This Marketing Portfolio examines the marketing issues of Nintendo, Lincoln and Spotify. For Nintendo I look at how adapting Corporate Strategies to the environment could be critically important. For Lincoln I investigate segmentation strategies parallel to looking at how New Product Developments techniques in the motor industry could be what Lincoln needs. Finally I research how a more modern approach to Corporate Social Responsibility in combination with Public Relations could be the change the Spotify need.
There is common theme amongst all articles. Irrelevance in the Industry. Both Nintendo and Lincoln are becoming more and more irrelevant in their respected industries and Spotify is in danger of joining them. While all my recommendations employ different marketing techniques, my main goal was to fix this overarching issue which can be seen in all three companies Marketing Issue Articles, with different company examples and positions within their industries. I also want to show how a range of different marketing approaches can be adapted and hope to show there are multiple ways to go about fixing a problem.
Article one: Nintendo
“The world is Nintendo’s (If only they’d take it)”
Paul Tassi – February 28th 2015
“All this is to say that Nintendo has the potential to be in a dominating position in the market, and yet as we all know, they’re lagging far behind”
“They need to produce a console that catches up or surpasses the current generation in terms of power, during that generation, not afterward”
“If I had to sum up Nintendo’s central problem in one idea, it’s that they are failing to modernize. That manifests itself in a few different ways, all of which are bringing the company down as a whole.”
Nintendo posted a 46.4 billion yen operating loss ($456 million) for the fiscal year ended March 31, 2014, the company announced today in its fiscal earnings, marking the third consecutive annual operating loss for the company (Pitcher, 2014). While Nintendo may have secured an operating income of $207.83 million for the fiscal year that ended March 31, 2015 (Tach, 2015) I do not believe this necessarily puts Nintendo back in good light. They have made some questionable decisions at a corporate level of late and the sudden death of CEO Satoru Iwata in July 2015 has led many to believe that “Nintendo feels rudderless” (Apolon, 2015). I believe the overarching issue facing Nintendo is strategic ambiguity at a corporate level for the future. Further strategic issues causing this uncertainty are failing to recognise market trends within the industry. This can be seen in their games console, the Wii U, which underperformed drastically in sales figures and in technical performances as well compared to the other, newer generation of consoles form Microsoft and Sony (Tassi, 2015). But it is not just the performance of one of their products that has caused this almost outdated aura around Nintendo. In some situations the company has gone as far as hindering its own freely attained promotions. By employing strict rules about people streaming their video game content on video streaming services like Youtube and Twitch, they are failing to adhere to the new growths and trends in the industry, but, also damaging their reputation with their own fan and consumer base. These issues, plus others all culminate in leaving the company in a risky, shrouded outlook on future strategies.
I think Nintendo needs to take a step back. Yes, the gaming industry has greatly changed with mobile and many other trends, but I think Nintendo has the resources to combat this if they re-evaluate their current corporate strategies. In 2011 Satoru Iwata said “We have our roots in the playthings connecting people, as the company’s original business was playing cards” (Nunneley, 2011). With Iwata now gone, Nintendo should look to examine and question its mission. Trying to please everyone at the same time can often lead to no-one pleased at all with such a large target market. I think it is crucial Nintendo quickly come to terms on their position within the industry before their massive target market disperses even more so.
The Boston Consulting Group Matrix is a good starting point for Nintendo to evaluate themselves within the market and emerging markets. Improvements to decision making speed would be useful in a changing industry environment. This I think is very much needed as a lot of articles and forums online focus on Nintendo “failing to modernise” (Tassi, 2015) or are always one step behind the competition. Examining directional (grand) strategies should help Nintendo decide what they need to do in the industry. They have the capabilities and resources to do it. They just need to figure out what it is.
Boston Consulting Group matrix and strategic planning
The major objectives of the strategic planning process are of constituting Strategic Business Units (SBUs) in accordance with the corporate mission, planning new businesses and assigning resources to these SBUs (Kotler, 1994). Nintendo have a portfolio of products, future products and even game characters that can be considered products in their own right. The Boston Consulting Group (BCG) developed a portfolio matrix for more strategic allocation of funds based on cash returns (Tiles, 1966; and Henderson, 1970) and it is a two-dimensional classification of products according to relative market share and market growth rate (Dibb, 1995). The matrix helps in development of plans which reflects the need of each business unit as well as business as a whole (Bell, 1982) and also compares the strategic positions of company’s diversified business portfolio of investments (Thompson and Strickland, 1993). The important part there is that the matrix is suitable for both an SBU and the company as a whole which I think suits Nintendo’s ambiguity in corporate strategy.
In the matrix, for most products, growth rates closely correspond with certain stages of the life cycle (Srivastava and Prakash, 2011 P 23). Nintendo’s 3DS and short lived Wii U are reaching their end. I think the findings of the analysis done by Srivastava and Prakash on telecommunications companies mirror Nintendo. Many of the companies found a lot of their products were in the question mark segment of the matrix. High market growth but firms’ sales level low. Too many dogs and question marks generate inadequate cash flows (Douglas and Christopher, 1985). The portfolio matrix has to result in competitive resource allocation decisions (Srivastava and Prakash, 2011 P 30) as the matrix itself lends itself to companies in a highly competitive market place. With the traditional gaming industry making more money than Hollywood, I think evaluating Nintendo’s products and more so, their games characters within the BCG matrix may provide very useful for the allocation of future resources including looking at their characters’ positions in the minds of the target markets compared to rivals. See my BCG Matrix on behalf of Nintendo in Appendix 1.
The BCG matrix can also be very usual for one particular emerging market. Mobile gaming is both growing and a highly competitive race to the cheapest price with a fermium cost structure. This isn’t an alien market for large game developers as Electronic Arts proved with Plants Vs Zombies (Jordan, 2013) and in June of 2015 Fallout Shelter by Bethesda was iOS’ most downloaded app (Sheridan, 2015). It is growing more and more competitive and Nintendo’s price share dropped nine percent with the delay of Miitomo for mobile (Mochizuki and Pfanner, 2015). While I think it is an appropriate strategy for Nintendo not to ignore the mobile market I still think they may need to take a step back and just evaluate themselves for mobile and I think the BCG matrix can also help here. But, they need to do it fast.
Implementing decisions at a faster rate
The very pulse beat of a company is the speed with which it makes and implements decisions (Ford, 1973 P 2). Decision speed has long been recognized as a critical determinant of firm performance, particularly in dynamic environments (Kownatzki et al, 2013). Decision making has never really been seen as unimportant to business through the years. It is something I think Nintendo should look to improve on a corporate level. Nadler and Tushler 1999, also comment on how progressively competitive environments, shortened life cycles and global markets make decision making even more crucial.
I’ve looked at Kownatzki et al’s work on mechanisms that temper the need for coherence in corporate strategy making with a desire to preserve SBU autonomy and responsiveness to fast paced competitive environments. They identified six types of corporate control, Goal setting, Extrinsic incentives, Negative incentives, Decision process control, conflict resolution and strategy imposition. These types of control can be used together.
For Nintendo I think a combination of Goal setting and Decision process control go well together. Goal setting concerns the establishment of financial, operative, and strategic goals as well as budgets for SBUs, developed interactively between corporate and SBU levels (Kownatzki et al, 2013). Nintendo has always been a quirky company with big ideas and have been goal and mission focused even though they may have got confused as of late. I think setting goals as benchmarks could motivate SBUs. With refocused goals, Goal setting also proved to be the corporate control type that is the second most closely associated with high decision speed in a second study Kownatzki et al carried out. Due to transparency, alignment between corporate and SBU interests and allows more focus on outcomes.
Decision process controls deals with all procedural norms and guidelines established by corporate headquarters for monitoring SBUs’ decision processes. Examples include scheduled as well as ad hoc meetings, deadlines, and written guidelines (Kownatzki et al, 2013). I think this aligns itself with Goal setting well as goals and decisions can be monitored. It also proved the third most closely associated with high decision speed in the second study and has very similar reasons to Goal setting to as why.
With higher decision speed internally, Nintendo could quicker sort out its problems. I think by implementing the above corporate control models, not only can Nintendo reaffirm themselves internally due to Saturo Iwata’s sudden death, but also get back to making more decisions in a growing/evolving environment instead of just the odd massive decision. A previous Nintendo executive however, Dan Adelman, said in July 2015 that “They’re very traditional, and very focused on hierarchy and group decision making. Unfortunately, that creates a culture where everyone is an adviser and no one is a decision maker–but almost everyone has veto power.” ”All of this is not necessarily a bad thing, though it can be very inefficient and time-consuming” (Makuch, 2015). I think Nintendo really would need to examine its traditional culture to even take on board my recommendations above.
Directional (Grand) Strategies
Finally, I looked at Wheelen and Hungers work on Directional Strategy (Ch 7 pp 204 – 229). A corporations directional strategy is composed of three general orientations, (Wheelen and Hunger 2011) Growth strategies, Stability Strategies and Retrenchment strategies. With regards to Growth strategies, I don’t think a lot of them are suitable for Nintendo. Nintendo already in a way are backwards compatible for example as they develop their own games to play on their own consoles. What I think they are lacking is other games to play on their consoles. Diversification could be looked at but their product portfolio of games for example is already quite diversified amongst a lot of target audiences. Relationships between more third party game developers like an Electronic Arts or Ubisoft are certainly needed.
While Growth strategies are undoubtedly important for a large company like Nintendo, I think if they first implement a Stability strategy coupled with my recommendations on decision speed making. Implementing a Pause/Proceed with Caution strategy could be useful as it is a typically conceived as a temporary strategy when the environment has become more hospitable (Wheelen and Hunger 2011). The Pause/Proceed with caution strategy is a deliberate and conscious attempt to adjourn major strategic changes to a more opportune time or when the firm is ready to move on with rapid strides again (BMS, 2013). While the Industry may be currently hospitable for the Microsofts and Sonys, in Nintendos case, the gaming environment growth and new trends has in a way disrupted Nintendo’s traditional methods. Hence why decision making speed in Pause/ Proceed with caution strategy is very important.
Nintendo’s situation could also benefit from a Profit strategy. A Profit strategy is to act as though the company’s problems are only temporary (Wheelen and Hunger 2011). The profit strategy is an attempt to artificially support profits when a company’s sales are declining by reducing investment and short-term discretionary expenditures (Wheelen and Hunger 2011), in essence, blaming the poor performance on the challenging environment. While this is a strategy I don’t exactly think is all that helpful, I think it mirrors the Pause/Proceed with caution strategy as the gaming industry’s environment has become quite disruptive for one of the most disruptive companies in gaming, Nintendo, with innovations in mobile and social behaviours.
So, the above strategies tie in with my points that Nintendo needs to take time from its growth strategies. And look at it what they have, how what they have may need to change and look at how they are going to change it. The upcoming console to be announced in 2016, the Nintendo NX may be the innovation that saves Nintendo’s unfortunate streak and may have the answers to the ever growing gaming industry right now. But in the long run, Nintendo really do need to examine their corporate strategies. Even if that means they have to change around a lot of their traditional methods.
Ford, C 1973, ‘structuring the organization for fast decision-making’, Human Resource Management, 12, 2, pp. 2-14, Business Source Complete, EBSCOhost, [Accessed 02.11.2015]
Kownatzki, M, Walter, J, Floyd, S, & Lechner, C 2013, ‘corporate control and the speed of strategic business unit decision making’, Academy Of Management Journal, 56, 5, pp. 1295-1324, Business Source Complete, EBSCOhost, [Accessed 02.11.2015]
Nadler, D, & Tushman, M 1999, ‘The Organization of the Future: Strategic Imperatives and Core Competencies for the 21st Century’, Organizational Dynamics, 28, 1, pp. 45-60, Business Source Complete, EBSCOhost, [Accessed on 03.12.2015]
Srivastava, R, & Prakash, A 2011, ‘Growth-Share Matrix as a Tool for Portfolio Planning: Evidence from the Indian Telecommunication Services Industry’, IUP Journal Of Business Strategy, 8, 2, pp. 22-33, Business Source Complete, EBSCOhost, [Accessed on 02.11.2015]
Wheelen, T and Hunger, J 2011. Strategic Management and Business Policy Toward Global Sustainability. [online] Academia. Available from: http://www.academia.edu/7053808/Thomas_L._Wheelen_J._David_Hunger_Strategic_Management_and_Business_Policy_Toward_Global_Sustainability_13th_Edition_2011 [Accessed on 02.11.2015]
Apolon (iDigitaltimes) 2015. Nintendo New CEO: Nintendo Feels Rudderless Without Iwata [online] Available from: http://www.idigitaltimes.com/nintendo-new-ceo-nintendo-feels-rudderless-without-iwata-469204 [Accessed on 02.11.2015]
BMS 2013. What is Pause/proceed-with-caution strategy? [Online] Available from: http://www.bms.co.in/what-is-pauseproceed-with-caution-strategy/ Accessed on 30.12.2015
Jordan, J (PocketGamer.biz) 2013. The Charticle: The slow-growing success of Plants vs Zombies 2 [online] Available from: http://www.pocketgamer.biz/the-charticle/53371/the-charticle-the-slow-growing-success-of-plants-vs-zombies-2/ [Accessed on 02.11.2015]
Makuch, E (Gamespot) 2015. Nintendo’s Decision Making Process Too Slow, Too Safe, Ex-Exec Says [online] Available from: http://www.gamespot.com/articles/nintendo-s-decision-making-process-too-slow-too-sa/1100-6424780/ [Accessed on 02.11.2015]
Mochizuki, T and Pfanner, E (The Wall Street Journal) 2015. Nintendo Shares Are Hit by Mobile-Game Delay [online] Available from: http://www.wsj.com/articles/nintendo-jumps-into-mobile-gaming-with-miitomo-1446085215 [Accessed on 02.11.2015]
Nunneley, S (VG24/7) 2011. Iwata: Nintendo has always been “social” [online] Available from: https://www.vg247.com/2011/08/03/iwata-nintendo-has-always-been-social/ [Accessed on 02.11.2015]
Pitcher, J (Polygon) 2014. Nintendo posts $456 million annual operating loss [online] Available from: http://www.polygon.com/2014/5/7/5690124/nintendo-posts-456-million-annual-operating-loss [Accessed on 02.11.2015]
Sheridan, C (Gamesradar) 2015. Fallout Shelter’s the most downloaded IOS game in 48 countries [online] Available from: http://www.gamesradar.com/fallout-shelter-most-downloaded-ios/ [Accessed on 02.11.2015]
Tach, D (Polygon) 2015. Nintendo is profitable again [online] Available from: http://www.polygon.com/2015/5/7/8564943/nintendo-profit-fiscal-year-2015-financial-results [Accessed on 02.11.2015]
Tassi, P (Forbes) 2015. Nintendo Won 2014, But The Wii U’s Fundamental Problem Remains [online] Available from: http://www.forbes.com/sites/insertcoin/2015/01/02/nintendo-won-2014-but-the-wii-us-fundamental-problem-remains/ [Accessed on 02.11.2015]
Tassi, P (Forbes) 2015. The World Is Nintendo’s (If Only They’d Take It) [online] Available from: http://www.forbes.com/sites/insertcoin/2015/02/28/the-world-is-nintendos-if-only-theyd-take-it/ [Accessed on 02.11.2015]
To do this matrix I searched the internet for general sales figures and impressions on forums and industry related websites as well as my own understandings of the brands’ assets. I noticed that many of Nintendo’s IPs lie in the Question Mark section of the matrix. There are also many lesser known IPs such as Luigi’s Mansion or Pikmin that would also be in this section. What Nintendo should take notice of is the consoles they have to run these games on. The 2016 NX console is very important because if it doesn’t become a Star there is very little Nintendo can do with the Wii U and the 3DS family to further develop strategies for many of their IPs. While the 3DS is a very profitable product for Nintendo, outselling the Playstation 4 and Xbox One even in some months of 2015, it won’t be there for much longer with investments in mobile gaming and the fact it is reaching the end of its product life cycle.
Article Two: Lincoln
“Fields Sees Lincoln Profits Where Mulally Demurred: Cars”
Keith Naughton & John Irwin – June 30th 2014
“Ford starved Lincoln of unique products for a long, long time,” said Michelle Krebs, an analyst with researcher AutoTrader.com. “Rebuilding the Lincoln brand is a long road.”
“Lincoln ranks eighth among luxury brands sold in the U.S. and it is outsold by nearly two-to-one by GM’s Cadillac luxury line. A year’s worth of Lincoln sales would not fill half a Ford factory.”
“Getting people to pay attention to Lincoln — which has always been associated with grandpa’s car — is going to take a lot of clever advertising,” said Joe Phillippi, president of AutoTrends Consulting.
Lincoln is Ford’s luxury car brand in the US market just like Lexus is Toyota’s luxury car brand. Many of Lincolns rivals are names you would expect to see in the luxury car market in the US, such as the number one most popular brand BMW (WSJ, 2015) and many more brands including Audi, Mercedes, Jaguar, Cadillac, etc. I would consider Lincoln amongst the bottom ranks of the luxury car market in America and many industry articles, polls and sales figures would consolidate my reasoning’s as to why. “Lincoln, with U.S. sales down 65 percent from a 1990 peak, is such a big money loser for Ford that Mulally (former CEO) suggested killing it… in 2013” (Naughton & Irwin, 2014). They are considered by many to be quite an old fashioned car brand in a negative way. Lincoln’s latest product range offering could be argued is quite lacklustre compared to the popular brands. I would say they have primarily two base offerings. Sedans/Saloons and a range of similar SUVs/4X4s. Whilst this isn’t necessarily a bad thing, Lincoln’s offerings are too similar to each other if you compare their range to the BMW or Volkswagen range that would mainly have individual cars planted in different vehicle segments that differentiate themselves quite well with each other. Another issue Lincoln suffers from is pinning down what target market they want to sell to. If they are trying to sell to a younger target market, as their pricing strategy would suggest, they are failing in almost all other marketing areas, and this shows throughout their product range. For example, “when it comes to getting in the car, Lincoln is still catering to its former customers, not the young buyers who could actually make the entire relaunch a success” (Davies, 2012).
I think Lincoln could benefit greatly in examining the methods of successful brands in the motor industry on a global scale to help them improve on the areas that are holding them back from growing in today’s motor industry and to stop behaving like they are still in a 1990s motor industry.
Key areas I think they should focus on that can help them achieve the sales and brand image they want are in New Product Development and Segmentation. New Product Development (NPD) done correctly can extend product life cycles and decrease incremental costs as Volkswagen do effectively with smart product face lifts and knowing what market areas would be beneficial to develop products for, such as their hybrid electric Golf GTE. With regards to successful segmentation strategies, Jaguar and Skoda have shown it is possible to change perspectives on brand image. Jaguar have segmented their new model XE saloon in a younger target market frame without upsetting their brand heritage (McAleer, 2015) and Skoda managed to successfully change perceived brand image, and segmenting their updated model offer in the right target markets helped in this process and is continuing to help growth as they aim for new luxury segments with the new Superb (Beatty, 2015). Basically, NPD and segmentation methods have proved viable means to make big changes for a car manufacturing company, which is something Lincoln needs to begin seeing positive sales figures and start climbing up the online polls for the right reasons.
Lincoln can better tailor a product offering within their model range to each type of ‘Luxury car customer’ they recognise, instead of failing to balance young and old target markets, and also highlight specific benefits that this customer is seeking with Behaviouristic and Psychographic segmentation. With extended knowledge on more targets Lincoln can use NPD and innovation techniques primarily in the Improvements/Revisions and New Product Lines NPD typology put forth by Booz Allen Hamilton to move from being more Market Reader centric to Need Seeker centric.
Behaviouristic & Psychographic Segmentation to solve Need Recognition
Market Segmentation centres on using “protocols for the division of markets in a variety of ways into homogeneous groups of buyers, to form differentiated targets for marketing strategies and programmes” (Piercy & Morgan, 2006). Perhaps some of the most common methods for segmentation are Demographic and Geographic, which are versatile but quite basic and I don’t think are suited to strategic use in Lincoln’s circumstance of confusing elements from older target markets to younger ones, thus providing inadequate product offers. Behaviouristic (Behavioural) and Psychographic methods are arguably more creative ways to segment customers. Behavioural segmentation divides a population based on their behaviour, the way the population respond to, use or know of a product (Marketing91, 2015), whereas Psychographic segmentation is dividing your market based upon consumer personality traits, values, attitudes, interests, and lifestyles (Study.com, 2015).
Lifestyle Segmentation (psychographic)
“Nowhere in the field of mass communication research has the concept of ‘lifestyle’ been so prominently and fruitfully used as in the field of marketing communication, where it has been shown that lifestyles influence both consumption patterns and the processing of different forms of marketing communication” (Vyncke, 2008 p.1). Perhaps an additional bonus to using more a psychographic segmentation approach is not only can Lincoln determine the type of customer who is to buy, or who Lincoln wants to buy one of their cars, but also gain knowledge that can be used in advertising, largely the first touch point that many consumers will see first from the ever fading brand. Lincoln’s 2013 Superbowl ads left many people confused and many online industry journals have heavily criticised it as the worst Superbowl car ad of all time (Autoblog, 2013).
I’ve looked at Vyncke’s work at segmenting by lifestyle and I think it is the most appropriate re-starting point for Lincoln. Lifestyle is usually defined as the patterns in which people live and spend their time and money (Kaynak and Kara, 2001 p. 458). Chaney (1996, p. 4) defines lifestyles as ‘patterns of action that differentiate people. Vyncke developed a lifestyle and value questionnaire even to go as far to examine aesthetics in consumer culture as “style preferences are perhaps most visible in four ‘product’ categories: clothing, cars, houses and house interiors” (Vyncke, 2008). The questionnaire was delivered to 995 participants whom were grouped into more homogenous lifestyle segments by clustering analysis. Research results suggest that it is possible to develop robust and balanced general lifestyle typologies (using either values, life visions or aesthetic style preferences alone, or in combination) that can be used by communication and marketing managers for strategic segmentation decisions across very different markets (Vyncke, 2008). With regards to Lincoln, I think they can realistically employ something pretty much the same as Vyncke (2008) with an achievable sample size. While Vyncke (2008) looked at how understanding consumer lifestyle can lead to better attraction methods in marketing communications over typical demographics, Lincoln can use this type of questionnaire to examine the values different types of lifestyles place in a luxury car. As well as understand how advertising to each lifestyle segment might work based on the values that become more important. Finally this leaves Lincoln with a base of lifestyle segments that they can decide which ones they want to serve. The next part of segmentation should deal with how they serve them.
Benefit Segmentation (Behaviouristic)
“The belief underlying this segmentation strategy is that the benefits which people are seeking in consuming a given product are the basic reasons for the existence of true market segments” (Haley, 1968 p.31). Haley continues by saying Benefit Segmentation goes hand in hand with other segmentation methods. In this way, a reasonably deep understanding of the people who make up each segment can be obtained (Haley, 1968).
This can allow Lincoln to further ground their customers’ needs and adapt a suited product offer. The nature of this behaviouristic segmentation is also very suited to Lincoln. Usually, whatever the statistical approach selected, the end result of the analysis is likely to be between three and seven consumer segments, each representing a potentially productive focal point for marketing efforts (Haley, 1968 p.32). I think this is great for a luxury car manufacturer as three to seven consumer segments would lend itself to three to seven market segments which would give more room/markets to exploit a competitive advantage. For example, taking Volkswagen segment structure, you would have A class Saloons, B class Saloons, A0 class hatchbacks or A hatchbacks etc. These class structures represent size and different product natures, ie: city style driving or off-roading and there are going to be far more segments for a more mainstream brand. For a luxury car like Lincoln, there is a smaller range of segment structures but, they may find there is a segment in the overall branch of say, luxury hatchbacks that they have yet to explore. Just like BMW noticed with their 1 Series hatchback in Europe. Or on smaller scale, Lincoln could become more in tune with what benefits or needs effectively identified customers (from previous lifestyle segmentation) view in the small sized luxury SUVs. “The new product implications of benefit segmentation studies are equally apparent. Once a marketer understands the kinds of segments that exist in his market, he is often able to see new product opportunities or particularly effective ways of positioning the products emerging from his research and development operation” (Haley, 1968 p.33). This leads me onto my next phase of Lincoln’s marketing solution.
NPD & Innovation methods from the Global Motor Industry
As I’ve mentioned before and by examples, Lincoln can look at many of the major manufacturers to gain insight on strategies. Looking at Toyota for example who have been using Action Learning since the 1940s. “Action learning can be defined as a structured three-phase process that involves small groups of people from different disciplines to come up with new solutions for real problems and to learn from this experience” (Fuchs, 2007 p.28). Fuchs finds that action learning represents an efficient strategy to manage continuous change necessary for the successful innovation of products and processes and at its core, needs must be satisfied, the business must be capable to do it, and there must be organisational learning in relation to innovation and continuity (Fuchs, 2007). Like my segmentation recommendations, I find, as does Fuchs, Action Learning quite practical and reasonable for Lincoln considering the ground work already done on need recognition. A key point also is that “Action learning can be applied in various contexts and organizations looking for new solutions to an existing problem. In particular, action learning exhibits a set of properties patronizing innovation and new product development” (Fuchs, 2007 P.28).
How Lincoln can effectively use NPD upon building need recognition
I pointed out that Lincoln should focus on Improvements/Revisions and New Product Lines NPD typology put forth by Booz Allen Hamilton. My segmentation suggestions and Action Learning should help them consolidate what kind of work they should look to carry out in the current model range and in potential future models. With this point of view, Lincoln can become more Need Seeker. I’m not saying they should become Need Seeker completely as they are usually a first to market company with innovations as a consequence of deep customer understanding (Bernstein, 2008), Whereas Market Readers tend to be fast followers, taking an incremental approach to innovation (Bernstein, 2008). Lincoln should use elements of both and I think my suggestions so far should allow them to explore a more Need Seeker NPD typology.
With Improvements/Revisions I think they can use the information gathered from segmentation and undergo an Action Learning process to employ new model facelifts. Usually facelifts aren’t too radical but they can be successful at rejuvenating a products life cycle or a competition differentiation method. This is exact reasoning behind the 2015 Volkswagen Jetta for example (Technology VW Jetta, 2015). Lincoln could use aesthetics, and product usage info from both segmentation strategies to create more striking and innovative product facelifts instead of the poor looking model range they presented consumers in 2012, thus using more Need Seeker NPD methods. These methods could also solve the example I gave in the introduction of certain targets being very unhappy on the entry process of the car. Lincoln could tailor the entry process to separate lifestyle segments on different models perhaps.
This is where New Product Lines would also come in use. A new product line would undoubtedly take time (Usually 5-7 years from the starting process) but can certainly take styling and technology ques from the new model facelifts to shorten the processes. This is something Volkswagen do very well with their entire range by sharing many features, components and driving platforms. Another approach to New Product Lines Lincoln could look at is ‘Product Concepting’ with the segmentation data and Action Learning processes to guide them. On top of that good user experience is the goal of most product development projects today (Roto et al, 2009). Although the development process would slow down a bit in the early phases by integrating user experience / need recognition, it will pay back when Lincoln does not have to make expensive corrections in later phases or future models. “The goal of User Experience evaluations is to ensure that all products will be valuable and enjoyable for the target users, and this pays back in customer loyalty” (Roto et al, 2009 p.3). Therefore, not only does it solve Lincoln’s problem but should in fact start creating a loyal customer base once again.
With the processes I have pointed out, I think Lincoln could really benefit from a new model with benefits for the types of luxury car consumers they can successfully segment and target with appropriate marketing communications methods. Upon visiting the Lincoln website in December I had actually noticed Lincoln have indeed changed the family saloon model for 2017 and even have a future product concept on display. I think this is going in the right direction but only if these fresher models solve the needs of relevant customers. If it they do not, they could look to introduce or adapt a model that can. Another reason why I think the different segmentation strategies and different areas of NPD are appropriate is they are realistic, practical and the processes involved in each strategy can all impact or provide useful data to the other strategies in my recommendations.
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Marketing91, 2015. Behavioural Segmentation [Online] Available from: http://www.marketing91.com/behavioral-segmentation/ Accessed on 23.12.2015
McAleer, M (Irish Times) 2015. Jaguar takes a leap of faith with its new XE [Online]. Available from: http://www.irishtimes.com/life-and-style/motors/jaguar-takes-a-leap-of-faith-with-its-new-xe-1.2202151 Accessed on 22.12.2015
Randall Reed’s Park Cities Ford of Dallas, 2013. Lincoln Super Bowl Commercial – Pheonix Spot with 2013 Lincoln MKZ – Park Cities Lincoln of Dallas [Online] Available from: https://www.youtube.com/watch?v=lnbEeLTq1YM&ab_channel=RandallReed%27sParkCitiesFordofDallas Accessed on 23.12.2015
Study.com 2015. Psychographic Segmentation in Marketing: Definition & Examples [Online] Available from: http://study.com/academy/lesson/psychographic-segmentation-in-marketing-definition-examples-quiz.html Accessed on 23.12.2015
Technology VW Jetta 2015. ‘Volkswagen Jetta — decrypting the mild facelift’, Auto Tech Review, 4, 3, pp.52-55 [Online], Available from: http://link.springer.com/article/10.1365%2Fs40112-015-0879-8# Accessed on 23.12.2015
The Wall Street Journal 2015. BMW Retains Title of World’s Top Luxury Car Brand [Online]. Available from: http://www.wsj.com/articles/bmw-retains-title-of-worlds-top-luxury-car-brand-1429022230 Accessed on 22.12.2015
Article Three: Spotify
“Is Spotify in danger? It hasn’t turned a profit in three years”
Brian Lloyd – May 2015
“As for its subscriptions, the streaming service has 60+ million users, however only 15 million of them pay the requisite fee for the full service.”
“Apple is currently on track to release Beats, which will directly compete with Spotify whilst Jay Z’s TIDAL slowly builds up a customer base.”
“… Many artists have been speaking out against Spotify’s compensation packages for artists. Taylor Swift famously pulled her entire catalogue from the service last year in protest over the paltry earnings the service earned her.”
Spotify is losing money. This is partly driven by the fact it paid €605m in royalty costs – more than 80% of its revenue in 2014 (Torrance, 2014). This highlights that Spotify is effectively just a music facilitator. Many articles online also continue to point out that Spotify’s relationship with many high profile musicians has been fraught. Although the biggest worry is in fact the rise in competition. Jay-Z’s Tidal service is offering high clarity sound with many big names in the music industry backing it like Daft Punk and Beyonce, Apple Music has taken off with Apple’s iTunes Store delivering a massive music streaming cache and over 6.5m paying users already (Wang, 2015). And now YouTube Red has fundamentally changed the market for streaming music (Popper, 2015). Someone like an Apple or a Google is already realizing how valuable music is as a customer-engagement tool and will offer something quite similar to this (Seabrook, 2014). Customer-engagement is something I think, in a way, Spotify is missing, while the other music streamers have other brands and personalities behind them, Spotify is a platform to access what the customers are actually after. While Spotify still holds quite a large market share it is likely that this market share will become irrelevant when paying subscribers enters the frame. Apple owns iPhone, Google owns Android, and both are already implementing pricing structures in combination with their streaming services. Large industry players, such as Facebook, Microsoft or Amazon, are likely to enter the inescapable battle and Spotify may begin to struggle further (Reynolds, 2015). The bottom line for Spotify is they will need to do something drastic in order to hold their current market position (Reynolds, 2015).
While Spotify may have brought music streaming on a large scale successfully to a global market I don’t think they will be around to see it grow. This case also mirrors my two other articles. Nintendo and Lincoln are seen as have already fallen behind. Spotify will fall behind if not vanish in the immediate future as many online music industry and tech industry articles point out. While pricing structures/strategies or relationship marketing methods may seem like an apt approach short term, I still think Spotify will continue to spiral into irrelevance.
This is why I’m recommending something rather different. A large Corporate Social Responsibility (CSR) campaign in combination with a Public Relations (PR) campaign centred on climate change may provide a fresh perspective on the company amongst its unpaying subscribers and the media and musicians as well and perhaps invoke a large climate change movement using music as a mediator. We’ve seen from the Paris summit that 196 countries have agreed to keep emissions down to keep the worlds temperature from rising above 2C (Harvey, 2015). However emissions and climate change is something that will always be of importance and I think will become more and more serious as the world finds it may not be able to keep to these agreements or that in fact the lasting damage has already been done.
Where Spotify comes in on this is it could be a globally unifying voice about the importance of climate change to its users. I look at how this CSR campaign could bring about more customer engagement; act as a long lasting substantial differentiator for the company and how the importance of integrating a PR campaign can further emphasise a CSR campaign as well as how important actually branding CSR campaigns may become. Finally I examine Strauss-Howe generational theory to show how a potential crisis in 2025 may be centred on climate change.
CSR for the Future
“In the future, the focus will not be on whether or not to engage in CSR, but how to do it smarter, more strategically, and to integrate it into companies’ day-today business strategies. The focus will also be on how best to communicate and brand your CSR” (McElhaney, 2009 p.39). Perhaps a place to start would be to examine how CSR works today and how it will work in the future. McElhaney sums it all up very well. CSR done right, according to McElhaney, allows for more satisfied employees who become interested in the company and can provide customers with a more relationship focused purchasing mentality. For example, Levi Strauss’ VolunteerMarch website matched volunteers to do work locally. Instead of showing consumers how they are socially responsible, they are instead saying “Do it with us” (McElhaney, 2009). In essence Levi Strauss added another part to their messaging and branding on buying jeans. Also, Two-thirds of consumers around the world would prefer to buy products manufactured by companies with strong corporate social responsibility credentials, according to a report by Nielsen (Warc, 2012). “Think of CSR as another component of this strategic communication and messaging management. Perhaps it can even be one of its most important components” (McElhaney, 2009 p.39).
While CSR efforts are often not directly linked to what the firm actually knows, does, or is expert in (McElhaney, 2009), the CSR campaign must in a way be aligned with the firms core competencies. It would have made more sense for Ford to align its CSR with environmental or alternate fuel instead of breast cancer as McElhaney points out. The CSR strategy must also be measured effectively and consistently and be consistently portrayed as part of the brand and even in a brand in itself. Brands already use CSR for differentiation and companies can not only generate favourable stakeholder attitudes and better support behaviours (e.g. purchase, seeking employment, investing in the company), but also, over the long run, build corporate image (Du et al, 2010).
How Spotify can use CSR to Unify/Create a Customer Base
Spotify is quite different to most companies in many of these CSR respects. They don’t need to show they are decreasing a carbon footprint by new distribution techniques. Like Ford, while acting on breast cancer or medical issues is noble it probably isn’t suited strategically. Local issues may also seem appropriate but probably wouldn’t have a great effect as say Tesco or Apple even. What Spotify does have is a global digital presence that each customer can access for many different outcomes but one unifying reason in enjoying music. Hence where climate change comes around, many different people and only one planet. I also think the green colour as part of the brands image also reflects earth (See Appendix 2 for possible braning). “Partnerships are critical as a pathway forward, either between companies or with NGO partners. They help build credibility, and no one company can go it alone against an issue as large as global warming or AIDS” (McElhaney, 2009 p.39). Like with the CSR strategy aligning to Spotify, aligning with a similar company in nature, especially regarding climate change is very important and I think necessary for something of large scale to work. Spotify could engage with NASA, a company that is highly respected and seems to becoming more prominent in the Western eye and could arguably be considered an aspect of pop culture. Since 2013, NASA has appeared in large Hollywood productions getting a larger role each time with productions such as Gravity, Interstellar and recently The Martian. NASA, unlike many other activists monitors the earth and are a chief scientific resource for advice such as in the Paris Summit (YoungAfricanLeadersInitiatve, 2015).
What I’m suggesting is more similar to the Levi Strauss approach of getting consumers to engage with them on the CSR campaign. Spotify is not looking to solve climate change here. Merely continue to act as the music platform it has always done but promote not direct knowledge and scientific figures but an ethos like NASA does around the importance of climate change. I think it brings this climate change ethos down from what may be more seen as a scientific/governmental level to the individual level. Spotify could implement a strategy where subscriptions contribute to reducing carbon footprinting globally but I don’t think that will be necessary. I think if Spotify can use their music streaming to unify users and even non users and continue to implement this ethos, it will be a consistent differentiator and hope to attain positive attitudes amongst global consumers and perhaps more importantly the musicians who may want to be seen as advocates for wanting to make a difference in climate change.
CSR and PR Combined
“Public relations is the management function which tabulates public attitudes, defines the policies, procedures and interest of an organization followed by executing a program of
action to earn public understanding and acceptance” (WPP, 2008). The aim is to create goodwill towards the brand or to foster a generally positive view if the corporation or brand among stakeholders or the general public (Hackley, 2009) and in Spotify’s case, to musicians as well. This shows the importance of Spotify understanding Stakeholder Theory as it impacts on both CSR and PR (Goi & Yong, 2009). There are reciprocal responsibilities between business and society, and with a range of stakeholders (Goi & Yong, 2009). Stakeholder Theory also suggests that there is a wide range of groups in the social environment that an organisation can affect, and that these groups have legitimate claims on the organisation due to agency and property theories (Goi & Yong, 2009). The central to PR practice is maintaining an excellent communication with its various publics (Goi & Yong, 2009). Note the plural in publics. This emphasises that Spotify will need to try and create a large impact on not just its users and non-users, but all of the various stakeholders that impact on the business and even on climate change itself.
Clark talks about the connection between CSR and PR and puts forth a communication management process. A comparison reveals a key difference whereby effective communication methods are largely absent from the social responsibility literature; yet by including such techniques, one can enhance the development and overall impact of managing corporate–stakeholder relationships (Clark, 2000). Clark’s Communication Management Approach (CMA) uses the knowledge of identifying stakeholder groups and a corporation’s responsibility to them with the ability to strengthen these relationships through effective communication with three steps. I would think that these steps should just ground and clarify processes that Spotify should be aware of when attempting this Climate Change CSR campaign.
The first step highlights the needs of the publics that I already mentioned from examining Goi & Long (2009) and determine a large portion of Spotify’s publics they should pay attention to. This first step highlights how the publics feel towards certain issues.
Step two deals with the communication efforts between the company (Spotify) and the publics. The communication needs to flow two ways. This can determine the quality of the organizational-public relationship. Management of the communications effort relies on the quality of the present relationship with the primary or secondary stakeholder and the communication effects of various methods. This type of analysis is precisely what is missing in current CSR research (Clark, 2009).
In step three, taking the above research streams into consideration, one can establish, inform, mitigate, or maintain his or her relationship with key stakeholders (Clark, 2000).
These are the steps Spotify should carry out either before or during the campaign. They seem like something a company before it considers or starts a campaign. I however think they can be used during. They can use them to effectively monitor and manage potential changes stakeholders/publics feel towards both Spotify and climate change. For example they’d be able to see if partnering with NASA turns out to be the wrong way to go about it the campaign they have the opportunity to take a different approach.
Millennials and Spotify
CSR theory is very different from traditional business mind set, in fact, it is an opposite of the traditional business mind set of profits maximisation as proposed by Friedman (1973), Nobel Prize winner for Economics (Goi & Yong, 2009). Now that approach is changing and while I recognise the fact that Spotify hasn’t turned a profit, I don’t think the typical/natural profit maximising techniques are candid in this circumstance. The Millennial generation, which is now hitting the workforce, is demanding and driving this reality (McElhaney, 2009) of consistent CSR. CSR and Spotify go hand in hand for Millennials, who are highly influenced by pop culture and listen to hours of music every week (Johnson, 2015). Millennials would both act as the audience and the continued driver of such a campaign. Spotify is already seen as a music experience. Experience, according to many academic journals is part of the 4 E’s (Experience, Entertainment, Exhibitionism, Evangelizing) as Holbrook 2000 points out, and plays a large role for Millennial consumers.
Another reason why I think Spotify need to recognise Millennials as an important future factor is that they could be the ones initiating a large social change in 2025. This is more theory than practical advice but it’s interesting to consider. The Strauss-Howe Theory expresses that society follows a predictable cycle of moves, each lasting about 20 years (Vsauce, 2015). Social moods and common life stages are what distinguish one generation from the next. Strauss and Howe call changes in social mood a turning (Vsuace, 2015). A turning describes how society will act by establishing, accepting, challenging or fracturing in lieu of established customs (Vsauce, 2015). This is essentially a cycle (Appendix 3). According to the cycle a social/generational crisis will happen in the year 2025, yet it is not known what it will be (LifeCourse Associates, 2015). It is also important to point out this is unscientific. There are predications like World War III and the likes.
I Think attitudes towards climate change (especially in the Millennial generation) will change and it will continue to become more and more serious thus Spotify could become involved early on in this lead up to crisis. What I am tactfully advising is that Spotify just take notice of the Generational Theory and possibly try and examine what exact social changes may indeed develop. Social change as is has implications on the type of music people listen to and what music develops so I don’t think it is just related to the CSR Campaign.
This set of recommendations for Spotify certainly have more theoretical implications compared to the ones for Nintendo and Lincoln. I think different approaches are what Spotify need though to avoid becoming overtaken either by competitors or remain continuously the background people who supply their users music. Music in itself is a complicated business. I think this CSR campaign is different and radical enough, without asking too much from Spotify in attaining this radicalness, to be effective at generating the processes that Spotify need to make profit and their users and publics become more aware of them in a positive mind frame. Which may in turn yield paying subscribers and musicians
Hackley, C. 2010. Advertising & Promotion An Integrated Marketing Communications Approach. 2nd ed. London: SAGE publications Ltd.
Clark, C 2000, ‘Differences Between Public Relations and Corporate Social Responsibility: An Analysis’, Public Relations Review, 26, 3, p. 363, Academic Search Complete, EBSCOhost Accessed on 30.12.2015
Du, S, Bhattacharya, C, & Sen, S 2010, ‘Maximizing Business Returns to Corporate Social Responsibility (CSR): The Role of CSR Communication’, International Journal Of Management Reviews, 12, 1, pp. 8-19, Business Source Complete, EBSCOhost, Accessed on 30.12.2015
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Holbrook, M 2000. The millennial consumer in the texts of our times: Experience and entertainment. Journal of Macromarketing, 20, 2, pp.178-192. [Online]. Available from: http://jmk.sagepub.com/content/20/2/178.short Accessed on 30.12.2015
McElhaney, K 2009. ‘A strategic approach to corporate social responsibility’, Leader To Leader, 2009, 52, pp. 30-36, [Online]. Available from: http://claridenglobal.com/programs/CGArticle_CSRLeadership.pdf Accessed on 30.12.2015
Harvey, F (The Guardian) 2015. Paris climate change agreement: the world’s greatest diplomatic success [Online]. Available from: http://www.theguardian.com/environment/2015/dec/13/paris-climate-deal-cop-diplomacy-developing-united-nations Accessed on 30.12.2015
Johnson, L (AdWeek) 2015. 4 Ways Spotify and Pandora Target Millennials Differently CMOs dig into music fans’ habits [Online]. Available from: http://www.adweek.com/news/technology/4-ways-spotify-and-pandora-target-millennials-differently-167222 Accessed on 30.12.2015
Life Course Associates, 2015. The Four Turnings [Online]. Available from: http://www.lifecourse.com/about/method/the-four-turnings.html Accessed on 30.12.2015
Popper, B (The Verge) 2015. YouTube Music is here, and it’s a game changer [Online]. Available from: http://www.theverge.com/2015/11/12/9723496/youtube-music-app-offline-background Accessed on 30.12.2015
Reynolds, O (The Market Mogul) 2015. Spotify’s Struggle [Online]. Available from: http://themarketmogul.com/spotifys-struggle/ Accessed on 30.12.2015
Seabrook, J (The New Yorker) 2014. REVENUE STREAMS: Is Spotify the music industry’s friend or its foe? [Online]. Available from: http://www.newyorker.com/magazine/2014/11/24/revenue-streams Accessed on 30.12.2015
Torrence, J (Management Today) 2014. Spotify is in trouble [Online]. Available from: http://www.managementtoday.co.uk/news/1323921/spotify-trouble/ Accessed on 30.12.2015
Vsauce, 2015. Juvenoia (17:00-23:09) [Online] Available from: https://www.youtube.com/watch?v=LD0x7ho_IYc&ab_channel=Vsauce Accessed on 30.12.2015
Wang, A (Quartz) 2015. Apple Music has already attracted a third as many paying users as Spotify [Online]. Available from: http://qz.com/528449/apple-music-has-already-attracted-a-third-as-many-paying-users-as-spotify/ Accessed on 30.12.2015
Warc, 2012. CSR could benefit brands [Online]. Available from: http://www.warc.com/LatestNews/News/CSR_could_benefit_brands.news?ID=29644 Accessed on 30.12.2015
WPP, 2008. Corporations, Social Responsibility and Public Relations.
Harold Burson’s Speech at the Welcome Dinner of the 18th IPRA World Congress in Beijing, November 13, 2008 (condensed) [Online] Available from: http://www.wpp.com/wpp/marketing/publicrelations/corporations-social-responsibility-pr/ Accessed on 30.12.2015
Young African Leaders Initiative, 2015. Can we stop climate change? The Paris summit may be the key. [Online]. Available from: https://youngafricanleaders.state.gov/can-we-stop-climate-change-the-paris-summit-may-be-the-key/ Accessed on 30.12.2015
Appendix 2: Climate Change Branding for Spotify
I think it’s quite easy to see how much of Spotify’s branding could be adapted or moulded into a climate change centric image. The green colours and constant world centred images align themselves quite well with climate change.