Big data, social media, sustainability and emerging markets were important topics at the 2014 Marketing and Innovation Symposium, hosted by Professor Stefan Stremersch’s Erasmus Centre for Marketing and Innovation (ECMI).
In plenary and parallel sessions, thought leaders from business and academia shared their experiences, research, best practices and predictions for the future.
A report of the plenary sessions:
While big data enables a broad range of new business opportunities, data quality and compression pose significant challenges.
Big data has a sizable impact on inventory management in the grocery retail industry, said Frans Muller, CEO of Delhaize, a multinational food retailer. For example, Tesco has half a billion less products on the shelf than it had ten years ago, thanks to big data analysis. As a result, they have 50 million pounds more working capital per year. Still, Muller warns: “If data quality is not 100 per cent, you’re in trouble.”
“Government-to-consumer is a growing business,” said Anil Menon, Deputy Chief Globalization Officer at Cisco, a multinational in networking equipment. As aging, urbanisation and technological developments reshape the global landscape, he foresees the emergence of urban services markets, which will be worth 2 billion dollars by 2020. For example, big data analysis will allow for new management practices in city parking. Today, 40 per cent of all city traffic consists of car drivers looking for a place to park, while many parking spaces are actually vacant. By equipping parking spaces with sensors and connecting them to the internet, new ways of parking and price-setting will emerge. Companies and governments will increasingly cooperate. Menon: “Mayors are the next presidents of the world; they are the new CEOs of urban services.”
“It’s not about big data, it’s about data compression,” emphasises Eric Bradlow, Professor of Marketing, Statistics and Education at the Wharton School, University of Pennsylvania. Looking for ways to compress data without losing value, he argues that big data’s business question is: “When is data old?” Getting rid of old data is an important challenge.
Social media have become indispensable marketing sites, but old media like television remain important advertising channels.
“If you don’t have the best service on social, you have no licence to operate,” stated Martijn van der Zee, Senior Vice President E-commerce at KLM Royal Dutch Airlines. KLM has a social media staff of 130, answering 35,000 questions per week in ten different languages. The speed with which customers are served has increased starkly in recent years. “From the moment you expose yourself to your customers, you are pressured to solve problems,” Van der Zee said. In that way, social has a positive impact on business operations as well. For companies, it’s also important to think about what content they post on social media. “Create content that people want to share,” Van der Zee recommends. If you do this well, you might get lucky: KLM has become a big brand in Malaysia through social media, even though the airline has only one destination there. KLM keeps an open mind about new media. “We don’t know what technology is coming next, but whatever it is: embrace it. Experience has taught us that consumers will accept it immediately.”
Randstad, a Dutch deployment agency, has embraced social media completely, according to its CEO Jacques van den Broek. It uses social media as a source of new candidates and as channels for campaigns. “We can become trending on Twitter in the Netherlands if we want,” Van den Broek said. “The speed with which you can reach a lot of people of amazing.” Alongside marketing, speed is of the essence in other aspects of Randstad’s operations as well. “We screen CVs overnight in India. We deliver in the morning in Europe,” according to Van den Broek. The company is also on the lookout for other opportunities arising from new technologies. Van den Broek: “Randstad has an innovation fund that invests in companies to see what’s out there.”
Although social media are effective marketing channels, we shouldn’t give up on old media just yet, argued Professor Glen Urban, Chairman of Sloan’s MIT Center for Digital Business. A study on the effect of advertising has demonstrated that TV and Facebook advertisements have a significant effect on brand consideration in the US, while search engine advertising in Google doesn’t. Professor Urban: “TV is still effective; social media are effective; and there is some evidence of synergy between them.”
In the coming decades, emerging markets will be an important source of growth. What is more, they are on the verge of a massive expansion into developed markets.
“In the past 40 years, China has been producing for the world,” said Nirmalya Kumar, Director at Tata Group, a multinational conglomerate company encompassing seven business sectors. “In the next 40 years, the world will produce for China.” In addition, he predicts the global rise of Chinese brands in the next ten years. Chinese companies can build upon the expertise they have in production. Kumar: “It’s a misunderstanding that China only produces low-quality products.”
Former Belgian Prime Minister Yves Leterme, who is now Deputy Secretary-General of the OECD, concurred. The economies of China, India and Indonesia are leading in terms of growth and their growing middle classes hold great potential.
Jean-Francois van Boxmeer, CEO of Heineken, stressed the importance of emerging markets as well. 57 per cent of Heineken’s profit and 62 per cent of their sales is already located in emerging markets. In a relatively short period of time, the brewer’s centre of gravity has moved to Mexico, Nigeria and Vietnam – a trend Van Boxmeer doesn’t expect to change anytime soon: “If there are good governance and sun, our market will grow!”
Rob Malcolm, who is on the American Marketing Association’s Board of Directors, illustrated how the whiskey brand Johnny Walker gained popularity in emerging markets. The brand had lost a lot of ground in the late 1990s, but experienced spectacular growth in the ten years thereafter. Malcolm: “Identifying a global ‘truth’ was key: whiskey is not about status but about inspiring progress.” The slogan, “Keep Walking” was translated with respect to each country’s culture.
In a final plenary session on sustainability, chaired by former Dutch Prime Minister Jan Peter Balkenende, Unilever illustrated their sustainable business model, while companies in emerging markets appear to need help from NGOs to innovate sustainably.
According to Unilever’s CEO Paul Polman, the present is characterised by three trends: (1) increased volatility – “the average lifetime of a company is only 18 years;” (2) the consumer is in charge; and (3) abundance has become unsustainable, as the economic crisis demonstrates. “Capitalism is one of the best forms of governance, but we are leaving too many people behind,” Polman argued. “New business models are needed.” Engaging in philanthropy is not enough. “You need a business model with a positive contribution,” according to the CEO. “We take responsibility for whole value chain. From farming to obesity. […] It’s not only corporate social responsibility, it’s also corporate social opportunity.”
Looking at emerging markets, Professor Jagdish Sheth, Chair of Marketing at Goizueta Business School, Emory University, argued that there is much to be done in their attitudes towards the environment. The number of middle class consumers in India and China is increasing rapidly – by 2020, their numbers will add up to nearly one billion middle class consumers. However, “better access to capital and technology will only aggravate the environmental situation,” Professor Sheth argued. “Innovation is admired; marketing is not. No one talks about role of marketing for global sustainability.” NGOs could play a positive role in this: they could partner with companies in emerging markets that want to produce in an innovative and sustainable way.
Annual symposium series
The symposium was the inaugural edition of a bi-annual symposium series organised jointly by the American Marketing Association (AMA) and the European Marketing Academy (EMAC). The next edition of the conference will be held at the Wharton School of the University of Pennsylvania in 2016.