Organizational Cross-Cultural Adaptation through Social Networks: A Multiple-Case Study of Chinese Firms Operating in the United States

Abstract

In the era of globalization, Foreign Direct Investment (FDI) has become the prevalent internationalization strategy for multinational enterprises (MNE). As cultural distance remaining a barrier for firms to achieve desired performance in their foreign operations, it is less informative as to how firms can reduce the problems caused by cultural distance from the host environment. Using the context of Chinese firms operating in the USA, this study is designed as a multiple-case study oriented toward theory development. Through the examination of the structure of the organizational social networks in the host country, I aim to arrive at a conceptual synthesis to define cross-cultural adaptation to an organization, establish its process and demonstrate its crucial role for firms to successful develop and maintain a stable, reciprocal and functional relationship with the new cultural and institutional environment. The framework contributes to the body of global management knowledge. It also provides a tremendous managerial implication to firms who are coping with the issues brought by cultural distance with the host environment and ultimately helps to enhance their competency in the global market.

Keywords: Cross-cultural Adaptation, Cultural Distance, Social Network Theory, Local Adaptation

Please read more from the link

The Cases of Best Buy and Home Depot in China

After operating in China for less than six years, in 2011, both Home Depot and Best Buy, two major big-box retailers from the U.S. announced the close of their stores in spite of the increasing size of the Chinese middle class. Based on this backdrop, I wrote a teaching case study “What Is Up With The U.S. Big-Box Retailers In China? The cases of Home Depot and Best Buy“, which was published at China Research Center.

Both cases illustrate the typical challenges facing western retailers  success in China. The big-box retailers not only need to face the challenges from their local competitors and the different practices in Chinese retail industry, but also to adapt to Chinese consumption culture. Facing the complex operating environment, both companies need a long-term vision and commitment to strengthen their brand image and create values for their customers.

Check out the link for the whole article!

China, Becoming an Innovation Super Power?

Credit: http://www.aboutastra.org/latest_news/05-16-2011-china-innovation.asp

Recently, there have been a lot of discussion about China becoming the next innovation super power. A recent HBR blog “Get Ready for China’s Innovation Juggernaut” alerts the readers that China is making huge strides to transform themselves as an innovative nation.  It uses examples that more than 100 million registered private enterprises in China; the Chinese firm Huawei was third among all companies in number of patents filed last year; and media conversation these days centers on when, not whether, China will produce a success story like Steve Jobs’. For the first time in 2009, four Chinese companies are listed in the 50 Most Innovative Companies ranking by Bloomberg Businessweek, while American companies on the list decreased from 35 in 2007 to 22 in 2009. All signs are pointing to the fact that China is going to become next innovation power house.

On the other hand, there are doubts existing about Chinese innovation capability. An earlier NPR report Plagiarism Plague Hinders China’s Scientific Ambition pointed out that 31 percent of papers with unreasonable copying and plagiarism. Blame lies in part with traditional Chinese culture, as many scientists believe, which values rote memorization and repetition and holds that copying a teacher’s work is a way of learning.

No one can deny the fact that Chinese government is pushing innovation with strong incentive policies. From WIPO data source, China is the only major country with increased Intellectual Property (IP) application in last two years when other countries experienced IP application decreasing because of financial crisis. We can argue that IP application only means quantity, not quality. However, we also see China has a dramatic increase in IP granted. Below graph illustrates Top 10 countries of IP granted according to WIPO data from 1995 to 2009.

Top 10 Countries with IP Granted (Source: WIPO)

Japan has been the leader of IP granted, followed by the United States. Korea surpassed Germany becoming the number third since 2004. However, China passed Korea in 2009 while Korea experiences a significant drop in IP granted since 2007. According to the NPR report, China is forecast to become the world’s leading innovator in 2011, overtaking the United States and Japan in number of patent filings.

There is no doubt that China is very good in enhancing current technology. However, the question lies whether China can create “disruptive” technologies or services, which can lead the market and build the brands, such as Apple, Facebook and twitter. Government policy motivates the number of IP application or grants, but perhaps majority of those innovation are incremental improvement and development, instead of breakthrough creations which can drive much more value for the business and the society.

Thus, come back to my question: will China become next innovation super power? To my knowledge, Chinese are still learning how to be more creative and more innovative. If China wants to become the most innovative nation, the government policy should drive a scientific culture which emphasizes quality, instead of quantity, with an innovative environment embracing patience, persistence and precision.

Brownfield Entry in Emerging Markets

Reading:

Brownfield Entry in Emerging Markets
Author(s): Klaus E. Meyer and Saul Estrin

Source: Journal of International Business Studies, Vol. 32, No. 3 (3rd Qtr., 2001), pp. 575-584

Definitions

Greenfield: A Greenfield project gives the investor the opportunity to create an entirely new organization specified to its own requirements, but usually implies a graduate market entry. It is a start-up investment.

Acquisition: An acquisition facilitates quick entry and immediate access to local resources, but the acquired company may require deep restructuring to overcome a lack of fit between the two organizations.

Brownfield: A Brownfield is a foreign acquisition undertaken as part of the establishment of a local operation. From the outset, its resources and capabilities are primarily provided by the investor, replacing most resources and capabilities of the acquitted firm. It is a hybrid mode of entry.

Two frameworks establish determinants of entry mode choice

  1. Resource requirement based on transaction and integration costs
A Model of Entry Mode Choice

Managerial applications: Decide the entry mode based on transaction and integration costs and resources

Future research:

1. The relationship between institutional variation across countries and emergence of brown strategy.

2. Incorporate brownfield into analyses of both determinants of entry mode choice and the impact of entry modes on subsidiary performance

Preface: A Flat but Complicated World

First of all, I am so sorry for not being available to write the business blog for a while. So what have I being doing recently?

My PhD study in Marketing and International Business has started in August so I have been adjusted myself to get used to this challenging while intriguing student life. Very different from the learning in my MBA, which is quite practical for a business professional, the PhD learning is quite theoretical while beneficial for my future research. I am also glad for my choice of moving my concentration from supply chain management to international marketing and business. With my interest in international trading and global cultural, this transition provides me a broader platform to fulfill my career goal to comprehend international conflicts and to promote global conversation and fair trading.

As a Chinese origin, I of course will pay more attention to the growth of Chinese economy and its relationship with other nations. Recent frictions between Chinese and U.S. over Chinese currency appreciation and penalty tariffs against each other draw my attention. As an advocate of fair trading, I hate to see this kind of political game between nations which only hurt businesses and consumers as a result, especially between two important trading partners. However, there are too many misconceptions and misleading information regarding the root causes of job loss in American manufacturing, China obviously became an easy target to blame and be used as a scheme for political goals.

There are also much focus on the growth of China and many articles have discussed this new challenge to China. After decades of leapfrog growth, China is facing significant challenge to remain its double-digit annual GDP growth. A very recent HBR blog Will China’s Growth Slow Over the Next Decade by Liu Shengjun points out there are four dividends behind the growth miracle: population, reform, opening and resource. Facing the diminishing return of those dividends, Mr. Liu recommends the following consideration for China to create new dividends:

  • Eliminate discrimination against private enterprises.
  • Further reform state-operated enterprises
  • Promote innovation

Those recommendations are well analyzed and right to the point. However they may not be easy for the Chinese government to make such huge turnaround in the near future. Corruption at all levels of central and local governments will not allow such reform to be easy because many people in power will lose their advantage of authorization and grey income. To encourage innovation, China needs to first fight against the challenge or habit of plagiarism and copyright infringement, and establish a stronger IP protection law. Otherwise, the innovations by the enterprises are not able to be protected thus discouraging their investment in R&D. Overall, China needs a political reform in order to create those dividends. Right now, I do not see such push from the central government.

What will happen among nations and how will China and the U.S. can grow together? I do not know yet. We are now living in a flat but quite complicated world. I hope my future studies will soon bring me more knowledge to solve those puzzles regarding global trade issues and challenges. And of course, I wish to see my future research contributing to a “flatter world”.  I will keep everyone posted!

Business Buzz Podcast #3 – Personal Branding: Is there a Right and Wrong Way?

Google Me, or not.

During our Third Business Buzz Podcast, Jodi and I are going to talk about personal branding and we will debate the question, is there a wrong or right way to do this? The question arose after reading several blog posts and comments about personal branding and in particular, the approach some people are taking by printing out business cards with their names on it and the words “Google Me.” So shall we “Google Me” or Not? Is there a right and wrong way for personal branding? Let us listen to what Jodi and I have the say about it.

Play Podcast

Cross Posted at Jodi Kiely Communication

Transcript:

Business Buzz Podcast: Is there a Right or Wrong Way to do Personal Branding?

 

 

Jodi: Hi everyone! Welcome to another edition of our Business Buzz podcast. My name is Jodi Kiely of the blog Jodi Kiely Communications. I work as an independent PR and communications consultant based out of Orlando, Florida.

Zac: Thanks for joining us again listeners, my name is Zachary Long, small business owner of CameraConcierge.com, photographer, and social media pundit based in Atlanta, Georgia.

Jodi: Folks, I know it’s been a long time since our last podcast but regular listeners may have picked up on something in Zac’s introduction and that is, he has now moved to Atlanta! Pretty exciting! So in case you were wondering if episode 3 was ever going to happen, that explains our little hiatus. So Zac, how is Atlanta?

Zac: Atlanta is great, a bigger city than Orlando and a lot more opportunities. We are finally all moved in but I don’t think we will ever finish unpacking!

Jodi: I know how that goes. I hate packing and unpacking.

Anyway, during this episode of Business Buzz, Zac and I are going to talk about personal branding and we will debate the question, is there a wrong or right way to do this?

The question arose after reading several blog posts and comments about personal branding and in particular, the approach some people are taking by printing out business cards with their names on it and the words “Google Me.”

Zac: There has been debate on whether this – and other self-branding methods – is an effective way to market oneself or if it is really just portrays the person doing this as being self-centered and egotistic. While discussing this together, it became clear that Jodi and I have different views about self-branding and what is acceptable or not.

Jodi: First of all, I would like to point out that there is a difference between self branding and corporate branding. I recently posted on Twitter a very good article discussing the difference. In a nutshell, personal branding focuses on you as a person. Are you easy-going? Do you have a sense of humor? What are your interests and if I were to ever work with you, would I feel comfortable around you?

Zac: According to that same article, corporate or executive branding focuses on your actual work record. It touts solid, measurable results, much the same way a resume would.

So back to our original question, Jodi. Is there a right or wrong way to do personal branding?

Jodi: I think there is, not so much in the sense that, “Here is a book or manual telling you step by step how to personally brand yourself,” but more along the lines of, “There are good and poor approaches you should be mindful of.”

For example, the whole idea about putting the words “Google Me” on a business card. I’m trying to think of a situation where that would be appropriate but I really can’t.

Every time I am at a networking function, I realize that such situations are more for the purpose of personal branding. I want people to remember me, to think of me positively as a person so that when the need for my services arises in their lives, they will remember me as being friendly, professional and knowledgeable in which case they may want to learn more about me and in then take the initiative to Google me on their own – or else pick up the phone and call me. But I have heard of others taking the opposite route.

Zac: In my opinion putting “Google Me” on a business card is a way to differentiate yourself from the dozens of other business cards passed around at these events. Once everyone else starts doing it then it loses its charm and uniqueness, but for now it serves two purposes: One, it shows a bit of your personality that you are unique with a bit of creative flair, not one to simply use a standard Kinko’s printed card. If you are a creative type such as a photographer or other artist, then sometimes your name is your brand. Two: This also speaks to your confidence in managing your own personal brand. Growing up I didn’t know any other “Zachary’s” but on the internet I’m not the only “Zachary Long” out there. However, googling my name does bring me up on the first page though not the first result. If I were to give this out to a prospective employer, they would know that anything out there on the internet is fairly mild since I am basically inviting someone to start digging around based on my name.

Jodi: Well, those are worthy arguments people make in favor of using that technique. But there is another thing about the whole “Google Me” approach that makes me a little nervous. I want to come off as being knowledgeable in my industry, but I also want to be seen as being a person who puts customers first. If I tell a potential client to “Google Me,” isn’t that just the same as saying, “I don’t want to take the time to connect with you in person so just go ahead and research me on your own”?

Now granted, if someone did hand me a business card with the words “Google Me” on it, sure, if I ever remembered to, I probably would Google them. And sure, maybe what I would see online would impress me, but at the same time, I can’t help but be turned off by the whole “me first” attitude when it should be a “you first” one.

Zac: Ha! Well at the end of the day at your power networking session, who do you remember more: the guy in the black suit with the standard cardstock business card with name and title, or the confident guy with the unique Google Me card that no one else had that night?

Jodi: Honestly speaking, the person I meet at the end of the night is the one who didn’t try to hard sell me like the others did, and the one who took an active interest in me as a person. I remember the person who tries to build a relationship with me first before trying to get me to buy.

Having said that, I think it is possible to relay the same message as “Google Me” but in a different way. Instead of simply writing “Google Me” on your card, do what folks are already doing and include the address to your website and on that website, link to other online mentions of you and your work. Even a simple message of “Let’s connect” can be powerful.

My email signature does just that. I have the message, “Let’s connect” along with links to my blog, LinkedIn account and Delicious bookmarks where I share a lot of industry-related links.

I’m a big believer in social media. “Google me” doesn’t say “social.” It says, I know I’m great and I want you to know I’m great rather than, “I can help you and I invite you to find out how.” Key words being “invite” and “you.”

Zac: Wait, aren’t you inviting them to Google You? You’re inviting someone to use the number one site on the internet, Google, and to simply type in your name instead of typing in a possibly complicated blog address. Another reason for a simplistic URL to your blog but I think that is a whole other conversation on SEO!

Jodi: True! But to me, “Google Me” is not an invitation. It sounds like a command.

In comparison, “Let’s connect” sounds like an invitation. I hate to be a grammar teacher here but let’s break down each message:

Google Me.” All I’m hearing is “me.”

“Let’s connect.” Broken down into words, “let’s” is “let us.” Let us connect. I know it sounds weird when you say it like that, but see the difference…it’s not about me. It’s about two people now.

Kind of like when you’re writing a cover letter to a prospective employer. You can only talk about yourself so much before the reader wants to know what you can do for them. How you can help his or her company? I really do think there is a reason why we are taught to use the company’s name and the word “you” more often than the word “I” in a cover letter.

Anyway, we agree to disagree on this one. I think we’ve hammered to death the perceived down and upsides of using the phrase “Google Me” in one’s personal branding campaign. Can you think of other tips our listeners may want to know of?

Zac: I think we can review some general personal branding tips, the first of which is to have a home base. Where do you want people to go when you hand them that business card? The simple answer may be a link to your LinkedIn page showcasing your accomplishments, or your twitter profile where you actively participate and add to the discussion about your industry. All of that aside, I think the most powerful way to drive traffic around your personal brand is to develop a blog with a custom URL to consolidate all of those extraneous sites we mentioned briefly before like Delicious Bookmarks, Twitter, LinkedIn, etc. Jodi, I know you have recently had some success since you launched your blog, how has this helped your personal brand?

Jodi: The blog has been really helpful in getting me exposure. It has increased the amount of inquiries I have received from people who say they are interested in working with me sometime in the future. I know this because people have actually mentioned my blog when they write to me. I think the biggest strength in that has been the fact that my blog showcases my knowledge in my area of expertise and hopefully paints me as a good person to work with.

Zac: I think that is a perfect example of a social media – and personal branding – success story! You consolidated all of the other links around the internet to one landing page, with your own thoughts within the blog posts as the glue keeping everything together. As another tip to Personal Branding, you used your own name as the site URL – further linking your name with the posts that may eventually show up in Google search results.

Jodi: That’s true and I think it is a start. I do believe in the end, the most effective method is to go out and meet people. Go to the same networking events over and over again where you will see some regulars. Establish a relationship with those regular attendees and then, after you get to know them more, go in for the hard sell. At least, this is what I am learning having attended Asian-American Chamber of Commerce events on a regular basis now. I do think personal branding helps though, and having presence online is very powerful – and mandatory.

 

Zac: You bring up another good point that bears repeating, and that is that relationships matter both online and offline – and that the one reinforces the other. By meeting and talking to these people over time you have built a relationship based on your personality and professionalism. Now, when they want to take the next step and engage with you, they can pull up your website that was written on your business card, and see examples of your work to reinforce that connection.

For me as a small business owner, I have had a very similar experience with making relationships which affect our brand. As owner of CameraConcierge.com, a camera equipment rental company, I am often at photography events because of my own love for photography. I don’t go to these events aggressively handing out business cards, but if I start talking to someone and we make a connection about what we do for a living I do bring up the business. Now, I don’t know if you call this a “soft sell” or personal branding, but I see my personality – and my wife’s – as a large driver of business for us. Making a personal connection either in person or over the phone has made the sale for us, allowing others to feel comfortable doing business with us and wanting to come back for repeat business as well.

 

Jodi: I really do think the internet – and perhaps the current economic situation in the world today – has changed how we promote ourselves. I think in a sense, we are all becoming more and more guilty of “me” marketing vs. “you marketing” and that includes myself as well.

Is this good or bad? Or, to rephrase the question, What makes a ‘me marketing approach’ good or bad? As you can see from our debate today, there is no easy answer. I think we can agree that as uncomfortable as we may feel about talking about ourselves so highly, personal branding is necessary and to ignore it means you miss out to the competition who are promoting themselves aggressively.

Zac: Well even if we may feel uncomfortable talking about ourselves, by effectively managing your personal brand you are basically letting your work speak for itself. It’s a passive marketing approach and one that once you set up with a website has little costs, only requiring a time investment for blog posts, tweets, etc. to keep content fresh. That is my final thought and tip, think of your personal branding as a long-term “slow burn” commitment, you may not see immediate results even in the first couple of months but stick with the regular updates – as you should be doing in all of your social media efforts – and eventually you will start seeing results.

 

Jodi: Great discussion today.

Well, this concludes today’s episode of “Business Buzz” – thanks again for listening. And in the spirit of personal branding, I invite all of you to join me for more discussion about this and other topics on my blog, JodiKiely.com (J-O-D-I    K-I-E-L-Y . COM or follow me on twitter at Jodi   UNDERSCORE    Kiely.)

Zac: Well you really can just Google Me, but I will point people to the same places that you did Jodi – head over to ZacharyLong.com for my photoblog which has links to my various other activities around the web or connect with me on twitter at ZacharyLong.

 

Jodi: And one note to our listeners before we conclude: Business Buzz will be taking a rather long break as I am getting ready to take off for a very long but busy trip to Denmark with the Central Florida Rotary International program starting in September. I will be back in October though, and we will pick up from there, so don’t forget us!

I’m relying on Zac to keep us alive in your thoughts during our podcast break.

Zac: Anyway, thanks again for listening! And until next time, we look forward to more discussions on our Business Buzz podcast!

Apple’s Global Smartphone strategy

Image Source: Kevin Van Aelst, Apple Globe, 2009

I am reading the article by Dr. Dan Steinbock, Apple iPhone4 Success Masks Global Strategic Challenges, posted on Harvard Business Review blog.  Dr. Steinblock compares Apple and Nokia in their global presence, and states that although Apple enjoys a huge  success  in the United States for the smartphone market, Nokia has advanced in l strategical development toward a global market, especially in emerging markets. The article concludes that “Apple needs to adopt a dual business model, one for the advanced economies which enjoy high living standards but relatively slow growth, and another model for emerging economies which have relatively low living standards but enjoy high growth”, and that “global leadership requires success in the advanced economies and the emerging world.”

While I can fully respect Dr Steinbock as the Research Director of International Business at India, China and American Institute (USA) and Senior Fellow at the Shanghai Institutes for International Studies (China),as a highly respected expert in the field of international business and global strategy, I pause to wonder if Dr. Steinbock is an iPhone user, or is familiar with it. I am not a big fan of Apple, but I happen to use an iPhone and know about this product; I believe that I may be able to present some valid arguments to justify why a dual business model is not necessary for Apple.

First,let us conduct a side by Side comparison for Apple and Nokia according to their 2009 annual report.

It is not necessary to discuss the gap of the market capital and the stock price between Apple and Nokia. Our comparison will rather review each company’s operational key performance indicators. Apple reports two billion more in revenue than Nokia, but to clarify, the Apple data includes products beyond  Smartphones such as iPods and Mac Computers. The iPhone accounts for 30% of the total revenue. Apple’s gross profit margin for 2009 is 41% with an income before tax of 28%.  According to the analysis from iSuppli Corp, iPhone has a profit margin of almost 52% for the cheaper model. Comparatively, Nokia, a manufacturer of mobile devices, has 32% of gross profit, with only a 2.3% income before tax. Nokia’s R&D cost is high at 13% vs. only 3.1% for Apple.

From this comparison, we may conclude Apple has a business strategy of “Differentiation”. Apple enjoys a high profit margin from the well-designed high-end Smartphone. Apparently, Nokia is heading toward a different strategy to become a “cost leader” to focus on more low end products with lower margin. My speculation is further articulated by the article, Nokia to Halve Smartphone Production in 2010, Official Suicide Watch Starts Now. Nokia announced it would halve production of its Smartphones in 2010, to gear itself toward a concentration on ‘dumbphones’, or “mid to low end Smartphones.” Nokia Smartphones’ R&D also “cut down unnecessary differentiation”. While I choose not to comment on  whether Nokia is choosing the right business strategy, it seems a fair assumption that their focus on low-end Smartphones is directed toward a global focus met to face an increasing demand in emerging economies.

On the other hand, Apple, having a singular iPhone product in their Smartphone portfolio, was able to increase their market share to 16.1% in 2010 Q1, a 131.6% leap from a year ago. (Source: Apple boosts global smartphone market share big-time, holds on to No. 3 position) With the introduction of iPhone 4, I would expect to see increased market share for Apple.

It seems paramount that we should ask this question: Why is the Apple R&D cost is so low in comparison to Nokia? I believe that the answer lies hidden within Dr Steinbock’s article.  Nokia is a device manufacturer however Apple uses OEM (Original Equipment Manufacturer) Foxconn to produce their Smartphones. Although I do not have inside information, I believe Apple collaborates with Foxconn for product development. Utilizing the supplier’s technology and production expertise, Apple is able to focus on their core competency of product design and software program development and achieve such low R&D cost. Apple has only one model of iPhone with some variation of memory size, which is naturally easier for mass production, and allows the achievement and maintenance of lean inventory management. This results in a lower COGS (Cost of Goods Sold) and a higher gross profit margin. Nokia, on the other hand, released 13 Smartphone models in 2009, which increased not only their R&D cost, but added a level of complexity to its supply chain and increased the capital investment required to manage the vast array of models.

So when iPhone is considered a luxury product in the Smartphone market, why would they require different pricing strategies for different markets? It is my belief that it is not required.  Just as Louis Vuitton for purses or Rolex for watches, premium brands do not require different prices for different markets. This is especially true for the Chinese market, where premium brands are considered to be an indicator of personal social status. I cannot speak for the Indian market without further research, but Chinese consumers are willing to pay for premium and trendy products. Before Apple settled an exclusive sales agreement with China Unicom for the exclusive right of iPhone sales, iPhone had been sold throughout China on the black market at a premium price. Many Chinese consumers asked their friends or family in U.S. to buy unsubsidized iPhones for them to use in China. The iPhone initially failed in China, not because of the cost barrier but because of GSM (Global System for Mobile Communications) compliance, thus forcing Apple to redesign the iPhone for China to meet the Chinese wireless network requirements. Even after prices were cut to 3,000 yuan ($439.46) in April by the carrier China Unicom, Chinese consumers are still paying significantly more than U.S. consumers for an iPhone without subsidy from the wireless network carrier. However, contrary to what Dr Steinbock claims in his article that Apple flopped in the Chinese market, Apple’s Chinese iPhone sales exploded and largely contributed to the growth of Apple last quarter sales, with estimated 2.1 million iPhone sold in China within 6 months.

A lot has been said, I believe I have answered the questions:

Does Apple need a global strategy? Absolutely, yes. Apple should establish and expand the distribution channels in different nations, with possible redesign to meet local market requirements. It is also crucial for Apple to work with its suppliers to meet its increased demand.

Does Apple need a dual business model for the advanced economies and emerging economies? I do not believe so. iPhone sales are disappointing in India or other emerging markets due to different consumer behavior, so be it. There is still much room for growth in the global high-end Smartphone market. Smartphone users typically replace their phones every two years as contracts expire. Apple enjoys such high profit margin from a single Smartphone model, so it is not necessary for Apple to add additional resources to develop a low-end model for those markets and dilute its premium brand image, just like we can not imagine Louis Vuittonor or Rolex producing a low end product for low-income consumers. Being a global leader does not necessitate becoming the leader of market share in quantity while struggling with profit margin. Apple is definitely a leader in the Smartphone market with their product design mission to “be sweet to customers and vicious to rivals”. I foresee that we will continue to see the growth of Apple in the Smartphone market.

Business Buzz Podcast #2: Marketing via Facebook

The second episode of Business Buzz Podcast with Jodi Keily discussed how to use Facebook effectively for marketing tools. We discussed the changes of Facebook from a pure personal social networking to a commercialize marketing tool, the challenges for businesses to manage their fan pages, the possible solutions and the future trend of using Facebook for marketing.  Betty also joined us as the guest host to talk about her challenges as a small business owner in dealing with facebook fan page.

Play Podcast

Cross Posted at Jodi Kiely Communications

[PODCAST SCRIPT]

Jodi: Welcome to our “Business Buzz” podcast where today I am joined by Zachary Long and our guest host for today’s episode Betty Feng. And Betty is actually our technical specialist but she is joining us today for this particular discussion because as we were brainstorming ideas on what to talk about, it was actually Betty who brought up the topic of Facebook marketing. And as the discussion evolved, she had a lot of great insight so it just made sense to bring her in today as a guest host.

So as I mentioned, we’re going to be talking about Facebook marketing and the challenges that small businesses encounter when they are using Facebook as a marketing tool, and also some of the issues that people should consider when they start using a Facebook marketing page.

My name is Jodi Kiely and I’m a freelance PR and communications consultant based out of Orlando, Florida.

Zachary: And my name is Zachary Long and I’m a social media user and I also operate the Twitter account for the Orlando World Center Marriott at the front desk. (@TheFrontDesk).

Betty: My name is Betty Feng and I’m the co-owner of a camera rental business called Camera Concierge and I’m also the technical specialist of the “Business Buzz” podcast.

Jodi: So as I mentioned earlier, today we’re all going to be discussing Facebook as a marketing tool, and I’m just going to make the broad assumption here that everyone listening to the podcast is familiar with Facebook. And you all should be and if you aren’t you better have a great excuse because it is pretty much arguably the number one social networking site in the world.

But it’s interesting because the site is also going through a transformation and that is it is turning from a social networking site to a marketing tool. And we’re just going to discuss the shift that this brings up in terms of the challenges that companies encounter as they start experimenting with Facebook marketing.

So before we go into that, I’m just curious as to what Betty and Zac have to say about this trend overall.

Betty: Well, Facebook started as an alumni networking site requiring members to register with a university email address. Later on the greater public was able to sign up and as it happens, we are now seeing and befriending our parents, friends, bosses and colleagues. HR managers now screen candidates on their Facebook profiles and Facebook is becoming more and more complicated and challenging with its changing privacy settings. This site used to be place for all of us to share our secret moments with friends but it is now changing into a commercialized social network with many concerns about privacy settings, privacy control and information sharing.

Today many companies have jumped onto social media tools to market their businesses and connect with their customers. This kind of transformation of Facebook is just amazing.

Zachary: Like Betty was saying, there has been a real commercial shift in Facebook and as Jodi first pointed out, it is the number one social networking site, pretty much in the world hitting about 500 million users right now. And businesses are definitely taking notice. Currently for every company or every brand you are now able to find a fan page for and a business fan page on Facebook, about the brand of the company.

One of the interesting things is how brands have evolved to interact with their customers directly through Facebook. As Betty was saying, there has been a significant shift in the business world toward Facebook as businesses in general have taken notice of the site.

As Facebook hits the 500 million member mark, it is becoming increasingly important for corporations and any small business as well to have a presence on the site. One of the unique things about Facebook is that users are not some anonymous avatar like a random BBS or forum. These are the actual personal accounts of the customers. And having that demographic information and analytical information is extremely powerful for any company, large or small.

And one of the shifts as Facebook has slowly evolved is that with fan pages, you used to be a fan of the brand, but now you “like” a brand. And as changes occur through the privacy settings as well, there has also been a shift in these business’ pages as people create pages for businesses on a corporate level and make them more complex, changing the landing pages that you first see, special sign-up and then you can see a wall post in the way that businesses are interacting directly with their unique users.

Jodi: You know, I’m actually glad you mentioned how complex Facebook fan pages are turning into, Zac because I think there is a big misconception for a lot of companies jumping into this is that they think, “Oh, this is just a great, easy way to increase my marketing efforts!” But I think that’s a misconception because it can be difficult if you really do it right and its going to take a lot of investment, more so in time, and if you’re lacking in time or knowledge, then it’s going to require some investment in money as well.

And in just observing early users – the companies that have started early on marketing on Facebook – there are some businesses that are struggling to effectively use it. And I’ve kind of noticed a few themes or similarities that they all share.

One being that few businesses on Facebook really have a strategic plan. And as a result, they are struggling to update their page regularly – and that could be a time management issue – we can talk about that a little later.

I also noticed that some companies are not really engaging with their fans and the irony about that is we call consider Facebook to be social media. So you have to ask, “Where is the socializing?” You don’t have page administrators interacting with customers on Facebook.

And I also think that some businesses are really struggling to find good content and so in the end, they are just spamming their customers. And I think that is a challenge for businesses that are new Facebook. How do you strike a balance between promoting yourself but also offering something of value to your customers?

I don’t know if you have any thoughts on that, Zac?

Zachary: Yeah, definitely.

I was going to look at this through a corporate perspective by taking a couple of examples from companies that have their own social media departments and are trying out some pretty innovative things using Facebook as a customer service platform and to attempt to engage with the fans.

Looking at these as basically from smallest to largest, take a company like the Home Depot and their Facebook fan page has a 150 “likes” at this time, approximately – 150,000. People are posting on the wall anywhere from questions and they have the team at Home Depot – they respond directly to these, offering points of contact and real people that they can talk to to help them solve these problems.

Another good example to contrast that is a company like AT&T who, as we all know, has not been the greatest liked among the technology community with their service at the moment due to their exclusive contract with the iPhone. You see a lot of comments about dropped service, about calls, and they are basically a service company who you run the risk of having that corporate presence and now you have an open forum where everybody can really post their complaints and their compliments as well, but in a case like AT&T at the moment, their service issues bring more complaints than compliments.

Another one example I did want to look at as well is a company like Victoria’s Secret – their “Pink Page” has 2.7 million fans and not all are actual fans of the company. You will see the occasional comment about a Victoria’s Secret product but because it’s so big, you will have regular people basically spamming the wall with posts totally unrelated to the brand, and really there is no way to moderate it because it is Facebook – everything is immediately public.

And those are just a couple examples of how different corporations are going about addressing issues, like AT&T and Home Depot responding directly to posts and comments on their wall. But at the same time, another component of both of their wall pages or fan pages is another tab with specials and news about current happenings, using it as a true PR and marketing piece.

Jodi: Now Betty, as a small business owner you also have experience with this, too. Do you want to talk a little bit about your experience?

Betty: Yes, definitely and it’s a really good point to bring up as different sized companies have different challenges managing their Facebook pages. For me, speaking as a small business owner, we also have our own Facebook fan page and I feel the challenge to provide good content and to connect with our customers. We don’t want to spam our customers like you mentioned, however, our posts can be easily lost in the hundred of posts of our friends’ received every day. I know it’s happened to me over time. For example, I once missed the update announcing my friend’s new baby. So how bad is that? So you can easily miss any post.

Jodi: And I think this all goes back to when you’re looking to use Facebook as a marketing tool, companies really need to research it, I think, before they jump onto the Facebook bandwagon.

I can think of one company whose Facebook fan page literally died the same month that they started it. The problem was pretty obvious, that is, their target audience wasn’t on Facebook and wasn’t really using social media at the time. I’m not going to name the company, but for what it’s worth, it was in the managed care industry so they were basically a Medicare company. And when you at the demographics of their target audience, it’s an older audience who probably isn’t quick to adapt to social media per se.

So I think the lesson with that was that basic planning can go a long way.

I would suggest that companies that are considering a Facebook fan page should ask a few basic questions. For example:

–          What do I hope to gain by having a Facebook fan page?

–          How will I know my goals have been met?

–          Who is my target audience and are they even using Facebook?

–          And for content, what am I going to post on my page? How often? Should I be posting daily, weekly, on weekends and if so, are there specific times that attract more traffic than others and I can’t say for sure – I can point to research saying weekdays attract traffic than weekends, but still, it’s worth thinking about as you start writing your plan.

I also think you should ask yourself, “Where am I going to find consistent, good content to share with my fans?”

And this goes back to what we were talking about before, finding the balance between promoting yourself and offering useful information for your customers.

Zachary: And that’s a great point and I think that any information you post has to be really relevant to the customers. And if your Facebook fan page, if you’re a restaurant and you’re posting about the local politics, do your fans really want to see the politics from you, the restaurant owner? No, they probably want to see something related to the industry you’re in. You want to be posting an update about your industry or a special going on.

And to your point about frequency of posts, yes there may be optimal times, but should you hold that content just because you have it or is it more a matter of frequency? Different users would access Facebook different times of the day. You might have the college kid accessing it in the middle of the afternoon or you have a family so maybe you access it first thing at work so that 9:30 is the optimal time, so they maybe access it again when they get off work, maybe 5:45 when they get home. So there is the balance of yes there are optimal times, but do you really to withhold news just because you want to hit those optimal times. Then you’re only delivering news at scheduled intervals and maybe missing larger parts of the story.

Some other thoughts on the subject of engaging your fans and finding relevant information is when taking a look at, when using an example, CNN, yes they are a news organization but they don’t post every story, but the stories they do post generate hundreds of likes and hundreds of comments – it’s something that really gets discussion going. They know their target audience are obviously watchers of the news and by filtering that news and finding only a couple relevant stories that they think will generate the most interest, they are basically effectively managing their posts, not overwhelming their users, but giving the ones that could spark that discussion and spark more sharing among Facebook users that do access the page.

Jodi: And Betty you were showing me some research on the frequency of Facebook updates. Do you want to share what your learned?

Betty: Yeah, I learned more about the frequency of posting. I read some conflicting research regarding the best time to post on Facebook. One report says Tuesdays is the best time and weekends are the worst since everyone is going out on the weekends so they don’t log onto Facebook. But another report says the weekend is the best time so with this conflicting information, without seeing any raw data myself, I would just recommend having one or two posts every day.

And back to Zac’s point, the content is more important than frequency. When you have good content, your fans will more likely leave comments and “like” it which will bring the post onto the Facebook home page top news feed, even in posts posted a while ago.

It’s also very important to interact with your fans besides offering incentives such as coupons, companies can just use other techniques such as contests to give more fans incentives to participate. So the challenge for most of the companies is to post good content. It is not an easy task to create good content without professional knowledge if the business wants to be seen as an expert or provide useful information.

Big organizations can hire a dedicated social media coordinator to write content. With small businesses, we often see that they are struggling to create good content without a significant input of time and energy. So for many organizations and businesses, they often post news and photos of their events (as their page contents).

I also just want to emphasize the importance of a person responding to comments. Fans will leave a fan page if their questions or comments are not responded to – as least that’s the case with me. I’ll leave some comments on a company’s Facebook page and if I don’t get a response, I will be disappointed and I will “unlike” the page.

Jodi: I think you brought up a lot of good points and thing I want to return to is something you said about the issue of time management. I think that is a big challenge for some companies and you have mentioned hiring an external party to manage a social media site. It makes sense: Folks get busy, they forget and their fan page can be ignored.

Considering that, what are both of your opinions on outsourcing that to a third party?

Zac: I think there is value. You both mentioned that time investment is necessary to successfully execute a page. There is value in freeing up resources – if you’re a small business and your expertise is not social media, it does make sense to find someone who is, but with the caveat that they have to have an overall strategy and know who your fans are and know what content is relevant to them. And to our prior points, it has to be quality content that is targeted to the audience.

Betty: Yeah, totally agree with that. I would love to outsource that task if I could afford to do it, so a dedicated social media expert could create good content, manage Facebook promotional events and interact with the fans in a timely manner. I have to be honest in that I often forget to update our own Facebook fan page for Camera Concierge, as I have so many other things going on.

So Jodi and Zac, perhaps you guys can create a consulting company to manage social media accounts for small businesses. So what do you think?

Jodi: I’d be open to that, I enjoy working with Zac!

And as we go back to the issue of time management and outsourcing this job, as an independent consultant, I do feel that it can be done effectively, but you have set some ground rules or you have to have some sort of plan, like Zac said.

And just from my experience managing a client’s social media account, I have a few big tips that I would suggest to companies considering making a Facebook fan page to consider:

And one is, share your company’s social media policy with your consultant because this is going to be a great way to not only to provide guidance on what the company’s rules are in terms of using the company social media site, but it also protects you in a way. Social media policies are kind of a new thing, you can find examples online of companies who have made their’s public. I have also written about a little about this on my blog at JodiKiely.com – that’s J-O-D-I-K-I-E-L-Y dot com and if you just search in my archives for social media policies and guidelines, that could be a good starting point for any company that has not drafted one – and I strongly suggest that if you haven’t started a social media account yet, draft your social media guidelines or handbook before you do. If you already are using social media and you don’t have a set of guidelines, really consider doing that right away. There are just a lot of benefits to doing that.

But another thing I would like to stress is that if you are going to outsource your social media efforts to a contractor, make sure there is a constant flow of information because your contractor is not going to have all that inside information about the business that you have. So for example, if you have a big trade show coming up, make sure your contractor knows where that trade show is going to be, what the dates are, where your booth is going to be located in the convention center so all that can be shared with your Facebook fan page members and followers.

Also, if you have an e-newsletter, make sure your consultant is receiving that because that’s a great source of information in terms of updating your page as are news releases.

Just make sure there is a flow of constant communication.

Betty: Yeah, I totally agree with you that the consultant needs to be updated about what’s going on with the company in order to provide relevant content to customers. Otherwise you’re providing irrelevant information and confusing your fans.

Jodi: You know, in an ideal situation, the person writing your e-newsletters can be the same person managing your social media account. You know, it’s just something to consider.

Also, in my experience, I’ve found out that some of the best information comes up at the spur of the moment. Like, for example, the CEO will be on T.V. – you need to make sure your social media coordinator or whoever you are outsourcing this to is aware of these kind of details that come up at the last minute so that they can put that online and give your fans a chance to catch you on T.V. or hear you on the radio.

I don’t know if either of you have anything more to add on that?

Zachary: There’s just one other point. Besides have a social media policy, have a real strategy and know what you want to achieve with the site. Is it more fans – well, why do you want more fans? Is there a real reason behind that or do you really want to engage your fans? Before you go out and hire a social media consultant, sit down with the leadership team of whatever organization it is and let them develop some goals and the metrics of what you want to achieve and why you want to achieve those – really think it out.

Jodi: Right Zac, and I totally agree. Like we said it all comes down to planning and communicating your plans with the right people.

So before we tie things up, I have one question for Zac and Betty and that is their feelings on Facebook as a trend in social networking. Facebook has about 50 million registered users (sic) and apparently it’s getting more visits than Google. So considering this, how do you guys feel about Facebook as a marketing strategy long term?

Betty: Personally, I find myself spending less time on Facebook for my personal profile just because Facebook is so commercialized today. I don’t feel that personal touch anymore. It’s great to connect with friends and update others on the changes in my life, but I’m afraid people will actually spend less quality personal time on Facebook because of information and advertisement overload.

Perhaps some people are logging in just to spend time playing Farmville – I can tell by my friends’ annoying status updates. I don’t know how a company can target to those customers playing Farmville, but I feel Facebook is becoming a large business forum site like Zac mentioned earlier. The good thing about that is that customers can enjoy the convenience of getting updates on fan pages and it’s easy for them to use Facebook to interact with companies or organizations they like.

Most importantly, the customer can use Facebook to voice their opinions. With such large amounts of users, Facebook is a mandatory marketing strategy for many – not all- B2C businesses if Voice of Customer is important to them.

Zac: And that’s exactly right. Facebook is too large to ignore. At this point in the game, it’s pretty much mandatory that you have some sort of presence on Facebook. And if you’re not, you’re missing out on a huge marketing opportunity and interaction opportunity. It’s an opportunity to connect on a personal level because these are real people behind all the accounts. And they are not afraid to voice their very public opinions on your fan page about what you’re doing right or wrong at the company. And so as a company again, you have that responsibility to respond. And if you’re not responding then that kind of snowballs the whole PR effect and makes matters worse by not responding so there is that catch 22. Now because you’re public and because they’re leaving comments about you, you have an obligation to respond to those comments or be seen as being unfeeling or uncaring.

Jodi:   Well there actually are a lot of case studies out there on the web addressing that problem. I’ll see what I can do about tracking those down and posting those on the blog in case anyone is interested in reading those. I guess in closing we can all agree that Facebook marketing can be worthwhile but there is a wrong and right way to approach it. They key is be strategic about it, do your research before you jump into the pool and don’t forget to interact.

So this wraps up our episode today. On behalf of all of us, I want to thank everyone for joining in and listening to us. If you want more information, you can check out my blog at JodiKiely.com or you can follow me on Twitter @Jodi_Kiely.

Zac: And of course you can follow me on Twitter as well and find me just by googling my name, pretty much. Zachary Long, spelled Z-A-C-H-A-R-Y L-O-N-G. Go to @ZacharyLong on Twitter, zacharylong.com or just google me.

Betty: It was my pleasure being guest host for this episode, and listeners can find my blog at GSCMotion.wordpress.com and follow me on Twitter @BettyFeng (one word). Also, don’t forget to join our Facebook fan page for Camera Concierge if you are a photography fan.

Jodi: Great, thanks for listening everyone, we hope you gained a lot from our discussion today and thanks to Betty and Zac for another great episode!