Findings from recent MSI mobile marketing symposium

In January, the College of Business Administration Northeastern University co-sponsored the Marketing Science Institute’s (MSI) Mobile Marketing Symposium that was held recently on December 4 and 5, 2008 in Boston. MSI is a non -profit organization that brings academe and industry together on marketing issues.

Prof. Fareena Sultan, Associate Prof. of Marketing and Robert Morrison Fellow at the CBA, Northeastern was co-chair of the symposium along with Prof Russell (Russ) Winer, Prof. at NYU and Executive Director of MSI. Dean Tom Moore of the CBA welcomed the participants and indicated that the CBA’s sponsorship of the symposium fits well with the strategic initiatives of the CBA that focuses on innovation and global issues.

Prof. Sultan and her colleague at Northeastern Prof. Andrew (Andy) Rohm have been conducting research related to the mobile platform for four years. Prof. Sultan states that “I thought that it was time to hold a conference that brings academe and industry together on issues related to Mobil Marketing. The US has been slow compared to Japan, Korea and Europe in adopting the mobile platform as well as mobile marketing initiatives. This device allows for communication features such as location specific messages as well as interactivity in a way that other media do not. Our research indicated that it was time to take a serious look at the platform which is far more personal to consumers than any other device and consumer attachment to mobile devices is unprecedented.”

Prof. Sultan presented her research titled,
“Brand in the Hand: Global Research in Mobile Marketing”

Summary Points from Prof. Sultan’s talk:

“The mobile phone is a device that is unique in that consumer attachment to it is unprecedented. Not long ago, students in our Universities started walking around with their phones stuck to their ears, ignoring the world around them. If you ask these students what would happen if you lost your mobile phone, they make dramatic statements such as ‘it would feel like I my right hand was cut off’ or that ‘my best friend had died,’ or that ‘I had died!’ This attachment to mobile phones is what spurred my interest in studying mobile devices. As a marketing professor, I was curious how marketers could offer services to consumers through these devices that consumers are so attached to. The unprecedented attachment to this device means that the marketers have to have something of value that the consumer wants in order to reach them at this personal level.

Global brands such as adidas, Nike, Coca Cola, Volvo and many others have already engaged in mobile marketing. Clearly industry is ahead of academics in understanding this new medium. Statistics clearly show that half of the world population is now connected through a mobile phone and that technology is developing rapidly. Global brands have to think about not only the different cultures but also about the different, often incompatible, mobile standards and technologies around the globe.”

Mobile Marketing Research
One of the first research projects I worked on with Prof. Rohm involved Adidas in Amsterdam. We wrote a case study that focused on Adidas’s promotional activities around the Euro 2004 Football Championship. The challenge was how to reach consumers at the stadiums when there were many limitations about branded advertising. Mobile proved to be the successful answer. Other case studies were subsequently written focusing o the use of Mobile Marketing at the World Cup soccer championships. These cases are used in classes at Northeastern and other universities. The “Brand in the Hand" adidas case is a best seller at Ivey case publishing.

The Mobile Marketing Paradigm
he The mobile medium is different from other traditional mediums in two main ways: it is more location-specific and more interactive. In the US it is also purely permission-based marketing and not push marketing. This means that the consumer thinks, “If you can provide something of value, I would let you enter this private space of mine.”

Mobile marketing is a new marketing paradigm that if used effectively, can enhance brand awareness and positive attitudes towards the brand. For this reason, marketers need to understand what the emotional attachment to the device is, and how to provide value to the consumer in order to influence engagement and interaction with the brand. Privacy is a key issue when engaging in mobile marketing.

Our global research has shown that there are certain similarities between youth adoption of mobile marketing across developed and emerging economies. The most obvious similarity is usage characteristics. One clear difference is that users in emerging markets are more open to receiving promotional offers through their mobile phones than in the US.

Managerial Implications from Sultan and Rohm CBA NU research
-The medium is the message. If you are doing a mobile marketing promotion, it clearly says something about the innovativeness and “coolness” of your brand.

-Mangers should use universal appeals in mobile marketing such as sports and music, yet adapt for the local taste. Success in one market does not guarantee success in others.

-Mangers need to use cross-promotions in order to create awareness about mobile marketing campaigns and educate the consumer about what they can do with their mobile phones.

-Mangers need to recognize and respect privacy. Stress on trust-building through permission-based promotions. Control of the consumer-marketer interaction can be a significant driver for acceptance of mobile marketing promotions.

Other Summary Points from the MSI Symposium

-The mobile medium is seeing explosive growth that is projected to continue with about 30% CAGR. Innovations such as the iPhone and Google’s Android are heightening consumer interest and industry activity related to Mobile Marketing

-Marketers need to be cognizant of personal attachment of consumers to mobile phones. Consumer behavior and specifically the emotional attachment that people exhibit towards their mobile phones is a unique phenomenon to this medium

-It is of paramount importance to draw a model of the mobile ecosystem. This should include all players (networks, handset makers, marketers, users, etc) and the techno-economic interrelationships. An ecosystem model is vital for understanding where value is in the system and how business models affect the behavior of the players.

-Fragmentation is a major barrier to adoption of mobile technologies. Today carriers worldwide, and within a country follow different standards, and this coupled with over 300 different handset models and thousands of applications makes it extremely hard to standardize.

-The lack of understanding of the mobile consumer, coupled with the fragmentation of the industry prevents tapping the huge potential of mobile devices.

-Managers have to be very careful about privacy issues. However, the debate is shifting from a privacy debate to a question about the value proposition to the consumer. Furthermore, demographic segments such as Gen Y do not have a strong opinion about privacy.

-The industry needs to establish a common currency for mobile analytics. This has to do above all with media buying, similarly to what Google Analytics did for online advertising.

-Companies have to execute mobile campaigns globally. With over 3 billion sets around the world, companies have to run localized and personalized programs that are scalable globally and that address cultural and infrastructural differences. -However, for some companies a global mobile campaign can require up to 65 different mobile networks in tens of countries, which makes costs and implementation very complex and few advertisers are willing to experiment. Again, the demand is standardization of standards in order to achieve scale and thus facilitate adoption.

Guest Op-Ed: Who's Afraid of Hussein?

Who’s Afraid of Hussein?

Several years ago, a federal jury held that Abdul Azimi, a Muslim immigrant from Afghanistan, had suffered years of vicious racial invective and physical abuse at his workplace. The evidence established that co-workers had regularly taunted Azimi with the N-word, linked him by blood to Osama bin Laden and Saddam Hussein and left notes with swastikas and profanity-laced vituperations against his faith. They assaulted him, forcing pork into his mouth and pockets as they denounced his religion in the crudest terms. Shortly after filing a complaint against this hateful and abusive treatment, and just a few weeks after the attacks of 9/11, Azimi was summarily fired.

Despite wholeheartedly agreeing that Azimi had suffered discrimination, the jury found that the unlawful harassment had not caused Azimi “to be damaged by emotional distress, pain, suffering, emotional anguish, loss of enjoyment of life and/or inconvenience.” Azimi did not receive a single penny in damages. On appeal, the verdict was affirmed, making it fair to wonder whether the courthouse door is effectively shut for Middle Easterners seeking redress for brazen civil rights violations. Surprisingly, as far as civil rights suits involving Middle Easterners go, Azimi was a relative success for the plaintiff. In 2007, the year of the Azimi appellate decision, courts reported decisions on 69 employment discrimination cases involving claims by Muslims, many of Middle-Eastern descent. Of these cases, only Azimi resulted in a plaintiff’s verdict. In the words of journalist Adam Liptak, it was the lone victory, “if you can call it that.”

Though accelerated by the tragic events of 9/11, Islamophobia and anti-Middle Eastern sentiment have festered in our country for at least a generation. During this time, Middle-Eastern Americans have faced rising discrimination—through targeted immigration policies, racial profiling, a war on terrorism with a decided racialist bent, and increasing rates of workplace harassment and hate crime. Indeed, the experiences of many Middle Eastern Americans readily belie the Panglossian trope of colorblindness that has permeated public discourse on race in recent years.

“The way to stop discrimination on the basis of race is to stop discriminating on the basis of race,” proclaimed Chief Justice Roberts just last year. With these words, the Supreme Court effectively ended the use of affirmative action at secondary schools. However, Roberts’ edict against discrimination apparently gave a federal appellate court no pause when it declared earlier this year that “Race or ethnic origin of a passenger may, depending on context, be relevant information in the total mix of information raising concerns that transport of a passenger ‘might be’ inimical to safety.” Cerqueira v. American Airlines (2008). On this basis, the Court took the remarkable step of reversing the jury verdict for a plaintiff who, because of his Middle Eastern appearance, had been forcibly deplaned despite clearing all security checks. It is particularly ironic that some of the most vigorous proponents of government colorblindness in social policies represent the most ardent supporters of government profiling of Middle Eastern and Muslim Americans.

This year’s presidential campaign exemplified the challenges facing both Middle Eastern and Muslim Americans. During both the nomination battle and general election, political operatives attacked Barack Obama’s candidacy by linking him to Islam. Robocalls charged Obama with “palling around” with terrorists, rally emcees stressed Obama’s middle name of Hussein, advertisements linked Obama’s support of driving licenses for illegal immigrants to a desire to empower jihadists, and partisan bloggers highlighted photographs of Obama donning a turban and questioned Obama’s early education at an allegedly radical madrassa. The implication, of course, is that ties to Islam are inherently suspect; innuendoes of terrorism, religious extremism, and barbarism closely follow. Such an appeal to our worst prejudices betrays our most fundamental values of inclusion and tolerance.

And the unfortunate taint does not merely apply to Muslims. For example, I am neither Arab nor Muslim. But I am frequently perceived as both. In the popular imagination, we have conflated geography, ethnicity and religion to reify the Middle East, Arab descent and Islamic fundamentalism into a single Axis of Evil. We therefore assume anyone of Middle Eastern descent is Muslim. The depth of this misperception is remarkable. In fact, only 23% of Arab-Americans are Muslim. Many Iranian-Americans are Jewish, Baha’i, Christian or Zoroastrian. Armenian-Americans are mostly Christian.

In his endorsement of Barak Obama’s candidacy, Colin Powell cited his concerns about the underhanded attempts to link Obama to Islam. To suggestions that Obama is a Muslim, Powell eloquently pointed out, “the correct answer is, 'He is not a Muslim, he’s a Christian, he’s always been a Christian.' But the really right answer is, ‘What if he is? Is there something wrong with being a Muslim in this country?’” Unfortunately, in some circles, that answer is still a “yes.”

Historically, no country has ever been more open and welcoming to immigrants than the United States, and no country has ever demonstrated a greater respect for civil rights and the protection of minorities. The election of Barack Hussein Obama highlights this point. However, as the tenor of the presidential campaign and recent events involving Middle Eastern and Muslim Americans have demonstrated, we still have much work to do.

John Tehranian is a professor of law at Chapman University in Orange, California, an entertainment and intellectual property attorney, and the author of Whitewashed: America’s Invisible Middle Eastern Minority (NYU Press, 2008). Coincidentally enough, he and Barack Obama graduated from the same high school in Honolulu, Hawai’i and the same institution of higher learning in Cambridge, Massachusetts.

Ways independent retailers can better compete with bix box retailers in current economy

I thought you might be interested in the thoughts of Tony Gao, Ph.D., a marketing professor and retail expert at Northeastern University’s business school, on ways independent retailers can better compete against big box retailers in the current economy (you can find Prof. Gao’s bio here: http://cba.neu.edu/faculty/directory_detail.cfm?e=240):

“Generally speaking, in competing with larger national chains, independent stores suffer from a lack of economy of scale (larger size -> bigger buying power against suppliers -> better price and delivery terms) and a lack of economy of scope (merchandise scope, geographic scope, and multichannel presence). Therefore, they should avoid competing directly on price but should take advantage of their relationships with customers, unique merchandise, and unique services as key competitive weapons.

“In today's economic environment, though, even small stores which pride themselves on selling at full prices should be prepared to given incentives to shoppers. If not in the form of price discounts as commonly seen in national chains, these incentives could come as surprises or delights that add to the purchase order and sweeten the purchases to shoppers. They could also start or make more intensives uses of their loyalty programs to channel the best incentives and deals to their best customers.

“Smaller and independent retailers, by their family-owned nature, may enjoy a unique advantage over their larger counterparts, especially public ones. They can perhaps better withstand the economic storm than their larger foes because they don't have to face the same pressure from outside investors on profitability and sales performance fronts. Work and life balance is another major goal for indies in running an independent store and they can sacrifice some income and profit for these additional benefits.

“In slow business times, owners of small stores can take the time to reflect on their business experiences and seek ways to come out of the crisis as a stronger and more relevant player in the local retail market.”

Is Sarbox unconstitutional?

I thought you might be interested in the thoughts of Sanjay Anand, chairperson of the GRC Group (www.grcg.com), as to what could happen if SOX was ever deemed unconstitutional:

“I am not going to speculate on whether Sarbanes-Oxley will be ‘struck down’ or not, since that is anyone's guess at this point,” Mr. Anand says. “However, I will discuss what could happen should the Supreme Court conclude it is unconstitutional.”

1. Since SOX is an "all-or-nothing" regulation, deeming any portion (in particular Section I that deals with PCAOB) of it as unconstitutional immediately negates the entire legislation.

2. There is no overwhelming precedent that has been set for the Supreme Court to either deem it unconstitutional or to understand what the repercussions of deeming it unconstitutional would be.

3. Should it (SOX) be deemed unconstitutional, I still feel that SOX will not go away. In other words, there is a lot of pro-SOX momentum in the marketplace that companies will continue to push it as best-practice.

4. SOX will become a differentiator in the marketplace (just like ISO). Big companies will continue to adopt SOX as a way to differentiate themselves and to take advantage of industry best-practices.

5. Some small companies will take to SOX, but many will ignore it saying it is too expensive. But they may take on some elements of it.

6. New legislation will come into being that will be more similar to J-SOX, C-SOX etc. and will be a "watered-down" version of current US-SOX. The new legislation will apply only to large publicly-held companies and non-profits.

7. The new PCAOB will be a part of the SEC, and will not have as many powers over the audit firms as the current PCAOB. The new PCAOB will likely not be called PCAOB due to the bad image associated with the current PCAOB.

8. IT will continue to operate as it currently does (with maybe a few less curse-words towards SOX). COBIT, ITIL, ISO etc. will go back to being best-in-class industry-standards rather than SOX suck-ups.

9. We may end up with a bad sequel (SOX II) to the first movie (SOX). The sequel is never as good as the original as we all know. Maybe this will start to feel a bit like Groundhog Day (SOX all over again).

10. There is nothing wrong with SOX, per se. The problem was with the guidance and standards. Maybe this time the new PCAOB (and the auditors) will get it right.

Ph.D. asks: How many other Madoff's are out there?

As people sift through the rubble left behind by Bernard Madoff’s Ponzi scheme, Harlan Platt, Ph.D., a business turnaround expert and finance professor at Northeastern University College of Business Administration, raises an interesting question (you can find a copy of Prof. Platt's bio here: http://cba.neu.edu/faculty/directory_detail.cfm?e=33):

“What people should be asking is how many other cases like Bernie Madoff's alleged fraud are out there waiting to be discovered. The answer to that question is probably too many,” Dr. Platt points out. “The problem is that as private vehicles, often owning illiquid and rarely traded securities, hedge funds are not subject to the same rigorous auditing as would be a mutual fund. Hedge funds often establish the value of their holding themselves or in conjunction with other hedge funds. The opportunity for self dealing and overestimation of values is overwhelming.”

“Trillions of dollars have been invested by ‘sophisticated’ investors in hedge funds. The requirements to be a hedge fund investor are high though I believe they were recently lowered,” Prof. Platt states. “The presumption is that intelligent investors will hold funds accountable. That is too much to ask.”

“Should the government come in and regulate the disclosure and accounting practices of these huge accumulations of capital. I don't necessarily think so,” Dr. Platt denotes. “What is necessary is that the government keep small investors away from the fire. Of course pension funds and others who invest for small investors may get caught in frauds and lose the small investors money. Pension managers generally run with the herd. In the ‘go-go’ years they fought to be allowed to invest. Now they will all run away. Maybe what the small investor needs is better pension managers?”

Law prof on Madoff ponzi scheme

I thought you might be interested in the thoughts of Larry Rosenthal, a law professor and white collar crime expert at Chapman University’s School of Law (You can find Prof. Rosenthal’s bio here: http://www.chapman.edu/law/faculty/rosenthal.asp):

“The high-end securities business places a great deal of emphasis on personal relationships and trust. For that reason, it is unsurprising that Mr. Madoff was able to raise enormous amounts of money from investors. Moreover, given his reputation, it would not have occurred to anyone that he was running a Ponzi scheme,” Prof. Rosenthal states. “The defining feature of a Ponzi scheme, of course, is that it always is discovered. Most criminals who run Ponzi schemes run them as what prosecutors call “bust outs”, in which, just before the scheme unravels, the schemer flees with the money and cannot thereafter be found. That, of course, is the only rational way to run a Ponzi scheme. No one would have suspected Mr. Madoff of running such a scheme, which is precisely why he could have gotten away with it for so long. And, of course, Mr. Madoff did not run his scheme as a bust-out – it just unraveled, . One can only speculate, but in cases like this, typically there is some factor at play that impairs the judgment of the person running the scheme – drug or alcohol dependency, family problems, or mental illness. I suspect some sort of extraordinary personal stress was at play here.”