Critical Thinking in Marketing

Thinking about marketing innovation

How to make money from Big Data

Originally posted on Sand Hill- Business Strategy for Software, Cloud and Mobile November 7, 2012

The digitization of business continues apace; every company is challenged by competitors that are leveraging the Internet. The market pressure to invest in disruptive product and service development projects leveraging the cloud is at its highest point ever. Marry this need with new technologies to manage and understand the massive amounts of data that companies are generating, and suddenly there are all kinds of new commercial opportunities. In fact, entirely new business models emerge. Gartner is forecasting technology spending on Big Data to grow to $232 billion by 2016.  And that’s just the tip of the iceberg as it doesn’t even estimate the value-creation opportunity of Big Data.

Leading companies are now moving beyond the challenges of how to make Big Data available in one place for managing it to allowing hundreds or thousands of people to use it in ways that create real business value. Companies have started to understand the data they have and are building strategies around it. Their focus: How can we productize the information and make money from new businesses or services based on it?  

Three ways to generate value out of Big Data

We’ve recently observed leading companies using three main strategies for generating value from their data.

1. Create a business model around a service that helps traditional companies take advantage of their own Big Data

This strategy is especially great for startups. An example is edo interactive, a Silicon Valley company that created a service for credit card companies. edo interactive analyzes consumers’ purchasing patterns residing in the Big Data of its credit card company clients along with what the consumers are doing in real time. As edo observes a consumer buying something at a store, it delivers a digitized discount offer right at the point of the transaction.

Although the credit card companies possess the Big Data, some are currently unable to capitalize on it. So startup edo created a service that consumes Big Data coming from its customers (credit card companies) in a way that the credit card companies want to pay for it as a service. Someday the credit card companies may decide to do this for themselves and thus lower the cost of this service. But until they reach the point of overcoming their legacy operations, they will buy such services from more nimble, innovative startup companies like edo.

2. Aggregate data from various sources and make it available to organizations that want to consume it

New business models are also arising from this data-aggregation strategy, both in for-profit and non-profit organizations. Not all of the models generate revenue, but all generate value for the users of the data information.

Medical Data Vision develops management support software for hospitals and health clinics throughout Japan. MDV offers an evidence-based medicine service that collects and shares medical data from public and private healthcare centers across Japan. MDV aims to improve the quality of medical care by analyzing and sharing medical results with pharmaceutical companies for epidemiological studies, market research and further drug development.

University of Oxford Clinical Trial Service Unit (CTSU) extracts and analyzes data that pertains to the causes, prevention and treatment of premature death and disability worldwide. They study the causes and treatments of chronic illnesses such as cancer, heart disease and strokes. The Oxford CTSU curates many thousands of pieces of information from over half a million volunteers and makes it available anonymously to the worldwide scientific community. Scientists all over the world can then use that data to find out more about the causes of illnesses, the links between the causes and diseases, and hence improve prevention and treatment. To do this, Oxford CTSU had to build a Big Data IT solution to identify, manipulate and extract exactly the data that researchers need and make it available to them within extremely fast timescales.

3. Analyze consumer behavior data to generate revenue from targeted advertising

Social media companies have truly led the charge in commercializing Big Data. Many of them are investing in understanding the behavior of the people using their media and then feeding that behavior data into tailored advertising/promotions and content generation.

Badoo, the world’s largest and fastest growing social network for meeting new people, is a free service that generates its revenues from advertising sales. Badoo is an example of a social media company now using its customer behavior data to generate content targeted at the interests of specific users.

IsCool Entertainment is an online gaming company that created a new business model around Big Data. They analyze which games people like and what they’re doing with online games so they can present targeted advertisements from their customer companies that want to advertise to consumers, as well as shape their product development of new games as advertising platforms. As with all advertising, the more you can advertise to the right people, the more you sell and the more money you make.

Uncovering Big Data opportunities

Until recently, many companies lacked visibility into their Big Data. Either they were unable to capture it or unable to store it. In some companies, the data didn’t exist. Where it did, people often lacked access to it. It was in some kind of rarified data center environment or it was too expensive to get in there and use it in a practical way for the business.

Traditional companies vs. startups

Traditional companies are transitioning their IT to be able to commercialize Big Data opportunities, but startups are leading the way, for sure. They don’t have any kind of legacy IT baggage, so they are able to innovate and create new business models ahead of the curve of the traditional companies.

Traditional companies are realizing they have to get on board now like the startups or they’re going to lose the value of the data that their own business is generating from their standard product lines and services. As I mentioned at the beginning of this article, they need to invest in R&D for a disruptive product and or service leveraging their Big Data. But this is not like a typical IT project where there is an ROI for a certain amount of spend. This is an R&D game where the company determines where there is a market for the potential data service or product, which then helps in the calculation of the appropriate amount to spend on R&D for developing the new product.

A word of caution for someone in a large company who is trying to build a new business unit on a Big Data commercial opportunity or for an entrepreneur launching a new company in this arena: Be sure you marry your vision as a business strategy with the technology strategy.

Tools for capitalizing on Big Data

The new digitized business model generates tons of data, as do new mobile devices. Devices and technologies are now generating data about when and how much time people spend consuming it. Plus transactions of buying online are generating data (what did the consumer buy, how much was she willing to spend, how far in advance did she buy or how long did she wait before buying). We now have information coming from all different angles that didn’t exist before.

Companies need the tools to be able to handle all this data and capitalize on it. edo interactive, the company I mentioned that is delivering a service to credit card companies, is using Actian’s Vectorwise real-time information-management infrastructure. Its high-performance analytic database allows companies to manage Big Data and deliver it either into business intelligence tools or into application services (such as what edo provides).

With the new data types and volume of data, pricing of traditional database solutions is not affordable for small businesses and startups — the companies that are nimble enough to quickly create new business opportunities from Big Data. Vectorwise was built to optimize the Intel x86 chip architecture, making its hardware requirements a fraction of the cost of leading solutions. It’s extremely affordable and ideal for startups, which often change and iterate their applications. (See the SandHill.com article, “Big Data Doesn’t Have to Cost Big Money.”)

Where Big Data commercialization is headed over the next three years

Today we hear a lot of talk about Big Data: “What are we going to do with it? and “How can we get on top of it and commercialize it before our competitors do?” Those conversations will continue through probably the next three to four years. But starting in the next two years, we’ll see the conversation start to shift because organizations will be challenged with the “Big Information” that Big Data is creating.

We’re going to have a lot of information in the future. If we were to collect every piece of information ever generated by every society today, it wouldn’t compare to what we’ll be facing in two to three years. This will change the game to another level of innovation. At that time, we’ll not be focusing just on infrastructure build-out for new business models but, rather, on application development of new analytic products and services for the always-on, anywhere connected consumer.

There will be a new spurt of application and business model development around the gargantuan volume of information. It’s visible on the horizon now.  Around 2015 the market will shift to “Big Information” and application development as the next phase. And as we’re seeing today with efforts to commercialize Big Data opportunities, some companies will be faster and some slower in capitalizing on Big Information app development.

Kevin Cox is vice president of Corporate Marketing at Actian Corporation, a leading analytics database company helping companies tackle Big Data. He previously led leading strategic marketing initiatives for SAP NetWeaver, SAP’s line-of-business marketing and SAP HANA. Earlier he worked for prominent marketing agencies. He founded Ogilvy & Mather Interactive Singapore and the digital arm of Doremus San Francisco. He was named a top digital marketer of 2011 and 2012 by B-to-B, the Magazine for Marketing Strategists.

The conundrum of Big Data: What is the question to the answer you already know?

Originally posted on BtoB- The Magazine for Marketing Strategists October 24, 2012 and in print November 6, 2012

The true challenge of Big Data is not that it’s “big” per se, but that its scope encompasses so many possibilities that marketers can find themselves faced with a form of writer’s block—staring into the endless depths of 0s and 1s wondering where to start and what value lurks in the unfathomable depths of their data. All of the answers held in one large unwieldy collection of data present the marketer with a myriad of choices for value creation and insight. So where to start?

As you begin this journey, it is important to embrace the notion that you can and will be making technology selection decisions. You need to think like a chief technology officer and not accept dead-end answers that a traditional IT department may give you. You’re here to rattle the cages and get some action.

There are two obvious forks in the road with many branches fanning out from there.

First there is the route of insight and analysis. The web log files that you’ve struggled with for years to extract value have suddenly become extremely easy to store and very accessible for analysis. The social media companies overcame these hurdles by creating a whole new technology for storing vast data files, and a whole new generation of database and business information technologies are making it easier than ever to now analyze this information. Social media companies are running their businesses today by analyzing this data to manage customer churn and acquisition, segmentation of offers and purchase propensity. A wealth of information that can be applied to every facet of your business is now available and accessible. And the more digitized your business, the more powerful this data is. Start by supporting all your important decisions with data analysis.

The second route is to create from Big Data totally new “productized” services and business models based on your ability to analyze and execute on the analysis. The world is full of start-ups creating amazing new services on the Internet based on using Big Data. For example, one company is offering credit card companies a service to analyze their card members’ data on the fly and deliver special discounts at the moment they swipe their cards at a store; it’s the rebirth of the coupon. Even in traditional industries, embracing business innovation on the Internet has been critical to thrive. Just look at the media industry’s continuing transition to digital. Who better than marketing knows the customer well enough to play a role of positive disruption?

Let’s face it, the science of marketing is relatively new. Until the development of business intelligence tools, marketing was largely driven by the learned knowledge of the practioner. This learned knowledge is still critically important to strategic decision-making, but now we have so much information it is possible for day-to-day decision-making to be done by nonpractitioners.

It’s never a straight path from point A to B. And it isn’t even a path paved with a clear ROI. You’re embarking into the realm of creative destruction. Your goal isn’t to break even—it’s to build the next killer application. It’s to rejuvenate your somewhat stagnant or settled business into a new paradigm for the 21st century. As you begin this journey, it is important to embrace the idea that you can and will be making technology selection decisions. You need to think like a chief technology officer.

Big Data Kills by a Thousand Cuts

Originally posted on BtoB- The Magazine for Marketing Strategists July 18, 2012.

Death by a thousand cuts was an ancient punishment reserved for heinous crimes such as treason or killing one’s parents. The process involved tying the person to be executed to a wooden frame, usually in a public place, and proceeding to cut off little slices of flesh until the guilty party expired.  Big data has the potential to do just this to your company.  The worst part of it is that you will not even know this is happening to your company until it is too late.

In the world of today, your customers are writing about you and their experiences of your products or services across thousands of different websites, Yelp, Google, Bing, your own Facebook page, your own Youtube channels, your own website feedback forms, win-loss data from your own sales force-you name it.  The big data explosion is coming from the hundreds of millions of transaction and social media engagement channels across the Internet and your own systems that you set up to serve your customers in the first place!

The genie is out of bottle and there’s no retreating from the world of big data.  Before your business has even been contacted, 57% of the purchase decision has already been made –this based on 2011 research from the Marketing Leadership Council of Corporate Executive Board.  Where is all this decision-making happening if you haven’t even met once with this prospective customer?  It’s happening on the Internet.  Prospects are using the myriad web channels to find out just what everyone really thinks of your solutions and forming their own opinions without ever meeting you.

“Well Kevin”, you say, “this is such a bleak picture it just can’t be, we’ve been a customer-centric company for many years- this is how we have grown our business in the first place”.  And you would be correct.  It is a well known fact that companies that listen to their customers win.  “Aberdeen Group, Customer Experience Management: Engaging Loyal Customers to Evangelize Your Brand”  report cites 70% of customer experience management best in class adopters use customer feedback to make strategic decisions. 50% of industry-average organizations and 29% of laggards do this.  This hasn’t changed; it’s just that now this feedback is being posted in a thousand other places than your website.

Businesses today have to embrace big data to really understand the totality of what their customers are experiencing and reporting to out to their networks.  You have to develop strategies for being able to collect all of this feedback in whatever format and bring it together with your own information to have a true 360 degree view of your customer. The truisms on which the most successful businesses have been built stand true, it’s just that the execution of those truism have become much more complicated with the hundreds of new communications channels that we are using in our everyday lives.  Gartner, the world’s leading information technology research and advisory company, estimates that CMOs will be outspending CIOs on IT in the next 5 years, driven by the inexorable rise in on-line business and big data.  With the right big data strategy, instead of a thousand cuts, you could be facing a thousand compliments:-)

Fio do bigode- my experience working in Sao Paulo, Brazil

Dear Colleague,

I wanted to share with you some of my recent experience working in Brazil.

Fio do bigode is a colloquial Portuguese phrase that I learned during a recent assignment leading agribusiness industry marketing in Brazil.  It means “hair of my mustache” and was given to me by the agribusiness industry principal, Claudio Lot, with whom I worked in developing the industry plan.  Claudio himself came from a family farm business and this was what his father would say would do when sealing a deal, making a promise, or swearing an oath.

Instead of a contract, he would pluck a hair from his bushy mustache and offer it as pledge.  It’s an expression of sincerest genuineness and honesty.  It is a phrase that gives some insight into the mind of the agribusiness customer who comes from rural beginnings but now transitions into modern day business.

Agribusiness is a very large part of the Brazilian economy accounting for 25% of national GDP and 37% of the national  workforce.  Brazil is the second largest agriculture producer in the world with 22% share of global production after the USA which produces 50% of global agriculture.  China and Malaysia are distant followers-up with only 5% each of global agriculture production.  Did you know that 85% of the orange juice in the world comes from Brazil?  A Brazilian company just bought Tropicana as they wanted a global brand to help market as they continue to expand.  Brazil is the leading worldwide producer of several other crops that any household counts as essential:  sugar (47% of the world), beef (25%), poultry (41%), coffee  (27%), and soy beans (30%).  Bain & Company estimates that Brazilian agriculture will out grow the USA over the next 35 years.  Why is this such a growth industry in Brazil?  Brazil is a country with lots of land located at exactly the right latitude with abundant water.  Global population and income growth has created a ready export market for Brazil’s abundance.  Agriculture is the national champion industry in Brazil, just as financial services is in the UK, and high technology in the US.  Matter of fact, Brazil is often referred to as the “market basket of the world”.  Brazilian agriculture is also the leading global driver in the development of alternative fuels.  Sugar mills switch to ethanol production based on the market pricing that day and then back again to sugar when  prices push the other direction.  The cellulose materials left over after processing the sugar cane is also used as fuel in electric generation plants.  Did you know that sugar cane produces 6X more ethanol than the process to convert corn?  Scientists have just begun to work on pushing this astonishing productivity figure higher with advanced technology providing for many more years of productivity growth in the agribusiness sector beside just the expanding production of food stuffs.

All of this attention to Brazil’s agribusiness industry has drawn all the major global players to set up shop and complete in Brazil. This in in turn has spawned a massive number of IPOs for family-owned, farms and mill businesses seeking capital to expand operations and step-up to compete globally themselves.  Agribusiness is like the dot com boom of Brazil, only it’s all about food and alternative energy production which is facing a continuous upward demand curve far into the future.  This is why agribusiness in Brazil is so important.

There was also the social aspect of being in a different culture that I found amazing.  I am a huge fan of samba and Afro beats music.  Brazilians love music and it is essential part of everyday life.  I was amazed to be listening to all of my favorite music all time where ever I went, airports, restaurants…  I was also able to join some colleagues in some public service work during my time there.  SAP Brazil sponsors a local youth group Meninos do Morumbi that keeps the kids out of the street teaching them music, dance and Brazilian culture.  Here’s a video that I got to participate in for SAP’s 40th anniversary.

And of course for a country where so much of the world’s food comes from, there is excellent cuisine.  I liked to say that Brazilian cuisine is all beef and sushi—yes sushi!  Japanese have been immigrating to Brazil since after World War II.  Speaking of which Brazil has to be the most diverse and multiethnic society in the world.  All kinds of peoples, races, and cultures blended up in a melodious anthem of civil society.

Brazil is an amazing growth market.  The people of Brazil are forward facing and love to embrace new ideas. I hope you enjoy my story.

Kind regards,

Kevin Cox

Can critical thinking play a role in marketing today?

Dear Reader,

I believe the answer is “yes”; critical thinking can play an important tole in marketing today whether in strategy or execution.  Critical thinking in marketing can be like the old fable of the tortoise and the hare.

Social media is one of the biggest disruptions of traditional communication paradigms and human behavioral norms.  The entire race course has changed in obvious ways and not so obvious ways.  The known world of GRPs, reach and frequency, direct marketing response rates and lead generation scoring are in flux as everyone contemplates the new race before them.  Critical thinking in marketing offers every professional a laboratory of unprecedented leaning and expansion of knowledge to dramatically increase the likelihood of successful marketing innovation.  Why push to “fast-fail forward”, when you can win the race with a modicum of rational thinking –saving yourself, your team, and your company much time, effort, resources, pain, blood, sweat, and tears.

Critical thinking has been described as “reasonable reflective thinking focused on deciding what to believe or do.”  It is a methodology to map a new course of effective marketing strategy and practice.  As you practice critical thinking, it is important to prepare yourself for the journey.

  • Be open-minded, letting go of your inhibitions and stereotypes.  These are baggage that might prevent you from finding the answers you are looking for.  You need to be rational, reasonable.
  • Be humble and recognize the flawed nature of human thinking including your own and strive to reduce any biases while constantly seeking an improvement in the quality of understanding.
  • Avoid being simplistic about complicated issues and strive to achieve a reasonable balance between the two.  The devil can be in the details and heaven lost in generalizations.
  • Be honest, socially conscious, and well-mannered– aware of your place or position and empathetic of the position of others.
  • Be inquisitive–unaccepting of the status quo and generally accepted preconceptions.

There are many tools for the practice of critical thinking in marketing.  The only limitations are your imagination.  Many of the tools that I will present here will be familiar.  Some of them may seem to overlap but nuances in the approach may reveal insights that would otherwise have been foregone.  These tools should be used in combination in order to test and validate a conclusion or considered course of action.

  • Another person’s shoes– Step outside of your own frame of perspective to examine the situation from multiple other perspectives.  This is particular important in marketing as you eschew the perspective your customer or prospect and anticipate their reaction to your blog posting, tweet or any other social interaction.
  • Pros & cons– Methodically list the pros and cons of any situation or course of action in order to develop a solid understanding of the consequences.  Don’t presume that everything is obvious; there are consequences to every action and they should be weighed carefully.
  • Objectivism—What would someone completely unrelated to the matter you are considering think about the proposed action?  Your posting may seems innocuous to your own perspective but to someone else they may perceive some insult.
  • Subjectivism – Similar to walking in another person shoes but conducted for the purposes of examining the impact of extreme perspectives.  What would someone to the far left and right of your spectrum think of the activity?  Is there a way to satisfy both perspectives?  If not which will be the most important to achieving what you want and how can you mitigate the other from obfuscating your objective?
  • Empirical examination- Related to objectivism but with today’s social media we now have more data ever for analysis and interpretation that can uncover insight, presuppositions, and hypothesis on which to build further understanding and decision-making.
  • Deductive reasoning- If one thing is true then the next thing should also be true leading to a conclusion based on the natural flow of premises.  If my competitor wrote something about a mutual customer, why did they do this?  What is the likely immediate and mid-term outcome of this action?
  • Devil’s advocate–A methodology of deliberately poking holes in a plan of action for the purposes of eliminating and/or validating underlying premises and beliefs central to that endeavor.  Sometimes it is helpful to beat the living day lights out of a proposed course of action in order to reveal any hidden weaknesses that could prove a liability later on.
  • Worse case/best case scenario analysis—Allows you consider the potential range of implications of any given activity under extreme perspectives or dimensions.  Similar to subjectivism.
  • Deconstruction– A deliberate disassembly of a hypothesis or plan into components for individual examination and validation to eliminate flawed portions of a plan and strengthen the final outcome.
  • Extrapolation– If we except point “a” as true then as we look forward from this point based on known circumstances to point “b” somewhere in the future what  would this look like?  What precautions or risk can be mitigated by anticipating the future outcome?  This is a way to explore the future consequences of any given course of action and contingency plan.
  • Reverse logic- If we know where we want to arrive, then we can work backwards from there to identify what are the necessary steps to reach that destination.

Many of your competitors and peers will rush to blindly invest in plans and strategies expecting to learn as they go along.  And they will get there eventually after many trials.  However, the critical thinker will get there with fewer trials.  And the more you practice it, the better and quicker you become at achieving success in marketing innovation.  The hare won’t even see you as you blow by him.

Kind regards,

Kevin Cox

Re-interpreting the marketing 4 P’s

Dear Reader,

My colleague Marcus Starke proposed an interesting question the other day.  “Many of us undoubtedly recall the good old 4 Ps of the marketing mix: Product, Place, Price and Promotion. These have been interpreted in different ways in the past.  Is it now time to definitely retire them as a concept of the dark ages?”  This was a very interesting question to me.  Putting an idea in my head is like giving a dog a bone.  So I had a good chew on this one.

My first reaction was poppycock.  How can such a fundamental pillar of marketing, almost a “marketing law of physics”, be called into question.  I’ve always believed that all marketing is merely a reflection of human behavioral psychology; how much does our fundamental behavior ever really change?  Love, jealousy, admiration and rage, we see every day; the oldest stories of humanity are as engaging today as they were hundreds of years ago.

So what has changed?  I believe that nothing and everything has changed.  The emotional dynamics of being human have not changed, but our emotional intelligence has evolved and expanded.  As individuals, we are now communicating through many more channels than before.  As a result, the opportunity for understanding, interpretation and sensitivity have expanded and so too have the principles of the four Ps broadened– reflective of the rising emotional intelligence of the human species.  This great video from Brian Fetherstonhaugh, Chairman of OgilvyOne really crystalized it for me: http://bit.ly/y9wxkc

  • Product expands to “experience” of product, of the company, of the brand, of the employee
  • Place becomes “every place”, where ever you are there is an expectation of access and availability
  • Price becomes a much broader concept of “exchange”, the understanding of reciprocity expands as we trade for bits of information regarding customers’ intentions and desires
  • Promotion broadens to “evangelism” as our most ardent customers and fans become the loudest voice of promotion over any discount

Thank you Marcus for challenging the status quo and stimulating my thinking on this subject.

Kind regards,

Kevin Cox

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