Editorial Board of “Holistic Marketing Management” (A refereed journal published four times annually by the School of Management-Marketing of the Romanian-American University) Editor-in-Chief Theodor Valentin PURCĂREA
John L. STANTON
Léon F. WEGNEZ
William PERTTULA Levent ALTINAY
Andrew KILNER Dana ZADRAZILOVA Riccardo BELTRAMO Sinisa ZARIC Gabriela SABĂU Hélène NIKOLOPOULOU Vasa LÁSZLÓ Peter STARCHON John MURRAY Kamil PÍCHA Irena JINDRICHOVSKA
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President of European Retail Academy; President of EuCVoT, Member of the Astana Economic Scientists Club; Former Managing Director EHI Retail Institute, Germany, Chairman of the Advisory Board of EuroShop, Chairman of the Board of the Orgainvent, Trustee of EHI Retail Institute at GLOBALG.A.P. President - Association of Global Management Studies (USA); Editor-in-Chief, Journal of Entrepreneurship and Sustainability Issues; Former Editor-in-Chief, Journal of Management Systems, USA; Australian Graduate School of Entrepreneurship, the Faculty of Business and Enterprise, Swinburne University of Technology; Member of France’s National Academy of Scientific Research (CNRS); Director - ESB International Teaching and Research Exchanges, Reutlingen University, Germany Professor of Food Marketing, Erivan K. Haub School of Business, Saint Joseph’s University Philadelphia, USA; Director, Institute of Food Products Marketing, Editor, Journal of Food Products Marketing Secretary General, International Association of the Distributive Trade, AIDA Brussels; Member of France’s Academy of Commercial Sciences; Doctor Honoris Causa of NUPSPA (SNSPA) Bucharest; Hall of Fame of the European Retail Academy, Honored Personality 2015 Internet Marketing Professor, College of Business, San Francisco State University, USA Professor of Strategy and Entrepreneurship, Research Area Leader, Oxford School of Hospitality Management, Faculty of Business, Oxford Brookes University, UK First MBA Director at the Rennes Graduate School of Business in France; Director of RAFME Research into Management Excellence; PhD (Cambridge), MBA (City, London) Faculty of International Economic Relations, University of Economics, Prague, Czech Republic University of Turin, Italy University of Belgrade, Yugoslavia Memorial University, Grenfell Campus, Corner Brook, Canada University of Lille 3, France Szent Istvan University, Hungary Comenius University in Bratislava, Slovakia Faculty of Business, Dublin Institute of Technology, Ireland Faculty of Economics, University of South Bohemia in Ceske Budejovice Deputy Head of Department of Business Economics, University of Economics and Management, Prague, Czech Republic 1
Norbert HAYDAM Constantin ROŞCA Hans ZWAGA Roxana CODITA Dumitru MIRON Valeriu IOAN-FRANC Iacob CĂTOIU Virgil BALAURE Gheorghe ORZAN Luigi DUMITRESCU Marius D. POP Petru FILIP
Ion VOICU SUCALA Virgil POPA Alexandru NEDELEA Olguța Anca ORZAN Ana-Maria PREDA Ovidiu FOLCUȚ Doinița CIOCÎRLAN Marius Dan DALOTĂ Mihai PAPUC Gheorghe ILIESCU Alexandru IONESCU Olga POTECEA Oana PREDA Nicoleta DUMITRU Monica Paula RAȚIU Costel NEGRICEA Elisabeta Andreea BUDACIA
Faculty of Business, Marketing Department, Cape Peninsula University of Technology, South Africa President of Romanian Scientific Society of Management - SSMAR Kemi-Tornio University of Applied Sciences, Finland Technische Universität München, TUM School of Management Academy of Economic Studies in Bucharest National Institute for Economic Research, Romanian Academy; Romanian Marketing Association; Romanian Distribution Committee Academy of Economic Studies in Bucharest Academy of Economic Studies in Bucharest Academy of Economic Studies in Bucharest Lucian Blaga University of Sibiu Babes-Bolyai University, Cluj-Napoca Dimitrie Cantemir University, Bucharest Technical University of Cluj-Napoca, Management and Economic Engineering Department; University of Glasgow, UK, College of Social Sciences, School of Social & Political Sciences; Managing Editor, Review of Management and Economic Engineering Valahia University of Târgovişte Ştefan cel Mare University of Suceava Carol Davila University of Medicine and Pharmacy Bucharest Romanian-American University Romanian-American University Romanian-American University Romanian-American University Romanian-American University Romanian-American University Romanian-American University Romanian-American University Romanian-American University Romanian-American University Romanian-American University Romanian-American University Romanian-American University
Associate Editors Diana SOCA Irina PURCĂREA Dan SMEDESCU Art Designer Director Alexandru BEJAN
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“Holistic Marketing Management” (A refereed journal published four times annually by the School of Management-Marketing of the Romanian-American University) Jubilee Issue Volume 6, Issue 1, Year 2016 Contents
Theodor Valentin PURCĂREA - Editorial: If the Founder Gave Us the “Text” (1991-2008), Now it’s Time to Supply the “Commentary on It with Friends and the Academic Family …….4 Congratulatory Remarks for the 25th Anniversary of the Romanian-American University by distinguished RAU International Partners……………………………..........................10 Cosmin TĂNASE-GHEORGHIU - Congratulatory Remarks: Celebrating the 25th anniversary of the Romanian-American University (by 2007 Management-Marketing School Valedictorian, Romanian-American University)…………………………...13
Andrew KILNER - MANAGER or SPECIALIST. Which Role is Most Suitable for You? (initially published in 2015, Volume 5, Issue 1, pp. 06-10)……………………………………………………...14
John L. STANTON - Advertising to the Older Consumer Becomes More Important (initially published in 2011, Volume 1, Issue 2, pp. 5-15) …………................................................................................19
William PERTTULA - Holistic Marketing Management and Social Media (initially published in 2011, Volume 1, Issue 4, pp. 06-08)..............................................................................................................30
Sinisa ZARIC - Management and trust during the Global Economic Crisis: The case of Serbia Vojislav BABIC
(initially published in 2012, Volume 2, Issue 2, pp. 07-18).......................................33
Roxana CODITA - Multinational Companies and Sustainability Practices beyond Headquarters – Evidence from Foreign Subsidiaries in the Romanian Food and Beverages Industry (initially published in 2012, Volume 2, Issue 3, pp. 6-26)......................................................................46 Holistic Marketing Management
Riccardo BELTRAMO - The Scatol8® for Sustainability: an update on the remote sensing system of Sergio MARGARITA
environmental, landscape and management variables (initially published in 2012, Volume 2, Issue 4, pp. 06-18)........................................................................................67
William PERTTULA - How Internet Marketing has changed over the Years and What the Future will bring published in 2013, Volume 3, Issue 1, pp. 08-12)……………………………………….80
Hans ZWAGA - Innovation Management and Tuning the Entrepreneurial Process (initially published in 2014, Volume 4, Issue 2, pp. 14-17)…………………………………………………………………..85
Theodor PURCAREA - Marketing’s Continuous Rise and Shine (initially published in 2014, Volume 4, Issue 3, in pp. 06-25)…………………………………………………………………...89
Andrew KILNER - Improving Company Management: Review of Recent Ideas (initially published in 2015, Volume 5, Issue 2, pp. 11-14)……………………………………………………………….111
Costel Iliuta NEGRICEA - Marketers, Challenged to Meeting Digital Priorities (initially published in Ioan Matei PURCAREA
2015, Volume 5, Issue 4, pp. 07-14)……………………......................115
Andrew KILNER - Failings in the Management of World Affairs (initially published in 2015, Volume 5, Issue 3 pp. 07-12)……………………………………………………………………………123
Irina PURCAREA - Cultural Entrepreneurship. The Importance of Developing Cultural Competences within the Framework of Resource Mobilization (initially published in 2015, Volume 5, Issue 4, pp. 15-21)……………………………………………………………………………………129
The responsibility for the contents of the scientific and the authenticity of the published materials and opinions expressed rests with the author.
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Editorial: If the Founder gave us the “text” (1991-2008), now it’s time to supply the commentaryon it with friends and the academic family It’s an absolute honor to mark this historic moment of our beloved ROMANIANAMERICAN UNIVERSITY (RAU) starting from the strategic intuition of the distinguished Founder, Professor Ion SMEDESCU, in what concerns building a new road while walking on this road. Paraphrasing Schopenhauer, I can say that if the Founder gave us the “text” (19912008), now it’s time to supply the commentary on it with friends and the academic family. In today’s terms we can say that Professor Ion SMEDESCU did think in multiple time frames, anticipating and reacting to discontinuities, and enhancing capabilities while looking ahead, constantly challenging priorities and inspiring the entire academic family, empathizing with students, identifying and developing talent, learning to adapt and effectively address changes in the relevant market demand or competition, actively seeking to understand broader trends outside RAU, reflecting RAU values and principles in the key managerial processes, stimulating innovation and preventing generational barriers by engaging younger generations in formulating RAU policy and organizational development, managing to create RAU value and enduring through time with patience, and moving on. As we all know, at the heart of our basic human experience there is our brain’s ability to preserve or alter our memories, which are transformed each time we revisit them. Allow us to consider the 25th Anniversary of the ROMANIAN-AMERICAN UNIVERSITY as an opportunity to strengthen the memory, by recalling some older memories, making them feel vivid and putting them in relation with the present challenging time. That is why I am honored to recall the words of the RAU Founder, Professor Ion SMEDESCU, which are still very much relevant nowadays: << Times are changing, absolute values – truth, good, beauty – remain, always giving their owners the quality of being united and responsible in the promotion of education and culture, in gathering wisdom, knowledge and willpower. One of the Fathers of the American nation, Thomas JEFFERSON, answered a question regarding the University of Virginia (which he founded) as follows: “Here we follow the truth wherever it may lead”. Jean MONET, one of the Fathers of the European Union, said in turn that: “Education and culture are the key to European integration. >> This great anniversary also reminds us the fact that Professor Ion SMEDESCU often quoted James MADISON, always insisting on the need to accelerate the advancement and diffusion of knowledge (“the only guardian of the liberty” according to James Madison), and also recommending the same “best medicine in the world”, namely: “a long journey, at a mild season, through a pleasant country, in easy stages”. Let us also remember that when Professor Ion SMEDESCU underlined that “marketing strategy means drift refusal”, there was a clear understanding of today’s so-called “customer decision journey” (popularized by McKinsey in 2009) – compared to the traditional “marketing funnel” (“sales funnel”, “conversion funnel”) – seen as a new mental map to navigate the continuously changing competitive landscape. Professor Ion SMEDESCU often spoke Holistic Marketing Management
passionately about the world of human creativity and shared subjective experience, by constantly pledging for both, on one hand, a better understanding of customers’ and prospects’ needs and expectations from our University, and on the other hand, having the right message and delivering it in the right time and right place, while responsibly and accountably teaching students to adequately apply what they have learned.
The words of Professor Ion SMEDESCU, Founding Rector of the Romanian-American University, are still with us: “For me, the Romanian-American University is everything: my home, my profession and my spare time. This establishment of education and science is a mirror of me and of my work for tens of years, my eternal soul, and my idea for the renewal of the concept of work”. It is worth remembering that within the calendar of events dedicated to the RAU’s 20th Anniversary, on April 12, 2011, an impressive launch of a „Marketing” (English version) book took place, book written by a group of authors under the coordination of Professor Ion SMEDESCU. „Respect”, communication”, and „accountability” were the key words on this special occasion. Professor ION SMEDESCU did set himself as a standard becoming voluntarily accepted by his colleagues, bringing all of them renewed trust, hope and inspiration, year by year. The Founding Rector of the romanian-american university and President of the RomanianAmerican Foundation for the Promotion of Education and Culture did so much for the ROMANIAN-AMERICAN UNIVERSITY and its students, showing an extraordinary intellect, a strong commitment and dedication to providing a quality education, sharing a true love of learning and for the University and bringing a real sense of belonging to all those privileged for participating in the academic life.
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As a fact which speaks for itself of RAU proper evolution, allow us to also remind within this special context that: • the ROMANIAN-AMERICAN UNIVERSITY’s Aula Magna hosted a year ago (March 27, 2015) the works of Association of Faculties of Economics in Romania (AFER) General Assembly, on that occasion: being highlighted that the Romanian-American University proved once again to be an excellent choice for the works of AFER productive and participative meeting; RAU Rector Ovidiu FOLCUŢ, former student of Professor Ion SMEDESCU and internationally recognized for “the diligent dedications that he always brings forth for RomanianAmerican University”, was the traditional great master of ceremonies, ensuring the right tone according to the objective of the important academic event;
• six month ago (October 30, 2015), within the framework of the celebration of the 10th Anniversary of AFER (hosted by the historical Aula Magna of the Bucharest University of Economic Studies, ASE), RAU Rector Ovidiu FOLCUŢ has received the distinction of Honorary Membership conferred by AFER upon persons of great distinction who have rendered exceptional service. It is worth remembering that RAU Rector Ovidiu FOLCUŢ was also the coordinator of the Chapters 19-27 of the AFER’s Volume “Pages from the Romanian Economic Higher Education History, 1843-2013” launched on the occasion of the celebration of 170 Years of Economic Higher Education in Romania, and the 100th Anniversary of the initiation of the First Congress of Romanian Economists (November 22, 2013), also hosted by the above mentioned historical Aula Magna - on that occasion Professor Ovidiu FOLCUŢ was awarded the “Diploma of Excellence”, this Diploma being handed over to RAU Rector by Professor Holistic Marketing Management
Gheorghe ZAMAN, Vice President of the Economic, Law, and Sociological Sciences Section of the Romanian Academy, Director of the Institute of National Economy, Romanian Academy, President of the General Association of Economists from Romania, AGER, President of the Scientific Council of Romanian Scientific Society of Management, SSMAR, and Chairman of the Group of Experts of the Romanian Distribution Committee.
Professor Ion SMEDESCU, Founding Rector of the ROMANIAN-AMERICAN UNIVERSITY was constantly pleading for opening the eyes for truth, the good and the beautiful in an effort to shape minds and characters, the education of intelligence being connected to finding the truth and intelligence being strongly related to moral education. He used to state that he learned from his Great Teachers that there is always the need for moderation (as a rational attitude towards pleasure), courage (as a rational attitude towards pain), justice (as respect towards the man) and the feeling of justice, of lawfulness, education meaning first of all respect. Professor Ion SMEDESCU widely opened up the gates of knowledge management and innovation, always doing what he thought best and without experiencing any fear, his intuition giving birth to the ROMANIAN-AMERICAN UNIVERSITY, a great service provided to the future generations. Professor ION SMEDESCU lived with intensity, making a constant and coherent effort to transpose in the academic landscape powerful ideas specific to the „cultural architect” that is his beloved „Marketing”, advocating „intelligent growth”. Honoring the ROMANIAN-AMERICAN UNIVERSITY’s Jubilee is a great task for our “Holistic Marketing Management” Journal, an issue on the special occasion of celebrating the Romanian-American University’s first quarter being truly challenging. To that honoring purpose our thinking behind was to have in view a twofold approach: by inviting distinguished members of our Journal’s Editorial Board, and very close distinguished collaborators of our beloved RAU
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to say some words within this special context; by republishing some of the most significant articles in this jubilee issue.
On this special occasion of celebrating the 25th Anniversary of the ROMANIANAMERICAN UNIVERSITY, it is our honor and pleasure to warmly congratulate all of you, RAU Colleagues, RAU Students’ Family and RAU Friends. Let us always confirm RAU common values and principles, reconfirming who we are, what we are capable of and what we believe in, while vigorously managing to create RAU value and enduring through time with patience, and moving on!
Theodor Valentin Purcărea Editor – in – Chief Holistic Marketing Management
Congratulatory Remarks for the 25th Anniversary of the Romanian-American University by distinguished RAU Partners
Professor Ronald CARRIER, USA << RAU is an Educational Model for post-Communist countries. At a time when many private colleges emerged from the controlled environment of nearly fifty years RAU had the model that has made it a success for the past twenty-five years. Its leadership shaped a strong curriculum, an excellent faculty, good government contacts and a strong partnership with James Madison University of Virginia. I congratulate its success and wish the best for the future!
Ron Carrier >>
Professor Bernd HALLIER, Germany << RAU has established itself within the first 25 years as a leader of innovation and driver for the transition of Romania! Its Journal Holistic Marketing Management has become a prestigious magazine not only in Romania and Central Europe - but it is also a bridge between the former COMECONDistribution philosophy and the Western Marketing approach used since the 60ies in the USA and in the founding members of the EU. Being myself several times guest at RAU, I have to admit that RAU became also for me a kind of second home when visiting Romania! Romanian-American University: Vivat, Crescat , Floreat! Bernd Hallier >> Holistic Marketing Management
Professor Bijan SAADATMAND, USA << Thank you for informing me about your upcoming Journal of Holistic Marketing Management. Over the years you continually kept me informed about your academic programs at RAU. Your commitments and efforts toward the growth of RAU’s Marketing Management were noticeable as far away as JMU. Your frequent communications with me over the past many years regarding RAU’s progress, “has been, and still is” among the various information I receive about the “RAU’s Continual Success Stories. Looking forward of seeing you soon, Bijan Saadatmand >>
Professor Léon F. WEGNEZ, Belgium << On the occasion of the Romanian-American University Jubilee, I would like to underline that your University always has been faithful, as a teaching institution, to an essential mission: to serve society and contribute to the economic growth of Romania. Congratulations! Léon F. Wegnez >>
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Professor Nicholas Dima, USA << As a Romanian who left his country in search of freedom, the very existence of RAU is a dream come true: Freedom of learning, of education, of seeking knowledge are the foundation for a better generation today and for a better society tomorrowâ&#x20AC;Ś In America, I was a strong advocate of such freedoms in my capacities as a professor, a writer and a VOA journalist. Yet, when I met for the first time Professor Smedescu, I thought that his idea of establishing a private university was an impossible dream. He proved me wrong. Today I am happy to be a visiting professor at the RAU International School. What I thought it was a dream is now a beautiful reality. Congratulations! Nicholas Dima >>
Professor Eliot Sorel, USA << Warmest congratulations, wish you continued good health and success! Eliot SOREL >>
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Celebrating the 25th anniversary of the Romanian-American University
Congratulatory Remarks by Cosmin Tănase-Gheorghiu 2007 Management-Marketing School Valedictorian, Romanian-American University
“Celebrating the 25th anniversary of the Romanian-American University elicits a storehouse of wonderful memories, heightens my appreciation for the work of professors, students and the entire academic community, evoking many thoughts about the past, the present and the future. My experience at the Romanian-American University is bound up inextricably with the intellectual pursuits that I have followed. There are important, but more elusive, qualities of this University - a unique place - that are more difficult to put into words. I believe that the character of its special academic prestige was distinctively shaped by the expectation that each and every one of us will bring our full share of curiosity, analysis, passion, and intellectual brilliance to bear on our lifelong search for new insights and interpretations. To me, it is the fulfilling notion that the Romanian-American University could achieve at once, namely teach students to explore new intellectual horizons, and at the same time, create class after class of devoted alumni who see positive action in the real world as their highest achievement. It has been a great honor and privilege for me to participate with my professors and colleagues in the never-ending task of building an academic community of distinction. Through our efforts, generation by generation, a 25-year enterprise has not only endured but flourished and I am glad to be a part of this achievement. For all these reasons, the Romanian-American University will always have a special place in my heart and memory.”
Cosmin Tănase-Gheorghiu 2007 Romanian-American University Management-Marketing School Valedictorian
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MANAGER or SPECIALIST. Which role is most suitable for you?
* email contact firstname.lastname@example.org **http:// rafme.homestead.com ***http://www.businessexpertpress.com/books/achieving-excellence-management-identifying-andlearning-bad-practices
Abstract There is a current tendency in Business Schools to glorify the status of 'manager'. his practice is unrealistic because many students are not suitable for this role -which therefore leads to problems for them and their eventual employers. This article discusses alternative avenues of development which can be more appropriate for such people. Keywords: manager; career; skills JEL Classification: M51; M54
Introduction There is a proliferation of MBA courses on offer and each one invariably promises prospective students the acquisition of skills to enable them to become managers, as if this were the only career ideal to aim for. However, probably only half of these candidates really have the potential to become good managers-the rest being more suitable for a career as specialists. What is the basis upon which this distinction should be made?
Which role is most suitable? As explained in the Management Excellence book**,the fundamental reason is that a Holistic Marketing Management
manager of a department requires certain interpersonal skills which some people do not possess nor are they capable of acquiring. Typical among these skills are the abilities to motivate and coach their subordinates, to handle certain difficult situations -especially those dealing with conflict, and to foster the good performance of the whole team rather than just of themselves.
The origin of this situation is that we all have an innate preference either for dealing with people or for working on tasks: very few of us are excellent in both. It is thus the first group who are more suited to be managers, whereas the second group can follow a career as 'specialists' be it in research, information technology or in other specific departmental functions like accounting. Among auxiliary characteristics of these two groups are opposing perspectives (broad and general versus narrower and detailed), and the usually less extrovert behaviour of scientific specialists, who are also more at ease to work on their own.
A common error made by companies is to designate a successful but non-suitable person as manager. Take the example of a good salesman gifted in dealing with his clients but who could be ineffective in managing other salesmen. Promoting such a salesperson to sales manager will have a doubly negative effect in that the firm acquires a bad manager and at the same time 'loses' a good salesman.
However, there are of course many people who are not at either of these two extremes; they could be represented by coordinates of say 5,5 on a 10x10 graph showing emphasis on people as opposed to task.
For such people, there is the possibility of being project team leaders where, from time to time, they lead a multi-disciplinary team working on a specific project. The project team leader option is therefore useful for specialists to get an experience of management, and for managers to improve their knowledge of complex factors concerning the product or process being developed. The latter is particularly important in Anglo-Saxon companies which frequently select as managers people who do not have much product knowledge. Thus, for example, one finds General Managers within electrical engineering firms who do not have Holistic Marketing Management
scientific degrees-something which would never occur in a German company who would insist on the person having an engineering or at least a physics degree.
To conclude, a few words about careers for the two types of employees. In the more progressive firms there are parallel avenues of advancement for managers and for specialists with fairly comparable salary scales. Although the managers may be seen as being more important and possessing greater prospects for reaching the top levels within the company, they also run greater risks of being made redundant especially during periods of change when they may get a new boss who appreciates them less than did the previous one. Moreover, as there is obviously only limited space at the top of the organisational pyramid, the less successful candidates reach a positional and salary plateau from which they are encouraged to depart from the firm after the age of 45. Such a situation is more rare for specialists who, if they have been keeping up with progress in their subject, can maintain their post to a later age.
Management Processes summary chart
Planning • Mission, goals, strategies, plans, actions • Continuous plans (every year for 3–5 years) • Strategic plans (periodic, “where do we want to be?”) • One-off plans, e.g., small firm start-up or launching major event • New projects (why, where, who...) • Time table (+ PERT chart?) • Problem solving (groups, sequence/methods, alternatives/constraints) • Decision making (free discussion, consensus, importance, speed)
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• Centralization vs. devolution (depends on culture, degree of control, staff availability) • Departmentalization by function, product, place, hybrid, matrix (depends on importance of rapid response vs. duplication, cost)
Organisationnel Style • Bureaucratic/mechanistic (hierarchy) or organic (flat) (depends on nature of environment, age/size, plus for manufacturing: on technology process (continuous/batch) • Services: on whether routine or no routine
Organisationnel Change • Transformation based on “hard” issues, e.g., reengineering and “soft” issues, e.g.empowerment, resistance
Staffing • Selecting, hiring, training, evaluating, promoting, parting, future planning
Leading/Directing • Leader behavior: carrot and stick, democratic/autocratic (depends on leader needs, nature of followers, situation) • Leader orientation: human/broad/fl exible or task/detailed/rigid (largely depends on leader’s personal character and background) • Motivation and respect (individuals/groups, methods, absence) • Communication (internal/external, up/down, formal/informal) • Delegation (what, to whom, how, benefits, resistance) • Management
(complexity/efficiency vs. change/effectiveness)
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Control • Four financial statements (profit/loss, balance sheet, cash flow, break-even) • Budgets, financial ratios (liquidity, leverage, profitability) • Operations activity (stocks, capacity) • Projects (within time-frame, budget, quality norms) • People (performance evaluation) • External control (auditors, non-exec administrators, regulators)
While on this topic, it should be emphasized that managers also have to 'keep themselves in shape' by frequently making use of the four management processes (planning, organising, leading, controlling) for handling complex projects. These processes (Management Processes summary chart), remain largely unchanged, in contrast to management functions-especially marketing & finance, which need to be considerably adapted to deal with the present situation of crisis and recession. -----------------------------------About the author •
Andrew Kilner, PhD (Cambridge), MBA (City, London) spent over 15 years as Business Planning Manager in large international companies in several countries, and ultimately became Professor, Head of Department and first MBA director at the Rennes Graduate School of Business in France. He is currently Director of RAFME research** into Management Excellence with a book published on this topic*** and is giving conferences and writing articles in the French business press.
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ADVERTISING TO THE OLDER CONSUMER BECOMES MORE IMPORTANT Professor John L. Stanton, PhD* Professor of Food Marketing, Erivan K. Haub School of Business Department of Food Marketing Saint Joseph's University, 265 Mandeville Hall, 5600 City Avenue Philadelphia, PA 19131-1395 Phone: (610) 660-1607 Fax: (610) 660-1997 email@example.com Abstract In many parts of both the more developed nations and the less developed nations the average age of the populations is increasing. Some researchers argue that research on mature consumer's buying behavior and attitude is scarce. Other researchers discuss the development, importance and impact of marketing to senior citizens with particular emphasis on demographic change. The purpose of this paper is to examine exactly what types of advertising elements are most impactful with older consumers. The objective of this study is twofold. First, we will attempt to identify which executional alternatives are most effective (as measured by recall and persuasion) for older consumers. Second, we will quantify the effectiveness of these executional alternatives such that future advertising executives will have a guideline that they can use to more accurately predict how consumers in these age cohorts may react to an advertisement that does or does not contain the given element. Key words: consumer, advertising, population JEL classification: M31, M37
Introduction The world is aging! In many parts of both the more developed nations and the less developed nations the average age of the populations is increasing. While this has had a dramatic effect on many aspects of society, it will also impact how the older consumers react to and respond to advertising. Some researchers suggest that given the increasing number of older individuals, the exploration of age differences in attitudes toward â&#x20AC;Ś is critical. (Lapel, 2011) Some researchers argue that research on mature consumer's buying behavior and attitude is scarce. (Holmlund, 2011). It has been shown that the Socio-demographic trends mean that the 50+ age group are wealthier and now enjoy high per capita incomes. Some large firms are now exploiting the opportunities within this market. (Charton, 2011) The key issue is whether small firms are also revising their marketing practices in response to socio-demographic change. Equally significant are both the large and small firms adjusting the way they communicate and advertise to the older consumer. Some researchers are being more proactive in their findings. Meiner et.al. discuss the development, importance and impact of marketing to senior citizens with particular emphasis on demographic change. (Meiner, 2010) Holistic Marketing Management
The purpose of this paper is to examine exactly what types of advertising elements are most impactful with older consumers. While this paper does not dwell on the reasons for the aging populations some background may provide context for the analysis. According to a United Nations report, "Population ageing is unprecedented, without parallel in human historyâ&#x20AC;&#x201D;and the twenty-first century will witness even more rapid ageing than did the century just past. Population ageing is pervasive, a global phenomenon affecting every man, woman and childâ&#x20AC;&#x201D; but countries are at very different stages of the process, and the pace of change differs greatly. Countries that started the process later will have less time to adjust." (United Nations, 2002). Key factors leading to global aging There is not one single factor that explains global aging but clearly there are two key factors. One primary factor is fertility decline. Over the last half century, the total fertility rate decreased globally by almost half, from 5.0 to 2.7 children per woman. Over the next half century, it is expected to drop to the replacement level of 2.1children per women. In the more developed countries fertility is significantly below the replacement level. (United Nations, 2002) In countries like Singapore, women are paid to have children to increase the fertility rate and stem the aging issue. A second and more obvious factor is that people are living longer. Over the last five decades, life expectancy at birth increased globally by almost 20 years, from 46.5 years in 1950-1955 to 66.0 years in 2000-2005. On average, the gain in life expectancy at birth was 23.1 years in the less developed regions and 9.4 years in the more developed regions. On average, at current mortality rates an individual born in the more developed regions is now expected to outlive by almost 12 years an individual born in the less developed regions. (United Nations, 2002) It appears that while some countries may be more impacted by the aging population, all countries are impacted. Table 1 shows the percentages of the population that is 65 or over for the year 2000 to 2050. As one can see globally the percentage of over 65 will more than double and in some regions of the world over a third of the population will be over 65. Japan will have the highest percentage over 65 with more than 36% of their population over 65. Romania is not far behind Japan. The percentage of the population over 65 in Romania in 2005 was 19% and predicted to be over 34% in 2050 and older than the eastern Europe average of 23% . In the year 2000, there were approximately 35 million individuals aged 65 or older in the United States (US Census Bureau 2002b). They head over 18 million households in the United States and in 2010, 1 in 7 Americans were 65 or older. In the next twenty years, the number of individuals aged 61-79 will grow by 90% (Lach 2002). The issue is whether Romanian marketers will change TV commercials executional elements to create recall and persuasion from when there were only 14% of the population over 65 in 1975 to something different when 23% of the population in 2025 will be 65 or older. If they are going to change what is the most effective way to garner the older population's recall and persuasion.
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The purpose of this study is to investigate the extent to which 65 year old and over consumers respond to various executional elements in television advertisements. The key to this analysis is the rich data provided by a commercial advertising testing agency. The data were obtained from a large-scale study on advertising effectiveness, as measured by recall and persuasion. Literature review Researchers have studied and written extensively on how various age groups differ from one another in terms of attitudes, experiences, information-processing ability, consumer tastes, and musical tastes (Cole and Balasubramanian 1993; Holbrook 1993; Holbrook and Schindler 1989; Meredith and Schewe 1994; Ryder 1965; Yoon 1997). In general, how any advertisement is executed may have a significant impact on the persuasiveness of the commercial. For any given ad, one consumer may enjoy the humor, another may appreciate the product information, while still another may like to see a favorite sports star as the spokesperson. These and other executional elements used by advertisers may be more or less impactful for different viewers. While there are countless ways in which we can divide the consumer world to compare one group of consumers to another, this study focuses on the unique perceptions that different age cohorts have about various executional elements in advertising. Age-related differences in perceptions of advertising are of particular interest to advertising professionals. When advertisers purchase airtime, they make a request for a show that, for example, targets women 18 to 45. Similarly, when advertisers purchase space in a magazine, one of the first questions asked is the age demographic which the particular magazine is designed to target. Individuals who are in the same age cohort have similar life experiences and have reached similar life stages as other members in the cohort. Because of this, different age cohorts are likely to view the executional elements in advertisements differently from one another. That is, certain appeals, music, and images are likely to work better with people in a similar age cohort. The purpose of this research is to investigate some of the similarities and differences in how people in different age groups view certain advertising elements. Marketers need to better understand older consumers in order to develop product, distribution, pricing, and promotional strategies that better meet the unique needs of this segment. It has been found, for example, that older consumers prefer situations in which they perceive that they have an established relationship with a particular retailer or manufacturer (Medina 1997). Advertisers also need to better understand the particular characteristics of advertisements that older consumers find most appealing. The consequences of not doing so could be devastating to a company that relies on the older market for a significant portion of their business. According to one study, fully one-third of older people said that they deliberately did not purchase a product because the older actors in the ad were portrayed in a negative light (Beck 1990). Although this example is only one executional element in a vast assortment of elements that are potentially available to the advertiser, a better understanding of which elements work and do not work for this group would certainly be advantageous.
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The objective of this study is twofold. First, we will attempt to identify which executional alternatives are most effective (as measured by recall and persuasion) for older consumers. Second, we will quantify the effectiveness of these executional alternatives such that future advertising executives will have a guideline that they can use to more accurately predict how consumers in these age cohorts may react to an advertisement that does or does not contain the given element. Other researchers have addressed memories and recall for various historical events as a function of age (Schuman and Scott 1989). However, these previous researchers have not examined how age differences relate to the effect of various executional elements on the recall and persuasiveness of a commercial. As a result of our analysis, we will illuminate important perceptual similarities and differences in these age groups. Method The data used in this study were provided by RSC, The Quality Measurement Company. Each commercial was coded as to whether each executional element was present or absent in each commercial. Each commercial was categorized by multiple coders. Coders were part of the trained RSC organization. To be considered in the analysis, an executional element must be present in at least 200 commercials, and the inter-judge reliability must be at least .80. Also, note that these judges were only used to determine whether the executional elements were present or absent. The persuasion score, or dependent variable in the analysis, was obtained from actual advertising tests conducted on the audience selected by the advertiser. The research firm used a pool of several hundred TV advertisements, which were previously tested for corporate clients to develop a comprehensive list of different executional elements that are present in advertisements. The research firm used multiple coders to classify these elements, and the resulting list of 24 elements represents the most commonly used techniques (see Table 2). The most commonly used executional element was “Substantive Supers” (i.e., if there were a significant number of supers - more than one sentence - it was considered present) while the least commonly used element was “Convenience in Use” (i.e., if the ad described the convenience/benefit of the product, it was considered present). Each ad was classified as either containing the executional element or not containing the executional element. If the ad contained the element, the element was considered to be “present” whereas if it did not contain the element, the element was considered “absent.” Consumers were invited to the testing lab, and after a brief introduction to the study, they rated each of the commercials using the standard copy testing methods employed by the advertising research firm. The number of consumers who viewed a given executional element varied from a high of 440 consumers for “Product Results Demonstrated” to a low of 255 consumers for “Actors Playing Ordinary People.” At the conclusion of the study, participants were debriefed and thanked for their participation. Dependent Measures Recall. The recall measure assesses the extent to which the consumer can recall the ad, where a higher score suggests that more consumers recalled the ad. The measure itself is referred to as Holistic Marketing Management
“related recall,” indicating that the consumer must do more than simply recognize the ad by saying, “Yes, I remember it.” Instead, the consumer must prove that the specific commercial was recalled from memory. Persuasion. Persuasion is the change in potential purchase behavior after watching the ad. This measure is akin to the behavioral intention measure that is used in many consumer research studies in that it measures the extent to which consumers intend to purchase the product. Again, higher persuasion scores indicate that the advertisement persuaded more consumers to change their intentions. In addition to global recall and persuasion scores, individual item recall and persuasion scores are also calculated for each executional element. These measures represent the average recall or persuasion score for the ad for which the element was either present or absent. Finally, the percentage change scores represent how much the inclusion of the element in an ad either helped or hindered recall and persuasion. Results Recall in Older Consumers By far, the advertising element that was most effective in terms of recall with the older consumer was “Actor Playing an Ordinary Person” (135% increase in recall). It seems that the older consumer is more attuned to seeing people like them…ordinary as shown in Table 4. Other elements that were likely to increase recall for the older segment were “Cute/Adorable” (34% increase) which should be no surprise as this executional element is believed to always grab people's attention of all ages; “Demonstration of Product in Use” (26% increase), “Principal Character(s) Male” (13% increase), “Child/Infant/Animal/Animated” (13% increase), and “Time Until Product/Package is Shown” (13% increase). As important as what executional elements enhance recall are the elements that seem to detract from recall. As can be seen in Table 5, there were very few executional elements that were detrimental to recall for this group. Advertisements which showed “No Principal Character” hurt recall the most (12% decrease in recall) as it seems that the older consumer wants to see "someone" in the advertisement. Other elements which resulted in a few percentage points decrease were “Time Product was on the Screen” (4% decrease), “New Product or New/Improved Features” (3% decrease), and “Nutrition/Health” (2% decrease). It might be surprising to some that Nutrition and Health is not more important in getting consumers' attention but they are so involved with health and nutrition that it may just fall on deaf ears… or eyes. Persuasion in Older Consumers The most persuasive element for this group was “Convenience in Use” (99% increase in persuasion). It seems the older consumer wants the products to be convenient as shown in Table 4. This group was also positively impacted by “Product Results Demonstrated” (55% increase), “Brand Differentiating” (54% increase), “Indirect Comparison” (53% increase), and “Actor Playing Ordinary Person” (38% increase). Holistic Marketing Management
There were also several elements that were detrimental to persuasion. Older consumers did not seem to respond favorably to “Humorous” ads (37% decrease in persuasion), “Nutrition/Health” claims (28% decrease), or ads which had a very short time until the “Product/Package was Shown” (25% decrease), shown in Table 5. Discussion A review of these findings indicates that older consumers are somewhat inconsistent in their recall and persuasion. For example, of the five most important elements in recall and persuasion none appear in both top five. This obviously makes creating advertising for older consumers more difficult. The elements that seem to get remembered are not the same ones that impact persuasion and therefore intention to buy! A similar situation is true for the "lowest five" executional elements or the ones which have the most detrimental effect on recall and persuasion. Only Nutrition and Health appear on both the recall and persuasion list. This is the most perplexing to the author. One would expect that this executional element would have the most appeal to older audiences. Clearly more research needs to be done in this area. The creation of effective advertisements is both an art and a science. It is hoped that the conclusions and recommendations reported in this study will result in the development of better science in advertising. In developing better science, advertising creatives can focus their efforts on what they do best; the art of advertising. Limitations Any consumer researcher knows that the answer to almost any question about how a consumer might behave is, “It depends.” Age differences are but one means by which we can analyze how consumers might recall and/or be persuaded by a given executional element. Further, variations in the viewing environment, in the type and duration of ads that come immediately before or after the ad, and in the number of times a consumer views a particular ad can all have a big impact on group similarities and differences. Instead of issuing global edicts as to how an advertiser should or should not approach older consumers, this research provides guidance on what appears to be effective and ineffective. By offering some guidelines that may help the creative person in making more effective ads, we believe that we can allow that person to better focus their talents in creating such ads. Bibliography: . Beck, Melinda (April 23, 1990), “Going for the Gold,” Newsweek, 115 (April), 74. . Ian Chaston. Older consumer opportunities: small firm response in a selected group of UK service sector markets The Service Industries Journal. London: Feb 2011. Vol. 31, Iss. 3; pg. 371 . Cole, Catherine A., and Siva K. Balasubramanian (1993), “Age Differences in Consumers’ Search for Information: Public Policy Implications,” Journal of Consumer Research, 20 (June), 157-69. . Holbrook, Morris B. (1993), “Nostalgia and Consumption Preferences: Some Emerging Patterns of Consumer Tastes,” Journal of Consumer Research, 20 (September), 245-56. . Holbrook, Morris B., and Robert M. Schindler (1989), “Some Exploratory Findings on the Development of Musical Tastes,” Journal of Consumer Research,16 (June), 119-24. Holistic Marketing Management
. Holmlund M, A Hagman, P Polsa. An exploration of how mature women buy clothing: empirical insights and a model Journal of Fashion Marketing and Management. Bradford: 2011. Vol. 15, Iss. 1; pg. 108 . Lach (2002). “Dateline America: May 1, 2025.” . Karen Leppel, Donna W. McCloskey. A cross-generational examination of electronic commerce adoption The Journal of Consumer Marketing. Santa Barbara: 2011. Vol. 28, Iss. 4; pg. 261 . Medina, Kurt (1997), as quoted in “Marketers Reveal Industry Dos & Don’ts; Say Capitalize on Relationship Building,” Selling to Seniors: The Monthly Report on Marketing, Silver Spring, MD: CD Publications, 97-11 (November), 1-2. . Meiner H, B Seeberger. Marketing to Senior Citizens: Challenges and Opportunities, The Journal of Social, Political, and Economic Studies. Washington: Fall 2010. Vol. 35, Iss. 3; pg. 293, 36 pgs . Meredith, Geoffrey, and Charles Schewe (1994), “The Power of Cohorts,” American Demographics, 16 (December), 22-31. . Ryder, Norman B. (1965), “The Cohort as a Concept in the Study of Social Change,” American Sociological Review, 30 (December), 843-61. . Schuman, Howard, and Jacqueline Scott (1989), “Generations and Collective Memories,” American Sociological Review, 54 (June), 359-81. . United Nations, Department of Economic and Social Affairs World Population Ageing: 1950-2050, 2002 . U.S. Census Bureau (2002b), “Census 2000 Profile http://www.census.gov/main/www/cen2000.html. . Yoon, Carolyn (1997), “Age Differences in Consumers’ Processing Strategies: An Investigation of Moderating Influences,” Journal of Consumer Research, 24 (December), 329-42. Table 1. Percentages of population 65 years of age or older
Eastern Asia Southern Asia Southeastern Asia Western Asia
8 5 5 5
23 13 16 11
Europe Eastern Europe Northern Europe Southern Europe Western Europe
15 13 15 16 16
29 28 27 34 29
Latin America North America Africa
5 12 3
17 21 7
Source: United Nations, World Population Ageing: 1950-2050
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Table 2. Definition of Executional Elements. Executional Element Definition Brand Differentiating Number of Brand Name Mentions Time Until Category Identification Time Until Brand Name Identification Time Until Product/Package Shown Time Product on Screen Number of On-Screen Characters Nutrition/Health Convenience in Use New Product, New/Improved Features Product Double-Branded Setting Related to Product Use Substantive Supers Cute/Adorable Humorous Indirect Comparison
Demonstration of Product in Use Product Results Demonstrated Principal Character(s) Male Actor Playing Ordinary Person No Principal Character Background Cast No Particular/Neutral Setting Child/Infant/Animal/Animated
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If the ad has a message differentiating it from other brands If the # of mentions in the ad exceeds 3, it is considered present If the category is mentioned before 4 seconds, it is considered present If the brand is mentioned before 5 seconds, it is considered present If the package is shown before 5 seconds, it is considered present If the total time that the product is on screen exceeds 6 seconds, it is considered present If the number of on-screen characters exceeds 3, it is considered present If a nutrition/health claim is mentioned, it is considered present If the ad described the convenience/benefit of the product, it is considered present If the ad announced that some aspect of the product was new or improved, it is considered present If both the company and brand are mentioned, it is considered present (e.g., P&Gâ&#x20AC;&#x2122;s Tide) If the setting relates to the use of the product, it is considered present (e.g., food in the kitchen) If there are a significant number of supers (more than one sentence), it is considered present If, in the opinion of the raters, the ad sought to be cute, it is considered present (e.g., pictures, music, or theme) If, in the opinion of the raters, the ad sought to be funny, it is considered present If a comparison is made between brands, but does not mention the other brand by name, it is considered present (e.g., â&#x20AC;&#x153;the bestâ&#x20AC;?) If the product is shown in the ad being used, it is considered present If the results of the product are demonstrated, it is considered present (e.g., the floor is clean) If principal character is male, it is considered present If principal character is playing an ordinary person, it is considered present If there is no principal character, it is considered present If there is a background cast in the ad, it is considered present If there is no particular setting to the ad, it is considered present (e.g., a white background) If ad included children/animals/animation, it is considered present
Table 2. Average Recall Scores for Older Consumers. Older Consumers Avg 1.89 Executional Element
Brand Differentiating Number of Brand Name Mentions Time Until Category Identification Time Until Brand Name Identification Time Until Product/Package Shown Time Product on Screen Number of On-Screen Characters Nutrition/Health Convenience in Use New Product, New/Improved Features Product Double-Branded Setting Related to Product Use Substantive Supers Cute/Adorable Humorous Indirect Comparison Demonstration of Product in Use Product Results Demonstrated Principal Character(s) Male Actor Playing Ordinary Person No Principal Character Background Cast No Particular/Neutral Setting Child/Infant/Animal/Animated
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1.96 1.87 1.94 1.98
1.82 1.89 1.82 1.81
8% -1% 7% 9%
2.03 1.84 1.90 1.86 1.95 1.85
1.79 1.91 1.87 1.89 1.88 1.91
13% -4% 2% -2% 4% -3%
2.07 1.93 1.89 2.50 1.97 2.04 2.02 1.99 2.06 4.38 1.74 1.95 1.87 2.10
1.85 1.83 1.88 1.86 1.88 1.85 1.60 1.84 1.83 1.86 1.98 1.84 1.89 1.86
12% 5% 1% 34% 5% 10% 26% 8% 13% 135% -12% 6% -1% 13%
Table 3. Average Persuasion Scores Older Consumers Older Consumers Avg 6.58 Executional Element Brand Differentiating Number of Brand Name Mentions Time Until Category Identification Time Until Brand Name Identification Time Until Product/Package Shown Time Product on Screen Number of On-Screen Characters Nutrition/Health Convenience in Use New Product, New/Improved Features Product Double Branded Setting Related to Product Use Substantive Supers Cute/Adorable Humorous Indirect Comparison Demonstration of Product in Use Product Results Demonstrated Principal Character(s) Male Actor Playing Ordinary Person No Principal Character Background Cast No Particular/Neutral Setting Child/Infant/Animal/Animated
8.05 6.47 5.92 5.76 5.48 6.04 7.17 4.99 12.50 7.37 8.42 6.97 6.63 6.97 4.25 9.06 6.80 8.61 5.99 9.02 6.24 6.30 6.42 5.42
5.23 6.64 7.26 7.22 7.30 6.89 6.00 6.97 6.28 6.03 6.23 6.04 6.40 6.56 6.77 5.93 6.09 5.57 6.77 6.55 6.79 6.76 6.64 6.71
54% -3% -18% -20% -25% -12% 20% -28% 99% 22% 35% 15% 4% 6% -37% 53% 12% 55% -12% 38% -8% -7% -3% -19%
Table 4. Most Effective Recall and Persuasion Elements. Persuasion Older Consumers
Recall Older Consumers
1) Convenience In Use
1) Actor Playing Ordinary Person
2) Product Results Demonstrated
3) Brand Differentiating
3) Demonstration of Product in Use
4) Indirect Comparison
4) Child/Infant/Animal/Animated *
5) Product Double-Branded
5) Principal Character(s) Male* Time Until Product/Package Shown*
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Table 5. Least Effective Recall and Persuasion Elements. Persuasion Older Consumers
Recall Older Consumers
1) No Principal Character
2) Time Product on Screen
3) Time Until Product/Package Shown
3) New Product, New/Improved Features
4) Time Until Brand Name Identification
5) Number of Brand Name Mentions * No Particular/Neutral Setting*
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HOLISTIC MARKETING MANAGEMENT AND SOCIAL MEDIA Prof. William PERTTULA, PhD Internet Marketing Professor, College of Business, San Francisco State University Abstract: Social media and social media marketing are real challenges to holistic marketing management approach focusing on real customer value. A distinct problem for social media is making a profit when the standard practice is to not charge the user any money. Social media marketing relies on its similarity to word of mouth marketing which has always been praised for its effectiveness. Social media marketing can be faster and cheaper that other forms of marketing, and should be integrated with the rest of the marketing plan in keeping with the central ideas of holistic marketing management. Key Words: Social media marketing, Internet marketing, Marketing plan JEL Classification: M15, M31
Any discussion of holistic marketing management must take note of social media and social media marketing. Social media is dominated in 2011 by Facebook after its explosive growth to 800 million registered accounts world-wide. Other big names in social media are YouTube, Twitter, Tumbler and LinkedIn. Social media marketing is the use of social media in its various forms by organizations trying to communicate with their customers or clients.
As Internet marketing became pervasive in the developed countries in the years after 2000 many commentators wrote that the rules of marketing had changed: the new rules of marketing were digital. After several years of this misinformation there has been general agreement that no basic rules of marketing have changed, rather, the Internet has meant lower costs and higher speeds for nearly everything in the marketing and customer relationship field.
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Social marketing exhibits these two changes. Communication is much faster and cheaper than in the past. Social media marketing relies on its similarity to word of mouth marketing which has always been praised for its effectiveness. Trust and believability are usually characteristics of word of mouth communications. Word of mouth communications usually have great effectiveness but in the past have taken too long to reach a large enough number of people for most businesses that are trying to grow quickly. It is a rare product or service that can grow at 30 to 40 percent a year relying on its customers or users to tell friends in person or by telephone. Rapid sales or usage growth in the past relied on mass advertising to reach mass audiences at great expense. Dropbox, a web based file hosting service, is a recent startup that benefited from universal electronic communication techniques. Dropbox began in 2008 with a file storage service that was simple to understand and that worked quickly and reliably. The company encouraged electronic word of mouth by giving existing users who referred a new user more free storage for their files. Publicity, which is free, in the major tech magazines and other media contributed greatly to its growth to 50 million users in 2011 after just three years of operation. Dropbox grew rapidly despite not using advertising or even search engine marketing with Google Adwords text ads after discovering that it was costing about $300 per new user for a service that was free to users who needed only 2 Gb of file storage. The speed of communications enabled by the Internet has meant that a type of word of mouth communication can be practiced at high speeds by millions of people. A 2011 study by bitly.com on the â&#x20AC;&#x153;half-lifeâ&#x20AC;? of Tweets on Twitter, the 140 character microblogging service, and posts on Facebook showed that brief communications move very quickly through social media. In the first three hours after a Tweet or a post on Facebook containing a bitly.com shortened link approximately 300000 people click on the link.  In the next few hours another 300000 people are likely to click on the link. Thus, for no promotional expense an audience of nearly million may have seen your picture or story. It is no wonder businesses are using social media. The costs are near zero and the speed of communication is measured in just hours with potential audiences in the hundreds of thousands. However, the persistence of the message is very short compared to a newspaper or magazine advertisement or a television campaign run over a period of weeks. If a business is willing to pay for a Tweet by a person with a large number of followers on Twitter, its brief message may be seen by millions in a couple of hours. Famous people such as celebrity Kim Kardashian, actress Lindsay Lohan, or skateboarder Ryan Sheckler charge $2000 to $3000 to send one promotional Tweet to their millions of followers. A significant cost advantage that social media sites have over online newspapers and magazines is that newspapers and magazines must pay for their content while social media sites such as Facebook get their content for free from their users. A cost/benefit analysis strongly favors social media. A distinct problem for social media is making a profit when the standard practice is to not charge the user any money. There are two basic ways to make money online: sell a product or service or sell advertising space to advertisers who want to reach your web site audience. Holistic Marketing Management
Facebook, until 2011, relied solely on selling advertising space. Advertisers liked the large number of Facebook users and their extensive time spent on the web page but generally found that Facebook users were not interested in the ads and so the bid price or cost per thousand (CPM) viewers that Facebook could charge was very low. Dividing Facebookâ&#x20AC;&#x2122;s total revenue in 2011 by total registered accounts yields only about $.30 per account per month. Compare this to $.40 per account per month for Dropbox in 2011 after just three years. After seven years of operation Facebook generates very little income. This appears to be a rather common attribute of social media because the usersâ&#x20AC;&#x2122; focus when visiting the web site is the news and pictures from their friends not commercial messages from businesses no matter how targeted the message is. This table shows that fewer people reported taking action after seeing an ad on a social media site compared to four other types of ads.
Social media marketing can be faster and cheaper that other forms of marketing. Most organizations should be using social media marketing once they learn how to present themselves and their products appropriately on whatever types of social media they chose to use. Social media marketing should be integrated with the rest of the marketing plan in keeping with the central ideas of holistic marketing management. Bibliography: . Experian Hitwise . http://blog.bitly.com/post/9887686919/you-just-shared-a-link-how-long-will-peopleHolistic Marketing Management
MANAGEMENT AND TRUST DURING THE GLOBAL ECONOMIC CRISIS: THE CASE OF SERBIA Professor Sinisa ZARIC, PhD University of Belgrade, Faculty of Economics Kamenicka 6, 11000 Belgrade Professor Vojislav BABIC, PhD University of Belgrade, Faculty of Economics Kamenicka 6, 11000 Belgrade ISR Belgrade
Abstract: The paper analyzes the trust influence on management and business indicators of Belgrade entrepreneurs during the global economic crisis. The first chapter points out that entrepreneurs are exposed to significant nonmarket risks in countries with underdeveloped institutional infrastructure. Due to that fact, creation of business strategies is more difficult. Under the conditions of economic crisis, large number of decisions are made by the institutions that influence on the behavior of entrepreneurs, in order to seek answers for the crisis disturbances. In such conditions, solid stocks of social capital are of great importance for the stability of the economy and individual agents.In chapter 2 it was defined the term, structure and functions of social capital. Besides, it was considered the influence of social capital on the micro-economic sector. In chapter 3, it was measured institutional, financial and stakeholdersâ&#x20AC;&#x2122; trust of entrepreneurs and its impact on the investment trend, the volume of business and real salaries of micro and small enterprises. Based on empirical data, it was shown that low trust stocks have the negative influence on business indicators and development of firms. Keywords: Economic crisis, Serbian entrepreneurs, social capital, trust, business parameters; JEL Classification: G01, O43, L26, D22, A13
Economic agents are performing within the business environment. David Baron (Baron, 2010) makes a distinction between the market and the non-market environment. Operating within the non-market environment, the entrepreneurs are facing the problem of formulating socalled non-market strategies. It is of significant interest to know how favorable the non-market environment is for business. In the same time, having in mind the character and the structure of the non-market environment, the economic agents have to be prepared for answering to the impulses coming from the government non-market environment. Many of the elements of the non-market environment (the network of institutions) are, in the same time, the factors of Bank initiative an upswing of quotations was registered in economic literature, including terms social capital and social network (Isham et al. 2002). According to Putnam, the social capital refers to relations among an individual, a social network, reciprocity norms and trust resulted from them (Putnam 2000). Under the term of social capital, Schiff implicates a sum of social structural elements which affect interhuman relationships and represent an input for production or
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functional utility (Schiff 2002). Portes sees the social capital as the actors` ability to insure benefits through members in social networks (Portes 1998). To Pennar’s definition, the social capital consists of networks of social relationships that influence individual behavior and thus cause economic growth (Pennar 1998). The name ”social” in the term social capital, points to the fact that resources are neither personal property nor they are possessed by any single person. They can be only used within interrelation network. Entrepreneurs’ network is a personal and business network that an entrepreneur builds in order to realize his entrepreneurial ventures. Within business management, networks are treated as a variable of a social capital that enterprises exploit to overcome limitations related to their size and possible institutional barriers, providing access to other resources that can improve business (Curran et al. 1995). In addition to business networks, trust presents a significant input variable of the social capital. Numerous authors give it the importance of weighted variables and quite a number of them identify it with the social capital. A trust idea refers to correct expectations about the actions of other people that have a bearing on one’s own choice of action when that action must be chosen before one can monitor the actions of those others (Dasqupta 1998). The trust can be also explained as a firm belief in the reliability of an individual, company or institutions, i.e. the reliability and the veracity of their claims and statements without being checked before. Trust can have an effect on developing entrepreneurship course, on forming different sorts of enterprises as well as on entrepreneurs’ behavior. In connection with it, low stocks of trust increase transactional costs, limit market entry as well as firm growth and competition. It is possible to speak about the positive impact of social capital at the micro-economic, macro-economic and financial sector. Due to the nature of work, the emphasis will be on analyzing the impact of social capital at the micro-economic sector. The influence of social capital at the micro-economic development can be seen at the level of families, companies and communities. At the family level, social capital is used especially among the poor, to ensure the disease environment, harsh climate and government restrictions. In such cases social capital encourages the pooling of resources such as food, loans, etc.. In addition, good informal relationships enable the poor to start small business and increase revenue. The influence of social capital on firm level is manifested through the dense business networks that encourage economic cooperation and build trust between economic agents. Social capital positively affects the productivity of firms to exchange valuable information about products and markets and reduces Holistic Marketing Management
the cost of contracting, regulation and enforced collection. Repeating business transactions and business reputation promote sides of acting in order to achieve mutual benefits. Social capital, created among firms, significantly reduces business risks. It allows the exchange of valuable information about products and markets and reduces the cost of contracting, regulation and enforced collection. As we know from Coase theory of the firm, one of transaction costs incurred in terms of market mechanism are the costs of incomplete contracts (Coase 1937). Signing a contract entails a dose of uncertainties, regarding the future state in which the laws and clauses will be applied. For example, the contract may specify the delivery of certain quantities of inputs at a specified price at some future date, and that no party knows with certainty if the market prices of inputs and outputs will be produced on that day. A possible solution would be to include in the contract each possible pair of market prices of outputs and inputs. This kind of contract is called a complete understanding or agreement. However, in practice contracts are rarely complete for several reasons. The first reason is the high cost and time used for compiling a list of all possible pairs of unpredictable cases. Another reason may pose some unforeseen events that took place, and could not be verified by a third-hand court. In these situations, developed commercial network, with significant stocks of social capital, eliminate or significantly reduce the risk factors. Social capital also facilitates the implementation of collective projects, because it reduces the risk of free riding and stronger interpersonal trust. According to Martin Raiser, firms belonging to networks increasingly avoid free riding, in order not to lose a reputation of reliability (Raiser 1999). Social capital encourages and facilitates the pooling of resources and access to alternative credit activities to those residents who were denied access to formal financial institutions. Several projects, based on increasing the stock of social capital, were conducted in Tanzania, Rwanda, Cambodia, Bolivia and Nicaragua under the auspices of the World Bank (The Initiative for Social Capital 2000). Consequently, in the field of Management, social capital leads to greater efficiency compared to traditional organizational models. Thus, in firms with Taylorian organizational form (Taylor 1929.), information is delayed or distorted while being transferred through a strict hierarchical chain of command. Taylorian form is increasingly replaced by a flexible management structure in which responsibility is transferred to each of the sectors in the company. In that way, workers are forced to make decisions independently, because they are not constantly obliged to consult their superiors in the hierarchical chain. Such organization of the company increases efficiency but on the other hand, Holistic Marketing Management
it depends on the stock of social capital workforce. In such situations, lack of trust between social workers and managers can lead to opportunism and paralyze production. The NorwegianItalian study from 2006 examined the influence of human and social capital on productivity (Greeve et al 2006). The survey was conducted in three organizations involved in research and development (R&D) and provided consulting services. Analysis included the Italian company "GESTO", which provide business consulting services and two Norwegian companies "ALPHA" and "BETA" for applied research and consulting in the fields of economics and social sciences. ALPHA is more concerned with applied research and consulting than BETA, where more emphasis is made on applied research work. GESTO and ALPHA are profitable organizations while BETA is non-profit. The BETA rewarding of employees is in relation to academic satisfaction and participation in projects. Within the database for the companies ALPHA and BETA were analyzed: employee participation in projects, salaries, working hours on projects and the number of permanent employees. The database for BETA contained even information about published works. The dependent variable for measuring productivity in the firm GESTO was measured by average number of days required to complete the project (which was 19 days per project) and the average number of completed projects within one year (14). The average employee in the ALPHA completed 20 projects for one year. In the ALPHA is measured the productivity of each individual through the payment per hour for participating in the project expressed in NOK. Since BETA is a nonprofit organization, the variable of productivity is measured by the weighted ”publishing index” which has the following composition: articles published in international academic journals (4), articles in the Norwegian and Nordic academic journals (3), the number of international chapters in academic books (3), research reports (2) and BETA working papers (1) (Greve et al 2006). In the study, the independent variables were selected this way: 1. human capital, 2. tenure to measure effects of experience and 3. social capital. In the firm GESTO, data on the social capital were obtained via an online questionnaire which was tested over 52 employees. The questionnaire covered the following topics: general staff contacts at the time of starting the project, getting advice while working on the project, providing advice during the work on the project, contacted with alters in the past two months, contacted alters at the time of commencement of the project, general advisory relationship and social relationship. In the case of companies ALPHA and BETA employees were asked two questions: “From whom did you get advice at the time of starting the project?” and ”Who Holistic Marketing Management
advised you during the project work and research questions?”. The study examined several hypotheses, but the most important for our analysis is the next one: H*: “The Social capital has a direct impact on productivity. People with more social capital will be more productive than those having less of it.” (Greve et al. 2006) After the regression analysis, it is demonstrated the positive impact of social capital on productivity in all three cases. Common to all three organizations is that social capital has a major contribution to productivity in comparison with other observed variables. Additional reasons should be looked for in nature of work these three organizations go in for. All three organizations run most of the projects, unless they are ordered from other companies and institutions. Working teams in these organizations are small and the imperative is the ability to get advice from others in order to create greater productivity. Social capital, in the form of opportunities to establish direct business contacts, affects more access to information, discovers new opportunities, learning from the mistakes that other people have previously made and enables more efficient troubleshooting and fulfilling tasks. 3. Measuring Belgrade Entrepreneurs’ Trust and Its Influence On Business During The Global Economic Crisis In this chapter it is presented part of the survey we carried out in 2011 about institutional, financial and stakeholders’ trust of Belgrade micro and small entrepreneurs before and during the Global economic crisis. Beside, we also examined the influence of previous variables on business parameters such as: investment trend, business extent and entrepreneur real earnings. As a methodological instrument it is used a questionnaire. In the survey it is started from the following hypotheses: H1: Institutional trust of Belgrade entrepreneurs is on a low level H2: Index of financial trust and investment trend for next 6 months are in a positive correlation H3: Index of financial trust and business extent of enterprises are in a positive correlation H4: Index of financial trust and real salary of entrepreneurs are in a positive correlation As for institutional trust, it is measured in 19 institutions connected in a direct or indirect way with functioning of economic and financial spheres. For measuring it is used 4-level Likert scale which is defined the following way: 1. do not trust at all, 2. do not have enough trust, 3. have Holistic Marketing Management
trust and 4. trust completely. The hypothesis H1 will be rejected if a majority of respondents have trust in more than 50% of institutions offered. Trust existence in each of the institutions implies that share of the answers which express institutional trust (sum of responses: ”have trust” and ”trust completely”expressed in percents) exceeds the share of answers which express institutional mistrust (sum of responses:”do not trust at all” and ”do not have enough trust” expressed in percents). To the question: ”Will you please quote how high is your trust degree in each of the following institutions”, to the least degree respondents believe in political parties(3,1%), Agency for privatization (6,1%), Republic parliament (7,7%) and Serbian government (10,8%): Table 1. Institutional trust of Belgrade entrepreneurs during the global economic crisis Do not trust at all %
Do not have enough trust%
Have trust %
Trust completely %
Large Companies Central Bank (NBS) Municipal Administration
Public Utility Companies Serbian Government Republic Parliament Belgrade Stock Exchange Ministry of Treasury Ministry of Economy Privatization Agency Statistical Office of Serbia Political Parties Serbian Chamber of Economy
23,1 49,2 52,3 26,2 41,5 46,9 56,9
43,1 40 40 56,9 41,5 36,9 36,9
33,8 10,8 7,7 16,9 16,9 16,9 4,6
0 0 0 0 0 0 1,5
Belgrade Chamber of Economy Agency for Business Registers Agency for MSE Investment Funds Voluntary Pension Funds
Practically 75.4% of respondents do not trust political parties at all, 56.9% do not trust Agency for privatization and 52.3% of them mistrust the Republic Parliament. Speaking about institutions directly connected with economic and financial spheres, some better results are achieved in the case of the Agency for business registers, Central bank and commercial banks Holistic Marketing Management
(due to the reforms in Serbian banking sector, and because of measures for increasing work efficency in the Agency for business registers in the period 2008-2010). Finally it could be concluded that majority of respondents do not trust 18 out of 19 institutions. So it can be stated that hyphotesis H1 is confirmed. In order to test differences within trust level in the same institutions the period before the recession in Serbia, we put the following question: ”Related to the period before the recession in Serbia (4th quarter of 2008.) – is your present trust with these institutions much lower, lower, without change, greater or much greater”, they answered following way (Table 2). Table 2. Institutional trust of Belgrade entrepreneurs now vs. before the recession Much lower % Commercial Banks Large Companies Central Bank (NBS) Municipal Administration Public Utility Companies Serbian Government Republic Parliament Belgrade Stock Exchange Ministry of Treasury Ministry of Economy Privatization Agency Statistical Office of Serbia Political Parties Serbian Chamber of Economy Belgrade Chamber of Economy Agency for Business Registers Agency for MSE Investment Funds Voluntary Pension Funds
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Without change %
Much Greater %
According to the analogy with replies from table 1, a great percent of answers in the column ”without change” testifies low institutional trust in the period before the recession, too. On the other hand, a trend of further trust decreasing is evident in institutions such as: Republic Parliament and Agency for privatization (with 52% of respondents), Ministry of Finance, large companies and political parties (with 52.3% of respondents), investment funds (with 50,8% of respondents) and Ministry of Economy (with 49.2% of respondents), etc. The next part of survey was related to enterprise business parameters. To the question: „Are you planning to reduce, leave unchanged or increase your investments in business in the next 6 months”, the respondents answered the following way (Table 3). Table 3. Investment trends for next 6 months Investment trend for next 6 months Reduce Status quo Increase Total
12 47 6 65
18.5 72.3 9.2 100.0
The majority of them (72.3%) will keep an investment status quo, 18.5% of respondents will reduce investments while 9.2% will increase theit investment in the 6 months. To the question: „Related to the period before the recession in Serbia is business extent of your firm significantly less, slightly less, without change, slightly increased or significantly increased”, most of respondents faces the recession consequences (Table 4). Table 4. Business extent of enterprises related to period before recession Extent of Business Significantly decreased Slightly decreased Without change Slightly increased
Percent 52,3 38,5 7,7 1,5
In order to examine etrepreneurs` real earnings we put the following question: ”Related to the period before the recession in Serbia (4th quarter of 2008.) is your real salary now significantly decreased, slightly decreased, without change, slightly increased or significantly increased”, 61.5% of respondents state that earning was significantly decreased, 30.8% state that it was slightly decreased, 4.6% of them state that salary was without change, while 3.1% state the earning was increased (Table 5).
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Table 5. Real salary of entrepreneurs now vs. Before crisis Real salary now vs. Before the crisis Significantly decreased Slightly decreased Without change Slightly increased
40 20 3 2
61.5 30.8 4.6 3.1
To examine a relation between business variables and financial trust of entrepreneurs, we have created an index of financial trust (Ift). It is synthetical index whose components unclude trust measures in four financial institutions having the greatest significance for running business: trust in banks, trust in Central bank, trust in Ministry of Finance and trust in investment funds. The final model was set up as follows: Ift = Pb + Pcb + Pmf + Pi (equation 1) Pb - Trust in banks; Pcb - Trust in Central bank; Pmf - Trust in Ministry of Finance; Pi - Trust in Investment Funds
The trust in institutions were weighted with: 5 : 3 : 2 : 1 respectively. To test hyphohesis H2 a correlation analysis was done between the Index of financial trust and entrepreneursâ&#x20AC;&#x2122; investment trend (Table 6). Table 6. Correlation between the Index of financial trust and Entrepreneurs` investment trend Correlations Index of Financial Trust Index of Financial Trust
Investment trend for the next 6 months 1
Sig. (2-tailed) N Investment trend for the next Pearson Correlation 6 months Sig. (2-tailed) N
*. Correlation is significant at the 0.05 level (2-tailed).
As it is seen on the table 6, a significant linear correlation was found, showing a direct linear relation between the index and entrepreneursâ&#x20AC;&#x2122; investment trend. To test hypothesis H3, a correlation analysis was done between the Index of financial trust and business extent. As a result, it was achieved a more significant Pearson coefficient value (Table 7.)
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Table 7. Correlation between the Index of Financial Trust and business extent of enterprise Correlations Index of Financial Trust
Business extent of enterprise
Index of Financial Trust Pearson Correlation
N Business extent of enterprise
**. Correlation is significant at the 0.01 level (2-tailed).
To test hypothesis H4 it was done a correlation analysis between the Index of financial trust and the variable: “real salaries now vs. before the crisis” (Table 8). Table 8. Correlation between the Index of financial trust and changes in real salaries Index of financial trust Index of financial trust
Real salaries now vs. before the crisis 1
Sig. (2-tailed) N Real salaries now vs. before the crisis
Pearson Correlation Sig. (2-tailed) N
*. Correlation is significant at the 0.05 level (2-tailed).
Also, it was received a significant Pearson coefficient value (.298*) which indicates the existence of a direct linear relationship between these two variables. In the survey was also examined entrepreneurs’ trust in the following stakeholders: suppliers, competitive firms, foreign investors, consumers and employees of the firms. Generally, the majority of respondents (81.6%) has trust in suppliers, customers (70.7%) and employees in their firms (79.4%):
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Table 9a. Trust in suppliers, competitive firms, foreign investors and consumers during the global economic crisis
No Trust at all % Not enough Trust % Have Trust % Have Complete Trust %
1,5 16,9 55,4 26,2
Competitive Firms 18,5 50,8 29,2 1,5
Foreign Investors 32,3 49,2 18,5 /
Consumers 3,1 26,2 56,9 13,8
Table 9b. Trust in employees in respondents’ firms Trust Level in employees No Trust at all % Not enough Trust % Have Trust % Have Complete Trust %
Percent of entrepreneurs 1.7 19.0 46.6 32.8
To the question: “Related to the period before the recession in Serbia (4th quarter of 2008.) – is your present trust in the same people much less, less, without change, greater or much greater”, most of the respondents have the same trust in stakeholders. However, concerning the period before the crisis a decreasing trend was registered with suppliers (16.9% of respondents), with competitive firms (24.7%), with foreign investors (27.7%), with consumers (21.5%) and the employed (10.3%). In the period of economic crisis, a good recipe for keeping business stability of small companies presents winning an preserving loyality of suppliers, employed people as well as consumers. For the analysis requests, an index of stakeholders’loyality has been created. Its components consists of 3 components such as: trust in consumers, trust in suppliers and trust in employees with weights 5 : 4 : 4 respectively Isl = Pc + Ps + Pe (equation 2)
We have started from the following hyphothesis H5: The Index of Stakeholders’Loyality makes an influence on a change of a dependante variable „the change of real salaries with the reference to the period before the recession”. Model of linear regression has been put the following way:
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yi = β0 + β1xi + εi (equation 3) yi = dependant variable (real salary) β0 = y intercept β1 = slope xi = predictor (index of stakeholders` loyalty) εi = error in the observed value for the i cases
After the regression, the next results are received (Table10): Table 10. Excerpt from the regression analysis Model Summaryb Coefficient of determination Standard Error of Model R R2 Adjusted R2 the Estimate 1 .222a .049 .032 .695 a. Predictors: (Constant), Index of Loyalty b. Dependent Variable: Real salary now vs. before the crisis
As it can be seen, low values are received for the coefficient (R = 0.22) together with the coefficient (R2 = 0.049), so we can conclude that the hypothesis H5 was not confirmed. It means that entrepreneurs associate crisis cause with financial trust more than trust with stakeholders. 4. Conclusion The text puts emphasis on the measurement of trust and its impact on business operations of firms in Belgrade during the global economic crisis. Based on survey results, most entrepreneurs have no confidence in 18 out of 19 institutions that are directly or indirectly related to economic and financial sphere. This negatively affects the creation of business environment and business operations of firms. In relation to the period before the recession in Serbia, the trust of entrepreneurs mostly fell in the Parliament, the Privatization Agency, Ministry of Finance and the large companies. With the great majority of entrepreneurs there was a decrease in the volume of business and real wages related to pre-recession period, whereas 18.5% of respondents intended to reduce their investment in their own business. The study measured the correlation between the Index of financial trust and the three business variables in firms. In all three cases, a significant positive correlation was achieved. In the survey it is found that most respondents have trust in suppliers, customers and employees, and that there is no trust in the competitive companies and foreign investors. In relation to the period prior to 4th quarter of 2008 there has been a slight decline of trust in all of these stakeholders. In addition to it, the survey found that more respondents associated the cause of crisis with institutional trust declining rather than with a lack of trust in stakeholders. Bearing in mind economic disparities in the state, it is rational to
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expect that in other parts of Serbia stock of measured trust would be lower, and the business environment and the firms’ parameters less qualitative. Bibliography: Baron, D. (2010) Business and It`s Environment, Pearson . Coase, R. (1937) ”Nature of Firm” in: Williams, O. and Winter, S. 2000. Nature of Firm, Podgorica, CID . Curran, J., Blackburn, R.A. and Kitching, J. (1995) Small Businesses, Networking and Networks: A Literature Review, Policy Survey and Research Agenda, Small Business Research . Dasgupta, P. (1988) ”Trust as a Commodity” p. 51 in: Gambetta, D. (ed.) Trust: Making and Breaking Co-operative Relations. Oxford: Basil Blackwell . Greve, A. , Benassi, M. and Sti, A.D.(2006) ”Exploring of contribution of human and social capital to productivity”, Sunbelt XXVI, Vancouver, april . Isham, J. et al. (2002) Social capital an well-being in development countries, Edvard Elgar Publications . Kim,Ph. and Aldrich,H. (2005) Social Capital and Entrepreneurship, nonPublishers Inc . Pennar, K. (1997) ”The tie that leads to prosperity: The economic value of social bonds is only beginning to be measured”, Business Weekly . Portes, A.. (1998) ”Social capital: it`s origins and applications in modern sociology, Annual Review of Sociology 24 . Putnam, R. (2000) Bowling Alone: The Collapse and Revival of American Community, New York, Simon & Schuster . Raiser, M. (1999) ”Trust in Transition”, EBRD, Working Papers N 37 . Schiff, M. (1992) ”Social capital, labour mobility, and welfare: The impact of uniting states”, Rationailty and Society 4. : 157-175 . Svensend, G.L.H. and Svensend,G.T. (2005) The Creation and Destruction of Social Capital: Entrepreneurship, Co-operative Movements and Institution, Edward Elgar . Taylor,F.W. (1911) Principles of Scientific Management, New York, NY, USA and London, UK: Harper & Brothers . Bebbington, J et al. (2000) ” Induced social capital and federations of the rural poor” ,The Initiative for Social Capital, Working Papers N19: http://siteresources.worldbank.org/INTSOCIALCAPITAL/Resources/Social-CapitalInitiative-Working-Paper-Series/SCI-WPS-19.pdf . The World Bank (1998) ”The Initiative on Defining, Monitoring and Measuring Social Capital” , Social Capital Initiative Working Paper No 1 (Apr.) . Zaric, S. and Babic.V. (2010) "Social Capital Influence on Global Economic Crisis" in: Chavdarova, T. et al. Markets as Networks (eds.) , Sofia: St. Kliment Ohridski University Press .
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MULTINATIONAL COMPANIES AND SUSTAINABILITY PRACTICES BEYOND HEADQUARTERS – EVIDENCE FROM FOREIGN SUBSIDIARIES IN THE ROMANIAN FOOD AND BEVERAGES INDUSTRY Roxana CODITA, PhD TU München, TUM School of Management Alte Akademie 14, D- 85354 Freising roxana.Codita@tum.de
Abstract This article is based on in depth face-to-face interviews, which were conducted in September 2006 with 8 managers of 6 foreign subsidiaries in Romania as well as with a Greenpeace representative and a consultant on environmental issues in the food industry. The findings of this study have been presented at the 3rd Annual International Sustainable Development Research Conference, Västerås, Schweden, 10-12.06.2007. Results indicate that subsidiaries of multinational companies tend to adopt the environmental and social standards imposed by the headquarters regarding supply and production policies, but these aspects do not flow into the product marketing. Community-directed social and ecological activities are communicated under the CSR umbrella. Neither market nor stakeholders pressures are being felt at the subsidiary level, so that the motivation for adopting sustainability practices derives almost exclusively from headquarters policies. Keywords: sustainability practices, neo-institutional theory, multinational companies, food and beverages industry JEL Classification: F23, L66, M14, M31
1. Introduction There are few topics that polarize the public opinion all over the world to such extent as the globalization issue does. Multinational corporations, the engines of world trade, have long been criticized for their lack of social and environmental responsibility (Greider, 1997; Gray, 1998; Korten, 2001). Their irresponsible behaviour may eventually lead to the worldwide erosion of social and environmental standards, more marked social asymmetries and the permanent damage to the environment (Gray, 1998). At the same time multinational companies are credited with a major potential in promoting sustainable development by transferring environmentally friendly technologies and know-how to host countries, raising awareness and educating consumers on social and environmental problems (Levy, 1995). This sustainability debate seen in the globalisation context has fueled the authors to address a different and differentiated question than whether multinational companies (MNC) have a positive or negative contribution to sustainable development. Rather the question to be asked is whether one and the same company has the same share in sustainable development in every Holistic Marketing Management
place it operates. Basically, MNC have two options regarding the design of their sustainability policies: either they tailor their strategy to match the institutional profile of each individual country or they set global standards, which must meet the most stringent expectations (Rugman and Verbeke, 2001). More and more companies have added sustainability issues to their business agenda, as a result of the increasing awareness and the expression of social and ecological concerns in developed societies (Kolk, 2003). Multinational corporations increasingly communicate their efforts regarding the integration of the three principles of sustainable development (Elkington, 1998)- environmental integrity, social equity and economical prosperity- into their business activities, by publishing separate or joint reports like Social and/or Environmental Responsibility Report (Unilever, Danone), Corporate Social Responsibility Report (NestlĂŠ, General Mills) or Corporate Citizenship Report (Diageo). On a time line, we could say that corporations seem to be gradually moving from shareholder value driven practices towards stakeholder-oriented, sustainable policies. But to what extent do MNC manage to replicate their sustainability policies and practices in their foreign subsidiaries all over the world? This study intends to answer following research questions: 1.) Do MNC attempt to transfer sustainability practices to their foreign subsidiaries? 2.) To what extent are sustainability practices being adopted by foreign subsidiaries of multinational companies? 3.) How do foreign subsidiaries balance external institutional pressures and internal organizational pressures? These questions have been addressed in an exploratory study conducted in Eastern Europe, particularly Romania in autumn 2006. In the present paper, the authors present the theoretical background (section 2), describe the methodological approach (section 3), present (section 4) and discuss (section 5) the results of the empirical study. The conceptual framework presented in this paper draws on institutional and resource dependency theory in order to explain the dynamics of the institutionalization process of sustainability practices throughout foreign subsidiaries and headquarters. The paper intends to make a theoretical contribution to neo-institutional theory by: 1) proposing a conceptual framework to explore the role of multinational companies as agents of institutionalization of sustainability practices across national borders and 2) integrating the theory of institutional duality in MNC in the sustainability literature. 2. Theoretical Background Neo-Institutional Theory Neo-institutional theory stresses that business choices are not exclusively the result of managersâ&#x20AC;&#x2122; rational economic decisions, but they are also influenced by external norms, values and traditions, which provide the organization with a sense of social legitimacy (DiMaggio and Powell, 1983, 1991a; Oliver, 1991; Scott, 1995). Management choices and practices thus Holistic Marketing Management
incorporate social and cultural pressures (Scott, 1992) to gain or maintain social legitimacy, considered a key factor in determining a business facility’s long-term profitability and survival (DiMaggio and Powell, 1983, 1991a). Institutionalization ultimately results in a “social construction process” in which companies in in the same organizational field1 gradually become alike, due to the influence of external pressures on the selection and implementation of strategies (Scott, 1995). DiMaggio and Powell (1983, 1991b) identified three types of institutional mechanisms- coercive, mimetic and normative isomorphism- that foster this convergence phenomenon. Pressures applied by governments, which rely on mandatory standards, monitoring, and sanctions, are of coercive nature (Meyer and Rowman, 1977). Coercive pressures can also be exerted by organized societal interests, for instance by environmental groups or the media, which have the potential to successfully challenge the corporate’s social legitimacy. The changes resulted from such pressures lead to coercive isomorphism among companies. Normative isomorphism occurs when companies adopt values and norms of conduct promoted by professional networks, professional or industry associations, academic institutions and industry-wide initiatives such as voluntary programs (DiMaggio and Powell, 1991b). This type of influence rests on peer pressures and embarrassment of noncompliers (Hoffmann, 1999). The third institutional mechanism causes companies to imitate each other’s behaviour, especially that of the most profitable and respected companies in their industry, in order to appear legitimate and competitive. Giving in to this type of pressures leads to mimetic isomorphism (DiMaggio and Powell, 1983). The firm’s institutionalization process will be different depending on the source of pressure. Resource-Dependency Theory However, the assumption that firms would passively conform to all institutional pressures, neglects the role of organizational self-interests and active agency behaviour in moderating firms’ response to institutional pressures (Oliver 1991, Cashore and Vertinski, 2000). An answer to this criticism is offered by resource dependency theory, which proposes that firms “will respond more to the demands of those organizations or groups in the environment that control critical resources” (Pfeffer, 1982, p. 193). Firms will, hence, act in self interest and acquiesce to those pressures that decide over critical resources. Resource dependency theory defines the criticality of a resource as a function of “the importance of a particular resource to the organization, the degree to which those who control the resource have monopoly over the resource, and the discretion they have over its allocation” (Jawahar and McLaughlin, 2001, p. 401). In her article “Strategic Responses to Institutional Pressures”, Oliver (1991) added the resource dependency perspective to institutional theory, by identifying a range of strategic 1
An organizational field is defined as “those organizations that… constitute a recognized area of institutional life: key suppliers, resource and product consumers, regulatory agencies and other organizations that produce similar services or products” (DiMaggio and Powell, 1983, p. 148). Holistic Marketing Management
responses to the institutional environment: Besides acquiescing to external pressures, firms might also compromise, avoid, defy or manipulate, depending on their degree of choice and activeness exhibited. Institutionalization as a Process While early institutional theorists mainly examined convergence processes among organizational actors, a growing number of researchers turned their attention towards institutional change, analyzing the origins of new types of organizational practices (Greenwood and Hinings, 1993; Aldrich and Fiol, 1994; Suchman, 1995; Dezalay and Garth, 1996; Ventresca and Porac, 2003) as well as their eventual decline (Zucker, 1988; Scott et al., 2000; Scott, 2004a). Tolbert and Zucker (1996) regard institutionalization as a process unfolding in three stages: from preinstitutionalization, semi-institutionalization or progressive institutionalization to full institutionalization. Thus, the adoption of a practice evolves from an initial stage, characterized by few adopters and limited knowledge, to a final stage when the practice is “taken for granted by members of a social group as efficacious and necessary” (Tolber and Zucker, 1996, p. 179). Institutionalization of a practice is determined by two dimensions, implementation and internalization (Kostova, 1999). Implementation represents the degree to which formal rules implied by the practice are followed within the organization, while internalization occurs when the organization members attach symbolic meaning to the practice, or “infuse it with value” (Selznick, 1957, p. 17). Institutional Duality Neo-institutional theory provides an appropriate conceptual platform to study strategies of multinational companies, which operate in multiple institutional environments and under diverse institutional pressures (Xu and Shenkar, 2002). This paper deals specifically with the transfer of organizational practices from the parent company to its foreign subsidiaries. Organizational practices are defined “as particular ways of conducting organizational functions that have evolved over time under the influence of an organization's history, people, interests, and actions” (Kostova 1999, p. 309). The organizational practices under scrutiny consist of corporate social and environmental practices, which are referred to as sustainability practices. Subsidiaries of multinational companies are expected to adopt heterogeneous sets of responses to practices imposed by the headquarters, as they are seeking to maintain both internal legitimacy within the organization and external legitimacy within the host-country. Kostova and Roth (2002) refer to the concurrent influence upon foreign subsidiaries of local institutional pressures and organizational pressures within the MNC as institutional duality (see figure 1). The active agency behaviour of foreign subsidiaries is thus shaped by the institutional profile of the homecountry, defined as “the issue-specific set of regulatory, cognitive, and normative institutions in a
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given countryâ&#x20AC;?, as well as by the internal relational context in the organization (Kostova and Roth, 2002). Levy and Rothenberg (2002, p. 176) argue that â&#x20AC;&#x153;each company interprets the institutional environment through a unique lens, a product of its history, organizational culture, and market positioningâ&#x20AC;?. The fact that multinational companies operate within multiple institutional fields exposes them to different repertoires of institutionalized practices and norms (Westney, 1993; Levy and Rothenberg, 2002). Therefore, balancing global integration and local orientation is one of the main challenges faced by multinational companies (Westney, 1993).
Foreign Subsidiary institutionalization
Local Institutional Environment
Figure 1: Basic Model: Institutional Duality at the Foreign Subsidiary Level 2. Methodology Industry Focus: Food Processing Industry By focusing on a specific industry the study takes a field-level approach, which confers an analytic value-added (Hoffman and Ventresca, 2002). After air and water, food is the most essential resource people need to sustain their existence. Yet the food production system often severely damages the natural environment through soil depletion, overuse of water, deforestation, aggressive use of pesticides, fishery collapses, and the loss of biodiversity in crops, livestock, and wild species. The activities pertaining to the food system have a deepimpact not only on the environment, but also on the community: This can be related to fair working conditions and respectable wages, the guarantee of food safety as well as to the maintenance of rural communities and family-owned farms. Starting from the production, processing, transportation, selling, storage, cooking and eating of food, to the disposal of the
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produced wastes (Tansey and Worsley, 1995; Millstone and Lang, 2003), the whole food chain should be transformed towards sustainability. The food system in industrialized countries is striving high labour productivity and economies of scale, which are achieved by resorting to intensive use of soil, irrigation, pesticides, fertilizers, or genetic engineering. Such practices lead eventually to higher volumes and short-term profits, but these come at the cost of degraded cultivated land, reduced ecological diversity of cultivated crops, and the promotion of a consumption pattern leading to waste, deliberate destruction and underuse of food resources (Shrivastava, 1996). In Central Eastern European (CEE) countries, the challenges confronting the food system are rather of economic and social nature: land abandonment resulting in a decrease of soil quality and impoverishment of biodiversity, lack of financial resources, unclear property rights, rural poverty, ageing of the rural population (Beckmann, 2001; Gatzweiler and Hagedorn 2003). The farming systems in CEE are dualistic in structure: There are a small number of large–sized, market–oriented agricultural enterprises and a large number of small– and medium–sized family farms, often producing for subsistence and only partly producing for the market. Though the farming structure is expected to change towards a higher consolidation degree and subsequently to a more intensive form of agriculture, the environmental and social impact of the food system could in this way decrease, provided that sustainable production and management practices are adopted (Gatzweiler and Hagedorn, 2003). Multinational food manufacturers, as a major factor of influence both on the supply as well as on the demand side, can play a crucial role in promoting sustainability along the whole food chain. Geographical Focus: Romania Representing the second largest market in the Central-Eastern European region after Poland with a population of nearly 22 million, Romania lived 2006 its 7th consecutive year of economic growth at a steady rate of over 5%, within a stable political environment. In 1995, at the same time as other candidates from Central and Eastern Europe, Romania submitted alongside Bulgaria its application for accession to the European Union. In October 2004 the European Commission concluded that Bulgaria and Romania complied with the political accession criteria, but they still had to comply with the economic and legal criteria in order to be ready for accession on 1 January 2007. As of January 1st 2007, Romania and Bulgaria are full members of the European Union. This ongoing process of economic and institutional reforms, necessary to gain the arduously desired European Union Membership, bestowed Romania with an increasing interest on the part of foreign investors. The country reported last years one of the highest foreign direct investment levels in Europe (EU, 2006). International companies and investors are increasingly joining the Romanian scene. In some sectors, foreign companies have already secured themselves an important share of the market. Taking the food market for example, Austrian (Brau-Union AG) and Athens-based (Coca-Cola HBC) investors dominate the beverage sector, French and Dutch Holistic Marketing Management
companies (Danone, Friesland, Campina) bestride the milk sector, American investors (Bunge and Cargill) control the edible oil sector, a Dutch (Unilever) and a Norwegian (Orkla Foods) company part the margarine market and the examples could continue for other food sectors. By selecting Romania as the location of this study, the authors intend to put the sustainability debate, until now most visible in developed countries (SustainAbility, 2002), in the context of emerging markets. Data and Procedures Given the clear need to understand the current implementation stage of sustainability practices and the motivation for adopting them, an exploratory qualitative approach was chosen for this study. Qualitative methods are particularly useful to study in-depth a small number of people or organizations but reduce the possibility of generalizations (Maxwell, 1996; Mason, 2002). In this case the qualitative approach was used to investigate the interdependency between local institutional forces, headquarters management and the adoption of sustainability practices, without considering the selected firms as a representative sample for the whole Romanian market. It is a hypothesis-generating rather than a hypothesis-testing approach to a complex and not yet well-understood topic. The sampling consists of multinational food processing companies with a foreign subsidiary in Romania that claim to have adopted sustainability practices at the headquarters level, e.g. they publish sustainability reports. Beyond that, the companies approached are market leaders in their segment in Romania. This is a purposive sampling, as companies were deliberately selected to provide interesting information from a theoretical point of view (Maxwell, 1996; Mason, 2002). The authors maintain that large multinational companies that are also local market leaders, thus enjoying high public visibility both at the global and local level, would exhibit the greatest potential to actively transfer sustainability practices. This pre-study was intended to lay the conceptual foundations for further in-depth case-studies and identify possible case-study partners. Case-studies are generally considered to be well suited to the research aims of generating and building theory in an area with relatively little existing data and theory (Bonoma, 1985; Eisenhardt, 1989; Yin, 1989). In depth face-to-face interviews were conducted between 11. - 23. September 2006 with 8 managers of 6 foreign subsidiaries in Romania and one expert interview with a Greenpeace representative and a consultant on environmental issues in the food industry. In August 2006 twenty managers were contacted via e-mail, with a positive answer from three of them. Hereafter another e-mail of recommendation has been sent by the Romanian Council of Foreign Investors and six more companies answered positively. Due to various (mis-)coordination reasons such as lack of time or of appropriate interview partners, the positive reply of Pepsi, NestlĂŠ and SAB Miller did not materialize. In the case of Zaharul S.A., the general manager had to call off the appointment on short notice, delegating instead a legal advisor, a marketing manager and the chief controller to the interview. Table 1 presents the companies interviewed. Holistic Marketing Management
Table 1: Interview Partners
Unilever South-Central Europe Cargill Orkla Foods Zaharul S.A. (Sugar S.A.)
Alexandra Olaru Martin Schuldt Dinel Oarfa Diana Cosma Melinda Robas
Gabriel Paun Dragos Dima
Position Corporate Affairs and Communication Manager Corporate Affairs and Communications Manager Corporate Affairs and Communications Manager Merchandising Manager Supply Chain Manager Legal Advisor Chief Controller Marketing Manager Project Coordinator Consultant
Location Bucharest Bucharest Bucharest Bucharest Bucharest Oradea
A semi-structured interview schedule was used and interviews typically lasted between 40 and 120 minutes. The interview guide (see Figure 2) was designed in relation to the defined research questions of the study. This methodology allowed respondentsâ&#x20AC;&#x2122; motivations to be explored in detail, enabling a richer understanding of the reasons behind particular environmental and social practices. Additionally, following written documents were included in the analysis: corporate sustainability reports, local websites, press releases and brochures of the local subsidiaries. 1.
Debates on how responsible corporate behaviour should look like are increasingly taking place on a local and global level. From the perspective of your company (e.g. Danone Romania), what is the role of a company in the society? Bearing in mind the whole value chain of your products (starting from procurement, production, packaging, consumption till recycling), which social and ecological aspects does your company consider along it? (sustainability practices) When did your company become engaged in the social and ecological area and what determined initially the orientation towards these problems? To what extent was, and eventually continues to be, the management of your mother-company involved in this area? (headquarters/ internal pressure) How do you judge the impact of various external stakeholders, e.g. civil society, mass-media, governmental agencies, competition, customers over your organizationâ&#x20AC;&#x2122;s environmental and social policies? Eventually you can resume yourself to those you consider relevant for your company. (local institutional environment/ external pressure) To what extent does your marketing strategy take into consideration and communicate the ecological and social performances of your products/ company? Do you consider that sustainable products (defined as products that satisfy customersâ&#x20AC;&#x2122; needs, but compared to the market standard, have a reduced impact on the environment and a social positive effect for the employees, local communities and consumers) enjoy a competitive advantage on the Romanian market? How do you appreciate the future of the market for sustainable food products in Romania and what role will your company play in this context? Figure 2: Interview Guide
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4. Empirical Results A coding scheme (see table 2) was developed, using a mixed approach to coding. Accordingly categories were derived inductively, from the empirical material, and deductively, based on institutional duality (Miles and Huberman, 1994). The two first order categories represent on the one hand the “what” or the descriptive dimension captured by “sustainability practices in the foreign subsidiary”, and on the other hand the “why” or the explanatory dimension reflected in the category “pressures”. The second-order category identifies on the one hand the areas where the local subsidiary implements sustainability practices, and on the other hand classifies the source of pressures into organizational and local institutional pressures. First-Order Category Sustainability Practices in the Foreign Subsidiary Pressures
Second-Order Category Procurement Production Marketing Organizational Pressures Local Institutional Pressures Table 2: Coding Scheme
The next sections will present the information gathered, by subsuming data to the above defined categories. 4.1. Sustainability Practices in the Foreign Subsidiary 4.1.1. Procurement On the procurement side, the focus lies on social aspects. None of the interviewed companies purchase their raw materials from organic farming. Their efforts concentrate on enhancing the suppliers` technical, managerial and financial capacity in order to improve their quality and safety standards. Danone initiated in April 2005 the program “Reaching West”, intended to support small farmers to acquire modern equipment like milking machines and genetically superior cows. “At the beginning of the year, about 80% of the farmers in Romania had on average of 2 cows. With Romania’s entry in the EU, things become complicated for the farmers, because, besides the need to bring up a quota, their milk has to feature a European quality, meaning a certain number of germs, no inhibitors... If you own two cows, you don’t afford to buy these machines which help you attain the European quality standards”. The program consisted of preferential credits negotiated by Danone with various banks. Farmers which had an audit certification from Danone and a long-term contract could thus access credits with lower interest rates. This program was complementary to the programs of the European Union Agency SAPARD2. The Danone´s supplier audit is set at the group level. 2
SAPARD (Special Accession Programme for Agriculture and Rural Development) was established in June 1999 by the Council of the European Union to help countries of Central and Eastern Europe deal with the problems of the structural adjustment in their agricultural sectors and rural areas, as well as in the implementation of the acquis communautaire concerning the Common Agricultural Policy and related legislation. Holistic Marketing Management
“The program supports the establishment of family farms of about 70 cows, which would be able to implement the modernizations imposed by the European Union, while next years the number should increase at an optimum of about 350 milk cows. We consider that this average number of cows per farm maintains a corresponding load of animals per hectare and fits the concept of sustainable agriculture – a correct soil exploitation and the prevention of environmental degradation”. (Press Release Danone Romania, April 17, 2006). Most of the over 100 farms delivering milk to Danone, do this on an exclusive basis, as Danone commits to pick up their whole milk quantity irrespective of seasonal fluctuations. Danone enhances the know-how and managerial capacity of their farmers in Romania by offering them guidance through company consultants. The procurement practices of Danone Romania are thus mainly directed at ensuring the quality, safety, and traceability of the primary raw material: milk. Zaharul S.A. procures its sugar beets entirely regionally from farmers with partially reduced financial and technical capacity. The company assists them both with educational and consulting programs and with material resources (seeds, pesticides etc.). A company consultant is assigned to a number of cultivators, who trains the farmers on environmental topics, such as secure handling and safe disposal of pesticides, on modern cultivation methods and on work safety. A measure they undertook for the first time last year was to equip the transportation vehicles with a device that cleans the sugar beets from dirt at the source, thus optimizing the transportation quantity and costs. Orkla Foods stressed the high standards they apply to their suppliers with special attention to traceability, food safety and quality: “All our suppliers have to fulfill strict norms regarding the logistical conditions of transportation and delivery of the merchandise […]. Regarding traceability, every supplier has to ensure the traceability of every product, irrespective of whether it concerns raw materials or packaging [..]. They are compelled to fill out the forms “GMO- and allergens-free”, accept at any time an audit from Orkla and permit the audit in all critical points”. The interview partner considered these standards to exceed by far the local legal requirements. Because of the incapacity of Romanian cultivators to fulfill the quality standards required, they are even considering to give up the procurement of fresh fruits for their jam production, even if this means an image loss. They also pursue a non-GMO policy and source only non-GMO ingredients: “For instance, the soy oil we used to buy from Cargill, is no longer imported. We actually even eliminated this ingredient from the margarine recipe because of the risks of GMO contamination”. Although Romanian legislation requires that GMO-products be labeled accordingly, not even one laboratory exists in the country to carry out controls: “Orkla does not wait for the Romanian legislation [to become effective]; we implement the policies required by the headquarters”. For Cargill instead GMO is not an issue, as they “offer what the market wants, and if the market buys GMO-products, we offer GMO-products”. Coca-Cola and Unilever stated that their procurement policies are fully aligned to those of the mother company. “When we enter into a contract with a supplier, as an integral part of this
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contract, they sign Unilever´s Code of Business Practices, and there we refer to air quality, interdiction of child-work, relationship with the consumers, exploitation, fair competition etc.” 4.1.2. Production The production facilities of the companies interviewed are operating according to high environmental and social standards. Most of them have implemented ISO 14001, OHSAS 18001 (Occupational Health and Safety Assessment Series), IFS (International Food Standard) and/or HACCP (Hazard Analysis Critical Control Point). The general impression gained from the interviews is that most environmental and social activities are concentrated in the area of production. The investments directed at improving the environmental and social performance of the production facilities come to support this statement. Danone for example launched in October 2005 a wastewater treatment station, a project financed in partnership with SAPARD, amounting to 1.5 million euros. The station has a capacity of 1,200 cubic meters per day, at present functioning at about 40 percent of its total capacity. Orkla Foods too invested 0,75 Mio. EUR in a 1,5 Mio. EUR project aimed at improving the working environment at their canned meat and paté plant. Orkla is also relocating an important part of their production activities from the plant in Craiova to Bucharest, to decongest the Craiova plant, located in the middle of the city. In the long run, the Craiova plant will be completely relocated. “In Covasna we own one of the most modern factories in Romania, regarding microbiological control, production processes, raw materials…” The group established a Food Safety Standard that “applies to all factories in the Orkla Group that produce food and beverages. The standard is based on the internationally recognised Food Technical Standard of the British Retail Consortium. The Orkla Food Safety Standard, introduced in 2004, has created a uniform approach to food safety in the Orkla Group, thereby making it easier for companies to exchange products.” (Corporate Website) All six Coca-Cola HBC Romania plants have received The Coca-Cola Company’s Environmental Management System eKOsystem certification, as well as ISO 14001 certification. Lloyds Quality Assurance Ltd., an internationally-recognized auditor, surveyed all Coca-Cola HBC Romania’s bottling plants in 2004. The maximum rating-"clear pass," which is rarely obtained by all the plants in a country-was issued to them. For Coca-Cola Romania“the protection of the natural environment represents more than abiding by the local laws and norms in this area. Coca-Cola integrates in its daily activities environmental practices. Even in the absence of specific environmental regulation, the company’s divisions act in a responsible manner, in conformity with the requirements of the corporate environmental standards.” Zaharul SA is the only sugar producer in the country possessing a microbiology laboratory. They pursue an integrated management system: quality-environment-health and occupational safety, being ISO 9001, 14001 and OHSAS certified.
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Unilever was a pioneer in introducing modern management systems: “Unilever had all systems implemented, even before Romania introduced any legislation on any system you can think of, and the most often mentioned is the HACCP.” Regarding the employees, among the programs mentioned there were private health insurances, life insurances or membership cards for fitness centres. In terms of internal communication, the author could notice the display in and outside the offices of some companies (Danone, Unilever, Zaharul) of various sustainability-related principles and guidelines, from general environmental, social and safety policies, to concrete office rules (in Unilever and Zaharul), such as: recycle paper, send e-mails instead of letters, print double-sided pages, re-use envelopes for in-house mail etc. 4.1.3. Marketing The activities directed at promoting sustainable consumption are mainly concerning educational aspects. These regard for example dietary habits, nutrition, stimulation of sports activities, information on ingredients, reading and understanding the information on the product label etc. Danone organized a campaign for their brand Activia where nutritionists offered counseling in the retail markets on any topic regarding nutrition. Unilever initiated an educational program in cooperation with other food companies aimed at teaching consumers to read product labels, prevent consumption after expiry date etc. The educational programs they initiate have an impact on consumer behaviour, which may thus evolve towards a more conscious, quality-oriented food choice. Unilever for instance created and financed in cooperation with the Food Industry Federation the “Foundation for Healthy Nutrition”, which is meant to foster research in the area and raise awareness of the population through national campaigns. One of them has just started under the slogan “Healthy life starts at the table”. Yet looking at the products of the companies interviewed, there are only few communicated aspects that signal a certain orientation towards sustainability. Orkla Foods` brand products “Goodies from the Granny” are labeled allergens-, preservatives- and GMO-free. The communication of the brand stresses the home-made quality of the products, with ingredients exclusively from natural sources. Danone has recently introduced on the market a range of products called “Casa buna” (Good House), enriched with a complex of calcium and vitamins A, D and E, especially created for the Romanian market at a most affordable price (0,14 EUR), promoted under the slogan “Health at hand”. The complex of calcium and vitamins has been chosen in accordance with scientific studies that revealed a deficit in these substances in the Romanian population. Unilever has committed to disclosing three ingredients more than the mandatory five under Romanian regulation out of transparency reasons. Next year Unilever`s self claim “My Choice”3 will also 3
“The Choices stamp is appearing on foods and drinks that meet benchmark criteria for four key nutrients: trans fats, saturated fats, sugar and sodium (salt). We're also encouraging other companies, retailers and caterers to use it. Their products that meet all four criteria can put the Choices stamp on the front of their packs.” Holistic Marketing Management
be introduced in Romania. Under the same sign of transparency, Coca-Cola by indicates all ingredients on the label (which is not the legal standard). It chooses to practice a responsible marketing, by not advertising two liters bottles or addressing children in their commercials. In general, social and ecological aspects are rarely being used as a product marketing instrument. Companies are lacking the incentive of customers linking the socio-ecological problems to their needs and wants. Not the same thing can be said about the social and ecological activities of the company, which are communicated under the CSR umbrella. All companies enumerated various community programs, of social or environmental nature, involving schools, kindergarten, hospitals, NGOs, local administration etc. There are many initiatives of environmental education taking place in schools, which fill in a gap in the school curricula, but also in the education at home, as environmental awareness scores poorly with the average Romanian. All in all, most marketing practices here mentioned can be subsumed to corporate philanthropy and employee volunteering, thus addressing, in more or less enlightened self-interest, the community, rather than the consumer. 4.2. Pressures 4.2.1. Organizational Pressures Most interview partners found it somewhat difficulties to approach the question related to how their company sees its role in the (Romanian) society. They either stated that they follow the global mission proposed by the group, without adding any local nuances, as in the case of Unilever, Danone and Coca-Cola, or had problems formulating an answer on the spot. The Cargill Manager was not acquainted with the mother company’s sustainability policies published in the latter’s corporate citizenship report, but stressed the importance of offering a safe working environment for their employees in Romania. Cargill seems to have a decentralized structure and the interview partner lacked any detailed information on their environmental management system: “We have some, but I don’t know exactly what type.” “We take pride in the fact that Danone has always produced healthy products. This is the first thing that makes a company responsible…And of course, our desire is to offer them (n.b. healthy products) to as many people as possible on the globe” (Danone). This is a rephrasing of the official mission formulated by Danone, which is “Bringing health through food to a majority of people.” Danone as a group developed a global program called Danone Way which “is a crossfunctional program aiming at long-term progress. It calls on business units to conduct a selfassessment onto practices regarding all areas of corporate responsibility. DANONE Way provides to the Group business units a basis for action plans regarding various fields: human resources policies (compensation, training for employees), quality (animation of quality policies, matching consumer expectations), purchase (management of relationship with our suppliers), environment (animation of environmental politics, focusing on packaging issue).”
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In the case of Unilever, the answer was: “Unilever South and Central Europe, as a regional center, cannot have but the same mission as the mother company, and that is “vitality”. Unilever`s mission, “vitality”, is what we chose to communicate, to help people feel better, look better and take what’s best from life.” On the corporate website, we find: “Unilever's mission is to add vitality to life. We meet every day needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life.” Unilever, Coca-Cola, Danone and Orkla Foods underwent a process of convergence towards the global sustainability standards of the mother company. A global approach is noticeable particularly with regard to the implementation of environmental standards through various certification schemes. However most companies give their foreign subsidiaries a leeway to design social and environmental activities based on local specifics, within the policies established at the headquarters, as the Coca-Cola manager explains: “The policies and commitments with general character of Coca-Cola HBC are indeed established at group level, as it can be observed in the CSR report on our internet site. In this report you can notice a diversity of approaches, within this frame, at local level. Most of the projects are elaborated and planned at country level, including the case of Romania, according to the local specifics. For example in Romania, we have a preference for programs oriented towards education, environment and charity.” Zaharul SA is owned by the sugar groups “Pfeifer & Langen” (Germany) and “Cristal Union” (France). Their shareholders didn’t impose any environmental and social policies, but financed the investments in the environmental and social area, undertaken by the locally owned company. 4.2.2. Local Institutional Pressures Market Stakeholders In one case, that of Zaharul SA, the company considered their demanding business customers to be one of the main drivers behind their involvement with environmental and social issues. Given the nature of the product they offer, sugar, 60% to 70% of their production goes to business customers, which impose very high environmental and social standards on their suppliers. They were very proud to be one of the few sugar suppliers of the pharmaceutical industry in Romania, meaning that they are able to fulfill the most exigent claims. However all companies stated that a critical customer base for products with superior ecological and social value is not yet available, and this is the reason why they are not communicating their social and ecological performances at the product level. Thus, individual customers were rather considered a non-stimulating factor, because of their price-oriented behavior and lack of environmental and social awareness. The other competitors play a neutral role, as none of them derives yet a competitive advantage from its sustainability commitment. Rather in the CSR area, (mis-)interpreted as a PR tool for social activities, a sort of competitive environment has taken shape. Various CSR initiatives have Holistic Marketing Management
been launched over the past years, among which an annual CSR conference, a CSR page in a major Romanian business magazine “Capital” and the CSR Awards at the “People for People Gala” (among past winners, noticeably McDonald’s and the tobacco corporation JTI for their community programs!). Non-Market Stakeholders Civil Society (CSDF, 2005) Romania lacks a strong civil society sector, a fact mentioned by all companies. The civil society in Romania is characterized by low citizen participation, a poor level of organization and limited inter-relations among civil society organizations. The most problematic aspects regard the lack of financial resources and qualified personnel. The main source of funding for Romanian nongovernmental organizations (NGOs) still comes from foreign financial support, as individual charitable giving, public funds and private companies’ contributions remain limited. On the organizational level, the Romanian civil society is relatively diverse and thriving, yet is has so far not managed to develop a common identity: “Its role in society is, for the most part, ignored by the public and its public image remains marked by negative stereotypes” (CSDF, 2005, p.8). Consequently they do a rather poor job in voicing and addressing common interests and concerns of the general public. The specific structure of the Romanian economy, with a very large public sector and state owned companies, has driven NGOs to direct their efforts more towards holding the state accountable and less towards holding private companies accountable. In most cases, private companies develop and conduct their community projects in partnership with NGOs, their relationship being thus of cooperative rather than of confrontational nature. Greenpeace makes for one significant exception. Their last campaign against genetically modified soy cultures was one of the most visible and aggressive campaigns conducted in Romania. Media Though Romania has one of the most dynamic media markets in South-Eastern Europe, the mass-media coverage of socio-ecological issues is quite limited, due to lack of expertise in the area. The bird flu scandal was highly covered and other food scares came sporadically into attention, but a sense of pressure from the part of the mass-media is not being felt by the companies. Legislation The EU has been a very significant driver of the Romanian government’s recent environmental initiatives. As a candidate country, Romania has been going through the process of approximating EU environmental legislation which is a prerequisite of EU membership. However, it is widely recognized that the main problems with environmental legislation in Romania concern the implementation of, and compliance with, laws and other regulations. Enforcement alleviation, lack of incentives, insufficient technology, financial implications and obstacles to public participation are the main reasons for the actual low influence on company behaviour and performance. Holistic Marketing Management
It is actually the companies who shape the institutional environment. Coca-Cola HBC Romania is co-founder and Unilever and Danone are members of "ECOROM Ambalaje S.A.", a recovery organization that is working on introducing the "Green Dot" packaging recovery system in Romania. They were also active in various consultant boards and provided assistance to the government in drafting the environmental legislation. 5. Discussion This paper intended to build a conceptual framework for analyzing the extent to which multinational companies, through their subsidiaries, assume a role as sustainability agents beyond their home-country. The interviews revealed that foreign subsidiaries in Romania are confronted only to a low extent with institutional duality, as local institutional pressures are not perceived as strong enough to impose the adoption of sustainability practices. The regulatory pillar of the institutional environment lacks the instruments to enforce the existing laws. The cognitive and normative components seem to exhibit a low profile regarding sustainability issues. Consequently, foreign subsidiaries in Romania are primarily exposed to organizational pressures. It is to assume that due to the institutional profile of the country, the investigated foreign subsidiaries practice ceremonial adoption, which accounts for a relatively high level of implementation, whereas the level of internalization remains low (Kostova and Roth, 2002). A high degree of implementation of sustainability practices was visible especially with regard to environmental management systems in production and procurement policies. This is in line with the resource dependency theory, which suggests that a companyâ&#x20AC;&#x2122;s strategy will reflect its need to acquire critical resources or improve the control over critical resources (Pfeffer, 1982). Standardization of procurement policies allows for an increased control over suppliers and answers to the need of â&#x20AC;&#x153;sustainableâ&#x20AC;? companies to ensure the sustainability profile of their procurements through codes of conduct, environmental guidelines etc. On the other hand, environmental management systems monitor and improve the situation of environmental costs for energy, water, transport and waste handling. The implementation of global standards in production and procurement may thus be driven as well by potential economies of scope, indicating a behaviour in line with economic rationality (Rugman and Verbeke, 2001). Another critical driver of implementation of standardized practices in procurement and production are the coercive pressures regarding food safety and traceability exerted at the international level. Standards set by international organisations such Food and Agriculture Organization, World Trade Organization, World Health Organization, European Union (Codex Alimentarius, Good Agricultureal Practices or GAP, European food regulation etc.) flow, often more restrictive, into national regulations. These coercive pressures are complemented by normative and mimetic pressures, as voluntary standards, such as ISO 14001 or various labelling schemes, are being diffused among and developed by companies or industry associations. Numerous industry initiatives, such as the International Food Standard established by the federations of German and French food retailers, EurepGAP established by the Euro-Retailer Holistic Marketing Management
Produce Working Group in order to drive the adoption of the GAP standards in conventional agriculture, or SAI - Sustainable Agriculture Initiative founded by Danone, Unilever and Nestlé, can be considered international drivers of mimetic and normative isomorphism regarding sustainability practices, especially in procurement and production. The few marketing activities directed at promoting sustainable consumption and sustainable products take local aspects into consideration to a great extent. This may be explained by the major role played by the normative system, i.e. values and norms held by the individuals in a given country (Kostova, 1999) in marketing decisions. Demand for sustainable products is related to customers’ awareness regarding environmental issues (Polonski et al. 1998). Though consumers’ purchase and nutritional decisions are increasingly considering environmental issues, in Eastern European countries, purchases of organic food, for example, are motivated far more by personal health reasons than by environmental concerns (Kovacs and Frühwald, 2005). However, besides the local content, visible especially in the educational area, but also in the product design, there are some product-related aspects that are implemented on a global basis, illustrated by the non-GMO policy of Orkla Foods, the labelling scheme “My Choice” of Unilever or the affordable product-policy of Danone. The few product-related sustainability practices are overcompensated by community programs. Corporate philanthropy, with both social and environmental local content, is practised extensively by the interviewed multinationals and communicated under the CSR umbrella. Figure 3 represents an attempt to classify the identified categories according to the degree of local versus standardized content of the subsumed social and environmental practices. This classification is to be interpreted as a proposition to be tested in further research. In this study, a dominance of global practices in the production and production area could be observed, with a local touch particularly regarding social issues. The marketing category proves more difficult to assess, as the data did not reveal sufficient clues to incline the balance in favor neither of local nor global content. However, by splitting the marketing activities into product- and communityrelated, we can infer a tendency towards locally designed community activities and rather standardized sustainability-related product activities. Social Practices
Global Integration/ Local Orientation
Global Integration/ Local Orientation Global Integration/ Local Orientation
Figure 3: Global Integration vs. Local Orientation of Sustainability Practices
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Generally, the organizational pressures felt by the subsidiaries can be assessed as being quite high. Although the social practices implemented by the subsidiaries are to a great extent adapted to the local situation, these are guided by the global principles established by the headquarters and are incorporated into the global policies of the company. The results of this study can be embedded into an extended model of dynamics of institutional duality (see figure 4). The fact that the subsidiaries adopt sustainability practices driven almost exclusively by organizational pressures, can be interpreted as an institutionalization factor in a local institutional environment, which may be thus be changed towards developing stronger normative, mimetic and coercive pressures. Therefore, at the international level, multinational companies can act as agents of progress in transforming countries towards sustainability. At the national or subsidiary level, the concrete implementation of sustainability practices is influenced both by local institutional pressures and organizational pressures.
Figure 4: Extended Model: Dynamics of Institutional Duality and Institutionalization Effects
The organizational pressures reflect pressures from a multitude of institutional environments or global pressures. As illustrated in figure 4, due to global pressures, multinational companies may transfer sustainability practices from countries where sustainability is highly institutionalized to countries with lower degrees of institutionalization, thus contributing to institutional changes within the host-countries. Institutional changes in the host-country will lead to the emergence of a new institutional profile. A new institutional profile means new regulatory, cognitive and normative environments and thus new institutional pressures to be faced by the multinational company. Consequently, a higher institutionalization of sustainability practices will be reflected in stronger global pressures. Sustainability dynamics comprehend thus international as well as national components.
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This study attempted to apply the concept of institutional duality to the realm of sustainability practices. The sample and the methodology, referring especially to the researcher bias and subjectivity as well as the credibility of corporate views and lack of triangulation, limit the ability to generalize of our findings, which are meant to serve as a basis for subsequent research and theory development. Appendix Company Data: Company Danone
Parent Company Danone (France)
Production Facilities in Romania 1 Diary Plant
Coca-Cola HBC (Greece)
6 Bottling Plants
Unilever SouthCentral Europe
Orkla Foods (Norway)
Pfeifer&Langen (50%) (Germany) and Cristal Union (50%) (France)
1 Margarine Plant 1 Knorr Spices, Soups and Sauces Plant 2 Oleaginous Seed Processing, Vegetable Oil Refining and Bottling Plants 1 Canned Meat and Liver Paté Products Plant 2 Margarine, Mustard, Ketchup Plant 1 Margarine Plant 1 Jam Plant
1 Sugar Plant
Location Bucharest Bucharest, Ploiesti, Timisoara, Oradea Iasi, Floreni Targu-Mures Otopeni
Craiova, Covasna, Targoviste Bucharest Iasi
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. LEVY, D./ ROTHENBERG, S. (2002): “Heterogeneity and Change in Environmental Strategy: Technological and Political Responses to Climate Change in the Global Automobile Industry”, in: Hoffman, A.J. / Ventresca, M.J. (Eds), Organizations, Policy and the Natural Environment: Institutional and Strategic Perspectives. Stanford University Press, pp. 173-193. . MASON, J. (2002): Qualitative Researching, 2nd Edition, California. . MAXWELLl, J.A. (1996): Qualitative Research Design. An Interactive Approach, California. . MEYER, J.W. / ROWAN, B. (1977): “Institutionalized Organizations: Formal Structure as Myth and Ceremony”, in American Journal of Sociology, Vol. 83, No. 2, pp. 340-363. . MILES, M.B./ HUBERMAN, A.M. (1994), Qualitative Data Analysis, 2nd ed. California. . MILLSTONE, E. / LANG, T. (2003): The Atlas of Food: Who Eats What, Where and Why. Earthscan, London. . OLIVER, C. (1991): “Strategic Responses to Institutional Processes”, in: Academy of Management Review, Vol. 16, No. 1, p. 145–179. . PFEFFER, J. (1982): Organizations and Organization Theory. London, Pitman. . RUGMAN, A. M. / VERBEKE, A. (2001): “Environmental Policy and International Business”, in: Rugman, A. M. / Brewer, T.L. (Eds.), Oxford Handbook of International Business. Oxford University Press, pp. 537-557. . SCOTT, W.R. (1992): Organizations: Rational, Natural and Open Systems. Prentice-Hall, Englewood Cliffs, New Jersey. . SCOTT, W.R. (1995): Institutions and organizations. London, Sage. . SCOTT, W.R. (2004a): “Competing Logics in Health Care: Professional, State, and Managerial”, in: Dobbin, F., (Ed.), The Sociology of the Economy. New York: Russell Sage Foundation, pp. 276-287. . SCOTT, W.R. / RUEF, M. / MENDEL, P.J. / CARONNA, C.A. (2000): Institutional Change and Healthcare Organizations: From Professional Dominance to Managed Care. Chicago: University of Chicago Press. . SELZNICK, P. (1957): Leadership in Administration: A Sociological Interpretation, New York: Harper & Row. . SHRIVASTAVA, P. (1996), Greening Business: Profiting the Corporation and the Environment, Cincinnati, Ohio: Thomson Executive Press. . SUCHMAN, M. (1995): “Managing Legitimacy: Strategic and Institutional Approaches”, in: Academy of Management Review, Vol. 20, pp. 571-610. . SustainAbility- INTERNATIONAL FINANCE CORPORATION AND ETHOS INSTITUTE (2002): Developing Value: The Business Case for Sustainability in Emerging Markets. London: SustainAbility. . TANSEY, G. / WORSLEY, T. (1995): The Food System: A Guide, London: Earthscan Publications. . TOLBERT, P.S. / ZUCKER, L. G. (1996): "The Institutionalization of Institutional Theory," in Stewart R. C., / Hardy, C. / Nord, W. R., eds., Handbook of Organization Studies. London: Sage Publications, pp. 175-190. . VENTRESCA, M.J. / PORAC, J. (Eds.) (2003): Cnstructing Industries and Markets. London: Elsevier Science. . WESTNEY, E. (1993): “Institutionalization Theory and the Multinational Corporation”, in: Reed, M. / Hughes, M. (Eds.), New Directions in Organization Theory and Analysis. New York, St. Martin’s Press, pp. 5375. . XU, D. / SHENKAR, O. (2002): “Institutional Distance and the Multinational Enterprise”, in: Academy of Management Review, Vol. 27, No. 4, pp. 608-618. . YIN, R. K. (1989): Case Study Research - Design and Methods. California: Sage. . ZUCKER, L. G. (1988): “Where do Institutional Patterns Come from? Organizations as Actors in Social Systems”, in: Zucker, L. G. (Ed.), Institutional Patterns and Organizations; Culture and Environment. Cambrifdge, MA: Ballinger, pp. 23-49.
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THE SCATOL8® FOR SUSTAINABILITY: AN UPDATE ON THE REMOTE SENSING SYSTEM OF ENVIRONMENTAL, LANDSCAPE AND MANAGEMENT VARIABLES Professor Riccardo BELTRAMO, PhD University of Torino, Department of Commodity Science Professor Sergio MARGARITA, PhD University of Torino, Department of Management Abstract: This paper describes the evolution of Scatol8®, a remote sensing system conceived and developed within the Department of Commodity Science (DCS) of the University of Torino. The DCS developed, along the years, several projects related to Sustainable Management of economic organizations; the first part of the paper summarizes the key-elements of projects that enriched the knowledge base, providing hints that took to Scatol8®. Scatol8®’s vision has been described in a previous paper. Its basic elements form the second part of the paper. The third part is devoted to describe several activities that have been undertaken, which display the potential of the Scatol8®’s system along directions not foreseen at the beginning; the description is splatted into Research projects and Education initiatives. Key words: Sustainable Management, Remote sensing, Environmental and Landscape , Management System, Innovation, Simulation models, School Network JEL Classification: I25, L66, M11, M31, O13, O31, Q56
1. DOCS and sustainability The core activities of the DCS of the University of Torino are research and teaching in sustainable development. Around fifty projects, at national and international level have been designed, launched and produced, by finding, from time to time, adequate funding. Since the '90s, the DCS is very active in applied research, to develop methodologies and tools for environment qualification of organizations and territories. Topics covered by multidisciplinary research groups range from enhancement of typical and traditional agricultural food production, environmental management of manufacturing and services - with an emphasis on tourist facilities -, environmental sciences and technologies, conservation and recycling of natural resources, environmental management and control as well as on the study and application of environmental management systems. Within these issues, the following researches are worthy to be considered:
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- Project CRESTA - Environmental Management System for the Rifugio Regina Margherita. Launched on 1997, it ended on 2002 with ISO 14001 certification of the highest mountain hut in Europe. It was the first research with a systemic view condicted in mountain huts, to verify the applicability of environemntal management system to small tourist accomodation. After the identification of environmental significant aspects, to reach an environmental and economic optimum, a multidisciplinary team worked to adapt the European standard to the peculiar contest and to draw proper operative instructions. - Strategies of sustainable tourism developed in Aosta Valley, Piedmont and Liguria. The experimental work in mountain huts took us to involve more than 30 huts’ managers whose role was helpful to write guidelines, available in four languages, to lead courses and other initiatives on environmental education in mountain refuges, This multiannual engagement took to the WWF award of the Golden Panda, for the continuing action on sustainable tourism in the Alps, - Participation to K2 italian alpine expedition (Pakistan), on 2004, to design and implement the Environmental management system of the expedition. This on field research assured the complete control on the environmental aspects, sharing the operative instructions with participants of different roles and nationalities. Results of this experience were guidelines that are being spread throughout the remote mountainous areas of the world. - Research on Environmental and Landscape Management System (ELMS). The four years research, which was implemented in the municipalities of Langa and the Barolo, took to a proposal for an evolution of the European Regulation EC n. 761/2001 (EMAS II), which sees its integration with the principles of the European Landscape Convention (ELC). This new method increases the benefits of EMAS and visibly the declination of the principles on a regional scale, promoting the value of the landscape, its conservation and enhancement, through the active involvement of population and economic actors. - Interreg Project (2007-2013) "VETTA, Enhancement experiences of Transboundary Tours and products of high and medium altitude', with the involvement of 52 mountain huts. These accommodations have environmental aspects related to the most popular organizations, including domestic reality and landscape aspects of excellence, which help to make them the attractors of a growing number of tourists. Sustainability is not just a matter of business, but it is associated with everyone’s daily life, with consumers’s choices and behavior. Internalize this principle and to adjust accordingly, their decision-making models is possible if you have data that express the pressure on resources and the environment. The Scatol8® was born for this! 2. Scatolo 8® in short The Scatol8® is a remote sensing network of environmental, landscape and management variables, created at the DCS, entirely based on free and open technology (hardware and software) (Open Source), with a view of controlling costs, of openness and ease Holistic Marketing Management
of access. The choice of the name Scatol8® conveys the idea of a friendlydevice, handmade, easy to understand and easy to use, so affordable.
Fig. 1: Scatol8® As described in Fig. 1, Scatol8® consists of a central unit and of peripheral (end) units, connected in a network. Numerous sensors, able to detect the monitored variables, are connected to peripheral units which transmit the data to a central unit, connected with a server. Sensors and peripheral units change in type and numbers depending on customers’ requirements. Collected data are transmitted to a personal computer, where they are stored, processed and displayed by an instrument digital panel, called the Crusc8. Thus, you can create a real-time monitoring of each measured variable, as well as evaluate their performance over time, thanks to the display of time series. In turn, the personal computer is able to upload data on a server on the Internet; the server collects and organizes them in a collective database. Data can be input for environmental management systems and/or for actuators (i.e. a wide range of devices, from leds to motors). The part list is the following:
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END NODE Brief
Arduino uno Wirless sd shield
The Arduino Uno is a microcontroller board based on the ATmega328. It has 14 digital input/output pins and 6 analog inputs. The program language C++ Shield thatused acts is like a socket for the bees modules and that contains an SD to store data in if the coordinator node is temporarily unavailable
XBee and XBee-PRO ZB ZigBee modules from digi provide cost- effective wireless connectivity to devices in ZigBee mesh networks
The real time clock DS1307 is used to add a timestamp to every sample
This shield replies the power supply, the ground and other signals from the ATmega many times. It is used to easily connect all the sensors and the RTC to the microcontroller
COORDINATOR NODE Main parts Brief Arduino MEGA
The Arduino Mega is a microcontroller board based on the ATmega2560. It differs for the one used in the end node basically because it offers more memory to run programs
It connect the microcontroller to the internet using the TCP protocol to send data to the server
XBee and XBee-PRO ZB ZigBee modules from digi provide cost- effective wireless connectivity to devices in ZigBee mesh networks
It interfaces the Xbee radio to the microcontroller
Until now, the set of variables the system is capable of monitoring is illustrated in the following table: variable
unit of measurement
Air emission quality
Presence of LPG, butane, smoke, propane, methane, alcohol, hydrogen
Electric energy consumption
Solid waste quantity
Waste water quality
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Guidelines of Scatol8® Designed in the perspective of sustainability, Scatol8® is inspired in its creation and implementation to various criteria, such as: • Open Source. Hardware and software are fully based on open technologies and software (Open Source) in view of cost containment, openness and ease of access, even for training purposes; • Modularity. The system is constituted from time to time, according to the requirements and specifications of each application; • Environmental compatibility. All collection and processing devices are placed in recycled containers, coming mainly from food and electronics industry, transformed and adapted to their new function, or in containers made of wood (a renewable resource), or even cardboard. • Knowledge dissemination. The Scatol8® is not only a product, but also an initiative to spread knowledge, which aims to involve young people in the creation of technology (and not only in its use), which is accompanied by information tools on the relationship between observed variables and sustainability and proposes the reuse of components through the concrete realization of the active systems. The implementation of hardware and software is entrusted to Ing. Paolo Cantore who takes part in the definition of the technical specifications of the circuits, designed them and takes care of selecting sensors and microprocessors, conducting tests in DCS Lab to verify accuracy and reliability, within the economic constraints. When the testing phase reaches satisfactory results, Scatol8® is packed in customized packaging. Finally, systems are installed and tested by Scatol8®’s Team in real conditions. Afterwards, the phase of writing technical documentation and reports begins. Communication plays a key role in the Scatol8®. It presents a number of problems because there are different subjects to which it is addressed (teachers, students, entrepreneurs of various productive sectors) and the means (website, social networks, brochures, research reports). A multilayer communication is carried out continuously, providing news updates to stimulate reflections and to keep the attention, to arouse curiosity in the potential of the system and to encourage involvement in the project proposals. Given the importance of these instances, in the organizational structure of the team Scatol8® has been inserted the “Communication” function, assigned to the Architect Camilla Botto Poala. As noted above, a great importance is given to the packaging that plays a role in communicating the values associated to Scatol8®. For this reason, she is also entrusted with the responsibility of the trials conducted on packaging recovery that must meet functional and communicational requirements that change depending on to the context.
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3. Scatol8®‘s in Research projects Scatol8® makes it possible to simultaneously monitor different variables and multiply the number of these variables as necessary: the configuration of a network in a domestic unit is similar to the needs satisfied in mountain huts, that despite their structural peculiarities, exemplify application Scatol8® inside a building. Being able to store and view the captured data in real time and compare, thanks to the series, the environmental performance of a building (including not only the technological characteristics of the building and the materials used, but also plant components) together with the temperature and humidity characteristics of the interior, put the remote sensing system as a useful tool for understanding and monitoring of building in question. In addition to displaying the data collected continuously, also be carried out remotely, the system can convey a subsequent processing and analysis of the historical data collected in order to build maintenance actions or, where necessary, to improve the management of activities carried out in the domestic unit. 3.1. Scatol8®’s indoor applications Scatol8®’s in accommodations The sparks that took to Scatol8® has been the EU funded Interreg Project (2007-2013) "VETTA, Exploitation of Transboundary Tourist Experiences and products of medium and High altitude". Within the actions assigned to the DCS, there is a pilot project aimed to design and carry out three Wireless Sensor Networks (WSN) in as many mountain huts of Verbania province. In the summer of 2011 and 2012 Scatol8® systems were first tested and then installed permanently.
Scatol8®’s in manufacturing companies The DCS is engaged, with the University of Gastronomic Sciences and the Polytechnic of Torino in the project POLIEDRO - Pollenzo Index Environmental and Economics Design whose aim is the developing of a sustainability index for agro-industrial production in Piedmont. In particular, the DCS is committed to design the index, through the application and execution of Life Cycle Analysis on food products typical of our region. The need to overcome the reference data, often lacking or so generic to be meaningless, through an accurate measurement suggested to place a Scatol8® systems on the machines. Attention has been devoted to energy consumption of the main production stages. The monitoring system is used for the acquisition and management of environmental data and to provide a database from which to draw for the preparation of a quality index of food production based on aspects of environmental, social
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and economic sustainability. The project is in the final phase and the outcome will be a prototype of a dedicated system to start the production.
One of Scatol8ÂŽâ&#x20AC;&#x2DC;s installation was in Winery of Carema, in the province of Torino. The harvest of grapes and production of wine took place during the first weekend of last October. Scatol8ÂŽ monitored the production process of wine-making, via a specially crafted network of remote sensing. Five peripheral units have detected the electrical consumption of the machines that make up the production line: roller conveyor, destemmer, crusher, pump and press, for the entire duration of their use. The purpose of monitoring is to measure and record the power consumption of each device, and on a technical level, this is done by means of clamp meters, prepared to work on a three-phase voltage, such as the one in the Winery. The above picture illustrates the positioning of the nodes and of the central unit. The timely detection and display of power consumption have multiple utilities: - to control the operating conditions of the equipment; - to ease a prompt intervention with maintenance operations, should they occur abnormal absorption conditions; - to provide a reliable picture of energy requirements in order to assess costs and benefits of installation of production of electricity; - to prepare an initial energy analysis, useful to develop an energy management system, - to calculate the carbon footprint of a product, in order to raise consumer awareness on the contribution of consumer goods to greenhouse gas emissions. Winery of Carema can be considered a pilot-project from which other applications originated: a furniture firm and a home applications.
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3.2. Scatol8®’s Outdoor applications The system, its features and architecture, allow outdoor applications, for the monitoring of environmental variables. In this framework, the DCS is working on ProGeo, in collaboration with the Faculty of Geology of the University of Torino. The project aims to develop a tourism offer focused on geological sites of relevant interest, such as quarries and mining sites. This convertion process is fostered by multimedia devices, able to make natural signs readable and, in general, to turn environmental data into stage effects, increasing visitors’ emotional involvement. Scatol8®’s task in this project concerns environmental quality data acquisition (air temperature, relative humidity, lighting) and communication with a wide range of sensors and actuators already installed in the sites. In addition, data will be used to feed an Integrated Management System (Environment, Safety and Social Responsibility) developed by the DCS. 3.3 Scatol8®’s in other initiatives Cooperation with Italian Association of Landscape Architects (AIAPP) As previously mentioned, DCS has invented ELMS and then gave rise to ELWSMS, which considers the possibilities opened up by the Internet. Though designed for local authorities, ELMS can be applied to all initiatives that seek to promote the environment and the landscape, sharing the principles of sustainability and enhancement of the landscape and by controlling the impacts resulting from its activities. Such a large-scale management system will be tested in the organization of an international event, the 2016 International Federation of Landscape Architects (IFLA) Congress, to be held in Turin. In this contest, data access through the Internet is particularly important and ELWSMS has the chance to be tested. The AIAPP is the entity that adheres to IFLA, and it is responsible for organizing the event at the national level. Through a Memorandum of Understanding, being formalized, the DCS is in charge of identifying ways to verify the applicability of the ELWSMS to events that, over three years, will accompany the international congress, where some 3000 landscape specialists are expected. The ELMS will be tested from the planning of events, to predict and monitor its multidimensional impacts along the life cycle. The ELC leads to emphasize the dimension of knowledge sharing, which is already present in EMAS, and to direct it towards the landscape, not just the physical, perceptible by the senses, but also to the cultural landscape. The Scatol8® will be used to detect a number of variables that are at the basis of the assessment of the sustainability of events and to make available the environmental and landscape profile event. Other variables attaining the social and istitutional side of sustainability will be added to complete an on line Sustainability Report. Our commitment has been Holistic Marketing Management
formalized in the application dossier, presented in Cape Town, September 4, 2012 which led Italy to win the race for hosting the Congress. 4. Scatol8®’s in Education activities Scatol8®’s in University Courses provided by DCS The teaching of the DCS has had for many years two courses: Commodity Science and Technology of Production Cycles. Commodity Science presented the methods for chemical and physical characterization of goods; the Technology of Production Cycles dealt with transformations from raw materials and all auxiliary services to production. Since 1983, the course of Social technology has been entered in the learning process, whose program included considerations on the environmental impacts from the production of goods and the study of technologies and methods for clean-up interventions. Since then, the course has changed its name (Technology of production cycles - address environmental, Environmental technology, Environmental management systems and certification, Integrated management systems) and programs included new feelings and new tools to reflect changes that have constitute the cultural heritage of graduates in Economics. In addition to a technical approach, the share of organizational and methodological aspects has been expanded, providing students with technical tools such as Life Cycle Assessment, and organizational tools, such as management systems ISO9001: 2001, ISO14001: 2004, ISO26000: 2010, ISO 50001:2011. Recently it has been realized a course in Industrial Ecology and Integrated Certification within which the "physical records" allow you to develop hypotheses of integration among firms located in Ecologically Equipped Productive Areas. Partnerships with companies for educational purposes have formed a significant part of the didactic and were appreciated by students who, in many cases, have developed their thesis within enterprises. Now Scatol8® is an integral part of didactics. The ebook “Scatol8®: A Path To Sustainability”, downloadable on http://scatol8.net, can be a useful support in different teaching methods and to different students. It is possible to prepare tailor-made releases of the book, combining parts of it in relation to teachers and students’ needs. The issue of sustainability is linked to the availability of natural resources for future generations, a requirement influenced by the concepts of intra-and intergenerational fairness. Future generations are prepared to sustainability from the present. The message must be addressed right through the school, with motivated teachers and through engaging educational proposals, instilling in students concepts that form the foundation of sustainability, the environment, in order to form individuals who incorporate this value in their decision-making models. The interactive didactics made possible thanks to Scatol8® can do a lot to attract young people to concepts that may appear abstract or too complicated.
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The funny side of teaching has been tested by DCS thanks to the participation at the 6th Edition of the "Researchers' Night" on September 2011. At our booth, set up in Turin, there have been various classes of primary school who participated with enthusiasm to the trail that Scatol8® has made it possible: the different games related to the monitoring of certain environmental variables have created a virtuous competition, which has stimulated the logical capacity, creativity and team spirit of the students, allowing you to reflect together on consumptions and on the concept of environmental sustainability. This year, the experience has been renewed, with new games. On September 2012, students had the chance to see the system in operational conditions, variables displayed on Crusc8 and clips on the experiences in the mountain huts. Interactive games have been organized. A new proposal for teaching-oriented capabilities of today's students, benefits from the potential offered by new technologies. New technologies very often allow the creation of gadgets that not only have a very short life cycle, are likely to be confined in the environment, very limited, the experimenters. But new technologies can also accompany a customized learning path. Therefore, at the basis of Scatol8® ‘s proposal there is the idea that new technologies are capable of imparting a tremendous impetus to training, if make it possible to understand important concepts in a fun way and if this process occurs in large numbers. From our experience with regard, in particular, to students of the Faculty of Economics, the values of Scatol8® led us to dialogue with other educational institutions to enrich and decline the initial concept, according to the wishes expressed by the new categories of users to which we refer. Holistic Marketing Management
Scatol8’s in Primary schools Primary schools “Sant'Anna” and “Santa Teresa” of Chieri are the first schools involved, since last year, in a positive competition on sustainability. After a meeting with the teachers, from the month of October 2012 will be organized educational activities with proper cultural association of science for children Ar:kid:lab, coordinated by the Architect Simona Gallina. Besides this initiative, whose costs are totally funded by pupils’ families, the Piedmont Region has started, in the school year 2011-2012, a project to promote energy savings in public buildings, with specific attention to the schools, was carried out a project for environmental education in primary schools in Piedmont. In the school year 2012-2013, two schools, respectively located in Torino and Vercelli join the initiative "Everybody in the race for Energy with the Scatol8®", which includes meetings with teachers to arrange the competition, installation and monitoring of two remote sensing networks, and a closing event. In autumn 2012, a network of remote sensing of environmental and management variables will be installed in two classes of each school. Around the monitored variables they will build a learning path based on the reading of the monitored data. From the operational involvement of students in the design and manufacture of containers of Scatol8® to be installed within the school walls, the game will run through analysis, comparisons, comments and use of good environmental practices. Pupils and teachers will work on data of waste production, energy consumption and temperature. The schools will be "virtually" connected thanks to their display on Crusc8. 5. Scatol8’s improvement Technical Highschool “Ettore Majorana” On school year 2010-2011, DCS started a collaboration with the Technical Highschool Ettore Majorana - Grugliasco (TO) - to organize traineeships periods on technical issues (choice of sensors, electronic circuits production, ...). Some students were involved in the installation of Scatol8®’s in the huts participating to the project VETTA. The school is still actively working on the system. Polytechnic University of Turin - Faculty of Architecture In the academic year 2011-2012, the Scatol8® was presented to the students of Communication and Visual perception. It has been the theme for 8 working groups that have developed full proposals for games, videos, websites for an educational offer for the primary School. The results, some of which have appreciable effect and completeness, can be seen at the following link: http://scatol8.net/?p=639
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In addition, the system has been presented in the course of Industrial Design (Prof. Claudio Germak) and is expected to carry out laboratory activities during the academic year 2012-2013. School network In our region, it has been set up a School Network for the Scatol8®’s dissemination in training activities. The following highschools joined the network: Institute “A.Monti” and “B. Vittone” of Chieri, Institute “N. Bobbio” of Carignano (TO), Institute “Plana” of Turin. The network is open to national and international schools. This initiative has been promoted by the Italian Association of Teachers of Natural Sciences - ANISN. The strong environmental characterization of Scatol8® has made it possible to meet the ANISN, the Italian Association which links teachers of Natural Sciences, an Association strongly engaged in EU funded projects for the dissemination of scientific culture. On last May, Scatol8® was presented to the National Assembly and it was decided to explore ways to spreading the system and creating initiatives to teaching support. The first result was the formalization of a Memorandum of Understanding to create a Schools Network, which took place on July 31, 2012. Through the protocol, it has been planned a competition on Sustainability among the schools linked in the School network and decided to applicate to a national Call for proposals with a multi-year project. 6. Conclusion The following diagram was drawn at the time of the invention of Scatol8®.
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It represents the initial structure has been followed in the development of the project. All the initiatives that, since then, have been dropped give an idea of the potential of Scatol8®’s system. Although they stand for a wide range of existence, we are still at the beginning of our exploration of the pervasive concept of Sustainability. On the website http://scatol8.net we provide an upgrade of the project, on a concept map.
Bibliography: R. BELTRAMO, “The SCATOL8™: an innovation for shifting from Environmental and Landscape Management System (ELMS) to the Eco-Land-Web-Scape Management System (ELWSMS)”, Romanian Distribution Committee Magazine, Volume 2, Issue 2, 2010, pp. 1623, http://www.distribution-magazine.ro/magazine2/ . R. BELTRAMO, B. CUZZOLIN, R. PES, “Turismo, Ambiente e strutture ricettive, Sistema di gestione ambientale per il Rifugio Regina Margherita”, Pubblicato in proprio ai sensi del decreto legislativo luogotenenziale 31/8/1945 n. 660, Torino, 20 aprile 1999. . R. BELTRAMO, B. CUZZOLIN, “Manuale-tipo per la realizzazione di un Sistema di gestione ambientale dei Rifugi di montagna”, Editions l’Eubage, Aosta, Agosto 2001. . Beltramo R., Duglio S., Quarta M., “Sistema di Gestione Ambiental-Paesaggistico SGAP: Una metodologia per la gestione integrata dell’Ambiente e del Paesaggio”, Aracne Editrice, Roma, 2011 . R. BELTRAMO, S. CAFFA, S. DUGLIO, “Il Sistema QIT: uno strumento di Qualità Integrata Territoriale”, Valutazione Ambientale, n. 16, Edicom Edizioni, Luglio-Dicembre, 2009, pp. 75-84. . R. BELTRAMO, S. MARGARITA, "Smart technologies per Ia gestione ambientale e paeaggistica: lo SCATOL8® della sostenibilita", Atti del Congresso Nazionale AICA, Torino, 15-17 novembre 2011 .
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How internet marketing has changed over the years and what the future will bring William Perttula, PhD Internet Marketing Professor, College of Business, San Francisco State University (William Perttula interviewed by Theodor Valentin Purcﾄビea)
Abstract The trend toward internet marketing has been going on since the internet went graphical in 1993 and Amazon began selling online in 1995. There is near universal awareness of this general trend but a large percentage of organizations are far from doing an effective job of using the internet to achieve success. This includes nonprofit organizations and government as well as for-profit companies. William Perttula made his first online purchase in 1995 and began teaching about internet marketing in 1999 at San Francisco State University. Over the last dozen years he has taught undergraduate and graduate students in South Korea, Denmark, France and Germany in addition to his students at SFSU. His work inside and outside the classroom has brought him into contact with many professionals in Silicon Valley and others in the high tech field. He moderated a panel in 2010 on Social Media and Cloud Computing for the San Francisco Chamber of Commerce that had panelists from Microsoft, AT&T, and Salesforce.com. Key Words: Internet marketing, social media marketing, mobile advertising JEL Classification: M15, M31
HMM Journal recently asked Professor William Perttula about how internet marketing has changed over the years and what the future will bring. T.V.P.: First, please give us a definition of internet marketing so we are clear on what the term means.
W. Perttula: Internet marketing ties together both the creative and technical aspects of the internet, including design, development, advertising and marketing. Internet marketing includes such methods as search engine marketing, display advertising, e-mail marketing, affiliate marketing, social media communications, and interactive advertising. The old term of integrated marketing has come to include these internet marketing methods to describe how a modern, effective organization conducts its activities with its target audiences. Holistic Marketing Management
The key characteristic of the internet is the internet protocol (IP) developed in the seventies to allow information to be broken down and assembled into packets that are sent over cables and wirelessly. Most people have experienced this information on web pages inside of a web browser such as Internet Explorer, Firefox, or Chrome but there are email programs and other software that use the digital packet architecture of the internet with no need for a browser. For example, users of smartphones are familiar with using text messaging (SMS) and applications (apps) which run outside of a browser yet still run on the internet using the internet protocol. T.V.P.: Some years ago we read many accounts of how the internet has changed all the principles or rules of marketing. How accurate have those accounts been?
W. Perttula: Based on my experience over the last 35 years in marketing I would say that use of the internet has made marketing cheaper and faster but has not changed any marketing principles. One must still find a customer demand for a product or service and satisfy that demand at a profit in order to have lasting success. There have been hundreds of examples of companies that have satisfied a customer demand as shown by millions of users but these companies could not make a profit and eventually disappeared when the investor money ran out. A very significant change in internet marketing has occurred in the last three to four years as much higher bandwidth speed has come to many more people. As speed has increased the price per megabit to users has fallen year after year. This higher speed, on both wired computers and wireless smartphones, has meant that more elaborate and effective messages can be sent to and received from customers. This has resulting in increased use of the devices by their owners. This use includes uploading of text and graphics and video to sites such as Facebook and YouTube. The price of higher bandwidth has been trending toward zero for two decades. There are several ways to measure bandwidth speed but they are correlated with each other. The Akamai table below shows how high bandwidth capability exists in developed and less developed countries and countries in Asia and Europe and North America. Table from the Akamai 2Q 2012 The State of the Internet Report
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T.V.P.: What about social media and social marketing? Are they just fads and should they be used by every organization?
W. Perttula: Any discussion of holistic marketing management must take note of social media and social media marketing. Social media is dominated in 2013 by Facebook after its explosive growth to one billion registered accounts world-wide from its inception in 2004. Other big names in social media are YouTube (owned by Google), Twitter, Tumbler and LinkedIn. Social media marketing is the use of social media in its various forms by organizations trying to communicate with their customers or clients. Social media includes status updates, tweets, social bookmarks, video sharing, and social mediaâ&#x20AC;&#x2122;s photo commenting. The following table shows the dramatic growth of Facebook in a three year period.
Social media marketing relies on its similarity to word of mouth marketing which has always been praised for its effectiveness. Trust and believability are usually characteristics of word of mouth communications. Word of mouth communications usually have great effectiveness but in the past have taken too long to reach a large enough number of customers for businesses that are trying to grow quickly. It is a very rare product or service that can grow at 30 to 40 percent a year relying on its customers or users to praise it to friends in person or by telephone. Rapid sales or usage growth in the past had to rely on mass advertising to reach mass audiences at great expense. But with social media it is possible to reach large numbers quickly and cheaply with words and pictures. Let us look at three examples. Dropbox, a web based file hosting service, is a recent startup that benefited from universal electronic communication techniques and avoided mass advertising. Dropbox began in 2008 with a file storage service (in the cloud) that was simple to understand and that worked quickly and reliably. The company encouraged electronic word of mouth by giving existing users who referred a new user more free storage for their files. Publicity, which is free, in the major tech Holistic Marketing Management
magazines and other media contributed greatly to Dropbox’s growth to 50 million users in 2011 after just three years of operation. Dropbox grew rapidly despite not using advertising. It quickly dropped advertising on Google with Google Adwords text ads after discovering that it was costing Dropbox about $300 per new user for a service that was free to users who needed only 2 Gb of file storage. Dropbox charges its users for the service if they store more than 2 Gb of data on the Dropbox servers. Reportedly the private company became profitable after just one year and is planning to have its initial public offering of stock in 2013. Facebook is a service that does not charge its users for its central service of enabling the sharing of personal information and pictures. It obtains about 85% of its revenue from placing advertising on its web pages with most of the remainder coming from Zynga, a game provider that works inside of Facebook, and, more recently, game providers Wooga.com and King.com. The Facebook service of providing an easy to use, multi-media communications platform for hundreds of millions of people brings in relatively little money per user. If we divide its total revenue of $4.62 billion in 2012 by 1 billion users, we see that Facebook has revenue per user of just $4.62 per year or $0.39 per month. Also, Facebook’s average revenue per user (ARPU) growth from 2010 to 2011 was 26 percent but just 6 percent from 2011 to 2012. Facebook has shown small profits over the last four quarters but its operating margins appear to be shrinking. The future does not look particularly bright for Facebook’s revenue growth because users are moving more to mobile devices which have screens too small to effectively display the advertisements that Facebook relies upon for revenue. Companies are being asked to shift from display ads used on full sized web pages to sponsored news feed messages on the mobile version of Facebook. Results from 2012 show revenue growth from mobile ads but this growth may be short-lived. Facebook is also experimenting with ways to charge users for specific actions such as sending messages to nonfriends or pushing one’s news feed post to the top of one’s friends feed for $7. Membership growth appears to have ended in the United States where the vast majority of Facebook’s revenue comes from but continues in some parts of the rest of the world where the majority of users do not have smartphones capable of working well with Facebook. Compare this business model to another social networking business that began the year before Facebook: LinkedIn. LinkedIn is a social network focused on business professionals and their networking needs. With 200 million users, mostly in the United States, it is much smaller than Facebook but more focused, which is a good thing in marketing terms. LinkedIn charges businesses to sift through its database to look for possible employees, and the company became profitable years ago with its combination of advertising and direct charges. Use of the basic networking service is free to members but there are some premium services for which LinkedIn charges $20 per month. Continuous high revenue growth and profits set LinkedIn apart from the other major social networking businesses. T.V.P.: What has happened to advertising since the development of web browsers for the internet twenty years ago? Holistic Marketing Management
W. Perttula: Advertising is a major part of communications, the most visible component of a company’s marketing mix. Marketers define advertising as paid-for presentations of a product or service by an identified sponsor. The big consumer products companies may spend one to two billion dollars a year to create and send advertising messages to consumers. World-wide about $500 billion is spent on advertising. The last eight years has seen a significant shift toward customer driven social media messages in contrast to company driven messages sent out to mass markets. Often this means that companies are spending money on nontraditional or nonmeasured media to reach customers. Advertising spending in newspapers and magazines, for example, has fallen every year for eight years in the United States. But there has been healthy growth in the digital arena which now accounts for about 20% of total advertising spending. ZenithOptimedia predicts that global internet advertising will grow by 14.6% in 2013 compared to just 1.7% for traditional media. Search marketing, dominated by Google, takes half of all the advertising dollars spend on internet marketing. Marketers debate whether internet advertising’s objective should be to raise customer awareness or lead to direct action or purchase by the customers. In the past the awareness side came from display advertising such as magazine ads or television commercials. Today, awareness (or buzz) is thought to be achieved more through “likes” on Facebook or mentions on Twitter. In the past the direct action came from techniques such as telemarketing, direct mail, or coupons. Today direct action comes from the customer clicking on a link and taking action or making a purchase. Recent research (Optify 2012) shows that in the business to business field social media is a very small player with regards to finding customers. Advertising by use of search engine keywords and email messages are far more effective than social media. Social media accounts for just 5 percent of total leads to B2B websites. And, Twitter is the main source of leads outperforming Facebook and LinkedIn 9 to 1. The trend for B2C and B2B is away from big budget advertising campaigns and toward more focused advertising supplemented with relatively inexpensive social media marketing. Social media promotion can be effective at low but not zero costs. All experts in social media advocate having certain employees dedicated to be active in Twitter, Facebook, LinkedIn, and possibly other media. Mobile advertising is the real battleground in 2013-2014. The use of smartphones with the capability of displaying text and graphic advertising is growing rapidly in every country. Advertising budgets devoted to mobile devices are tiny but growing. The small screen on a phone or small tablet creates huge problems for advertisers compared to the typical desktop or laptop screen. Optify 2012 B2B Marketing Benchmark Report http://www.optify.net/ ***********
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Innovation Management and Tuning the Entrepreneurial Process Hans ZWAGA Professor Hans ZWAGA interviewed by Ioan Matei PURCÄ&#x201A;REA Abstract Professor Hans ZWAGA is Senior Lecturer in Marketing, Management and Internationalization, Kemi-Tornio University of Applied Sciences, Finland and Visiting Senior Lecturer (Netherlands, France, Austria, Norway, Russian-Federation, and Romania), being deeply involved in cluster development especially cross-border, and having special research interests in Competency development in Entrepreneurship Education, Cluster theory, Knowledge and Innovation Management and Futurology. He has a strong involvement in Competency-Based Education Curriculum Designing and Competency Measurement. In February-March 2014 he held two Courses (Design Factory - Developing Innovation, and Start-up Garage: Tuning the Entrepreneurial Process) at the Romanian-American University. Key words: Learning by Design, Innovation Management, Entrepreneurial Process, Social Interaction JEL Classification: L26, M13
IMP/HMM: Mr. ZWAGA, I would like to ask you about your prior experience, teaching and classroom experience, work history, research interests, professional goals, professional activities and associations, your attitudes and beliefs, and your opinions on professional issues. And this because you made a very favorable impression on our students from the very beginning, being an excellent communicator and proving advance knowledge about the topic and even your enthusiasm in the topic. Your visual materials and notes, your clarity of explanation and your approach to instruction, confirmed that you master your pacing, volume, emphasis, and fluency, making the courses relevant and appealing to the students. When did you know you wanted to become a Professor? What made you choose an academic career? Hans ZWAGA: The choice of becoming a professor probably came when I noticed that I had some strong communication skills. I have been involved in sports, in student activities management. In these activities and actions I could make a team work perfectly because I could convince people of my views. Holistic Marketing Management
That was actually not a choice. It was more the result of a process that brought me to higher challenges. I started in 1974 as a teacher of social sciences at higher secondary education. Later on, in 1985, I wanted to become a teacher in vocational education. I felt that in this type of education I could better in combining theory and practice. In that period I started to teach in English. My Vocational College was the first school in Europe to introduce a full program in Business. In 1998 I became a part-time lecturer at the University of Applied Sciences in Eindhoven. In 2002 I migrated to Keminmaa, Finland where I became a full lecturer at the KemiTornio University of Applied Sciences. IMP/HMM: Who are the individuals who have had a profound influence on your career? Hans ZWAGA: Let me think for a moment. There are many people who have been in my life that have helped me to change rapidly. However, there are “some animals more equal than others” I will start with my language teachers who made me aware of the value of language. It is essential for understanding good communication, communication structures and culture in the general sense. My professor in private law who taught me to think critically and taught me the value of perception. I owe a lot to my professor in neuro-physiology who made me aware of systems-thinking. He influenced strongly the understanding of the brain as “a living computer” and its role in learning. My rector of the Vocational College had confidence in my teaching competencies. He allowed me to teach in English. Finally, I want to mention my professor in educational psychology and PhD supervisor. He let me experiment with all sorts of pedagogical thoughts until I found my format. IMP/HMM: Did your prior jobs contribute to your professional skills and attitude? Hans ZWAGA: I have been in education all my life. The university that I visited started already in 1970 with practice as a part of the curriculum (court-cases for law and research project for psychology). I have worked in consultancy and I have been a company ambassador. These practical experiences have deepened and widened my views on education: “learning-by-design” and “life-long-learning” IMP/HMM: How was the college that you attended? Please tell us a little bit about your graduate school experience. Hans ZWAGA: The University I attended was a young University with 3 faculties of economics, sociology and law. It was established in Tilburg, a town in the South of the Netherlands. I started my studies at the Law faculty and later also at the Faculty of Psychology. Rather conservative I would say now. It was nothing special, although the Law faculty was known as “very liberal”. The faculty of Psychology was very modern. Many foreign professors
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were appointed. That made following lectures and projects very special. There was no time for “sleeping on the couch”. IMP/HMM: In what ways do you feel you can lend support to young colleagues? Hans ZWAGA: I think that many younger colleagues already have good competencies to do their job properly. Many of them have had special training for teaching their subjects. My vision on education starts with having a future orientation towards what students should be able to perform. This process takes at least 3 years. Very often studies will take longer. Most curricula in contrast are based on theories from or in the past or in the present at best. “Learning by design” is a different process than traditional classes. The objective of this process is to educate students to the future and combine the future perspective with knowledge, skills and attitudes needed. I.e. the use of social media in education is already changing the nature of learning now. Technological progress, rapid changing markets, innovative organizational formats (virtual organization, the co-creator company, and the center-less organization) means that current knowledge, skills and attitudes are only of relative importance. My support could be:
to train younger colleagues to learn the competencies of “learning by design” to build confidence in the competencies of scenario-planning in education to learn how to run design classes (self-confidence) what building a future orientation in education means in practice how to build a double-tracking learning trans-disciplinary learning
IMP/HMM: Please tell us something about your discussions and social interactions with your young colleagues, about the level of compatibility and sharing similar interests and values. Hans ZWAGA: Being interviewed for this Journal, the best example that I have describes a workshop that I have facilitated with 10 younger colleagues of Romanian-American University in September 2013 in Tornio, Finland. The objective of the workshop was to build a “brandnew” Master curriculum. Beforehand it must be understood that Romanian and Finnish educational systems differ significantly. It took 2 days before the colleagues “got” the message of the workshop. Albeit cultural differences (different countries but also different faculties) the team did the job excellently. My discussions and social interactions with younger colleagues cover many fields. In my opinion, the key competences in working with people are “open-mindness” and willingness to take another perspective”. Compatibility is merely a matter of absorption, finding the correct Holistic Marketing Management
translation, putting the result at work and retention. Actually, the four steps described above (dynamic capabilities) characterize the successful universities and make them distinctively different from others. The younger colleagues I have met in RAU share many similar interests. And I do believe that there is a solid understanding and appreciation of each other’s values. IMP/HMM: What is the best thing about being a Professor? Hans ZWAGA: My job!! IMP/HMM: You have good research results. How do you manage the time and resources on each project apart from teaching responsibilities? Hans ZWAGA: I don’t keep them apart in the sense of content. The advantage is that projects and teaching cross-fertilize each other. So, I gain time and resources. IMP/HMM: You are involved in teaching and research. What are your research goals in the coming years? Hans ZWAGA: My PhD, finally!! IMP/HMM: As we know, cooperation and teamwork can lead to very interesting outcomes in education. Within this framework, is there a potential for development of the relations with the Romanian-American University? Hans ZWAGA: I am an optimist. My slogan is: When you never shoot you always miss! Very simple answer to the question: there is always a way for the prepared mind!!
IMP/HMM: Thank you very much.
Professor Hans ZWAGA interviewed by Ioan Matei PURCĂREA (from right to left) Holistic Marketing Management
MARKETING’ S CONTINUOUS RISE AND SHINE Theodor Valentin PURCAREA Abstract The face of the marketing function is struggling to keep pace with major changes, by assuming its strategic and systemic leading role. Being considered the corporate equivalent of a central nervous system, an art and also a management science calling for the implementation of rigorous processes and metrics, marketing is challenged to be more and more creative and accountable, more real-time offering personalized, content delivered across channels, and to engage CEOs and the top leadership to valorize the ability of the marketing function to help drive organizational change, focusing on what is important to customers, consumers and users, within the rise of social media, big-data analytics, and smart mobile devices, differentiating social media marketing from social business. There is no doubt about the importance of reinforcing and embedding ROI thinking in the daily marketing approach, the struggling of marketing managers for new rules and measurements to use in the new world of measurable performance, while the purpose of measuring must extend beyond just collecting metrics, focusing on demonstrating how marketing is creating and capturing customer value, taking into account both, the opportunity to measure customer value, and the power that has shifted from sellers to buyers. Marketers need to know what exactly they should measure and if their analytics are actionable, balancing their inbound and outbound marketing, mastering the latest technology, assimilating vast quantities of data, engaging and delighting their more connected and empowered than ever before customers, and delivering products and services that surpass their expectations, combining technology and teamwork and using technology and teamwork to listen accordingly, creating a vision for an exceptional customer experience and connecting everyone in the organization to the delivery of that seamless experience, stimulating a more collaborative working relationship between CMOs and CIOs, and a vision to anticipate new digital channels, and considering digital marketing makeover as the number one transformational project. Marketers also need a good understanding of the fact that the content is the fuel for company lead generation and nurturing programs, driving leads through the marketing funnel to become customers, and in order to implement buyer journey marketing from a lead generation perspective there are crucial guidelines for organizations. There is also a real need for marketers of not relying too heavily on analytics, but on the so-called “both-brain” approach, by making the right balance between creativity and analytics, and also to constantly reevaluate the marketing strategies, by acting with speed and agility in addressing key customer needs and expectations. Marketing has to take responsibility, and confirm that innovation is its best friend, not forgetting that the integration of looking both inward and outward is the most powerful formula for creating long-term, high-impact Marketing Thinking change. Key words: Marketing function; Creative, Accountable, and Real-Time Marketing; Marketing ROI Thinking; Balanced Inbound and Outbound marketing; Customer-Centricity; Lean Content Marketing; Buyer’s Journey; “Both-Brain” Approach JEL Classification: M31, M14, M15, D83, D03
Major changes that promised in the sixties, the 20th century, to transform future marketing efforts, and marketing in the first decade of the 21st century Forty-eight years ago, (Louth, 1966 ) John D. Louth (a principal in McKinsey’s San Francisco office and specialized in problems of organization, marketing, and sales management) attracted our attention that the face of the marketing function will have to keep pace with six Holistic Marketing Management
major changes that promised to transform future marketing efforts: the dominance of the customer; the spread of marketing research; the rise of the computer; expanded use of test marketing (more controlled experimentation to narrow the odds of an error in making marketing changes); metamorphosis of field selling (tomorrow’s salespeople will be “sophisticated marketers”: planning oriented, service oriented, and technically skilled); global market planning (but, according to Louth, without unduly restricting initiative and responsibility within each national segment). On July 23, 2014 (Verdino, 2014), Greg Verdino (a leading digital strategist and popular keynote speaker who helps leaders build thriving 21st century organizations – according to gregverdino.com/), went beyond simply praising John D. Louth („for his prescience, although his ability to foresee a decades-long evolution of the marketing function is indeed impressive”), highlighting „the importance of taking the long view — in marketing and in business in general.” Verdino listed the six trends underlined by Louth, followed by his modernday take on each theme, concluding, after some actual references, including a reference to his article „ Strategy is change” (Verdino, 2013), that: „ The smart business leader might make serious work of understanding how the things happening right now and the things that may happen 40 years from now are merely two points on a continuum of constant change.” This opinion expressed by Verdino reminded me of an article published in McKinsey Quarterly, March 2014, by Nate Boaz (a principal in McKinsey’s Atlanta office) and Erica Ariel Fox (a founding partner at Mobius Executive Leadership, a lecturer in negotiation at Harvard Law School, and a senior adviser to McKinsey Leadership Development; Fox is the author of “Winning from Within: A Breakthrough Method for Leading, Living, and Lasting Change,” HarperBusiness, 2013).(Boaz & Fox, 2014) According to the authors, organizations don’t change - people do, anyone who pulls the organization in new directions must look inward as well as outward, organizational change being inseparable from individual change, because: despite the stated change goals, people on the ground tend to behave as they did before; individuals learn to align what they intend with what they actually say and do to influence others (“closing your performance gap”, according to the mentioned book). The article concluded: “Learning to lead yourself requires you to question some core assumptions too, about yourself and the way things work… This integration of looking both inward and outward is the most powerful formula we know for creating long-term, high-impact organizational change.” It is well known that marketing’s object of study is a result of the economists’ research (from the end of the 19th century) referring to the nature of distribution process.(Purcarea & Ratiu) Being in Bucharest for the first time, in May 2005, Philip Kotler highlighted the imperative of “the development of better abilities in innovation, differentiation, branding and service, in a word marketing”, recommending the development of a stronger marketing: holistic, strategic, technological, financially oriented. The “father of marketing” emphasized, among other things, the need to resort to a lateral marketing, conceiving new product and service ideas. In Kotler’s opinion, marketing is the art of brand building. He also showed that one of the shortest definitions of marketing is the profitable fulfillment of needs. The commercial space is no longer what it was, more and more marketing people acknowledge the need to have a more complete, Holistic Marketing Management
cohesive approach which goes beyond traditional applications of the marketing concept. An approach that attempts to acknowledge and reconcile the sphere and complexity of marketing activities is represented by holistic marketing (development, design and implementation of programs, processes and marketing activities which acknowledge content and interdependencies) whose components are: relational marketing, integrated marketing, internal marketing and marketing of social responsibilities. Marketing management is - according to the same acknowledged opinion - the art and science of choosing target markets and winning, preserving and increasing the client base by creating, delivering and communicating a superior value to the client. He - the client - has, in many cases, undefined preferences, which are ambiguous or even conflicting. On the other hand, Kotler’s mentor - Peter Drucker - says that the purpose of marketing is to know and understand the customer so well that the product or service is perfectly suited to him and sells by itself. But customers respond differently to the company’s image and the company’s brand; the identity - the way in which a company identifies itself, self-positions itself or positions its products - and the image - the way in which the public perceives the company or its products/services – require a distinction. Philip Kotler and Kevin Lane Keller (Kotler & Keller, 2005) emphasized, in 2005, the need to build a creative marketing organization, the capacity for strategic innovation and imagination coming from the assembly of instruments, processes, abilities and measures which will allow the company to generate more and better ideas than their competition. And this requires also assuming social responsibility because the business success and the client’s continuous satisfaction are closely related to the implementation of high leadership standards of a business and marketing. The key to branding - emphasized Kotler and Keller - is the customers’ perception of the differences between the brands belonging to a category of products. A branding strategy identifies which elements of a brand (name, term, sign, symbol, design, a combination of the previous) the company chooses to apply to the different products it sells. In order to serve multiple market segments, often, multiple brands are required (the basic principle in designing a brand portfolio is the maximization of market coverage, so that no potential customer is ignored). In the same year, 2005, Vincent Grimaldi (Grimaldi, 2005) argued that resistance to change – which is ingrained in human nature – makes good marketing difficult in practice, adding that marketing must be given a role that is both strategic and systemic (in order to maintain company’s competitiveness), managing to live in a symbiosis with the increasingly demanding customers and the changing environment, going beyond marketing’s support role and penetrating most aspects of the organization. According to Grimaldi, marketing is the corporate equivalent of a central nervous system, being an art and also a management science calling for the implementation of rigorous processes and metrics, and it should be both creative and accountable. Grimaldi insisted further that: the Baldridge criteria for performance excellence puts marketing in a leading role, together with leadership and strategic planning; because the customer is at the core of the problem, great strategies are developed around him; the corporate
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strategy ends up being totally customer-driven ensuring that every step of the process is developed with a market quick feedback and… obtaining the customers’ ”Wow”. A year before, in 2004, Nirmalya Kumar (Kumar, 2004) drew the attention to the fact that: “management has forgotten, or never realized, the ability of the marketing function to help drive organizational change” (Nirmalya Kumar - Marketing as Strategy: Understanding the CEO's Agenda for Driving Growth and Innovation, Harvard Business School Press, May 5, 2004). To improve the company’s value, marketers must engage CEOs and the top leadership in meeting the two marketplace challenges that all companies face (enhancing customer loyalty and reducing downward pressure on prices), in looking for growth-related initiatives (like expanding to new and growing channels of distribution, selling solutions instead of products, and pursuing radical rather than incremental innovation), and in finding which aspects of marketing are really scale-sensitive versus those elements where local adaptation truly increases value for customers. In the “next-generation marketing”, customer experience is going behind the lines, “audience is king” so, let’s “learn more about the customers and how they think”. First of all, a company has to see if it is possible to integrate this customer orientation and how can this be made possible. According to the opinion expressed in 2006 by the well-known Professor Don E. Shultz (Schulz, 2006), the first thing is to stop thinking about products (ensuring the transition from product to service) and start thinking about customers as income flows, then think about all of the ways customers touch you, or you touch them. This customer alignment and integration presumes having good customer data and using it efficiently, customers always appreciating the manner in which the company and its partners deal with dissatisfaction, inefficiency and opportunity. The “machinery” made up of the employees’ engagement and the clients’ engagement can significantly influence the company’s performance, the difficulty consisting in the fact that the recognition of the customer engagement’s need and the actual measurement of the real engagement are two different things (the real engagement being the consequence of the marketing/communication programme which produces an increased level of brand perception as meeting and overwhelming customer expectations/“brand equity”, while customer expectations are generally based on emotions). Professor Shultz considered that: marketers’ training must be focused on what is important to customers, not to the company (because, for example, in the case of the FMCG, the manufacturer has to start thinking about how to become a better partner for the retailers in terms of capturing, sharing and using information and data); marketing is what the organization does, the marketing department ought to be the one that is aligning the organization, taking into account that there are lots of tools, tactics, techniques that can be outsourced - including strategy - rather than having those done by employees. Within this framework, Shultz’s company has proposed a “media consumption model”, because every developed approach is based on distributing messages through the media and what is measured is distribution: every consumer today is creating his or her own internal information network, having an internal model for how he evaluates information sources and how he solves his problems (internal networks created for themselves). Consumers have created the ability to not only give advice, but also to get advice Holistic Marketing Management
from multiple sources and, that is why marketers need to look at how customers and consumers and users communicate with each other, by going back to the consumer-created media. And coming back to a pragmatic question: how do we get customer insight? The future’s marketing organization is going to have employees who can deal with both push and pull forms of marketing, by recognizing that today’s real challenge is to be very responsive, and to give feedback (the responses generated by the marketing come back to customer service, sales, technical support), so that the marketing people have relevance and view of what the responses are. Brand experiences - according to the same Don E. Shultz - are the responsibility of part-time marketers - employees, retailers, customer service people who are not trained as marketing people but they are doing most of the marketing for the organization, being on the ground responding to people – and not of marketers. That is why one of the challenges is to get budget starting by thinking about customers as flows of income, aggregating those customers up and, building a financial calculation so that it is an investment and a return (beyond the actual marketing department as a cost center that can’t measure, financially, the returns the marketing organization is generating). Just remember that on April 2006, the well-known Al Ries (Ries, 2006) wrote that marketing study starts with psychology study, and if psychology is the systematic study of human behaviour, then marketing is the systematic study of human behaviour on the market. In order to discover how the company can better satisfy customers’ needs, marketing people have to work together with the company’s clients, offering assistance and trying to understand their preferences. That is why Kotler considers “participation marketing” as a more appropriate concept, compared to “permission marketing”. The next year, 2007, Jonah Bloom (Bloom, 2007) showed that “we now live in a culture of instantly disseminated opinion”, everything in the public domain being instantly spread and dissected and in such a world marketers have to accept that they won't please all the people all the time: consumers are in control and messages are reinterpreted and criticized”. As we all know, in our world of continuous change, where the boundary between the organizations becomes even more complex, reacting (besides being proactive) to the marketplace’s challenges means to build architecture that will flexibly integrate corporate information. And as this world of continuous change is a “marketing world” governed more by perceptions, marketers need: an adequate marketing roadmap to arrive at the best positioning on the targeted market, knowing how customers perceive them, having the ability of being perceived as they really are, trying to offer their customers expertise and insights because they really need to have someone buy, so they must help their customers to decide how to buy; to be value driven (so as to understand what customers expect), implementing the knowledge obtained, overcoming the barriers to communications, translating each value proposition into the customer’s language, thinking of expertise as an abundant resource and time to respond as a scarce one, enabling the future; to renew organizational knowledge continuously - developing a knowledge culture – and within this framework to improve communication between internal suppliers and customers, by supporting a cross-functional process and adopting an interactive Holistic Marketing Management
value perspective, according to a relationship value management, working in a way that enables the relationship marketing process to deliver on key stakeholder expectation. As we underlined in 2008, there was a continuous debate within the academic marketing community about the so-called “critical marketing” and providing critical understanding: of the organization and impact of marketing operations; of the factors that are shaping marketing activities; of marketing professions and morality on the marketplace; of the mechanisms used by marketers for creating and supporting customer values; of consumer culture and the impact of brands; of the development and implementation of marketing strategies and programs; of the impacts of the marketing concepts’ and techniques’ application in a competitive environment; of marketing’s interpretation within the framework of the relationship marketing; of redefining markets and marketing. Marketers or not, we are all consumers and cannot escape the market, but we are not passive recipients of what marketers do, that is why – as the well-known Professor Michael Saren sustained in 2007 (Saren, 2007) – marketers must look at the marketing phenomenon as consumers experience it, as active participants in it, by achieving a broader perspective on marketing. And, the key to achieving such a new perspective is building of customer relationships, by understanding that customer relationships are the most important company’s asset needing to be managed. This “interaction approach” (Industrial Marketing and PurchasingIMP), whose essential aim is to create value for both parties, is based on the idea that this process of interactivity takes place between active buyers and sellers that are individually significant to each other. According to Professor Saren: the “critical marketing” extends its domain and gives a specific example to demonstrate the necessity that the academic discipline of marketing must encompass the wide range of activities and effects that it manifests in practice today; the problematic issue of relevance in marketing, considering the fact that in management and marketing relevance itself has often been defined in a restricted manner to imply usefulness as measured by a sub-group of either practitioners or self-selected intermediaries. Next year, 2008, there were interesting opinions expressed by David Armano who has insisted on the followings: there is a problem with marketing, because many times it doesn’t allow marketers to gain an intimate understanding of human behavior, (Armano, 2008) and we have to take into account that “the real action happens in the comments” (Armano, 2008); “unconventional times call for unconventional tactics” (speaking on his personal blog experience as one of the most effective manifestations of “marketing”) (Armano, 2008) and we have to consider the so-called “marketing spiral” (introduced during his conversation with Gary Cohen and Jay Ehret - Armano, 2008): awareness - interaction, engagement, participation, conversation, affinity - community. Allow us to remember that in 2006 we noticed (Theodor Purcarea, REBE-FA06-A7.pdf) that the “machinery” made up of the engagement of the enterprise worker and the engagement of his clients can significantly influence the performance of the company, the “engagement” (Passikoff, 2006) having already entered the list of traditional marketing activities and having already proved an increase in demand for evaluations connected to Return on Investment (ROI). Holistic Marketing Management
The latter in the context in which engagement – defined as the result of marketing activities and advertising which substantially increase the power of the brand in the eyes of the client (if it has been measured adequately in can really forecast sales and profitability) – is used more and more to allocate marketing budgets. Three years after, in 2009, we underlined (Theodor Purcarea, REBE-SU09-A4.pdf) the importance of a long term relationship between marketers and customers on the road to “the next society” (a road dotted with many signs / phrases: “new society”, “new reality”, “new economy”, “the new organization”... It is also worth to remember in this framework that in in the same year, 2009, in a White Paper entitled „The Future of Marketing”, published by the Chartered Institute of Marketing (Evmorfia Argyriou, Peter Leeflang, John Saunders, Peter Verhoeff), it was argued that marketers have a key role to play in better business performance, but marketing can be hampered by short-term thinking by the business and a lack of accountability, creativity and courage on the part of marketers themselves… By having respect for the marketing department activities, recognizing the strategic importance for marketing (there is a well-known agreement on marketing’ s important contribution to strategy, the exceptional importance of branding, and the need for businesses to be customer centered), top management can win by backing marketing (in both B2B and B2C markets, marketing being more developed in its B2C birthplace) which has the unique ability to add value in the market place and constitutes the facilitator helping the whole organization to survive and thrive by serving customers (customer proximity being a marketing strength), conveying customer needs across the company and converting best marketers knowledge into product ideas, considering the ingredients of high corporate returns: product quality, innovation and strong brands. As marketing accountability is considered being tough intellectually and spiritually, this involves, in the opinion of the mentioned authors, the followings: a) projecting and living with financial outcomes of plans and strategies; b) developing several skills (forecasting outcomes; dynamic forecasting showing the impact of marketing activities on sales: profits and return on investment); c) having courage (this being bundled with analytical skills that are central to market accountability), the courage being considered the greatest of the highlighted trifecta (accountability, creativity and courage); d) being creative (engaging not only the left hemisphere of the brain for the sequential and analytical processes necessary for accountability, but also engaging the holistic and intuitive strengths of the right hemisphere that help creative marketing). A year later, during the spring of 2010, Tim Parker (Parker, 2010) began to underline the importance of “the new rules of thought leadership marketing” (<< the customer has become the hunter, the marketer the hunted; an author's admirers now do the promoting; influencers have become critical marketing targets; online columns are potential new channels etc. >>), arguing that: marketers can’t control the new channels (influencers and quality online publications, viewed by readers as more credible); buyers are moving from biased to unbiased channels, the major cost in working the unbiased channels being the time. It has been observed that the new marketing reality implies a growing engagement in accepting the creative thinking challenge, progressing through knowledge and understanding towards mutual confidence, converting Holistic Marketing Management
emotions into agreements and the relation based on these agreements into a loyal and emotionally connected one, for a certain period of time. Next year (July 2011), in the prestigious McKinsey Quarterly (Marketing & Sales Practice), Tom French, Laura LaBerge, and Paul Magill emphasized that „We’re all marketers now”, (French, LaBerge & Magill, 2011) challenged to redefine the traditional marketing organization, while intensively collaborating to adapt the organizations to the way customers now behave, marketing being the company (and the company being the marketing vehicle) in the era of engagement, but not any kind of marketing, but an accountable one. In other words, a thorough understanding of the difference between being responsible (in a general sense; you can delegate it) for something and being held accountable (more measurable; you can’t delegate it to anyone) if it goes wrong, McKinsey representatives are pledging for the need for the marketing organization to become the customer-engagement engine (a customer engagement going beyond pure communication to include the product or service experience itself), while considering all related interactions with customers that make up the customer experience (challenged in turn by the multiplication of the customers renewed touch points used to interact with companies) within the reality that the buying process has become collaborative, and must ensure critical touch points that drive engagement. According to Tom French, Laura LaBerge, and Paul Magill, a new kind of marketing organization must evolve along four critical dimensions: distribute more activities; more councils and partnerships; elevate the role of customer insights; more data rich and analytically intense. There is a real pressure of quickly responding to the signs of customers’ changing needs, focusing on problem-solving and strategic-marketing skills, stimulating crossfunctional collaboration and a clear delineation of roles, entering into creative arrangements with outside parties, and raising the organizational barrier to engagement and avoiding the risk of being overtaken by competitors. Avoiding being guilty of marketing deadly sins, and measuring marketing, among a company’ top priorities. Real-time marketing and the balance between inbound marketing and outbound marketing In the first quarter of 2013, Ben Straley (Straley, 2013), VP of social technologies at Rio SEO and lead instructor of interactive marketing at University of Washington’s Continuing Education Program, attracted our attention, in the well-known “Forbes”, to the paradox revealed by the difficulty of reaching real-time information about the target audiences and customers of marketing organizations and engaging them in despite of the rise of social media, big-data analytics, and smart mobile devices. Within this context, he recommended six “must-dos”: strive to master all digital media; lead the charge on attribution; re-think and then re-invent lifetime value; think and act like a publisher; get your arms around your audience data; think “serendipity,” not “stalking.”
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On the other hand, we saw that in the opinion of Cory Treffiletti (Treffiletti, 2013), SVP of Marketing, BlueKay, the same year, 2013, was considered as being critical junction for ROI, the 2013 channels talking to each other: search, video, social, display, and mobile. Within the same framework, other opinions showed that: customer profiles become the DNA for real-time customer engagement (Joe Cordo, CMO Extraprise), driven by the rapid shift to cloud-based services and solutions buyer behavior has shifted (Michael Ni, CMO/SVP of Marketing and Products, Avangate), marketers begin to make serious strides in using listening data, check-ins, photos, and other online behaviors to figure out social signals, including purchasing intent (Michael Della Penna, Senior Vice President of Emerging Channels, Responsys), the older half of Gen C will understand the repercussions of the over-sharing they engaged in as teens (Richard Pasewark, CEO, Visible Technologies), marketers understanding customer needs and preferences on mobile will be successful in tapping the potential of this channel (Michael Della Penna, Senior Vice President of Emerging Channels, Responsys). In the same period of time Rob Carpenter (Carpenter, 2013) demonstrated that “today’s belle of the ball” is the “real-time marketing” (“the practice of brands engaging their audience via content, advertising, and product placement that is relevant to a specific current event or cultural happening”), which sprung up in marketing nomenclature at the beginning of 2005, before “social media marketing” (the first major channel for brands to monitor and engage in real-time conversations), which was starting to be used heavily in 2006. Carpenter made reference to the study released in July 2013 by Neolane (Neolane, 2013) and the Direct Marketing Association (235 North American marketers): the majority of the participants (43%) think of real-time marketing as “dynamic, personalized content delivered across channels”; 64% of participants believe real-time marketing revolves around some kind of dynamic personalization; only 23% believe real-time marketing is about making quick responses to mainstream events or injecting your business in social media conversations; only 49% of the participants believe providing real-time marketing within social media channels is highly important; while 69% believe that providing dynamic, personalized content is highly important on the web channel; 43% of respondents say that their biggest marketing challenge (3rd in votes) is how they can increase business metrics like customer retention; 57% of respondents say that their biggest marketing challenge are the conversion rates (2nd in votes); real-time marketing is the potential cure to these challenges, real-time marketing’s greatest benefits being “marketing effectiveness” (higher conversion), and customer satisfaction and retention. Carpenter showed that the first and only real-time web personalization platform that covers every point that marketers have been waiting for in a web personalization solution was created by Evergage. Finally, Carpenter stated that the real-time marketing means: “truly relevant, compelling engagement happens when you take into account the full picture of who someone is (past and current behavior) specifically with your business (not with what’s currently on TV).” Next year, in May 2014, Michael A. Stelzner (Founder, Social Media Examiner, and Host, Social Media Marketing podcast) presented the 6th annual study of Social Media Holistic Marketing Management
Marketing Industry. Let’s take a look at the primary findings revealed by Stelzner (Stelzner, 2014): marketers place very high value on social media (a significant 92% of marketers indicate that social media is important for their business, up from 86% in 2013); tactics and engagement are top areas marketers want to master (at least 89% of marketers want to know the most effective social tactics and the best ways to engage their audience with social media); blogging holds the top spot for future plans (a significant 68% of marketers plan on increasing their use of blogging, making it the top area marketers will invest in for 2014); marketers want to learn most about Google+ (while 54% of marketers are using Google+, 65% want to learn more about it and 61% plan on increasing Google+ activities in 2014); podcasting on growth trajectory (only 6% of marketers are involved with podcasting, yet 21% plan on increasing their podcasting activities in 2014 – a more than three-fold increase - and 28% of marketers want to learn more about it); Facebook and LinkedIn are the two most important social networks for marketers (when forced to only select one platform, 54% of marketers selected Facebook, followed by LinkedIn at 17%); most marketers aren't sure their Facebook marketing is effective (only 34% of marketers slightly more than one in three - think that their Facebook efforts are effective); original written content is most important for social media marketing (a significant 58% of marketers stated that original written content is the single most important form of content, followed by original visual assets - 19%). On the other hand, on August 19, 2014, eMarketer attracted the attention that (according to April 2014 polling by Useful Social Media, “The State of Corporate Social Media 2014”) (eMarketer, 2014) half of corporate execs can measure social's ROI, fewer than 34% of respondents of the mentioned study saying that they were accurately measuring social media’s effect, and the majority listed had dropped in usage of key performance indicators (KPIs) in 2014 than previously over the past few years. According to this study, in the last two years: the top KPI, engagement, had jumped 32%; sentiment tracking showed year-over-year growth of 38%; sales conversions and brand ambassadors (previously popular) dropped by 38% and 58%; web traffic as well as followers, fans and group size (simple and relatively useless figures) ranked second and third, was “slightly disconcerting.” But we also have to take into account that more than 50% of organizations do not differentiate Social Media Marketing (the use of social media spaces for marketing) from Social Business (using the elements above to enable more efficient, effective, and net-new connections between people, information, and assets to drive business decision, action, and outcome across the enterprise). (DiMauro, 2014) Another definition used in this context (adapted by Vanessa DiMauro from a Deloitte’s study: The Social Business Initiative) was for Social Media (the spaces where we interact with one another over the web, including public, private and semi-private spaces defined within, and by certain contexts). Within the same context, the following aspect was underlined: marketing typically leads their organizations’ social media strategy 50% of the time, and but chart the social business strategy course in only 32% of firms. A month before , on July 21, 2014, Hana Abaza (director of marketing at Toronto-based content marketing and lead nurturing platform provider Uberflip), underlined seven marketing Holistic Marketing Management
deadly sins (Abaza, 2014): marketing without metrics (not combining a metrics-driven approach with the creativity); marketing in a silo (not communicating internally within the marketing team and to other departments, and not talking to potential and existing customers so as to keep a pulse on them); no audience segmentation (not understanding each segment and not speaking directly to the individuals in the specific segment); no process for experimentation (not understanding that testing is often the missing ingredient); “spray & pray” marketing (not focusing on how your content is actually converting customers); too much “selling”, not enough “nurturing” (not creating valuable content around the target audiences' interests); “set it and forget it” marketing (not having a process in place for iteration and optimization, and not focusing on optimizing conversion rates across emails or landing pages). It is also worth to mention (and compare), within this context, the “seven deadly sins of mobile marketing” (Jarsky, 2014) underlined in the infographic of TextMarketer (a provider of business SMS services http://www.textmarketer.co.uk/): forgetting a call to action (CTA; customers need to know what you expect them to do); forgetting to test and check for errors (readability, contact details, website addresses, spelling, grammar, phone numbers); no option to unsubscribe; treat everyone the same; overloading customers (spamming customers); focus only on selling; develop a pointless app. As we all know, within the context of organizations developing purchase funnel models (that show how marketing and advertising efforts affect consumer attitudes and behavior) in order to make effective marketing decisions, there is a real need to quantify results, and “one of the major ways results can be measured are by looking at Return on Investment (ROI), which measures the relative efficiency of various marketing tactics (such as advertising/promotion mix, media mix, scheduling options, etc.) against marketplace performance (typically reported as sales results)”. (The Association of Magazine Media) CMO can respond to the complex challenges they actually face only by thoughtfully and systematically applying investment fundamentals to marketing, being necessary to boost marketing’s ROI. (Court, Gordon & Perrey, 2005) There is no doubt about the importance of reinforcing and embedding ROI thinking in the daily marketing approach. Peter Rosenwald (Rosenwald, 2004), an industry leader with broad experience (accountablemarketing.info/author.htm) in every aspect of the application of direct and datadriven marketing to a wide range of businesses (well-known for his constant pledge for the necessity of accountability in marketing and CRM), highlighted the struggling of marketing managers for new rules and measurements to use in the new world of measurable performance: understanding the economics of the marketing continuum and where begins the accountability, determining the allowable cost per name for a customer database, localizing the most effective and efficient integrated marketing database, knowing where marketing managers want to go and what is the best and most economical way of getting there, thinking of “contribution and/or profit” as a “cost”, understanding that good content is the most important churn reducer, that incentives come in all forms and sizes, and that testing and archiving are the foundation stone for Holistic Marketing Management
marketing improvement, considering the most likely prospects are almost always better and less expensive and that the “household” is a better marketing unit than the “individual”, establishing the right balance between catalog customers and prospects, moving the customer up the value ladder and selling a variety of goods, understanding that the prospect is almost always multidimensional. On May 20, 2013 Laura Ramos attracted the attention that (according to the research study launched by Forrester together with the ITSMA and VisionEdge Marketing – VEM, in April, the 12th year that VEM has undertaken this research): “B2B marketers continue to struggle to prove marketing's contribution to the business instead of using metrics and performance management to improve it… Marketers say just 9% of CEOs and 6% of CFOs use marketing data to help set corporate direction… the vast majority of marketing dashboards… report marketing activity rather than business outcomes, which are metrics executives can’t use to chart a business strategy. Instead, marketing measures and analysis should show how marketing moves the needle on topline growth or profitability.” (Ramos, 2013) On July 31, 2014, Laura Patterson (Patterson, 2014) attracted our attention that the purpose of measuring must extend beyond just collecting metrics (budget-to-expense ratios, ontime delivery, people-to-budget ratios, response rates, click-through rates, website traffic and activity, media mentions, article views and shares, fans, followers etc.), avoiding a timeconsuming, meaningless exercise, and focusing on to demonstrate how marketing is creating (customers believe they received at least what they expected, if not more, for the price they paid) and capturing (the value of the customer exceeds the cost to acquire or retain the customer) customer value, taking into account both, the opportunity to measure customer value, and the power that has shifted from sellers to buyers (thanks to the increased pricing transparency, product commoditization, product/service customization capabilities, and the Internet). As tips for measuring value, Patterson recommends the followings: define the data (the types of data we collect); focus on customer intelligence (a quick assessment of customer supplier, touch point and channel preferences, buying criteria, buying processes, and buyer personas etc.); establish the right metrics (so as to fine-tune your initiatives and ensure you invest your limited resources the best way). Next month, on August 25, 2014, Laura Patterson came back and showed some findings of the 2014 VisionEdge Marketing/ITSMA study, such as: “Best-in-class (BIC) marketers can be characterized as value creators because their primary focus is on using data to make market, customer, and product/service decisions that create value for customers and shareholders. Accordingly, the following are top roles for marketing ops function among the value creators, in priority order: Customer, market, competitive intelligence, research, and insights; Analytics and predictive modeling; Data management; Campaign analysis and reporting; Budgeting and planning; financial governance and reporting; Organization benchmarking and assessments… With the pressure increasing on Marketing to measure its value and contribution, Marketing Ops is the logical entity to champion and orchestrate the six A's of marketing performance
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management: alignment, accountability, analytics, automation, alliances and assessment.” (Patterson, 2014) On August 13, 2014, Scott Vaughan (CMO at Scottsdale, Ariz.-based marketing software and media services provider Integrate) recommended a strategy that will generate improvements in defined areas of marketing performance and increase credibility with stakeholders by delivering measurable business results (Vaughan, 2014). He started from the fact that analytics involves in marketing, more specifically, the studying of historical data to research potential trends, analyze the effects of certain decisions or events, or evaluate the performance of a given tool or program. According to Vaughan, in order to properly measure marketing and business outcomes, marketers must ask themselves three fundamental questions: Who are we developing/adopting the analytics for (marketing managers may need more real-time or frequent data while business leaders/analysts may only require a monthly or quarterly summary)? What exactly do we need to measure (to start with the end-game and work backward is one of the best ways to develop an analytics program)? Are our analytics actionable (you need to know why you got generated clicks or which content performed best)? On August 14, 2014, Heather Fletcher mentioned a few statistics (Fletcher, 2014) about content marketing (according to HubSpot’s “2013 State of Inbound Marketing” research: content marketing yields positive ROI – 41% of marketers; positive ROI for their inbound marketing – 82% of blogging marketers; inbound marketing delivers 54% more leads into the marketing funnel than outbound marketing. As relationships today are built with information, it is very important to understand the process of inbound marketing as a way of looking at the customer relationship that parallels any other, by determining whether there is a mutual attraction, and by building a relationship based on shared interests and values, taking into account that according to Forrester buyers are 60% of the way to a decision before they contact sales. (MarketingProfs.com) According to other opinions (Nickerson, 2014), it is worth to evaluate the balance between inbound marketing (which build communities and relationships with company’ customers and prospects by authoring books or eBooks, sponsoring events, writing articles, public relations, blogging, public speaking, content creation, SEO, video content, social media marketing and anything else that’s not commonly associated with direct marketing - Nickerson, 2014) and outbound marketing (“interruption marketing”, traditional forms of marketing: print ads, online display ads, TV commercials, radio commercials, billboards, trade show booths, cold calls, sales letters and bulk email blasts to purchased or rented lists etc. - Nickerson, 2014) currently done in the company, because, for example: if the sales pipeline is thin or needs a boost, could be necessary putting more into outbound marketing; if the pipeline is doing okay right now, could be necessary putting more towards inbound marketing. But in both cases it is necessary, according to Nickerson, spending at least some portion of company’ resources towards building up the inbound marketing as a lifestyle choice. Holistic Marketing Management
The superpowers of marketing, and major hindrances to marketing automation success At the end of 2013, we find out, thanks to the well-known Harward Business Review Blog Network, that in order (Bonchek & France, 2014 ): to win customers’ hearts and minds marketers need to master the latest technology, assimilate vast quantities of data, engage and delight their more connected and empowered than ever before customers, and deliver products and services that surpass their expectations; to generate extraordinary results today’s top marketers are combining technology and teamwork. Following their talk with dozens of chief marketing officers (CMOs) in Silicon Valley about the qualities that define extraordinary marketing, Mark Bonchek and Cara France identified five marketing capabilities that in their most refined form border on superpowers: to hear what no one else can hear (using technology and teamwork to listen accordingly); to be part of the conversation, even when you’re not in the room (the exponentially explosion of the conversations about products and companies thanks to social media); to leap tall piles of data in a single bound (finding meaningful insights, making split-second decisions, and creating truly relevant experiences thanks to digital devices which generate a mountain of information); to make silos disappear (creating a vision for an exceptional customer experience and connecting everyone in the organization to the delivery of that seamless experience); to bring out the superpowers in others (recognizing the importance of building great teams and cultivate a superpower of bringing out the superpowers in others). In an interview (Wenig, 2014) with eBay’s Devin Wenig (president of eBay Marketplaces) conducted by McKinsey Publishing’s Simon London in April 2014, it was underlined from the very beginning that technology is enabling the creation of a single global online marketplace, Internet (fuelled by the availability of information and electronic financial flows) enabling truly global commerce. Wenig showed that 20 percent of eBay’s (one of the world’s largest online markets) overall business is cross-border, and everywhere in cross-border trade there are both, friction (in currency, payment, trust, government rules and regulations, language - which inhibits the global trade), and opportunities (created by solving the mentioned problems, working with partners to fulfill, to deliver at the last mile, and using the sharing economy (services-based marketplaces that help balance supply and demand). On July 28, 2014, Ayaz Nanji made reference to a recent report of Ascend 2 and Research Partners (Marketing Automation Benchmark, July 2014, based on data from a survey of 291 global marketing, sales, and business professionals) showing major hindrances to marketing automation success (Nanji, 2014): the lack of an effective strategy (45% of global marketers); budget limitations (44% of marketers cite as a challenging obstacle); lack of skilled staff (40%); insufficient data quality (34%); lack of management buy-in (23%); the difficult-touse interfaces of marketing automation software tools (22%). Additional key findings concerned: satisfaction and goals (current marketing automation efforts are somewhat successful - 69%, very successful - 24%, not successful - 7%; improving productivity is one of their top goals for marketing automation - 45%; increasing sales revenue is a top goal - 44%); resources and tools Holistic Marketing Management
(company handles all of its marketing automation efforts in-house - 52%, use a combo of inhouse and outsourced resources - 41%, fully outsource - 7%; the quality of analytics and reporting tools is a top factor in choosing a marketing automation system - 41%; ease of use as a top factor - 40%; look for an all-in-one solution - 34%); metrics (say knowing the rate at which leads are converted is one of the most useful metrics to measure marketing automation performance - 57%, revenue generated is a key metric - 42%, cite lead generation ROI - 40%) . A more collaborative working relationship between CMOs and CIOs, and the optimism of CMOs about the current business environment On July 30, 2014, a recent report (based on data from a survey of 1,147 senior marketing and IT executives from around the world: 37% working for B2C-focused companies; 28%, B2B; and 35%, hybrid) of Accenture, highlighted that (Nanji, 2014): some 43% of CMOs and 50% of CIOs say their relationship with the other has improved over the past year, while 23% of respondents say collaboration between the two groups is currently at the right level, up substantially from the 10% of respondents who last year said collaboration was at the right level. But there are considerable differences concerning various issues such as the speed at which new digital initiatives are being implemented. Other key findings of the report pointed to: alignment (more than half of CMOs -52%, and CIOs - 53%, say keeping marketing and IT departments aligned is a top priority; most respondents agree on the top five marketing-IT priorities: customer experience, customer analytics, social media, corporate website, and other Web development); digital divide (company's IT team doesn't understand the urgency of integrating new data sources into campaigns - 40% of CMOs; technology development process is too slow for the speed required for digital marketing - 43% of CMOs; marketing requirements and priorities change too often for them to keep up - 43% of CIOs; CMOs lack the vision to anticipate new digital channels , compared with just 11% who expressed that view last year - according to 25% of CIOs). A month later, in August 2014, another recent report (based on data from a survey of 525 CMO Council members around the world; 41% of respondents focused on B2B markets, 23% on B2C, and 35% hybrid) from the CMO Council displayed the following opinions of the respondents (Nanji, 2014): management mandates for top-line revenue growth and market share in 2014 are realistic and attainable - 81%; 55% plan headcount additions in 2014, compared with 22% who expect reductions; their own jobs are at risk - 10%; 54% have increased budgets in 2014 compared with 2013. Additional key findings from this recent report from the CNO Council highlighted three directions: digital focus and spend (59% of chief marketers list â&#x20AC;&#x153;digital marketing makeoverâ&#x20AC;? - involving platforms, programs, and people - as the number one transformational project in 2014; top areas of digital marketing investment include email marketing, website performance optimization, mobile applications, lead management, website design and development, and search marketing; the top reason for deploying new digital solutions and cloud-based services: improved efficiency and campaign effectiveness ; between Holistic Marketing Management
10% and 30% of their budgets allocated to digital marketing in 2014 - > 70% of respondents ); effectiveness and performance (gave themselves an A+ in digital marketing performance - 6%; “getting better by growing capabilities and improving measurement” - 54%; planning to maximize the impact and value of marketing through improved customer segmentation and targeting in 2014 - 63%, but only 6% see themselves as leaders in big data management, compared with 62% who view themselves as just keeping pace or lagging behind competitors etc.); relationships with peers (today's CMO is equal to other C-level peers - nearly 30%, while 45% say that is sometimes the case; CMOs are most inclined to partner and interact with chief financial officers -58% do so, chief information officers - 53%, and chief sales officers - 51%; while as the top professional objective for the majority of respondents in 2014 is seen the increasing collaboration with Sales and/or channel organizations was listed). Strategies for Transforming Customer Experience, and Customer-Centricity, a focused strategy In May 2014, Ernan Roman (one of the “2014 Top 40 Digital Luminaries” according to Online Marketing Institute; one of the “100 most influential people in Business Marketing” according to Crain’s BtoB Magazine), President of Ernan Roman Direct Marketing, approached the proper strategies for transforming the customer experience. Ernan Roman (author of both, “Voice of the Customer Marketing”, and well-known Huffington Post published blog “Ernan’s Insights on Marketing Best Practices”) is considered an industry thought leader, being inducted into the Marketing Hall of Fame thanks to the three Customer Experience methodologies he created: Voice of Customer Relationship Research, Integrated Direct Marketing, and Opt-in Marketing. Based on insights from industry thought leaders and research findings from thousands of hours of Voice of Customer (VoC) research, Roman recommended – in what concerns helping to engage customers and prospects in a competitively differentiating, multichannel experience (Roman, 2014) - five strategies for transforming the customer experience: 1) Understand How Customers Define “Customer Experience”; (2) Satisfaction Has Become a Given. Engagement is Now the Critical Competitive Differentiator; (3) Rethink How You Engage With Customers; the Reciprocity of Value Equation; (4) Provide Personalized Experiences and Communication; (5) Achieve a Multichannel Experience. Roman also identified 12 action items to help transform your customer experience, the final one being this: “Deliver
high quality customer service in every channel. Marketing has to take responsibility!” As not all the prospects or customers are the same, in today time of the competitive advantage derived from remarkable customer experience, customer-centricity (Henderson & Weber, 2014) can be defined as helping the prospects and customers achieve their goals in a way that makes sense for the company, and as agility, relentlessly pursuing improvement and innovation by: prioritizing the efforts on those customer needs and desires that the company can serve well and profitably, while operating in a place of shared value, integrating and analyzing Holistic Marketing Management
the customer data so that the company can predict the customer lifetime and referral values of its customers, and defining accordingly the markets and pursuing more focused and profitable value propositions; treating each of the prospects and customers the company choose to serve personally, by taking customer understanding to the level of the individual and differentiating company’ products, services, and experiences accordingly; involving constant iteration, testing the effectiveness of the content and experiences, learning what works, and then scaling as appropriate, by staying close to the customers to uncover emerging and latent needs and testing hypotheses (quickly and at a low cost) about demand with small-scale experiments that replace speculation with reality, and make pivots to company strategy as necessary. On August 11, 2014, Andrew Rudin (a BS in marketing and an MS in information technology, both from the University of Virginia; successful background as a technology sales strategist, marketer, account executive, and product manager), Managing Principal of Contrary Domino Partners approached an interesting topic (Rudin, 2014): “CapitalOne Digital’s New Architecture of Customer Centricity: People, Process, and an Awesome High-Tech Office”. Rudin stated that yesterday’s office is dead, and the office of the future will inspire life, creativity, and innovation. His guided tour (by Tom Poole, CapitalOne Digital’s Managing Vice President for Mobile Payments and Commerce) provided a glimpse into some exciting resources that CapitalOne Digital has developed: Device bar; Social media command center; Design Studio; Usability Lab; Large galley and game room area; Room for outside groups to meet and congregate. He concluded that: “CapitalOne Digital… places paramount importance on knowing its customers, fostering effective collaboration inside the office, and, by joining these two, enhancing ability for developers to create something valuable for people to use”. Marketing tactics from the 2014 World Cup, lean content marketing, the buyer’s journey, and the constant need to reevaluate the marketing strategies On July 22, 2014, Josh Haynam highlighted 10 marketing plays that helped the 2014 World Cup become the most watched in history, considering that similar tactics can be used in most every marketer’s plan (Haynam, 2014): use controversy to your advantage; highlight personal stories; categorize/segment your audience; have a clear goal; understand the public perception of your product; remove barriers, but set boundaries; create snippets worth remembering; create content tailored for your audience; use what you have in various ways; partner up with complementary people. Yes, indeed, content is king, is tough for any marketer, it is the fuel for company lead generation and nurturing programs, driving leads through the marketing funnel to become customers, because today’s buyer is different taking into account that due to the abundance of information on the internet, 66–90% of the buyer’s journey is complete before he even reaches out to a sales person. In order to master lean content marketing, it is necessary to assign the right
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roles, mapping content to buyer personas and buying journeys, and becoming experts at repurposing the existing assets. Allow us to remember that in August 2013 (Jacobs, 2013), Tom Jacobs (founder and president of Jacobs Agency, a Chicago-based agency that helps companies untangle their business problems through marketing communications) recommended - in order to implement buyer journey marketing from a lead generation perspective - five crucial guidelines for organizations: prepare your marketing and sales organizations for a shift (from the organization’s need to roll out new offerings or increase market share) to the customer’s desire to resolve a business issue (marketing and sales processes and metrics need to be aligned to support the buyer-focused approach); don’t guess at buyer needs (the expectation of all marketing communications today is that the customers’ behavior should dictate what comes next); step up your segmentation (every organization should try to find an aggregation of behaviors or buyers in various stages); commit to content (conduct a content audit and organize all previously developed content by the various phases of the buying cycle); get ready to manage multichannel execution (multichannel communications and marketing automation are essential, but these are not the only hallmarks of becoming buyer-journey-oriented, it starts in the organization’s processes for innovation, product/solution management, customer segmentation and marketing strategies). Coming back to the well-known Harward Business Review Blog Network, this time looking at the month of August 2014 posts (Joshi, 2014), we remarked the pledge for inspiring and effective marketing, by underlining of the necessity for marketers of not relying too heavily on analytics, but on the so-called the “both-brain” approach (which now is gathering speed and will become essential to future marketing success), by making the right balance between creativity and analytics. And this requires a change in mindset and organizational culture, a concerted effort involving at least four steps: set the right tone at the top (leaders have to acknowledge and champion the change that’s needed and model the necessary behavior, refining and perfecting the creative content based on a data-driven analysis of live feedback from the marketplace); integrate both approaches into the production cycle (moving to shorter creative cycles punctuated by frequent testing, analysis and revision; marketing that is more engaging, better targeted, and much more effective at driving results); design clear decision-making processes (identifying the specific decisions that could benefit from analytic insights, clarifying the criteria used to make each decision, and only then gathering the required data and perform the needed analyses; clear roles to both analytic and creative team members for each of these key decisions); nourish both-brain skills with thoughtful training and incentives (seeking out, hiring, and promoting both creative and analytic talent; cross-training team members on the importance of both left-brain and right-brain skills; co-locating the two groups and creating both-brain teamlets that work together on multiple campaigns over time, rewarding the individuals involved).
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And as a conclusion at the level of the month of August 2014 posts (Roman, 2014), and in accordance with the actuality of the constant need to reevaluate the marketing strategies (a critical priority for marketers) it is worth coming back to Ernan Roman (who is considering that innovation is marketing’s best friend) recommendations to act with speed and agility in addressing key customer needs and expectations: empowering the buyer to become an active participant in their experience; increasing relevance; increasing differentiation and engagement; solving problems and needs. As a critical priority for marketers is the reevaluation of the current marketing strategies to determine if they are achieving key objectives (competitively differentiating the brand and engaging customers across the multichannel mix), Roman highlighted 7 game changing marketing trends (which can transform the quality, relevance and ROI of your marketing) you need to consider as you reevaluate your strategies: Extreme Creativity (to help you achieve competitive differentiation in an increasingly cluttered and distracted market); New Technology (to enhance user experiences at every touch point, by understanding how your specific customers want to use technology to improve their experience with your brand); True Personalization (83% of consumers see value in being recognized with personalized experiences across channels. - according to the 6th Annual Personalization Consumer Survey); Leveraging the Power of Community (turning passive buyers into active brand contributors, by giving brands relevant consumer insights about market preferences); Embracing the real customer journey (making it simple and easy for people to do business with you, by understanding the path to purchase lets); Multiscreen communication (68% of consumers engage in “content grazing,” multi-tasking using several devices at once - according to Microsoft Advertising’s Cross-Screen Engagement study); Location based marketing (the ability to use location to target consumers with messages based on where they are). Yes, indeed, Marketing has to take responsibility, and confirm that innovation is its best friend, not forgetting that anyone who pulls Marketing in new directions must look inward as well as outward… This integration of looking both inward and outward is the most powerful formula for creating long-term, high-impact Marketing Thinking change!” References John D. Louth - The changing face of marketing, McKinsey Quarterly, September 1966, available at: http://www.mckinsey.com/Insights/Marketing_Sales/The_changing_face_of_marketing?cid=other-eml-cls-mipmck-oth-1407 Greg Verdino - The Long-Term View of Near-Term Change, July 23, 2014, available at: https://www.linkedin.com/today/post/article/20140723170841-416864-the-long-term-view-of-near-term-change Greg Verdino - Strategy is change, November 18, 2013, available at: http://gregverdino.com/strategy-is-change/ Nate Boaz and Erica Ariel Fox - Change leader, change thyself, McKinsey Quarterly, March 2014, available at: http://www.mckinsey.com/insights/leading_in_the_21st_century/change_leader_change_thyself Theodor Purcarea, Monica Ratiu - On Effects of the Producer-Retailer-Consumer Relationship's Knowledge on the Marketing Future, International Scientific Conference "European Integration- New Chalenges for the Romanian Holistic Marketing Management
Economy", Faculty of Economics, University of Oradea, 4th Edition, Oradea, 30-31 May 2008, Analele Universităţii din Oradea, Ştiinţe Economice, Tom XVII, 2008, volumul IV, Management and Marketing, pp. 11431152 Philip Kotler, Kevin Lane Keller - Marketing Management, Twelfth Edition, Pearson Prentice Hall, 2005, Pearson Education Inc., p. 5-6,13,16-17, 285, 300-303, 320-321, 721, 724 Vincent Grimaldi - The real danger comes from disconnects and inertia, 31 – Jan – 2005, available at: http://www.brandchannel.com; Vincent Grimaldi is managing partner of global strategy consultancy “The Grimaldi Group” Nirmalya Kumar - The Strategic Role of Marketing, Q&A by Manda Salls, 5/31/2004, available at: http://hbswk.hbs.edu/archive/4156.html Brad Berens - Don E. Schultz on What Companies Can Do to Integrate, iMedia Connection, December 06, 2006, available at: http://www.imediaconnection.com/content/12698.asp#0 Al Ries - Understanding Marketing Psychology and the Halo Effect, April 17, 2006, available at: http://adage.com/article/al-ries/understanding-marketing-psychology-halo-effect/108676/ Jonah Bloom - Marketers Need to Stand Up to Hysteria From the Outrage Nuts, Ad Age Daily, Febuary 26, 2007, available at: http://adage.com/article/jonah-bloom/marketers-stand-hysteria-outrage-nuts/115154/ Michael Saren - Marketing is everything: the view from the street, Marketing Intelligence & Planning, Volume 25, Issue 1 2007, p. 11-16, available at: http://www.emeraldinsight.com/doi/abs/10.1108/02634500710722362 David Armano - When marketing feels shallow, go deep, Sunday, July 13, 2008, available at: http://darmano.typepad.com David Armano - Digital marketing needs a reboot, Friday, July 25, 2008, available at: http://darmano.typepad.com/logic David Armano - Unconventional marketing, Sunday, October 12, 2008, available at: http://darmano.typepad.com David Armano - Accidental marketers: The podcast, Sunday, October 23, 2008, available at: http://darmano.typepad.com Robert Passikoff - “Rules of Engagement”, February 2006, available at: www.chiefmarketer.com/rules_engagement_02132006 Tim Parker - The new rules of thought leadership marketing, April 16, 2010, available at: http://www.socialmediatoday.com/SMC/ Tom French, Laura LaBerge, and Paul Magill - We’re all marketers now”, McKinsey Qurterly, July 2011, available at: http://www.mckinsey.com/insights/marketing_sales/were_all_marketers_now Ben Straley - Six Things Every CMO Needs To Know In 2013, available at: www.forbes.com/sites/onmarketing/2013/01/03/six-things-every-cmo-needs-to-know-in-2013/ www.mpdailyfix.com/whats-next-in-marketing-bold-predictions-for-2013/?adref=nlt011613 Rob Carpenter - Real-Time Marketing Isn’t What You Think It Is, available at: http://www.evergage.com/blog/realtime-marketing-isnt-what-you-think-it-is
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Real-time marketing insights study five keys to success for marketers, Conducted by Neolane and the Direct Marketing Association, July 2013, available at: http://www.neolane.com/Assets/neolane.comAssets/us-Assets/resources/pdf/RealTimeMarketing_eBook.pdf Michael A. Stelzner - 2014 Social Media Marketing Industry Report. How Marketers Are Using Social Media to Grow Their Businesses, May 2014, Social Media Examiner When It Comes to Social Measurement, Corporate Marketers Can't Get It Together, eMarketer, Aug 19, 2014, available at: http://www.emarketer.com/Article/Comes-Social-Measurement-Corporate-MarketersCant-Together/1011115/2 Vanessa DiMauro - Highlights from the 2014 Social Business Benchmark Study, August 12, 2014, August 12, 2014, http://customerthink.com/highlights-from-the-2014-social-business-benchmark-study/ Hana Abaza - The 7 Deadly Sins of Marketing, July 21, 2014, available at: http://www.targetmarketingmag.com/article/the-7-deadly-sins-marketing/1 Ver贸nica Maria Jarski - Seven Deadly Sins of Mobile Marketing, Infographic, August 2, 2014, available at: http://www.marketingprofs.com/chirp/print/2014/25712/seven-deadly-sins-of-mobile-marketing-infographic Accountability: A Guide to Measuring ROI and ROO Across Media, Magazine Publishers of America, New York, www.magazine.org/accountability, www.customores.com/ad_blues/Accountability_Study.pdf David C. Court, Jonathan W. Gordon, and Jesko Perrey - Boosting returns on marketing investment, McKinsey Quarterly, 2005 Peter Rosenwald - Accountable Marketing: The Economics of Data-Driven Marketing, South-Western Educational Pub; 1 edition, August 13, 2004 www.accountablemarketing.info/author.htm Laura Ramos - Marketing Performance Management Is Operationally Proficient But Strategically Stalled, available at: http://blogs.forrester.com/laura_ramos/13-05-20marketing_performance_management_is_operationally_proficient_but_strategically_stalled Laura Patterson - What You Should Measure in Your Marketing - and Why, July 31, 2014, available at: http://www.marketingprofs.com/opinions/print/2014/25703/what-you-should-measure-in-your-marketingand-why Laura Patterson - Marketing Ops Is Now a Must Have: The Six A's of Marketing Performance Management, August 25, 2014, available at: http://www.marketingprofs.com/articles/print/2014/25875/marketing-ops-is-now-a-musthave-the-six-as-of-marketing-performance-management
Scott Vaughan - Marketing vs. Business Analytics, August 13, 2014, available at: http://www.targetmarketingmag.com/article/marketing-vs-business-analytics-analytics-basics-world-big-data/1 Heather Fletcher - Give It Away Now! August 14, 2014, available at: http://www.targetmarketingmag.com/article/content-marketing-freebies-give-it-away-now/1 Inbound Marketing: The Art of Attraction, available at: http://www.marketingprofs.com/store/product/2226/inbound-marketing-the-art-of-attraction#ixzz392l0TTQQ
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Kris Nickerson - Lead Generation: Inbound Marketing Versus Outbound Marketing, April 17, 2014, available at: https://www.linkedin.com/today/post/article/20140417175149-8685044-lead-generation-inbound-marketing-versusoutbound-marketing Kris Nickerson - Lead Generation: Inbound Marketing Versus Outbound Marketing, April 17, 2014, available at: https://www.linkedin.com/today/post/article/20140417175149-8685044-lead-generation-inbound-marketing-versusoutbound-marketing Kris Nickerson - Lead Generation: Inbound Marketing Versus Outbound Marketing, April 17, 2014, available at: https://www.linkedin.com/today/post/article/20140417175149-8685044-lead-generation-inbound-marketing-versusoutbound-marketing Mark Bonchek and Cara France - The Five Superpowers of Marketing, PM December 2, 2013, available at: http://blogs.hbr.org/2013/12/the-five-superpowers-of-marketing/ Flow without friction: An interview with eBay’s Devin Wenig, McKinsey Global Institute, April 2014, available at: http://www.mckinsey.com/insights/operations/flow_without_friction_an_interview_with_ebays_devin_wenig Ayaz Nanji - 2014 Marketing Automation Benchmarks and Trends, July 28, 2014, available at: http://www.marketingprofs.com/charts/print/2014/25658/2014-marketing-automation-benchmarks-and-trends Ayaz Nanji - Are Marketing and IT Execs United or Divided? [Infographic], July 30, 2014, available at: http://www.marketingprofs.com/charts/print/2014/25675/are-marketing-and-it-execs-united-or-divided-infographic Ayaz Nanji - The State of Chief Marketers in 2014, August 18, 2014, available at: http://www.marketingprofs.com/charts/print/2014/25811/the-state-of-chief-marketers-in-2014 Ernan Roman - 5 Strategies for Transforming Your Customer Experience, May 14, 2014, Ernan Roman Direct Marketing Corp., available at: http://www.erdm.com/resources.php#.U_NF3sIcTIU Lisa Leslie Henderson, Larry Weber - Serving Everyone Means Serving No One - and Other Truths About Customer-Centricity, July 24, 2014, available at: http://www.marketingprofs.com/opinions/print/2014/25640/serving-everyone-means-serving-no-oneand-othertruths-about-customer-centricity Andrew Rudin - CapitalOne Digital’s New Architecture of Customer Centricity: People, Process, and an Awesome High-Tech Office, August 11, 2014, available at: http://customerthink.com/capitalone-digitals-new-architecture-ofcustomer-centricity-people-process-and-an-awesome-high-tech-office/ Josh Haynam - 10 Marketing Lessons From the World Cup, July 22, 2014, available at: http://www.marketingprofs.com/articles/print/2014/25630/10-marketing-lessons-from-the-world-cup Lean Content Marketing. How to Create Content on a Budget, 2014 Marketo, Inc., eBook, available at: http://www.marketo.com/_assets/uploads/Lean-Content-Marketing.pdf?20140605095553 Tom Jacobs - Buyer Journey Marketing Is Hard: A Five-Step Guide to Making It Easier, August 2013, available at: http://jacobsagency.com/sites/default/files/resources/JA_BuyerJourneyMktg_POV.pdf Aditya Joshi - Use “Both-Brain” Marketing to Balance Creativity and Analytics, August 13, 2014, available at: http://blogs.hbr.org/2014/08/use-both-brain-marketing-to-balance-creativity-and-analytics/ Ernan Roman - 7 Game-Changing Marketing Trends to Engage Customers, Build Your Brand, August 15, 2014, available at: http://customerthink.com/7-game-changing-marketing-trends-to-engage-customers-build-your-brand/
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Improving company management: review of recent ideas
Abstract. This paper is largely based on over a hundred articles and comments (including the author's), submitted to the french Les Echos online business daily during the past few months. It reviews possible management improvements to help companies and consequently also their national economies. Keywords: management, organisation, leadership JEL classification: M10; M14; M51; M53
Introduction With the continuing problems of most countries trying to re-launch their economies after the crisis, commentators are putting the onus on companies to create growth and hence more employment by using better management. Two kinds of approaches are being used: The first is to introduce ideas from other sources which has included sports teams (for cohesion), the military (leading by example), the theatre (for roles and communication) and even the Papacy (achieve change without conflict). Also from other discipines like neurosciences (emotion, stress). Various useful key words have been suggested in this context such as confidence, flexibility, slow business, ambition, audacity, agility to which I should like to add two less common ones namely realism and judgement - much missing on the political scene. The second and most common approach is based on action on the management processes*: Inside the company for improving performance by having an ORGANISATION which is flat rather than hiearchic to empower staff to make quicker and more effective decisions. Holistic Marketing Management
In addition,calling for a more humanistic LEADERSHIP based on communicaton,motivation and sharing rather than just on brute authority. This requires appointing as managers those who have the necessary human qualities as well as operational skills to successfully pilot change or even a comprehenive transformation if necessary.The Glassdoor organisation has regular surveys identifying the company leaders most appreciated by their employees. Combining the two factors of organisation and leadership,the idea is to move towards the analogy of the orchestra and its director rather than the general and his soldiers. The hope being to achieve a more congenial work environment with less stress and danger of 'burn out' which is becoming more common although not so much in anglo-saxon or scandinavian companies as those in southern & eastern europe (confirmed by a recent Edenred survey). In contrast, the annual surveys of 'best companies to work for' (prepared for several countries), are a useful aid for candidates seeking new employment.
Thus it should be pointed out to the critical commentators that the the kind of organisational structure they advocate ('organic' as opposed to 'mechanistic'), has existed for many years in the type of companies for which it is most suitable i.e.service firms and high tech firms like those newly created in the digital IT industry. Recommendations To apply exactly the same features to larger firms,particularly in manufacturing industry, is not automatically the best solution, especially nowadays when managers under pressure for results may need to be rather autocratic than democratic in order to more easily carry out unpopular decisions. These requirements do not of course excuse dictatorial behaviour of which the most repugnant is the boss who surrounds himself with acolytes to do the 'dirty work' of sanctioning and firing staff.
In contrast to the above,firms which are less subject to pressure from shareholders or company head office have more easily adopted the norms which critics are advocating. Among these are a large proportion of family owned companies and more recently, firms which have organised themselves as cooperatives where workers manage themselves in teams or circles and do not have one fixed 'boss'.
Even more recently have appeared variants of the latter based on the principles of Zobrist management, OuiShare collaboration or Holacracy techniques. As well as creating a better Holistic Marketing Management
internal climate for their workers,these firms are more long term oriented and more respectful of all the actors in their microenvironment rather than just the pursuit of incessant growth (pocheco moonfish syndrome) for the benefit of shareholders. However such consideration of all stakeholders has been advocated since many years and a suitable evaluation chart prepared by EFQM was used to define 'excellent companies' in the Management Excellence book**.
Having attained most of what is possible internally,additional progress must be sought externally. Unfortunately since the financial crisis the external environement has become so unstable that even medium term PLANNING is difficult and more emphasis has to be put on seizing available opportunities wherever they present themselves . However during such activity the fourth process of CONTROL cannot be ignored; new projects still have to satisfy the requirements of realism and return in terms of cost,quality and timing.
Growth possibilities mostly arise from additional demand either in-country or overseas. However demand almost everywhere is now very modest (people have little money to spend on non-essentials),and exporting is hampered by the tendency of the foreign countries to want to manufacture the products themselves. Investment for expansion is thus at low levels and that for innovation is more oriented towards process and productivity improvements than new products (except those in the digital sectors which however often have a very short lifespan).
A common related suggestion is to encourage more entrepreneurship but unfortunately most of these ventures have a relatively minor revenue impact and create few jobs. Even worse,the new digital revolution where they are most active,while creating some new jobs is destroying many more in the service sectors. Under these conditions government pressures on more investment (for more employment) are unrealistic-companies find other less risky ways (finance, publicityâ&#x20AC;Ś) to improve their results and thus satisfy demanding shareholders. "It is only free enterprise and companies that create wealth" liberal oriented peope have always been saying, but this is less the case today as the priorities of companies and the state are now no longer the same. And yet the demands on essential state services (lodgings,education,health) are growing with the increasing number of elderly, or young, or both. In addition, governments are now faced with immense challenges: the environment (pollution,resourcesâ&#x20AC;Ś) which have been too much neglected in the past ,and the new issues Holistic Marketing Management
in geopolitics (world conflicts,immigration...) which will take up more of the already scant state resources available. At the same time private sector finance is reduced since those who have amassed great riches (legally or by tax evasion or corruption), are either speculating on the financial markets or putting their money in paintings,villas on tropical islands etc Conclusion The net outcome of all of this for the future is therefore bleak; even with more investment and growth it will probably not be possible to have all segments of our western society improve or even maintain their past prosperity levels. This has just been demonstrated in the Polish election where those groups seeing meagre future prospects (despite the country's recent successes), voted out the incumbent President.
It is therefore rather world affairs which will have to be managed quite differently-a subject previously brought up in the Management Excellence book of 2010** and due to be developed further in future RAFME research. Adjustments in management procedures inside companies-the initial topic of this article- are therefore of relatively minor significance within such a broad context, *http://rafme.homestead.com â&#x20AC;˘
**www.businessexpertpress.com/books/achieving-excellence-managementidentifying-and-learning-bad-practices Copyright Andrew Kilner, June 2015
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Marketers, challenged to meeting digital priorities Dr. Costel Iliuță NEGRICEA Ioan Matei PURCĂREA Abstract There is a real need of talent and leadership to approach digital marketing challenges, by having a more active digital agenda, doing periodic assessments and developing action plans to improve company’s execution, raising awareness for digital marketing among the executive staff. Marketers must avoid mistakes in the process of realizing digital marketing success, and reflect the brand and consumer interest, also paying attention to right managing their company’s reputation online, fixing the problems signaled by customers and ensuring customers know marketers care and they are just looking for relief. Marketers are also challenged to create an integrated marketing experience across multiple channels, building the proper capabilities to support digital marketing operations accordingly, taking customers’ insights and developing and delivering a seamless omnichannel customer experience. Keywords: Digital marketers; Digital agenda; Manipurated; Omnichannel customer experience; Digital marketing operations JEL Classification: L86; M15; M31; M37; O33 For a more active digital agenda In our previous article we talked about the emergence of new ecosystems thanks to digital disruption, the marketers’ need of bringing marketing operations into the digital era, by enhancing the customer journey and shifting consumer behavior with the help of the digital tools (while actively encouraging feedback from users, and building a circle of trust with the company’s audience), and by better understanding the connections among business functions and applications and identifying the digital opportunities. (Negricea and Purcarea, 2015) Right after publishing this article we came across the results of “Cracking the digital code: McKinsey Global Survey results”, September 2015. According to this new valuable McKinsey Global Survey, digital’s promise seems more of a hope than a reality because of insufficient talent or leadership (which tops a longer list of complex challenges), only digital “high performers” having a more active digital agenda, that is confirmed by a triptych: taking more risks in their digital programs; moving faster to implement initiatives; reallocating their resources and their best people to digital work. (Bughin, Holley and Mellbye, 2015) McKinsey’s representatives showed, among other aspects, the following: digital trends are changing fundamental aspects of the ways that companies do business, the digital engagement of customers being the top priority on their agendas, and automation and/or the Holistic Marketing Management
improvement of business processes climbing (automation being a greater focus in manufacturing, while big data being a top priority in healthcare, for example); in response to digital companies have adapted products, services, and touchpoints to better address customer needs, the review of the portfolio for opportunities and challenges caused by digital trends being the most common change to corporate-level strategy; there is a variety of hurdles reflecting the complexity and difficulty of implementing a successful digital program (a lack of leadership or digital talent – and here especially analytics, data science, mobile development and user experience – as shown above, a limited understanding of how digital trends affect the company and industry, difficulty keeping pace with digital development, an inability to adopt an experimentation mind-set, misaligned incentives between digital and traditional businesses). On the other hand, for developing a successful digital program it is recommendable to learn lessons from high performers, by following practices such as: building a risk-taking culture; putting your money (and resources) where your mouth is; dedicate the best people to digital, and then keep them engaged; move quickly; lead from the top. McKinsey’s representatives concluded by highlighting the companies’ need for perspective on: scaling up digital with an integrated approach; getting the board involved; bringing a digital rhythm to corporate strategy. Digital marketers, challenged to systematically review key areas while assessing themselves As a recognized valuable digital marketing software company, Silverpop (constantly focused on helping marketers transform the customer experience, increasing engagement and driving revenue) pledges for periodic assessments done properly, comparing to benchmarks where possible and developing action plans to improve company’s execution, raising awareness for digital marketing among the executive staff and helping get budget buy-in for new campaigns. (Silverpop, 2015) In this respect, Silverpop recommends marketers: ▪ to take a closer look at the following areas: Target Market (the “email magnet” - the offer company make to encourage anonymous website visitors to sign up for company’s email list should contain some of company’s best content and educate prospects while providing information about company’s culture and brand); Pipeline (B2B marketers: how many companies and people at each stage in the buying cycle, time it took to progress through each step, new content, incentive or other tactic, new communication channel introduced into the mix etc.; B2C marketers: lifetime customer revenue for every customer, purchase frequency, average time from opt-in to first purchase and from first to second purchase, a scoring model etc.); Content (inventory: content piece name/ stage in buying cycle it’s being used/ who is consuming?/ how often accessed or downloaded this year or time period/ action needed - update, promote, educate, retire; think about content in terms of three considerations: Format - white papers, webinars, videos; Channel - email, social media, SMS; Buying cycle phases - interested, educated, lapsed); Engagement (how well marketers are communicating with contacts, customers and prospects separately; if that is the case, consider initiating an “early reactivation” Holistic Marketing Management
program that would “listen” for early signs of disengagement, fostering interactions with those contacts; consider taping the power of behavioral marketing to deliver more relevant content); Technology and Skills (current use of marketing department’s digital platform as well as marketers’ skill levels in each of these areas; continuous education for staying on top of both industry trends and technology enhancements); Mobile Marketing (how mobile-engaged is company’s audience; processes in place to capture telephone numbers; how engaged is company’s mobile app audience etc.; mobile worksheet: mobile email experience/ email performance, desktop vs. mobile/ preferred mobile device types); Social Media (processes and resources in place to listen, evaluate and respond to social conversations; encouraging customers to share their experience on social media; using social to drive database growth; social campaigns of the marketing team aligned with other team members’ initiatives ; adding advertising tools that enable marketers to connect with prospects that meet certain key criteria; striking the right balance between promotional and nonpromotional posts); ▪ to sidestepping a few mistakes marketers commonly make when performing a self-evaluation (a list courtesy of Rich Wilson, creative director at Big Scary Cranium): not thinking about overall goals; neglecting to tie features to goals; ignoring the metrics that matter; underestimating company’s database; overlooking the customer’s buying process; not testing assumptions. Within this framework allow us to also note that right at the beginning of December this year significant mistakes made in the process of realizing digital marketing success were highlighted, such as: lack of audience understanding, lack of planning and focus, unrealistic expectations, unrealistic budgeting, too many social media platforms, forgetting the importance of content and of mobile, forgetting to measure results, using old-school SEO (not providing valuable content and non-creating natural inbound and outbound links), failing to use a combination of offline and online marketing strategies. Today, when print advertising includes digital marketing information, and multilevel campaign not only reach consumers but connect with them on a deeper level, marketers are challenged to reflect both the brand and consumer interest, by developing digital marketing practices accordingly. (Moyers, 2015) In what concerns Mobile Marketing area, let us note that this year, according to eMarketer’s first-ever estimates of mobile phone messaging app usage around the world, nearly 93 million people in Central and Eastern Europe will use such apps at least monthly (up 49.3% over 2014 usage levels), this being the highest growth rate of any region in the world. Central and Eastern Europe region is also characterized by the second-fastest-growing mobile phone internet market overall, with a 16.3% increase in users this year. (eMarketer, 2015) On the other hand, with respect to Content area, it is worth underlining that according to a recent report from Apester (based on data from over 250 million monthly page views, engagements, and social media shares of content from major online publishers), which examined which types of content were most often shared on male-orientated websites compared with female-oriented websites, men are more likely to share online content pieces that are shorter in Holistic Marketing Management
length, have the potential to spark debate, and are about timely topics. This analysis also found among others that content pieces with a high number of shares on the male-orientated sites tended to ask debatable questions and/or include controversial opinion-driven commentary. (Nanji, 2015) Another recent report (based on data from an ongoing survey of thousands of Internet users in 34 countries) from GlobalWebIndex (Nanji, 2015) found that men and women are equally likely to own a tablet (44% of each group say they do), 44% of global online adults age 16-64 saying they own a tablet, but only 70% of tablet owners saying they have been online using their device in the past month (compared with 92% of desktop/laptop owners in the past month and 83% of smartphone owners), older age groups leading for tablet ownership. From “Manipulated” to “Manipurated” According to the opinion expressed on Jul 1, 2012 by a Forbes Contributor, Nir Eyal (Lecturer in Marketing at the Stanford Graduate School of Business; blogger about the intersection of psychology, technology, and business at NirAndFar.com; founder of two startups; advisor to several Bay Area companies and incubators), we have all experienced manipulation, which is a designed experience crafted to change behavior, all those involved in the consumer web industry being in the manipulation business. Eyal cited the famed game creator and professor Ian Bogost, who called the wave of habit-forming technologies the “cigarette of this century” and warned of its dangers. Eyal also offered a “Manipulation Matrix” (as a simple decision support tool), which seeks to help you answer not the question, “Can I hook users?” but “Should I attempt to?” Also other two questions to ask are needed in order to use this matrix: “Will I use the product myself?” “Will the product help users materially improve their lives?” (Eyal, 2012)
Figure no. 1: Manipulation Matrix Source: EYAL, Nir - The Art of Manipulation, Jul 1, 2012, http://techcrunch.com/2012/07/01/the-art-ofmanipulation/
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On December 1, 2015, Daniel Lemin, digital marketing and online reputation strategist (at Convince & Convert), published his book entitled “MANIPURATED”. (Lemin, 2015) Lemin explained clearly that amazing businesses can be permanently damaged with a few bad reviews, managing a reputation online requiring skills and tactics that are not always intuitive to business owners. This book authored by Lemin, “Manipurated”, is considered a manifesto for business owners struggling against an online ratings and reviews industry that is holding their businesses hostage through manipulative practices. (manipurated.com) Next day, on December 02, 2015, MarketingProfs revealed that Lemin was invited by Kerry O'Shea Gorgone (instructional design manager of enterprise training at MarketingProfs; hosts and producer of the weekly Marketing Smarts podcast) to a challenging conversation to Marketing Smarts about online reviews and ratings (episode brought by Experian Marketing Services). This conversation revealed among others that: negative comments must be seen as helpful feedback rather than as unjustified whining; to avoid a bad review, make it easy to get in touch with you and fix the problem first; no response is the worst response to a negative review, just ensure that your customers know you care and you’re just looking for relief; follow the money, because there’s money to be made with fake reviews. (O'Shea Gorgone, 2015)
Digital marketers, challenged to create an integrated marketing experience across multiple channels. The Big Five Capabilities to support digital marketing operations However or whenever customers decide to interact with companies’ brands, marketers have to be ready to offer them a seamless experience, and in today’s data-driven marketing world that means to create an integrated marketing experience across multiple channels, and – pay attention - with a personal touch. Email, Display Advertising, Social, Direct Mail, Mobile, SEO (Organic Search) are already usual marketing channels (of course, in order to get your message across various touchpoints, print advertising, telemarketing, tradeshows, and broadcast may also be effective), the most effective channels varying by industry. (Bedgood, 2015) The market leader in omnichannel customer experience (CX) and contact center solutions in the cloud and on-premises, Genesys, (eBook, 2015) recommends six best practices for a seamless omnichannel customer experience (its Customer Experience Platform powering optimal customer journeys consistently across all touchpoints, channels and interactions to turn customers into brand advocates): Design (identify your target customer segments & what matters to each of them; baseline the current customer journey for each segment; prioritize your focus & map out the “to be” customer journey) ; Implementation (use context; identify the customer experience (cx) & operational metrics to measure success; adjust “the 3rs” - resources, routing and reporting - to operationalize the experience). Just take a look at the “big picture” of how “Genesys delivers a seamless omnichannel customer experience”:
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Figure no. 2: Genesys delivers a seamless omnichannel customer experience Source: Genesis - Best practices for a seamless omnichannel customer experience, eBook, 2015, retrieved from: http://www.genesys.com/about-genesys/resources/best-practices-for-a-seamless-omnichannel-customer-experience, 12/4/2015
And allow us to consider that within this framework it is the proper time and place for remembering â&#x20AC;&#x153;The Big Five Capabilities to support digital marketing operationsâ&#x20AC;? according to the vision exposed by McKinsey&Companyâ&#x20AC;&#x2122;s representatives in July 2015, (Edelman and Heller, 2015) as shown in the figure below:
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Figure no. 3: The Big Five Capabilities to support digital marketing operations Source: EDELMAN, David and HELLER, Jason - How digital marketing operations can transform busines, McKinsey & Company, McKinsey Digital July 2015, p. 3.
And as a conclusion… Indeed, as the above mentioned McKinsey&Company’s representatives concluded: “… it’s never been more important to use data to map customers’ DNA, understand exactly what they want, and then take those insights to develop and deliver a superior (and flawless) customer experience”.
References NEGRICEA, Costel Iliuta & PURCAREA, Ioan Matei, 2015. "Digital Marketer: Facing Digital Marketing Opportunities, “Holistic Marketing Management” Journal, vol. 5(3), pages 20-25. BUGHIN, Jacques, HOLLEY, Andy, and MELLBYE, Anette - Cracking the digital code: McKinsey Global Survey results, September 2015, retrieved from: http://www.mckinsey.com/Insights/Business_Technology/Cracking_the_digital_code?cid=digita l-eml-alt-mip-mck-oth-1509, 9/26/2015 Silverpop - Ultimate guide to assessing your digital marketing program, Silverpop, an IBM company, retrieved from: http://aml.com.au/downloads/dm_resources/Digital-MarketingAssessment-Ebook-Silverpop.pdf, 11/9/2015 MOYERS, Stephen - The 11 Biggest Mistakes Entrepreneurs Make With Digital Marketing, December 8, 2015, retrieved from: http://www.marketingprofs.com/opinions/2015/28989/thebiggest-mistakes-entrepreneurs-make-with-digital-marketing#ixzz3tqV1GCX9, 12/9/2015 eMarketer - Central & Eastern Europe Is World's Fastest-Growing Mobile Messaging Market, Dec 8, 2015, retrieved from: http://www.emarketer.com/Article/Central-Eastern-Europe-WorldsFastest-Growing-Mobile-Messaging-Market/1013312, 12/8/2015 NANJI, Ayaz - Content Types Men Share Most, December 8, 2015, retrieved from: http://www.marketingprofs.com/charts/2015/28995/content-types-men-sharemost#ixzz3tqVKiz7c, 12/9/2015 NANJI, Ayaz - Tablet Ownership by Age, Gender, and Income, December 2, 2015, retrieved from: http://www.marketingprofs.com/charts/2015/28943/tablet-ownership-by-age-gender-andincome#ixzz3tB5WjWh9, 12/2/2015 Holistic Marketing Management
EYAL, Nir - The Art of Manipulation, Jul 2, 2012, http://www.forbes.com/sites/stevemorgan/2015/12/13/j-p-morgan-boa-citi-and-wells-spending1-5-billion-to-battle-cyber-crime/, 12/14/2015 LEMIN, Daniel - Manipurated: How Business Owners Can Fight Fraudulent Online Ratings and Reviews, December 1, 2015, Quill Driver Books MANIPURATED, http://www.manipurated.com/ O'SHEA GORGONE, Kerry - When Your Reputation Is on the Line (and Online): 'Manipurated' Author Lemin on Marketing Smarts [Podcast], December 02, 2015, retrived from: http://www.marketingprofs.com/podcasts/2015/28944/online-reviews-daniel-lemin-marketingsmarts#ixzz3tB6DDCCy, 12/2/2015 BEDGOOD, Larisa - Did You Know Multi-Channel Customers Spend 3-4 Times More? Hereâ&#x20AC;&#x2122;s 6 Ways to Get on Board! , November 20, 2015, retrieved from: http://customerthink.com/didyou-know-multi-channel-customers-spend-3-4-times-more-heres-6-ways-to-get-on-board/, 12/4/2015 Genesis - Best practices for a seamless omnichannel customer experience, eBook, 2015, retrieved from: http://www.genesys.com/about-genesys/resources/best-practices-for-a-seamlessomnichannel-customer-experience, 12/4/2015 EDELMAN, David and HELLER, Jason - How digital marketing operations can transform business , McKinsey & Company, McKinsey Digital July 2015, pp. 3, 6.
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Failings in the Management of World Affairs
Andrew KILNER Abstract This paper is a sequel to the previous one (HMM, Volume 5, Issue 2, 2015) evaluating possible improvements in the management of companies and national economic affairs. It extends the analysis to consider international problems which have now come to dominate the world scene. Keywords: Management Excellence; National Economic Affairs; International Problems JEL Classification: M10; M14; F10; F20; F33; F42; F50; Q50
Background In the Management Excellence (ME) book of 2010** there was already a chapter devoted to this topic. In classical management process fashion it was based in turn on the key elements of leading, organizing, controlling and planning. It thus identified weaknesses in the conduct of our leaders which were often due to the inefficient political systems in place or to organizations constructed in ways which led to ineffectiveness of action and inability to pursue even a modest amount of planning. Similarly it highlighted the lack of controls in crucial matters of financial transactions, trade etc. Within the book were established lists of problems needing to be addressed categorised under the headings of: A. Issues for International Action B. Issues for Individual (developed) countries This list available on the link http://resappmanexcell.homestead.com/Major_Issues.pdf is attached as an Appendix to this paper and serves as a basis for further and updated analysis as follows.
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Major Issues in 2015 It has become convenient to group these under three main headings which will be discussed in turn. 1. Economic & Social Two basic causes were at the root of our problems and they failed to be controlled by relevant organizations as cited below. Firstly the financial crisis triggered off by the subprime scandal of 2007/8 not mastered by the likes of the IMF, Federal Reserve, EIB, EU until several years later, and even then by preferentially saving the banking institutions and the assets of the rich at the expense of imposed austerity measures on citizens and small firms. Secondly globalization which having originally brought the benefits of variety and lower prices, was allowed by the WTO and EU to go too far thus harming the productive economies of western nations just trying to recover from the financial crisis. The combination of the two above factors has brought increasing levels of citizen poverty to every country-even those like Germany & Poland who were able to maintain some growth in national indicators like GNP during the recessions elsewhere. These poorer classes have naturally reduced their consumer demand and seek ever lower prices which, coupled with competition from the increased number of global suppliers, heavily cut down company margins and discourages investment in conventional goods. The explosive situation in the French pork, beef and milk sectors is a good illustration. Unfortunately our leaders seem unable to understand this basic situation still 'hoping' for recovery in growth and employment - even though the majority of new ventures which do create some growth tend to destroy more jobs in other sectors than they themselves create. Catering for the new poor who seek lowest cost services (car sharing, flat rental, autocars etc.) seems to be a profitable activity for many entrepreneurs but these will seriously reduce the return on past infrastructure investment made by traditional companies in sectors like hotels and railways. The EU had proposed massive new investments in infrastructure etc. but how are these to be funded as most nations are running deficits and companies are finding other less risky but non value creating destinations for their funds (TV publicity, financial dealings etc.) Furthermore, much infrastructure investment has tended to go into facilities for amusement or office type projects based on past expansion forecasts now unlikely to be realized.
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In conclusion, national and EU politicians have to become realistic and admit that future prosperity is limited - and that is not yet counting the demands of the environmental and geopolitical issues discussed below. However, as we all know, refusing to be optimistic and able to solve all problems has not been a recipe for winning elections! 2. Environmental Despite so much recent evidence, there are still many people who say global warming and its various effects on climate, are just perennial fluctuations rather than structural problems which need urgent attention. At the other extreme, numerous famous scientists like Frank Fenner said that it was already too late to reverse the situation in 2010 and the substantial population increases would accelerate the oncoming disasters. To these has to be added the subsequent tendency to withdraw from nuclear power following the Fukushima accident. It is hard to place specific blame on our lack of action during so many years as countries have naturally been seeking to improve their economies since the period of the end of the second world war and are now hoping to agree to a targetted programme at the COP21 conference in December 2015. However what can be criticized is again their unrealistic optimism in that people will be willing to give up various aspirations like acquiring cars, that governments will give up available natural resources like lignite, shale gas which enhance their competitiveness, and that the huge necessary funds can be found to pay for the transition (as at time of writing even the COP21 organizers are short of money!). 3. Geopolitical This is the area receiving most current attention because of the large number of conflicts and killings taking place all over the world. There are now 50 million displaced refugees and ,in financial terms, costing almost 15% of generated national product. Of course conflicts have always been part of world history because of man's desire for power, territory and wealth and on a much larger scale during the two world wars. What seems to be different now is that instead of one global conflict we have a large number of smaller ones. Most of these are not started by invasions and declarations of war, but by internal rebellions often based on the laudable aims of democracy and freedom from corruption and therefore outside the outmoded scope of resolution by the United Nations, the main body existing for this purpose. New and different methods have therefore to be devised for dealing with them. Two specific cases will be selected for discussion.
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a) Syria. The time for action was at the beginning when Assad started killing peaceful demonstrators in the streets. Because of Russian blockage of military action, serious efforts should have been made to persuade President Poutine to have this stopped, firstly in a friendly way but eventually by threats to arm the rebels. Later on another opportunity presented itself namely enforcing a no fly zone for Assad's bombers by missiles on US warships off the coast. Receiving no help from us one cannot blame the rebels accepting assistance from the islamists who were subsequently dominated by Daech fanatics which has led to them causing havoc all over the middle east. With no UN or US action, the burden in terms of refugees has fallen on the EU with the naively incorporated idealistic principles which had been conceived at the time of its creation. b) Ukraine. This is in some ways the reverse of the Syrian case. Following the Maidan revolution of 2014 it was essential to pacify the feelings of the eastern regions by promising them more autonomy or perhaps even a form of federalism on the Belgian pattern. The EU should have more strongly pushed Kiev in this direction, which could perhaps have also included Crimea and thus avoided the Russian annexation. In the event, some response to the Russian move was essential and stopping the delivery of the two French built warships was quite appropriate albeit at a considerable financial cost. The NATO exercises in countries near the Russian border were also appropriate (in contrast to their subsequent shameful decision to allow the Turks to re-awaken their conflict against the Kurdsour only effective ground fighters against Daech). However the EU formulated ban on exports of consumer products was stupid as it mostly affected innocent Russian people and also western producers particularly of food items, who were already having a difficult time. In the longer term, this has permanently lost us important markets as Russian producers are effectively starting to fill the gap. Conclusions In reading this brief review the conclusion has to be that "things are running away from us". Little has improved since our book of 2010, much criminal activity is continuing or getting worse (corruption, drug trafficking...) and serious new problems have arisen. True that the financial crises seem to have been mastered and Greece saved for the moment but most world economies (including the previously applauded BRICS) are in bad shape so that unemployment and poverty levels are increasing. New conflicts are adding to the misery of millions of people who, if they manage to avoid injury, face living in destroyed cities unlikely to ever be rebuilt because no funds will be available. Capital, more and more in the hands of the rich, is rather flowing to non-risky ventures like TV sport or exotic infrastructures. All this while population in poor countries (especially Africa) is expected to greatly increase adding to problems of climate, air pollution, food/water shortages etc.
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What has happened in recent years is that many national problems have now become international and we lack effective international organizations to deal with them. In Europe we created the EU but not altogether on a sound basis: unlike the USA states too many countries with widely different internal situations. As criticized in the ME book, the EU has given us little protection from external threats but pushed so much to increase competition among internal members that whole sectors of production are now being destroyed. Its policies have accentuated the gap between Germany with large trade surpluses and most other countries with deficits. Their most recent directives regarding allocation of refugees does not take sufficient account that Germany needing manpower is in a quite different situation to most of the others (especially those in the south & east), who are much poorer with high unemployment levels where therefore the migrants would not face a bright future. And at the end of the day, how many of the 50 million world refugees is the UE supposed to take? It will not be easy to correct these shortcomings in the short to medium term but this is essential if the optimistic (80% in France), hopes of the young are to have any chance of ever being realized. **http://www.businessexpertpress.com/books/achieving-excellencemanagement-identifyingand-learning-bad-practices Copyright A. Kilner, September 2015
Appendix MAJOR NATIONAL & INTERNATIONAL ISSUES (adapted from the management excellence book of Prof. Kilner published by business expert press** in 2010) Issues for International Action The following issues go across national frontiers and can only be resolved by cooperation between countries: Political instability, terrorism, organized crime, drugs Financial instability & speculation requiring controls Pollution, climate change, and natural disasters Water shortage, waste disposal Holistic Marketing Management
Future energy sources: oil, nuclear, renewables, others Raw materials & basic foodstuffs (shortages, rising prices) Extreme poverty & health factors in less developed nations Issues for Individual (developed) countries The importance of the following issues varies by country, and each country can, to a large extent, search for its own solutions: Corruption, black economy & taxation shortfall Political systems needing modification to increase voter interest and reduce abstentions or conflicts Controlling the economy by sole use of the interest rates parameter Declining standard of living (and spending power) for all but the very rich Unemployment (particularly youth & seniors) Undesirable jobs with few applicants Altering demographics & retirement funding problems Immigration: pressures, needs, social integration Security against local crime Delocalization of manufacturing and services Trade balance: increasing imports and declining exports What to produce & develop? Hence appropriate education and training requirements Budget deficits impacting spending on health, education, housing **http://www.businessexpertpress.com/books/achieving-excellencemanagement-identifyingand-learning-bad-practices (Copyright 2010, A. Kilner)
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Cultural entrepreneurship. The importance of developing cultural competences within the framework of resource mobilization Dr. Irina PURCĂREA, ESC Rennes School of Business, France
Abstract A greater understanding of the relationship between cultural issues and entrepreneurial activity is important because of its implication for national and regional development and growth. This paper looks at cultural entrepreneurship from the perspective of the cultural competences a cultural entrepreneur needs to master with the view to grow their venture, with a special focus on the process of resource mobilization. It begins with providing an overview of literature on cultural entrepreneurship, then moves on to present the types of capital involved in resource mobilization and presents interesting insight on the way cultural entrepreneurs are able to use their competences in acquiring resources and helping their venture grow. Keywords: cultural entrepreneurship, competences, resources JEL: M 13
Introduction The essence of culture is creativity and creative economies have the potential to foster social inclusion, cultural diversity and human development. Entrepreneurship represents one key element which contributes to the sustainable development of the creative industries. At the same time, differences in entrepreneurial activity among countries, and regions within those countries, are persistent and cannot be fully explained by institutional and economic variables, so that a substantial part of these differences has been attributed to culture. When referring to cultural entrepreneurship research, there is a recent trend to view culture less in terms of ‘public constraints’ and rather as ‘public resources’ that they can draw on in order to devise strategies in line with their own interests or those of their organization (Weber & Dacin, 2011; Swidler, 2001). The concept of cultural entrepreneurship Cultural beliefs and attitudes are passed on from generation to generation through vertical (parent and child), horizontal (peers and media) or oblique (teachers and similar sources) Holistic Marketing Management
transmission channels. The role of the cultural entrepreneur is to coordinate such beliefs and fuse them into a coherent doctrine that others can share and develop and in this way make change effective (Mokyr, 2013). Useful in understanding cultural entrepreneur is how the entrepreneur concept has travelled from economics to sociology (Fine, 2001). Focault (1991) uses the notion of governmentality to trace how neo-liberalism’s emphasis on markets and active individualism interlace to enhance entrepreneurial subjectivities. Du Gay (1996) refers to the application of entrepreneurial outlooks to the problems of everyday life. Swedberg (2006) views „cultural entrepreneurship” as „the carrying out of a novel combination that results in something new and appreciated in the cultural sphere’’. Researchers point to the importance of focusing on cultural entrepreneurship and entrepreneurial stories particularly in the context of the earliest stages of entrepreneurial venture formation, when entrepreneurs begin to form a picture of who they are, what they want to do, why they are qualified and why they think they will succeed. Aldrich and Fiol (1994, cited in Lounsbury and Glynn, 2001) emphasize the role of culture in entrepreneurship stating that: „founders [of new ventures] who utilize encompassing symbolic language and behaviors will gain competitive legitimacy more quickly than others”. And, as Lounsbury and Glynn (2001) suggest, one mechanism that can be employed is that of storytelling. Lounsbury and Glynn (2001) suggest that stories are an integral part of the construction of new ventures, acquisition of needed capital and generation of new wealth, thus defining cultural entrepreneurship as „ the process of storytelling that mediates between extant stocks of entrepreneurial resources and subsequent capital acquisition and wealth creation”. Using crowdfunding mechanisms, entrepreneurs construct storylines that communicate not only static information, but also establish an interactive narrative through specific online-related features (Frydrych et al., 2014). The video pitch and text narrative provided by the entrepreneur appear to be the main tools for conveying a compelling narrative. Social and cultural capital Ellmeier (2003) observes that cultural entrepreneurship is a practice that occurs „sans capital”. The ability to acquire the right finances in a proper way is one of the attributes of a good cultural entrepreneur. To construct ‘buzz’ relatively sans economic capital, cultural entrepreneurs draw on different combinations of social, cultural, symbolic capital (Bourdieu, 1997). Social capital refers to social contacts and networks that that offer recognition and benefits of shared resources. For some cultural industries, social capital can be perceived as the primary form for cultural entrepreneurs (Scott, 2012). Bourdieu’s (1986) influential work explores how various forms of capital reproduce social structures. The notion of cultural entrepreneurship introduced by Bourdieu (1997) includes dispositions such as ways of speaking and acting that are Holistic Marketing Management
manifestation of historically transmitted cultural knowledge. The concept points to the fact that certain views on human capital ignore how the education system and parental nurturing reproduce social structures. Symbolic capital denotes distinctions such as accumulated prestige, reputation, honour and fame (Bourdieu, 1991). Cultural entrepreneurship requires mobilization and conversion of alternative capitals to construct ‚buzz’. „Social capital creates opportunities for the music producer to convert cultural capital manifest in recordings into symbolic and economic capital” (Scott , 2012) . The circumstances in which people operate influence whether they qualify as cultural entrepreneurs or not, meaning that cultural conditions matter. In the USA for example, it might be much easier to appeal for private support than in the European continent. European cultural entrepreneurship will, therefore, have a different character and may make for a different narrative. Entrepreneur competence and resources build up According to Aageson (2008), cultural entrepreneurs are: […] risk takers, change agents and resourceful visionaries who generate revenue from innovative and sustainable cultural enterprises that enhance livelihood and create cultural value for both creative producers and consumers of cultural services and products […]. [They] do have common characteristics around the globe that include being passionate, visionary, innovative, risk takers, net-workers and leaders. Skilled cultural action is crucial for entrepreneurs in order to attract resources to develop and grow their new organization. A number of researchers argue that the qualities entrepreneurs bring to new ventures largely depend on resources built up through their education and experience (Mosey and Wright, 2007; Rae and Carswell, 2001; Serneels, 2008). The concept of cultural capital highlights how supportive parents transfer positive values regarding education and hard work, to make learning an enjoyable experience for their children. In doing so, they influence their children’s own perception of the value of education evident in the positive development of their knowledge, skills and attitudes (human capital). Überbacher et al. (2015) developed a theoretical model of how entrepreneurs develop cultural competences in the market domains where they situate their new organizations. The model was based on the findings of their longitudinal, exploratory case study of how Frederic – their case entrepreneur – created and grew the corporate venture BluePublic in the public sector outsourcing market in a large European country. The model presents two processes of adaptive sensemaking – an approval-driven sensemaking process and an autonomy-driven sensemaking process – as necessary for entrepreneurs to Holistic Marketing Management
develop their cultural skills. Gaining cultural awareness or becoming aware of one’s external environment is a key component of adaptive sensemaking and necessary for competent cultural entrepreneurship.
Fig.1: Theoretical Model: How Entrepreneurs Develop Cultural Competences. Source: Überbacher et al. , 2015
Recognizing cultural resources invloves awareness of unexpected similarities between the company and the cultural frames and expectations of public sector authorities and awareness of unexpected contrasts between the company and competing private sector companies. Recognizing cultural constraints, a component of the entrepreneur’s broader ‘autonomy-driven sensemaking’, creates awareness of unexpected contrasts between the company and the cultural frames and expectations of public sector authorities as well as a joint realization of unexpected similarities between the company and competing private sector companies. ‘Calibrating’ symbolic enactments refer to better adapting and tuning the crafted business identity claims to the contingencies of the cultural context of the targeted public sector authorities. Two concepts appear here: symbolic coupling and symbolic decoupling. Symbolic coupling refers to the gradual process of more tightly ‘aligning’ the symbolic representation of the company with enabling public sector frames via mobilization of analogies to create Holistic Marketing Management
similarities between aspects of the company and public sector frames as well emphasizing the way in which the company differentiates from competitors. Symbolic decoupling on the other hand, aims at avoiding recognized cultural constraints by symbolically â&#x20AC;&#x2DC;shieldingâ&#x20AC;&#x2122; the venture from cultural frames that threatened the viability of the company.
Fig. 2: Process model of cultural entrepreneurship Source: Lounsbury and Glynn, 2001
Lounsbury and Glynn (2001) consider two important types of capital acquisition, namely resource capital and institutional capital. They provide a process model of cultural entrepreneurship (fig.2) that looks at how entrepreneurs must tell stories about their stock of capital in order to identify and legitimate their new ventures which will enable enable the acquisition of new capital and, ultimately, the generation of wealth. The authors view resource capital as a broad category that encompasses a variety of more specific kinds of capital such as technological capital, financial capital, human capital, intellectual capital, and social capital that are important ingredients for the success of both entrepreneurs and established organizations. On the other hand, institutional-level capital as consisting of three main industry-level elements: industry legitimacy (the degree to which the products and services offered by organizations in a given industry are accepted as appropriate and useful by broader publics), industry norms and rules, and industry infrastructure.
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Conclusion The aim of our paper has been to investigate on the importance of building entrepreneur’s cultural competences in attracting resources to grow their businesses. Becoming a skilled cultural operator accordingly means that entrepreneurs should gradually become aware and deepen their understanding of context-specific cultural resources, opportunities and constraints, and to translate their evolved understanding into updated and better calibrated strategic actions. The model proposed by Überbacher et al. (2015) emphasizes the critical role of ‘decoupling’ as entrepreneurs create, locate and grow new organizations in their external cultural environments. Decoupling – and coupling– thus constitute key symbolic competences that entrepreneurs may need to develop and master. As Lounsbury and Glynn (2001) pointed out, „entrepreneurs need to learn to become skilled cultural operatives who can develop stories about who they are and how their resources or ideas will lead to future benefits for consumers and society”. The same authors advocate for detailed ethnographic studies of entrepreneurs at early conception stages for a better understanding of how some entrepreneurs are able to make it to the stage of formal organizational creation while others fall by the wayside, showing that processes of cultural entrepreneurship may be a particularly key element in revealing what separates potential ‘winners’ from ‘losers.’ References Denis Frydrych, Adam J. Bock, Tony Kinder & Benjamin Koeck (2014), Exploring entrepreneurial legitimacy in reward-based crowdfunding, Venture Capital: An International Journal of Entrepreneurial Finance, 16:3, 247-269, DOI: 10.1080/13691066.2014.916512 Du Gay, P. (1996). Consumption and Identity at Work. Sage, London Foucault, M. (1991). Governmentality. In: Burchell, G., Gordon, C., Miller, P. (Eds.), The Foucault Effect: Studies in Governmentality. Harvester Wheatsheaf, Hemel Hempstead, UK, pp. 87–104. Ellmeier, A. (2003). Cultural entrepreneurialism: on the changing relationship between the arts, culture and employment. International Journal of Cultural Policy 9 (1), 3–16. Bourdieu, P. (1991). Language and Symbolic Power. Harvard University Press, Cambridge, MA. Swedberg, R. (2006). The cultural entrepreneur and the creative industries: beginning in Vienna. Journal of Cultural Economy 30 (4), 243–261
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