BIG DATA - OPPORTUNITIES AND CHALLENGES FOR MARKETERS

January 29, 2015

Written by Emil Westrin

“We never, ever in the history of mankind have had access to so much information so quickly and so easily.”  (Vint Cerf, “father of the internet” quoted in Silva 2009)

Big data is the big thing in business today. We have all been told that big data will change our lives and revolutionize the way we do business. Marketers are no exception as marketing departments around the world are striving to implement big data into their routines. It is the word on everybody’s lips but do we actually know what we are talking about?

The purpose of this blog article is to demystify the concept of big data and to give marketers a better understanding how big data can be used in the planning, execution and analysis of marketing activities.

What is big data?

Every day, we create 2,5 quintillion of data on this earth. That is a staggering figure which can be exemplified by the fact that 90% of the data in the world today has been produced in the last two years alone (IBM, 2011). Big data has supposedly created big opportunities. The main idea for businesses is to exploit the growing mass of accessible information in large based on financial transactions or customer interactions to maximize business performance and create competitive advantages. (Purcell, 2013; Biesdorf et al, 2013) Collecting data to improve competitiveness is not a new phenomenon however; it has been around for decades. In the early nineties it was common for large corporations to build and take advantage of customer information systems. These systems were used to understand individual customers better and to develop and market new products based on the preferences of the consumers (Bessen, 1993).

Since the nineties we have experienced the digital revolution with the gradual shift towards digital products and information. This combined with innovations such as new databases and eventually clouds storage, has enabled companies to gather, store and analyze huge quantity of data much more efficiently. The result is a boom in data storage (Varadarajan & Yadav, 2009; Nunan & Di Domenico, 2013). Data is being stored, traded and used much like commodities today.  Some of the biggest corporations in the world are in the forefront of the data frenzy. Wal-Mart, the American retail giant handles and stores more than 1m customer transactions per hour, 40 billions photos had been uploaded to Facebook by 2010, and 48 hours of video is being uploaded to Youtube every minute (The Economist, 2010; Allocca, 2012).

What is the big deal?

So, with the vast amount if information easily accessible, it seems easy to reap the benefits in order to create competitive miracles.  Big data is a hot tech topic and is actively discussed in most business media today.  Some are giving movies like “Moneyball” or the books such as  “Freakenomics” part of the credit for the big data’s rise in popularity. Numbers and statistics have become somewhat “hip” again (NYtimes, 2012).

There are plenty of success stories and factors that point to an inevitable growth of big data usage. For example; 10-15 percent of organizations today are using big data in some capacity, and these companies outperform their competition by 20 percent (Scott, 2013). Greater willingness from consumers to share personal information online combined with the before mentioned technological advancements has increased the commercial value that can be added to organizations by using big data (Nunan & Di Domenico, 2013).  Another reason big data is celebrated it the way it empowers consumers as well. It has never before been so fast and easy to compare prices online as today (Sluis, 2014; Fulgoni, 2013).

Big data and marketing

Big data has created big opportunities for marketing departments all over the globe. The easy access to vast amount of information based on customer interactions has enabled marketers to go from knowing the customer as a demographic to understanding him or her as an individual (Sluis, 2014).  Bessen (1993) argues that successful marketing always has relied on a two-way information flow between the marketer and the customer. The marketers’ challenge has always been to collect detailed demographic and life-style information on consumers that can be used as a basis for effective and efficient activities. Today, it is easier than ever to establish the two-way information flow due to the Internet, social media and big data.  The challenge for many marketers today has moved from having too little information to having too much information coming from too many sources. The vast amount of data has turned marketers into insight hunters. Consequently, one of the greatest challenges for marketing departments is to create an information ecosystem by combining patterns of data from different sources (Prajicek, 2013).

Online giants such as Google and Facebook have made harnessing the data on the web into extremely lucrative businesses. Based on big data, Google and Facebook can now offer their clients tailored campaigns based on for example online searches, posts and messages. Marketers involved with Internet marketing know the potential reward of cost-efficient tools such as social media feeds, user videos and image posts etc. All the online tools have converged into massive dashboards that give marketers real-time and holistic views of the consumers and their ongoing activities (Smith, 2013). Marketers have been armed with advertising optimization capabilities overall, based on the growing amount of big data available to them (Fulgoni, 2013).

The challenges of big data for marketers

Prajicek (2013) criticizes many marketing departments for committing the “more is better”-fallacy. He argues that they seem to think that adding more sources of information will lead to better answers.  Having terabytes of data available but no one to successfully interpret the data is a major mistake.  And the fact is that many marketers lack skills that would enable them to use big data successfully (Vriens & Brazell, 2013; Ross, 2013). Another common mistake marketers commit is that they spend too much time “in the cloud” looking at macro trends. Great data and great insights are often wasted when big data is not being leveraged by little data and interpreted based on the integrations and relationships it’s based on (Ross, 2013; Fox & Do, 2013). Great data needs to be acted upon in order to create the potential competitive advantages.

Another challenge of big data stems from the established clash between marketing and sales. Big data can erode long-term marketing commitments in order to promote short-term sales. Fulgoni (2013) warns that a reliance on big data in a company has a tendency to cultivate a short-term decision making mindset. 

One of the main criticisms against the use of big data in marketing is the implication on individual privacy.  How much information on about consumers can big corporation store before it becomes an intrusion on private life?  There have been voices calling for ethical guidelines for the commercial use of big data, some actors have gone so far to call for self-imposed regulation in order to keep the consumers’ trust (Nunan & Di Domenico, 2013; Sluis, 2014; Cumbley & Church, 2013).

Key takeaways on big data for marketers

There are several reasons behind the rise of big data. The emergence of new technology such as more sophisticated databases and cloud technology has further pushed the boundaries of the digital revolution. Gathering, storing and analyzing of data has become more cost-efficient and organizations are not late to capitalize the potential benefits. This is proven by the statistic stating that the 10-15 percent of companies that are using big data are outperforming the competition by 20 percent.

The value of big data for marketing departments can best be explained by using the two-way information flow between the marketer and the customer, presented by Bessen (1993). Big data has enabled marketers to go from knowing the customer as a demographic to understanding them as an individual. The incredible depth of consumer information makes it possible for marketers to tailor their products, offers and activities to meet the expectation of a specific individual. Marketing with the use of big data will force marketers to attain certain skills in order to make use of the data. Marketers will chase insights by combining a mix of findings and data. Big data has started to provide marketers with real-time and holistic view of the consumers and their ongoing activities.

But marketers also need to acknowledge the challenges that come with using leveraging big data. The major question mark for the future is the implications on the consumer’s privacy.  Marketers with access to big data should strive to do ethically right and listen to common sense.

References

Allocca. K. (2010), Why videos go viral. Available online at: http://www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action.html [Accessed 15 january 2014].

Bessen, J. (1993), ”Riding the marketing information wave”, Harvard Business Review 71(5), 150-160.

Biesdorf, S., Court, D., & Willmott, P. (2013), “Big data: What's your plan?”, McKinsey Quarterly  2, 40-51.

Cumbley, R., Church, P. (2013),”Is “Big Data” creepy?”, Computer Law & Security Review 29(5), 601-609.

Fox, S., & Do, T. (2013). Getting real about Big Data: applying critical realism to analyse Big Data hype. International Journal of Managing Projects in Business, 6(4), 739-760.

Fulgoni, G. (2013), ”Big Data: Friend or Foe of Digital Advertising? Five Ways Marketers Should Use Digital Big Data to Their Advantage.”, Journal of Advertising Research 53(4), 372-376.

IBM (2013). “What is big data?”, Available online at: http://www-01.ibm.com/software/data/bigdata/what-is-big-data.html [Accessed: 15 January 2014].

Krajicek, D. (2013), ”Market research and the ethics of big data”, Marketing Insight 25(1), 8-9.

New York Times (2013), “The Age of Big Data”, Available online at: http://www.nytimes.com/2012/02/12/sunday-review/big-datas-impact-in-the-world.html?pagewanted=all [Accessed: 15 January 2014.]

Nunan, D., Di Dominico, M. (2013), ”Market research and the ethics of big data”, International Journal of Market Research  55(4), 2-13.

Purcell, B. (2013). The emergence of" big data" technology and analytics. Journal of Technology Research 4, 1-7.

Ross, J. W., Beath, C. M., Quaadgras, A. (2013), ” You May Not Need Big Data After All”, Harvard Business Review 91(12), 90-98.

Scott, N. (2013), ”Big data: What's the big deal?”, Director 66(10), 61-65.

Silva, D. (2009). The internet has only just begun, say founders”, Available online at: http://phys.org/news159644537.html [accessed 15 January 2014].

Sluis, S. (2014), ”DMA13 Marketers Must Carefully Consider Big Data Strategies”, CRM Magazine 18(1), 8.

Smith, S. (2013), ”Is Data the New Media? [Big Data impact on the media industry]”, EContent 36(2), 14-19,

The Ecoomist (2010), “Data, data everywhere”, Available online: www.economist.com/node/15557443 [accessed 15 January 2014].

Varadarajan, R. & Yadav M. S. (2009), “Marketing Strategy in an Internet-Enabled Environment: A Retrospective on the First Ten Years of JIM and a Prospective on the Next Ten Years”, Journal of Interactive Marketing 23, 11–22.

Vriens, M., Brazell, J. (2013), ” The COMPETITIVE Advantage”, Marketing Insight 25(3), 32-38.

The Power of Social Media: A Case of Kentucky Fried Chicken in China

January 26, 2015

Written by Wanyi Wang

Introduction

In China, recent developments in web and Internet technologies produce some new things for people. The most popular online content, applications and services called social media which has changed people’s life. A lot of people are toward the use of social media. For example, “5,700 China’s Internet users have found that 95 percent of them are registered on a social media sites” (Chiu, Ip & Silverman, 2012 [1]). Social media is a developing phenomenon in today’s marketing. (Hoffrnal & Novak, 2012) Companies are beginning to use the fashionable tools such as Facebook, Twitter and YouTube in marketing strategies and campaigns. The use of traditional media has decreased since marketers have turned their attention to social media. (Akar & Topsu, 2013) It is necessary to state that China’s social media have something different than Western. No Facebook and Twitter, people use China’s social media such as Qzone and Sina Weibo. (Chiu, Ip & Silverman, 2012 [2]) Recently, there is a hot topic discussed on China’s social network and many people reblog it. The author would analyze why most companies shift their attention from traditional media to social media through the hot topic.

The purpose of this paper is to understand the power of social media. More specifically, the author using a case of Kentucky Fried Chicken (China) to analyze why companies display online marketing campaigns can create more value than traditional media.

Literature Review

In the past, consumers accepted messages from traditional magazines, radio, television and direct mail. The product-focused one-way interruption mass communication gives a lot of trouble and inconvenience to receiver. Some consumers do not trust the information which provides by traditional media. (David, M. Scott., 2007) The new types of social media named Web 2.0 which including many different types such as social networking sites, blogging platform, social search applications and social coupon sites(Hoffrnal & Novak, 2012). According to Chiu, Ip and Silverman (2012 [2]) describe, the most popular China’s social media sites are: Qzone, Sina Weibo and Renren. The basic function is the same as Facebook, Twitter and YouTube. The new online technology Web 2.0 has grown to a scale. (Hoffrnal & Novak, 2012) With the rise in social media, consumers are beginning to talk about brands and products. Social media produce the opportunities to people communicate and exchange information with each other. Consumers also can get information from social media, and then they can instantly give feedback or share their ideas without any technical knowledge. (Akar & Topsu, 2013)

Hanna, Rohm and Crittenden (2011) mention that “traditional media is all about reach which can be achieved in large numbers and it often does not translate into a true marketing exchange.” However, social media has changed the traditional mode of market information, consumer changed from passive roles to an active role in the marketing process. “They simultaneously act the initiators and the recipients of information exchanges.” (Kietzmann, et al., 2011) The interactive digital media sites allow consumers connect, share and create information and fundamentally changed the way marketers control marketing activities (Hanna, Rohm, Crittenden, 2011).

As Hansen, Sheiderman and Smith, (2011) describe “billions of people create trillions of connections through social media each day.” Social media is a powerful and effective medium to communicate with millions of potential consumers for companies. Hence, companies who use social media may gain a chance of reaching a wider audience. (Bamford, 2012) Meanwhile, social media can help a company build a good relationship with consumers. Business uses two-way communication may provide an intimate and warm feeling for consumers. (DiPietro, et al., 2012) Moreover, consumers toward the use of social media in creating and exchanging message in today market. The message exchanged by consumer themselves which result in creating word-of-mouth communication. (Papasolomou & Melanthiou, 2012) When looking at the word-of-mouth effects, the effects of social media last longer than the effects of traditional marketing (Trusov, Bucklin, & Pauwels, 2009). Social media often has higher credibility and trust than traditional media (Akar, & Topsu, 2013). In addition, social media offer increased traffic and improved search rankings for a company or a brand (Hanna, Rohm & Crittenden, 2011). It means the exposure also increases. All the power of social media may lead a good consequence to sales (Dyer, 2013).

Case Analysis

Kentucky Fried Chicken is a fast food restaurant chain which famous for fried chicken and it also provides hamburgers and French fries etc. After KFC reach China market, it is intended to become the first fast food restaurant. In order to achieve the goal, KFC adjusts some products according to Chinese taste preferences and obtains consumers’ praise. In order to gain consumers’ attention and attract them to patronage, KFC promotes itself through making a series of advertisings and activities in Chinese markets. (KFC China, 2012)

In the past, KFC (China) devoted time and money to offline marketing such as TV advertising and posters etc to promote its products. Along with the social media is widely used and a large number of people fall into the trend. KFC is beginning to use social media as the communication tools. Recently, FKC (China) Company used social media to communicate a message and simultaneously involving the consumers in the campaign. (http://kfcpk.qq.com/) This message told consumers that, the classical “Original Recipe” stop selling five weeks in KFC China market from 30 December 2013. The new product “Extra Crispy” instead the “Original Recipe” is provided in this period. Consumer can join the campaigns to vote “the favorite fried chicken” to decide whether the “Original Recipe” will continue to sell in KFC China market. (KFC, 2013) KFC uses China’s social media sites Sina Weibo, Renren and QQ to develop the message.

谁能代表KFC   (Who can represent KFC)

Figure.1 Who can represent KFC (KFC, 2013)

In the past 43 days, more than 13 million people vote for the KFC campaigns through social media. This result is not the final result and the number of voting people continues to grow. As Hansen, Sheiderman and Smith (2011) mention social media have the unique charm of “billions of people create trillions of connections through each day.”In view of the large number of Internet users registered on a social media and be active in social network. KFC (China) decided to create an online marketing campaign and using social media to touch millions of potential consumers quickly. On the other hand, KFC’s main targets are young people in China. Most users of social media such as Qzone, Sina Webo and RenRen are precisely young people. Hence, creating and exchanging message through social media helps KFC accurately aim at its target group.

In this period of doing the campaign, consumers simultaneously act the initiators and the recipients of information exchanges through social media (Kietzmann, et al., 2011). First of all, consumers receive the message and then who like the new product “Extra Crispy” may offer a positive evaluation in social media sites. Then, they are willing to share the positive information and recommend the new products for their friends through the social media. This interactive communication provides an intimate and warm feeling for consumers, then building a good relationship between company and consumers (DiPietro, et al., 2012). From the recipients’ perspective, they are more likely to believe information which provided by friends than a marketer. Hence, a company use consumer as the recipients can bring higher credibility and trust (Akar and Topsu, 2013).

Of course, social media cannot avoid negative evaluation. Some consumers think the classical “Original Recipe” is the soul of KFC. They do not support using new fried chicken instead of the classical one and they hope to enjoy it unceasingly. Some of consumers hope KFC keeps both “Original Recipe” and “Extra Crispy” in market. As Papasolomou and Melanthiou (2012) describe the message exchanged by consumer themselves which result in creating word-of-mouth communication. More than 40 days later, many consumers still discuss this topic. Some consumers are waiting for a result of the campaign. Like Trusov, Bucklin and Pauwels (2009) mention, the effects of social media last a long period of time than traditional media. Launching the campaign only uses one day, but consumers’ discussion leads the campaign exists in people’s mind for a long time. However, if launching the new product through TV advertising. The effects will disappear with the stop of the advertising.

No matter the positive or negative evaluation provided by consumers through social media. The campaign “Original Recipe PK Extra Crispy” causes a fierce discussion. The hot topic increased KFC exposure and also improved search rankings (Hanna, Rohm & Crittenden, 2011). The results prove that consumers accept the interactive communication and willing to join the campaign. Consumers are beginning to contradict the traditional one-way communication which companies tried to control and decide how their products should be perceived by the customers. Sometime, consumers dislike the feeling that advertisings interrupt them when they watch TV or listen to the music.

From another aspect, social media can help the company improve sales (Dyer, 2013). No matter consumer tries the new product for the campaign or fierce discussion makes consumers want to try. A sustained rise in the sales of “Extra Crispy” from the campaign obtains consumers’ attention (CYOL, 2014). Consumers will continue to patronage the new product if they love the product. It also has opened the door to the sales of products in the future.

Conclusion

In summary, the power of social media is obvious through analyzing the case of KFC (China). The cheap social media create a great value for KFC not only result in sales, but also involve many aspects. First, social media provide a chance of reaching a wider audience for a company or a brand (Bamford, 2012). Second, social media help company to build a good relationship with consumers (DiPietro, et al., 2012). Third, the message exchanged by consumer themselves which result in creating word-of-mouth communication (Papasolomou & Melanthiou, 2012). Fourth, social media involve higher credibility and trust (Akar, & Topsu, 2013). Fifth, social media offer increased traffic and improved search rankings for a company or a brand (Hanna, Rohm & Crittenden, 2011). All these benefits from social media let companies shift their attention from traditional media to social media.

Social media have begun to explore a location in online marketing and have influenced companies and consumers to a large extent. Companies now pay attention to social media marketing. It is worth reminding, social media is a two-edged sword. We cannot say social media is a flawless approach. To be sure, companies need to consider both advantages and disadvantages of social media in the future. Using it in the correct way will bring more value to a company.

References:

Akar, E., & Topsu, B., 2013. “An examination of factors influencing consumers’ choice of social media marketing”, Journal of Internet Commerce, 10(1), 35-67.

Bamford, N., 2012. “Why you should consider using social media”, Money Marketing (online edition), pp.8.

Chiu, C., Ip, C. & Silverman, A., 2012. [1] “Understanding Social Media in China”, Mckinsey quarterly, 2, pp.78-81.

Chiu, C., Ip, C. & Silverman, A., 2012. [2] “China’s Social-media Boom”, Mckinsey quarterly, [online] Avaliable at:< http://www.mckinsey.com/insights/marketing_sales/chinas_social-media_boom> Viewed: 11 Feb 2014.

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