literature:

• The “western” – hard to find good people must fight tirelessly to bring order to a chaotic world


• The “detective” – idealists disillusioned with the existing order do the right thing for the wrong reason


• The “mystery” – clever and logical heroes politely work to maintain what they believe is a righteous order


• The “action” – well intentioned brutality


• The “drama” – heroes not concerned with social welfare, seek gratification of private desire.
  

Ethos is a style or form of emotional experience. Ruth Benedict, the grand dame of the cultural and social study of groups and a professor to Margaret Mead (see Wallace, 1963, p 103), distinguishes two type of ethos for groups: Dionysian and Apollonian. The desire for the Dionysian is personal experience, while that of the Apollonian is moderation.

Finally values (p 101) are concepts or mental images that motivate a group to action. They are either positive or negative, moving a group towards or repelling them away from some idea. Health, membership in a prestigious group, leisure, and affluence are examples of such motivational food pellets.

This type of information should be stored in our customer database in addition to the raw data on demographics, and so on to help formulate a meaningful appeal after we have segmented target audiences.

References
Scott, D (2007). The New Rules of Marketing and PR. Wiley.

Spiller, L. and M. Baier (2005). Contemporary Direct Marketing. Pearson/Prentice-Hall.

Wallace, AFC (1963). Culture and Personality. Random House.

Bove and Mitzifiris on Openness

In their article, Personality traits and the process of store loyalty in a transactional prone context, Bove and Mitzifiris (2007, p 507) give a quick and informative review of customer loyalty and the value it has to the marketing efforts of an organization. Customer loyalty results in better financial performance, forgiveness of service failures, and less price fighting. They assert that retailers must understand their customer’s loyalty orientation in the challenging business environment of today. The main topic of their article is an empirical study of how customer personality traits affect loyalty.

A well established personality profiling framework, the Five Factor Model (FFM) is used in deriving an answer to the key question, (p 508) “How can a retailer determine which customers have a relational orientation?” Their evaluation is how the FFM personality traits impact trust, commitment and satisfaction and in turn how these three factors affect loyalty with a fast food retailer.

This paper gave a good overview of the Five Factor Model, an important model for any discipline dealing with personality, including marketing. It also gave a quick summary of the literature related to customer loyalty – its benefits and the factors that affect it (p 509), trust, commitment and satisfaction. They also describe the NEO-PI measurement instrument (survey) that can be used for personality classification (p 510).

Bove and Mitzifiris posited fourteen hypotheses (p 509) about the relationship between personality traits and the three antecedents of trust, commitment and satisfaction, as well as between these antecedents and loyalty. The first method used was a literature review to establish the link between trust, commitment and satisfaction with loyalty. Previous empirical work had established these relationships so they built on that foundation.

They next designed a survey to use for measuring customer personality, the NEO-PI measures, and tailored it to their intended investigation. They used a Likert scale for each question’s response 1 to 5, strongly disagree to strongly agree. Rather than use a random sample of fast food retailers, they selected two with intent. They omitted one of the Five Factor Model dimensions, openness from the survey design.

They found (p 512, 514) that the relationship between the antecedents and the behavior aspect of loyalty is not explanatory or predictive. Additionally, of the four Five Factor Model personality traits they tested, only emotional stability had a material relationship to the antecedents, in this case trust (p 512). On the other hand, their model fared better with the attitude aspects of loyalty (p 515). Trust, commitment and satisfaction do have a positive correlation with attitudinal loyalty in fast food retailing.

I do think Bove and Mitzifiris (p 509) were hasty in the exclusion of the openness factor in the personality profile. They assert that there is no research evidence “to support an association between openness to experience and relation orientation.” However, Barbanelli, et al (1997) establish the link between openness and individuation and there is literature showing the link between individuation and commitment or even loyalty directly. For example, see Gnaulati and Heine (2001) or Chan and Misra(1990).

It also seems intuitively obvious that the personality factor of openness, which incorporates need for variety, would have an affect on commitment, especially in food retailing. Because of this, I would change the hypotheses model (p 510) constructed by Bove and Mitzifiris as noted by red coloration in the following diagram:

Despite this misgiving about openness, their investigation was able to make two significant conclusions. First, the pathway to loyalty proposed by Garbarino and Johnson for a theatre company may not be readily generalizable. Second, regarding the attitude towards the store (as opposed to buying behavior), trust, commitment and satisfaction do seem to be generalizable.

References
Barbaranelli, C, and G Caprara and C Maslach (1997). Individuation and the Five Factor Model of Personality Traits. Retrieved on August 27, 2008 from EBSCOHOST.

Bove, Liliana and Betty Mitzifiris (2007). Personality traits and the process of store loyalty in a transactional prone context. Journal of Services Marekting. Retrieved on August 26, 2008 from EBSCOHOST.

Chan, K and S Misra (1990). Characteristics of the Opinion Leader: A New Dimension. Journal of Advertising. Retrieved on August 27, 2008 from EBSCOHOST.

Gnaulati, E and B Heine (January 2001) Separation-Individuation in Late Adolescence: An Investigation of Gender and Ethnic Differences. Journal of Psychology. Retrieved on August 27, 2008 from EBSCOHOST.

Podsakoff, P, and S. MacKenzie, J. Lee, and N. Podsakoff (2003). Common Method Biases in Behavioral Research: A Critical Review of the Literature and Recommended Remedies. Journal of Applied Psychology. Retrieved on August 27, 2008 from http://www.usq.edu.au/users/patrick/PAPERS/Common%20Method%20Variance.pdf

Microsoft and Open Source: A Gambler's Ruin Competition

Open Source software strikes at the heart of Microsoft – its value add to the economy. Open Source offers for free the software that Microsoft sells and that is the basis for its enormous revenue stream.

I think the relationship between Microsoft and Open Source is a Gambler's Ruin Competition. This is a rivalry between two parties, one with a large, well established position and the other with a small position but able to compete effectively on individual transactions. The classic example is a casino versus a professional gambler who has a system (also known as a martingale) that enables them to win more than 50% of the time.

Microsoft might see a rapid reversal of fortune if a few strategic buyers go Linux. These would be big enough Open Source wins that they reverse the over-dominating share, the house advantage Microsoft holds in the market.

ISVs would then become interested in Linux; additionally, Linux vendors could extend the purchase price advantage into a clear TCO advantage by improving usability and administrative services; end-users and help desks begin training on Linux.

The key strategy for Microsoft is to keep that from happening. Keep the “strategic buyers” in Windows. Government and large corporate buyers - they are far and away the most important publics.

For a more comprehensive analysis, see Redmond Review Gamblers

Culture and Personality

A Canadian anthropologist, Anthony F.C. Wallace published a great book in 1963, Culture and Personality. He was largely forgotten and is now obscure, but he developed a theory of culture change that anticipated the very problems encountered by organization theory and marketing. He used historical studies of large social groups to warrant his conclusions but one of his application areas was in advertising. The process is the same in advertising as it is with a culture, a donor group introduce a change or innovation to a recipient group. Culture change.

He proposed a solution that is the heart of modern integrated marketing communications, to establish connections to publics for building long-term relationships. He suggested a variety of segmentation strategies based on modal personalities in these publics (we might say personas). A communication will have different levels of influence and effect on different modal personality types. He developed an influence scale as a guideline to improve the likelihood of group acceptance of the new ideas.

His criticism of advertising then (50’s and 60’s) was that it was too severe in its attempts to influence independent consumers, pegging it at the threat level on his scale. He notes (p 135)

“[Threat] is the device frequently used by commercial advertisers attempting to induce a target group to accept its product, non-buyers are threatened with loss of friends, job, health and sexual satisfaction if they fail to buy …”

His recommendation: move several steps down the ladder to peaceful negotiation. Here a mutually beneficial relationship is developed where the interests and motives of both parties “are well satisfied on a long-term basis.”

Law of Requisite Variety

With Cool Hand Luke (see imdb ), “Rabbit gonna run” results in a “Fay-yah to communicate” lecture and thumping from the warden. With web sites, just the opposite: a failure to communicate results in a rabbit gonna run.

In his book "The Social Psychology of Organizing", Karl Weick offers an intriguing insight about communications generally that I think applies with force in Websites where we can’t see the rabbits come and go, except by their abstruse reflections in our web logs. He defines the Law of Requisite Variety:

“the variety in a system [such as a Website] must be at least as great as the environmental variety against which it is attempting to influence.“

For Web site designers, our site must have appeal to our different publics. Weick gives as an example a photographer, and I give a Website Design corollary:

• A photographer has 5 subjects each at a different distance from the camera.
• A IMC Website designer has 5 different psychographic segments to reach with the site
  --
• The photographers camera must have 5 distinct setting to capture all subjects with uniform density and clarity
• The Website designer must have content for 5 distinct personas and apt navigation for each (as an example see WVU Home Page)
  --
• If the camera has fewer than 5 settings it lacks requisite variety and will not register with sufficient detail to depict with accuracy
• If the Website does not have content of relevant interest to the 5 personas some of the visitors will leave in frustration.
  

Paul Gillin (see Paul's blog) in his excellent book The New Influencers describes an approach for addressing a diverse audience such as a University Website.

My conclusion, the home page is an important traffic cop to direct personas to their appropriate content.

We also need to be a Web boss like at right, because the customer, well he's got rabbit in his blood, and he'll run.

Requiem for a Rolodex

Denise Schoenbachler, Geoff Gordon, Dawn Foley and Linda Spellman published attractive and informative guidance (see http://web.cba.neu.edu/~fsultan/Database%20Marketing.pdf ) for creating a customer database useful in Database Marketing. As a first step, they recommend that a vision document be prepared to explain the corporate need, to record user profiles, and to designate a project sponsor.

If the primary corporate use is list management, they suggest that a service bureau, such as All Media (see http://www.allmediainc.com/index.html) would be the most cost effective approach. On the other hand, if the corporate need is for segmenting customers, correlating customer traits with purchasing behavior, or which customer personas are the most profitable then a database development effort is necessary.

Sources of Feed Data
To build such a repository both internal and external sources of data must be filtered and merged. What types of information are typically stored and where can we get them? Spiller and Baier (2005, p73) list the usual suspects:

• Demographics
• Psychographics
• Financial history
• Prospect interactions
• Prospect Interaction Dates
• Address and phone number
• Profitability or net financial value

Psychographics is synonymous with life-style and personality. Such a profile can add supersonic energy to a direct marketing campaign by segmenting prospects for more effective communications (see Spiller and Baier, 2005, p 39). It may be derived from the appearance of a customer on various lists from different publications of note. A fine and handy source, however, remains The Lifestyle Selector by Equifax. It is fed by responses to surveys and completed product registration cards.

Spiller and Baier (pp 37-39 ) further disclose other sources of powerful information. These include the CensusCD Neighborhood Change Database. Census data (p 38) is a good source of demographic data about our prospects. This is the usual necessary demographics: age, gender, education level, income level, occupation, and type of housing. They (p 13) suggest that customer lists from prominent publications may have relevance not only as data to overlay the customer database but as channels for direct response print advertising.

There is also (p 13) the implication that web site audit logs are useful sources for data mining to see where visitors to the web site sourced from, as well as what landing pages they reviewed and for how long at they stayed at the web site. Their CGI headers will contain their IP address, and the Internet Service Provider (ISP) can be traced from that. It may be possible to purchase a list to get the demographic data and other monitoring data held by the ISP.

Additionally, there are compiled lists from third parties such as the Department of Motor Vehicles, Birth records, and other state and county court house data. Regarding information from governmental sources, Phelps and Bunker (2001, p 34) caution that

“Although the individual-level nature of public records information increases its utility for marketers, the use of such individual-specific information has contributed to consumer privacy concerns.”

Is all lost? Direct Marketers may be able to use access statutes to retrieve the desideratum. The Freedom of Information Act (FOIA) is a popular choice and there is no specific exclusion for commercial use of the information (p 35).

However, they summarize legal arguments (p 44) on the topic with the assertion that while FOIA may not restrict use based on motivation for obtaining the information, it does not guarantee access for commercial purposes. They conclude (p 46) that

“the creation of provisions that discriminate based upon the motivation of the requester seems a slippery slope that legislatures should avoid starting down. Marketers must realize, however, that public opinion, like gravity, can work to push legislation down this slope.”

How to Grow the Database
Spiller and Baier (2005, p 52) suggest starting with a simple name and address database and then incorporate geographic, demographic and psychographic data about each prospect. They explain (pp 75-79) how to calculate the Life Time Value (LTV aka PAR) of a customer and to decide if the cost of obtaining and maintaining the customer’s data in our database is a worthy exercise. The PAR Ratio is cost/PAR. If this ratio is less than one, then the customer’s record pays its freight.

According to them (p 7) the process should start with defining personas for the prospects themselves:

• Who they are
• What they need and want
• How the college fit into that
• Where they are located
• When they are ready to interact with the college
• Why they interact
• Their level of commitment
• What channels for distribution are most efficient.
  

Crucial facts from the databases would be the recency, frequency and monetary value of interactions with prospects (p 10). This will help profile an expected relationship with the prospect and the your company. It is vitally important the data obtained externally be guaranteed fresh (p 44). Stale data results not only in wastage but in antagonism to non-prospects getting spammed.

Lost Your Keys?
Keys are a critical part of joining data from different sources so you can be sure that you are adding the correct information from one source record to its corresponding record in another source (see Olson, 2003, p 176). Keys are fields or attributes that uniquely identify a record such as SSN but not like name. However, having such keys across all lists is a luxury, although Spiller and Baier have a remedy to take the place of unavailable keys (p 65) – a match code.

Match codes are formulated from Name and Address information and can be used to match records from different source so they can be properly merged (p 66) . They can also be used to purge duplicates. A counter of the duplicates discovered should be incremented on the retained record before the duplicate is deleted (p 68) because showing up on two or more lists is an indicator of the strength of interest for that prospect.

The database should also be updated with results from our own integrated communication campaigns to appealingly increase efficiencies. Schoenbackler, et al say that the different promotions or specific motivational actions and the responses to such, are

“perhaps, the most valuable benefit of the database. Marketers no longer have to
accept John Wanamaker’s lament that ‘half of what I spend on advertising is
wasted – the problem is which half?’”

They also recommend that a marketing analysis be conducted on the customer database to sub-serve two important functions: 1.) profitability; and 2.) Trends. Trends analysis is a dramatic synthesis of our most productive through least productive customer profiles – i.e. who are the whales.

What problems can confront us? Our old friend data quality is a usual suspect. See http://gmrwvu.blogspot.com/2008/07/impact-of-data-quality-on-new-media.html . Traditional project management failings can torpedo this type of effort but they can work their powerful wreckage on any type of information technology effort.

Schoenbachler, et al sum up that database marketing is a necessity not an option.

References

Olson, Jack (2003). Data Quality; Morgan Kaufmann Publishers.

Phelps J., and M. Bunker (Winter 2001). DIRECT MARKETERS’ USE OF PUBLIC
RECORDS: CURRENT LEGAL ENVIRONMENT AND OUTLOOK FOR THE FUTURE. Journal of Interactive Marketing.

Spiller, L. and M. Baier (2005). Contemporary Direct Marketing. Pearson/Prentice-Hall.

Impact of New Media on Database Marketing: Supersonic Energy

According to Spiller and Baier (2005, p 15) direct marketing contributes $2T to the U.S. economy and the industry employs 16.1 M people. They note that direct marketing is interactive, measurable, as well as response and database driven. MarketingCharts (see MarketingCharts ) reports that the Direct Marketing industry has experienced growth in the 18 quarters prior to first quarter 2008.

Direct marketing is the largest share of marketing services (see Share)


and Marketing Services is the largest segment of the media industry:


Business is changing its relationship with marketing. Spiller and Baier (2005, p 13) note that traditional advertising is largely unaccountable. Weber (2007, pp 115-116) notes there is a convergence between what management wants and what marketing can deliver with new media.

Additionally, direct marketing with the new media is addressable, interactive, dynamically customizable and contextual. Contextual means that corporate buyers will know how a customer came to them and have a basis for predicting where the customer is in the buying/subscribing/joining process. Database analytical services present context so marketers can “predict future behavior and use promotional strategies that will not only drive prospects to their web sites but also engage them in meaningful and ongoing transactions once there.” John Naisbit (see Spiller and Baier, 2005, p 13) says we are drowning in information but have little knowledge. Direct marketers are getting knowledge from database analytical services to customize messages to the buyer.

Larson (see FreeLibrary) says that more analytics are available with new database technology, and this enables marketers to refine their prospect list for customized messages more suitable to the specific publics being reached. Two other technology changes that have favored direct marketing according to Spiller and Baier (2005, p 16, 13) are in printing and the Internet. The powerful, low cost printing on PCs today as well as computerized type on large scale presses has initiated a “demassification” of print so that direct marketers can print sophisticated newsletters, brochures, and sales materials quickly and at low cost. The Internet is a ubiquitous medium for interactive, one-to-one communications from direct marketing to customers, ranging from email, to Web sites, to cell phones through SMS gateways, and a myriad of other creative approaches.

In summary, the growth of direct marketing is enhanced by high-tech such as New Media, and data mining. Goldstein (2006, p 16) concludes that high-tech is changing the nature of marketing, by enabling more targeted and values driven approaches that favor direct marketing.

“Brand and messaging strategies will become more targeted and values-driven. And to compete, companies will create their own direct channels to reach stakeholders with internet broadcasting, e-mail and other direct marketing techniques. Companies will establish their own databases of shareholders and customers willing to defend the firm.”



References
Goldstein, Stuart (2006). Fast forward: Future trends in corporate communication.
Strategic Communication Management. Retrieved from EBSCOHOST on August 18, 2008.

Larson, Boo (2008 ). How Direct is It? Osborn & Barr Communications, Kansas City, MO. COPYRIGHT 2008 Doane Information Service.

Spiller, Lisa and Martin Baier (2005). Contemporary Direct Marketing. Pearson/Prentice-Hall.

Weber, Larry (2007). Marketing to the Social Web. John Wiley.

BMW's Guitar Score

If you have been watching Mad Men season two, you have heard the quiet clarity of the guitar picking in BMW’s We Built commercial (Bimmer: We Built). It was composed by Singing Serpent (their blog) a San Diego music house that does elegant and attractive work. According to creative director Rafter Roberts, SingingSerpent provides "as wide an array of Musical/thematic concepts as anyone could ever want out of a spot.”

The We Built score is reminiscent of Christa Päffgen’s work in the mid-60s (see Nico) especially her These Days track on the Chelsea Girl album, if you can get through the violins . These Days is emblematic of the pop music of that time (Amazon_30_sec) and it has “lasted for decades as a classic of [blue] introspection made even more remarkable by [Jackson] Browne having been only 16 years old when he wrote it.”

Arrangements similar to We Built would seem effective appeals to baby boomers of higher income and education levels (see Music Audience). The demographics of this style pop music has a bias for higher income and education levels. Likewise for BMW’s demographics (for example see BNet).

Dr. David Allan (2006, p 435, in Effects of Popular Music) says the value of syncing music into advertising campaigns is increased involvement through a heightened arousal. However, his research also shows that

“The individuals in this experiment processed songs and artists they considered high in personal significance differently from those that were low in significance”

BMW has a song cycle of commercials to reach its various publics, including these:

• BWM Reflections
  
• BMW Thank Goodness
  
• BMW Its Only A Car
  
• BMW dhogue

Advertisers seem to pull out the stops for Mad Men and showcase their talent. SleepingSerpent is a persuasive best for BMW.

Is There a Smoking Hole in the Future of TV and Print?

I think yes, powerful vicious circles are converging around the traditional TV and Print media formats. They must face a new revenue reality. They must face accountability. Their God Complex days are over.

The interdependent nature of the variables in vicious circles means that different circles can become coincident and reinforcing, creating a perfect storm. TV and Print will be pulled through a vortex much more powerful than radio, and after which their look and capacity will be very much different than today.

An unspeakable degree of financial revenue destruction has been initiated. Advertising, especially classified advertising is shifting to the Internet, to the new media. Classified advertising had been the financial spine of newspapers, cross-subsidizing reporting, political commentary and editorial activities (See Free Press Article). It represented 30% (See Newspapers Suffer) to 37% of newspaper revenues (See Media Manager).

Accountability. That dread word. On the corporate side of this table, marketing has acted like a junkie in the boardrooms, tin-cupping for money without demonstrable value. On the other hand, the new media can provide the metrics that management wants.

It is plainly clear from current events that revenue base destruction, and accountability will change the business model in the traditional media of TV and Print. Their days of royal power are numbered, and they will become more of a first among equals in the world shaped by the new media.

For a more complete analysis see Redmond Review Smoking Hole.