The US Federal Reserve Bank’s rapid cutting of interest rates reminds me of the policy Japanese financial decision makers took a decade ago to stimulate their economy back to health, and could result in equally unhappy consequences now for the United States. Lower interest rates with the inevitable drop in the value of the dollar will only fuel greater inflation in the US, and as is obvious to consumers everywhere by now, the inexorable rise in the price of fuel and other basic commodities is causing prices of goods to rise faster than incomes. This treacherous environment will require innovative solutions by marketers of products from cars to flat screens to coffee shops in order to keep their target markets interested and cash registers ringing. This is a global trend, despite what the gurus who only yesterday were preaching a world economy “uncoupled” from the American consumption colossus would have us believe. When the United States stops buying, the global economy slows down, period. Hence the almost panicky cut in interest rates by the Fed, in a desperate attempt to prime the pump of the world’s largest economy before it becomes a whirlpool of economic insecurity and caution that could suck everyone else down with it.

            In Austin, Texas I attended the American Marketing Association’s Winter Educators’ Conference. I was particularly intrigued by the report of Donald Clay Barnes of Mississippi State University, who shared his findings on customer delight from the perspective of American service employee, showing that the employees surveyed evaluated benefits to themselves from providing good service as being more important than the benefits they are providing to the customer. They also fear negative consequences for them of giving good service to the customer, such as the customer coming to “expect it”. These interesting findings reflect, I think, the radical individualism of American society, and such egocentric attitudes would not be found if the study were replicated in Japan among Japanese service workers. As I always tell students, culture is the independent variable.

            My arrival back in Israel coincided with the announcement by a consortium including Nissan and led by a young entrepreneur Shai Agassi, that Israel will install a countrywide electric car network within five years. Talks for “Project Better Place PLC” are also underway to take the model being developed for Israel and duplicate it in Japan. The two countries are considered ideal candidates for such a system because they both constitute geographic “transportation islands”. Nissan Motor Co. Ltd. has been mentioned as the probable manufacturer of both the electric car and the battery to be used in these systems. (Globes, Feb. 26, 2008). If it succeeds, it will be a victory for sustainability and green marketing on a major scale.

            The next time I report to you it will be spring.
            May you all have a good one!

Kenneth Alan Grossberg
Zichron Yaakov, ISRAEL

       2007 is racing towards the finish line and if you are like me, you are prone to wonder where this year disappeared to.  The global economy is grumbling and groaning, but the world keeps turning.  It has been blessedly quiet here in Israel, but this month it was particularly exciting being at the place which is the focus of half the world’s year-end religious devotions. This month also saw a large delegation of Japanese business and political leaders arrive on a private fact-finding visit.  The group included a high-ranking Marubeni executive, the chairman of East Japan Railway Company, an owner of Kikkoman Corporation, executive vice presidents from Toshiba and Taisei Corporation, and the chairman and CEO of Hitachi Medical, among others.  Their itinerary included meetings with the President and Minister of Foreign Affairs, and visits to the Weizmann Institute of Science, the Dead Sea, and the Diamond Exchange.  This is no doubt the prelude to something more concrete.  Case in point: Hitachi Medical chairman and CEO Yoshiro Kuwata was quoted that, “Israelis invest a lot of effort in entering the US, both through listings on Nasdaq and business transactions, but they are hardly noticeable in Japan. I want to change this." Kuwata made special note of Hitachi Medical's need for R&D professionals for nanotechnology research, and the development of applications for medical imaging technologies such as MRI and CT and that he believes that such talent can be sourced in Israel

      In terms of the local Israeli economy, consumer demand is booming, as was brought home to me all too graphically when I visited the local IKEA store recently.  Prices on many items have just about doubled over the past five years, yet people are buying with such gusto that the staff can barely handle the crush.  The new fast train to Jerusalem is only a few years away from completion, as is the light rail system being developed in both Jerusalem and Tel Aviv, and ridership on commuter rail – while not yet approaching Japanese levels – is increasing rapidly.  Late last month, Israel was Jerry Seinfeld’s first stop on his world wide tour to promote his new animated film Bee Movie, and he too met the President and other dignitaries.  He quipped that when he last was in Israel 37 years ago as a 15 year old volunteer on a kibbutz, no one asked for his autograph or to take their picture with him, but just left him alone to hack away at those banana plants.  When asked what he found most impressive about the country he replied without skipping a beat, “The people.”  That’s how I feel about our Marketing Forum family.  So enjoy your year-end festivities whatever they be, and a happy New Year to all of you!

Kenneth Alan Grossberg

Zichron Yaakov, ISRAEL

Last month I left my sabbatical retreat in Israel’s wine country south of Haifa to travel to San Francisco to attend the 16th Annual Frontiers in Service Conference, and I want to share with you some of the exciting things I saw and heard there.  The sheer scope and scale of service industries and the growing importance of the service component of  businesses traditionally not considered “services” makes it very hard to summarize the event, but a few important themes emerged which impact all of us in the marketing and strategy fields.  For one thing, technology continues to be a critical variable of all attempts to improve the ways we use information that we collect from our customers.  One area is intelligent process automation (IPA), which refers to an application that improves a business process by integrating model-driven intelligence into a business process to replace some human decision-making.  This impacts how much data mining and analytics can be enhanced to provide competitive advantage.  In addition, the presenter from Cisco cited Frederick Reichheld’s (Loyalty Rules!) finding - that a 5% increase in customer retention due to increased loyalty leads to a 75% increase in the net present value of an existing customer – to emphasize the need for better customer intelligence.    

Related to technology and customer intelligence is the increasing emphasis on social media.  Social media is any user-generated content that is created by individuals and freely accessible to anyone.  A presenter from Wells Fargo Bank reported at the meeting that they are mining such social media for the purpose of enhancing customer insights.  Although search engines provide a less expensive source of such insight, they are also less customized, and the speaker emphasized that it is worth paying extra for the more customized ability social media tracking vendors can offer.  This extra investment will allow you to do more than just listen to the customer, but actually enable your organization’s intelligence gathering to advance to dialoguing with the customer.  The sequence proceeds from (1) customers talking to the service provider to (2) customers talking to each other about the service provider to (3) the customer actually conversing with the service provider in real-time two-way communication.  The newly empowered customer was also emphasized by the presenter from IDEO who reminded us that customers are not only connecting to each other, but they are also turning to new services to work around the system, and finding ways to get around old restrictions on what they do and making their own choices.    This user-generated content, these peer-to-peer services, and their activism makes innovating services somewhat unpredictable.  But the challenge is what makes marketing such an exciting field to be in right now.  Let the games continue…..

Yours until next month,

Kenneth Alan Grossberg

Director

Some of you have landed great jobs and internships, while others have decided to further develop your Japanese language skills in full-time courses. Whatever the next stage in your career may be, thank you for all your hard work this past year. You have helped the Marketing Forum exceed all previous records for attendance and interest - and we look forward to welcoming you back as successful alumni/ae in the very near future.

From my distant sabbatical aerie in Israel, I send you my very warmest wishes for your continued success!

Kenneth Alan Grossberg
Director