Strictly Business

Couldn't pass up this opportunity to congratulate all of those individuals who work with our Belmont undergraduate business students. BusinessWeek Magazine just released their list of Top 100 Undergraduate Business Schools for 2008, and Belmont has made the list for the first time ever. Wharton again topped the national rankings, but Belmont appeared at No. 89, which was good for the highest ranking of any Tennessee b-school. The program was also in some pretty good company, finishing just between the University of Arkansas (No. 88) and Louisiana State University (No. 90). The full story will appear in the March 10 edition, scheduled to be on newsstands this coming Monday. The full story and supporting analysis can be found at: http://bwnt.businessweek.com/interactive_reports/undergrad_bschool/

Posted by Joe Alexander at 12:09 PM | Permalink | Comments (0)

[Authored by Evans Smith, MBA Candidate] Brand loyalty consists of a consumer's commitment to repurchase a particular brand of product. Over the years, Harley-Davidson has evolved from a motorcycle shop to a lifestyle. Touting symbols on the backs of jackets and other accessories of the American Eagle and the American Flag, Harley Davidson wants to show that they represent freedom.

Harley Owners Group (HOG)

Each customer that purchases a Harley-Davidson motorcycle receives a free 1-year membership in the Harley Owners Group (HOG). This group is the epitome of brand loyalty. The H.O.G. organization consists of over 295,000 worldwide members with 900 local chapters and is the largest company-sponsored motorcycle enthusiast group in the world. With a mission statement of "To Ride and Have Fun,” who wouldn’t want to join the group? All of us have been driving down the interstate minding our own business only to get passed by a no less than 20-member motorcycle crew. Most of the group likely consists of weekend warriors that want to get out and release their inner rebel spirit. HOG does an excellent job of capitalizing on this. HOG sponsors State, National, and even International rallies for that span across all 50 states and 6 continents. Live bands, parades, bike shows, and games are just a few of the activities that take place during these events at every planned stopping point.

Womens Day Ride
Niche Marketing by definition is targeting a more narrowly defined customer group seeking a distinctive set of benefits. Within the HOG membership group, Harley-Davidson has targeted the specific niche market of women. As one example, they sponsor a Women’s Day Ride in Daytona Beach, FL each year, which benefits the Muscular Dystrophy Association summer camps. The event is hosted by Karen Davidson, great-granddaughter of one of the H-D founders, who rides with over 500 women on the last leg of the rally into Daytona Beach. From there, the women are invited to attend the seminar on “Function, Fit, and Style Made Just for Women." Harley-Davidson does an excellent job of relating to the female rider. The company understands that logging several hours on a motorcycle can be physically demanding. On their website, they have created the “10 Steps to Someday” for women to follow in order to achieve their goal of these long bike rides. They state on the site that “Whether your goal is to ride to Sturgis or take an overnight trip to a bed and breakfast, pick a date, book some vacation time, and make some reservations. And know that when that date arrives, you’ll be on the road, riding free.”

Harley-Davidson's President and CEO, Richard Teerlink says Harley-Davidson Motorcycles represents to America, "the adventurous pioneer spirit, the wild west, having your own horse, and going where you want to go - the motorcycle takes on some attributes of the iron horse. It suggests personal freedom and independence.” If this sounds like your calling, then I advise you to saddle up, cowboy.

Authored by Evans Smith, MBA Candidate

Posted by Joe Alexander at 04:36 PM | Permalink | Comments (0)

[Authored by Jeffrey Williams, MACC Candidate] On February 8, 2008, The WSJ came out with an article about Burger King’s tactic of getting customers to want the Whopper more than ever—take it off the menu. This was a marketing prank, a hoax on customers, to see how they would react. In the words of article author Suzanne Vranica, “The videotaped hoax was a twist on a market research technique called ‘deprivation research’ in which marketers measure how loyal consumers are to a brand or product by taking it away from them.” (See: http://online.wsj.com/public/article/SB120244090812952965-n9_CUGYWfucluaN0vL4eS28jL8w_20090207.html?mod=rss_free).

It sounds to me like the consumer is being cruelly treated in order to garner appreciation for a fast food staple of America. Maybe this makes sense, but to the people who are in line, I’m sure that it seems like a pointless waste of time. If one is a good sport, that’s fine. But most of us aren’t, at least as a first reaction instinct.

Other companies have tried this tactic of deprivation and deception. For example, Verizon challenged customers to avoid using their cells for a weekend; Dunkin’ Donuts served Starbucks’s coffee for a week. Following the pattern of giving away competitors’ products, Burger King gave away McDonald’s burgers and Wendy’s burgers, all while videotaping customers who felt bewildered and betrayed. Here's a link to the “Whopper Freakout” video, from which BK has made commercials: http://www.whopperfreakout.com/index.html

Perhaps this shows just how primal a need we have for predictability and routine. We know the routine for walking into BK, so we are uncomfortable and defensive when we are thrown out of balance. This throws uncertainty into our lives: No whopper? What’s next? No bread at the grocery? Try to watch the full video, perhaps as entertainment on your lunch break.

For the sample, BK used anyone who happened to walk in the store that day for the purposes of the study. What about a more focused deprivation research sample? It turns out that the ubiquitous chain Pizza Hut was able to deprive selected college students from pizza for an entire month to have a focused study of its effects on its prime consumers. How did they select the focus-group students? They specifically targeted “echo boomers,” or people born between 1977 and 1994, from six geographically diverse markets. Through face-to-face interviewing, Pizza Hut initially selected 350 high school and collegiate students in 1998 to participate in a panel, fill out surveys, and engage in other research initiatives. These people agreed to be a part of Pizza Hut’s ongoing market research project, even years into the future. The results of the studies are proprietary to the company, but we know that some of the frequent reactions to deprivation research are cravings, temper tantrums and even meltdowns. But Burger King and Pizza Hut didn’t organize the market research themselves, of course. Instead, they hired a marketing company named U30 Group out of Knoxville, Tennessee. It was U30 Group that master-minded these marketing projects (http://bizjournals.bison.com/press/pr530phut.html).

Tennessee-based U30 Group’s clients include: National Geographic Traveler, Coors, Boston Beer Co., Reebok, Procter & Gamble, Wrigley, Pizza Hut, Sega, MTV, Frito-Lay, and a host of others. U30 Group operates under the premise that the more quickly they can statistically discover insights about consumers, and the quicker their clients can get those ideas into the market, the better. U30 specializes in focused panels that have helped Burger King, et al, gain a competitive edge in using the data from deprivation research. The overarching mantra of U30 Group’s array of marketing techniques, or better yet, the reigning philosophy within U30 Group is that the consumer is king. Welcome to America, where the customer is always right, right?

I’m just guessing that the U30 Group would try to statistically find out the degree to which people crave certain foods when deprived of them. This seems like a micro-cultural question, because I’m sure that no food is craved quite the same way in disparate locations of the country. If I was in Philly, I may crave a cheesesteak sandwich. If NYC, then perhaps a slice of pizza. If San Antonio, something Tex-Mex. But, if consumer is king, then deprivation studies seem to exploit how impatient, dependent, and closed-minded we have become as a consumer-driven mass American culture. I have long said that convenience is the chief characteristic of this country; it is an unspoken principle embodied in the consumer who cannot be bothered to wait in line or wait until the shop clerk gets back from lunch. In my more cynical moments, I think of it as collective immaturity. Is it any wonder, then, that results from deprivation studies have included craving, tantrums, and meltdowns?

Author - Jeffrey Williams, MACC Candidate

Posted by Joe Alexander at 08:15 AM | Permalink | Comments (1)

[Today's post authored by Massey MBA Candidate James Preston] Southwest Airlines marketers have always developed clever advertising campaigns. Who can forget the “Click Ding” advertisements that depict an average office setting with businessmen and women normally going about their business until the “ding” is heard throughout the office. Suddenly these same staid office workers are franticly sprinting to their desks to “click ding” to see the “exclusive” and “deeply discounted” airfares available only through the “clink ding” program. The airline used the campaign to tout its “point-of-difference” that it is the low price provider.

The airline may have outdone itself with its new “Be More Productive” advertising campaign. In this series of advertisements, Southwest attempts to highlight its consistent on-time record by introducing us to Nick Pudder.

Nick is an unassuming looking fellow whose meteoric rise to Senior Vice President by the age of thirty-two has been met with a mixture of awe and disbelief from his colleagues. In the campaign, jealous co-workers are found whispering about his sudden increase in productivity and the fact that the company has given Nick his own parking place. He is referred to as a “machine” and thought to be “extremely productive”. Another co-worker standing in front of the “employee of the month” photographs (all of whom are Nick) calls Nick “amazing” because he closed four sales presentations in four different cities all in the same day.

Ultimately, several co-workers and media speculate that Nick is taking some sort of “productivity enhancers”. Nick finally denies using “productivity enhancers” but admits that he has been flying Southwest Airlines “a lot”. This is a clever tie-in to the current steroid scandal that has rocked Major League Baseball in which the recently released Mitchell report has named many high profile players as steroid users.

The campaign is a witty marketing technique to imply that by using Southwest Airlines for your business travel you can rely on the fact that Southwest will provide on-time departures and arrivals. Southwest’s strategy is also to show that it has more frequent flights and, in particular, more non-stop long-distance flights to more of the cities in which "Nicks" like you and me conduct business. Of course, the company is using “Nick” as a metaphor and implying anyone who uses Southwest will find more frequent and on-time departures and arrivals to many of the cities we normally travel to either on business or for pleasure. The emphasis on non-stop, long-distance flights also makes one think that they would get to their destination quicker than on an airline which required multiple stops along the way, thereby saving time and perhaps leading to less travel time overall.

To find out more about the “Be More Productive” campaign, check out the following:http://www.bemoreproductive.com/

Authored by James Preston, Massey MBA Candidate

Posted by Joe Alexander at 12:52 PM | Permalink | Comments (0)

So, it's official. After almost fifty years - the longest rule for a head of government- Fidel Castro has resigned as the president in Cuba. Much has been speculated over the last 24 hours about Cuba's future. Will the embargo be lifted? Will Raul, his brother, retain power? How much pressure will the US exercise over the coming months to bring about democratic reforms?
From a business perspective, Cuba would present some unique opportunities if the embargo was lifted and US companies were allowed to invest in the island. The big question remains: if and when these changes occur? I believe change will happen; but it will come slowly, and not without tremendous challenges.

When the Soviet Union collapsed in 1991, Cuba lost about $5.6 billion annually in aid. It was then that Cuba began to seek other sources of foreign resources to support its economy and opened the possibility for Foreign Direct Investment (FDI). Today the Cuban government allows foreign entities to own 100% of the equity in FDI ventures in strategic industries like tourism, communications, science and technology, and agriculture. Even with that though, the stock of FDI today is only about $11B
Companies based in Canada, Spain, Italy, United Kingdom, Japan, France, Israel, Italy and Mexico already have operations in the island.
Tourism in particular is an industry that has benefited greatly by the presence of foreign firms. Today the strength of the Euro makes Cuba a preferred destination for many Europeans for their long summer vacations. Who knows, Varadero could soon become the top destination for Spring Breakers outpacing Cancun or Panama City

Posted by Jose Gonzalez at 10:21 AM | Permalink | Comments (0)

Next fall, Belmont University will begin offering a major in Social Entrepreneurship. The fundamental idea is to provide a practical academic curriculum to serve the fastest-growing segment of society—the millions of individuals that are creating a society of citizen change agents. It makes sense. This is where much of the new job growth is, not to mention that some of the jobs are the most challenging, ethically based and well-paid. Bill Drayton is a pioneer in social entrepreneurship who, in 1978, founded Ashoka: Innovators for the Public. Drayton states that the citizen sector is growing explosively. “It is generating jobs two and a half to three times as fast as business. There are now millions of modern, competing citizen groups, including big, sophisticated second-generation organizations, in each of the four main areas where the field has emerged most vigorously: Brazil-focused South America, Mexico/U.S./Canada, Europe, and South and Southeast Asia.” (For more information, go to http://www.policyinnovations.org/innovators/people/data/bill_drayton

It is encouraging that the scholarly literature necessary to support an academic discipline like social entrepreneurship is growing. Morris Bornstein’s book How to Change the World provides a kind of In Search for Excellence for social entrepreneurs. If you are at all interested or intrigued by social entrepreneurship, I encourage you to read Chapter Eighteen entitled “Six Qualities of Successful Social Entrepreneurs.” Indeed, Bornstein’s conclusion that successful entrepreneurs are the ones determined to achieve a long term goal that is deeply meaningful to them, is a worthy foundational principle for our new program at Belmont University.

Posted by Patrick Raines at 08:40 PM | Permalink | Comments (0)

For those of you constantly looking for a fresh perspective to challenge your thinking on the topic of leadership, check out Steve Farber's blog at www.stevefarber.com. Steve made a recent visit to Belmont as part of the Scarlett Leadership Institute's Peer Exchange Network speaker series. His first book received Fast Company magazine's Reader's Choice Award, in addition to being named one of the ten business books that year by "The CEO Refresher."

Steve makes the case that in any organization the beginning of organizational change starts with some employee making the decision to do something significant and enlisting others to help. He terms this starting point as "accountability. Quite simply, someone has to lead. And it doesn't have to be the boss. Leadership, ultimately, has nothing to do with the title on your business card or your position on the organizational chart. He adds, it's really all about who you are and what you do to change things for the better -- regardless of your "place" in the company.

Posted by Joe Alexander at 07:16 PM | Permalink | Comments (0)

It's oft been said that "You can't fight city hall"--a reference, no doubt, to the collective angst of all those past local residents who felt wronged by their municipal leaders but felt powerless to do anything about it.

Don't you wish more city leaders had chosen the path of Coral Springs (FL) leadership?! C.S. is the 13th largest municipality in the State of Florida and late this past year they became the first municipality to receive the Malcolm Baldrige National Quality Award from the U.S. President. Back in the early 1990s, city leaders decided there was a better way to run city hall than the traditional stereotypical approach. So they began making strategic decisions based on a total quality management framework designed around performance targets like resident and business satisfaction, stakeholder partnerships, and overall continuous improvement.

After several years of implementing that strategy, their results began to speak for themselves. Last year, for example, 95% of residents indicated that the city had met or exceeded their expectations for quality of service delivered. Furthermore, 99% of resident businesses would now recommend the city to others as a "place to run a business." And these results are only two of the myriad of world-class levels being achieved by city management on an ongoing basis.

Thankfully, a big part of the Baldrige philosophy is for winners to share their recipes for success with others. If you're an existing (or aspiring) city leader, I'd urge you to take a look at the Coral Springs story and how they run their city hall (http://www.coralsprings.org/baldrige/BaldrigeApplication07.pdf). Your citizens (and voters) will be greatful for any best practices you identify that can be implemented locally. If you find these ideas of interest, check with our good friends over at the Tennessee Center for Performance Excellence (www.tncpe.org).

TNCPE has a wonderful set of resources in place specifically designed to help community leaders improve the quality of life for their residents.

Posted by Joe Alexander at 02:39 PM | Permalink | Comments (0)

The last time I was in Russia was in 2004. I visited my hometown Surgut, which is located in Western Siberia, as well as Moscow, the capital of Russia. On my way to Russia, my heart was filled with anticipation and excitement. I recalled with nostalgia leisurely strolls in the heart of Moscow, numerous museums, theatres, and magnificent architecture. So much had changed since the last time I was there.

When I arrived, I stood in front of the city in total disbelief. Where was I? In front of me now was a new and strange world. Most of us are aware that for the second consecutive year, Moscow remains the most expensive city in the world. Various newspapers and magazines talk about the phenomenon of “Novie Russkie”: New Russians or Nouveaux Russes as French would say, who purchase the most expensive real estate, contribute to the significant boost of the high-end retail profits and don’t stop traveling year around across the world. Where does this extreme wealth come from any mind would wonder? I won’t go into deep details, because I am not writing a thesis paper. However, I will attempt to describe very briefly.

First, Russia is the largest country in the world land wise and is abundant in natural resources. Privatization that took place in the early 1990s as one of the essential steps to building a free market economy and democratic society resulted in the creation of so called “new Russians.” Each individual was given a voucher to obtain shares in any domestic enterprise. The masses who have lived under the central planning system and have not understood the mechanism of a free market economy either sold it in the flea market for a few rubles or invested in the Investment Companies that vanished in the first few years. So the former communist party leaders who have become owners of the enterprises (and new entrepreneurs who have purchased a significant share of vouchers from the population or have engaged in trade bringing clothes and other consumption goods from Turkey, United Arabic Emirates, etc.) have become the new Russians. A financial crisis in August 1998, along with a severe depreciation of national currency by 600%, has helped exporting industries. As an emerging economy today, Russia is one of the major exporters of energy resources, timber, coal, metals and etc.

Moscow did not look anything I remembered. It did not look like the heart or soul of Russia but rather a very luxury-based western city with mega malls, more Mercedes and BMWs than in any other European city, and to my great surprise and disappointment angry, rude, arrogant, lost and unhappy people. You may accuse me of being biased, however Moscow is no longer a reflection of Russia and a true Russian character. Russians, despite the history of many cataclysms, remain very warm, kind, and hospital people. However, the people I observed in the streets looked quite opposite of my own thoughts and ideas. Why? I will share my ideas about that in the next blog.

My goal at Belmont is to provoke curiosity and passion for learning among students. The goal of this blog is to provoke a little interest of being globally or internationally aware and broadening our horizons.

Posted by Marieta Velikova at 09:03 AM | Permalink | Comments (0)

Last week I shared some facts and figures related to whether or not purchasing an advertising slot on the Super Bowl telecast would be considered "a good deal." We considered Audi as our example company for this illustration. Based on the estimated price tag of up to $3 million for a 30-second spot and an estimated audience of 93 million (our reference point from last year's number), we calculated that Audi would be reaching its audience at a cost of slightly more than 3 cents each. That sounded like a pretty attractive price!

So, now we need to build in some realism to our purchase evaluation. First, given that not all of us viewers have $38,400 (mid-point MSRP for an entry-level A4 model) sitting idly by in our bank accounts for such a purchase, we need to begin by figuring out what proportion of the 93 million viewers are actually within our potential market. For the sake of simplicity, let's "assume" that 25% of our 93,000,000 viewers (a pretty ambitious assumption) have the means to purchase an A4. That takes us down to only 23,250,000 individuals we really are interested in reaching who are likely to be part of our Super audience.

Our cost to reach that group now jumped to 12.9 cents each, which is still decent. Here, though, is where the concept of "information processing" comes into play. In order for an advertising message to have a lasting impact on a consumer, it has to surpass all sorts of obstacles that we consumers present, making meaningful communication from an advertiser a difficult thing indeed. The steps look something like this:

And an incoming message has to gain our attention, be processed accurately, believed, and saved in long-term memory (i.e., retention) in order for it to impact a future purchase decision. So, let's again assume a 25% success rate for each of these stages--and if you think that's too low, try to estimate how many commercials you can recall from the last evening you spent watching TV. Not a pretty picture.

Using those estimates, we move from 23,250,000 (exposure) to 5,812,500 (attention) to 1,453,125 (comprehension) to 363,281 (acceptance) to 90,820 (retention). Now, how much is that ad costing per person that has processed and remembered our message? Our initial 3 cents per viewer cost just jumped to slightly more than $33.

Actually, this could still be a good deal, given the company revenue we're looking at on each Audi purchase. But it does illustrate an important lesson that we have to consider when we're purchasing an ad. Will that advertisement actually reach a significant number of our targeted consumers, and can we effectively communicate our desired message in a way that is remembered until consumers are ready to make that actual purchase decision?

It's certainly one reason that makes the field fo advertising far more complicated than the average Joe considers it to be. It's also one of the reasons that advertising executives often look like they may not be getting enough sleep at night.

Posted by Joe Alexander at 11:04 AM | Permalink | Comments (0)