Hype Cycle for Emerging Technologies in Digital Marketing

Businesses today have been extensively integrated with digitization, promising convergence of people and businesses, while disrupting existing business models. A new age of digital marketing has arrived where extensive campaigns are pushing new products through platforms such as websites, e-mails, apps and social networks. With over seven billion people and businesses, and a millions of technologies bringing a new world together, digital marketing plays a major role in empowering businesses with the much-needed edge to thrive with the competition.

Digital Business Development Path

 Rapid change is fueling digital marketing. Within the last decade we have seen technology giants driving businesses such as Facebook and Twitter. Mobile marketing and advertising marketers have begun focusing on consistent and contextual without being interruptive.  Change is the one thing that is constant, with changes being made faster than ever before. However, impact due to the change is highly dependent on it’s temporal context. For example, wearable technology like Google glass has gained a lot of news coverage when in fact, Steve Mann had already developed a similar device, ‘EyeTap digital Eye Glass’ in 1999. This is a prime example showcasing the importance of analyzing the visibility of a product with time for organizations to capitalize its technological and business resources to make the best marketing sense.

Hype Cycle

 The Hype Cycle is a branded graphical tool developed and used by IT research and advisory firm Gartner for representing the maturity, adoption and social application of specific technologies (See Figure 1). The hype cycle map how technologies move through different phases of hype and indicate whether certain technologies and products are good for the company in short term and long term. Marketers need to understand how and when to derive value from a product and also when to dispose of it when new things come along.

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Fig 1: Five Phases of the Hype Cycle (source: Gartner)

What’s new in 2014?

Marketing Talent Communities: Marketplaces have come up that support organizations and marketers to find and hire qualified freelance talent on-demand. A lot of time is saved in the process of recruitment of a variety of qualified writers, designers, strategists, data-analysts etc. Bloomberg Institute is one such example which financial employers approach to hire talented college students through a normalized screening test called the Bloomberg Aptitude Test.

Marketing Technology Integrators: The scope of digital marketing has expanded broadly. Digital marketers can’t claim to address the digital marketing needs solely through offering new Web Content and Experience Management or Portal platforms. As a marketer, the time and attention required to solving technological solutions takes time away from their focus on target customer. Thus, marketing organizations are hiring services and products that design and implement software and increasingly integration-oriented implementation data solutions.

Transactional Ads: This is an example trying to connect marketing with productivity and conversion. Online ad units that are activated by gestures, present a secure transaction or coupon. This reduces the time consumption of the viewer by enabling a person to request information or to buy the advertised product without leaving the webpage on which the ad appears. If old companies can figure out a way to associate more with transactions, they can boost their chance of surviving in the online market. [3]

Quantified self: It is a movement to incorporate technology into data acquisition aspects of a person’s daily life in terms of inputs, states and performance. Applications or services on mobiles and wearable technology that provide self-tracking analytics contribute to self-knowledge through self-tracking with technology. Biometrics have been identified that people never knew existed making data collection cheaper and more convenient than ever before. Recently, companies like Google and Zomato have begun to use location data of a user’s phone to recommend suggestions to buy things based on the proximity to various shopping outlets.

Social co-browsing: Collaboratively sharing of the web space with one or more parties from a social network, regardless of the physical locations of the partners. In real-time, multi-user experience isn’t just slapped on top of an application, it’s directly built into the core experience. Companies would have to redesign their user experience to support social co-browsing so as to provide a natural extension of for users to communicate and interact to enrich their real-time, collaborative experience. [4]

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Future Implications

Most of the technologies at the peak of their hype cycles today, will plateau in terms of productivity within the next two years. The window to gain competitive advantage in this fast-paced environment is limited. Thus companies must adapt themselves for speed, agility and rapid customer response.

Content marketing can be very resource intensive. Organization should use marketing talent communities and agencies as an escape valve for demand as a way to scale elastically as demand comes online.  The in-source and outsourced roles must be carefully mixed together in order to optimize productivity. Organizations should appoint strong leadership to ensure the success of their elaborate content marketing strategy.

Common view of digital-savvy customers should be kept in focus to ensure tight coordination of marketing activities in sync with the changing customer needs and reactions. Emerging architectures of digital marketing hubs should be carefully reviewed periodically to best utilize resources for most productive outcome.

With increase in social-marketing hype, the social marketing objects should be tied to the corporate vision of the companies. Analysis of how each social marketing activity will support that goal and provide a high return of investment. Gain from adapting to emergent technologies can lead to savings on media from improved efficiency or lift in sales from improved effectiveness of a company’s budget.

B2B management investments should be made into multi-channel, taking advantage of accessible areas in data mining, segmentation and behavioral analytics. Useful analytic results should be incorporated to the marketing strategy to further boost performance.

Criticism about Hype Cycle

Several disadvantages of Hype Cycle have been brought to light. Firstly, it is very difficult to objectively estimate the current location of a technology in its hype cycle. Secondly, terms such as ‘disillusionment’ and ‘enlightenment’ are misleading for people as they give a wrong idea about how exactly and to what extent a technology can be used for an organization. Also, there is no mention of how a technology transitions between phases and what all factors influence the shift. Lastly, several technologies are heavily correlated in terms of advancement through the different phases. The hype cycle does explain the cause-effect relationships between technologies and their impact on acceleration of technology progress and generation of excessive hype for a product.

References:

http://www.gartner.com/newsroom/id/2819918

http://www.theregister.co.uk/2013/03/02/steve_mann_on_google_glass/

http://techcrunch.com/2010/03/07/the-rise-of-transactional-advertising/

https://goinstant.com/blog/collaborative-customer-interfaces-and-social-cobrowsing

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Will m-Commerce lead the way for e-Commerce in India?

As of now, India has 10 % population penetration in internet usage. This is in stark contrast to the global average of 35%, and much below the average of the developed world at 78%. Though the population base is big enough for a thriving e-commerce industry, India’s e-commerce potential at the moment is limited by a number of factors:

  • Infrastructure system – India still is a cash driven economy with very low availability of the credit systems. This is a bottleneck for many of the consumers willing to purchase goods online, and is the primary reason for India’s unique jugaad of payment via Cash on Delivery. However, many large players are wary of such a system that is manpower intensive, and requires time to collect the cash from the consumer’s doorstep.
  • Slow internet speed – India still has less than 5% broadband penetration among its internet users, compared to 30% globally. The slow net speed results in several payment gateways rejecting transactions because of the time lag in connecting to the server and getting confirmation. This results in poor user experience and discourages further attempts at shopping online.
  • Poor logistics infrastructure – For most of the e-commerce companies selling merchandise, the delivery of the good to the end mile is still critical. This requires excellent logistics and transportation infrastructure which has been a glaring concern in India.

To address such concerns, the government recently launched the ambitious National Broadband Plan with an outlay of USD 12 billion, which aims to bring 160 million households under broadband connection by 2016. This would take broadband penetration to that of the developed countries, opening up significant opportunities in sectors like education, business, entertainment and e-governance. However, it is feared that if we miss out on the intervening years, the Internet revolution could just bypass India.

This opens up an excellent platform for the private sector to contribute by pitching in and leveraging the strong telecom infrastructure already in place. With more than 67 million smartphones in the country and a ubiquitous 3G connectivity, high-speed mobile internet penetration far outpaces the broadband penetration. Though high speed fiber network is still important for organizations and institutions, mobile internet speed is sufficient for individual consumers – the main segment of customers in e-commerce.

Just as mobile telephony overtook the Indian wired telephone network thus revolutionizing voice-communication and sms, jugaad innovations in m-commerce are paving the way for a similar transformation in e-commerce. Mobile payments such as Airtel money and mobile to mobile transfer can circumvent the need for a credit card payment which has been so far unavailable to the mass public. Mobile e-commerce or m-commerce can really help capture the Fortune at the bottom of the pyramid. Already 45 % of the online users in India access so using only their mobile and contribute close to 3% of the e-commerce revenues. M-commerce is well established and trusted for small payments such as downloading ringtone and music. This suggests some trust is already established in the virtual mobile payment system.

Critics of m-commerce point to the small screen size of the handsets and suggest it would fail to gain momentum. However this argument fails to stand ground. Myntra is a leading online fashion portal and earlier had only 4% of its revenue coming in from mobile. However, they realized the advantage m-commerce offered in capturing the demand of Tier 2 cities and small town India, and after they redesigned their website to suit mobile screens they witnessed explosive growth in revenues generated from mobile purchases – they were able to garner 20% of their revenue from m-commerce last year. Additionally, 70 % of Indian e-commerce is for travel bookings and classifieds, which can be easily transferred to a small screen. The travel bus ticketing giant RedBus, attributes their success to presence in the mobile segment via apps that consumers quoted were its differentiating factors offering ease and convenience.

The m-commerce also offers other benefits such as geo-contextual shopping experience which is unmatched by any other media. Zomato and Justdial have shown leaps and bounds in their growth since they launched apps that use a consumer’s GPS position for better targeting of services.

To sum up, m-commerce is ready to take India’s e-commerce success to new heights. However it needs government and public support. The government should offer significant incentives such as promotion of FDI in e-commerce and telecom. High pricing of the 3G spectrum, and the failure to share 3G spectrum across competitors will only hamper India’s e-commerce growth story, and is bad for the consumer. Nonetheless, with year-on-year growth of 57%, m-commerce stares ahead for an exciting run.


Satvik Dudeja is a PGP1 student at IIM Ahmedabad, and a member of the Consult Club. 

Much ado about Sachets

In the FMCG industry, packaging of products has always been the most important factor driving consumer behaviour and fuelling marketing initiatives. A change in packaging technology always brings about a paradigm change in consumer patterns. Tetra Pak, a Swedish company introduced a flexible packaging product in the 1950s and forever changed the packaging of liquid consumables.

The next breakthrough in flexible-packaging occurred in 1983. C.K. Ranganathan, a Madras based entrepreneur started selling shampoo in small packets (later called ‘sachet’, meaning small bag in French), instead of bottles, to make it affordable to the poor. These sachets were small, flexible, and inexpensive. Ranganathan’s firm, now known as Cavin Kare, started on a shoestring investment of $300 became the market leader in shampoo in the Indian rural market by the early 1990s.

There was a fortune to be explored at the bottom of the pyramid. Even today, around 4 billion of the global population of 7 billion are living on a budget of less than $2 per day. These potential consumers are hungry to improve the quality of their lives by using new technology. With this in view, MNCs like Unilever and Johnson & Johnson entered the sachet market through India in the mid-1990s. The advent of the new millennium already saw 60% of shampoo sales in India in the form of sachets (see Exhibit 1 for complete evolution). Early in the 2000s, P&G, the largest consumer goods company globally started selling their flagship shampoo brand – Pantene in sachets in South-east Asia and India. The sachet market was no longer constrained to India. It was a huge opportunity for all companies to grow their businesses across categories in developing markets. Industry bigwigs like Unilever, P&G, Nestle, Kraft, ITC, L’Oreal and others started selling everything from food & beverages to laundry products in the form of sachets.

Exhibit 1: Evolution of Sachets in the Hair Care Market Segment

Himanshu FMCG 1

This large-scale explosion of sachets was great news for consumers. The minimum price payable for a premium product like Olay had gone down from $10 for a tube to Rs.10 for a sachet. Sachets had opened a new plethora of products for consumers worldwide. The developing markets witnessed an unprecedented growth in their demand for consumer goods in the new millennium. Nearly 90% of this growth was driven by demand for sachets (Exhibit 2 shows the approximate number of sachet users in India in the 2000s).

Himanshu FMCG 2

(Data as per IRI’s 2011 FMCG review)

For manufacturing companies, the picture was not so rosy. For small companies like Cavin Kare, which had introduced the world to the concept of sachet, it was now difficult to compete with MNCs like Unilever and P&G. They could not leverage scale across products like the MNCs. While Cavin Kare cannot manage more than 5 variants in their sachet SKUs (Stock Keeping Units), Unilever has more than 100 sachet SKU variants. As a result of fierce competition, MNCs emerged on top with growing market shares (See Exhibit 3 for total sachet market share split in India).

Himanshu FMCG 3

(Data as per IRI’s 2011 FMCG review)

For the conglomerates like Unilever and P&G, sales volumes had increased multifold. However, this had come at the cost of diminishing profits. Large scale proliferation of sachets had led to price wars in almost every market category. Returning to the shampoo industry example, the typical gross margin for any shampoo making company is around 70% – 80% for bottles. This number comes down to almost 20% – 30% for sachets. Therefore, the increase in profits is not proportional to the increase in sales for any manufacturer. Further, price wars in almost every category have led to companies selling their product at a loss in order to grow market share and maintain marketing momentum. When P&G launched the Rs.3 Pantene sachet, Unilever immediately slashed the price of their Clear sachet to Re.1. Cavin Kare responded by launching a 50 paise Chik shampoo sachet. Consequently, profit margins keep going down with increase in sales. Further, manufacturing costs also have risen with companies vying for higher service levels and increased manufacturing capacity. Almost every company today faces the higher profitability vs. greater market share conundrum.

The cost pressure has led to new capabilities in supply chain excellence for companies to reduce costs. Relatively new concepts, such as ‘Shelf Back Design’, may be the path forward. The idea is to design and operate the supply chain “from the shelf back”, delivering whatever it takes to win the consumer (see Exhibit 4 for an example). However, this design requires a lot of flexibility and responsiveness, which may limit the cost reduction potential of the design.

Himanshu FMCG 4

Overall, sachets have been instrumental in bringing about 2 key changes in the consumer goods industry. Consumer base has increased multifold on account of the packaging innovation while manufacturing firms been forced to look out for more innovative supply chain solutions to compete for cost. Technological and operational improvements at every link of the supply chain is now the need of the hour to sustain profitability.

Himanshu Pandey is a PGP1 student at IIM Ahmedabad, and a member of the Consult Club. Prior to joining IIM-A, he worked with Procter & Gamble in the Supply Chain function as a capacity planner and project manager. He holds a Bachelors degree in Aerospace Engineering from IIT Bombay.

Non-Profit Organizations, Telemarketers, and Accountability

Over the past few years, I had been receiving calls from various Non-Profit Organizations (NPOs) requesting for donations to help their cause. Feeling a sense of compassion, I would gladly write a cheque and be overwhelmed by the thought of about how I had contributed towards the well-being of humankind. However, after writing a cheque to a particular NPO, I started receiving phone calls every week from the same organization. Assuming that the NPO knew that I was not a billionaire, I began to wonder – do they have the resources to make such redundant efforts?

Economies of Scale: An illustration

The money that these NPOs need to carry out activities comes primarily through either government grants or household and corporate donations. I will focus only on household donations in this article.

 If an NPO wishes to solicit a credible donation amount it needs to make a large number of telephone calls. For that, it needs to incur infrastructural costs, work-force costs, training costs and acquire the necessary phones and related equipment. Suppose an NPO manages to make 10,000 calls a day garnering Rs. 50,000 after a mammoth effort. What if someone else could do this with ease? Professional Telemarketer Fundraisers – Bingo!

A telemarketing company (TC) can make use of economies of scale, professional staff, experience and a huge infrastructure to approach donors efficiently. Of course, it would not be affiliated with a single NPO: Affiliation with multiple NPOs would result in economies of scale. If the TC manages to make 50,000 phone calls a day and raise Rs. 250,000, it might take a cut of Rs. 150,000 to cover its operating expenses and earn profit for its shareholders. A maximum of Rs. 100,000 (40% of the donated amount) goes to the NPOs.

NPOs get more funds and the TC’s business makes hay. Everyone is happy – Really? What about the poor donor who was naive in thinking that 70-80% of his contribution would go in aiding the actual cause? Feeling deceived, cheated, angry or foolish?

If a smart donor dared to ask the telemarketer about the amount of contribution that will eventually reach the charity, the telemarketer would smartly tell the donor exactly what he needs to hear: 80-90% of the contribution amount.

The Industry

Though telemarketing companies have been in existence since the 1970s, they started flourishing over the last decade and a half due to the telecom revolution in India, a wide range of products that people do not need to buy, and a huge growth in the number of new NPOs. A report published in March 2012 by the Central Statistic Office (CSO) shows that the number of NPO registrations increased from 5.5 lakhs during 1980s to 11.22 lakhs in 1990s and 11.35 lakhs during 2000s. A number of these NPOs tie up with TCs for fundraising activities. The TCs usually charge a substantial percentage of the donated funds in lieu of the services provided. Owing to the booming growth of NPOs in India, the scenario seems just ripe for these companies to start exploiting unaware, emotional donors. The mushrooming of TCs catering to many sectors and their excessive phone calls to customers led TRAI to implement a ‘Do Not Disturb’ registry of phone subscribers who cannot be approached by telemarketers in the absence of permission from the subscriber.

Non-Profit Accountability

NPOs in India usually overspend on overheads. A 2006-07 government report revealed that out of $2.15 billion in foreign aid received, around $680 million was used for organizational expenses. Also, the credibility of NPOs, particularly those which allow its patrons to avail tax deductions, has come under severe public scrutiny. There have been allegations of money laundering and fund-misappropriation against some well-known trusts. Lack of transparency in public disclosure of the accounts, and non-standard accounting practices have allowed NPOs to be a part of such malpractices. The government has been able to probe and take action against just a few hundred trusts out of millions that exist.

Repercussions

  • The donors get irked due to repeated calls from numerous telemarketers representing various NPOs. This problem is accentuated by mismanagement of records while outsourcing to telemarketing companies and absence of due diligence by the TCs.
  • Because of misappropriation of funds, the compassionate donors feel betrayed and lose motivation to contribute to genuine NPOs.
  • Lastly, because of misappropriation of funds by NPOs and money laundering, the government loses tax revenue.

Action

Greater regulatory oversight and public disclosure of flow of assets in this sector is required. Policy changes should be aimed at achieving the same:

  • The TC should be required to disclose its name and the contractual agreement with the NPO to the prospective donor.
  • Feedback should be taken from the patron on the frequency of donations he wishes to make in a year and this feedback should be strictly taken into account before making repeated calls.
  • Ideally, no minimum contribution amount should be defined by the NPOs. A person should be free to make a contribution of any amount to any cause he wishes.
  • NPOs’ should be forced to disclose their accounts to the public using standard accounting practices, and their compensation to TCs should be unambiguously mentioned in their communication.

“Taru Agrawal is a PGP1 student at IIM Ahmedabad and a member of the Consult Club. He is a graduate from IIT Kanpur in Mechanical Engineering, and worked at Deutsche Bank before joining IIM Ahmedabad.”

The Cause Related Marketing Bandwagon in FMCG

FMCG GrowthThere has been strong growth in the Indian FMCG market over the years. The sector’s revenue reported a CAGR of 17.3% over 2006-2011. Consequently, today’s marketplace is flooded with brands in all product categories of the FMCG sector. With ever-increasing competition, a company is expected to do business in such a way that it stands for not just the financial returns, but for comprehensive social and economic returns to the society at large. Gillete’ Soldier for Women, Dove’s Real beauty sketches, Proctor & Gamble’s Thank you mom and Tata Tea’s Jaago re are a few examples of attempts made by leading corporations to do well financially by doing good socially. These campaigns are launched under a marketing strategy called ‘Cause-related Marketing’.

What is cause related marketing?

Cause related marketing is a marketing strategy wherein a product/brand/company is marketed in association with a ‘cause’. This identified cause is generally an issue that is prevailing in customers’ mindset. It can be social like child welfare, environmental like wildlife conservation or even abstract like uniqueness etc. Cause marketing campaign is used by companies strategically to create brand differentiation by enhancing brand equity and credibility. It can be employed by a company to achieve a number of marketing objectives, mainly, visibility, increased sales, repeat purchases, increased brand recognition, broadened customer base etc.

Now, more than ever, the companies are realizing the potential of aligning themselves with a cause. Earlier it was used mostly to increase sales and profits, but now it is used as a great brand positioning contrivance as it works on vitalizing brand equity and enhancing corporate image with sound economic and community impacts.

Cause-related marketing: differentiated from CSR

Cause Related Marketing and Corporate Social Responsibility (CSR) are often used interchangeably but there exists a vast difference between the two. CSR is primarily the philanthropic activities carried out by the company, generally in domains of social welfare or environment. The essential objective is to project the company as a responsible corporation resulting in positive brand image in eyes of consumer. Cause Related Marketing on the other hand is a marketing strategy done with a sole objective of building profit through goodwill. It is done by associating with a designated cause and is characterized as a profit-motivated giving. Unlike CSR, it is more targeted approach and a less selfless philanthropy.

Cause marketing practices

Cause related marketing is a flexible tool and can be employed in varied ways. Some of the common forms adopted by FMCG firms, of providing assistance to cause organisations are:

Transactional programs: This is the classic form of assistance to cause wherein a company donates a part of every sale of the affiliated product to the cause organisation. Many examples can be cited for this practice, a popular one being ITC’s INR 4 donation for the education of economically underprivileged students for every 4 Classmate notebooks sold.

Propaganda programs: Under these programs, the cause is promoted and contribution, in forms other than monetary, is made by the company. An example is Tata Tea’s Jaago Re campaign where the company promoted anti-corruption and encouraged the youth to vote. 

Time frame of the program

Cause marketing campaigns can be either strategic (long-term) or tactical (short-term). Long-term campaigns are generally found to help with enhancing brand loyalty, improving brand image and lowering apprehensions regarding company’s motivation. Proctor & Gamble’s Shiksha campaign has been contributing to the cause of child education since 2004. However, short-term associations are preferred by the companies at times, as they call for limited costs and bigger impact advantages. Lifebuoy’s ‘Roti Reminder’ at the Kumbh Mela 2013, which promoted the cause of hygiene, falls in this category.

Choice of cause

The fit between the selected cause and the profile of the company is an important variable in determining its impact.  For instance, Maggi’ Atta noodles promoting Taste bhi health bhi has high cause-company coherence, with the cause being health. In contrast Coca-Cola’s Arctic Home has rather low coherence. Generally, high coherence impedes the apprehensions arising in customer’s cognition and hence mobilizing the purchase intent due to higher urge to benefit the cause.

Epilogue

Cause related marketing fills a crucial void in society by giving the individuals an opportunity to contribute to the causes they feel for. If executed creatively, by carefully pairing cause and company, it can emerge as a rare and strong marketing contrivance which would converge social and corporate interests, favouring both equally.

Arushie Mangla is a PGP1 student at IIM Ahmedabad and a member of the Consult Club. She is a graduate from IIT Delhi in Civil Engineering with a minor area specialization in Business Management.