Page Title

Sample Pages

What are the reasons cage-free chicken eggs sell more even with higher price? -

The age is coming when emotions will be sold and bought.

Pepsi, the archrival of Coca Cola, launched the 'Pepsi Challenge' in the 1970s in U.S. It was a blind test that let the consumers taste few different brands of colas without revealing their brands and later have them pick their favorites. While this test was being conducted on the streets, shopping malls and in broadcasting, the participants always picked up Pepsi. Inspired by the incredible results, Pepsi expanded their campaign worldwide in the 1980s.

Coca Cola was hard-hit and in 1981, their market share plummeted to less than 24% for the first time in their history. Coca Cola sensed the possible crisis at hand and they developed a new cola that has sweeter taste than Pepsi through much consumer market research. With a colossal budget, they launched New Coke on April 23rd, 1985. But it was an utter failure.

The sales of New Coke were dismal and consumers protested with "Give me back my old Coke!" Ultimately, Coca Cola stopped the production of New Coke and announced the re-release of Coke Classic on July 11th 1985. New Coke is considered to be the first in the list of Brand Failures, authored by Matt Haig which compiled 100 failed cases of big brands.

So what was the biggest mistake Coca Cola made? To U.S. consumers, Coke wasn't just soft drink, it was a nostalgic icon associated with camping, sports, first loves, parties, etc. which was an important emotional asset of their lives. But because of the competitor's event that featured blindfolding and picking only based on the taste, Coca Cola has forgotten the significant value of emotions.

As society develops, marketing communication structure keeps evolving. In Figure 1, 'Three Stages of Social Development', it shows the underlying reason of how society enters from the Industrial Age to the Information Age and then to the Emotional Age.

The spring water in the deeper part of the forest is pollution free and environmentally friendly material yet anyone and any animal can come and drink it for free. Let's say that one day, Mr. Kim takes the water from this spring and stores it in his big pot at home and drinks from it. Just as the picture shows (The Three Stages of Social Development), there was an added labor to the material which then becomes the product and can be priced. The production was fulfilled but it must now be exchangeable with other products such as straw shoes or silk from Mr. Park and Mr. Lee as well as satisfying 'informational condition for exchange'. There are three qualifying conditions. First, there has to be recognition that product exists; second, there has to be understanding for the way product is consumed; and third, there has to be an agreement for the value of using this product. Again, the informational condition that accompanies the exchange becomes a necessity for commodity value production. This is the part from the second stage, Communication labor producing the Commodity. The spring water now then becomes 'Mr. Kim's' spring water as a commodity.

Then, the competitors will also enter the realm, Mr. Hong, Mr. Kwon, Mr. Koo all jumping into the pool. This is the juncture when the value creation is necessary that takes it beyond the generality of the product. The producer now will work with emotional labor to draw out emotion labor (time, wealth, passion, etc.) from the consumers. Mr. Kim will talk about the legend associated with the spring water in meetings and personal encounters and will share the miraculous story of how a terminally-ill patient survived by drinking only the spring water which could induce emotional labor from consumers. Eventually, Mr. Kim's water now will become a brand, 'Clear Water from Jiri Mount'.

The producer (corporation) wants an increased production for profit maximization and such efforts of physical labor will formulate industrial revolution to lead into eventual industrial society. Then the efforts to increase the communication labor will bring about the information society. (Digital Media Revolution and Communication Labor, Joo-Hwan Kim, Page 59) Then they will enter into the emotional society for efficiency of the emotional labor.

Rolf Jensen, former CEO of Copenhagen Institute of Future Studies and Futurist, predicts that the coming age to be centered around emotion in his book Dream Society as he illustrates with Denmark's Egg market.

More than 50% of the eggs for Denmark's Egg Industry are produced by cage-free chickens. These eggs by these chickens are 15 to 20% more expensive but the consumers willingly pay higher prices.

In fact, the consumers would not know how these eggs are produced in reality or what is better nutritionally. But the consumers are purchasing the story that makes them feel like sensitive and environmentally friendly people who love animals by purchasing these eggs.

With the existing marketing tools and advertising strategy, a corporation cannot survive in the Emotional Age. With social changes, marketing strategy also needs to adopt new development and modifications. Hence the recommended solution is the new marketing strategy of iWOM. This is far more aggressive when compared to the advertising marketing of the past; it is not merely a one-way communication but an interactive exchange of experiences with a concept of support in the background. Only then, the emotional marketing that is suitable for the Emotional Age will be accomplished and the profitability of the corporation could be maximized.

MarCom: Abbreviated for Marketing Communications.

iWOM: Integrated Word Of Mouth

From Traditional Marketing Mix of 4P and 4C into New Marketing Mix of 4E

Evangelist. Enthusiasm. Experience. Exchange - New Marketing Mix 4E's

Donald Calne, neurologist, stated the differences between the reason and emotion, "The essential difference between emotion and reason is that emotion leads to action while reason leads to conclusions." If we could link this to purchasing, it would mean that marketing mix strategy needs new developments and revisions that fit the social changes.

In the manufacturer-oriented Industrial Age, Jerome McCarthy popularized the marketing concept of the 4P's (Product, Price, Place, Promotion) in late 1950s which was enough to explain the marketing strategy.

However, in 1960s with Information Age emerging through consumer oriented movement arrives, Philip Kotler published a new theory, 4C (Customer Benefits, Cost to Customer, Convenience, Communication). For 10 years thereafter, we have been broken in by this Integrated Marketing Communication (IMC) to implement the 4C's.

But now, to embrace the new age that considers emotion, a new marketing mix that will support iWOM (Integrated Word Of Mouth) is necessary. We recommend 4E's: Evangelist, Enthusiasm, Experience and Exchange in a new Marketing Mix.

This construct highlights evangelists as the engine of corporation growth, enthusiasm as efforts to inspire customers, experience as more important than ever in current flooding of advertisements, and exchange as a factor that generates experience between consumers in a support format.

1. Evangelist-sales force without wages

Traditional marketers have been worshipping 20% of customers as VIP or VVIP who occupy 80% of their revenues and were hung up on special management program developments for this special group.

However, there is one crucial element that is missing which is the networking influence of consumers which is not very detectable in the customer database. We need to move our focus onto evangelists who perhaps did not make a purchase right away yet defends and embraces the brand for their networks to make a purchasing decision.

Joseph M. Juran who applied the Pareto Principle to economics asserted through the theory of Vital Few and Trivial Many that the quality oriented management is necessary because 20% produces 80% of the results. This theory that was implemented widely in industrial and Information Age basically states that the management resources should be poured into the high 20%. This implies that only the qualified 20% of the products are eligible enough to be distributed to the consumers.

However, there are limitations on application of this theory for this current Emotional Age. Pareto Principles is an ideal that came from the older generation when few, isolated consumers with a variety of needs formed powerful purchasing networks.

Let's look at an example from an Amazon.com, the epitome of the continuously growing corporation in the Emotional Age. It is easy to assume that the main source of Amazon's revenue comes from the high 20% yet a significant portion of the revenue is generated from the 80% of the books that few people are looking for.

In its early stages of entering into the market, Netflix (DVD rental firm) was predicted to fail by many market analysts yet tasted success. Their success is greatly contributed to the fact that hard to find DVDs and videos at massive video chains such as Blockbuster or Hollywood Video were more available for purchase at Netflix. Along with products that serve the niche to bring in customers intertwined with similar sentiments and the generation of unique forums, Netflix was able to create WOM with higher influences. Initially, they were few in their customer base but they become the group that leads the flock. (The Long Tail, Chris Anderson)

Now then, how should we change our strategy? The existing customer assessment standards of Recency, Frequency, Monetary (RFM) based on IMC should now be discarded and the loyalty index should now be the core criteria for evangelists.

The criteria for evaluating evangelists are their recommendation rate and the psychological and practical loyalty index. These evangelists with high loyalty index are major contributors because they not only purchase products but they are also sales force without wages.

As Frederick F. Reichheld said earlier, Evangelism does not result in immediate success in the corporate world. Nevertheless, without customer evangelism, highly profitable growth cannot be expected.

2. Bring enthusiasm to customers

Enthusiasm is a measuring stick that has evolved from price to cost for assessing the value of a brand in the Emotional Age. There are two big areas of enthusiasm: situational enthusiasm which inspires the customers and the enthusiasm generated by the product itself.

This is what I have experienced when I was touring in South Africa. I was on a Harley Davidson tour from Cape Town to Stellenbosch and I completely fell in love with my Harley. The powerful sound of the Harley's heartbeat made my heart tremble, and the fellowship I shared with others who were crazy about the same thing I was, drove me to the apex of enthusiasm for the product and emotional enthusiasm for the situation.

But even if there is no product enthusiasm factor in the product like the Harley Davidson, there still is a way. Just concentrate on all the emotional efforts to transform the brand into an enthusiasm point through product sponsored concerts, exhibitions, museum grand openings, etc.

Viral marketing, a marketing tactic based on how viruses propagate, could also be utilized when the product lacks the enthusiasm factors to create a "buzz."

3. Experience that sells the value of the brand

It's not easy for the brand to survive in the current days filled with inundated advertisements. Even if the uniqueness caught the attentions of consumers, there are limitations on expressing the true value of the brand only with visual appeal. Customers want the Experience over the concept of Place and Convenience.

Now this is not just a simple experience and a designed customer experience would be more of a fitting description. For instance, we can certainly pay for a vending machine coffee with a quarter ($0.25) yet we willingly pay up to $5.00 for pay for a cup of coffee at Starbucks.

What is the difference here? Starbucks not only provide coffee to the consumers but delivers the whole experience of cool interior, music and modern lifestyle to achieve their branding successfully. In other words, drinking coffee at Starbucks means that the person has purchased not only the product but also the value of the brand at the same time.

4. Exchange that calls for social diffusion

Think of advertisement by many of the corporate giants now; think of their online/offline promotions and public relations. The underlying assumption here is that if the consumers are satisfied then they have this blind faith that they will automatically carry on with WOM to other customers but this is unrealistic in the real world.

From iWOM perspective, the significant customer experiences to remain in that consumer alone are very inefficient. For the Emotional Age to convey information, then there needs to capability to exchange consumer experiences overcoming the communication based on general product advertising of Information Age. Also, it must be remembered that consumer experiences will be broader and stronger with exchanging of their experience from the other consumers who feel the same way.

Just look at the example of Dongsung Art Hall at Daegu that exclusively plays art movies. Dongsung Art Hall re-opened on September of 2004 as Art Movie Exclusive Theater and witnessed the remarkable increase of the movie audiences up to ten times. But to think that a change in concept produced these results is hasty half truth. In the initial periods of their changes, the theater still had very casual attendance.

During this time, on February of 2005, one audience opened up a community called 'Dongsung Artholics' in one of the internet portal sites. As people flocked to this community, it generated increase in attendance up to ten times in short time. Likewise, the source of audience increase at Dongsung Art Hall was a result of one person exchanging his experiences and this is the core of the social diffusion.

Furthermore, another good example is the church. Church is where the congregation members share their spiritual experiences and maximize the experience. To the new believers, the existing believers undertake the role of bridge. The following are the special traits of the church.

First, Voluntary and Autonomous Management

Second, System that enables the efficient exchange of their experiences.

Third, Open Network

For this reason, effective business marketing should break the mold from generic promotion or communication format to build relationship but rather build exchange of interactive communication with supporting format by customers sharing unique experiences which will be absolutely essential.