Month: November 2010

Alexander Mak in his blog wrote about the convergence between reality and gaming, giving specific reference to the Call of Duty franchise that now has products that are Call of Duty branded that are not video games.
Indeed, this trend is getting quite common! If one checks electronics stores, it is quite easy to find “gamer” branded materials. There are gamer mice, keyboard, towers, processors, graphics cards, monitors, fans, Drinks, and I kid you not, Glasses.
The intent for these products is clear: to tap into the gamer market, a market that traditionally has not been reached to, due to the draconian societal stigma against “gamers”. Nowadays things are changing though, and gamers are now being treated just like any other social group that is vulnerable to powerful consumerist promotion. Hooray! Equality for all.
In all seriousness though, the gamer market is one with potential, that could potentially be taped by companies who know what theyre doing. They are a difficult market however, as they have needs and wants that are different from the traditional markets.
Now excuse me, gotta finish Black Ops’ campaign.

For a company that works on a value-driven approach, there is no customer type better than the advocate. The advocate is the customer that not only buys the product and stays loyal to but, but they also go out of their way to promote the product to their friends, or even to strangers. We’ve all dealt with advocates, perhaps you are an advocate yourself. There are the “apple fanboys/girls” who go around telling everyone to get macs and ipods and iphones. There are the “Xbox fanboy/girls” who can’t wait to repeat for the thousandth time that the Playstation and the Wii are inferior choices. There are the Honda enthusiasts who just won’t ever suggest a car that isn’t Honda. The bottom line is, it’s simply impossible to not deal with advocates in at least a weekly basis.
Therefore, it is easily observable that advocates are everywhere. But it is important for marketers to notice that it is much easier for certain products to generate advocates than others. Usually, advocates appear to defend products that are inherently more expensive and that involve larger opportunity costs. An example would be a car, or a computer, since both of them require a relatively large financial investment, when compared to more mundane things, like cereal. It is very hard to see someone arguing over cereal. Another thing that tends to incentivize (i love this word) advocacy is when there is little utility gained from having a second item of that same type. Again, let’s talk about laptops. There is very little to gain from having 2 laptops. Therefore, it is irrational for someone deciding between an HP and an Acer laptop to choose both, because they would gain very little extra utility. Therefore, the choice is more important. Contrast that with shirts, where you can easily buy both shirts you like, since apparently wearing the same shirt everyday is frowned upon.

Nonetheless, it is possible to create reasons for customers to become advocates. If you add a social value to your product, it drives customers to advocacy. For example, if you promote your product as environmentally friendly, and your customers are environment enthusiasts, chances are that there will be some extra advocates popping up, telling their friends to get this new fancy green product.

Go forth and reproduce, advocates!

Advertisement placement is an art in the sense that they have to reach the largest number of members of the target audience as possible for the least amount of money spent possible. A traditional example is, if one wishes to advertise their new male cologne, advertisers probably would not line up to publish their ads on Cosmo, but probably would be eager to place their ads in car magazines. It is always important for marketers to take into consideration the demographic component of the places they advertise at. If there is a billboard that for some reason is seen mostly by female youth, that billboard should only be used for products that targets this target market, right?
The next logical step to this targeted advertisement strategy is web pages, including social networks like Facebook. It is already a quite big success, as the deep pockets of Google (through AdSense) and Facebook (through targeted advertisements), and yet it is still a growing industry. How they work is quite simple. Google’s ad network detects your browsing history through your use of google products, and through your stored cookies. Then it compares your usage habits with the adverts that companies pay to be in their database. Then, it displays the ad that is most similar to your web usage habits. That way, if you are a user that uses google to search for new laptops, Google knows that it should show you ads for HP, Apple and Lenovo. There wouldn’t be much chance of it showing you completely irrelevant ads, like ads for refrigerators. Facebook’s work in a similar fashion, except that Facebook knows your intimate details even more, since you decided to share them with Facebook.
The upside of such targeted advertisement is that you receive focused advertisement that has greater chance to interest you. The downside is that your demographic information is (possibly) stored in a database somewhere.
Ethics aside, it is unquestionable that this field of targeted advertisement will become the main form of advertisement in the next coming year. It will be gone those days where perfectly healthy people are bombarded by prescription drug ads. Welcome the new internet overlords.

Chris Neels has posted an interested blog article about Corporate Social Responsibility . He argues that companies shouldn’t be doing things that are good for the community, because that hurts profit maximizing behaviour, and because of that, people are worse off. Additionally, he says that the BoD of a company shouldn’t be using shareholder’s money for Charity because that’s immoral and inefficient.

This will address his conclusions, which I find potentially faulty:
* Firstly, companies don’t do these projects because they are nice. They do that because they have never deviated from their profit-maximizing objective. CSR deviates from profit and efficiency maximization as much as marketing, which is to say, it doesn’t. CSR makes the company look better and more socially responsible when compared to other companies. When you live in an age where people, yes, are expecting companies to be more responsible, engaging in this social responsibility acts as a complement to the companies’ marketing scheme, since it increases awareness about the company and positions the company as one that is so close to their customers, that they directly help them

* The second claim is that because companies are not as focused in maximizing profits, people are worse off. This is fallacious in many levels. Firstly, profit maximization does not necessarily lead to the well-being of the population. Just take a look at monopolies. Competition makes people better off, not the bottom line for shareholders. Secondly, profit disregards externalities and non-monetary effects. Most companies do produce negative externalities, which means that the company is making everyone else worse off just so they can become better off themselves. There is nothing bad to the community if companies are ‘trying’ to offset such externalities. Is money being diverted from product research? Maybe. But money is also saved, because CSR works as marketing.

Are companies less efficient than charities at doing public good? Yes. Which is why most of the time companies prefer to donate to those charities. Sometimes though, they wish to grab some marketing attention out of CSR, and there is nothing immoral or inefficient about it. It’s simply uniting the useful with the nice. Companies look nice, people feel better, everyone wins!