Asian Correspondent » Kemmy Business School Asian Correspondent Tue, 30 Jun 2015 18:59:21 +0000 en-US hourly 1 Exploring the Mediating Role of Speed to Market and Product Quality Mon, 18 Jun 2012 19:48:10 +0000



This research attempts to reconcile conflicting results regarding the speed to market—product quality relationship, their joint impact on product profitability, and their mediation role in the effects of development expenses and cross-functional integration on product profitability.  Analysis of archival and survey data collected from new product development (NPD) managers for 1115 different NPD projects in several large U.S. firms suggests: 1) Speed to market and product quality together enhance product profitability, but the impact of speed to market is larger than that of product quality. 2) Development expenses in the fuzzy front end impact product profitability directly and through their impact on speed to market and product quality, while expenses incurred later in development exhibit no impact on profitability. 3) Internal and external cross-functional integration substantially impact product profitability directly and through their impact on speed to market and product quality.


Introduction and Background

Among managers and academics alike it is widely accepted that three main factors impact NPD success: time, quality, and expense. Meta-analyses suggest product quality (i.e., product advantage and meeting customer needs) is the most important factor of the three, followed by time considerations (i.e., speed to market, order of entry, and reduced cycle time) and R&D expenses. The problem is that these three factors are not independent: changes to one factor impact the other two.

For example, speed to market may increase market acceptance because the sooner a firm can launch a new product, the more accurately it can predict customer preferences and develop a product concept customers find attractive. Also, shorter development cycle time reduces the amount of time available to spend development funds. In other words, faster speed may mean higher quality and reduced development expense.

However, faster is not always better in NPD.  A particular concern regarding speed to market is that extreme speed may jeopardize product quality as a result of short cuts taken.  Speed to market may result from “crashing” the NPD project by allocating more resources than had been planned originally, resulting in higher development expenses as both headcount and coordination expenses grow.

Success, therefore, requires firms to consider simultaneously the impact of speed to market, product quality, and development expense. Conventional wisdom and empirical research suggest managers understand this need, making tradeoffs between these three factors. In addition, different tradeoff arrangements (emphasizing speed, quality, or expense) are equally successful for highly efficient projects.

We investigate these tradeoffs across a large number of NPD projects. Furthermore, we expand the literature by digging more deeply into the role of development expense and by accounting for the impact of cross-functional integration. Specifically, development expense effects are examined during four different phases of the NPD process, thus identifying when and how development expenses contribute to profit.  We include cross-functional integration because of its influential role in NPD project success. The conceptual model and hypothesized paths are depicted in Figure 1.

The Conceptual Mediation Model

The Conceptual Mediation Model


Data were gathered for 1115 NPD projects undertaken by business units or divisions of seven U.S. firms from various industries.  All are large conglomerates with over $1 billion in annual sales revenues.  The data collection approach combined archival secondary data compilation with survey responses to perceptual measures from senior product development managers intimately involved in the specific new product development projects on which they reported. Survey items were drawn from the extant NPD literature. All raw data were standardized prior to analysis. The data analysis procedure used was the structural equation modeling technique of partial least squares (PLS).

Results and Findings

This research attempts to reconcile conflicting results regarding the speed to market-product quality relationship, their joint impact on product profitability, and their mediation role in the effects of development expenses and cross-functional integration on product profitability.  Thus, this study makes two contributions. First, because speed to market and product quality are correlated, simultaneous consideration of both factors and their correlation enhances insight into their joint effect. Second, it provides evidence that speed to market and product quality jointly mediate fuzzy front end development expense and cross-functional integration effects on product profitability.

Key results from the large sample data analysis are:

  1. Mediators considered jointly:
    1. Speed to market and product quality enhance product profitability.
    2. Speed to market is more impactful than product quality on product profitability.
  2. Development phase expenses:
    1. Only development expenses in the fuzzy front end impact speed to market, product quality, and product profitability.
    2. Both speed to market and product quality partially mediate the impact of fuzzy front end phase expenses on product profitability.
  3. Cross-functional integration:
    1. Both internal integration and external integration substantially impact product profitability, with internal integration exhibiting the stronger effect.
    2. Both speed to market and product quality fully mediate the impact of internal integration on product profitability.
    3. The impact of external integration on product profitability is partially mediated by speed to market, while product quality plays no role in the impact of external integration.

While meta-analysis results suggest that process characteristics are not as influential in new product success as are product, strategy, and market characteristics, processes are necessary to implement strategy and deliver product advantage in real-world environments. This research demonstrates that process matters in delivering product profitability because it positively impacts profits directly as well as indirectly through speed to market and product quality. Moreover, not only should research account for time-quality-expense tradeoffs when examining NPD success, but also the timing of development investments involves tradeoffs with important profit implications.


This article was written by Dr. Regina C. McNally- Senior Lecturer in Strategy at the Kemmy Business School, University of Limerick, and M.Billur Akdeniz and Roger J. Calantone.

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Big hat, no cattle? The relationship between use of high performance work systems and managerial perceptions of HR departments Mon, 28 May 2012 05:50:27 +0000

Big Hat, No Cattle? –  Summary

This study examines the relationship between the use of high performance work systems (HPWS) and managers’ perceptions of the strategic value of their HR departments. Based on survey responses from 132 firms, we match HR Managers’ descriptions of human resource practices with the evaluations of HR departments provided by firms’ general managers. Results indicate that managers’ assessments of the strategic value of their firms’ HR departments are significantly influenced by relative HPWS use. When HR managers report higher use of high performance HR practices, managers perceive their HR departments as having more strategic value. We also find that this relationship is mediated by workforce human capital and social capital.

Introduction and Background
In 1981, Skinner used the phrase “big hat, no cattle” to describe the failure of the personnel function to deliver on the promise of improving organisational functioning through the effective management of employees. More recently, Hammonds (2005), in his somewhat infamous (at least among HR professionals) article wrote an updated “Big Hat, No Cattle” themed article, entitled “Why We Hate HR”, in which he decries HR’s failure to deliver on the “strategic” promise as one of the key drivers of business performance. HR professionals argue that HR is the corporate function with the greatest potential – yet it is also recognised as the one that most consistently under delivers. However, a substantial body of SHRM research has examined the potential for bundles or systems of human resource policies and practices to influence firm performance. These high performance work systems (HPWS), which include rigorous staffing procedures, employee participation, job redesign, investments in training and alternative approaches to compensation (skill-based pay and group incentive compensation) are widely believed to improve organisational performance through their impact on employees’ competencies, discretionary authority and motivation. The adoption of HPWS may help understand the gap between the rhetoric and the reality of the strategic value of the HR department.

Issues and Questions considered
Research in the area suggests that the level of strategic integration of the HR department within the firm is a key factor determining the perceived value of HR. While employees may agree with HR executives in their views that the core functional areas of HR (e.g. attraction, selection, compensation, etc.) are valuable for effective organisational functioning, they often disagreed with the HR executives in their assessments of how HR departments delivered in terms of effectively managing these important activities – particularly with the performance of HR in its strategic role. It is important that all executives perceive HR as providing a value-added contribution to the firm in order to gain equal footing with other functional areas in the decision-making process.

We suggest that the relative use of HPWS within a firm may elevate the standing of a firm’s HR department. Thus, the motivation for our study was to empirically test the following research question: Does relative use of a set of high performance HR practices within a firm influence the degree to which managers believe that the firm’s HR department has strategic value?

A second question we explore is the mechanism which might underlay or mediate this relationship. Recent research suggests that high performance work systems help organisations succeed in part by affecting workforce capability in the form of human and social capital. Human capital refers to the knowledge, skills, and abilities embedded within a firm’s human resources that are the direct result of learning, education, and training. It is an asset that allows firms to create and reconfigure resources to attain a sustainable competitive advantage firm performance. In addition to human capital, social capital (the strength of relationships in the firm) has also demonstrated the ability to achieve high levels of teamwork, collaboration, knowledge sharing/creation and discretionary behaviors. We argue that the influence of HPWS use on managerial perceptions may be mediated by the link between HPWS and human and social capital. Thus, our second research question is as follows: Is the relationship between HPWS use and managerial perceptions of HR departments mediated by workforce human and social capital?

The procedure was to solicit survey-based descriptions of HR management practices in the areas of communication and participation, training and development, staffing and recruitment, performance management and compensation and to match these descriptions with indices of HR capability. To achieve this objective, two separate survey instruments focusing on “General Management Practices” and “Human Resource Practices” were sent to the Managing Director (MD) (i.e, the CEO) and to the senior HR manager, respectively. The sample included both indigenous Irish firms and foreign-owned firms with operations in Ireland. In total, 241 companies participated; 132 of them completed both surveys.

Outcomes and Findings
Despite cumulating evidence that HR practices can affect organisational performance, HR departments are still often viewed as more bureaucratic than strategic. Our study tested this premise. Building upon recent research suggesting that high performance work systems help engender human and social capital, we hypothesized that greater HPWS use would be associated with managers holding more favourable views of HR departments’ strategic value. We further proposed that this relationship would be mediated by a firm’s relative levels of human and social capital. Results supported these hypotheses, with the strongest support for the mediational role of human capital.

Our findings suggest several things. First, in addition to evidence suggesting that HPWS can positively affect a variety of organisational outcomes, the present findings suggest that these same practices will often lead to line managers viewing HR departments as having more organisational value. Second, in addition to supporting previous work suggesting that HPWS positively influences human and social capital, these workforce characteristics are also important avenues through which HR practices can influence managers’ perceptions of HR departments. Third, these results suggest that HR departments are not all painted with the same broad brush; practices that create a more competitive workforce can serve to differentiate and elevate HR departments.

A number of authors have proposed that in order for HR departments to elevate in stature, they will have to deliver on the rhetoric of being “strategic”. In fact, previous research has shown that it is this role — the strategic role — where line executives believe that HR is particularly deficient. Our results suggest that the use of HPWS can help ameliorate this perceived deficiency through an influence on workforce human and social capital.

Skinner, W. 1981. Big hat, no cattle: managing human resources. Harvard Business Review, 59(5): 106-114.

Hammonds, K. H. 2005. Why we hate HR. Leadership Excellence, 23(2): 40-47.

Written by James P. Guthrie, Patrick C. Flood, Wenchuan Liu, Sarah MacCurtain, Claire Armstrong

Dr. Sarah MacCurtain is Co-Director of the Strategic Healthcare Management Research Group. She received her PhD from Aston Business School in 2005. She teaches Organizational Behavior at the Kemmy Business School, University of Limerick and is Course Director, MBS in Human Resource Management. Continuing research interests in include top management teams, trust and organizational performance, bullying, employee stress and well being, organisational climate and innovation.



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Newton Exchange Rates Sat, 26 May 2012 11:00:22 +0000

Newton Exchange Rates

First a  little history….

This year, for the first time in seven years, China reported a quarterly trade deficit. Imports in China are surging. The emergence of China as a global trading power is having a profound effect on global trade, exchange rate policy, and geopolitics.

There is nothing here, however. Looking back across the centuries, and we can see the same problems of currency pricing, trade, development, and politics, playing out in worlds made of wooden ships, monarchies, and gold and silver coins.

In his later years, Sir Isaac Newton began to search the Holy Bible for clues and pointers towards the true ‘system of the world’. Before he turned 35, Newton had revolutionized natural philosophy, the study of physics, optics, developed the calculus, and of course the theory of gravity. Newton’s life after these discoveries is not well known, but he ended life very rich, very well thought of, and with a sinecure as Warden, and then Master, of the Royal Mint from 1696 to his death in 1727. In fairness, when you have changed the course of human history, your later work as a mid level civil servant does seem a little dull to most observers.

Not to an economist, however.

In his later years Newton was responsible for the money supply, and the exchange rate policy, of the largest economy in the world. In practice and in theory, he worked to create the system of the world’s trade. Newton was, in some respects, the world’s first modern central banker.

Newton’s main job was ensuring the quality of the gold and silver coinage in the realm, stopping counterfeiters, and setting the exchange rate of gold and silver coin. As Master of the Royal Mint, Newton got himself into hot water a few times, mainly because he treated coined gold as the sole real money of the realm: this meant silver and copper coins were relegated to second and third place. As we will see, events in Asia forced him to change his stance.

As an aside, one glorious row Newton had was with Sir Johnathan Swift, on the issuance of copper coinage in Ireland. Swift’s anonymously written Drapier Letters—the seventeenth century equivalent of a blog—stirred a fervent anti-British sentiment amongst the Irish who were being deprived of silver coins, and hence credit for their businesses. Much of Ireland’s land at that time was owned by absentee landlords, Englishmen who collected their rents in copper and silver coin, shipped that coin to England, and exchanged the coin for gold coinage at a favourable rate, sucking all the coinage out of Ireland. Newton never forgot Swifts ‘nefarious rancour’.

By 1701, Newton’s imagination had conceived a theory of a managed currency. Newton wrote that he didn’t much care whether the money of a country was backed by gold, silver, paper, or wood, provided that there was enough coin to produce “market money and workman’s wages” (Newton, MSS. II, p. 631). In fact, he wrote that

“…tis mere opinion that sets a value upon money; we value it because with it we can purchase all sorts of commodities, and the same opinion sets a like value upon paper security….All the difference is that value of gold and silver is set upon their internal substance or matter and therefore is called intrinsic, and the value of paper security upon the apparent form of the writing and therefore called extrinsic, and the value of the former is more universal than that of the latter”.


“So much [paper credit] is best for us as suffices to lower interest, make dispatch in business, set the people on work and inspire life in the bust part of the nation”.

Newton’s counterparts across the world had other ideas, and he was forced in the end to accommodate the monetary policy of England to Asian interests. At that time, the East India Company traded regionally in China in Amoy, Chusan and Canton. Their expanding trade forced Newton’s hand:

“Our silver must go to China till gold is dearer there or cheaper with us. And it is in our interest to let it go thither. For China is inclined to take off our manufactures which India is not, and therefore fit to be traded with and the trade for their gold must greatly increase out coin, being a profit to the nation as to the merchant himself.”

Newton in the 1700s, like our central bankers today, had learned a crucial lesson: one cannot ignore the currency of a trading partner when that partner is growing faster than you are. They will win, and you will lose, whether or not you have invented the theory of gravity.

Further Reading

J. H. Craig, Newton at the Mint, Cambridge University Press, 1946.

Papers relating to the Mint by Sir Isaac Newton, held in the National Library at Kew Gardens.

This was written by Dr. Stephen Kinsella, Stephen is a Lecturer in Economics at the Kemmy Business School, University of Limerick. He is the author  of Ireland in 2050: How we will be Living, Understanding Ireland’s Economic Crisis: Prospects for Recovery, QuickWin Economics, and Computable Economics.

He also Blogs  at

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The Value of PMOs Wed, 09 May 2012 07:15:12 +0000

Organisations continue to look for organisational structural forms that will help them deal with the challenges they face such as increased competition and  increased demands for product process and service innovation. Project Management Offices (PMOS) are such an organisational entity that has emerged in recent years allowing a greater degree of flexibility in which projects are more numerous and more strategically important.To date no consistent set of features of PMOs have been identified in practice and research confirms that PMOs have the potential to transform the organisation in  many different directions (Hobbs, Aubry et al. 2008)

Given that the PMO and organisation itself  are co-evolving we asked a group of our online MSc Project and Programme Management students what they felt were the most important features of PMOs, and not surprisingly we got quite a mixed response. In broad terms the PMO performs supporting and development functions, but the benefits may be short lived. Some felt the remit of the PMO must be clear and measurable, and must be linked to  organisational benefits and the bottom line. Others emphasised the need for PMOs to bring a level of consistency to projects and programmes and in effect for it to become the custodian of good practices. Relatedly, some focussed on the governance improvements aspects that PMOs can offer. In effect the responses indicate that PMOs need to be carefully designed to ensure it is meeting the specific needs of the organisation.

It might seem obvious, but where the PMO is not linked to value/benefits it will have a limited timespan, and some commented on this aspect where they had first hand experience of PMOs being axed for the wrong reasons.

On the question of outsourcing, there is consensus that routine administrative functions of PMOs can be outsourced. However there are many internal aspects of running successful projects and programmes that are best left in-house, particularly those of a political or commercially sensitive nature. Companies outsource so they can focus on core strengths. Getting agreement on what these are is a useful exercise in itself,  and outsourcing some of the non-core apects of PMOs can lead to a wider acceptance. However there are risks and any aspects of the organisation that relate to the strategic intent or  decisions on prioritising projects and programmes are better dealt with internally.

So its “horses for courses” with no descernible patterns emerging. PMOs and organisations co-evolve and given the ever changing nature of organisations, this might always be the case.

Hobbs, B., M. Aubry, et al. (2008). “The project management office as an organisational innovation.” International Journal of Project Management 26(5): 547-555.

Written by John F. Kelly – Director, Centre for Project Management –  MSc in Program and Project Management

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The Future for Financial Engineering? Tue, 01 May 2012 19:42:19 +0000

Financial engineering has been blamed for its role in triggering each and every one of the most notable disasters that have occurred in international financial markets since the Black Monday crash of October 19th 1987.  Synthetic portfolio insurance programmes were central in triggering the stock market crash of October 1987.  Not to forget the influence of human psychology, hubris and greed in particular, it was the excess and easy availability of leverage combined with supposedly ‘low risk’ arbitrage trading that contributed to the collapse of the Long Term Capital Management hedge fund in the Fall of 1998.  Again it was derivatives based innovations which underlay the collapse of Enron in late 2001.  More recently, it was the widespread adoption of the Gaussian-Copula ‘magic formula’ in fuelling the massive growth in CDS and CDO markets which led to the dual credit cum liquidity global financial crisis of late 2008-2009.  In each of these cases, financial engineers and derivatives traders have been to the forefront of the financial innovations which, for a while at least, brought huge profits to the financial institutions involved, and a supposedly more controlled if not benign risk environment for the clients of those institutions.

You might well ask – given the consequences for the stability of global financial markets, is the ‘computationally scientific’ discipline of Financial Engineering (like it’s not too distant computationally scientific relation Nuclear Engineering) an inherently negative or potentially destructive knowledge domain ?  Should the financial innovation genie be firmly put back in its box, to be forgotten about but possibly left to be re-discovered by some unsuspecting future generation ?  The answers to each of these questions are firmly in the negative.  Lessons have to be, and are being, learned by the incumbent generation.  With stricter and hopefully better informed financial regulation coming quickly down the tracks in the form of Dodd-Frank, Basel III, Mifid II (Markets in Financial Instruments Directive) and Emir (European Market Infrastructure Regulation), the brakes may be well and truly applied to the financial engineering arms race that has typified the surge in financial innovation that has occurred in the international financial markets of the last 25 years or so.  However, this will not signal the death knell of financial innovation.  This author believes that a more controlled and better understood form of financial engineering will continue to thrive.  Investors will continue to demand innovative wealth-management products which better balance their tolerance for risk, expectations for return and needs for liquidity.  The aviation industry, and in particular the aviation leasing sector, for example represents an end user likely to benefit from this more controlled and better understood form of financial innovation and risk management.  This author is actively collaborating with industry partners to bring the ‘best parts’ of financial engineering best-practice to bear in the creation of structured hedges which will significantly mitigate the operating cost uncertainties faced by airlines, and add shareholder value as a result.

Financial engineering will also continue to be taught in leading business schools – but of necessity through a more interactive and experiential delivery mechanism by academics, who themselves must become more industry facing, relevant and connected in their research.  Finance students – the financial engineers, traders, risk managers and regulators of tomorrow – are already being taught how to apply financial engineering insights and knowledge, adapting and refining their insights using the feedback signals provided by market simulators, potential future exposure stress-tests, and strategy back-testing using the ever more extensive back-filled financial databases which are now available from suppliers such as Bloomberg.  Behavioural Finance theorists will play an increasingly important role in the development, refinement and application of Finance theory.  In short, the international financial services industry will continue to demand that Finance graduates combine a quantitatively-founded understanding of market dynamics and financial risk, but will equally expect that these graduates possess the added ability to de-mystify and apply complex financial models with a mix of common sense and keen intuition.

Written by Dr. Bernard Murphy, Course Director – MSc in Computational FinanceKemmy Business School, University of Limerick, Ireland.


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The Lifecycle Impact of Alternative Higher Education Finance Systems in Ireland Tue, 01 May 2012 19:30:27 +0000

Introduction and Background
Ireland has experienced rapid growth in higher education participation over the past 15 years: student numbers increased from 86,624 to 155,000 in the period 1994 to 2010 and are expected to grow to 204,000 by 2018. Within Ireland, the vast majority (85%) of third-level funding is provided by the state. Given the current difficult fiscal situation in Ireland, alternative forms of higher education financing have been muted.

More specifically, a graduate tax scheme and an income contingent loan system (ICL) have both been suggested in the recent National Strategy for Higher Education to 2030 as possible alternatives to the current free fees scheme. With the possible policy shift towards alternative higher education financing structures, the impact such change will have from various viewpoints remains unclear. This research attempts to address this issue by examining the impact of the introduction of either a graduate tax scheme or an ICL system. These alternative systems are considered with respect to their redistributional and fiscal implications.

The research uses microsimulation techniques to age a sample of the Irish population, based on the Living in Ireland survey data (1994-2001) up to 2050. We identify within this sample those who had completed upper second-level and tertiary education by the end of their 22nd year. We then track these individuals throughout their lifecycle until the point of retirement. We assume that these graduates pay nothing when they enter higher education but have a student debt of €10,000 at graduation. Under the ICL system, only those who work and earn above a certain limit in a given year contribute towards repaying the debt in that year. As an individual’s employment and income status vary over their lifetime, so too do their repayment obligations on the debt. An individual stops repayments once their debt is cleared, but graduates who do not have their debt repaid by the time they retire simply have the debt cancelled. In an alternative scenario, we assume that the student pays no up-front fees entering higher education and leaves with no debt. However, they must pay a special graduate tax, which takes the form of an extra 1% in PRSI-related charges, for the rest of their working lives.

Outcome and Findings
The results of simulating two alternative higher education finance systems for Ireland are analysed in terms of repayment patterns and redistributional issues and from a fiscal viewpoint. Under the ICL system, the results of the research indicate that with an assumption of a zero real interest rate on student loans, 82% of graduates pay back their debt in full, taking an average of 15 years to do so. The results also show a substantial gender difference in terms of repaying the debt in full: 89% of male graduates do so compared to 74% of female graduates. Males who do pay off their debt in full do so over 14 years on average, while females take 16 years on average.
The ICL system does seem to be fair from an equity viewpoint because those with lower incomes across their lifetimes repay the lowest amount of their student debt and may not have to repay their debt in full at all.

With regard to the graduate tax system, this also holds some qualities of fairness in that those who earn more over their lifetime will pay more than those who earn less. However, the research also indicates that substantially more revenue is generated under this system than under the ICL system. With the graduate tax system, the graduate continues to pay the tax even after the cost of his/her education has been met, whereas with the ICL system, repayments stop once the graduate’s debt is cleared. This means that the graduate tax system may be more desirable from a fiscal viewpoint.

In current circumstances, with growing demand for higher education combined with a tightening fiscal situation, this research may help to inform policy in relation to the manner in which higher education is financed.

Details of Paper
Flannery, D. and O’Donoghue, C. (2011) “The Lifecycle Impact of Alternative Higher Education Finance Systems in Ireland”, The Economic and Social Review, Volume 42 Issue 3, 237-270.
Full copy of the paper available at:

Dr. Darragh Flannery is a lecturer in economics at the Kemmy Business School, University of Limerick. He completed his doctoral studies through the National University of Ireland, Galway and has spent time conducting research at the University of Essex through the ECASS programme. Darragh holds a primary degree – the Bachelor of Business Studies (BBS) – from the University of Limerick and a master’s degree – the MSc in Economic Policy and Planning – from NUI Galway. Darragh’s primary area of research, the economics of higher education policy, focuses on issues such as higher education participation and financing. He also has a keen interest in teaching and learning methods within economics, specifically with the use of technology.

Email: Dr. Darragh Flannery

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The Power of Brand Stories Sun, 15 Apr 2012 03:31:54 +0000

Now, more than ever, we need something to believe in. Faced with years of economic upheaval and an uncertain future we have to have something we can depend upon. As a result, marketing in the here and now must come from somewhere real. Powerful brands, and the consumers who love them, are telling stories of authenticity, sacredness and utopianism.

It is possible to view the consumer as a communicator, using brands to signal ideas about self and social identity to others. To function in this way, brands must be capable of operating as marks of differentiation; highly charged words in the narrative of consumption. They shout – ‘This is the kind of person I am. This is the kind of person I am not’. But brands are only meaningful in this regard if they carry an aura of authenticity. It is to truly authentic brands that we will look for support in a chaotic marketplace. To the brands that we’ve cherished for so long. To the brands that are founded on quality and craft. And even to the brands that saw us through rough times in the past.

The function of brands to differentiate depends too on there being something special, almost sacred, about them. There is sacredness to be found in the rituals associated with particular brands, in the membership of a community of brand aficionados, and in the martyrdom and sacrifice associated with devoting oneself to a brand that may be stigmatised by the mainstream.

Finally, for differentiation to work brands not only have to be special; in the eyes of at least some consumers they must be more special than competing brands. Utopian brand messages tell us how consuming this brand is better than consuming that one, and how interacting with people who love this brand is better than interacting with others.

Dr. Maurice Patterson is a Senior Lecturer (Kemmy Business School) and a consumer researcher with a particular focus on embodiment, though he has also contributed work within the fields of branding and advertising. He has co-written two textbooks in the field of direct and relationship marketing, and has over 30 peer-reviewed publications. These publications have appeared in journals such as Consumption, Markets & Culture, the European Journal of Marketing, the Journal of Marketing Management, and Marketing Theory. He is on the editorial board of the Journal of Consumer Behaviour.

Maurice can be found on Twitter as @MScinMCS

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Movie Marketing – A Fickle Business (Part 1) Fri, 06 Apr 2012 04:17:50 +0000

With movies like Disney’s John Carter becoming the greatest flop of all time, and the book adaptation of “The Hunger Games”, becoming a global box office hit, what is the secret elixir for movie marketing success?

Pictures have an extremely short life span when released at the cinema. The typical life span of a movie at the box office is 6 weeks. They need to make an impact in their first three weeks of release. In some cases, studios need to achieve large opening weekends to recoup the costs of the picture. If there is negative word of mouth about a picture, primarily from critics and the media, it can be devastating to a movie’s chance of success (e.g. “The Avengers”).

Timing is crucial, especially in such a competitive marketplace, where new products are introduced every week. Studios have to time their release dates so as to reach the market at most opportune time and avoid competition which is likely to poach suitable demographic audiences from their movie. The typical launch strategy for films is to pre-market the movie before the release date, building up audience interest and launching the movie on a large scale basis, simultaneously launching the movie in thousands of cinemas at the same time. The movie industry is very much a seasonal business, with two prime seasons; winter and summer. Furthermore some films are launched at peak times where their audience is more likely to go to the cinema (e.g. launching kid’s movie during school holidays). Release calendars are constantly reshuffled so as films can maximise their chance of success. Large budget movies try to open on public holiday weekends, trying to gain large opening weekends, thus gaining further publicity. Other movies try and find ideal release dates so as not to clash with other films of a similar genre or a competitive threat. Opening weekends are crucial in the determination of success. If a film has a large opening weekend, studios breathe a sigh of relief in that they may recoup some of their costs, even if the film opens to negative reviews.

Some of the crucial factors in determining the likelihood of success for a movie are the type of movie theme, the film’s promotional strategy, its distribution strategy, and of course the quality of the movie.

  • Movie Theme (Genre of Movie)
  • Promotion Strategy (Creative strategy, Media budget, Choice of media vehicles, Media schedule, Media Interest, Publicity & Word of Mouth Generated)
  • Distribution Strategy (Release Pattern and Distribution Intensity)
  • Movie Quality (Production Values, Direction, Acting, Cinematography, Script)
  • Cast (Movie stars themselves can be viewed as brands, adding extra pulling power to a film)

Movies can be classified into several movie categories as outlined in Table 1 (below). These categories highlight a film’s genre and the demographic appeal of a movie. As with all forms of marketing it is about segmentation, positioning, brand building, and utilising all forms of marketing communications to develop the hype. Unfortunately some of the hype does not live up to the quality of the merchandise!

“High Concept”
These movies are built around single concept ideas, with large focus on scale and effects. Are frequently called “event movies”
Examples include;

  • Avatar
  • The Avengers
  • The Hunger Games

“Franchise Movies”
Movies created in the hope of developing sequels to the original films. Huge cash cows for studios in terms of merchandising and spin off opportunities
Examples include;

  • Harry Potter
  • The Dark Knight
  • Twilight Series

“Oscar Hype”
Well-respected material by critics and the general public alike. Favourites at award ceremonies. Awards generate extra box office revenue due to the extra kudos.
Examples include;

  • The Artist
  • Tinker Tailor Solider Spy
  • The King’s Speech

“Chick Flicks”
Movies that appeal primarily to a female audience, including the genres of drama, romance, comedy or suspense.
Examples include;

  • Pretty Woman
  • Dirty Dancing
  • Sex & City

“Bullets Not Broadway”
Movies that appeal primarily to a male audience, including genres of action, sci-fi, comedy or suspense.
Examples include;

  • Total Recall
  • Prometheus
  • The Bourne Legacy

“Sleeper Hits”
Low budget movies that gain popularity through positive word of mouth and slowly build up screen coverage.
Examples include;

  • Bridesmaids
  • The Hangover
  • My Big Fat Greek Wedding

“Magic Kingdom”
Primarily focused on children, but also appealing to the accompanying adult audiences. Typically animation feature films. Huge earners.
Examples include;
Despicable Me
The Brave
Happy Feet

“Star Power Movies”
Movies that use the pulling power of its leading actor(s) or actress(es) to gain extra box office revenue.
Examples include;

  • Ocean’s Eleven
  • The Dictator
  • The Iron Lady

“Turkeys & Straight to Video”
Movies that vanish without a trace despite large budgets and appear quickly on video/DVD format. In some cases bypassing cinemas altogether
Examples include;

  • John Carter
  • Mars Needs Moms
  • Battleship

Written by Dr. Conor Carroll , Lecturer in Marketing, Kemmy Business School, University of Limerick, Ireland.

Twitter feed @conca or email Dr. Conor Carroll

Want to know more about the Kemmy Business School?

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