Trust erosion as an outcome of a celebrity’s endorsement of a ‘failed’ brand: Is there a recovery mechanism?

Recently, star cricketer Mahindra Singh Dhoni filed a plea at SC claiming about 48 crores of unpaid dues from Amrapali group. The group is facing a fraud charge and the case is with SC. The buyers who invested in the residential projects promoted by the group fought a long battle to ensure that the Supreme court of India intervenes and help them get their property and or refund from the company. The Amrapali buyers are raising a point: till the time the Amrapali group was engaged in a legal battle with its customers, Dhoni did not say a word. Now, for his own money, he is knocking at the door of SC. Customers consider this behavior as a breach of trust because customers bought the property with an idea that the project is not only endorsed by Dhoni, he himself owned a penthouse there. Several customers took to media saying that Dhoni should have stood by them to help them get their flats or money refunded rather than just fighting for his own endorsement money.

This raises two key issues; the first one relates to the moral responsibility of a celebrity who endorses a product or service (in this case, it is a very high value and high involvement purchase) and the firm gets entangled into financial fraud, and, the second one is about the post hoc impact of such fraud on the celebrity brand value. The key question here is; is there a trust recovery mechanism?

Endorsements and moral responsibility

Celebrity endorsements have several risks for the brands such as eclipsing of the brand itself by the celebrity’s powerful brand image. The reverse of that is also true “when the brand does something deemed unacceptable by consumers, the celebrity can also be seen in this light. This could cause followers of the celebrity to be doubtful of them, not just the brand. Assumptions could be made that the celebrity agrees with all actions of the brand and become less credible by association”. (https://en.wikipedia.org/wiki/Celebrity_branding#cite_note-:13-54)

Clearly, in the case of Amrapali, the buyers believed in the endorsements made by cricketer Dhoni and now they feel let down by him. There is a clear case of a wrong moral judgment that kept Dhoni silent on the whole issue of project delays. The buyers created their own self-help group and took help of the regulators to seek justice from the highest court in the country. No word from the celebrity who urged on the potential buyers to trust Amrapali brand because he believed it to be trustworthy.

A mechanism to recover trust

Dhoni did break his silence but only to claim his endorsement fees from his client, Amrapali Builders. This move was certainly ill-advised. A futile attempt to tell the customers; look I am also a victim of this fraud! That is a very meek way of handling the issue of trust erosion. Any celebrity in a situation like this should not only be seen and heard as being empathetic towards the customers but they could also seize the opportunity to engage into customer advocacy for safeguarding customer interests from such firms. A potent mechanism, therefore, is to engage directly with the factors that led to the m-s-dhoni-1460730892loss of trust and amplify the intent to work on those factors. This could help in regaining trust and strengthening the celebrity brand with more power and credibility.

 

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Wear the badge of a Salesperson with pride

Last few days of 2017 and first few days of 2018 gave me few memorable experiences; sweet and sour. Let’s get over with the sour thing first. I was booked on a Indigo flight on 31st Dec and I was looking forward to being with my family in Delhi, however owing to bad weather the flight was cancelled. A short and crisp message from the airline left me stranded there. But that was not the service failure (we understand bad weather), the failure was that in such situation the service provider did not care for its customers – a call to the customer would have helped. My ticket was booked through premiermiles, a Citibank outfit and they did not even bother to send me a SMS (as per their record, I did travel on the flight which never took off!) A classic and not so pleasant example of a service operations failure. With so much of technology at their command!

Let’s get to the sweet experience. On Jan 2, I walked into a store of Himalaya Opticals and met a very helpful salesperson. While helping me in selecting a good frame he quickly realized that I was closing in on my choice. However, he also sensed that I was not very happy with my selection. Looking at my decision dilemma, he suggested that I postpone my purchase for three days as they were expecting more stock in the store and I will surely get what I was looking for. He was a smart salesperson who could have easily sold something to me that day itself. He chose not to do so but invited me to a later date. That set me thinking; why do good salespeople bet on their customers? How do they offset their risks and tradeoff short-term gains for long-term relationships with customers? To understand these questions, we need to consider the evolution journey for this profession called ‘Sales’.

Powers et al.(1987) published an interesting article chronicling the profession of selling before 1900. This paper provides a detailed review of how the profession evolved through different ages in the history. Here are some of the key points:

1. The Ancient World: Selling as an economic activity started with the idea of shortages and surpluses in the agriculture produce. The ‘Peddler’ was the first salesperson which did primarily two jobs; selling and holding the inventory. The salesperson would go house to house to sell their wares driven by the entrepreneurial spirit.

2. The Classical World: After the Greeks developed coinage system and formed commercial regulations, the markets got a structure: clusters of sellers in one place competing for customer’s business. The era saw the emergence of ‘Merchant Salesman” and Women Salesperson (Pea Soup Woman!).

3. The Dark Ages: It was during this period that Islamic traders started developing the profession and selling became a primary source of economic growth. A salesperson/merchant was considered a contributing member of the society.

4. The Middle Ages: Selling evolved as a career choice and people took this option for quick success. However, it was also realized that a career of the travelling salesman was not a pious existence.

5. The Renaissance: The salesman assumed different roles; auctioneer, trader, lecturer and even entertainer. He was considered wise and powerful people invested in his wisdom to increase their own treasuries. During this period of commercial re-awakening, merchant markets and fairs provided a fertile ground for the selling profession to grow further.

6. The Modern Age: Beginning of 18th century, a retail system started forming and technological inventions were taking shape. To complement these developments, advancement on sales practices was an important driver. Josiah Wedgewood, a Potter, can be considered one of the leading businessman in that era who implemented the idea of market expansion and coverage and served his markets by getting his ‘salesmen out on the road’. His use of company salesmen to execute his marketing plan including creative promotion was remarkable. He first coined this idea that distribution would be best serviced by the captive agents of the firm. Also, development in transportation and communication technology helped in realizing the idea of a fully integrated sales force. These developments in transportation and communication made salespeople more efficient.

Therefore, the evolution of sales profession provided a solid foundation for the development of the marketing paradigms in the 20th century. It is important to understand the linkage of marketing thought development and further evolution of sales profession in 20th century and beyond. Let’s take a closer look.
1. The Transactional Paradigm: Selling continued to be dominated by the idea of a transaction; a seller and a buyer and hence the exchange. A large part of 20th century, a salesperson job continued to be a ‘peddler’; to sell and manage inventory. Yes, the sales organizations crafted the selling job in a way that required salespeople to manage customer demand through a distribution channel network. In industrial selling, salespeople mostly handled customer enquiries, gave a demonstration and collect the order. (Many organizations did not have a sales function; they called it commercial department)

2. The Relationship Paradigm: By the end of 20th century, marketing scholars started building the concept of relationship marketing and that had a major impact on the way companies would look at their salespeople. A big change that took place was in terms of the value of a salesperson. Since customer relationships became the key driver for sales growth, salespeople were on the front of relationship building efforts. Again, a technological advancement in term of computing software made the idea of CRM operationally efficient. Now, salespeople were much more informed about their customer and they could customize their selling strategy to be more effective. Salesforce effectiveness became the buzz word.

3. The Value Paradigm: As we entered the 21st century, marketers emphasized that the sustainable relationship with customers is possible only if we understand customer value and deliver it to them. This had huge positive implications for the profession of selling. (a) Salespeople started appreciating the idea of customer value creation and that made them customer oriented. They started following the customers’ benefit schema and designed their sales pitch accordingly. (b) A salesperson was no longer responding to customer requirements, she was actively participating in helping the customer understand and articulate the requirements. The salesperson started doing so with the help of relevant knowledge delivery. (c) The notion of a salesperson as a ‘Value Merchant’ started gathering more strength, as more and more companies treated their salespeople as ‘knowledge brokers’ to get more customer insights that would help them to design market offerings. (d) This brought more prestige, accountability and integrity in a salesperson’s job. (I wish to exclude exceptions to unethical practices by few companies. Salespeople did not fail, sales strategy did!)

With this understanding of the evolution of a salesperson’s profession, I go back to my experience with the salesperson I met at Himalaya opticals. As a salesperson, he was taking full responsibility for the value that I was looking for. With his experience, he could make out that I was looking for something that was comfortable to wear and he must have noted that I was not looking at the MRP. Therefore, he possibly and rightly so took me as someone who could pay a higher price for a better frame. Hence the advice: come back on Friday, we are getting fresh stock. And to ensure that I come back, he said with confidence: “You will get what you are looking for and I will work out the best deal for you”. Am I going back to the store? You bet!

The Consumption behavior of Politics Consumers: View Through the Marketing Lens

Post Gujrat elections, rims of newsprint, hours of primetime news and thousands of pages of social media are abuzz with multiple views on the winners and losers of the elections. Despite different undertones of the opinions colored by political affiliations, identity inclinations and EVM scare, there exists a common underlying theme; the real winner of the election was the voter, the consumer of the Indian politics. Possibly, the last time that the voters (consumers, here on) swayed on a ‘wave’ was during the elections that followed the end of Indira Gandhi era. Since then, Indian voters have evolved in their approach to voting decisions (read political consumption). Voters are seemingly making a shift from being an automatic thinker to becoming a rational thinker (effortful thinking) while making their choices. If one scans through the results of the recent Gujrat elections, it would be difficult to miss this shift. With so much of noise around the GST by the opposition parties and general anti-GST sentiments among traders, the results of Surat constituencies threw a pleasant/nasty surprise. Through their majority votes, the traders almost approved the reform initiated through GST. Anyone would have guessed that ‘automatic response’ from these voters will be against the BJP, however it turned out to be in favor of the BJP. Clearly, the consumers of political parties (read voters) did some effortful thinking when it came to exercise their choice.
Daniel Kahneman, in his book, Thinking Fast and Slow, describes two systems of thinking; system 1 that operates quickly and automatically without much effort, and system 2 that allocates attention and effort to think through complexities. Possibly, when voters in Gujrat were confronted with the choice of voting for a party, a large majority applied system 2 thinking. Therefore, when they evaluated GST impact, they possibly traded off through the short-term pain and long-term gains; when they considered reservation, religion, identity, corruption and development, their placed more weightage on development and corruption free ideas. Therefore,

Point No.1: Consumers of political parties are moving to system 2 thinking.

This brings us to the core marketing issue; to understand the mechanism that shapes consumer (voter) preferences and choices. My argument here is as follows; as much in marketing of any product or service or a combination of the two, understanding of consumer choices is equally critical in political marketing. The marketing as applied in elections must move beyond managing communication and image of the political parties and leaders. It must take a customer (voter) centric view. A political promise (if we consider that as a product) is a combination of two or several issues that concerns the consumers such as; job reservations, agriculture reforms, economic development, corruption etc. to name a few. Most of the time, communication focusses on one or two such issues whereas the consumers consider multiple issues in different measures and try to figure out the best combination for her choice. This is like a high involvement purchase situation where a consumer may trade off a shorter warranty period for a lower price being offered by a seller, or a consumer may pay a higher price for a machine for a longer service contract, in this case making a trade-off for long-term value. If you ever wondered that why the voters ignore the ‘Hindutva’ label associated with BJP and still vote for it, the answer lies in the trading off mechanism that puts extreme values on development and trust in the leadership. Same goes with demonetization and GST. Consumers trade off the short-term pains with the long term expected gains. Therefore;

Pont No.2: If you want to decode system 2 thinking of the voters, mine into their trade off mechanism and learn to manipulate that.

Clearly, the way forward is to get close to the consumers. Understanding consumer’s choice designs across consumer segments may turn out to be a great enabler. It’s time to think about voting as a high involvement shopping decision and marketers (politicians and their parties) should tune in to their target segments and understand what is not being said. As a Gujrati friend quipped post-election results: Voters are a thinking lot, BJP ko dara diya, congress ko hara diya (They scared the BJP and made congress lose the elections).

Win-Win is certainly an outcome of  system 2 thinking!

The Jingle Jangle Fallacy: Perspectives on Business Teaching

“Jinglejangle fallacies refer to the erroneous assumptions that two different things are the same because they bear the same name (jingle fallacy) or that two identical or almost identical things are different because they are labeled differently (jangle fallacy)”.  (Wikipedia)

Often, I have struggled with this fallacy when I read an article or participate in a discussion that deals with the contrast between teaching and research. I do agree about the difference in terms of skill sets needed to pursue one or the other, however, if one looks closely from an outcome point of view, in a strictly academic sense, they mean the same thing; furthering the cause of learning. The faculty whether he/she is teaching or working on a research project, it is about what can be taught to the students which is already available and what new can be added to the extant body of knowledge. Can you sense the jangle fallacy in action here?

Talking about teaching and research, a dominant thought is about making both useful to the industry. You teach what the industry needs, you research what can solve a problem in an organization. No one can disagree with that! However, the way we approach relevance issue needs a relook. In a simplistic way, let us approach this using the knowledge-skill-attitude chain. Seemingly, knowledge is the starting point and therefore transferring of knowledge that exists and the pursuit of creating new knowledge serve the same cause. Clearly, this whole ‘relevance’ debate is making us drift a bit from our purpose and various perspectives are emerging. Some to the extent that it undermines the conceptual grounding that is so important for even seeking the right knowledge. Consider an excerpt from an email that I received this morning: “Students will find this book useful because, while marketing textbooks by Philip Kotler and others introduce students to a plethora of terms and jargons leaving them wondering as to what to do with them, our book helps students develop solutions, perspectives, and convictions………True marketing wisdom can be obtained only under the tutelage of the master practitioner. Sadly, our students do not get this opportunity. The ‘Best Practices’ are substitutes for the best practitioners of the world. As a student goes through each of the ‘Best Practices’, he feels he is under the apprenticeship of the master practitioner. The ‘Best Practices’ are the most precious jewels of the book.” 

A few months ago, Prof. Nirmalya Kumar wrote about bringing practitioners in the classrooms. Indeed, I too have a bias (being an industry person myself) for getting more and more industry insights into my class and students love those sessions. However, if left at that students will receive the knowledge on things that happen in an organization. As a business faculty, we need to go further; as Prof. Kumar suggests, to bring the nuances of causation and boundary conditions of a marketing phenomenon. The complete chain of ‘what-why-how-why not’ is important for the students, not just what happened in that specific industry context. ( In case method of teaching, that’s what we do – specific to the general with boundary conditions!) In my opinion, this is the way forward to build strong industry-academia connect.

Academic research must unravel mysteries that the industry is grappling with. Absolutely! Good research is always about that. A good marketing journal is not prepared to look at your work if it does not advance the body of literature and is found lacking on a promising story for practitioners. Prof. V.Kumar, the editor of Journal of Marketing advocates the idea of marrying academic rigor and industry relevance. This clearly sets the agenda for research which converges on the basic need of business education; to serve the industry. As Prof.Nirmalya Kumar suggests; “The responsibility of faculty is to debunk widely held myths and simplistic causal inferences through research, reflection, analytical rigor, and data. And, this process helps develop a more nuanced and complex understanding of how the world works”. If that was not true then why do we need to develop multiple perspectives on, for example, customer engagement? It’s not an academic debate but a ‘real’ industry dilemma; whether pre-purchase engagement more important than the post-purchase engagement? Does customer extra role behavior accrue benefits for the firm or it has a dark side to it? Listening to a doctoral student’s seminar this week, I was thinking; if this research was going to add to the existing knowledge on customer engagement. I bet, it would and all of us will benefit; the teachers,  researchers, students and my ex-colleagues at The Times Group.