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STRATEGIC ORBIT
SYNCHRONIZATION IN RETAIL INDUSTRY
In our
previous article, we explained our views about the structure of
the “Social Media” as well as the opportunities and threats
which bring to business. Actually social media with its all
features and effects is one of the novelties and developments
which the new era brings to us. To analyze the existing
situation in the market within social media context and thinking
social media as a technology driven new communication channel
only, will be a wrong and damaging approach. Although social
media is one of the most important products of the new era, it
is not the source of the change and development but it is the
result of it. The new postmodern era, which is started with the
effect of several change and developments factors, is a new time
period where new dynamics and rules are dominant in the retail
industry and all these require new strategic approaches and fine
tuning activities. This new era is the product of several
technological, social and economic development and changes which
started in the beginning of 21st century. As we claimed in our
book “Internet Commerce” (http://www.internetticareti.net)
in 2003, the roots of ecosocial system has been inseminated in
the beginning of 21st century and the system started to show its
real economic and social effects in the present day.
Those companies who will succeed to synchronize their strategic
orbit with the market dynamics will gain considerable
competitive strength.
The dynamics
and rules of the new era prevent companies to succeed or keep
their existing positions in the market via tactical movements
only. The success is dependent to the results of the strategic
evolutions, fine tuning activities and restructuring operations.
So what are these strategic evolutions or changes? In order to
answer the question we first need to define and understand the
two important features of the new era.
The
conductivity of consumers increased in the new era.
The first
important feature is the transition from singularity to
plurality in consumer behavior. In other words, the extreme
connectivity power and strong sharing behavior that consumers
have, resulted consumer behavior to shift from singular to
plural structure. For companies the meaning of this situation is
the following: Companies should see their customers as a part
of a social movement rather than individuals who are just
working with them. In other words, all customers are both the
source and target of a social movement which in return may
affect the company performance. When we look at the situation
from companies’ perspective, not only their customers but also
prospect consumers, who have tight connections and conductivity
within the society, became strong and important independent
factors for the success of these companies. As a result,
compared to the previous times, consumers have higher
conductivity in the society which can directly influence company
performance.
Conventional
management models lose their effectiveness.
One of the
important consequences of the new era is that conventional
business models in marketing, branding and communication started
to be ineffective in producing the desired results. While return
on investment ratios and added value multipliers have downward
shape in present time, companies try to find new approaches to
stop their undesired business performance. Professionals,
agencies and other parties in retail industry still couldn’t
develop a new strategic and tactical approach which can be
regarded as a solution to this acute headache. So is it really
possible to develop such a solution? It is extremely difficult
to find a cookbook tasted solution in the industry while we face
contradictory and unexpected results. As an example, we have
such cases where the performance a very logical tactical
marketing or communication move fails but on the other hand
customer sourced or company made content, becomes a legendary
viral campaign and produces unbelievable results in a very short
period of time. In this perspective, it is extremely difficult
to develop a “cookbook tasted” solution model for retail
industry in this new era.
The strategic expansion process from “Customer Relationship
Management (CRM)” to “Social Relationship Management (SRM)” will
bring considerable social competitive advantage to companies.
It is obvious
that this period is a transition one which bridges the previous
and coming eras of the market. This is why all conventional
rules and principles started to become out of date and a
cookbook tasted business models are difficult to develop. The
first thing to do should be the planning of strategic movement
and actions based on the dynamics of the transition period. In
this perspective, companies should restructure the definition
and perception of customer within the company and implement
refreshed customer management models. The transition period
requires marketing, customer relationship management and public
relations functions to progress in a synchronized and more
connected structure. This means that the above mentioned
functions, which previously had joint high level strategic goals
but differentiated
 execution
functions, now should be unified in the common ground both
strategically and tactically. The meaning of this requirement
for the companies is as follows: Now it is a requirement to
shift the strategic perspective in marketing and customer
relationship management from “customer relations” to “social
relations” management. Consequently, this means that the
strategic dimension of public relations is unified with
marketing and customer relationship management functions. The
new management function which is evolved as the result of this
unification is called “social relationship management”. During
this strategic expansion process, the main change has been
occurred in the definition and meaning of the value of customer
for the company. In the new context, in addition to the existing
direct economic value of customer for the company, indirect
contributions also became invaluable sources of value.
Increasing conductivity of consumers bring leading position to
the indirect social value or damages over direct economic
values.
In this
perspective, there are three key success factors in social
relationship management. These are expansion of “customer
communication” to “social communication”, increasing importance
of brand equity and expansion from “customer satisfaction” to
“social satisfaction”. Starting from communication perspective,
it seems that it is inevitable to shift from one sided to two
sided communication models. In this context, the planning and
use of social media as well as its control and performance
measurement functions become extremely important for the success
in social communication. Brand equity concept continues to be a
very important determinant of success for the companies. It
seems inevitable that strong brands will gain considerable
competitive advantage in this transition period where the market
has homogenous product and service offering with the market wide
standards. In this perspective, brand perception of consumers
will play the key role in decision making process during the
transition period. Consequently, one of the major targets of
social relationship management is the creation of strong and
attractive brand perception. As the third success factor, the
meaning of expansion from “customer satisfaction” to “social
satisfaction” for the companies is as follows: In the transition
period, the value added of one satisfied customer is much higher
than previous times. Consequently, companies should not see
customer satisfaction as an individual factor but a totally
social performance factor. In this perspective, companies should
plan and restructure their business models and organizations in
order to satisfy customer expectations and claims which
consequently will boost business performance. As a result, the
three factors listed above will play key roles in the success of
strategic expansion from conventional customer relationship
model to social relationship model.
Those companies, who will succeed to shape consumer perception
in favor of social motivations of company over commercial
motivations, will gain considerable competitive advantage.
Companies, who
will suppress commercial motivations by manipulating consumer
perception regarding social motivations of company or brand,
will gain competitive advantage. In order to realize this
target, companies should allocate a part of their communication
budget to activities which will shift consumer perception of
company in favor of social motivations. To complete this
strategic movement, there are three tactical movement areas.
These movement areas are sponsorship involvements, donations and
cause-related marketing activities. In order to create and
increase the strength of social motivation perception, the
company should be positioned as giving back to society, sharing
with consumers and creating social value added. Starting from
sponsorship involvements, the choice of companies should be
sponsoring of social events or non-profit organizations rather
than commercial events or organizations. In the context of
empowering social motivation perceptions, the sponsorship of
non-profit organizations and social events are expected to
create higher value for the company than being the sponsor of
commercial events or organizations. In addition to this,
sponsorship activities should be leveraged via other
communication activities in order to get better returns on this
investment. In the second place there are donations which are
more concentrated indicators of social motivation for a company.
These are also expected to create and boost the perception of
social value creation of companies as it is in sponsorship case.
The important point which should be taken into account is to
plan these activities with the social communication
contribution. The difference of communication activities in
donation activities is that these activities require reversed
communication sequence which means the beneficiary party to
which donation is made should make the communication of such
donation to the social community. This reactive structure of
communication is expected to increase the positive effects of
such donation activities. The third tactical movement area is
cause-related marketing activities done by companies. These
activities are also expected to suppress the perception of
commercial motivations and boost social motivation perceptions.
The target of the company should be to empower the perception of
consumers regarding company’s social motivation by generating
cause-related marketing programs which allow company to share
some of its income for a social purpose. Before finalizing this
part we should also state that in order to create and boost
social motivation perception, companies should be very careful
in selecting which type of activity (sponsorship, donation or
cause-related marketing program) they are going to implement. In
the selection process of such activity type, companies should
consider their business area, current situation in the market
and target segments in order to reach to the right segment on
the right time and with the right activity.
As a result,
companies should take into consideration the importance and
priority of the planning and execution of the two strategic
expansions in order to get competitive advantage and have a
strong position in the market in mid-term. These strategic
expansions are transition from “customer relationship
management” to “social relationship management” and positioning
of company based on its social motivations.
Those
companies, who will implement and execute such strategies faster
and more efficient than their competitors, will be listed in the
winning list.
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