Do We Prepare MBAs To Avoid Mistake-Repeating?

Irish statesman Edmund Burke is often misquoted as having said, “Those who don’t know history are destined to repeat it.” Spanish philosopher George Santayana is credited with the aphorism, “Those who cannot remember the past are condemned to repeat it,” while British statesman Winston Churchill wrote, “Those that fail to learn from history are doomed to repeat it.” Lessons from the past may not always ward off doom, but they can provide insights into the present and even the future.

In June of 2009, an interviewer asked the legendary economist Paul Samuelson what advice he would give to someone entering graduate study in economics. “This is probably a change from what I would have said when I was younger,” Samuelson replied, but “[I would urge them to] have a very healthy respect for the study of economic history, because that’s the raw material out of which any of your conjectures or testings’ will come.”

When you ask any faculty member if economic, financial, or business history is important, they would almost for certain say yes. Yet business schools in India rarely recruit a business historian as a member of their faculty. At most business schools, history provides marginal value at best, it makes an interesting elective, but is not at the core of what they provide to students. While historical questions rarely arise during placement interviews for jobs in investment banking or consulting, the ability to think in historical frameworks provides students of all stripes the capacity for analytical depth that outstrip their peers.

Teaching economic, financial, and business history enables students of business schools prevent the ultimate analytical error: fighting the last battle. Since humans intrinsically look to the past for guidance, they tend to find solutions in the past as well. Formal education in history prevents bad, ad-hoc uses of history in decision making.

While our businesses are unlikely to break the tyranny of the quarterly report any time soon, teaching history forces business school students to think in the long term. Analysts who think in the long term are less susceptible to mistaking volatility spikes for the greater trend, and thus better structure investments and firms that are successful over 20, 50, and even 100 or more years.

Business students are likely to carry a wrong notion that their forerunners were less sophisticated than them, because they have better data, more developed analytic theory, and better computational tools. So they believe that they would not have made the mistakes made by their predecessors. Once they study business history, they would realise that the people of the past were not ignorant bumpkins. We are subject to asymmetric information, negative externalities, and deficient regulatory apparatuses just like they were.

Not political or social trends but economic crises cause profound societal shifts. Political crisis of 1975-77 did not change India but the economic crisis of 1991 forced us to shift our priorities. Not undermining the science, humanities, technology or policy studies, it is largely business school graduates who will make the economic, financial, and business decisions that prepare the ground for massive societal change. As business schools train students to make these decisions, they have the duty to remind them of the implications of these decisions as well.

Business history, together as a body of literature and a community of academic researchers, has both a narrow and a broad definition. The narrower definition includes researchers who conduct primary archival research, although using a plurality of sources and methods, on the history of business enterprises, who belong to the professional business history societies now established in many countries. The broader definition comprises scholars from a variety of social science disciplines (including management studies) who study the historical development of business (sometimes doing original archival research of their own, and sometimes bringing new theoretical perspectives and conceptual frameworks to bear on existing research). These two circles interact and enrich the field, which remains open to multiple methodologies and new questions, without falling under the spell of crippling orthodoxies which constrain research agendas.

The “open architecture” of business history as a discipline means that it is unusually well‐placed to participate in vigorous two‐way exchanges with scholars in adjacent fields. On the one hand, careful empirical research by business historians can effectively challenge or qualify many of the “stylized facts” on which influential theoretical analyses in the social sciences sometimes rest. Corporate governance and financial systems are particularly striking examples, as few if any of the typological frameworks influential in the comparative literature (insiders vs. outsiders, stakeholders vs. stockholders, banks vs. capital markets, common vs. civil law) can account persuasively for the range of variation observed by historians over long time periods within and across countries. On the other hand, comparative social‐scientific analyses suggest new questions for business historians, concerning the morphology and explanation of cross‐national differences in the organization of business interest associations, the development of vocational education and training systems, and other similar issues which have not hitherto figured prominently in national historiography.

A sense of business history is important for business leaders to develop a contextual intelligence; that is, a strong sense of the business environment they are navigating. “11 future lessons we can learn from the history of business” by Jonathan Wichmann (10 September 2018) is a very insightful read from the World Economic Forum (https://www.weforum.org/agenda/2018/09/11-things-business-history-can-teach-us-about-the-future/). 

Indian Institute of Management at Ahmadabad had initial collaboration with Harvard Business School. The institute followed Harvard tradition of the case study approach that required management students to probe into past business dealings to understand the evolution of business operations and strategies. This initiated a new course called Business History. This course was introduced in the post-graduate curriculum under the able guidance of Dr. Dwijendra Tripathi, former Kasturbhai Lalbhai Professor of Business History at IIMA. Nearly all management schools in the country boast of using cases as the pedagogical tool in imparting business education without actively acknowledging that cases are historical events and case-method of teaching involves simulating and emulating history for acquisition of wisdom.

India does not have any “core” business history journal, like the international journals like ‘Business History’, ‘Business History Review’, ‘Enterprises et Histoire’, ‘Enterprise & Society’, ‘Japan Business History Review’ and ‘Zeitschrift für Unternehmensgeschichte’. With apologies to other authors for my ignorance, I am aware of two popular books contributed by Tripathi ­– ‘The Oxford History of Contemporary Indian Business’ and ‘The Concise Oxford History of Indian Business.’ three popular books contributed by Tirthankar Roy are – ‘A Business History of India’, ‘The Economic History of India, 1857-2010’ and ‘The East India Company: The World’s Most Powerful Corporation.’

Paul Samuelson came to realize only in 2009 that history, economics, business, and finance are interconnected and inseparable, and need to be treated as such. By relegating history to the far-flung corners of a few elite business schools, we deny the intrinsic character of the subjects we study and teach, and risk condemning our students to a cycle of mistakes that can, in fact, be avoided.

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Articulated by borrowing liberally from https://som.yale.edu/blog/the-importance-of-teaching-history-in-business-schools and https://www.oxfordhandbooks.com/view/10.1093/oxfordhb/9780199263684.001.0001/oxfordhb-9780199263684-e-001

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First published 26 July 2021

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Customer Disservice in the Name of Service

What could be the height of customer service – this question was answered by a former Managing Director of LIC of India during an informal gathering – and he had described it as a hypothetical episode:

“A customer walks into the LIC office, a multi storey building in south Mumbai, gets his life insured, climbs up to the top, and takes a jump from top which would definitely result into his death. While he is falling down, an LIC official extends his hand out of the window and presses a cheque for his claim settlement, so that the claim is in already in his hand when he is hits the ground and is discovered dead.”

Howsoever macabre the narration may feel, the reality of expectations both from the point of customer and customer-service personnel is captured realistically.

Marketing chases growth through a combination of four basic approaches –

expand the possibility for consumption,

enlarge the number of occasions for consumption,

swell the number of consumers, and

increase consumption per occasion of consumption.

A simple example for any typical mouth-wash will show the above approaches in practice. Let us understand the product and its evolution.

We have probably been cleaning our teeth ever since humans began using tools. From toothbrushes made out of sticks, to dental floss made out of horse hair, we have always been mindful of our oral health. But what about a mouthwash and when did we start swishing liquid around hoping for cleaner mouths?

There are references to mouthwash in Chinese, Greek, Egyptian and Roman literature, but the most well recorded early instances of humanity using mouthwash comes from ancient Rome, in A.D. 1. The Romans used to buy bottles of Portuguese urine and use that as a rinse. GROSS! Importing bottled urine became so popular that the emperor Nero taxed the trade. The ammonia in urine was thought to disinfect mouths and whiten teeth, and urine remained a popular mouthwash ingredient until the 18th century. [So much for the modernists of the world who ridicule, deride, mock and scorn at the medicinal use of urine of cows and auto-urine therapists like Morarji Desai]

People have used some strange combinations – besides urine – as mouthwash. Tortoise blood was once thought to disinfect mouths and clean teeth, and mixtures of berries, mint leaves and vinegar or wine has also been used as mouthwash. In the 12th century, Saint Hildegard von Bingen advocated that swishing pure, cold water could remove plaque and tartar.

Known as the “father of modern microbiology,” Anton van Leeuwenhoek is credited for discovering oral bacteria in the 18th century. Upon his discovery, he experimented with a variety of solutions that could kill the bacteria. Leeuwenhoek discovered that he could immobilize and kill bacteria by dousing them in ammonia and/or alcohol. It is around this time that alcohol became the most popular ingredient used in mouthwash – and it is still used today!

In 1865, English doctor Joseph Lister became the first surgeon to perform an operation in a chamber that had been sterilized with antiseptic – a practice that was very uncommon. After Lister’s practice was discovered to reduce mortality rates, it became a more widespread practice.

Inspired by Dr. Lister, Robert Wood Johnson and Dr. Joseph Lawrence modernized surgical sterilization practices and established the iconic company Johnson & Johnson. In 1879, Dr. Lawrence created Listerine – a mouthwash used for cleaning mouths and sterilizing surgical wounds.

By 1895, Listerine was sold to Lambert Pharmaceutical Co. and dentists began to observe the cleaning power of the mouthwash. In 1914, Listerine became the first prescription mouthwash to be sold over the counter in the United States.

Today, we can buy mouthwash for gum health, to help with plaque build-up and to prevent gingivitis. There is mouthwash for just about every oral ailment that we can have. [expand the possibility for consumption].

We are advised to use mouthwash every time we brush our teeth but also before every social interaction [enlarge the number of occasions for consumption].

Mouthwash is for everyone, adolescents, adults and the elderly, with normal oral health [swell the number of consumers].

We are advised not to dilute the mouthwash, its pungency being an indicator of its efficiency and to use sufficient (more) quantity of mouthwash – as per the measuring cup provided free – every time we use it [increase consumption per occasion to consume].

In the pursuit for such growth in sales, more particularly in case of consumption of services, machine driven CRM software has had a field day. CRM specialists can be heard professing, “If you are not focused on receiving and using customer feedback, you are missing out on an amazing growth tool. Gathering customer feedback throughout the entire customer journey is of great importance to the buyer life cycle, marketing campaigns and the entire consumer experience. As focuses shift to improving this experience, continuous feedback will be required.”

There are other claims of the kind, “Due to the recent technology and digital transformation boom, an entire ‘customer revolution’ has taken place and a new breed of informed and socially engaged Customer 2.0 has appeared. No longer is price or product the reason why a customer does business with you. Today, it’s all about the customer experience. To be competitive, you need to go above and beyond expectations and deliver a great experience.”

While all such exaggerated statements are correct, the missing link is treating a customer as a human being with ‘individualized identity’ and not as a commodity.

A sad and inhuman experience a few months back is an example of how customers are undifferentiated items of a commodity. [This is not a made up story and I have documented evidence to prove it should the hospital in question wish to challenge it].

Smt xxxxxx Gupta, mother of my close friend breathed her last at a premier private hospital in Jaipur.  Since CRM systems of hospitals maintain Customer-records in the name of patients, their automated CRM system sent a message “Dear xxxxxx Gupta, Thank you for availing services at Fortis. Request you to spare 60 seconds to share your experience with us. Click here: https://tinyurl.com/y3pufy8n?id=FxBCHqV8a

The system did not capture that Smt xxxxxx Gupta was already dead. My friend, a higher-ranking vice-chancellor, was crestfallen with the experience. He responded, “on behalf of my mother in the heaven, I am sending you the following response… ‘your customer service manager is welcome to visit me here in this tranquil and serene place (cremation ground) for a feedback’ …”

The CRM system was at its best in replying to late Smt xxxxxx Gupta, “Thank you for your valuable feedback.   We are sorry to learn that your experience wasn’t up to your satisfaction. We have taken your feed back into consideration and shall take appropriate action. We wish you good health always.”

The counter-response to the reply supplied by my friend against the request for feedback from late Smt xxxxxx Gupta is rubbing salt in fresh wounds.

What has really gone wrong? The answer is simple – the CRM database refuses to acknowledge the difference between a customer and a consumer. In this case, Smt xxxxxx Gupta was a consumer while her son was the customer. The contact details captured were of the customer but the feedback was being solicited from the consumer. The CRM system did not know if it was seeking feedback from the consumer of the customer. This is a case where the consumer is dead and the post sales feedback has rendered a disservice to the customer.

I have had personal experiences of receiving unending trail of phone calls from Maruti Authorised Nexa Service Stations chasing me for feedback, so much so that upon my refusal to provide feedback, I have been chastened by the customer service executives that I was legally duty-bound to provide the feedback. I have evidence to prove that the nuisance did not stop much until after I had escalated my suffering and harassment to the senior management of Maruti Udyog Limited.

These days, I and my spouse are suffering at the incompetent, uncaring and arrogant customer service team at Axis Bank. They are very good at hitting the self-esteem of their customers. We have been their customer since last 25-years. I have taken up the matter with the RBI Ombudsman and hope that the service failure is now dealt with quickly and squarely. A similar unpleasant experience with Corporation Bank was dealt with by their management very quickly and humanely where I was treated with dignity. They have succeeded in retaining me as their customer.

It is unfortunate that many service providers use Customer feedback to soften and pre-empt customer reaction to lapses in service rendered rather than any genuine concern for better customer service or improved customer experience.

It is time for the customer to stop taking bullshit from marketers and service-providers. It is time for the customer to REJECT such marketers and RAISE VOICE against such disservice.

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First published 17 Dec 2020

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Advertising to children in the schools

Children in India spent more than Rs 220 Billion, given to them as pocket money during 2016. This amount was more than the GDP of 52 small countries which included Maldives and Bhutan.  Cartoon channel Pogo had conducted a survey on the pocket money of the kids in the country. The ‘Turner New Generation 2016’  study was conducted in all major cities and also places with more than 1 lakh population. This study had covered 6,690 respondents, including 7-14 year kids and parents of 4-14.

As per this study, 52% of the kids were receiving pocket money. The average pocket money received by the kids was Rs. 555/- per month. This amount had doubled over the last four years since a similar survey conducted by Pogo in 2012 had estimated the average pocket money of kids at Rs. 275/- per month then.  (https://www.financialexpress.com/economy/pocket-money-of-kids-in-india-more-than-gdp-of-52-countries-says-pogo-study/757331/ )

These children were not only buying products as toys, clothes, candy, and snacks but also saving up for big ticket purchases.  Children were found influencing the purchases made by their parents for microwave ovens (57%), washing machines (58%), refrigerators (62%), televisions (68%), mobiles (64%), cars (66%) and even the choices of travel destinations (78%); which may add up to at least Rs. 3000 Billion in parental purchases. 71 percent children had personal mobiles as well as other electronic gadgets with them. (https://economictimes.indiatimes.com/wealth/spend/kids-pocket-money-up-100-since-2012-turner-international-india-study/articleshow/53238075.cms)

Children are buyers themselves, they are major influencers of their parents’ purchases, and they are future adult consumers. As future adults, children are potential consumers for all goods and services. Children therefore attract many advertisers.

During the last 50 years, Indian children got their own foods/snacks and clothing brands and such high-ticket items as video games and other high-tech products besides dedicated TV networks.

New advertising strategies aimed at children steadily proliferate. Linking their products to educational goals, advertisers have reached into the schools by sponsoring such activities as literacy programmes, reading projects, anti-drug campaigns, and communication skills training, while rewarding students for good performance with coupons for products and free meals. In-school advertising and examples of in-school commercialism can be put into four categories:

  1. In-school ads that can be seen on hoardings, on school buses, on scoreboards, and in school galleries. In-school ads include ads on book covers. Advertising is also found in product coupons and in give-aways that are distributed in schools.
  2. Ads in classroom materials include any commercial messages in printed materials or video programming used in school.
  3. Sponsored educational materials include free or low-cost items which can be used for instruction. These teaching aids may take the form of multimedia teaching kits, CDs/DVDs, software, books, posters, reproducible activity sheets, and workbooks.
  4. Contests and incentive programs bring brand names into the schools along with the promise of such rewards as free pizzas, cash, and points toward buying educational equipment, or trips and other prizes.

Although some educators defend the use of commercially produced materials as a way of providing useful supplements to the curriculum or as a way of raising funds and building needed bridges to businesses, other educators oppose it, fearing that market values may, for the most part, take the place of democratic values in the schools. Those who defend the trend argue that commercialism is highly prevalent throughout our society and a bit more advertising in the schools should not adversely affect students. On the other hand, many educators do not want to participate in offering up students as a captive audience.

In dealing with the issues of in-school commercialism, a three-pronged approach may be considered:

  1. Reviewing all sponsored materials and activities and holding them to the same standards as other curriculum items.
  2. Pursuing non-commercial partnerships with businesses and rejecting the notion that it is ethical to bring advertising into the schools to provide materials or funds to bolster dwindling budgets.
  3. Beginning the teaching of media literacy in elementary school, to help educate children to be critical readers of advertising, propaganda, and other mass-mediated messages, while helping them gain the skills to be intelligent, aware consumers.

With the expanding presence of advertising targeted to younger and younger children, schools have become involved in serving up students as captive audiences to advertisers. It is time to pause and reflect on the appropriateness of various kinds of connections between businesses and schools, and the influence those connections might have on the integrity of education in a democracy. Although traditionally there have been links between business and education in this country, commercialism in schools has recently skyrocketed. The overall goal of collaboration between businesses and schools should be for business leaders, educators, parents, and government officials to work together “…to embrace practical, responsible approaches that will protect the educational integrity of our school systems.

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Democracy echoes majority of feeling, not thinking

Elections are always about human feelings, desires, aspirations and choices and not about human rationality. Elections are about political liberalism which enshrines that voter knows the best.

If democracy were a matter of rational decision-making, there would be absolutely no reason to give all people equal voting rights – or perhaps any voting rights. There is ample evidence that some people are far more knowledgeable and rational than others.

Any search or expectation for rationality in the political discourse or democratic actions is irrational by default.

Gathering knowledge and understanding of the dominant irrationality of the majority and making a rational use of such knowledge is the foundation for political success in democracy.

This is what makes the data from social-media such precious commodity.

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From Spiral to Circular Innovation

The Spiral of Innovation has been a “buzz phrase” in the business world. Idea of “New Product Development” was described according to the pace of bringing in the NEW – Continuous New Product Development, Dynamically Continuous New Product Development and Innovation (now also described as Disruptive).

The process centred around the concept of improvements; incremental or radical; over the previously developed products and thus there was a screw-pitched, spiral like developmental graph in three-dimensional modelling which would show up as a linear growth model in two-dimensional graphics. This worked well, so much so that businesses could lead the market through planned obsolescence.

The iPhone 6s is the perfect example: In spite of the revolutionary design that introduced us to the 12-megapixel camera and 3D Touch technology, its disappearance from the Apple store is enough to render it obsolete in the minds of consumers. Apple, the world’s second-largest Smartphone producer, signed the death warrant of the wildly popular iPhone 6s with the launch of new models iPhone XR, XS, XS Max, X, 8, 8 Plus, 7 and 7 Plus last quarter. This is planned obsolescence.

Very little has changed in the twelve months since the launch of the iPhone X.  The release of a new iPhone model marks the disappearance of the iPhone 6s from Apple’s catalogue — a mere three years after a release with so much of noise and fanfare. This well-oiled mechanism has been in place since the very first iPhone and Apple has conditioned its consumers to happily accept this pace of obsolescence.

In spite of Apple’s “psychological warfare against their common sense,” the iPhone 6s still retains the qualities that have made it one of the most popular smart phones ever, with over 80 million sold worldwide. These 80 million phones still have good years ahead of them. In its three years in the market, the iPhone 6s has taken the lead in the marketplace.

A linear “take-make-dispose” economy, which has been the most popular economic models around the world, since the industrial revolution, is largely wasteful because up to 90% of the raw materials used in the manufacturing process end up as waste even before leaving the production line. In addition, 80% of goods manufactured are eventually thrown away within the first six months, which translates to an unsustainable rate of wasting fast-diminishing natural resources.

Produce, use and dispose-off? No, reduce, reuse and recycle. The current paradigm of lineal economic model could be coming to an end and its place will be taken by the circular economy. Fortunately, a circular economy that is based on regeneration and restoration can help solve almost all the problems associated with a linear economy. More specifically, a circular economy aims to keep raw materials, goods, and product parts at their highest value and utility levels all the time. This is in addition to differentiating between biological and technical cycles.

As more ideas come about, more principles for circular innovation will emerge; but there are at least ten principles that define, as of now, how circular economy should work:

  1. Waste as a resource: is the main feature; all the biodegradable material returns to the nature and the non biodegradable is reused.
  2. Use: reintroducing those products that no longer correspond to the initial consumers needs back and once again in the economic circuit.
  3. Reuse: put to reuse certain products or parts of those products that still work to elaborate new artefacts.
  4. Reparation: give damaged products a second life.
  5. Recycle: make use of materials discarded as waste.
  6. Valorisation: harness energy from waste which can no longer be recycled.
  7. Sell functionality not ownership: eliminate sale of products and transfer of ownership. User rents the product and returns it to the company after using it, where it is put through use/reuse/reparation principles as may be possible.
  8. Switch to renewable Energy: eliminate use of fossil fuels to produce, reuse and recycle the product.
  9. Eco-design: considers and integrate the environmental impacts throughout the life cycle of a product.
  10. Ecological Management: establish optimized management of stocks and flows of materials, energy and services by industry and by geography.

 

The world is changing and there are campaigns to convince consumers to stop systematically turning to new models. This fight against a fetish, where new models are gobbled up and then soon enough purged, is an effective way to combat the overproduction of electronics, the overexploitation of natural resources, and the explosion of e-waste.

Certified refurbishing is one proven and reliable way to extend the life of electronics, keeping them out of the landfills. Fearing a social and market backlash, Apple has taken recent steps to improve the sustainability of its devices. It has committed to develop a closed-loop model for its supply chain by focusing on using only renewable resources and recycled materials and eliminating conflict materials from its value chain. The tech giant has already incorporated artificial intelligence, a robot called “Liam” to aid in the disassembling of products and recovery of components that can be recycled; and hopes to encourage more consumers to return products to be recycled and made into new equipment through its Apple Renew recycling program.

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Ethical Dilemma* in Marketing

A society can usually be viewed as comprising of three sectors- government, business and social sectors. These are no disjoint groups. Nonetheless, they exhibit a lot of heterogeneity across each other and homogeneity among themselves. The interface between the three varies across societies and nations, yet all the three have a common pursuit- the benefit of the people. The ways and means adopted by these three are different, sometimes even in conflict with each other. The interplay of the actions of these three groups provides the social dynamism.

The interface between government and business gives rise to regulatory frameworks. Between social sector and government, the issues are political and legislative. The interface between social sector and business gives rise to ethical issues. The differences across societies lead to typical cases making ethical issues subjective to a society.

Marketing efforts face dilemmas some common, others different, across societies. A typical example is where pressures of social sector forces government to regulate advertising messages from marketing enterprises in public media. Similarly social sector doesn’t let Gujarat government to lift prohibition in the state for the last 70 years in spite of loss to the exchequer and innumerable incidents of bootlegging. So far, so good. In both of these instances, social sector used its interface with government to ensure that the government uses its interface with business and regulate the business behaviour.

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In situations where, things do not work out this way in which the government regulates business at the behest of social sector, the business-social sector interface becomes critical. This interface creates both opportunities and threats. Opportunities arise for corporate image building by business through supporting social causes. Charities, philanthropy, endowments, social marketing all are some of the few ways that business uses these opportunities. Threats arise when marketing actions are not perceived as socially correct by the social sector. What is socially correct may usually be a matter of perception and debate and lead to disagreements.

Take for instance, a simple example of a tip to a nursing sister in a hospital by the sales representative of a pharmaceutical product company, who tipped her for her support to the products that he promotes. The basis of such dilemma is the thin line between a harmless tip for expressing gratitude and clear inducement money or bribe to seek unreasonable advantage over competing products. Who draws this line and where this line is drawn is very subjective and prone to disagreements.

Use of animal tallow in making of hydrogenated vegetable oils, a practice adopted internationally, becomes a moral and ethical issue in India for its social context. Using vigour, strength, vitality and success, as the stereotypes for promoting a known health hazard like cigarettes is an ethical issue. Promotion of baby milk powders in competition with breast-feed is an issue.

Such issues become marketing dilemmas since it is possible for any marketing effort to be well within the legal and regulatory framework yet being totally out of sync with the expectations of the social sector. In these situations, the social sector likes to fight back. It has two ways of handling such situations; use its interface with the government and let government bear down upon business through government-business interface; or create a social backlash against the marketing efforts. Social backlash is wielded through pressure groups, media, public opinion and simple boycotts.

Marketing managers have only two options in cases of such ethical dilemmas. Proactively make corrections to suit the context and avoid any retaliation from the social sector. Any confrontation from the social sector can only lead to tarnished image, loss of business and intervention from government. The other alternative is to build a favourable social perception for its marketing practices. This route is slow, difficult and expensive. It may not always succeed. If it works, new marketing opportunities may be created. Further this route may not be in exclusion to the first route; it may compliment the first one.

 

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Existing Research:

Jamnik, A. (August 2011), “The Question of Ethical Decision in Marketing and Ethics” Revista Cultura Económica, (Journal of Pontificia Universidad Catolica Argentina – the Catholic University of Argentina) 29(80), pp 41-53.

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Refresher for the academically inclined:

Marketers are routinely confronted with ethical dilemmas in practice.

Situations that are uncomfortable but that don’t require a choice are not ethical dilemmas. For example, Salesmen are required to be under the supervision of their appropriately credentialed superior. Therefore, because there is no choice in the matter, there is no ethical violation or breach of confidentiality when a salesman discusses confidential customer information with the superior.

There are three conditions that must be present for a situation to be considered an ethical dilemma. The first condition occurs in situations when an individual, must make a decision about which course of action is best. The second condition for ethical dilemma is that there must be different courses of action to choose from. Third, in an ethical dilemma, no matter what course of action is taken, some ethical principle is compromised. In other words, there is no perfect solution.

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In determining what constitutes an ethical dilemma, it is necessary to make a distinction between ethics, values, morals, and laws and policies. Ethics are prepositional statements (standards) that are used by members of a profession or group to determine what the right course of action in a situation is. Ethics rely on logical and rational criteria to reach a decision, an essentially cognitive process. Values, on the other hand, describe ideas that we value or prize. To value something means that we hold it dear and feel it has worth to us. As such, there is often a feeling or affective component associated with values.

Finally, laws and company policies are often involved in most cases.

It is also essential that the distinction be made between personal and professional ethics and values. Conflicts between personal and professional values should not be considered ethical dilemmas for a number of reasons. Because values involve feelings and are personal, the rational process used for resolving ethical dilemmas cannot be applied to values conflicts. Further, when an individual elects to become a member of a profession, he or she is agreeing to comply with the standards of the profession, including its Code of Ethics and values.

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Focus on people’s love, not hate- Oh! Marketing Guys

Remember (?) advertising for ‘Dove’ – as in “Dove is not a soap – it is one quarter moisturising crème.” This refers to calling attention to the positioning of the product category but refuting it for the brand in the same category. This is not positioning Dove as not being a soap but highlighting a product attribute which other brands in the category may not have – it’s competitive parity method of positioning a brand against a category – the point of parity being that ‘Dove is in fact a soap’ yet the point of difference being – it is different from all other soaps in terms of its product attribute resulting into a differential (superior) consumer benefit.

Marketing for products promising sustainability has usually seen their positioning as what they “weren’t.” (it is analogous to saying ‘Dove is in fact not a soap’ which was never the intent or the meaning in its communication actually). Products promising sustainability are a different product category in terms of their attributes (points of difference) but using parity of benefits with a less sustainable category, which they wish to take on. The proposition here is same consumer benefits, entirely different attributes and an Extra value proposition of sustainability and ethicality.

Notice these:

  1. Mock Meat isn’t meat. (Good for vegetarians and vegans). Mock meat, also known as meat analogue, faux meat or vegan meat, is a cruelty-free substitute for animal-derived meat. It looks like meat, cooks like meat and tastes like meat but it’s healthier, better for the environment and doesn’t involve killing any animals. Today, mock meat brands are emerging in India, and are armed with numerous kinds of textured meat. You could literally replace meat in any recipe with mock meat and it will be the same. Some brands are on the market –
  • Veggie Champ
  • Good Dot
  • Vegeta Gold
  • Vezlay
  • Vegitein

Similarly,

  1. Solar isn’t fossil fuel. (Good for environment) The climate change openly call for the world to make a shift to an alternate fuel; a fuel that brings with itself both the dependability and usability of fossil fuels. Some players in India’s solar industry are:
  • Tata Power Solar Systems Ltd.
  • Kotak Urja Pvt. Ltd.
  • Moser Baer Solar Ltd.
  • Indosolar Ltd.
  • Photon Energy Systems Ltd.
  1. Soy milk isn’t a dairy product. (Good for vegans and people with dairy allergies) Some brands on the market:
  • Sofit
  • Soy Milky
  • So Good
  • Soyfresh
  • Soyvita

Positioning against the negative helped companies attract consumers who were revolting against the polluting impacts of standard manufacturing practices and products. But doing so ignored what potential customers still wanted, whether a product was sustainable or not: delicious in taste, high on performance, reliable in terms of quality and comfort, and overall satisfaction.

Many eco-conscious consumers have given up meat grudgingly. But that doesn’t mean they don’t miss the savoury taste of a good burger.  It is not a good idea to build a brand by telling people not to eat what they love; instead, encourage people to eat more of their favourite food — just a healthier, more humane, more sustainable version.

Consider the following suggestions and examples for focussing on people’s love rather than their hate –

  1. Consumers shopping for fuel-efficient cars were convinced they had to sacrifice safety and speed. People don’t just buy a car, they invest in a brand. Build a brand on what most of the drivers would value above fuel efficiency – delivering the high level of quality and performance – but bringing along fuel efficiency too.
  2. Women don’t want to give up make-up. But beauty products contain many toxic chemicals. What’s the choice? Risk cancer or go make-up free? The opportunity lies in developing innovative products that provide the same level of beauty as their conventional counterparts conforming to new standard of safety which you set to lead the industry.
  3. Most domestic gadgets, appliances and lighting brands can stretch the technology and stress their technological prowess but declare, “Saving energy is a beautiful thing.” Not that it saves money or is good for the planet, both of which are true.
  4. Government is enacting plastic bag fees and other laws to reduce use of plastic bags. Retailers and departmental stores are on a mission in stopping the use of throwaway plastic bags by encouraging shoppers to BYOB (bring your own bag). There lies the opportunity of empowering people to take an active role; giving them a shopping bag which they would love to flaunt: an inexpensive, durable, fashionable and affordable bag they can use over and over and over again. Business could be expanded to co-branding operation so that other businesses can take advantage of the good will that the brand creates in the marketplace and appear to do right by association.
  5. For decades, selling more sustainable products was hindered by limited access to customers because of established channels of distribution — many of which were hard, if not impossible, for purpose-driven brands to infiltrate. Today, organic dairies and cow-milk dairies are surviving by resurrecting the home delivery “milkman.”
  6. Women silently face problems in public washrooms because of unhygienic toilet seats, making them prone to infections. Archit Agarwal realised the problems while compiling a report on the condition of public washrooms. He joined hands with a colleague to plunge into entrepreneurship. They built a novel sanitation device, which allows women to stand and urinate eliminating physical contact of body with dirty toilet seats and with it, the risk of infections. In this social media era of revealing tell-all and first-person narratives, explaining a new product with a compelling origin story sells.

Marketing driven with the purpose of sustainability need not compromise with the wants of the consumers. In fact, sustainability is not anti-consumer satisfaction; it provides additional gratification for the customer and more opportunities for differentiation.

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Envisioning Organizations as Brand Ecosystems

Doctrine of a corporation as a legal person, separate and distinct from the personality of the members who compose it, has been defined and propagated by lawyers and judges. Unless it is a dummy, a corporation would have an organisation comprising of people. How would one describe an organization? One way could be through anthropomorphizing the organizations.

Usually one single word captures the personality of an organization – such as – overbearing or happy or joyful, and so on. This one word description is a collective for the “behavioural” aspects and “personality traits” of the organisation. Does the organisation have fair policies or unfair practices – perhaps an espoused technical superiority of products that is mostly based on copy-paste practices with little advancement led from research effort and innovation?

Who are you and why should we care?” Since the 1950s, companies have turned to externally focused branding methods to answer such questions that consumers ask from them about their businesses. Today, companies face increasingly hyper-connected customers in sceptical marketplace where they want to know the substance beyond the sizzle of advertising. For branding to remain the economic engine it has been over the past 70 years, there has to be an acceptance of the fact that transparency is the new mantra of communications. This amplifies the importance of a strategic approach that engages every corner of the organization — the whole system — in ensuring the walk and talk are aligned.

Where a corporation is signified, corporate brand is the signifier. Borrowing from Edgar Schein (Schein, Edgar H with Schein, Peter: Organizational Culture and Leadership, fifth Edition, Hoboken, New Jersey: John Wiley, 2017) – if organisation is the body (Artifacts), mind (Espoused Values) and soul (Basic Underlying Assumptions) of a corporation, it is inside this organisation that the corporate brand is conceived, carried, birthed, nurtured, groomed and delivered to business arena as an economic contribution from the corporation. In this vain, organizations can be re-imagined as brand-ecosystems and that may well be the next evolution of branding. This perspective transcends the shiny veneer of the shallow and superficial efforts focused on external communications, first introduced by the men of Advertising, and takes on the responsibility of connecting the sizzle to the substance, a connection which the customers, employees and the world are seeking.

This framework of “Organisations as Brand-Ecosystems” thus defines these components of organizations that must be managed in order to build trustworthy brands as image, identity, culture and vision.

Image is the impression carried in the minds of the audience (customers, consumers and stakeholders) about the culture and the vision of the organisation. Identity is the manifestation of the culture and the vision of the organisation in its policies, products, practices, communications, conduct and response to external and internal stimuli.

Organizational culture is all of those shared norms, beliefs and values that linger in the fabric of the organization. Some of these values are embodied in the policies and procedures while others are an unintended consequence of these same policies, procedures and practices. Vision answers the questions – ‘what’, ‘why’ and ‘how’ about an organisation.

In this framework, strategy is redefined as a process of composing the cohesion of the various elements of the system: identity, image, culture and vision. Well-executed strategy produces a tight interlocking of the various elements of the ecosystem. Authenticity and trust, two crucial determinants in attracting and retaining the best and brightest employees and loyal customers, are strengthened, as the twining between the identity storyline (who the organization says it is) and the other parts of the system takes place. This virtuous brand spiral, over time, builds the most valuable asset for any organisation – its reputation – by engaging the most important resource, its people. On the other hand, organizations unable to create this alignment spin into a vicious cycle resulting in dysfunction and distrust of the organization and movement away from the vision of the leadership.

Viewing organizations as brand ecosystems acknowledges the walls that once-separate internal and external audiences have fallen down. Everything is connected, and everything communicates. From thinking of branding as a function owned solely by marketing departments or experts charged with pushing out messaging, this represents an important shift to the realisation that brands are a co-creation, dependent upon engaging all stakeholders in shaping the “meaning” that defines the brand.

When a new vision is introduced that is significantly out of alignment with the existing identity of the organization, a new narrative must be introduced to bring the system into balance and avoid any Identity-Vision Gap. When frustrations emerge among leaders because they feel members of the organization are not, or cannot, deliver on the aspirations for the company, it shows a Vision-Culture Gap. Vision-Image Gap exists when the images held by the marketplace are disconnected from the aspirations of leadership, and it becomes difficult for the organization to move to the next level.  When the organization fails to deliver on the story told to its employees and the marketplace, we say the culture is out of alignment and an Image-Culture Gap has set in. Gaps in the ecosystem are symptoms of weak brands.

Organizations will find the brand ecosystem a valuable framework in producing both a brand that people trust and, over time, a reputation that builds sustainable success.

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3-Point Agenda for Marketing

Sustainable Marketing, Responsible Consumption and Healthier Choices: Agenda for Practitioners and Academics

 

Outdated values such as “more is always better” are gone and the world needs a roadmap for 21st-century brand leadership toward sustainable consumption norms. Marketers have to commit to consistently use their advertising voice as a force for the good. To drive tangible action, the advertising must appeal emotionally to viewers’ hearts and rationally to their minds.

The Agenda is actually quite simple:

  • Inspiring Consumers and Companies to Make Healthier Choices – encourage imagery about real people not stereotypes, critique the collateral consequences of consumption vis-à-vis the hyped up real or pseudo-benefits;

 

  • Promoting Responsible Consumption – inducting the dictum from industry “reduce, reuse, recycle” into the consumption equation; example of single-use plastic; and

 

  • Making Marketing Strategy Sustainable – Sustainability not as a selling proposition but as a core to driving Marketing action – evaluating it through the filters of Socioeconomic equitability, Social and ecological tolerability, economic and environmental viability and above all sustainable for society, environment, and business.

 

Putting such strategy to action would need creating lust, craving or desire for sustainability which would in turn require a deep understanding of the core human emotions that drive action, and knowledge of how to reliably elicit these emotions in a market setting. The latter is what the Practitioners and Academics have always been doing or at least claimed to have been doing.


 

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BRANDS have a ‘HALO’ – BRANDS also have ‘HORNS’

“Customers rationally weigh the pros and cons of competing products to select one that best fits their needs,” this is the classical economic view of consumer decision-making; but watch or ask anyone who has compulsively bought a giant block of “Cadbury’s Dairy Milk Silk” at 3:00 am and one realises that purchasing decisions are not always so logically driven. Consumers report a desire to buy sustainable products, but their purchasing decisions do not always reflect that desire.

The psychological processes that influence this intention-action gap are being explored through the field of decision neuroscience. Neuroscientists conduct experiments using tools such as fMRI (functional magnetic resonance imaging) to explore the activation of different brain regions. Certain regions of the brain are activated when a customer makes purchasing decisions. Scientists have observed reduced activation in the reward system in the brain when consumers are viewing ‘green’ ads.

Because consumers are not aware of their own psychological factors at play in decision-making, the best way to capture these processes is to use measures that don’t rely on a conscious response, such as reaction time measures, eye tracking or “fast” choice tasks. By coupling these with more traditional market research methods, such as surveys, one can paint a fuller picture of the rational and irrational components in the product-purchasing process.

Emotional intensity during the purchasing process can be monitored through physiological methods, including electroencephalogram (EEG), which measures brain waves; or galvanic skin response (GSR), which measures the amount of sweat conductance on the skin. These studies have indicated that ‘green’ consumer decision-making involves a high degree of emotional processing.

In a recent study a combination of eye tracking, biometrics, and EEG was used to explore the effect of food cues on consumer choices. The study first measured consumer responses to a variety of brands, creating a hierarchy of brand perceptions that ranged from “healthy” to “unhealthy.” Healthy and unhealthy brands were then paired with healthy or unhealthy foods and displayed to the consumer — for example; a McDonald’s salad represents an unhealthy brand selling a healthy food.

The study revealed two phenomena — the HALO effect, where people believe that the unhealthy foods marketed by healthy brands are better for them; and the HORNS effect, where consumers believe that the healthy products sold by unhealthy brands are more harmful to health. The study has implications for the obesity crisis, as consumers may be purchasing high-calorie foods from “healthy” brands without realizing that they have made an unhealthy choice. It is also possible that these two phenomena could also be at play in consumer perceptions of “sustainable” and “unsustainable” brands.

The consumers are willing to accept a black coloured (product attribute) toothpaste for making their teeth shining and pearly white but they may be unwilling to accept Woodland, Kiwi, Brasso, Silvo or CherryBlossom toothpaste. How about a Colgate Shoe polish?

(Fresh from the conclave of over 2000 representatives from the global community of Marketers and Neuroscientists on June 04, 2018 at Vancouver, Canada)

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