Is social media a fad or fundamental?
Is social media a fad or fundamental?
Facebook, Google, Apple, and Amazon are the titans of modern day information technology. Just a few years ago, Apple could be described as an organization that made consumer electronics, Amazon was an online store where you could purchase just about anything, Facebook was a social networking site and Google was purely a search engine. Each of these organizations has been at the top of their game when it comes to strategy, innovation and exceptional execution. Because of being consistently good with these attributes; Amazon held its own against a plethora of web stores and today is a force to be reckon with. Facebook was able to, despite being a late entrant, eliminate all its competition in the social network sphere (orkut, myspace). After intense competition between Yahoo and Google, Google emerged as the industry leader. Apple’s industry of consumer electronics was the most saturated of all with the highest number of competitors but this did not stop them from becoming an industry giant.
These four behemoths of the information technology age now have their eyes set at the markets for mobile applications, mobile phones, tablets and social networking. Amazon has already attempted to enter the digital media realm with Kindle. There is talk about Facebook launching a search engine. Google+ was launched in order to take on facebook. But unlike other organizations that usually set out a roadmap as to where they plan to take their company in the short-term and what their goals might be in the long-term, these four are highly secretive about their future endeavors, one could expect Coca-Cola pasting their secret formula on a billboard before hearing one of these four talking about their future forays.
Nonetheless some common denominators do exist in the strategies of the big four that can be observed. First, all of them have embraced Steve Jobs view of the ‘post-pc world’ and they all share the vision of everyday life revolving around smart-phones, tablets and other easy to use computers. Secondly, these post-pc devices will boost and enable consumption and so one can expect that each of the big four will deepen their efforts to provide consumers with media, be it games, movies, tv, music, etc. Lastly, its DATA the big four are after, it’s the lifeblood of their existence. It is data that assists them to come up with better advertising systems. It is data that allows them to predict what you might buy next. And its data that directs new inventions (e.g. googles traffic maps).
Because of the vision of the big four converging on these three factors, there is sure to be an intense amount of conflict over every strategic move. All four of these organizations have a history of crushing their competition and so it will be very interesting to see how these organizations jostle for position against each other in the coming future.
External Factors impacting profitability of the newspaper industry in Hong Kong
Assessment of the ‘COMPETITION’: According to the Honk Kong Trade development Council, there were 49 newspapers and 752 periodicals. Twenty three out of the forty nine mainstream newspapers were printed in Chinese, thirteen were printed in English and eight were printed in both dialects. These newspapers were targeted at the population of seven million residents of Hong Kong. There is complete press freedom in Hong Kong and government intervention is minimum.
A significant impact in the newspaper industry in Hong Kong was the introduction of free newspapers. In 2002, Metropolis daily was the first free newspaper launched in Hong Kong. After having seen its success of becoming the third largest newspaper in circulation in virtually no time, Sing Tao decided to launch Headline Daily in 2005. The impact of these free newspapers was direct and very significant for newspapers aimed at middle and low end readers. The newspapers aimed at upper-middle class and high income people were insulated to an extent from these free newspapers but they did acknowledge that their advertising had gone down slightly due to companies spending more on high circulation mass newspapers.
NEWSPAPER Market share (target pop. btw ages 15-64=5,133,100)
ORIENTAL DAILY 28%
Apply Daily 24.1%
Ming Pao(ELITE) 6.7%
Sing Tao(ELITE) 4.7%
Metropolis Daily(Free) 13.7%
Headline Daily(Free) 17.9%
Assessment of new technologies and trends ‘The Internet & Digital Media’: Internet is another externality that has transformed the face of the newspaper industry and Hong Kong is no exception to the rule. Although Mr. Fung is of the view that the culture of Hong Kong is different in that they like to take some time of the day to relax with a cup of tea and the newspaper, the fact of the matter is that people between the ages of 18-35 have readily switched to digital media and they make for a substantial proportion of the consumers. The power of digital and social media has pressurized mainstream media globally. News on the worldwide web is free, it’s updated in real time and you can have access to it anywhere.
Assessment of the Market ‘CONSUMERS’: The Hong Kong nationals have consistently become more and more affluent through the 90’s and 2000’s. Hence there is now a more mature market that requires more authentic and more customized news according to what they require. Sensational and gossip newspapers like Apple daily have gone down in popularity by more than 20% from 2001 to 2006 (360,000 circulation to under 300,000). Another seismic factor that has changed the nature of the demand of consumers is that people have become use to information that is available and up to date all the time (generation now). The newspaper industry prints issues once or at the most twice a day and this does not meet the needs of the online generation of today. To the consumers of today picking up a newspaper is picking up news that happened yesterday as opposed to news that is happening now which can be found online. Since switching costs are very low, buyers power can be stated as HIGH.
Hong Kong Economic Times & Blue Ocean Strategy
Indeed Hong Kong Economic Times has been able to grow its business so far even with all the adversities in the newspaper industry. More specifically HKET’s circulation has consistently grown at an average rate of 18% since 2003 (with the exception of 2004 in which the SARS epidemic broke out). This has largely been due to the policy of ‘organic growth through diversification’ that HKET has undertaken consistently.
It is important to note that the founder and chairman Mr. Lawrence Fung after having returned from the UK indulged in a number of startups (taking advantage of Chinas new open door policy) before launching HKET which imitated the ‘Financial Times’. At the time of the launch of the Hong Kong Economic Times, there was no other newspaper in Hong Kong that provided professionals with credible business and financial news. Therefore it is safe to say that at the time of the launch of HKET, it had indeed employed a Blue Ocean strategy. This can be said because it 1, Tapped into an unknown market in Hong Kong at that time, 2. Rendered competition irrelevant, 3, Created and captured new demand, 4, used an existing technology to create this new market, 5, aligned the entire system of the company towards differentiation.
Mr. Fung clung on to the belief of diversifying through differentiation on a continual basis in order to stay ahead of competition and that was the core strategy of HKET (Blue Ocean all the way!). Mr. Fung created three performance thresholds, 1. The business had to break even by three years, 2. By the end of the 5th year the business had to create a return on investment of 15%, 3. The business had to aspire to be no. 1 in its segment.
In 1998 e-zone magazine was launched by HKET to address the growing interest in the IT products during the time of the IT bubble. This was also a Blue Ocean strategy and met the criteria’s partially. ET Net was a Blue Ocean strategy because it created new demand and a leap in value. It had no competitors in Hong Kong offering real time financial quotes and updates in both Chinese and English. It was indeed an unknown and uncontested market. U-magazine on the other hand was an undifferentiated product and therefore can be qualified as a red ocean strategy. A recent newspaper launch called ‘take me home’ was a free newspaper that was tailor made to fit the needs of six regional communities in Hong Kong. This approach of having a newspaper that is targeted at a very select geographic population was a novel approach and can be qualified as a partial blue ocean strategy. It does indeed tap into an unknown market but it does not render the competition as irrelevant. It does create new demand within the community however that too is debatable (to what extent and with how much success). Unfortunately at the time of the case it is unclear whether it successfully created new demand.
HKET also launched Electronic Property (EPRC). This enterprise kept complete electronic records of property data catering to the property boom in Hong Kong in the 90’s. With time it became a user friendly and professional property information portal. It later also used the EPRC system to give advertisers access to direct marketing through their database of professional clients and revenues were generated from service fees. Both of these were novel approaches and therefor can be described as a slight increase in value as opposed to a leap in value. However it can also be argued that EPRC gave HKET competitive edge in the property media market. Did they establish a new market? The simple answer to that question is No. E-Zone, ET Vision and ET Wealth are just the same. They add value slightly but don’t meet other characteristics of the Blue Ocean strategy like being in uncontested markets. They create and capture demand but barely. Coming into an industry that is already saturated and distinguishing your offering by making it slightly tailor made does not entirely qualify as a complete Blue Ocean strategy.
ET Press tried targeting younger audiences with its publications on finance, Management and investment topics. This business had most principles of Red Ocean Strategy. There was competition present in this market and HKET tried to gain competitive advantage to steal market share.
Therefore in summary Hong Kong Economic Times at its inception did follow all the characteristics of the Blue Ocean strategy but later on with just about all their subsequent business launches, they did not follow all the principles of the Blue Ocean strategy (with the exception of differentiation which they followed religiously) instead their strategy became more and more like Red Ocean strategy.
Case Analysis on Jones Lang LaSalle
Analysis of the Situation
Jones Lang LaSalle has come to be known as one of the largest and the most successful real estate firms in the world. It is the market leader in providing real estate solutions for its clients. Mr. Collin Dyer is the recently appointed CEO of JLL. He was appointed CEO in August 2004 by the board of directors not for his expertise in the real estate, but because of his experience in client services and his ability to lead change within an organization. Lauralee Martin is the chief financial officer as well as the chief operating officer at JLL. Peter Roberts is the CEO of JLL America’s division.
Industry environment and trends
· The real estate industry has grown constantly for the second half of the twentieth century.
· Real estate in 2005 accounts for 12.5% of the entire US gross domestic product.
· Between 1995 and 2005 competition in the industry increased exponentially and was largely modeled on commissions.
· Because of increased competition real estate organizations had to compete on the basis of price due to which margins decreased substantially.
· On the other hand American MNC’s during this period expanded aggressively which in turn raised the demand in the real estate industry.
· Technological advances made it easier for real estate firms to increase their geographic presence (online real estate data basis).
Market Capt. (in millions USD) SALES (MnUSD)
Jones Lang LaSalle 1228 1167
CB Richard Ellis Group Inc. 2363 2365
Cosmos Initial Company Limited 208 1847
Nexity 1071 1847
Pirelli & Co Real Estate 2163 868
DTZ Holding PLC 202 296
Relo Holding Inc. 205 314
Sevills PLC 605 630
Sumitomo Real estate Sales Co. 1379 474
Originally JLL had three autonomous divisions with their own respective profit & loss;
Tenant Rep. Group (TRG)
Based on local markets, High operating margins, highly compensated management. Corporate real estate revenues 41%
Corp. Property Services(CPS)
Based on Corp. clients, narrow margins, Low compensation for management. Corporate real estate revenues 23%
Proj. Development Service(PDS)
Based on Corp. clients , high margins, strong growth. Corporate real estate revenues 36%
In 2001 however JLL restructured its organization in order to differentiate itself from competition as well as grow business (global clients, 3x). They placed the TRG, CPS and PDS divisions under the ‘Account Management’ division. This was JLL’s first move towards providing complete solutions for its clients. This was a successful move and in the very near future JLL acquired big accounts like GM, Coca-cola, Motorola, P&G etc. However JLL soon realized that it was losing out on local business. In order to address this they tried a test pilot in New York and hired a local market expert, Peter Regaurdi. The decision of setting up a regional market unit turned out to be a big success and within a year JLL grew its business in N.Y. by 25%, making it the third biggest real estate group in the area.
Peter Roberts formulated two options. The first option was to build on the existing structure while addressing its weaknesses (the three legged stool). The second option was to completely realign the business by merging the three traditional units into two new client facing groups: Global client management (Clients) and geographic market execution (Markets).
It will be a better option for Roberts to pursue the second option of organizational realignment. Indeed there is resistance to change from within organizations but on the other hand companies that are slow to change are never successful in the long run. Roberts has support at the top from Dyer, on top of which, Dyer has had extensive experience in successfully leading change in organizations.
Metropolitans Inventory(m.sqt ) Vacancy Rate (%)
Phoenix , AZ 286.9 18.9
San Diego, CA 233.0 15.8
Kansas City, MO 261.8 11.3
Jacksonville, FL 2,239.8 11.6
Greenville, SC 334.3 9.9
Can a leader like Riguardi be found in every market? Well the simple answer to that question is that JLL did not make the decision of setting up a regional office after having stumbled upon Riguardi. They first made the decision of setting up a regional office and then looked for the best real estate person with the most local know how and clientele. Indeed Riguardi was a very competent manager and leader, however competent managers and leaders are not restricted by geographies, therefore JLL would be quite capable of hiring equally good if not better ‘local’ talents.
There is indeed a strong need to cater to geographic regions because in order for JLL to be viewed as a true solutions company that is a market leader, JLL must address the concerns its clients have of JLL being good globally but not locally. In order for JLL to decide which areas to target for geographic growth it is important to analyze existing inventories and vacancy rates (exhibit 6). On the premise that high existing inventory indicate the volume of business and low vacancy rates indicates that properties are renting well, JLL should expand into the domestic metropolitans shown in the table above.
In terms of regions, Asia Pacific ranks as the most conducive region for JLL to expand geographically. It has the highest inventory to vacancy rate ratio (10.46472) along with the highest cumulative GDP growth rate (55.8). Americas is the second most feasible region in terms of real estate with inventory to vacancy rate ratio of 10.46436. The least attractive amongst the three is the Euro/MEA region with an inventory to vacancy rate ratio of 9.419069 (for reference please view table 1.1 in the appendix). Although growing through acquisitions have great advantages like reduced competition, increased market share, increased employee capabilities, studies have shown that its major pitfall can be customer attrition, and therefore JLL should focus on growing organically where possible and through acquisitions as a second option.
Service offering excellence is going to be at the heart of any organizations success in the future. As products are commoditized and services are replicated by competitors, margins are eroded and therefore organizations that will truly want to thrive in the long run will have to concentrate on service offering excellence. Solutions offering excellence is regarded by experts as a necessary technological wave. The second proposal of creating two new client facing groups provides a greater assurance of succeeding in this realm for the following reasons;
· The realignment will place JLL in the fourth level of solutions mastery with marketing driving collaboration across the two new BU’s(corporate accounts, regional markets).
· Centralized leadership and reward matrix system.
· It will allow JLL to integrate its management functions by placing their strongest capabilities in the right departments (Merging TRG with regional markets & CP, PDS with Corporate accounts).
· Lower bureaucracy and turnaround times for clients, leading to increased customer satisfaction.
· By merging the ‘corporate account’ and the CPS and PDS in the same department and putting them under the same financial incentives, there will be harmony between what the account managers propose to their clients and quotes given by CPS and PDS as they will now be under the same P&L system.
· They will be uniquely differentiated from all their competitors (experts locally and globally).
· They will move up the solutions hierarchy by being able to provide ‘customer specific solutions’ regardless of any limitation of global or local specializations, will be perceived as experts in both. They could also be able to leverage this advantage into ‘thought leadership programs’.
Change in organizations is never an easy task. Employees that have worked in a single service business for their entire careers will have a more difficult time adjusting to the organizational realignment. However if this change is organized in the right manner, it could further enhance the utilization of the employee capabilities. In the new organizational structure, employees will have the opportunity to cross train in other service offerings within their service clients adding to dynamism and employee growth. JLL will better be able to leveraging the employee’s best capabilities by placing them in the new structure. By placing the CPS and PDS in the new corporate accounts department and the TRG in the regional markets department, JLL will leverage the department’s best capabilities according to historic performance.
Broader Concerns. Restructuring is always crucial for any organization, but more importantly it is important for organizations to restructure themselves according to changing times in order to stay on top of their business. Although this restructuring is a major step for JLL and it can be a daunting task to make the decision, all the evidence suggests that JLL should restructure for their long-term growth. Moreover, it is rare that top level management is not just accepting of change but welcoming of it and experienced in managing it in the form of Colin Dyer and therefore it is the perfect time for JLL to implement this change.
Roberts can build on the 2001 restructuring by showing that this organizational realignment is just a further refinement of what they started. They initially carried out ‘Silo Busting’ by improving the coordination between the key departments and with this next step they will be able to completely integrate the relevant departments (CPS, PDS, TRG) in their respective corporate accounts or regional markets departments.
In order to minimize the managers from being distracted by the restructuring at hand, JLL should implement the restructuring in well thought out phases that overlap departmental and employee responsibilities and hence reduce the internal distraction of restructuring.
Marketing has changed substantially and very rapidly in the last decade. Because of this even the most seasoned marketers might find themselves falling behind in their field and this book serves as a complete eye opener as to how drastically different marketing after the advent of the internet and the meteoric rise of social media has become. The author very potently makes a case as to why the old rules of marketing are ineffective in an online world. The reasons he highlights are as follows;
One way interrupted marketing is yesterday’s message he states. The web delivers useful content at just the right moment when the buyer needs it. Old ways of traditional communication channels (tv, newspapers, magazines, radio) may still work for mass appeal products (P&G, movies, US elections) but it’s completely ineffective for niche products, local services and specialized non-profit organizations.
Advertising and PR were completely independent of each other and were run by different people with different strategies, goals and measurement metrics. However these days reporters, editors and buyers use the web to seek out interesting stories and products. Therefore it is important for organizations to have a prominent footprint online.
In the older days companies were at the behest of media groups to get their message out to the customer. The web has enabled companies to directly communicate with customers through blogs, online videos, news releases and other forms of web content.
NEW RULES OF MARKETING: Marketers have to accept the shift from advertising through mainstream channels to the masses to a strategy of underserved audiences through the web. The web has also made the ‘long tail’ of the demand curve accessible through reduced distribution cost (e.g. amazon). The author emphasis that in the digital space you are what you publish. People want authenticity, not spin. People want participation not propaganda. Good analogy of PR not about your boss seeing your company on TV but about your buyer seeing the company on the web. The author also indicates that the lines between marketing and PR are blurred in digital marketing.
REACH YOUR CUSTOMERS DIRECTLY: The web has much greater ROMI. Highlight your company’s expertise through Websites, podcasts, blogs, e-books and online news. Instead of spending major money on tv commercial production, one should think about reaching the niche audiences, create lots of content that appeals specifically to them by first creating buyer persona. Tell your organizations story directly to the customer through thought leadership programs.
Social media: Your customers take part in online forums, you should too (excellent example on B&H). Create your own wiki. Alacra (60 employees) was able to compete with Thomson Reuters(50,000 emp.) and Reed Elsevier(32,000e,emp.).
Blogs: The author points out that only 20-30% of marketers read blogs, blogs are very efficient way of getting information out. The uses of blogs to marketers are: Monitor what people are saying about you, Participate by commenting on what people are saying, work with bloggers. Shape the conversations by writing your own blog.
NEW RULES OF PRESS RELEASES: The author emphasis that organizations should not wait for big news in order to create a press release rather they should create press releases frequently and instead of targeting a handful of journalist, they should target them to appeal to their customers. Use keyword-rich language used by your customers. Optimize news release delivery for search engines and browsing. Add social media tags so your press release can be found. Drive people into the sales process with news releases. Include offers that compel consumers to respond to your press release in some way.
GOING VIRAL: The opportunity to make your brand globally recognizable for free! The author uses a great example of how Queensland created a huge buzz with the ‘best job in the world’. The author admits that it takes a great amount of luck and timing for a video to go viral. As marketing managers one should always monitor the blogosphere to keep an eye out for viral eruptions. Rules of the rave: no one cares about your product, no coercion required, learn to lose control of your message, create triggers to make people share and lastly be sure to point the world to your virtual doorstep (once you get the hits, your website will automatically rise on search engines like Yahoo and Google).
“Action Plan to harness the Power of the new rules”
The author then guides the audience step by step on how to create a successful digital marketing campaign.
Build your marketing plan!
Thought leadership programs: brand your organization as an industry leader through white papers, e-books, e-mail news-letter, webinars, Wikis, research and survey reports, blogs, Audio Video.
How to write to your buyers: Avoid using clichéd words like industry groundbreaking, cutting edge etc. The author urges the readers to be simple, concise and remember that the purpose of this exercise is to establish a relationship with your customer.
Web Content and buying process: Website should have a personality that resonates with the buyer’s persona. Keep the visitor entertained through imagery, charts and graphics. Include interactive content tools. Always provide avenues for the customer to provide feedback via the website. Perhaps most important of all is to link the content directly into the sales cycle of the customer. After the sale is closed, continue the conversation.
Get involved on social networking platforms: The author describes how important it is and how to effectively establish a presence on Facebook, Twitter, LinkedIn etc.
Blogging: The author describes the basic etiquettes and skills that succeed in the blogosphere.
Video & Podcasting: David Meerman explains how to best leverage these elements into your digital marketing campaign as well as their potential reach.
Press Release: The author explains how to digitize a press release by including links, publishing it online, using the appropriate wording (keywords), including social media tags and so forth.
The importance of an online media room: search engine algorithms place news releases at the top of their rankings and drive traffic there first, hence it is pivotal to get your best practices for online media rooms right.
Search engine marketing: The author describes through examples how important it is to appear in a relevant search however does not go into detail about the working of search engine optimization. Instead asks the readers to just focus on building good/relevant website content.
This book is exceptional at educating readers about the importance and the power of digital marketing in today’s world and bringing them up to date with its best practices.
Jeremy Clarkson challenges the Atom to prove more fun than a motorbike - with astounding and face melting results!..Pure Adrenaline!