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Transparency in Organizations

Transparency is defined as the availability of group specific information to those outside of the group (Bushman, Piotroski, and Smith, 2003). Organizational transparency is when the organizations information is produced, gathered, validated, or disseminated to outside participants (Bushman, Piotroski, and Smith, 2003). Transparency can allow for businesses and individuals to get speedier feedback on products and services (Bennis, 2013). Stakeholders have a right to information concerning the company, brand, and potentially stocks. Transparent organizations allow for stakeholders to gain proper insight into the workings and issues that are relevant (Dubbink, Graafland, & Liedekerke, 2008). Transparency is beneficial for companies in that it helps them to distinguish themselves from similar companies by enhancing innovation (Dubbink, Graafland, & Liedekerke, 2008). Being transparent and informing consumers and partners of important business aspects can be seen as an ethical approach (Dubbink, Graafland, & Liedekerke, 2008). For a leader, being transparent creates trust, honesty, accountability, and responsibility (Dubbink, Graafland, & Liedekerke, 2008). Morally, transparency is important considering it can affect personal integrity, attitude, and organizational commitment (Dubbink, Graafland, & Liedekerke, 2008).

An example of a transparent organization is the travel agency, which moved from traditional travel agencies to online digital offerings. As an online organization, prices, reservations, itineraries, suppliers, and competitive disadvantages became transparent and disrupted traditional sales and business (Granados, & Gupta, 2013). With technology and the internet, business transparency is crucial and business leaders need to understand the power in which transparency enables loyal followers (Bennis, 2013; Dubbink, Graafland, & Liedekerke, 2008). Using digital networks as a transparent company generates sales for new and potential consumers who desire unbiased information and offerings from all vendors (Granados, & Gupta, 2013).

Complete transparency, however, has its setbacks. Companies could lose freedom, secrets, and privacy because of this. Being transparent could conflict with leaders’ moral principles (Dubbink, Graafland, & Liedekerke, 2008). If companies are transparent, consumers can gain knowledge and shared information about products that are available (Dubbink, Graafland, & Liedekerke, 2008). Digital transparency also effects competition as businesses can view, compare, and match competitor prices to their advantage (Granados, & Gupta, 2013). Full transparency may distract consumers and stakeholders from focusing on more important items and information (Dubbink, Graafland, & Liedekerke, 2008). If a company desires to become transparent, it should respect the freedom of both stakeholders and individuals (Dubbink, Graafland, & Liedekerke, 2008).

 

Credits

Bennis, W. (2013). Leadership in a digital world: embracing transparency and adaptive capacity. MIS Quarterly, 37(2), 635-636. Retrieved from http://misq.org

Bushman, Robert M. and Piotroski, Joseph D. and Smith, Abbie J., What Determines Corporate Transparency? (April 2003). Available at SSRN: http://ssrn.com/abstract=428601 or http://dx.doi.org/10.2139/ssrn.428601

Dubbink, W., Graafland, J., & Liedekerke, L. (2008). CSR, Transparency and the Role of Intermediate Organisations. Journal Of Business Ethics, 82(2), 391-406. doi:10.1007/s10551-008-9893-y

Granados, N., & Gupta, A. (2013). Transparency strategy: competing with information in a digital world. MIS Quarterly, 37(2), 637-641. Retrieved from http://misq.org

Crisis Management

Case in point: After the launch of the Fitbit Force, a wrist-worn product that tracks fitness activity, 1.7% of more than 100 million users began developing skin rashes where the device was being worn. CEO James Park, responded almost immediately to the news, delivering an apology and initiating a product recall with a full refund for all of the devices. Later, test results showed that users were likely experiencing allergic contact dermatitis which is an itchy rash and caused largely by a substance that comes into contact with the skin. The likely cause of the rash, in these instances, was users not properly cleansing the area of their skin beneath the device, which was very often worn all day, every day. The Fitbit Company could have easily blamed the rash on user error, but instead decided to take full responsibility and issue a recall. Instead of dealing with customer backlash, due to the company’s timely, and proactive response, the company continues to do well, having maintained their integrity in the marketplace as well as the trust of their customer base.

At the other end of the spectrum, Kryptonite, a leading manufacturer of bicycle locks, had a crisis in 2004. After an internet video had surfaced of a user hacking the well-respected company’s lock, many more videos and complaints began forming. The videos showed how the lock could be easily unlocked by jamming it with a plastic pen. Kryptonite eventually did address the situation, but weeks later, with a product recall and an explanation that the issue dealt with all types of cylinder locks including those associated with vending machines and some automobile ignitions. Because it took the company an extended period of time to respond, customers and the media continued to smear the company’s brand for days. This led to a loss of customer trust and a near irreparably tainted brand. Beyond the cost of the recall, millions of dollars have been spent to rebuild the company’s reputation.

When dealing with a crisis, the focus is centered on brand trust and risk. A crisis should be addressed through direct contact whenever possible as in the case of Fitbit where users received an email from the CEO about the recall versus the use of mass social media. It is also important to recognize that media outlets and third parties have the capability to either preserve or damage customer-to-brand trust. Consumer relationships and widespread brand trust are essential during a crisis, and your business cannot afford to neglect the element of the media if you want to retain customers. Marketing strategies during a crisis should also project that your company remains adaptive and is present during the crisis.

Educating = Satisfying

Not all customers will understand the details of your product or the necessities of your service offering. It’s important that you help educate your customers on your product and changes in the market relevant to your business. While you may not want to move away from your original contract, your competitors will try and attract your customers by introducing new tools, methods, and trends. To prevent your customers from moving to a competitor, you should setup and attend regular weekly or monthly meetings with your customers and go over what it is that you are doing for them and why. When asking your customers what they think about the quality of your product or service, don’t be surprised if they ask about new technologies or trends and why you aren’t using those methods. If you aren’t aware of new changes or innovations, you should inform the customer that you will look into the technologies and present your findings to them.

Privacy and Data Management

There is a growing concern from customers that their privacy and personal information is being digitized and sold without their permission. The concern is that credit cards, billing details, and other private data are bought and sold across the marketing industry between businesses and organizations to use as soliciting tools. Customers agree that the lack of organizational ethics when collecting information is morally wrong. The debate amongst customers and businesses is that both parties feel they own the information. Businesses believe that they have the right to use the information any way they choose to help better their organizational goals and to produce better marketing services. Additionally, the organizations that purchase the user information feel they own the data because they purchased it. If the results show that your company is being unethical by confusing or misinforming customers on how their private information is used, you should work diligently to resolve the confusion by making privacy details clear.

Security Breach and Ethics. You should focus on making ethical decisions when handling customer information in regards to implementing effective security and privacy measures. Many organizations, including healthcare corporations, spend thousands to millions of dollars on securing patient privacy and protecting data against breaches and hackers. It is your responsibility as a leader to understand and influence ethical practices which relate to privacy and security threats. Security breaches can disable the functions of your business and pilfer confidential customer information such as personal contact information, social security numbers, and passwords. In addition to a potential loss of revenue, breaches also create customer distrust, and can negatively impact your brand reputation. The risks associated with breaches such as loss of confidentiality, integrity, and availability should cause you to be aware and proactive with threats that generate concerns.

Common Interest

In a relationship, it’s important that you have common interests. It’s hard to keep a relationship moving forward if you have nothing or little in common. Factors that customers consider when entering a relationship with your business include the business’s reputation, niche, work ethics, communication, customer service, and if your business has the resources to meet their needs.

Customers select you for a reason. In the initial meeting with your customers, you should try to determine that reason by simply asking, “What is it that you want from me or my business in this relationship?” or “Why did you decide to meet with me today?” Additionally, ask yourself what you want from your customers and always outline that during the meeting. Don’t just focus on the product or service benefits that you offer, but also outline your unique processes in achieving results.

Terms of Agreement. Once you decide on how the relationship should move forward, write it down and make it clear. Just because you understand your terms, does not mean that your customer has a clear understanding. If you are selling a product on a website or through a physical location, you should have important terms mentioned multiple times during the course of business, in contracts, and on your website. Furthermore, educate your customers to prevent confusion about the terms. If you can create a solid and mutually rewarding foundation with your customer, the rest of the relationship will be smooth.

Effective Communication. Many customers will discontinue business with you simply because they are confused about something or misunderstand your contract. Effective communication is key to a healthy relationship. As a representative of your business, you should be involved in, and dedicated to, the satisfaction and growth of customer relationships within your business. When working with customers, know why the customer selected you in the first place. Keep sight of customer goals and pursue those goals relentlessly to satisfy your customer. Chances are your customers have a good reason for wanting to work with your business or purchase your product or service. Ask what that is and why, today of all days, they chose to make the move.

Most customers already believe they know what they want, very often they do not want your opinion, and want only for you to provide them with the product or service requested. While this is often ok, you should still try and understand what they are trying to achieve, or you may end up with poor reviews and an upset customer who feels they wasted their time. It all comes down to staying focused on the goals of the customer and the strategies for achieving those goals. Two primary questions to consider asking customers when attempting to understand their goals include:

  • What is your goal for using or purchasing this product or service?
  • What results are you expecting by using this product or service?

Asking these questions will help demonstrate a genuine concern for your customers and they will, most often, appreciate your sincerity.

Handling Negative Reviews

Review Credibility

Knowing the platforms on which customers prefer to express their views, and on which readers of those reviews are most likely to visit, is essential for effective online management.

Review Websites. Review platforms including Yelp, Amazon, Angie’s List, TripAdvisor, and more heavily influence consumers when researching desired products and services. Unfortunately, these sites, and others, often end up authorizing unauthenticated reviews and manipulated reviews on their websites which could unduly damage the reputation of your business. For instance, the Yelp platform contains an algorithm that automatically determines which reviews are “most useful” without actually authenticating the reviews. This is because, like many other review sites, Yelp has no verification process in place to validate whether the reviewer actually participated in any transaction with the business in question, which enables fraudulent reviews by Yelp users and business competitors. After analyzing the writing style of reviewers and the effectiveness of manipulated reviews through sentiments, readability, and ratings, researchers have determined that 10.3% of products were subject to online review manipulation.[1]

Negative Reviews

Review credibility is important, particularly in situations where reviews falsely or purposefully misrepresent a situation. Your business should develop an appropriate response to counter the effects of negative word-of-mouth (NWOM) communication. How your business responds to NWOM is crucial in terms of limiting the negative effects to the business.

Sensory marketing helps to identify and comprehend the senses and influences of marketing engagement in light of customers’ perceptions, behaviors, and judgments. How your business reacts to NWOM is critical in determining whether your business can recuperate from the negative reviews and feedback. While positive reviews do have an influence on customer decision making, one negative review from a disgruntled customer generally has a more significant effect on overall product ratings. Conversely, negative reviews have less of an influence when contrasted to a vast majority of positive reviews.

While you may be aware of the effects of customer reviews, do not succumb to the temptation of generating fake reviews to help promote your products or services. The drawback of manipulated reviews is that they could unduly damage the reputation of your business. Respond to customer reviews in a timely and effective manner as they influence customers’ perceptions of your business. Your business should place a priority on responding to both positive and negative reviews. Don’t ignore negative feedback, as from an overall brand perspective, negative reviews have the potential to hinder brand awareness by creating customer doubt which can decrease leads and referrals.

 

[1] Fan, Y. W., Miao, Y. F., Fang, Y. H., & Lin, R. Y. (2013). Establishing the adoption of electronic word-of-mouth through consumers’ perceived credibility. International Business Research, 6. doi:10.5539/ibr.v6n3p58

Articles and Press Releases

Another form of marketing includes article writing, press releases, guest posting, and video blogging. Consider attending local group events to link up with blog writers and journalists to see if there is an opportunity for you to work together. By attending these events and getting to know local writers, you can build a list of contacts for both writing and distributing your content. You can also find local groups using many resources including Meetup.com, BNI, conferences, trade shows, and by simply asking friends and colleagues for suggestions. In addition to local distribution methods, you should look to distribute your releases within e-mail newsletters, RSS feeds, and using social media networks. Your business should not only release news of big events and happenings within the company, but should also share stories of awards, conferences, products, and other unique marketplace events and activities.

Locations and facilities

Your Location Matters

Most online only businesses operate in an online space so a physical location may not be needed. However, your location still affects your business’s marketing efforts even as an online company.

For example, if your company is located within the state of Texas, but seeking to do business in New York or another, you need to make certain that your website addresses the concerns of each target customers’ location

Things to consider:

  • Is your location/website convenient (address / online address)
  • Is it consistent with your brand image?
  • Is it what customers want and expect?

Private Label Brands

If providing your product to private label retailers, you may be concerned about competition and losing revenue. However, if you choose not to provide your product to private label retailers, another brand likely will. An online study consisting of 1,600 customers found that brand imitation by private labels increased a customers’ preference relative to the imitated brand. However, the study also found that if the private label retailer used its name on the imitated national brand, it did not hurt the sales or reputation of the national brand, but may have negatively affected the private labels’ brand image and reputation.[1]

Private label products account for more than 30% of global grocery sales. Although there are individuals who are cautious about their purchasing decisions, there are also many shoppers who shop based on name recognition and perceived value. Within the United Kingdom, for example, private label production rose from 21.5% in 1980 to 39.3% in 2003.[2] The success of private labels throughout the world has presented challenges to international brands concerning budgets, advertising, and sales.

An example of national and private label products are over-the-counter medicines. While a national brand may present a televised commercial or a print advertisement, the private brand offers little or no promotional efforts. In this regard, the national brand should sell fairly well based on their marketing efforts. Regarding the private brand, individuals who purchase private brands likely do so because they are not affected by marketing efforts and are attracted to the lower cost. Consequently, if your business can earn revenue by providing to private labels, you will not necessarily lose a customer or profits. Whether you lose revenue is determined by the real value of the product. Regarding working with private labels, your business would be responsible for product sourcing, advertising, warehousing, and promotional efforts. If you can generate higher profits from selling the same product under a different name, and still have your current business, what’s the harm?

The main difference between private label and national brand awareness is the brand’s marketing and advertising efforts. Marketing generates familiarity to customers, and the assumption is that the perceptual response patterns are different toward private labels than national brands. One important factor is that private labels lack outside advertising which affects product knowledge and sales. Customers are likely to purchase a national brand if they believe the private labels are of lower quality. National brands often sell more product than private labels considering customers perceive that national brands have a better quality than private labels. Wonder bread, for instance, may not use the same quality materials for private labels as it does for its national brand. Additionally, the company may use a different formula or materials that are not as fresh.

Large national brands seek customers with a higher level of knowledge than private labels. By promoting their brand, national brands enjoy customers that are loyal and who are likely to promote their products. In addition, national brand customers often purchase based on cues from their memory of the brand. For instance, if a customer were to arrive at a retail shelf to purchase a box of cereal, they are likely to purchase the box that reminds them of something they have seen or with which they have a positive perception. In this instance, the national brand is the likely choice of the customer considering the national brand generally has a larger marketing budget and will be more familiar to the shopper.


[1] Aribarg, A., Arora, N., Henderson, T., & Youngju, K. (2014). Private Label Imitation of a National Brand: Implications for Consumer Choice and Law. Journal Of Marketing Research, 51(6), 657-675. doi:10.1509/jmr.13.0420

[2] Lamey, L., Deleersnyder, B., Dekimpe, M. G., & Steenkamp, J. E. (2007). How Business Cycles Contribute to Private-Label Success: Evidence from the United States and Europe. Journal Of Marketing, 71(1), 1-15. doi:10.1509/jmkg.71.1.1

Your Unique Value Proposition

You can overcome your competition by offering products or services that are unique to your industry. When attempting to set your business apart from the rest with a unique product or service, you may arrive at situations where your customer does not fully understand your unique benefits. You will need to educate your customers on why your product or service is better for their personal or business needs.

A potential setback of creating differentiators such as unique features, services, and benefits, is that you are open to imitation by your competition if your differentiators are not proprietary. In this sense, your uniqueness will last only as long as it takes your competition to mimic your approach. Additionally, by offering too many differentiators or products, your customers could become confused, overwhelmed, or feel that you’re trying to sell them something they don’t need. To resolve this, take precautions and carefully educate your customers on the offerings and the importance and relevancy of the additional products or services.

Value Proposition. Customers have more options at their disposal than ever before, with that in mind, a well-drafted value proposition should be at the core of your sales collateral to solidify your competitive advantage. A value proposition is a statement of promise in terms of overall value delivered to the customer, and is a major factor in increasing sales. A value proposition helps you define how your product is the better solution for your customers’ needs. A strong value proposition is persuasive and outlines why the customer should purchase your product or service over the competition.

Having an effective and unique value proposition (UVP) is of critical importance as it distinguishes your business from your competitors. A UVP should uniquely identify the value of your business and should resonate strongly with your customers. For example, if you offer a product or service for the price of $10, and your competitor offers the same product or service for $11, what stops your competitor from stealing your customer if they match or lower their price? While price is considered a UVP, unless it is tremendously lower than the competition, you need to offer better and more UVPs.

UVPs may include:

  • Better price point
  • Better product quality
  • Better location
  • Better customer service/ hours
  • Better warranty / guarantee

Your business can evaluate and enhance customer benefits through gaining feedback from reviews of current, previous, and potential customers. Through this method, flaws within your business can be identified and needed corrections made. Another valuable method is to monitor your competitors’ marketing efforts, as well as gain insight into your reputation, by reviewing forums, complaint boards, and competitor websites for credibility, design, and customer testimonials.

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