Category: Uncategorized

In this video we’re going to talk about four ethical traps that could potentially ensnare digital marketers on their road to success. Then we’ll wrap up the discussion by looking at how firms can steer their employees towards making the right ethical decisions.

False Online Identities

First up is false online identities. What we’re talking about here goes beyond that secret Pinterest account that you might use to obsessively collect cat videos. We’re talking about using false online identities to mislead consumers usually for the purpose of faking product reviews. These types fake accounts actually have name: 

sockpuppeting. It’s similar to “astroturfing” or a fake grassroots movement. It plays on the consumer’s bias to want to believe stories that seem authentic. If someone posts a long, elaborate product review about how they tested the product, how much they love it, and so on, it becomes more believable. Sockpuppeteers know this and take advantage of it.

The problem even extends to online chat where customer service chatbots and even online dating chatbots have proliferated.

Hidden Consideration

Some prominent Youtubers and social media celebrities have gotten in hot water over shilling products without disclosing the paid relationships that are motivating their product reviews or product placements. This is called hidden consideration. For example, the Kardashian/Jenner clan got in hot water with the Federal Trade Commission for promoting products on Instagram and neglecting to tell their followers of paid product placements. Marketers must disclose meaningfully and prominently all forms of consideration or compensation received from 

Amazon went after sellers when it was discovered that many were using the freelance worker site fiverr.com to pay people to complete reviews on Amazon.

Hidden relationship

Similar to hidden consideration is a hidden relationship. An online promoter might not be getting paid to talk about a product, but it viewers later discovered that the owner of the product’s manufacturer was the promoter’s own brother, that would probably put the video review in a different light wouldn’t it? It’s a clear conflict of interest. Marketers have an obligation to provide transparency of all material connections between a speaker and the company or brand of the product being promoted. So what is a “material connection?” It’s any connection that could affect the credibility audiences give to that speaker’s statements about a product, company or brand. A material connection could be a familial or business relationship, the receipt of any benefits or incentives such as free product, discounts, gifts, sweepstake entries or anything else of value.Admittedly, hidden consideration and hidden relationship are similar. The important thing to realize is if you’re hiding something from consumer, you’re betraying their trust and also breaking the law.

Here’s a great example of what not to do: In 2008, a husband and wife decided to buy an RV and take a trip across America stopping at many Walmarts along the way (Walmart is known for allowing RVs to park in its parking lots overnight, free from hassle). They decided to create a blog called “Walmarting Across America” and in their travels they interviewed a number of employees that were happy to talk about how much they loved working at Walmart and the great things Walmart did for their communities. You can probably guess where this is going. It was later discovered that the husband’s brother worked for Edelman, the PR agency that had a relationship with Walmart. Edelman actually paid the couple to do the blog, but there was no mention of any of this on the blog at the time. Obviously, this created a big PR mess for Walmart and Edelman and they both lost credibility because of it.

Dishonest Communication

Finally, product review and online reputation management systems provide a powerful incentive for unethical behavior. If you’re the retailer who controls the reviews on your own website, the motivation to improve the reviews of your products might be difficult to ignore. But firms should allow consumers to reflect their own honest opinions, findings, beliefs, or experiences.

Don’t be like this hotel owner who threatened charging newlyweds $500 for each negative review that anyone in their party posted to Yelp. Clearly, this is a short-lightened strategy that ended up backfiring on the hotel owner with plenty of bad PR.

Code of Ethics

I want to end this video by giving some guidance on how management can ensure that employees act ethically. After all, you might feel like your decisions are ethical, but that doesn’t necessarily mean that everyone else in your firm is going to act in the exact same way. The best way to ensure that everyone within a firm makes engages in the same ethical decision making is by having a 

Code of Ethics. A code of ethics communicates two things: it communicates to your customers and the rest of the world that you take ethical concerns seriously, and it gives everyone in the firm a standardized framework to help make ethical decisions in a consistent way. But isn’t developing a code of ethics a complicated and difficult process? Will it probably can be, but fortunately a lot of the work has already been done for you. 

The Word of Mouth Marketing Association has a Code of Ethics that they have developed that they encourage firms that engage in digital marketing to use. It’s thorough, well-considered, and, maybe best of all, free. In fact, the ethical pitfalls I outlined above are specifically addressed in this Code of Ethics, so it’s one that I always suggest.

The American Marketing Association also has its own Statement of Ethics. Every member of this association is expected to follow these ethical guidelines. This would be a good place to start for any organization as well.

The ease with which anyone can create false identities online, hide payments or relationships, and  conduct dishonest communications means that firms must be extra vigilant when it comes to ensuring ethical practices.

If you’re engaged in digital marketing, there’s a good chance you could make a decision that could put your firm in legal jeopardy if you’re not careful. In this video, I’ll go over some of the laws that most commonly impact digital marketers.

CAN-SPAM

As most of us are keenly aware, spam is a huge problem. Well, not that type of spam. This type of spam. Our email inboxes are overflowing and scammers use these deceptive emails to prey on people. CAN-SPAM, or Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 was designed to eliminate these annoying emails from our lives. Obviously, this law hasn’t been entirely successful, but regardless it’s a law we must follow. An important thing to know is that the CAN-SPAM covers all email, not just bulk email. It can be a one-off individualized email and still be considered spam and covered under this law. 

There are two categories of email messages that the law designates: transactional and commercial. Transactional emails are those that arise from some form of pre-existing relationship between the recipient and the sender of the email. Examples of these messages include purchase receipts, shipping notifications, password change notifications, product recall, and others. These messages are exempt from CAN-SPAM as long as the information contained in the email isn’t misleading. Commercial emails are those that are traditionally considered “marketing” messages, the promotion of products or services, or the cross-selling of additional products or services. Even if an existing relationship already exists between the recipient and sender, these emails must comply with CAN-SPAM.

What are the requirements of CAN-SPAM? The webpages for the act on the Federal Trade Commission website lays it out well.

• Don’t use false or misleading email header information – in other words, don’t doctor the from, reply-to or hidden header information to mislead.
• Don’t use deceptive subject lines
• The email must be identified as an ad some how – there doesn’t have to be a huge “advertisement” banner across the top of the email, but somewhere in the email it has to acknowledge that the ad is commercial or promotional in nature. It’s ok to bury it down in the footer of the email.
• Tell recipients where you’re located. – this means you have to include an address in the email. The footer is the usual place.
• Tell recipients how to opt out of receiving future emails – You need to provide an unsubscribe functionality. All email marketing platforms such as Mailchimp, Emma, CampaignMonitor at others do this.
• Honor opt-out request promptly – since most business sending promotional emails use email marketing platforms, this really isn’t an issue. Unsubscribes are handled automatically.
• Monitor what others are doing on your behalf – if you hire a firm to manage your promotional emails, just because someone else is doing it doesn’t mean your don’t have full liability if they do something wrong. Make sure your partners are staying is legal compliance.

What happens if you don’t follow these rules and you send spam. If you are found in violation, you could be on the hook for $16,000 per email. That’s $16,000 for each and every email that you send that not in compliance with CAN-SPAM. Obviously, if you are involved with email marketing in any way, you’ll become very familiar with the CAN-SPAM act.

ACPA

Next, is the Anti cybersquatting Consumer Protection Act of 1999. This law is designed to protect trademark holders from having domain names of their protected marks registered and held captive by “cybersquatters”. Cybersquatting is the bad faith, abusive registration and use of the distinctive trademarks of others as internet domain names with the intent to profit from the goodwill associated with those trademarks. In other words, you cannot register domains as “real estate” that you intend to profit by at a later date. The penalties are about what you would expect, but the reality is that even though you might have this law to protect you, it might take the legal system far longer to resolve and cost far more in legal fees than if you just paid the cybersquatter what they want, which of course is not ideal. This is a common issue and one not even royalty is immune to.

ADA

The American’s with Disabilities Act of 1990 is most-widely known for the changes it made to help those with disabilities full access to retail and governmental facilities. What many people don’t realize is that the ADA also has provisions for how website operators need to facilitate full access as well. That means visually impaired consumers need to be given the ability to navigate content on the site utilizing accessibility software. This law is important to consider if you’re involved in the designing or implementation of websites. Web content should be accessible to the blind, deaf, and those who must navigate by voice, screen readers or other assistive technologies. Unfortunately, there is no clear regulation defining website accessibility. This has led to a spate of lawsuits claiming infringement when actual infringement isn’t necessarily clear.  

Next, we’ll look at some laws that impact digital marketers from a consumer privacy standpoint.

GDPR

The first and most talked about law is the GDPR, or General Data Protection Regulation. This is a European Union regulation, so why does that matter for digital marketers in the US? 

This law went into effect May 25, 2018 and it applies to “organisations located within the EU but also applies to organisations located outside of the EU if they offer goods or services to, or monitor the behaviour of, EU data subjects.” In other words, even if your firm is located outside the EU, if your website is open to EU citizens and collects data on them, you need to have a privacy policy that sets forth what data you will be collecting and why. The maximum fine for breaching the GDPR is €20 million or 4% of annual global revenue and data subjects have the right to seek compensation for damage. Obviously, a sum large enough to get the attention of any firm, which explains the flurry of privacy policy update emails and cookie data collection notifications on websites.

Believe it or not, the United States does not have a comprehensive law like the GDPR that protects the privacy rights of consumers online. There has been talk about adopting one for years now, but so far nothing has happened. But that hasn’t stopped some movement at the state level.

CPPA

The California Consumer Privacy Act went into effect January 1, 2020. Much like the GDPR, even if your firm is not located in California, the requirements of the law can still apply if your firm does business with California residents. This new law provides California residents with a variety of important privacy rights including being able to request information on what businesses are collecting about them, knowing whether their personal information is sold, and many others. Intentional privacy violations are subject to a $7500 fine. Unintentional violations are subject to a fine up to $2500.

COPPA

In 1998, congress passed COPPA or the Children’s Online Privacy and Protection Act. This law was designed to protect against businesses collecting the private information about children under 13 without parents’ permission. Any violation of this law could be subject to a $16,000 fine. That’s actually per child per violation, so a website gathering data on hundreds of kids could quickly rack up huge fines if they are prosecuted.

So far, Tiktok has paid the largest penalty for violating this act.

Now, are these all of the laws that you need to be aware of? No, not by a long shot. There are many other laws that require your attention if say, you’re doing a product give-away on social media, storing or acting on patient healthcare information, dealing with copyright issues, or employee screening. This book, Navigating Social Media Legal Risks by Robert McHale is a great resource for anyone engaging in digital marketing. It’s a great reference to have on your shelf when you have a question about something you do as a digital marketer that might effect you legally.

Because what we do is very public and often entails the capturing of personal information from consumers, we need to be intentional with regard to our activities and follow the letter and spirit of the laws that govern us. Whether its CAN-SPAM, ACPA, ADA, or whatever other alphabet soup you want to talk about, it’s important for you to know that legal minefields abound and the best way to prepare yourself is to be informed.

Have you ever been shopping in a store and found yourself moving from one product display to the next, completely entranced in the shopping experience, where the products just seem to invite interaction? Like they want to be picked up and inspected? 

Conversely, have you ever been in a store where you didn’t really find much of anything appealing and you figure that maybe it’s just you and you aren’t in the mood to shop. 

Chances are with the first scenario you’re in a store that handles visual merchandising really well and in the second, the retailer might not be giving it any thought at all.

This is the power of visual merchandising: to present the store and its merchandise in ways that will to attract the attention of potential customers. It’s also about understanding what you customer needs and finding a way to eliminate all of the obstacles that might get them to interact with your products.

For a clothing retailer, if you can get someone to take some items into a dressing room you will typically see a 67% conversion rate from those shoppers. In other words, for every three shoppers that go to your dressing rooms, two are going to buy something. If you display products in such a way that it’s not going to even invite someone to pick up a product, good luck getting them in the dressing room!

Merchandising Fixtures

Of course, a big part of visual merchandising is deciding how you’re going to display your products. There are common fixtures that we use to accomplish this. 

Straight racks hold a lot of apparel, but shoppers can only see the frontal view of at most two different products. These are found in most clothing stores, but are very common in discount and off-price stores.

Rounders are typically smaller than most straight racks and can hold the maximum amount of merchandise in a given floorspace. Unfortunately, shoppers have no frontal view of any merchandise on these fixtures. Again, these are very common in discount and off-price retailers. These were by far my favorite type of fixture to hide in as a kid, much to the annoyance of my mother.

Four-ways provide frontal views of merchandise in four different directions. These hold a substantial amount of merchandise, but they are usually more difficult to maintain as stores typically want to highlight multiple products on one rack, which may end up requiring more staff labor.

Gondolas are are extremely versatile and are typically found in grocery, drug, and discount stores. 

Flat-tops or tables are extremely common in more luxury-oriented clothing stores. They maximize presentation over product volume. 

Oh, and have you ever been in a store that hangs pants like this? This is a custom rack designed to hold pants in a non-traditional way. It’s not a coincidence that these are men’s pants too. A major clothing retailer was surprised at how little men were engaging with their products when displayed folded on a table. Very few were picking them up and looking at them. Why? Because most men don’t want to mess with a nice looking display. They don’t want to have to be responsible for re-folding something and putting it back. The solution: of course, make it as easy a possible by hanging the pants. No fiddly handers or perfectly folded merchandise. And it worked! Men started interacting with the products and sales dramatically increased. And that’s the whole point of visual merchandising: to get shoppers attracted to the store and merchandise. It’s not all about the types of fixtures you display the products on, however. We also need to think about strategies for how we will display products to grab the shopper’s attention. We need techniques for presenting merchandise.

Techniques for presenting merchandise

The first technique is idea-oriented presentation. This is displaying merchandise based on a specific idea or image of the store. For example, this isn’t just any living room as the price tags on everything will attest. This is a living room vignette within an IKEA furniture retailer. All of the products work together to create a unique vision or idea of how to use the merchandise.

Oh and lest you think visual merchandising is only about what you see from inside the store, store windows are a time-tested technique in urban areas for attracting shoppers into the store.

In fact, 50% of women get ideas for clothing from store displays or via window shopping.

We also have Item and Size Presentation. This is probably the most common technique for displaying merchandise. Products are arranged according to item type or size. In this photo you can see a cereal aisle where different sizes and varieties of Cherrios are presented together.

Retailers can also present products together based on their color. This is perhaps one of the boldest methods of visually capturing the shopper’s attention as the retailer runs the risk of combining products together that the shopper may not necessarily see as complimentary. In this example, a small library has organized its books by color, which is a trick that realtors use to make homes look more attractive and organized. How that works with the Dewey decimal system I have no idea.

Some retailers use as much vertical wall space as possible to show off merchandise. Bed, Bath & Beyond as shown here is well known for using as much square footage in their stores as they have available. Even it that means putting products beyond the reach of all but the tallest shoppers.

Tonnage merchandising is the practice of effectively using mass quantities of the product itself to serve as its own visual merchandising. These stacks of bottled water at Sam’s Club not only show off the product, but communicate the volume of the product that they sell regularly.

Bulk merchandising, similar to tonnage merchandising, uses the product as its own visual merchandising. This form of merchandise presentation allows the shopper to choose the volume of product they’re most comfortable with. I took this picture last summer at this candy shop of the main square in Prague. And boy was that candy expensive!

Finally, frontal presentation is about showing as much of the product as possible. In a typical book store you’d probably see the books shelved with their spines out. In this bookstore, each book is faced out providing ample access to each cover. This is far less space efficient, but from a shopping perspective it makes each book much easier to find, makes the shelves more visually interesting, and encourages more book impulse buying.

To recap, a key to retail success is understanding what motivates shoppers to handle and inspect merchandise. Fixtures play an important role in this, but they’re not enough on their own. Retailers also need to use merchandise presentation techniques to show products in their best light and make them inviting to the shopper.

We typically divide products into two types: goods products like a new laptop, and service products, like service on that laptop after you spill your soda on it.

Of course, goods products are those that we can touch and feel. The primary reason we have brick and mortar stores is to give shoppers the ability to interact with physical goods products. Feel the fine texture of a high quality garment for example.

When most of us think about service products we might think of getting some special attention at a salon, taking a laptop in for repair, or even getting a suit custom tailored. Service products are intangible and only exist in the interactions between the customer and the service provider. So are products either strictly goods or service products? Well, no. 

In fact, products exist along a service-dominant vs goods-dominant continuum. At one end you might have a regular appointment at a doctor’s office. Where everything you receive as a customer (in other words as a patient) is service-based. At the other end of the continuum you might have a grocery store, where the vast majority of the value you receive comes in the form of physical products. But here’s the thing: regardless of the product, there is nearly always a service component built into it.

You might buy a new iPhone, but embedded within it are all those service-based perks you’ve come to expect from Apple such as a free iCloud account, free news delivered 24/7, even an artificially intelligent agent at your beck and call. Increasingly, auto manufacturers, especially luxury brands, are including regular oil changes with the purchase of the car.

Even that trip to the grocery store has service embedded within it. The store itself is a service. The retailer is providing a showroom for you to use. There’s a very real cost associated with that. They provide employees to help at the meat counter. They provided cashiers at checkout. Heck, even if you use that self-checkout and didn’t talk to anyone. Guess what? It’s still a service, they’re providing the technology to allow you to checkout on your own. A human doesn’t have to be involved for a service encounter to take place. 

Why is this important from a retail perspective? If a retailer can add value to the shopper’s experience or even add additional value to the products it sells by embedding services within them, that’s value that becomes difficult for its competitors to replicate. And that will give you a sustainable competitive advantage.

Retailers want to ensure that their customers are satisfied with the quality of service they provide. A satisfied customer is far more likely to be a loyal customer after all. But what determines whether a customer is going to be satisfied with a retailer’s service quality? We have to have some way of measuring the expectations a customer has for a service against the actual quality of service that a retailer provides.

To do this, we can perform what’s called a Gap Analysis. Customers have expectations for service quality and service providers usually try to understand what those expectations are. But sometimes management’s perception of what those expectations are can be a bit off. 

This creates the knowledge gap. The retailer lacks the knowledge necessary about the customer to truly understand the customer’s expectations of service quality. 

So how does management close this knowledge gap as much as possible to best understand the customer expectations?

• Do market research – Interview your customers, do a survey. You can’t understand the customer without hearing directly from them.
• Connect management to customers and frontline employees – Provide opportunities for them to interact.
• Try to understand customer expectations more deeply. For example, if you’re a doctor you might expect your patients to want a highly credentialed doctor who provides excellent health outcomes. Yes, that might be true, but the customer (or patient) might also want a clean waiting room, better hours of operation, online health records, and automated prescription services. Unless you do your research, you might never know these things.

When the service provider knows what the customer’s expectations are (or at least they think they know) then they have to create standards of service based these perceptions. But sometimes the standards that are created don’t exactly meet all of the expectations that management has identified. 

This is the standards gap. Minimizing the standards gap is about fully utilizing the knowledge you have about customers and their expectations and ensuring that all of this knowledge is used to formulate the standards of service that you establish. 

How can we do this: 

• Put systems in place that ensure that research is disseminated throughout the organization
• Make understanding service standards a part of all employee training.

When the best standards have been set (or at least to management’s best ability or perception), then the service provider should provide service at that level of standard. Oftentimes, that can fail to happen. 

This is when we get the delivery gap. The actual service delivered does not match the standards that the firm has set.

How can we overcome this:

• Empower employees – give employees the power to reach the required standard of service for regardless of customer or context.
• Provide support and incentives to employees – reward them for meeting the service standard management has set
• Use technology – the effective use of technology can ensure that service delivery is more standardized.

Finally, as a firm, we want to make sure that the customer is aware of our services and the level at which we can provide them. We typically engage in marketing communications to achieve this. But what happens when our marketing communications doesn’t match the service we actually deliver? This is called the communications gap.

Think of it this way. You may not have ever stayed in a five-star hotel, but you probably have a pretty good idea of the level of service those five-stars requires. You have these expectations because of the communications from that hotel about the level of service you as a visitor should expect. If you subsequently stay at the hotel and don’t experience that expected level of service, there’s a communications gap.

There are a number of ways we can address the communications gap.

• Promise only what you know you can deliver – overpromising and underdelivering is the fastest way to create unsatisfied customers. Make sure that you know what you can deliver and communicate that, or even underpromise, and then deliver to the best of your ability.
• Treat all communications as part of one integrated campaign.
• Make policies and procedures consistent across all locations – no location should be doing its own thing.

To recap. A gap analysis lets service providers understand where the provided quality of service fails to meet the customer’s expected quality of service. If we add each of these gaps together, we arrive at an overall “service gap”. So to eliminate this service gap, we must close the knowledge, standards, delivery, and communications gaps.