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Abstract: If your company has successfully implemented a strategic plan, then you’re definitely in the minority. The real success rate is only 10 to 30 percent. This low rate is discouraging, mainly since a growing number of companies in recent years have invested considerable resources in developing strategic planning skills. Companies obviously need to improve strategy implementation activities, but the pace of these activities and the implementation itself has many problems. Traditional strategy implementation concepts overemphasize structural aspects, reducing the whole effort to an organizational exercise. Ideally, an implementation attempt is a ‘no boundaries’ set of activities that don’t concentrate on implications of only one component, such as the organizational structure. You should concentrate on four key success factors: (1) culture; (2) organization; (3) people; and (4) control systems and instruments. It’s worth the effort. An efficient strategy implementation has an enormous impact on a company’s success.
Piest, Bert, and Henk Ritsema (1993), ‘Corporate Strategy: Implementation and Control,’ European Management Journal, 11 (1), pp. 122-31.
This is an exciting article, which suggests incorporating the implementation process of corporate strategy into the control system for organizations to achieve their strategic objectives more effectively in the dynamic environment.
Abstract: Implementing and controlling corporate strategy is not an easy matter. What is called for is flexible control, combining individual creativity and direction without turning into rigidity? In a dynamic environment, change is the only constant factor. Therefore, possibilities of changing the corporate strategy should be incorporated into the control system. This sets specific demands concerning the process of controlling an approach. Some of the fundamental issues about implementation and control are discussed. These issues are: (1) using the business mission as a management instrument; (2) developing a control system that is directed towards the future; (3) discovering the limited value of financial figures; (4) finding information that is really meaningful; and (5) making ‘What if?’ analyses. Regarding the implementation of these management instruments, the control system should be kept simple, and the company should be segmented into various entities.
End of Chapter 14 case study: Social media impact on a brand launch at PepsiCo
Melissa Jones is a brand development manager at PepsiCo. During her 15 year career, she has worked her way up from a local marketing coordinator to now having responsibility for many of the new packages and brands the company launches. PepsiCo has a broad portfolio of beverages and foods, and Melissa is responsible for the energy drink category.
As reported in Convenience Store Decisions, the energy drink category has seen a 16 percent increase in 2011 and is expected to grow by 64 percent by 2016. PepsiCo understands the importance of this category to future growth and has challenged Melissa to increase AMP’s share of the market against rival brands Monster and Red Bull. PepsiCo believes that a successful launch of the new lime flavor extension will help grow the brand.
The most recent launch of AMP Juice was not a success and marketing research results showed that the product and promotion did not reach the 18-35 male demographic. Melissa knows she needs to present an improved communications strategy to the executive team. She is continually hearing from colleagues and trade journals that social media is an innovative approach to
14 STRATEGY IMPLEMENTATION, CONTROL, AND METRICS
Interaction with customers and has replaced or supplemented traditional marketing methods for competitors. Melissa does not know much about social media but thinks it may be a new tactic for her to reach target consumers. Before her presentation to executives next week, she must figure out how social media will be a part of her marketing campaign.
Social media continues to grow at an extraordinary pace with new players entering the market and additional users accessing social networks. Com Score demonstrates that starting with just a few players in the early 2000s, social media now has many companies that reach 80 percent of Internet users worldwide and account for 1.2 billion users. As both the number of social media users and the amount of time spent on social media content rise substantially, new players continue to enter this market, which Facebook continues to dominate.
Other trends in the evolution of social media include global penetration, mobile device usage, and adoption by males. The growth in social media is not solely in the United States; instead, it is becoming a global trend. Despite various factors such as availability of Internet access and cultural practices, social networking is growing in every single country. In a study of ten major global markets, social networks and blogs are the top destination in each state and account for the majority of time spent online, while reaching at least 60 percent of active Internet users.
Com Score also found that more than half of local online populations in North and South America, Europe, the Middle East, Africa, and the Asia Pacific engage in social media.
Social media versus traditional media
As the adoption of mobile devices rises, more users are accessing blogs and social networks every month. According to the Nielsen study The State of Social Media’, nearly two in every five social media users access this tool from their phone. As a higher proportion of the population begins using Smartphone mobile devices, that trend is likely to continue.
Finally, while females still tend to be the most frequent users of social media, the gender gap is starting to close. In a report by Eli Goodman, males were among the fastest growing segment of social networking users from July 2010 to October 2011. While women also spend more time on social networks than men, that gap is also starting to narrow, creating a broader audience of men, especially in the younger demographic.
As the use of and access to social media continues to grow, marketers must consider how to balance the use of traditional media, such as television, radio, and outdoor advertising, with social media marketing. Several benefits can be directly associated with social media.
First, social media is much less expensive than traditional marketing. The CPM model is used to show how much you will pay for an advertisement to reach 1,000 people during the duration of its campaign. The cost of entering 1,000 people with social media is nearly one-tenth of the cost of television ads and almost one-sixtieth of all the cost of direct mail.
Additionally, social media is much more engaging and interactive with customers than traditional media, which tends to be a one-way message. Customers can communicate back with a brand and have their voices and feelings heard. Finally, the success of social media is measurable. Marketers can look at metrics such as ‘Likes’ and ‘Posts’ on Facebook and ‘Re-tweets’ on Twitter, as well as click through rates and impressions from advertising done through social media outlets. Marketers can test different techniques and messages and are then able to quickly see which are more effective and thus adapt to optimize those messages.
Issues and drawbacks
Although social media has many positive attributes, marketers must be aware of specific issues that may arise when using this approach to speak to consumers. Since social media provides an ‘interaction’ between the brand and the customer, the brand should listen to what is being said. Consumers may use social media as a forum to post negative or incorrect feedback, which might be seen by countless others.
Companies must also be aware of the negative impact that social media can have on image. For example, in a recent social media gaffe, Southwest Airlines ran into unexpected problems with a promotion. To celebrate their three millionths follower, on 3 August 2012 they offered a one-day promotion with 50 per cent off certain flights. The response to the sale overwhelmed the Southwest Airlines website. Customers who were lucky enough to purchase a deal were charged anywhere from a few times to more than a dozen additional times for the same flight, resulting in many furious customers. This technical glitch directly affected customer bank accounts for those using debit cards; for others, credit cards were maxed out due to the multiple charges. Unable to get through to the airline by phone, people began to express their complaints on Facebook. Although Southwest was trying to reward consumers, they may have lost some trust along the way.
Companies also need to consider aligning their social media strategy with other communication vehicles and employees, using social media to speak about the organization or its products.
Evaluating social media
Although companies know that social media is a great way to reach their customers, it is important to be able to evaluate their success and display their value to business stakeholders. In particular, companies need to recognize how they are reaching consumers, reacting to their feedback, and growing the brand and sales.
Airports have been able to utilize social media to communicate to passengers before and during their travel experience in order to maximize their non-aeronautical revenues. London’s Gatwick Airport is a leader in this respect, having a screen displaying its Twitter mentions in full public view, allowing ‘social customers’ to tweet any issues that need attention. The airport needs to deploy a customer-centric social media strategy with the end goal being increased customer spending at airport retailers. According to the Journal of Airport Management, for an airport to have commercial success using social media for customer engagement, the program me must include three discrete steps.
- Customer insight strategy: develop customer knowledge-attract and recognize.
- E Customer value creation: segmentation analysis to create one-to-one retail offers.
- Customer retention: capture all offer redemption data, such as services used at the airport, for marketing similar services again.
Companies can see the benefits of social media marketing across the customer life cycle, in acquisition, retention, value development, and managing cost to serve. The knowledge gained on customer attitudes will help drive benefits throughout the value chain. To achieve this knowledge, companies can forecast and plan better by listening to consumers. The firm Virtue has worked out that, on average, ‘a fan base of 1 million translates to at least $3.6 million in equivalent media over a year, or $3.60 per fan. Virtue arrived at its $3.6 million figure by working off a $5 CPM, meaning a brand’s 1 million fans generate about $300,000 in media value each month’.
Ultimately, companies need to be able to quantify and recognize how social media drives sales and customer retention in order to justify the investment that it takes to establish a successful
14 STRATEGY IMPLEMENTATION, CONTROL, AND METRICS
Social media program me (salaries, computers, etc.). Social media do not always directly cause a sale and are sometimes difficult to track. However, social media can be a large part of the customer shopping process. There are many ROI metrics that companies can use to determine if their social media marketing is effective, including social presence, traffic on the website, and social mentions across platforms. It is important to note that ‘sales’ ranks low on the list, showing that social media is aimed at enhancing other metrics that may ultimately lead to sales.
Melissa must use her knowledge of social media and its trends to develop the communications strategy for the launch of the new AMP line extension. She must be able to weigh the benefits and costs to determine the ideal blend of traditional and social media to reach consumers and grow the brand.
- What are the primary elements of control that Melissa should consider when presenting her brand launch strategy to the PepsiCo executives?
- What methods or combination of techniques would you advise Melissa to use to set the energy drinks budget best?
- How might the concept of customer lifetime value influence her marketing plan?
- Identify appropriate metrics for the launch and provide reasons for their choice.
- Should the start prove to be a failure, have you any advice on how Melissa might disentangle whether it was the wrong strategy with the right tactics or the right approach with the illegal tactics?