anticipatory marketing

There are two components of Anticipatory Marketing (AM). Consumer choice and consumer experience.

Consumer choice is a consumer's mental image of a product or service. The mental image is what the consumer prefers or desires. Christensen, Olson and Ross refer to it as a consumer's self-referrent image of a product. A choice that emerges from a combination of knowledge, experience and suggestive information. It is most often what a consumer buys. Although not all the time. There are multiple gaps between a consumer's choice and a consumer's decision to buy.

For example, a time gap exists. Benjamin Libet's theory on free will recognizes a time lag between conscious purchase and free will. This time lag affects a consumer's ability to respond in real time. Which explains in part, or which appears to lead to, impulse buying. Shariff and Peterson of University of Toronto explain this perfectly well in their article on anticipatory consciousness. There are other gaps. Resource gap. Convenience gap. Influence gap. Which are all self explanatory. AM fully recognizes the consumer's self referent image and the realities that allow or prevent this image to materialize.

This position is significant in the formulation of an AM agenda. AM understands that consumer choice, to a manageable extent, is predictable. AM contends that by understanding and measuring the conscious choice, both in the context of what is desired and realities of consumption, a marketer may be able to anticipate the actions of a consumer. How?

Consumer experience is the sum total of a consumer's conscious choice and conditions that dominate this choice. This is measured by actual transactions which may be available in documented transactions or defined in statistical surveys. In its absence, actual transaction may be substituted by primary data drawn from a well-designed statistical survey. AM requires an investigation of consumer choice and free will. Results strengthens findings derivable from actual transactions.

The charts below shows an execution framework for AM presented in a hierarchical sequence (chart 1).
 

Chart 1: AM Execution Framework 

    
Is AM anticipation marketing. No, it is not. Although AM looks at anticipation marketing as an important influencer in consumer choice. It may have a greater influence in a consumer's free will. Anticipation marketing, as defined by Baron, Hickey and Merrel,  is identifying, exploring and understanding an interesting consumer response phenomena -- collective irrationality. It is a strategy that drives interest in a product in the absence of above the line and below the line advertising.

How is AM different from predictive analytics? Predictive analytics makes use of transactional data to generate a predictive model. Sometimes exclusively. AM borrows from various disciplines, as shown in the chart below, and formulates a consumer model that combines consumer choice, free will and consumer experience.

               Chart 2: Components of AM      

For comments, email Nick Fontanilla to abfontanilla@yahoo.com or nick.fontanilla@gmail.com. For inquiries on Anticipation Marketing and how a company may be able to make use of this tool, email to info@imetricsasia.com.

Bibliography
1. Glenn L. Christensen, Jerry C. Olson, William T. Ross, "Why Consumption Vision? Understating Consumer Value in Anticipatory Consumption Imaging," Advances in Consumer Research Volume 31, © 2004 (www.acrwebsite.org/volumes/v31/acr_vol31_65.pdf) 
2. Azim F. Shariff and Jordan B. Peterson, "Anticipatory consciousness, Libet’s veto and
a close-enough theory of free will," University of Toronto (http://sharifflab.com/wp-content/uploads/2012/03/Shariff-Peterson-2005.pdf)
3. Ellen Baron, Kristin Hickey and Paul Merrell, "Anticipation Marketing: Understanding buzz for Generation Now, Esomar, 2008.

Mastery of Risk

October of each year is when we celebrate statistics and recall the significance of this discipline. The annual event goes by each year with just a ring of stakeholders, mostly statisticians and academicians, attending the conference that the Philippine Statistical Association and other institutions organize.

It is not surprising that the annual celebration is not as popular as other professional events such as information technology, marketing and human resource. The field of statistics has an image closely associated with cold numbers and algorithms.

Tools and procedures in statistics are made to sound very inclusive with labels such as logistic regression and discriminant analysis. Back in college, some colleagues avoided degree courses that required the subject statistics. The discipline generally attracted talents who were usually office-bound and preferred a profile that was low key.

I am quite familiar with this perception because I have had the opportunity to work with extremely talented people in the field of statistics. At the same time, I am quite involved in a business primarily driven by statistics.

It is interesting how Peter Bernstein describes the value of statistics. Bernstein is a consultant and author of six books in economics and finance including the bestselling “Capital Ideas: The Improbable Origins of Modern Wall Street.” He is also editor of The Portable MBA in Investment and founding editor of The Journal of Portfolio Management.

He says that “The revolutionary idea that defines the boundary between modern times and the past is the mastery of risk.” The core of that idea is statistics, a discipline that allows decision makers to look at the past and, with the precision of a scientist, confidently manage the future.

Statistics, he says, guide us over a vast range of decision-making, from allocating wealth to safeguarding public health, from waging war to planning a family, from paying insurance premiums to wearing a seatbelt, from planting corn to marketing cornflakes.

In more developed economies, statistics, as a discipline, has been transformed into a very important engine for governance and corporate decision making. Practitioners work hand in hand with corporate decision makers. There are many proven practical applications that benefit industries and government. Three hot applications are fraud detection, credit scoring and micro-targeting.

The goal of fraud detection is to manage or prevent the commitment of fraud. Fraud is a billion dollar menace. It affects government and private banks, insurance companies and many other institutions. Fraud has a broad definition and includes money laundering. Hot money that travels from one country to another is considered fraudulent. After the 9/11 incident in America, it became a hot application to manage the unrestricted flow of dollars financing terrorism and terrorist activities.

Through a clever application of computer-aided statistics, governments and banks are able to process terabytes of transactions and identify, with a high degree of confidence, the most likely fraudulent cases. This telescoping enables intelligence units to focus on the more likely fraudulent transactions with ease and precision at the least cost.

Credit scoring is an old application but is not as extensively used in the Philippines as it is in other more developed economies including those in Asia. The use of statistics in credit scoring enables users to create a working model that predicts, with a determinate level of confidence, customers who are good, moderate or bad credit risks. Used with powerful computers, this model may be deployed to identify, at the point of contact, customers who should be approved or denied of service without the need to elevate the decision to top management.

Microtargeting is a new application. Its application as a campaign strategy started in the 2004 presidential election in the United States. Its value was fully exploited by Barack Obama when he won the presidential nomination for the Democratic Party versus Hillary Clinton. It uses the same principle in analytics and statistics.

The discipline of statistics is so important to leave the task of celebrating and promoting its value in the hands of statisticians alone. The primary beneficiaries – decision makers and government executives – must find time to partner with the practitioners to drive the widespread use of statistics in decision making.

To paraphrase Bernstein, the capacity to manage risk, and with it the appetite to take risk and make forward-looking choices using statistics, are key elements of the energy that drives the economic system forward. Let us support statistical month.

The Asia-Pacific Centre for Research (Acre), Inc. is doing its share in promoting the value of statistics in decision making by organizing this year’s SPSS Users Group Convention around the theme of Discovery. This will be held on October 22, 2009 at the Sofitel Hotel in Pasay City. To register, contact Veronica Nicolas (Veronica_Nicolas@spss-ph.com)

(for comments, email to nick.fontanilla@gmail.com or abfontanilla@yahoo.com)

ACREINC@20: Lessons in Enterprise Development

This is the start of a series of articles on The Asia-Pacific Centre for Research (Acre), Inc. Acre, Inc. is a full service marketing research and IT consulting agency. It will celebrate its 20th year as an enterprise on August 23, 2009.

In terms of assets and using Department of Trade’s definition, Acre, Inc. remains an SME after 20 years. As compared to the criteria set by Colins and Porras (Built to Last), Acre, Inc. has yet to cross the bridge of greatness which these scholars set at 50 years or more of sustainable operations. In terms of annual revenues, Acre, Inc. has yet to break into the category of the top 1,000 corporations in the Philippines.

However, there are other criteria, not usually emphasized in management books and industry standards, where Acre, Inc. has done considerably well. The company deliberately and purposely focused on these standards to create breakthroughs and raise the bar of excellence in management, marketing research and enterprise development.

I will be writing these articles from several perspectives.

First, as the founder of Acre, Inc. and as its Chief Executive Officer. From this perspective, I may be able to share historical insights and milestones which contributed to the continuing viability and struggles of Acre, Inc.

Second, as an educator. I have been a part-time professorial lecturer at the DLSU Graduate School of Business since 1987 teaching courses in strategic management, performance management and marketing management. From this perspective, I may be able to step back and evaluate Acre, Inc.’s history with objectivity to present lessons in enterprise development and decision making.

Third, as an entrepreneur. I am managing several SMEs including those that I have founded. I have helped many other entrepreneurs start a business. From this perspective, I may be able to internalize and share the challenges of enterprise development – the start up problems, day-to-day challenges, and the kind of business environment that tends to influence long-term viability of companies, large or small.

Fourth, as a student of performance management. As I write this introduction, universities and practitioners are testing and implementing new and more responsive concepts in performance management. As a student, I continue to keep an open mind on the principles that could best work in industry and government. From this perspective, I may be able to rely more on the more recent principles in management and rely less on current standards or dogmas.

This series comes in six parts. I hope that I will have the time to blog these articles way before the deadline on August 23, 2009. I do not discount the possibility of blogging articles other than what should be included in this series if conditions dictate.

The first part includes the pre-Acre, Inc. days (pre-1989). What were the conditions that led to the development of this new enterprise? What were the challenges? What were the management and enterprise development principles that became the bases for the new enterprise? What were the resources needed to start it up and roll over for long-term viability? This article attempts to provide answers to these questions and summarize lessons learned in the pre-Acre, Inc. days. This is a very interesting phase in the life of Acre, Inc. and, if I may, in the life of an enterprise conceived through a combination of randomness and purposiveness.

The second part is about the start-up days (1989 to 1994). What is the main purpose of the business? What are the secondary purposes of the business? What markets and customers will the enterprise aim to serve? In what processes should it excel in a business where systems, methods and technology are victims of obsolescence? In what way should the enterprise position itself in an industry dominated by multinational companies or companies that have been operating for many years? This part discusses the important decision-making days and documents the impact of these decisions on the future of the enterprise. Some are book-line strategies and decisions. Some are blue ocean scenarios.

The third part is about organizational and corporate transformation (1995 to 1999). There is usually a time in the life of an enterprise where management challenges the business and the concepts that gave the enterprise its corporate life. Should we continue to be a player in the industry where we now operate? How can we leverage the resources and experience that we have to expand or venture into other businesses? How do we create an enterprise that grows faster and earns more? This is one of the most challenging moments of Acre, Inc. It was at that time when the environment was changing and business was growing fast. The speed by which technology was changing was also very evident, putting pressure on capital investments and process improvement.

The fourth part is about the company’s physical environment (part of 2000 to 2005). Should we transfer from the tourism center to the financial district? Is it better to investment in an office space rather than lease the space? How far ahead should we plan our physical facilities? For over 10 years, Acre, Inc. was located at the Philippine International Convention Center (PICC) where all facilities were conveniently available. However, it was a city or two cities away from most of its clients. At the same time, PICC was no longer as tenant-friendly as in 1990.

The fifth part is about going back to the basics – the company’s core ideology and roots (2007 to present). With opportunities in research growing, should the company invest in this industry or should the company continue to find opportunities in the IT sector? Can research and IT, as separate businesses units, co-exist or should the company focus on only one business? Alternatively, should there be a third operating division that will focus on performance management, an area where the company has been well recognized? It is in this period that research experienced robust growth but mainly from foreign research clients and partners. Foreign companies from different countries started reviewing business opportunities in the Philippines. In 2008, there were more inquiries for research not only for the Philippines but also for other countries in Southeast Asia. It is also during this period when our talent pool was considerably more than at any point in the company’s history.

The sixth part is about the future of research, predictive analytics and performance management. Is research a growth sector? Will IT continue to grow? In which specific sectors in IT will growth continue? What should be the future of Acre, Inc.? Alan Kay writes that the best way to predict the future is to invent it. The picture of Acre, Inc. on its 50th year has been defined. The first 20 years of the company comprise the first big milestone. There will be other milestones, some shorter in years, and they will be discussed in this article.

(for comments, write to abfontanilla@yahoo.com or nick.fontanilla@gmail.com)

Time as a Resource

To economists, time is a constraint. To scientists, time is relative. To business strategists, time is a resource.

As a resource, time is a competitive advantage. Service companies such as those in document delivery, food delivery, financial services delivery, cafes, and repair services that use time as a resource improve their levels of customer satisfaction and increase market share.

As a resource, time enhances profitability. Cycle time is faster. Cost per unit of time is lower than other products or services and against competition. Capacity increases. Per capita productivity increases. Even per capita compensation normally increases. Operational competence greatly improves.

As a resource, time empowers management to become more strategic. Idle time and the cost of doing nothing (see activity –based costing/management) become strategic (not just operational) concerns. Leading indicators such as customer satisfaction, employee development and satisfaction and process excellence that make best use of time become important success measures.

As a resource, time creates a new breed of workers: workers capable of managing projects and tasks efficiently and effectively; workers with top-level productivity; workers that have a global outlook; workers that are highly motivated and empowered; and workers that are highly marketable and ‘employeable’.

As a resource, time builds a work environment where trust defines work relationship, professionalism is at its highest ebb, and peak performance is everyone’s daily goal.

To everything there is a season, and a time to every purpose under the heaven. Ecclesiastes 3:1

Taking Risks When Others Don't

What is special about The Design People to be the subject of this article? Three reasons. First, it was featured by the Los Angeles Journal as one of the 100 fastest growing private companies in 2007 in California and by Inc.Com as one of the 5,000 fastest growing private companies in America. Second, three young entrepreneurs set up this company some five years ago, two of them Filipinos who were batch mates in Maria Montessori Alabang and Ateneo de Manila University.

Third, and for which reason I took interest in writing about this company, it is expanding at a time when other companies are moving back. The company is hiring more web designers in their LA headquarters and production office in the Philippines. Donald Lim, President of Yehey, told me that the company is indeed hiring much to his and his colleagues’ surprise. The company recently moved to a fancy building along E. Walnut Avenue in Los Angeles taking two huge floors which the interior designer generously outfitted with impressive office gears in between elaborate open spaces.

The Design People, Inc. started with a five-man team holding office in a small run-down studio (conveniently converted to a sleeping area after office hours) which was just a jump away from the famous Sta. Monica beach. Judging from where they started and as recounted by Luigi Amante, one of two Filipino owners and son of Ning and Vic Amante, the three entrepreneurs wanted to work and get the chance to surf and play volleyball anytime. Growth was phenomenal year on year. It is a website design company focused on developing a professional image for businesses of all sizes whether just starting out on the Web or those seeking to improve their existing website (see www.thedesignpeople.com).

From when it started in 2003 to 2007 when it was voted as one of the 100 fastest growing private companies in California and up until the meltdown begun, The Design People, Inc. provided web design to real estate companies in a booming market. The company, no doubt, was hit by the credit crunch. Luigi, an electrical engineering graduate of Cal Poly in Pomona, himself said so. Instead of retreating, however, these three go-getting entrepreneurs decided to expand, not in a ‘blink’ but using the old-fashion ritual of management decision making. That is what makes this company and these entrepreneurs good case study materials.

The management philosophy of moving forward instead of moving back in a recession is not new. In 1983, right after Ninoy Aquino was felled by a gunman, the economy took a nose dive and the mighty dollar became scarce. The government allowed dollar remittances only to companies that earned dollars of an equivalent or greater amount. Glaxo, instead of cutting back its operations in the Philippines, decided to support local operations by shipping products to the country without any expectation of short term dollar payment. Shortly after that, Glaxo became the biggest pharmaceutical company. Fast growing companies, like Jollibee and Mcdonald’s never relented and kept pushing for growth. The same thing happened after the 1997 crisis. Growth oriented companies like SM and other retail companies just kept pushing for bigger market shares.

We can definitely learn some lessons from these three entrepreneurs. At the top of my list is the daring recipe asserting that leaders shape a company’s future, not competition nor the environment around it. Second, an economic meltdown does not have to be an obstacle to growth. To creative leaders, it can even serve as the tipping point. Many breakthrough performances happened during a crisis. Third, which is the image The Design People, Inc. typically projects, work and fun go together.

(Originally published in Business World. For comments, email to nick.fontanilla@gmail.com or abfontanilla@yahoo.com)