American Journal of Management · Dr. David Smith . NABP EDITORIAL ADVISORY BOARD . Dr. Nusrate...

American Journal of Management

North American Business Press

Atlanta - Seattle – South Florida - Toronto

American Journal of Management

Editor Dr. Howard Miller

Editor-In-Chief Dr. David Smith

NABP EDITORIAL ADVISORY BOARD

Dr. Nusrate Aziz - MULTIMEDIA UNIVERSITY, INDIA Dr. Andy Bertsch - MINOT STATE UNIVERSITY Dr. Jacob Bikker - UTRECHT UNIVERSITY, NETHERLANDS Dr. Bill Bommer - CALIFORNIA STATE UNIVERSITY, FRESNO Dr. Michael Bond - UNIVERSITY OF ARIZONA Dr. Charles Butler - COLORADO STATE UNIVERSITY Dr. Jon Carrick - STETSON UNIVERSITY Dr. Mondher Cherif - REIMS, FRANCE Dr. Daniel Condon - DOMINICAN UNIVERSITY, CHICAGO Dr. Bahram Dadgostar - LAKEHEAD UNIVERSITY, CANADA Dr. Deborah Erdos-Knapp - KENT STATE UNIVERSITY Dr. Bruce Forster - UNIVERSITY OF NEBRASKA, KEARNEY Dr. Nancy Furlow - MARYMOUNT UNIVERSITY Dr. Mark Gershon - TEMPLE UNIVERSITY Dr. Philippe Gregoire - UNIVERSITY OF LAVAL, CANADA Dr. Donald Grunewald - IONA COLLEGE Dr. Samanthala Hettihewa - UNIVERSITY OF BALLARAT, AUSTRALIA Dr. Russell Kashian - UNIVERSITY OF WISCONSIN, WHITEWATER Dr. Jeffrey Kennedy - PALM BEACH ATLANTIC UNIVERSITY Dr. Dean Koutramanis - UNIVERSITY OF TAMPA Dr. Malek Lashgari - UNIVERSITY OF HARTFORD Dr. Priscilla Liang - CALIFORNIA STATE UNIVERSITY, CHANNEL ISLANDS Dr. Tony Matias - MATIAS AND ASSOCIATES Dr. Patti Meglich - UNIVERSITY OF NEBRASKA, OMAHA Dr. Robert Metts - UNIVERSITY OF NEVADA, RENO Dr. Adil Mouhammed - UNIVERSITY OF ILLINOIS, SPRINGFIELD Dr. Roy Pearson - COLLEGE OF WILLIAM AND MARY Dr. Veena Prabhu - CALIFORNIA STATE UNIVERSITY, LOS ANGELES Dr. Sergiy Rakhmayil - RYERSON UNIVERSITY, CANADA Dr. Fabrizio Rossi - UNIVERSITY OF CASSINO, ITALY Dr. Robert Scherer – UNIVERSITY OF DALLAS Dr. Ira Sohn - MONTCLAIR STATE UNIVERSITY Dr. Reginal Sheppard - UNIVERSITY OF NEW BRUNSWICK, CANADA Dr. Carlos Spaht - LOUISIANA STATE UNIVERSITY, SHREVEPORT Dr. Ken Thorpe - EMORY UNIVERSITY Dr. Robert Tian – SHANTOU UNIVERSITY, CHINA Dr. Calin Valsan - BISHOP'S UNIVERSITY, CANADA Dr. Anne Walsh - LA SALLE UNIVERSITY Dr. Thomas Verney - SHIPPENSBURG STATE UNIVERSITY Dr. Christopher Wright - UNIVERSITY OF ADELAIDE, AUSTRALIA

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This Issue

Social Commerce Emerges As Big Brands Position Themselves to Turn “Follows”, “Likes” and “Pins” into Sales ............................................................................................... 11 Nora Ganim Barnes The use of social networking sites has exploded. Consumers now share information online (eWOM) through recommendations, reviews, ratings and referrals in what has led to purchases as a result of social interactions via these platforms. This consumer-mediated purchasing is called social commerce, a sub-set of e-commerce. A survey of the 2013 Fortune 500 reveals that their adoption of these social media tools has increased, most notably in the newer, more commerce friendly platforms. The world’s biggest brands may have found a way to move past engagement (likes, followers, pins etc.) and generate revenue on social media sites. Happiness and Productivity in the Workplace ....................................................................................... 19 Mansour Sharifzadeh, Jeanne Almaraz In a survey of 850 students at California State Polytechnic University, Pomona, students were asked four questions: What is happiness, what makes you happy, what makes you happy in the work place, and does happiness impact job performance? The responses, while remaining fairly consistent with current trends, provided some insight into one sector of the general public's perceptions of what the ideal life would be and how this ideal would impact job performance. Everyone Loves a Winner…Or Do They? Introducing Envy into a Sales Contest to Increase Salesperson Motivation ........................................................................................... 27 Alex Milovic, Rebecca Dingus This paper focuses on the role that envy can play in driving sales force behavior in competitions. Envy, an unpleasant emotion that occurs when a person covets something that another has, can be used as a motivating tool to push lower-ranked salespeople to better compete with high achievers. Following a review of envy and sales contest effectiveness, potential strategies are provided for implementing benign envy while avoiding the potential negative consequences of envy. Sales managers must be careful to ensure that envy is induced properly to engage the employees while not negatively affecting the long-term health of the sales force. Internal Marketing’s Effects on Employee Satisfaction, Productivity, Product Quality, Consumer Satisfaction and Firm Performance ........................................................ 33 Abhay Shah Marketers have typically studied the effect of external marketing to consumers of the firm and its effect on firm performance. However, the role of internal marketing (to employees), and its effects on employee satisfaction, productivity, product quality, customer satisfaction and firm performance has not been studied as extensively for manufactured goods. This paper proposes a more comprehensive model of internal marketing and its effect on firm performance in the manufacturing sector.

MetaSpace Designs LLC (MetaSpace): How Can a Lapel-ephant Stay Relevant? ............................ 40 Trace Reddick, Michael Dwyer, Yurong Liu, Eric Krause, K. Blaine Lawlor Trace started his small business by selling graphic t-shirts at music concerts. After familiarizing himself with the jam band market and learning that selling lapel pins was more profitable than selling t-shirts, Trace created MetaSpace Designs. MetaSpace Designs moved to not only vend lapel pins to individual consumers, but also stepped into business-to-business sales in order to buoy its position. High quality products and services yielded ever-increasing profits in all MetaSpace’s served markets. However, various obstacles brought Trace to rethink his competitive strategy and to adapt his small company to survive in this dynamic environment. Marketing Athletic Clubs, Recreation Centers and Country Clubs: Recruiting and Retaining Members Using Psychodemographics ........................................................ 60 Oscar T. McKnight, Ronald Paugh, Jordan McKnight, Lily Zuccaro, Gina Tornabene Membership recruitment and retention is critical to fitness facilities managers and often the primacy of product and service offerings is overemphasized. This research indicates that consumer psycho-demographics are more important in determining membership. A ‘SIT-UPS’ routine is offered to assist managers in marketing and membership initiatives. Understanding Leadership: Let’s Put the Horse before the Cart ........................................................ 68 Robert W. Halliman Leaders today lead in much the same way as those that preceded them. This begs the question, Why has our technology of leadership had such little impact? Our current "technology" of leadership presumes the existence of a leader/follower relationship. The problem is the presumption. If the leader/follower relationship does not exist, the application of the "technology" will be ineffective. A framework is established for a model which suggests the direction for a more effective "technology" of leadership. If we can effectively teach people how to get others to follow then we can more effectively concentrate on improving the leader/follower relationship. Professional Sports Compete to Go Green ............................................................................................. 75 Marlene Blankenbuehler, Michelle B. Kunz Sports, professional and amateur, can have a major impact on our environment, including: land use, power consumption, construction of event facilities and venues, consumption of water and other natural resources. Professional sports teams and leagues have recognized the importance of reducing the negative impact their activities and facilities have on the environment, and began implementing sustainable programs and actions a decade ago. This paper investigates green initiatives of major league sports teams and examines the information regarding sustainable actions posted on their individual team website. Results identify categories of sustainable initiatives and compare the data across different sports.

Global Communication Skills and Its Relationship with Emotional Intelligence ............................... 82 Teja Jadhav, Shiv K. Gupta Emotional Intelligence comprises of five components: Self-awareness, self-regulation, motivation, empathy and social skill. These components have a direct relationship on a person’s emotional intelligence that further drives a person’s performance and business. Communication skills vary globally. Collectively, we studied these components of Emotional Intelligence and our studies reveal that all five components have “communication skills” in common and that it is one of the chief requirements that will determine a leader’s effectiveness. This paper explains how Emotional Intelligence helps a person to communicate better and its benefits in understanding global communication skills.

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Social Commerce Emerges As Big Brands Position Themselves to Turn “Follows”, “Likes” and “Pins” into Sales

Nora Ganim Barnes

University of Massachusetts Dartmouth

The use of social networking sites has exploded. Consumers now share information online (eWOM) through recommendations, reviews, ratings and referrals in what has led to purchases as a result of social interactions via these platforms. This consumer-mediated purchasing is called social commerce, a sub-set of e-commerce. A survey of the 2013 Fortune 500 reveals that their adoption of these social media tools has increased, most notably in the newer, more commerce friendly platforms. The world’s biggest brands may have found a way to move past engagement (likes, followers, pins etc.) and generate revenue on social media sites. INTRODUCTION

Shopping has always been considered a social activity, but when combined with the likes, follows and pins of social media platforms and the proliferation of smart phones, shopping has been streamlined. The result of this evolution and maturation of social media is the emergence of social commerce or s-commerce.

Social commerce is a subset of electronic commerce or e-commerce. It involves “using social media that supports social interaction and user contributions, to assist in the online buying and selling of products and services” (2013 Business Insider). The term social commerce was introduced by Yahoo! in November 2005 to describe a set of online collaborative shopping tools such as shared pick lists, user ratings and other user-generated content sharing of online product information and advice.

The concept of social commerce was developed by David Beisel to denote user-generated advertorial content on e-commerce sites, and by Steve Rubel to include collaborative e-commerce tools that enable shoppers "to get advice from trusted individuals, find goods and services and then purchase them" (Cohen, 2011). The social networks that spread this advice have been found to increase the customer's trust in one retailer over another.

The consumer decision process is now impacted by social referrals from friends and strangers alike. Our search for, and evaluation of alternatives is being fueled at the core by social media. Our face-to-face communication is now moving online resulting in an unprecedented amount of consumer-generated information that impacts all aspects of decision making, including those surrounding the purchase and use of goods and services (Goldsmith and Horowitz 2006).

As a result, one can certainly assume that online discussions (eWOM) can, and do, impact sales, reputations and brands. While there has been some early work on the role of eWOM in the diffusion process (Arndt 1967; Sheth 1971) the more recent research has recognized the importance of online conversations for businesses (see especially Armstrong and Hagel 1995).

American Journal of Management vol. 14(4) 2014 11

http://en.wikipedia.org/wiki/User-generated_content�

http://en.wikipedia.org/wiki/Steve_Rubel�

In this paper we consider the growth of eWOM on social networking sites and as a result, social commerce. The Fortune 500 (F500) provide empirical evidence that the most successful corporations are embracing social media tools and that social commerce may be the next big wave in the digital marketing arena. We examine the growth in adoption of social media tools among the F500 and the corresponding growth of social commerce. We begin by looking at the evolution of the work done on WOM and later on eWOM especially as it relates to marketing. Conceptual Background WOM, PWOM, NWOM and the emergence of eWOM

Over 70 years ago, the two-step flow theory was tested and confirmed (Katz 1957). The hypothesis that ideas flowed from mass media to opinion leaders and from these to others, depended in large part on informal communications referred to as “word of mouth” (WOM). As early as 1955, Katz and Lazarsfeld claimed that personal influence has more effect than media because it consists of active communication rather than one-way promotion.

The WOM literature has been the focus of interest since then, mostly looking at the role of WOM in the diffusion process (Arndt 1967; Sheth 1971). The essence of WOM is its personal influence over others in their decision-making; people tend to gather opinions from sources they find credible or knowledgeable (Haywood 1989).

The potential power of influence made opinion leaders of interest for much of the early research on WOM (Arndt 1967). Arndt studied the effects of positive WOM (PWOM) and negative WOM (NWOM). He concluded that PWOM is more frequent compared to NWOM and consumers are eight times more likely to receive favorable WOM than unfavorable WOM.

More recently, East (2008) found that consumers were three times more likely to receive PWOM than NWOM across several categories. East also found that generally PWOM has more of an impact than NWOM, while others have claimed that NWOM can be more influential than PWOM (Bayus 1985). Breazeale (2008) concludes that NWOM has a more powerful influence on consumers due to the fact that dissatisfied customers disseminate their experience and feelings more frequently than those who are satisfied. Engel (1969) advised businesses that, “your best salesman is a satisfied customer.” Despite the mixed results on which has a more significant impact, East and others have found that both positive and negative WOM have a definite effect on purchasing behavior. eWOM and Market Impact

Researchers began to look at the motivation for consumers to engage in online referral activities, in terms of both giving and receiving. Hennig-Thurau and Walsh (2003) provide a list of possible motivations including risk reduction, reduction of search time, learning how to consume a product, dissonance reduction, determination of social position, belonging to a virtual community, remuneration, and learning what products are new in the marketplace. Regardless of the motivation, it is clear that this online chatter exists in the marketing environment.

Feick and Price (1987) suggested that some of those disseminating information about products were doing so based on their knowledge and prior expertise or involvement in the product. These opinion leaders were referred to as “market mavens”. Their information went beyond that of the traditional opinion leader in that information was not only about a product but the marketplace as well as they shared information about prices, best places to make purchases, and couponing. These influencers, if they were identified, could play a critical role in promoting a particular product or service.

Today, the internet is revolutionizing how businesses relate to consumers who have the potential to connect with each other in new and powerful ways (Rayport and Sviokla 1994). Armstrong and Hagel (1995,1996) proposed: “Commercial success in the online arena will belong to those businesses that organize electronic communities to meet multiple social and commercial needs.” The online option has become the vehicle of choice for many to exchange opinions and share information (Hennig-Thurau et al. 2004; Gruen et al. 2006; Brown et al. 2007; Edwards et al. 2010).

12 American Journal of Management vol. 14(4) 2014

As consumers flock to their favorite sites to share information, they have opportunities to express their support for products and services through Facebook “likes”, “follows” or retweets on Twitter or to “pin” things on Pinterest. There is now some evidence that these likes, follows or pins lead to purchases through these social networking sites.

One report (Smith, 2013) put Pinterest, a relatively new and less populated platform than Facebook or Twitter, squarely in the social commerce competition. According to their findings, during the second quarter of 2013, Pinterest accounted for 23% of social commerce sales while Twitter had 22% and Facebook’s share was 28%. They attribute this success to the visual and product-oriented focus of Pinterest which creates a natural social platform for e-commerce.

A White Paper released in July, 2013 (Stadd) reports the results of a survey with over 6,000 respondents over a 17 month period. The focus is social commerce on Facebook, Twitter and Pinterest. The results include the following:

• Social media drives roughly equal amounts of online and in-store sales • Nearly 4 in 10 Facebook users report that they have at some point gone from liking, sharing or

commenting on an item to actually buying it. • 43% of social media users have purchased a product after sharing or favoriting it on Pinterest,

Facebook or twitter. An interesting research question arises from these reports. Are businesses ready to take advantage of

the potential social commerce explosion? Are they moving to increase their presence and engagement on social networking sites in order to benefit from the emergence of social commerce?

An annual study of the Fortune 500 (F500) conducted at a northeast university shows evidence of increased social media adoption, especially of newer, more visual platforms, where social commerce has shown promise. The results of the latest iteration of the survey of the 2013 F500 provides some insight into how the top businesses may be positioning themselves in this new environment of consumer mediated purchasing through social media platforms.

Fortune Magazine annually compiles a list of America’s largest corporations, aptly named the “Fortune 500” given their size and wealth. Due to the hugely influential role that these companies play in the business world, studying their adoption and use of social media tools offers important insights into the future of commerce. These corporations provide a look at emergent social media trends among America’s most successful companies. The F500 list includes publicly and privately held companies for which revenues are publicly available.

The results presented here are based on the adoption of popular and well established platforms like Facebook and Twitter and some of the newer and fastest growing social media platforms and tools (Instagram, Google+, Foursquare and Pinterest) by the F500. Indicators of engagement (such as the number of Facebook fans and Twitter followers) are also included to gauge the involvement of consumers with brands.

All corporations were analyzed using multiple steps. First, working from the published 2013 F500 list, all corporate home pages were examined for links to, or mention of, the social networking platforms being studied. If none were found, a search on the company’s site was conducted using key words with the name of the platform. Any links resulting from that search were followed and evaluated using the established criteria.

If no results were located on the home page or through a site search, other search engines were used. Both Google and Technorati (a leading blog-focused search engine) were employed to check for corporate use of social media platforms using key words that included the primary/listed company name. This proved to be an effective method since additional sites were located. A search of other sites gathering information on the F500 was also reviewed for any mention of social media networking sites in that group. Twitter and the Fortune 500

Three hundred eighty-seven (77%) of the F500 have corporate Twitter accounts with a tweet in the past thirty days. This represents a 4% increase since last year. Eight of the top 10 companies (WalMart,


Exxon, Chevron, Phillips 66, Apple, General Motors, General Electric and Ford Motors) consistently post on their Twitter accounts. Berkshire Hathaway and Valero Energy do not tweet.

The 387 corporations with corporate Twitter accounts come from 72 of the 75 industries represented in the F500. A partial list is presented below showing those industries with the greatest presence on Twitter in the F500. The percent of corporations with Twitter accounts varies by industry. The Commercial Bank industry has 94% and the Food Consumer Products industry has 93% of their companies on Twitter. Companies in the Specialty Retail industry have 91% of their companies on Twitter. Other industries listed have half or more of their companies using this platform.

TABLE 1 CORPORATE TWITTER ACCOUNTS BY INDUSTRY

Corporate Twitter Accounts by Industry

Number of Companies w/Twitter Accounts

Percent

Commercial Banks 17/18 94% Food Consumer Products 13/15 93% Specialty Retailers 20/22 91% Chemicals 13/15 87% Telecommunications 14/17 82% Utilities: Gas and Electric 18/23 73% Aerospace and Defense 8/12 67% Insurance: Property and Casualty (Stock) 9/17 53% Motor Vehicles and Parts 8/15 53%

Rank appears to be an influence for the use of Twitter by the F500. Eight of the top 10 companies have corporate Twitter accounts. Forty-three percent of the Twitter accounts belong to the companies in the top 200 on the list, while 36% come from those ranked in the bottom 200. Those ranked higher in the 2013 F500 are more likely to adopt Twitter than their lower ranked counterparts. More successful companies are more likely to use social media and to have greater consumer engagement using popular metrics like followers or likes. This creates a fertile environment for the growth of social commerce.

Ironically it is the popular Facebook, new to the F500, that has the highest number of followers on Twitter, followed by Google, Starbucks, Whole Foods Market, Walt Disney, JetBlue Airways and Southwest Airlines. The number of followers provides an important metric for the potential of social commerce. Higher engagement could translate into increased sales for companies.


TABLE 2 TWITTER FOLLOWERS BY CORPORATION

Corporation 2013 Twitter

Followers Facebook 8,629,741 Google 5,965,743 Starbucks 3,813,472 Whole Foods Market 3,381,926 Walt Disney 1,757,871 JetBlue Airways 1,732,293 Southwest Airlines 1,500,140

Facebook and the Fortune 500

Three hundred forty-eight (70%) of the F500 are now on Facebook. This represents a 4% increase since last year. Nine of the top 10 companies (WalMart, Chevron, Phillips 66, Berkshire Hathaway, Apple, General Motors, General Electric, Valero Energy and Ford Motors) have Facebook pages. Exxon does not.

The 348 corporations with corporate Facebook pages come from 72 of the 75 industries represented in the F500. A partial list is presented showing those industries with the greatest presence in the F500. The percent of corporations with Facebook pages varies by industry. Companies in the Specialty Retail industry have 96% of their companies on Facebook. The Telecommunications industry has 88% with corporate Facebook pages. Other industries listed have half or more of their companies using it while the Utilities industry has 44% and the Motor Vehicles and Parts industry has 40%.

TABLE 3

CORPORATE FACEBOOK PAGES BY INDUSTRY

Corporate Facebook Pages by Industry

Number of Companies w/Facebook

Pages

Percent

Specialty Retailers 21/22 96% Telecommunications 15/17 88% Aerospace and Defense 10/12 83% Commercial Banks 14/18 78% Chemicals 11/15 73% Food Consumer Products 11/15 73% Insurance: Property and Casualty (Stock) 11/17 65% Utilities: Gas and Electric 10/23 44% Motor Vehicles and Parts 6/15 40%

Last year one hundred fifteen companies (23%) had neither a Twitter account nor a Facebook presence. This year that number has dropped to eighty-four companies (17%). Clearly, adoption is increasing on both these social networking sites and consumer engagement is strong.

Facebook pages among the F500 follow the same pattern of adoption by rank as Twitter and blogging. Forty-one percent of the top 200 have a corporate Facebook page while 38% of the bottom 200 use this tool. Rank clearly impacts social media adoption.


Coca-Cola dominated for the past two years but for 2013 Facebook, new to the F500 list, has the most Facebook fans. Coca-Cola followed with 66,875,169 fans. Walt Disney, Starbucks, WalMart and Target all have more than 20,000,000 fans. As Facebook increases opportunities for commerce, and companies market more directly on this platform, revenues from social commerce are certain to grow.

TABLE 4

FACEBOOK FANS BY CORPORATION

Corporation 2013

Facebook Fans Facebook 92,271,077 Coca-Cola 66,875,169 Walt Disney 44,183,582 Starbucks 34,547,696 WalMart 29,090,933 Target 21,854,546

Pinterest (Pin board-style photo sharing and social networking site)

Pinterest has grown in membership since its public debut in 2010 and is showing up in the F500. In 2012, 11 (2%) F500 companies had Pinterest accounts. This year that number has grown to 45 companies or 9%. Half of the top 10 ranked companies have Pinterest boards including WalMart, Exxon Mobil, Apple, General Motors and Ford. As noted earlier, Pinterest is experiencing some early success with social commerce through its platform. Adoption of this platform mirrors the growth of social commerce on it. Google+ (Multilingual social networking and identity service site)

One hundred and seventy-seven (35%) of the 2013 Fortune 500 have active Google+ accounts including WalMart, Phillips 66, Apple, General Motors, General Electric and Ford Motors. Additionally, 93 (19%) have Google+ corporate accounts that have not yet become active. This is the only platform studied where there were a significant number of open, but inactive accounts. It may be that corporations are still learning about Google+ or have not yet found the best use of this platform in their social media mix. Instagram (Photo-sharing and social networking site)

Instagram, owned by Facebook, is a first time F500 company. Forty-four (9%) of the 2013 F500 have a corporate Instagram Account, although 1 is inactive. Ford Motors is the only top 10 company on Instagram. Other adopters include AT&T, Avon and Home Depot. Like Pinterest, Instagram is a visual site with increasing numbers of users. It has also been connected with the rise in social commerce. Foursquare (Location-based social networking site)

Forty-four (9%) of the 2013 F500 have corporate Foursquare accounts for use on mobile devices. WalMart is the only top 10 company using Foursquare. Other adopters include Target, WalGreen and Lowe’s. Unlike the other platforms, Foursquare is location based so it may see social commerce generated off line as it directs it’s users to places of business in order to “check in” and win titles and awards.

The chart below shows the usage of social media platforms among the F500 in 2012 and 2013.

Foursquare, Instagram and Google+ were included for the first time in 2013 and debuted with respectable numbers. All other platforms show an increase in adoption.


FIGURE 1 FORTUNE 500 CORPORATE SOCIAL MEDIA USAGE

CONCLUSION

As consumers share opinions about products and services via their favorite social networking sites, the opportunities for increased sales exists. The Fortune 500 companies appear to have taken note of the significant new marketing opportunities as a result of the abundance of consumer-generated content. The 2013 Fortune 500 have now fully embraced new communications tools that have taken so many other sectors by storm. In the past year, these business giants have increased their adoption of Twitter for corporate communications by 4% and their adoption of Facebook pages by 4%. Sixty-nine percent of the 2013 F500 use YouTube, up 7% last year. Those social networking sites showing social commerce activity like Pinterest and Instagram, also show an increase in adoption.

This data indicates that there is a growing presence of big brands on social networking sites and that these sites are experiencing growth in social commerce or consumer-mediated sales. If other businesses follow this path, social commerce is destined to be the next big trend. REFERENCES Armstrong, Arthur and John Hagel III (1995). Real Profits from Virtual Communities, The McKinsey

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Fortune 500 Corportate Social Media Usage (2012 - 2013)

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Happiness and Productivity in the Workplace

Mansour Sharifzadeh California State Polytechnic University, Pomona

Jeanne Almaraz

California State Polytechnic University, Pomona

In a survey of 850 students at California State Polytechnic University, Pomona, students were asked four questions: What is happiness, what makes you happy, what makes you happy in the work place, and does happiness impact job performance? The responses, while remaining fairly consistent with current trends, provided some insight into one sector of the general public's perceptions of what the ideal life would be and how this ideal would impact job performance. INTRODUCTION

In a survey of 850 students at California State Polytechnic University, Pomona, students were asked four questions: What is happiness, what makes you happy, what makes you happy in the work place, and does happiness impact job performance? The responses, while remaining fairly consistent with current trends, provided some insight into one sector of the general public's perceptions of what the ideal life would be and how this ideal would impact job performance.

The majority of respondents concluded that a happy employee would be a more productive employee than an unhappy employee. Most respondents indicated that if employees had no worries, they would focus their attention on their jobs rather than on other aspects of their lives such as having enough money.

Many of the respondents indicated their belief that respect, compensation, and an idyllic personal life would benefit employers without questioning whether an individual is capable of being happy 24 hours a day.

Happiness Survey

Between 2003 and 2011, more than 850 students enrolled in a Principles of Management course at Cal Poly Pomona were asked four questions relating to happiness:

1. How do you define happiness? 2. What makes you happy? 3. What does the "Pursuit of Happiness" mean? 4. Is a happy employee a more productive employee?

The following is a brief summary of their responses.


Question 1: How do you define happiness? It would seem that happiness is something everyone wants, but cannot precisely define. The answers

to this survey question have a wide range of variation. It was difficult to classify the definitions in a clear-cut fashion, since many were vague or provided several ideas. Some took the route of defining happiness in terms of what it is not, such as "the absence of sadness." Others were more explicit about how the emotion can be recognized or what causes it. The responses were separated into several general categories, as depicted in the following graph:

FIGURE 1 STUDENT DEFINITION OF HAPPINESS

State of Mind – This was the largest category and is similar to Need/Want fulfillment (see below). The difference is that this group focused on the feeling associated with happiness, rather than the source of that emotion. Most of the respondents mentioned a feeling of contentment, satisfaction, or peace of mind unrelated to a specific cause. This feeling is usually indicated to be the result of an absence of problems, or a spirit of harmony with one's life or surroundings.

Need/Want Fulfillment – This group was more specific, indicating that happiness is brought about by one's needs and desires being fulfilled. The assumption here, apparently, is that a need or desire creates unhappiness, which turns into happiness by default whenever the need or desire has been satisfied. These needs and wants could be physical, emotional, material, or otherwise. The responses generally do not distinguish as to how those needs are satisfied, whether by personal efforts, someone else, or by chance. Also, there is no middle ground, only two possible states – happy or unhappy.

Achievement/Goals – This category delves further in that the need for achievement goes beyond basic necessities, and that one's own efforts are the key indicator of happiness. These respondents seem to


recognize a source of happiness that comes from clearly defined goals and in the struggle to successfully achieve these goals they go beyond merely satisfying basic needs and wants, and involve efforts toward material belongings as well as self-actualization.

Enjoyment - A few defined happiness as just a general good feeling such as "whatever makes me smile." These people can recognize the emotion of happiness but have obviously not thought too deeply about exactly where it evolves.

Activities – This classification centers on what a person does that makes him or her happy. In this case, it is clear that happiness is associated with certain enjoyable activities such as sports, entertainment, hobbies, etc.

Emotional attachment – Another group was especially oriented toward the feeling of love, as the result of having friends and family. These students felt that a large part of happiness is being closely connected to the lives of others.

Events – A similar category to Activities, but this one associates happiness with specific events, such as getting married, having a baby, graduation, concerts, and so on. Presumably these are people who derive good feelings from memories and being part of momentous occasions.

Opposite – A small number of respondents simply defined happiness as the opposite of sadness or something similar. The problem here again is the assumption that there are only two possible emotions, with happiness being simply the default condition in the absence of any other.

Other – Every other answer given was included here. Some were just vague. Others were unique and unrelated to the other categories, such as "high level of serotonin".

The following were a few other definitions of happiness: Happiness is defined in the dictionary as enjoying, showing, or marked by pleasure, satisfaction, or joy (“Happiness,” n.d., line 2). Realistically, happiness cannot be accurately defined with a universal meaning because people perceive “happiness” differently. For example, some people consider confidence as the key to accomplish happiness, while the others believe that happiness is a state of mind, of feeling content. Of course, there are countless other approaches people may find acceptable to attain happiness.

According to students in the Principles of Management course, the meaning of happiness seems to involve these criteria: fulfillment, satisfaction, independence, contentment, success, love, and confidence. One definition of the meaning of happiness is provided by a student, SW, and represents 70% of the answers given overall:

“Happiness is being satisfied with all aspects of your life. It includes economical, physical, emotional, and other elements. One does not have to be rich to be happy, but financial stability is a key. It would be very difficult to be happy if you constantly have to worry about where your next meal is coming from. Likewise, the other aspects of your life need not to be perfect, but rather satisfactory.”

There are some extreme cases in which 2 out of 10 people explained something other than those criteria to fulfill their meanings of happiness. As an example, MW stated that he preferred a simple satisfaction method such as hanging out in front of a television on a Sunday: “Through my eyes, happiness would be a cool Sunday afternoon sitting on the couch with a cold drink in hand watching football for a couple of hours. I would not care about anything except for the game on television.” Not everyone desires the same kind of happiness because some may be easily satisfied with the simplest things, and some may find happiness in a more complicated way. Why do people prefer happiness through more complicated ways? They strive to reach higher in life, and prefer to have challenges along the way because nothing seems to meet their standards for satisfaction. Happiness then results from achieving those challenges. Some people find overcoming obstacles and challenges more satisfying than following written rules or routines. Again, if satisfaction results from a solution, happiness occurs.

Happiness is often related to money and satisfaction, although material things can only bring momentary happiness. Such cases can be described as “liquid static”. Happiness occurs differently in terms of different periods of people’s lives. For instance, a 5-year old can be happy if given a piece of


candy, but a 35-year old is unlikely to find happiness through that same piece of candy. In order to lighten the smile of a 35-year old, a luxury car would most likely do the job in terms of material things. Although material things satisfy happiness, they do not last forever when wants are constantly changing with trends and time. Time causes instability and uncertainty in the definition of happiness, which always distinguishes between short- and long-term happiness. Long-term happiness is not as easy to achieve since the process takes time and feelings to develop. Companionship is a perfect example of a long-term relationship because effort, time, and emotion make a significant contribution to that relationship. Effort is how much time a person puts into a relationship; time is how long it takes to develop; and emotion amounts to a long-term relationship with a dash of passion. Most students find relationships of family/friends/companions as the definition of happiness, along with other important criteria such as wealth, confidence, and comforts to enhance their happiness. When everything is successfully achieved and placed, they would consider themselves as “happy”.

Now the happiness to people has been defined briefly, let us take a look at what happiness is in a religion. Happiness in the Islam religion focuses on the inner peace of a person, and that is how it is formed: “Happiness is a feeling that resides in the heart. It is characterized by peace of mind, tranquility, a sense of well-being, and a relaxed disposition. It comes as a result of proper behavior, both inward and outward, and is inspired by strong faith.” (“Happiness in Islam”, 2010, para. 2).

It is believed that wealth and material things are not the only tools to bring someone happiness, even though they are the causes of some temporary happiness. Of course, money solves many financial problems which cause countless headaches, but it will not bring inner peace to develop stability emotionally. In the Islam religion, wealth is not the main cause of happiness:

“From an Islamic viewpoint, happiness is not restricted to material prosperity, though material reasons make up some of the elements of happiness. The material aspect is merely a means, but not the end in itself. Thus, the focus in attaining happiness is on nonmaterial, more abstract concerns, like the positive effects of good behavior.” (Ullah, “Concepts of Happiness in Islam”, n.d., para 2).

Whether the definition of happiness comes from religious point of view or people, it sends the same message that money cannot bring long-term happiness; and everybody views happiness in their own way. On the Abramyan webpage, happiness is defined as “peace of mind”, which interestingly relies on education, environment, and an individual’s mentality (Abramyan, 2013).

In life, many people desire to be worry-free in regards to money or education, and to work instead toward a long vacation in a deserted paradise. They will define those relaxing moments as happiness since they are away in a peaceful place rather than staying in a hectic environment, where worries are involved.

Happiness can be achieved from someone else’s happiness, especially loved ones. For example, our parents sacrifice so much to attain better educations, shelter, luxuries, and time in order for their children just to grow up happily. In most parents’ definition of happiness, they wish for their children to smile externally and internally, knowing that it brings a peace of mind to them. In the survey of business students, one student, BQ, responds that, “sometimes when a person does something for someone else [it] will give happiness.” Happiness to her is simply succeeding in finding happiness from her loved ones in giving and receiving.

It is uncanny how happiness can be found, such as working overtime to earn extra money to afford luxuries for our loved ones. Happiness is not formed with just one incident; instead it builds up with each incident to make someone happy. An example from the Self creation is a perfect example of how each layer has its purpose, and then it comes out as a whole to form happiness: “Your core motivation to be happy is surrounded by layers of other desires. Like an onion, you must first peel away the layers to reach the core.” (“Getting Happy”, n.d. para 5). Let's look at an example.

I want a car. Why do you want that?


So I can get to work. Why do you want that? So I can earn enough money for a house. Why do you want that? So I can have a place I call my own. Why do you want that? So I can feel free to do with it what I will. Why do you want that? Because when I feel free, I feel happy.

The ways happiness is achieved are somehow all related to each other because one thing leads to another, and a happy result occurs.

How do you achieve happiness in life? This is a question that people have been asking for years. The key elements of happiness in life are as follows: realizing enduring happiness does not come from making it; take control of your time; act happy; seek work and leisure that engages your skills; join the movement; get rest; give priority to close relationships; focus beyond the self; count your blessings; and take care of the soul.

Adapting to change when you seek happiness does not guarantee happiness. According to one student, EP, when you become rich one day and you have all the money in the world you can still be unhappy: “…materialistic things do not lead to happiness, they only give the impression that one is happy, that is until that person gets tired of that material.” When you have all your favorite belongings in the world but you are missing an element outside of what you can buy, you become unhappy. The bottom line is that people desire what they cannot have, and then eventually consider themselves as not able to find unhappiness. Happiness may be achieved by being an optimist, who thinks life is a God-given gift and that everything happens for a good reason. Within those reasons, there is a lesson being taught on how to become a happier person as time progresses.

Time is of the essence to most people. When you master your schedule and time, you feel a sense of completeness resulting in happiness. We often underestimate the importance of time; therefore, we miss a lot of events due to being late or forgetting completely about the event. Once an individual has everything on track he or she will feel very comfortable.

Our mood everyday influences our lives. If a person is unhappy he will show it on his face. This is the state of mind you will be in when you are unhappy. If a person is happy all the time, he will show it also but, in a more cheerful manner. How do you achieve the happy look? Talk with a smile on your face and be cheerful, optimistic, and outgoing. What you see is what you get, so follow through on your happy, positive emotions. Seek work and leisure that engages your skills. When you are in a happy zone you are said to be in the “flow” of things. The most expensive forms of leisure do not provide enough flow as basketball, gardening, or tennis, which give you a better flow.

Exercise is a very important part of life. Not only does exercise condition your body, but it also conditions your mind. Exercise also fights depression and anxiety. A healthy mind resides in a healthy body. Get plenty of rest each night. It is imperative that a person gets 7-9 hours of sleep each night to fully recover the body’s energy. If a person does not achieve this goal, he or she will be fatigued and agitated. Even small doses of rest such as meditation or prayer replenish the mind, body, and soul.

Close relationships are almost always overlooked. When you say no to an occasion with your spouse, mate, siblings, or parents it will hurt you in the long run. Mishandling of relationships can and will turn into breakups or unevenness of relationships. Do not only think about yourself. Lend a hand to a neighbor at times. You will feel better for helping someone out and you will do well much more. Your good deeds will make you a much better person.

Keep a journal of all the good deeds and blessings you have received each day. This will help you understand how good your life is and how fortunate you are every day. The journal could be about your friends, family, classmates, senses, etc. This is to reflect on the positive aspects of your life. (Myers, 1993). Lastly, take care of the soul. In study after study, religious people are found to be more in touch


with themselves and their souls. They cope better when they are in pain. Faith provides a support group, a second family, and a way out of personal crises (http://www.davidmyers.org/happiness/research.html). Question 2: What makes you happy?

TABLE 1 COMMON STUDENT RESPONSES TO “WHAT MAKES YOU HAPPY”

Accomplishments Family Wealth/Money Love Rest/sleep Family Food Entertainment Friends Hobby Music Health Education/school/good grades A peaceful place Car/driving Boyfriend/girlfriend/spouse Reward/recognition A nice day/good weather Friendly people Helping others God/church Pets Sports/exercise

Places (beach, mountains, amusement park, Las Vegas) Having fun Children Solitude/peace/relaxation Vacation/travel Job Outdoors/nature Reading/writing Video games Smile/laughter Free will/independence Shopping Performing (singing, dancing) Freedom from worry or conflict Possessions Elevators/escalators Computers Surprises/gifts Rain Team/group Meeting people Socializing/party

There is not too much to be said about this list except that there is some commonality, perhaps because of the narrow age range and shared experience of college students. Question 3: What does the "Pursuit of Happiness" mean?

Very few students had a clear idea of what this meant. Most interpreted the phrase literally as the process of attaining happiness, which makes them happy. Some related it to equal opportunity or the American Dream. No one pointed out the fact that this phrase comes, not from the Bill of Rights, but the document that founded our nation - the Declaration of Independence:

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. --That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed…" (1776, para. 2).

The original draft referred to the "Pursuit of Property", but that was later changed (Davis, 2009, para. 4). The Constitution was written to guarantee that these rights could not be taken away from its citizens except by due process of law.


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It was difficult to categorize the responses, but separated them into two groups –those that seemed to have some relation to a government-guaranteed or God-given right, and those that did not. About 10% of the total fell into the first category. Question 4: Is a happy employee a more productive employee?

Most of the answers generally favored happy employees as being more productive. Less than 10% did not agree that happy workers were necessarily better workers. Common reasons given to justify higher productivity were higher motivation, more energy and greater enthusiasm. Obviously, an unhappy or disgruntled employee can be a problem, but most students felt that the happier they were, in terms of being treated well, paid well, and enjoying the work and environment, the harder they would work. This implies a happiness scale that is continuous and a relationship that is linear. On the other hand, if we look at the responses to question 2, on what makes them happy, the students mention mostly items that exist outside of the workplace: friends, family, hobbies, love, etc. Only a few of them, such as need fulfillment, wealth, and accomplishment, can be linked to the workplace. It would seem that most people would be happiest away from work. It seems logical that if only the work-related factors apply then more productive effort will lead to greater happiness, but is the converse true? Does greater happiness lead to greater effort? One could hypothesize a causal relationship between the level of happiness (if it can be measured) and the level of productivity and the test for evidence of causality. It is possible that the causality goes the other way – happiness is a by-product of hard work.

What exactly does it take to instill satisfaction in employees? When students in a Principles of Management course at Cal Poly Pomona interviewed managers at various companies in search of the answer to this very same question, the replies generally fell into two categories: monetary and environmental satisfaction. Surprisingly, 70% of the responses indicated that the work environment is a much more significant indicator of employee happiness than a larger paycheck. For those that based the happiness of employees on monetary factors, many of the criteria revolved around not only the amount of money earned but also the frequency with which raises were offered or granted. Many of the replies also suggested that benefit packages (dental, medical, etc.) were a major factor in employees’ happiness. Also, the hours that employees worked, both in quantity and level of reasonability, factored into the level of satisfaction. For instance, those that had the idealistic “9-5” day were much happier than those who were given graveyard shifts.

“Whatever your personal reasons for working, the bottom line, however, is that almost everyone works for money. Whatever you call it: compensation, salary, bonuses, benefits or remuneration, money pays the bills. Money provides housing, gives children clothing and food, sends teens to college, and allows leisure activities, and eventually, retirement. To underplay the importance of money and benefits as motivation for people who work is a mistake.” (Heathfield, 2006).

CONCLUSION

In conclusion, this study has shown that happiness is an emotion that is difficult for people to precisely define, even though everyone seems to have some idea of what it means to them. It was easier for students to give examples of what makes them feel happy than it was to describe the feeling itself. Most of the respondents referred to happiness as a qualitative variable rather than a quantitative one – as a condition that is either on or off rather than one that is measurable. Hardly anyone described it as a relative state, as in "more happy" or "not happy enough". On the other hand, when answering question 4, most inferred that there were degrees of happiness, just as there are different levels of productivity.

The obvious problem in studying the effect of happiness on productivity (or any other variable) is how to measure it. Another question is how to define the scope of what we are measuring. Is happiness a short-term phenomenon, as indicated by responses such as "whatever makes me smile", or a long-term and more life-encompassing one as revealed in answers like "accomplishing career goals"? In studying


whether happy employees are better workers we must also distinguish between factors that management has some control over and those they do not. There is a difference between an employee who is "happy" with his job, in terms of pay, recognition, empowerment, etc. and one that derives happiness from friends, family, sports, and so on. Also, we cannot assume that just because a person works harder or is more motivated that they will be more productive. It would seem that education, experience, and available technology would be much more important factors.

REFERENCES Abramyan. (2013). Осень как проверка на прочность! Retrieved August 23rd from Abramyan:

http://www.abramyan.ru/clauses/house/osen-pshycology/. Davis, Kenneth C. (2009). Pursuing Happiness: Surprising Facts about the Declaration. Retrieved from

http://www.huffingtonpost.com/kenneth-c-davis/pursuing-happiness-surpri_b_222334.html The Declaration of Independence. (1776). Retrieved from

http://www.archives.gov/exhibits/charters/declaration_transcript.html Getting Happy. (n.d.) Retrieved from http://www.aboutworkingtogether.com/Getting%20Happy.pdf Happiness. (n.d.). The American Heritage® Dictionary of the English Language, (4th ed.). Retrieved from

http://www.thefreedictionary.com/happy Happiness in Islam. (2010). In Moral Stories, Narratives, Anecdotes, Prophet Stories, Short Stories, and

More… Retrieved from http://www.ezsoftech.com/stories/mis10.asp Heathfield, Susan. (2006). What People Want From Work. Retrieved from

http://humanresources.about.com/od/rewardrecognition/a/needs_work.htm Myers, David G. (1993). “Want a Happier Life?” Digested from, The Pursuit of Happiness. Harper

Paperbacks. Retrieved from http://www.davidmyers.org/Brix?pageID=46 Ullah, Fariha. (n.d.) Concept of Happiness in the Islamic Perspective. Retrieved from

http://www.academia.edu/1334559/Concept_of_happiness_in_the_Islamic_perspective


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Everyone Loves a Winner…Or Do They? Introducing Envy into a Sales Contest to Increase Salesperson Motivation

Alex Milovic

Marquette University

Rebecca Dingus Central Michigan University

This paper focuses on the role that envy can play in driving sales force behavior in competitions. Envy, an unpleasant emotion that occurs when a person covets something that another has, can be used as a motivating tool to push lower-ranked salespeople to better compete with high achievers. Following a review of envy and sales contest effectiveness, potential strategies are provided for implementing benign envy while avoiding the potential negative consequences of envy. Sales managers must be careful to ensure that envy is induced properly to engage the employees while not negatively affecting the long-term health of the sales force. INTRODUCTION

Sales managers often use sales contests to increase activity and camaraderie among salespeople (Kalra & Shi, 2001). Salespeople are also receptive to contests, as these competitions lead to an increase in sales skills, in new customer generation, and in sales overall (Beltramini & Evans, 1988). Additionally, they offer salespeople a personal incentive, with prize rewards for those who “win” the contest by selling the most. When developing contests, managers should consider past successes and failures to determine if changes need to be made to keep sales contests from getting stale (Hair, Anderson, Mehta, & Babin, 2009). Methods for invigorating sales contests include revising the prize structure, changing the focus from existing to new customers, and switching from individual to team-based events (Moncrief, Hart, & Robertson, 1988).

The purpose of this paper is to discuss the idea of interjecting envy into a sales contest in order to induce motivating behavior. Following a discussion of the benefits of sales contests and a brief review of the literature on envy, we propose methods for introducing the positive form of envy into a sales contest in such a way that promotes increased competition among the sales force. We also discuss potential ways for sales researchers to monitor and examine the potential benefits of introducing envy-inducing techniques in sales contests. SALES CONTESTS AS MOTIVATING TOOLS

Salespeople are motivated by financial incentives and recognition (Moncrief, Hart, & Robertson, 1988) and are often more competitive than other firm employees (Brown, Cron, & Slocum, 1998).


Salespeople face much competition in their jobs, both externally – through competition within the industry, and internally – in the form of quotas and contests. Wotruba (1990) suggests that increasing competition in the sales environment is likely to bring about less ethical behavior among the salespeople. However, neither the work of Dubinsky and Ingram (1984) nor Verbeke, Ouwerkerk, and Peelen (1996) found a relationship between salesperson ethics and the perceived competitive intensity in their industry.

The focus of this paper examines internal competition and, in particular, sales contests. While salespeople are generally compensated with salary and a performance-based commission, salespeople can also benefit from prizes outside of their general compensation plan, such as cash or non-cash incentives. A popular form of such a reward is the sales contest. Eisman (1993) found that over two-thirds of consumer product companies and over half of all industrial goods companies have utilized sales contests. These contests aim to excite and motivate sales representatives to extend extra effort for the competitive event, in order to reach short-term sales goals (Murphy & Dacin, 1998).

The incentives offered to salespeople participating in sales contests can lead to an increase in both results and motivation. In her study of sales force contests, Caballero (1988) advises that sales contests should be used “judiciously so as to retain their impact on sales force motivation” (p. 58). She also advises that sales contests should be self-liquidating. With careful planning and implementation, sales managers are likely to experience great rewards from using sales contests.

In sales contests, a salesperson competes directly with other salespeople—often salespeople within their own sales team. The threshold of such a compensation system is the sales level of the other salespeople (Yang, Syam, & Hess, 2013). The moving threshold in sales contests—that individuals must identify plans relative to their competition, rather than relative to their individual quota—adds a level of intensity that improves results (Green & Stokey, 1983). However, salespeople competing in sales contests know each other reasonably well, and the presence of a strong interpersonal dimension in contests has been found to increase salespeople’s feelings of pride and disappointment based on their performance (Kilduff et al., 2010).

Sales contests can be open-ended, such that every salesperson has a chance of winning and the number of prizes to be awarded is not known in advance, or close-ended, with a specific, known number of top performers receiving prizes. Mantrala, Krafft, and Weitz (2004) ascertain that the open-ended format is favored because “everyone can win,” while “salespeople who fail to win in close-ended contests will be left demoralized and disgruntled” (p. 5).

While little research to date has investigated why close-ended contests may be more advantageous, Lim (2010) has explored the concept of social loss aversion in sales contests in an attempt to configure the ideal sales contest design. Using social comparison theory, Lim investigates how many winners and losers a contest should have, as well as how changing the number of winners or losers can move psychological reference points. Traditionally, marketing theory suggests that there should be more losers than winners—but Lim is the first to test this assumption empirically. By changing the proportion of winners and losers, contest designers are adjusting reference points used to make social comparisons. Lim (2010) finds that contests with a higher proportion of winners (than losers) attain more effort from participants than contests with a lower proportion of winners, especially if contestants have strong social loss aversion. As contest participants are likely to make social comparisons and fear being perceived as a loser, Lim suggests that optimal contests should have more winners than losers; in fact, the number of losers can be as low as one. Lim also notes that, when salespeople know the other contestants in the contest well, more effort will be expended when there are more winners; on the other hand, sales contests across different territories may encourage effort with fewer winners. In contests with very few winners, which are perceived as extremely difficult to win, losers may not code their results as a loss.

Given the degree of social comparison that occurs in sales contests, it is interesting to identify how contestants feel during a sales contest (while participating) and after the contest has ended (upon seeing the contest results). While importance has been recently established for investigating the emotions that salespeople feel during contests (Yang, Syam, & Hess, 2013), to the best of our knowledge, minimal research has examined the role of envy in the context of a sales contest. The relevant extant research on emotions in contests and tournaments is that of Grund and Sliwka (2005), which examines the role of


envy and compassion. Grund and Sliwka find that contest winners feel compassion, while losers feel envy, because contests always have clear winners and losers.

ENVY: COVETING THE SUCCESS OF A FELLOW SALESPERSON

One potential consequence of a sales contest is envy. Envy can be defined as an unpleasant emotion

that occurs when someone covets what another has (Hill, DelPriore, & Vaughan, 2011). Sales contests, which force sales representatives to compete directly with each other for rewards or recognition, lend themselves to negative feelings that are at the core of envy. A salesperson who is underperforming in a contest is likely to look at a higher performing sales peer with envy, as they wish that they could have similar success. What that salesperson does in response to these envious feelings depends on which form of envy they are experiencing.

Recent research has explored the theory that envy can be split into two distinct emotions – benign and malicious envy. Benign envy, sometimes referred to as “white” or competitive envy, leads to increased levels of motivation (Hill & Buss, 2008). Malicious envy, on the other hand, leads to negative behavior aimed at bringing someone down in order to make the envier feel better (van de Ven, Zeelenberg, & Pieters, 2009).

Benign envy has been found to increase work effort in a person feeling envy, as they seek to relieve the negative feelings of envy by obtaining that which is envied (Foster, 1972). This positive form of envy is also related to keeping-up-with-the-Joneses, a desire to have what others have (van de Ven, Zeelenberg, & Pieters, 2011). If sales managers can incite feelings of benign envy in their salespeople during a contest, it can be expected that motivation will improve, as those who are not doing well will look to call on more customers and increase sales volume in order to achieve results that are more in line with top performers (Crusius & Mussweiler, 2012).

While benign envy can lead to increased performance, malicious envy, the dark form of envy, can lead to actions that would not be desirable in any professional environment. These actions may include reduced self-esteem, uncooperative behavior, and even outward hostility towards a coworker (Tai, Narayanan, & McAllister, 2012). It may be difficult for a manager to determine if malicious envy is being felt by their employees. Envious feelings overall are often kept from others and seen as socially unacceptable (Foster, 1972). Sales contests are fertile grounds for envious feelings, as they lead salespeople to compare their own sales methods and successes with their peers.

Although a manager might be pleased to find out that an employee is feeling benign envy during a sales contest (as that employee would be more likely to increase effort to resolve the envious feelings), the discovery of malicious envy among sales staff should lead to actions related to diffusing negativity. If malicious envy is widespread, a manager may choose to adjust the contest in order to relieve the negative tension and promote more positive competition. Similarly, adjusting the rewards – by increasing the number of winners, for example – might reduce feelings of malicious envy while increasing benign envy, as the salespeople now consider a reward more attainable.

INTRODUCING ENVY INTO SALES CONTESTS

Adding an envious component to a sales contest can lead to a more competitive atmosphere for both

top- and bottom-performing salespeople. Envy, if added correctly to induce benign and not malicious envy, can raise the performance of lower-performing salespeople while keeping higher performing salespeople interested in the contest due to the increased competition level of the entire sales group. We propose a few techniques that a sales manager can implement in order to elicit benign envy in salespeople during a sales contest. We also note instances where malicious envy may occur, so that sales managers can monitor and adjust their motivation strategies should negative feelings begin overtaking the sales force.

A sales manager may choose to show the salespeople a list of top performers and metrics related to the contest. The list should be updated regularly to highlight leaders while spurring others to try harder


due to feelings of envy that will occur from those who do not appear on the sales leaders list. When developing this list, it is important to consider a few things in order to avoid negative behavior. Managers should consider the size of their sales staff when determining how many to put on the “top performers” list. By limiting the list to the top three to five performers, those not on the list should feel energized rather than demoralized and can adjust their performance for future contest updates. A manager may also wish to add a ‘bottom-performers’ list, though that might lead to feelings of malicious envy. Underperforming salespeople may give up on the contest or may begin to actively or passively engage in schadenfreude, taking pleasure at the suffering of others, by rooting for the top performers to fail for the remainder of the contest (Smith et al., 1996).

Additionally, managers can use prizes to elicit envy. Rather than giving out all of the incentives at the end of a contest, a manager can choose to award salespeople at different points during the contest (e.g., daily, weekly, monthly) in order to create envy-eliciting chances. Building on this, a sales manager may also create a second tier of sales incentives for representatives who are too far away from the top performers (on the original stated goals) to bother competing in the main contest for the remainder of the contest cycle. Developing smaller contests-within-contests can lead to increased opportunities for benign envy. Should there be a large gap between top performers and the rest of the sales staff, a secondary sub-contest might match sales performers who are closer in ability, leading to increased rivalry and a greater chance of eliciting benign envy among the participants.

Sales managers should also take care not to over-use envy in sales contests, as the envy “bump” (positive results due to adding envy to the contest) may be reduced over time. If the sales group experiences a certain level of turnover, then the contest can be re-used with minor revisions. If salesperson tenure is high, however, sales managers can retain envy by making contests annual and by giving gifts and awards that indicate past years’ winners. Murphy and Sohi’s conducted research on a Fortune 100 firm that used special jackets and rings to commemorate winners (1995). They found that the contest could result in self-esteem issues for underperforming sales representatives, as the gifts remind the representatives of past contest failures. Regardless of the method chosen, managers should solicit feedback from both winners and losers to see if the program needs to be modified for future contests.

From a research standpoint, there are a number of techniques that can be used to determine the effectiveness of adding an envious component to a sales contest. Researchers can measure individual performance, total sales group performance, or salesperson feelings based on introducing envy into a sales contest. Self-reported surveys can measure how effective the salesperson thought the contest was, whether or not they felt envy, what type of envy was felt (benign or malicious), and whether they found the envy component useful in driving performance during the contest. Measures conducted before the contest begins can determine what levels of inherent envy exist in each salesperson. The dispositional envy scale, developed by Bearden, Netemeyer, and Teal, is used to determine a person’s predisposition for feeling envy towards another, specifically malicious envy (1989). Managers can use this test to determine if a large portion of their sales team would be inclined to feel malicious envy, and then adjust (or choose not to hold) the contest accordingly.

Ideally, a researcher or manager can create two separate sales contests, where one group receives an envy-eliciting manipulation while a second group does not. However, it would be difficult for managers of small sales teams to create two near-identical groups, thereby leading to confounding results. Other opportunities include a longitudinal study that allows for tracking envy elicited and results over a number of years, though salesforce turnover may make such a study difficult. Researchers may also wish to see if salesforce size plays a role in the effectiveness of a sales contest that uses envy to motivate employees. Using the same contest with organizations of different sizes might also yield interesting results. Additionally, the size of the reward can be manipulated to see if there is a moderating effect of reward size on level of benign envy felt in a sales contest.


CONCLUSION Benign envy has been shown to increase motivation in a number of contexts (van de Ven, Zeelenberg,

& Pieters, 2009). By adding subtle elements of envy into sales contests, sales managers can increase positive competition, leading to results that benefit the sales team as a whole. Special care must be taken by managers to ensure that envy brought about in a contest is benign rather than malicious. Managers are looking to develop camaraderie and positive competition, not pursue options that might lead to negative feelings, added stress, and possible increased turnover. However, if envy is introduced properly (i.e., eliciting benign envy), managers and salespeople alike will be able to benefit in terms of increased work effort and ultimately positive sales results. REFERENCES Bearden, W. O., Netemeyer, R. G., & Teel, J. E. (1989). Measurement of consumer susceptibility to

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Internal Marketing’s Effects on Employee Satisfaction, Productivity, Product

Quality, Consumer Satisfaction and Firm Performance

Abhay Shah Colorado State University – Pueblo

Marketers have typically studied the effect of external marketing to consumers of the firm and its effect on firm performance. However, the role of internal marketing (to employees), and its effects on employee satisfaction, productivity, product quality, customer satisfaction and firm performance has not been studied as extensively for manufactured goods. This paper proposes a more comprehensive model of internal marketing and its effect on firm performance in the manufacturing sector. INTRODUCTION

Internal marketing was originally defined as making internal products (jobs) available to satisfy the needs of internal market (employees) so that it satisfies organizational objectives (Berry, et.al., 1976). The authors go on to add that a firm has to successfully hire, train and motivate employees to serve external customers since the needs of external customers can be satisfied partly because the needs of the firm’s internal customers (employees) are satisfied. Marketing aimed at internal customers is called internal marketing (Gronroos, 2001). However, since then, there have been a number of definitions of internal marketing and there is no unifying notion (Rafiq & Ahmed, 1993). For instance, George (1977) and Berry (1980) state that in order to keep external customers happy and satisfied the company’s internal customers (employees) should be happy in their jobs. Internal marketing’s goal is to hire, train and motivate employees so that they serve their customers well (Kotler, 1991), and to treat employees as customers (Berry & Parasuraman, 1991).

A firm should be considered as a market and marketing inside the firm is internal marketing and therefore marketing tools that are used for external customers might be used for internal customers and the field of human resource management has started adopting appropriate marketing tools (Foreman & Money, 1995). Internal marketing has also been defined as a marketing technique within an organization which creates and communicates corporate values (Hogg & Carter, 2000) and it should be considered as part of the broader market orientation concept which was originally developed for marketing to external customers, however, the same concept can also be used for marketing to internal customers (Naude, et.al., 2002).

However, Rafiq and Ahmed (1993) take issue with the concept of the employee as customer since employees may sometimes be coerced to do things in the organization whereas external customers have the freedom to buy or not buy from competing firms. To this end, Rafiq and Ahmed (1991) define internal marketing as a “planned effort to overcome organizational resistance to change and to align, motivate and integrate employees towards the effective implementation of corporate and functional strategies” (pg. 222). Shiu and Yu (2010) propose five components of internal marketing – employees as internal


customers, customer oriented employees, human resource management viewpoint, internal exchange, and the use of strategic tools. The authors’ study found support that organizational culture influences internal marketing which in turn affects job satisfaction and ultimately leads to increased organizational performance.

Internal marketing is not the same as managing human resource instead it seeks to develop human potential so that organizational and individual goals are fulfilled. A firm’s internal marketing program necessitates economic compensation of employees that encourages long term job commitment and customer satisfaction and management must communicate this by deeds instead of speech (Berry, et.al., 1976). Marketing activities require investments in employees and customers which may have a long term payoff (Evanschitzky, et.al., 2012), unfortunately, executives tend to be short term oriented and decrease investments in these activities (Graham, et.al., 2005).

Marketers have typically studied the impact of marketing investments towards external customers. However, there is very little empirical research on internal marketing’s effect on firm performance (Wieseke, et.al., 2009). Further, there is no study to date that provides a comprehensive model of the effects of internal marketing. This paper proposes a model (Figure 1) of the chain effects of Internal Marketing on Employee Satisfaction (acquisition and retention), Product Quality, Customer Satisfaction (customer retention and customer acquisition), and finally Firm Performance (profitability and sales growth).

The model has some similarities with the model of “Service Profit Chain” which was first proposed for front line employees in services by Heskett, et.al., in 1994. The missing link in the service profit chain is the service climate and investigates the antecedents and its influence in the chain (Hong et. al., 2013). However, the proposed model uses internal marketing as the independent factor that affects and sets off a chain reaction for subsequent dependent factors and ultimately firm performance. There have been a number of studies that have linked piece meal the effects of some of the components of the service profit chain, and lately Evanschitzky, et.al., (2012) studied the relationship between front line employee satisfaction with customer satisfaction and finally with firm performance. However, findings from comprehensively testing the Service Profit Chain are not conclusive (Bowman & Narayandas, 2004; Rust, et.al., 2004; Evanschitzky, et.al., 2012).

FIGURE 1

THE MODEL OF THE CHAIN EFFECTS OF INTERNAL MARKETING ON EMPLOYEE SATISFACTION, PRODUCTIVITY, PRODUCT QUALITY, CUSTOMER SATISFACTION

AND FIRM PERFORMANCE

Internal Marketing

Employee Satisfaction

-Productivity -Quality

Customer Satisfaction

Firm Performance: -Long-term Profitability -Long-term Sales growth

Employee Retention

Employee Acquisition

Customer Retention

Customer Acquisition


Internal Marketing’s Effect on Employee Satisfaction Internal marketing’s goal is not just to attract, retain and reward employees, but also to compensate

more those who are more effective and efficient by providing economic incentive plans that encourage the long-term perspective (Berry, et.al., 1976), which in turn raises employee satisfaction (Heskett, et.al., 2002). Internal marketing has been linked to job satisfaction (Ahmad, et.al., 2003; Hwang & Chi, 2005; Mukherjee & Malhotra, 2006; Shiu & Yu, 2010), work motivation (Bell, et.al., 2004), service quality (Bell & Mengue, 2002; Bell, et.al., 2004), cooperative behavior, organizational citizenship behavior and customer service (Riketta, 2005), customer satisfaction (Homburg & Stock, 2005; Koys, 2001; Wangenheim, et.al., 2007) and loyalty (Ahmed & Rafiq, 2002; Bergstrom, et.al., 2002; Hallam, 2003; Sartain, 2005). Based on the above, the following are proposed.

P1: Firms that spend more on internal marketing (as a % of their revenue) will have higher employee satisfaction than firms who do not spend as much in internal marketing P2: Firms that have high levels of employee satisfaction will attract more new employees (acquisition). P3: Firms that have high levels of employee satisfaction will retain more employees (retention).

Employee Satisfaction’s Effect on Productivity and Quality

The relationship between employee satisfaction and quality has not been studied very extensively. Most of the research that exist in this area link employee satisfaction to productivity (e.g. Heskett et.al., 1994), job satisfaction to productivity (Harter, et.al., 2002; Schneider, et.al., 2003; Bockerman & Ilmakunnas, 2012), employee satisfaction to customer satisfaction (Evanschitzky, et.al., 2012; Homburg & Stock, 2005; Koys, 2001; Wangenheim, et.al., 2007), and employee well being (happy) and job performance/productivity (Wright & Cropanzano, 2007) and with service quality (Lee, et.al., 2012). Employee satisfaction has also been linked to pride in service, customer orientation and how customers perceive the service (Johnson, 1996; Reynierse & Harker, 1992; Schneider, et.al., 1996), performance (Evanschitzky, et.al., 2012). Job satisfaction has also been linked to employee quitting behavior, absenteeism and job performance (Warr, 1999). Based on this, the following proposition is offered. However, the relationship between employee satisfaction and customer satisfaction is weak at best (Hoffman & Ingram, 1991). Based on the above, the following are proposed.

P4: Firms that have high levels of employee satisfaction will have higher quality. P5: Firms that have high levels of employee satisfaction will have higher productivity (sales per employee).

Quality’s Effect on Customer Satisfaction Better quality leads to customer satisfaction (Anderson & Mittal, 2000; Simester, et. al., 2000),

loyalty, and customer retention (Rust, et.al., 2002). Improvements in quality result in satisfied customers who in turn spread the word through word-of-mouth (Rust, et.al., 2004). Satisfied customers become repeat loyal customers, increasing the retention rate and profitability of the company (Al-Hawari, 2005; Cooil, et.al., 2007; Hogan, et.al., 2002; Liang & Wang, 2006). However, customer satisfaction and quality are sometimes, but not always, positively correlated (Schneider, 1991). Emphasis on internal processes to improve quality improves customer satisfaction, (Ekinci & Dawes, 2012).

There is overwhelming support in the literature that improving quality leads to improved customer satisfaction which in turn results in improved business performance (Bernhardt, et. al., 2000; Fornell, et.al., 2006; Lee & Hwan, 2005; Zeithaml, 2000). Service quality has been linked with customer satisfaction. Based on the above, the following are proposed for manufactured goods.

P6: Firms with high levels of quality have higher levels of customer satisfaction. P7: Firms with high levels of customer satisfaction will have higher customer retention.


P8: Firms with high levels of customer satisfaction will have higher customer acquisition.

Customer Satisfaction and Firm Performance

Customers are also willing to pay more if they are satisfied with the quality (Homburg, et.al., 2005). There are a number of studies that have found a positive relationship between satisfaction and firm performance (Kamakura, et. al., 2002; Mittal, et.al., 2005). Customer satisfaction has been found to have a positive relationship with repeat purchase and loyalty (Fornell, 2007). However, customer satisfaction’s influence on firm performance has been mixed. For instance, Anderson, et.al., (1997), Gupta & Zeithaml, (2006), Evanschitzky, et.al., (2012) find a positive relationship between customer satisfaction and financial performance, while Tornow & Wiley (1991), Bernhardt, et.al., (2000), Schneider (1991), and Wiley (1991), found just the opposite. Based on the above, the following propositions are offered.

P9: Firms with high levels of customer satisfaction have higher profitability. P10: Firms with high levels of customer satisfaction have higher sales growth rate.

CONCLUSION

This paper proposes a comprehensive model of internal marketing’s effect on employee satisfaction, productivity, product quality, customer satisfaction and firm performance for manufactured goods. This chain reaction has not been studied. These propositions can be tested using data from the manufacturing sector. For instance, internal marketing can be operationalized and measured by finding what a company spends on its employees as a percentage of its revenue. Employee satisfaction can be measured using data from Fortune and Forbes magazines who publish data of the 100 best companies to work for (this list can be used as a surrogate for employee satisfaction). Productivity and product quality of companies can also be found from sources like COMPUSTAT, Consumer Reports, etc. Customer satisfaction can be measured using data from the American Customer Satisfaction Index. And finally, the financial performance of companies can be found from their annual reports.

Managers in corporations can use this model as a whole or in part in order to increase their firm’s performance. For instance, a firm needs to have proper internal marketing strategies in place in order to increase employee satisfaction, employee retention and attract new employees. If a firm wants to increase the productivity of its employees and have higher product quality it needs to make sure that its employees are satisfied. A higher product quality will lead to satisfied customers that in turn will increase customer retention and acquisition of new customer. This will ultimately lead to higher firm performance in terms of higher revenue growth and higher profitability over the long run. The bottom line is that if a firm has proper internal marketing strategies in place, it will trigger a chain reaction which will ultimately lead to higher firm performance. REFERENCES Ahmed, P. K. & Mohammed, R. (2002), Internal Marketing: Tools and Concepts for Customer-Focused

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MetaSpace Designs LLC (MetaSpace): How Can a Lapel-ephant Stay Relevant?

Trace Reddick

University of West Florida

Michael Dwyer University of West Florida

Yurong Liu


Eric Krause University of West Florida

K. Blaine Lawlor


Trace started his small business by selling graphic t-shirts at music concerts. After familiarizing himself with the jam band market and learning that selling lapel pins was more profitable than selling t-shirts, Trace created MetaSpace Designs. MetaSpace Designs moved to not only vend lapel pins to individual consumers, but also stepped into business-to-business sales in order to buoy its position. High quality products and services yielded ever-increasing profits in all MetaSpace’s served markets. However, various obstacles brought Trace to rethink his competitive strategy and to adapt his small company to survive in this dynamic environment. METASPACE DESIGNS

The wheel is turning, and you can't slow down, You can't let go, and you can't hold on, You can't go back, and you can't stand still, If the thunder don't get you then the lightning will. (“The Wheel” by Grateful Dead).

Edgar Reddick, affectionately known to his friends as “Trace” and to his customers “Meta,” pondered

these words wafting across the breeze from a boom box in the tent next to him. He had been in Denver for four days selling his merchandise an artistic assortment of band inspired lapel pins at a Sound Tribe Sector 9 (STS9) show during its New Year’s Eve run. In fact, from a quick perusal of his books, his sales


were moving briskly and provided some confidence that this small venture could turn into something more. What originally started as a way to subsidize seeing concerts and do a bit of traveling had grown into a legitimate enterprise – filing taxes, organizing supply chains that included international partners, and developing a coherent marketing effort (see Figure1).

Over the past few years, MetaSpace had experienced tremendous growth. The question persisted: in which direction should the company turn next. In virtually every market there were a growing number of serious sellers and kids running around peddling merchandise. Trace looked around and saw the number of vendors that were plying wares much like his own had grown exponentially. “Only a few years ago there used to be me and just a few others,” he thought. “Now, it seems everyone is selling a similar product.”

Trace had ample experience in the concert vendor business – both as an up-and-comer and, more recently, as a situated wholesaler. But it had been a long and winding road that got him to the point where he no longer had to comb the crowd at concerts to find buyers. Despite his products being considered a fixture in a number of musical venues, the sheer number of people selling similar goods had multiplied to an unwieldy extent as of late. “How is MetaSpace going to continue to make money when the market seems to be getting so saturated?” Trace continued to muse. He knew he could not “stand still” for long.

FIGURE 1

METASPACE DESIGNS’ LOGO

The relative youth of the market created a number of unique challenges that confronted the organization; for example, how to formulate a strategy and deal with market demand. MetaSpace’s history, the market it served, the external environment surrounding the company, the growing competition, and how it should move forward were all aspects that needed to be carefully considered. MetaSpace knew it had mounting challenges and if current opportunities were not leveraged, the company might have to deal with potentially negative repercussions. The opportunities of this market might be better described by Phish in its song “Squirming Coil”: "I saw Satan on the beach, trying to catch a ray, He wasn't quite the speed of light and the squirming coil, it got away."

METASPACE HISTORY

MetaSpace was born from the seeds of humble necessity, the need for Trace to use his creative

talents. Trace internalized the name of Frank Zappa’s band The Mothers of Invention into his perspective on life. The name stemmed from the old saying “necessity is the mother of invention” and Trace needed to find a way to make a living and utilize untapped artistic talents. The opportunity to demonstrate these talents was discovered when Trace, a music lover and concertgoer, designed a few shirts to make a little cash while on the road. In 2008 Trace designed, had printed, and sold out of 50 t-shirts while at a show in Atlanta (see Figure 2). He went on to take a position as the general manager of a restaurant in Mississippi, but left in August 2010 to take to the road again – creating and selling more merchandise. During this time, he designed and sold patches, which supported his tour to more than ten different shows. Trace’s creativity had found an outlet and his merchandise had found a niche.


FIGURE 2 TIMELINE OF METASPACE DESIGN’S HISTORY AND ORIGIN

Trace was introduced to the lapel pin market, a product with higher margins than t-shirts and patches that was just beginning to gain popularity with fans attending these concerts. Initially, he traded for a few of these pins here and there to vend a larger variety of products, but it was not long before he took the idea and ran with it. In December 2010, Trace started MetaSpace Designs, created a website to go along with the new company, and designed and produced high quality lapel pins exclusively (see Figure 3). “When I started making patches, I was introduced to pins and there was a much bigger margin selling them. It would have been silly to not dive into that product line,” recounts Trace. At the time, there were very few people producing and selling this type of merchandise. Trace traveled to show after show in 2011 to sell his product and to gain recognition for his new company and designs. In addition to the extensive travel, he also ran his business online and filled web-based orders. As the number of designs produced and the number of shows attended increased, he began seeing sales of hundreds of pins in places like Denver, Atlanta, Chicago, New Jersey, New York, and California. The design creativity that had brought him stumbling into the market was monetarily rewarding in earnest during this time.

“I remember on my first ten show run with my merchandise,” Trace explained. “I was at the last show of the tour at Red Rocks in Colorado. I had sold nearly 400 patches up to this point and a handful of pins. Remember, at this time I had just been introduced to pins and had not yet had the opportunity to test those waters. So after the show I was at the exit with my patches, people were buying up the patches so fast that my backpack was full of cash. I could barely find the patches in there! That's when I knew I was in for a ride.”

As word of MetaSpace spread throughout the concert-going community, website sales increased and requests for wholesale orders became more frequent. By this time there were also many more competitors joining the lapel pin market at shows around the country. This newfound and aggressive competition among show vendors became disenchanting to Trace. In some cases, he would even see competition from vendors selling his own pins! In an effort to increase his competitive advantage, Trace pursued and gained connections to an overseas factory to produce pins less expensively. He also intended to enhance his business acumen and, hopefully, profitability in future endeavors by pursuing a Master’s in Business Administration.


FIGURE 3 LAPEL PINS PRODUCED BY METASPACE. FROM LEFT: UWA (A COLLABORATION

WITH YOSHINORI KONDO) PIN, NAUTILUS PIN, GROW PIN, AND APPA THE DANCING ELEPHANT PIN

By late 2011, MetaSpace had slowly moved out of the vendor market and began focusing on online sales of custom and wholesale lapel pins, going to select shows as a vendor. In 2012, the organization saw revenues double from 2011. Despite this substantial growth, Trace remained the company’s sole employee and continued to run all aspects of the one-person business himself. To keep up with the needs of a growing company, Trace outsourced some of the design work when necessary and adopted more efficient business tools to make online order receipts and shipments easier. With increasing competition, the company needed to continue to improve and adapt using Trace’s creativity and business know-how to stay ahead in the market and plan ways around these obstacles.

MARKET SEGMENT AND TRENDS

The niche market that MetaSpace served was born from the jam band music scene that had been

growing steadily since the rise of the Grateful Dead in the 1960s (“Jam band,” 2013). Since the mid-1990s, the number and popularity of jam bands had increased tremendously. During this time, bands formed their own music festivals, which spurred other festivals to be introduced throughout the country featuring many of these jam style bands. Some of the most popular jam bands included names like Phish, Sound Tribe Sector 9, Disco Biscuits, String Cheese Incident, and Widespread Panic (“Jam band,” 2013). Although the names may have sounded funny, the opportunities to profit from these markets were very serious.

Bands and fans alike were both able to reap the profits from shows in different ways. The majority of MetaSpace’s typical customers were fans that followed certain touring jam bands or that attended music festivals across the country. Some of these fans chose to sell different products in order to fund their trips and were viewed as vendors. These vendors were in need of inexpensive promotional items for resale. Initially, the vendor market was flooded with t-shirts and posters, but came to include anything from patches to homemade goods to lapel pins. Many of the lapel pins sold in this market were band themed in order to appeal to fans of particular bands or shows. The majority of MetaSpace’s revenue came from pins sold to individual consumers (B2C) by means of its website and by vending at select shows


throughout the year. The company did have some business-to-business (B2B) sales, i.e., vendors that purchase large quantities of pins at discounted prices for resale at shows.

The jam band market for vended merchandise was significantly affected by the time of the year. The summer months (June and July specifically) saw a far greater number of jam band shows and festivals than the other months throughout the year. While some vendors got their wholesale orders in early, managing order fulfillment was still important in order for companies to prepare for the surge in business at that time of year. In this way, wholesale orders tended to fluctuate fairly drastically during the year.

From 2010 to 2012, a boom in competition among pin makers shaped the market landscape among vendors of these goods. In 2009, when Phish ended their five-year hiatus, there were only a small handful of pin makers selling their collectible badges at shows. At that time, pinning was not unheard of, but pins were certainly not a commonly sold lot good, a merchandise item found outside of concert events. However, a new trend was birthing right out of the touring culture. As with any successful business idea, there were some entrepreneurial minds that wanted a piece of the action. Low costs and margins on pin sales pushing upwards of 1000% attracted numerous individuals to the hustle. Someone could easily have about any art or design translated into an enamel pin for a couple of dollars per unit. By the end of 2012, what started out as about five or so pin makers had turned into a force of 200-plus pin makers all in business for themselves. As competitive pressure began to mount, the margins on pin sales began to markedly decrease.

Free websites and social media provided a sales channel for new entrants. Facebook groups acting as a forum for collectors and sellers alike began popping up. These online groups were a place for collectors to seek new pins and for sellers to advertise and announce new releases. Because of the need for virtually no start-up capital, the stage was set for a massive influx of vendors. An individual (with little to no graphic skills) could have had a graphic made and offer pre-sales of the pin on Facebook. The order of pins would only be produced once enough presales had been made to finance the order. Sometimes novices in the business did not make enough pre-sales to fund their project and kept the money without refunding it to the customers. The focus of many sellers was to push merchandise by whatever means possible, a practice that often led to a less than pleasant online user experience via their websites.

As it became increasingly effortless to conduct business in the marketplace, the massive inflow of pin dealers led to an increased dilution of market share. During the first few years since MetaSpace’s entry into the pin market, the average price of pins had risen from $10 to $15, and although pin prices were rising, price competition was still prevalent. New entrants, who had less experience and a limited knowledge of the market, lacked price confidence. The new entrants entered the market with the perception of a mad cash grab and then realized that there was more to it than meets the eye. A sense of panic overcame some individuals, and they opted to sell their pins for a little over cost just to get out from under the inventory. Some vendors responded with lowering their prices while others remained steadfast. MetaSpace chose the latter and continued to sell high quality, creative products at a price it chose. The company created a price strategy that would allow the wholesale of its pins and maintain over a 400% markup, thereby, allowing vendors to sell the MetaSpace pins for more than double the wholesale rate. For example, MetaSpace would pay $1.75 for each pin and sold it at a wholesale discount of $7.00, which would then be marked up for resale to a typical market price of $14.00 by the vendor. At the same time, via the retail website channel, pins would be sold at standard retail prices, but the end-user benefited because the cost of shipping was not factored into the price for each pin, unlike most of its competitors. The company charged a flat shipping fee, which resulted in an online customer seeing much more competitive pricing and created an added incentive to purchase pins in greater quantities, as the shipping cost decreased per each additional pin ordered.

Despite this marketing plan, price reductions were typically sought out because of the hawker mentality of concert vendors and the haggling, “I’m broke” attitude of customers. In addition, the lack of coherence in the overall market of structured price points left vendors at a disadvantage in presenting a solid price. MetaSpace decided on a cost-plus basis to start, and driving down production costs as much as possible allowed it to compete. “I know buyers are sensitive to price. I also know how much money I want or need to make per piece in order to run and grow the business. Instead of charging a high price for


every pin, I would have different prices for different pins and I feel like its conducive to better sales,” explained Trace.

Executing business in this way kept prices low enough to be both competitive and attractive to the market. Furthermore, buyers of its goods were varied, with no one buyer representing a large portion of the company’s total revenue. Positive word-of-mouth reviews and a fastidious approach to customer relationship management had driven a great deal of the company’s success and had set it apart from its competitors. Implemented practices included swift response times to customer communication, next-day order shipment, and a favorable shipping price structure. “Really concentrating on the customers’ needs makes the difference in this market,” described Trace.

In the two years since MetaSpace entered the jam band lapel pin market, the demand for custom lapel pins at shows around the country had increased significantly, and with it, the number of producers and vendors selling similar items. Time had passed and the market was undergoing change. “People selling wares at shows is nothing new. That's how people that followed the Grateful Dead in the 60’s were able to do so… They made something Grateful Dead themed and sold it for gas money. Relative to pins, when I first started, I could count on one hand how many people I would encounter selling pins and now, within just a couple of years, I encounter easily 15 to 20; I often think to myself ‘When is this trend going to die?’” Figuring out what phase the market was in was a challenge for Trace.

METASPACE’S WORLD

The environment surrounding MetaSpace had changed in a number of ways since it first came on the

scene. Most notably among these environmental factors were the recovering economy, increased upward pressure on costs because of an inflating Chinese Yuan, and increased wages of labor in China (China Briefing, 2013). Another factor contributing to the turbulence of the market was the crackdown on copyright and trademark infringement by the bands’ labels, plus the increasing movement of the market to the online marketplace.

In the largest sense, in 2010 the economy had begun to rebound if only incrementally. As a result, people tended to have more disposable income to use for attending concerts and purchasing marketed souvenirs. Because of the nascent turnaround in the economy, an upswing in the total fortunes of concert attendees and vendors occurred. Interestingly, concert attendance had not sagged to any noticeable degree even during the recession. But because of the relative originality of the lapel pin segment, it was difficult to judge how much of an impact the recession had.

MetaSpace was linked to suppliers in China, and changes in the Chinese economy had a dramatic impact on pricing strategy. Lapel pin prices had risen steadily as a result of increased costs. Manufacturers overseas were faced with heightened pressure to increase labor wages and improve working conditions because of the burgeoning middle class in China and increased domestic consumer spending (China Briefing, 2013). Beginning in September 2011, Trace chose Metal Gifts Unlimited, one of the hundreds of manufacturers located in Guangdong Province, China, to be MetaSpace’s sole supplier. Inexpensive labor and material costs in China, as compared to those in the U.S., had led the company to contract with the Chinese manufacturer. However, China was no longer the low cost sourcing country it once was. Inflation, wages, and currency appreciation were three major factors that drove up the costs. Further, there was always the looming concern of the five-week lead-time associated with placing custom pin orders because of the distance of producers from the served market.

Additionally, the Chinese consumer price index, commodity prices, and labor costs had risen sharply. The minimum wage in China had increased annually by 12.6% over the past two years, with double digit increases anticipated to continue for the next five (China Briefing, 2013). Appreciation had exacerbated cost pressures as well, particularly for these companies selling goods to the U.S. market. Consequently, MetaSpace had increasing expenditures from its overseas manufacturer and struggled to estimate lead-times for its custom pin orders. These lead times were sometimes bumped by larger, more important orders to the manufacturer. These factors undermined lead-times by pushing them out from the normal three weeks to up to five weeks or longer.


Meanwhile, several alternative Chinese production facilities were available for contract, prompting MetaSpace to explore alternatives. The ability to choose among producers lent some strength to the company’s ability to control its costs from suppliers. However, with quality being such an important aspect of production, changing suppliers and risking its quality-in-product could have proven disastrous. Fortunately, the demand for several small orders, ranging from 100-200 pieces made by Trace’s clients, allowed MetaSpace to enjoy similar prices to larger firms which generated fewer, larger quantity orders. While MetaSpace could not purchase huge orders at once, smaller orders of 100 to 200 pins were placed with high frequency, which gave it some influence through its supplier relations.

In regards to the local supplier option, domestic manufacturers were limited by environmental regulations and demands by the labor pool. Since the cost of living was much higher in the United States than in Asia, wages were a much larger portion of the manufacturer’s expenses. This variable alone was directly responsible for a significantly higher price for lapel pins to be manufactured in the U.S. Additionally, stateside manufacturers could not make cloisonné pins, which were considered to be of the highest quality. This process was largely absent in American manufacturing because of government regulations that deemed the byproducts of the process dangerous to the environment. In addition, domestic manufacturers would not make precise molds for pins. These producers would make only basic shaped molds with content designed inside the shape. This particular aspect of domestic manufacturing was extremely limiting to artists and designers alike, especially for MetaSpace, which prided itself on creativity and its ability to break out of the literal and figurative mold. For this reason, Chinese manufacturers were a superior option, despite increasing costs.

A movement by concert promoters and bands’ labels to crack down on copyright and trademark infringement had also impacted the lapel pin business. What was originally benignly neglected, because of the limited number of purveyors and categorization as “fan art,” had turned into a growing and ever more noticed market. As a result, some owners of the infringed upon intellectual property sought to protect their investment by issuing cease and desist notices. MetaSpace had avoided infringing on any intellectual property, but the negative perception of the segment in which the company operated had caused problems when seeking sales venues at concerts or festivals. In other words, a few bad apples spoiled it for the bunch. This particular problem could have ultimately proven to be systemic in that there were a growing number of stringent rules that were enforced at concerts and music festivals that, in the end, could have driven up transaction costs. At worst, lapel pin vendors might have been prevented from accessing their target market at festivals if the relationship worsened.

The operating environment was very much affected by the growing prevalence and abundance of artistic offerings in MetaSpace’s lapel pin category online. Originally, the market functioned fairly collegially, informally, and almost exclusively at shows in-person; but in typical market lifecycle fashion, with more entrants and rapid growth the market turned into a state of chaos very quickly. As a consequence, the use of online distribution networks had lowered barriers to entry to a great extent and increased competitive pressure. Also, because of virtually no coordination or even interest in ‘friendly competition’ amongst one another, the online market had nearly broken into a complete state of disarray. This disarray was largely driven by the limited conceptualization of pricing strategies by the competing members. The competition seemed to act as though they were islands unto themselves. They implemented pricing strategies that were all over the spectrum, which made the gathering of market intelligence an incredibly arduous, if not impossible, task.

METASPACE MOVING FORWARD

The position of MetaSpace was in the wholesale and custom design of lapel pins to festival vendors

and storeowners for resale. The company was known for its high quality products, customer service, and unique designs. This was evidenced by referrals from current customers. It was not uncommon for MetaSpace to receive emails from new prospective clients stating they know MetaSpace made some of the best quality pins and backed up the product with reputable service. Trace recounted a story from an chance meeting with a fan in 2010. “I was walking from one stage to another with my pin board out and


this girl was following me and eventually stopped me to look at what I had. I introduced myself and she was almost smitten to learn that I was MetaSpace. She told me she pretty much stalked my Facebook page and website daily. I felt like a rock star.”

MetaSpace used the latest technology in graphic design software and incorporated market insight sharpened by MBA courses, experience, and time into each pin produced. The latest technology allowed MetaSpace to take full advantage of its native creative talent. Further, the company retailed, wholesaled, and took custom pin orders through one of the most comprehensive websites in the market. “I feel a lot more confident in what MetaSpace can offer and do as a company. I definitely feel like we could branch into other segments of the market – maybe even a spin-off company."

MetaSpace was registered in the state of Florida as an LLC. Although the company went to great lengths to avoid infringing upon any copyrights, the advent of more underground activity in the market and under-the-table pin dealing had put the industry under the microscope by many of the larger touring acts. These bands requested stricter definitions of copyrights in an effort to combat the rise of “pinfringement” as the market called it. By filing as an LLC, the owner and sole employee Trace had separated his business position from his personal position, granting him certain protections in an environment where “guilty until proven innocent” seemed to be the predominant way of thinking.

In response to the increased number of competitors, many of the first movers had chosen to diversify their offerings. As a direct result, MetaSpace offered customized lapel pin services and dabbled in apparel like hats and shirts utilizing its design skills. In the company’s custom pin segment, businesses and/or artists could have their own design made into a lapel pin. MetaSpace performed all of the necessary graphic design work to the customer’s request and approval. Then, the company contracted a supplier to have the pins produced. The sales cycle for custom pins was about one week from initial request to invoicing and carried a profit margin of close to 50%. Production took another three weeks. This segment was beneficial to the business because of the close to zero financial risk involved. The addition of this segment in 2012 brought in over $18,000.

MetaSpace began quite informally and was organized as such. Trace always knew he needed to keep good records of his business activities, but he took a “let’s cross that bridge when we come to it” approach. The result is that only basic records were able to be compiled in 2011 and 2012. No records exist for 2010. The online retail pin segment, thus far, had proven to be the most successful business segment in terms of total profit. Online retail pin sales resulted in nearly $23,000 in revenue in 2012. However, this segment might not have been the most profitable or led to the company’s success. More indirect costs were allocated to the online retail segment since the higher revenues could cushion the expenses. On-site retail, by the numbers, indicated the greatest area for success. There were fewer costs associated with selling on-site; however, opportunities to engage in this sales channel were limited.

TABLE 1 METASPACE DESIGNS’ SELECT FINANCIALS BY BUSINESS SEGMENT

Wholesale % Custom % Online Retail % On-Site

Retail % Total %

Revenue $14,647 100 $18,773 100 $22,844 100 $1,804 100 $58,068 100 COGS $3,222 22% $9,754 52% $2,741 12% $180 10% $15,898 27% Gross Margin $11,425 78% $9,019 48% $20,103 88% $1,624 90% $42,170 73%

Shipping $399 3% $295 2% $1,371 6% $0 0% $2,065 4% Seller Fees $366 3% $469 3% $571 3% $0 0% $1,407 2% Misc. $200 1% $0 0% $1,400 6% $214 12% $1,814 3% Profit $10,459 71% $8,255 44% $16,761 73% $1,409.60 78% $36,884 64%


Table 1 shows MetaSpace’s select financials by business segment in 2012. For internal accounting purposes, only direct costs were reported in this table with exceptions made for the specific sales channels, which are unique to this market. As a result of high costs, low revenues, and infancy of the business, MetaSpace took a $9,372 loss in 2011. From 2011 to 2012, revenues increased 166% to $58,068. In 2012, MetaSpace actually turned a profit! The net profit margin as a percent of sales improved from -48% in 2011 to 64% in 2012. However, even with higher revenues, MetaSpace incurred more costs to grow the business such as buying new design software and beefing up its inventory levels. In the online retail segment, miscellaneous expenses of $1,400 consisted mostly of Facebook marketing campaigns and website development and hosting. Miscellaneous expenses of $214 in the on-site retail segment accounted for banners, tables, and lighting to increase exposure and appeal at venues.

The primary strategy for 2012 was to push sales. Trace said, “I did not force products down people’s throats, but I certainly figured out what was most important to my clients and how to convince potential clients why buying my products was better for their wallets than buying someone else’s. The fact of the matter is that it was better for my customers.” Much of the growth from 2011 to 2012 was attributable to MetaSpace’s greater focus on selling the custom design lapel pins and Trace’s wholesaling of his own designed pins. In this way, the company attracted more and more customers who were willing to spend money shopping online for products. However, the fact that a new business was able to turn a profit early, in only its second year, signaled positively in terms of number of sales per day and the considerable markup that took place for on-site sales.

CUSTOMER RELATIONSHIP MANAGEMENT

In the beginning, the Trace would walk around venues hosting the concerts with the only two wares

for sale patches for a band called STS9 for sale. This type of sales strategy was implemented until late 2010 when pin dealers began sprouting up, and Trace decided it would be more rewarding to wholesale his pins instead of competing with other vendors. The Internet and Facebook proved to be very solid channels for marketing and creating awareness and sales. Internet and Facebook were virtually the only two means of business for much of 2011 and 2012. In the beginning of 2013, Trace linked up with a sales partner and began vending legitimately onsite at different festivals. He was no longer selling from a backpack, but from a venue sanctioned sales booth. These new formalized channels proved to be the most successful avenues for retail sales that MetaSpace had ever experienced in terms of being able to interact with the customer.

Since its inception, Trace had focused on MetaSpace’s customer service as a point of differentiation. Emails were returned within 24 hours, if not within a few hours, of receiving them. MetaSpace placed an emphasis on fast and efficient order fulfillment, shipping orders next day so the customer received them within a few days at the most (with the exception of custom pins) and provided an automatically generated tracking number that was emailed to the buyer. When shipping retail pin orders, the firm set itself apart by providing unique packaging to the customer, a round metal tin with a company label on top. This metal tin not only helped with advertising for the company, but also decreased the likelihood that a pin would be broken during shipping and provided the customer with an unexpected value-added complement to their purchase. Plus, word-of-mouth proved time and time again to be a massive determinant in acquiring new buyers. Trace’s consistent focus on enhancing the customer’s experience through whatever means he could truly helped make the startup a stronger enterprise.

MetaSpace was aware that the long-term potential in the consumer lapel pin market was extremely limited. In the concert scene, pins were only a trend that would fade out in the coming years. In order for it to grow to a level that would yield greater profits and continue to allow the company to prosper, the company considered expansion into new markets via new sales strategies. As it stood, the product diversification of the company was not long-term. Success with the concert and festival-going crowd depended on product availability and consumer attraction; however, the company was considering making inroads to penetrate a broader market base instead of serving many smaller niche markets. The firm considered using its product line and suppliers as a springboard to create a new company that sold


custom metal promotional products such as key chains, lapel pins, cuff links, coins, bottle openers, etc. The new company would cater to markets that were more sensitive to quality than price. “I also have a genius idea to open another separate company that would cater to the price sensitive market so I can capture everyone.” Trace chuckled and continued to say, “No customer-type should be excluded from the breadth of my vision and ideas.” In this way, MetaSpace had far greater potential for larger market access along with a larger clientele that would bring higher revenue transactions by leveraging its customer relationships. The company was poised to adapt to these considerations; however, what challenges remained and on what strengths to capitalize was a matter of some head scratching for Trace.

CHALLENGES FACING METASPACE

Trace looked at his most recent artistic vision come to life, a belt buckle encrusted with precious

stones and made of precious metal crafted into a flowing form. With the music from the festival dancing across the breeze, he smiled to himself because his success with MetaSpace had allowed his company to grow into this new market and begin to establish others. However, he knew that any advantages enjoyed today might be coming to an end, and he had to be aware of any potential opportunities that might be just over the horizon if he were to continue growing and developing his company. He knew he had his MBA training to fall back on, but often that only allowed him to see what was going wrong with how the market functioned. Still, he knew he had an edge against most of his competitors and planned on staying ahead of the game – like he had since MetaSpace began – all the while trusting his creative energies.

In the meantime, Trace also understood he had a number of things to deal with. For instance, he had to keep his traditional lapel pin segment up and running because it created a bridge for his new products. However, there were numerous challenges that were commensurate with continuing to operate in the lapel pin segment. MetaSpace’s current clients were not what Trace would describe as “ideal.” Additionally, Trace wanted to branch out of the jam band scene. However, he also wanted to stick with MetaSpace Designs and continue to play a role in the jam band space, but he felt there were unsettling limitations to his success. So what should he do to deal with the old challenges and the constant threat of the up-and-comers who created seemingly systemic chaos? MetaSpace was totally malleable with arguably a great deal of promise, a relatively large customer base, and a strong marketing/networking approach; yet where should the company go from here and how does it get there? How should MetaSpace leverage Trace’s creativity in the most effective way?

As Trace pondered these questions, while he was packing up his wares and thinking about getting back to the hotel, he heard the familiar lyrics of the Grateful Dead’s “Scarlet Begonias:” “Once in a while you get shown the light, in the strangest of places if you look at it right.” He knew he had already found a business opportunity in one of the strangest of places but hoped that he could soon discover the next “light” that would lead to continued success for himself and for MetaSpace Designs.

INSTRUCTOR’S MANUAL

Edgar (Trace) Reddick started his small business, MetaSpace Designs, in 2008 by selling graphic t-shirts at a jam band concert in Atlanta. After he became more familiar with the jam band market, Trace learned that lapel pin sales were more profitable than t-shirt sales. The company focused on selling band-inspired lapel pins in musical concert venues led and operated by only one person, Trace himself, through the period 2008-2013. As with any new opportunity, the market gained greater recognition as lapel pins grew in popularity. Further, market potential coupled with low-barriers to entry created an environment where MetaSpace struggled with a perpetual onslaught of new competitors. As a result, MetaSpace Designs stepped into business-to-business (B2B) sales in addition to sales to individual consumers (B2C). Armed with high quality products and services, Trace had achieved ever-increasing profits in all MetaSpace’s served markets. However, obstructions, such as more competitors appearing in the market, ever more demanding customers, and upward price pressure by suppliers, created challenges for MetaSpace to survive and thrive within this marketplace. Customer relationship management, though a


primary focus of the company, would not be the only thing to save MetaSpace from other players that ate away at market share. In order to overcome these obstacles, Trace thought it was time to change the competitive strategy and to adapt so his small company could survive in this dynamic environment. What should Trace do to take his one-person operation to the next level? Are there specific strategies that might help MetaSpace weather the chaos of a new market? Should Trace concentrate on B2B or B2C? Can MetaSpace Designs grow from a small company to a larger one with proper strategy implementation? Will Trace still be able to hang out at shows and have fun? COURSES AND LEVELS WHERE CASE CAN BE USED

This case can be used in an entrepreneurship class at either the undergraduate or the MBA level. It can also be used in a graduate or undergraduate strategy class. If used within a Strategy class, it is positioned well for a discussion of strategy implementation. However, it can also be a strong example of the identification of strategy analysis and the impact of a rapidly changing environment relative to one company dealing with a growing industry. LEARNING OBJECTIVES • Understand why entrepreneurship can be very volatile. • Gain experience on how one company within an industry can outperform another and assess the

reasons behind the situation. • Apply strategic tools to identify problems and opportunities. • Develop strategies to influence the market and to improve profitability. • Implement a strategy implementation plan. THEORY APPLICATION

The case’s solution requires students to understand Resource Based View (Barney, 1991) and Porter’s

(1979) competitive forces along with other information contained within strategy texts. A footing in industrial ecology and symbiosis helps extract a better understanding of firm interrelationships in this case. Furthermore, understanding the relationship between customer relationship management (Davenport, Harris and Kohli, 2001) and technology grounded in literature helps to develop key components of the case (Zeng, Wen and Yen, 2003).

RESEARCH METHODS

The information from this case through primary research by interviewing the owner of MetaSpace. The information was not attached, as it had been transcribed within the case. A copy of the transcript of those interviews is available upon request.

DISCUSSION QUESTIONS

1. Is this a successful business? Why or Why not? 2. What competencies does this company possess? 3. How can this business remain sustainable? If you were the owner of this company, what would you

do? Why do you think that will work? 4. How would you implement that plan? Answers to the questions are shown in this instructors note. In addition, once you get to question three, a guide is provided on how to distinguish between an “A” or a “B” student.


SUGGESTED TEACHING APPROACHES

Get the students to read the case and then ask them what they would do if they were Trace and why they feel that action would give them a competitive advantage. Get them to complete a general environmental analysis, a five forces analysis, and a value chain and resource based view analysis. With this information in hand, each student should be able to individually come up with problems and recommendations. The student should be thinking about how to help MetaSpace get to the next level, which would include 1) seeing growth in both revenue and profit in the near- to long-term, taking into consideration the individual market segments and 2) how to promote and enhance its marketing effort in a field dominated by a seemingly perpetual onslaught of new entrants.

Within the classroom setting, have the students discuss their findings within their groups. After a short individual group discussion, have the groups present their findings to the rest of the class. A student’s creativity has no limit to overcome these challenges and identify opportunities, albeit limited to some extent by the relative size of MetaSpace. Also, it is easily discernible that MetaSpace is worth the effort because of its dramatic turnaround from loss to profit in merely one year. Furthermore, a natural growth should be identified by the students from a guy hawking wares at a concert to a legitimate business operation on the upswing.

At the end of the discussion, provide them with information on the update to the case and then have another discussion. The scope of this analysis will also increase the reader’s understanding of how MetaSpace decided to change its marketing course through the rollout of a new website and the addition of new support and market information technology.

QUESTION 1 – IS THIS A SUCCESSFUL BUSINESS? WHY OR WHY NOT?

To fully investigate this question, requires a thorough investigation and analysis. The student should be able to investigate the general environment (1.1) and also understand and assess the impact of the industry environment – 5 forces (1.2). In addition, the student should be able to understand financials and determine how the financials are impacting the organizations (1.3). Also an understanding the organizational competencies is also an important consideration. Organizational Competencies are addressed in Question 2. 1.1 The General Environment

MetaSpace Designs’ business revenue was positively affected by bull economies because more disposable income was available to the general population to allocate toward these types of goods. Many concert attendees were present to escape from their daily routines and enjoyed purchasing and looking at the various art and goods that were available at shows. Many thousands of dollars of sales were generated through these vendors at each show.

MetaSpace Designs worked on a global level. Albeit small, the business had relationships with overseas manufacturers and shippers in order to cater to the needs of clients. Furthermore, these relationships allowed the small enterprise to accommodate all types of custom requests. One example of a technological advantage was graphic software. The software allowed the firm to create complex and detailed images with ease that later would be manufactured by the firm’s overseas supplier.

There were limitations by which MetaSpace Designs had to abide. Bands and other artists protected their intellectual property with copyrights that could not be infringed upon. Examples of copyright infringements were images with the likeness of members of the band, the name of the band, all logos and album cover art, and recently the dates in combination with the city of the event had become protected. As such, MetaSpace had to work to ensure that it remained above board, as it had in the past, in order to remain ethically viable in the market.

1.2 Industry Environment (5 Forces)

In relation to five forces, barriers to entry were low. All an individual needed to enter this business


was to have Internet access and a Facebook account. An individual with little to no graphic skills could have the graphic made and offer pre-sales of the pin on Facebook. Once they had enough presales to finance the order, then the individual would submit the order of pins to be made. The company differentiated itself by maintaining a professional and reliable reputation that led to a portion of its success. MetaSpace never left an order unfilled.

Competitive rivalry was high. It had increased at an alarming rate since 2010. Selling conditions online via social media networks were borderline cutthroat. Rookie pin salesmen were often not confident in their prices and when a design did not sell as fast as originally thought, the individual would try and sell the pins very inexpensively. This behavior by sellers would affect the market in two ways. If the individual felt that they had to sell their pin at an incredibly low price that person might exit the market and not make another pin. This quick exiting negatively impacted the market because it decreased the overall value of the goods and perpetuated a commodity-like perception of lapel pins. Ultimately, the shady dealings of some lapel pin dealers undermined the more creative designs’ values. Regardless, for every salesperson’s exit there were many more that replaced them.

The threat of substitutes was medium. There were a few substitutes for pins at festivals and on the Internet. The more experienced vendors knew that pins were unique. However, other vendors chose to also sell t-shirts, posters, and patches. Shirts and posters were a mainstay of merchandise items available at venues and online for a long time (before the Internet even existed). Pins had recently become the encroaching item on the other staple goods suggesting that pins by themselves were unique and without substitutes. However, in the memorabilia category all goods competed.

The power of suppliers was medium to high. This might have put companies like MetaSpace at a disadvantage. Overseas suppliers had clients that ordered in large quantities. Buyers of only 100 or 200 units were viewed as low priority and on occasion would have their order bumped to the back of the line in order to fulfill the request of more profitable clients. MetaSpace Designs had been able to limit supplier’s power to some extent through increasing its number of purchases. The company arranged a high quantity of low-cost unit orders, thereby creating itself as a high-standing, revenue-generating client of the supplier. Although MetaSpace had created a close relationship with its primary supplier, the company was not immune to increasing labor rates and inflation overseas.

Buyer power was low. MetaSpace Designs’ client base was comprised of many individuals. No one client or customer of the company provided a tremendous percentage of revenue (Porter, 1971). Over the firm’s lifetime, it had learned the value of the time and the work put into running the business and did not allow customers to sway from the stated price. The threat of backward integration was practically eliminated because MetaSpace’s unique designs were its own and could not be [legally] copied. However, to stay in business, it was critical to meet the needs of individual customers.

1.3 MetaSpace Financials

TABLE 2 METASPACE DESIGNS’ SELECT FINANCIALS BY BUSINESS SEGMENT

Wholesale % Custom % Online Retail % On-Site

Retail % Total %

Revenue $14,647 100 $18,773 100 $22,844 100 $1,804 100 $58,068 100 COGS $3,222 22% $9,754 52% $2,741 12% $180 10% $15,898 27% Gross Margin $11,425 78% $9,019 48% $20,103 88% $1,624 90% $42,170 73%

Shipping $399 3% $295 2% $1,371 6% $0 0% $2,065 4% Seller Fees $366 3% $469 3% $571 3% $0 0% $1,407 2% Misc. $200 1% $0 0% $1,400 6% $214 12% $1,814 3%

Profit $10,459 71% $8,255 44% $16,761 73% $1,409.60 78% $36,884 64%


Table 2 showed the MetaSpace Designs’ select financials by business segment reproduced from the case itself for referencing ease. As a result of more products sold in 2012, revenues rose an incredible 166%. This dramatic turnaround in financial performance also came from a broader variety of products, strong customer service, higher quality lapel pins, and sophisticated marketing approaches. In many ways, Trace’s inherent agility led his business to seize upon opportunities that other competitors were totally unaware.

In regards to the bottom line, net income increased dramatically from a loss in 2011 of roughly $9,000 to a profit of $36,884 in 2012. This increase in net income demonstrated that MetaSpace Designs was walking away from a business in its infancy and moving forward to a more secure, long-term position. However, this dramatic increase in the bottom line suggested that both a learning curve had been achieved and that financial management had become an important issue for the company. Furthermore, MetaSpace was finding itself in the position where it needed to start to pay attention to the individual market segments it served within the pin category. In fact, Table 2 was developed after the company recognized the need for better market segment identification.

One of the single most important aspects to developing a marketing plan for MetaSpace was to take into account which of its segments was performing the best in regards to its individual profit margin. Information within Table 2 clearly shows that the custom segment was the poorest performer. This finding is largely predicated on the fact that custom pins have a much higher cost of goods sold (52%) than the other segments, although a look at the pricing scheme should also be considered. However, as was mentioned in the case, the custom segment was a fairly new market for MetaSpace and the other segments also accounted for substantial revenue gains in 2012.

On the other hand, on-site retail would appear to be the strongest segment by profit margin percentage (78%) followed by online retail and wholesale. On-site venues in the region were time consuming and difficult to organize. While the profit margin percentage may look positive, the time spent and difficulty transporting and setting up/breaking down for these shows might eventually outweigh the benefits. However, on-site vending was important if aggressive growth in this segment was planned. Online retail orders made up the greatest revenue percentage of all segments and showed a strong return. Order fulfillment involved more time spent per dollar earned because these were typically lower quantity orders. Wholesale orders tended to be less cumbersome due to larger orders placed, designs already developed, and marketing effort undertaken by others on behalf of MetaSpace. In effect, wholesale orders were simply money in the bank with little effort on the part of Trace. Since MetaSpace remained largely a one-person show, the wholesale segment increased the company’s marketing reach without MetaSpace having to raise a finger. Even with the discounts offered to vendors who buy wholesale, the segment was still an important part of the business.

As was mentioned before, all demand in the market--whether business-to-business (B2B) or business-to-consumer (B2C), online or retail – was important in the overall marketing picture for MetaSpace. With that in mind, MetaSpace might have endeavored to use its brand image, as discussed as a sustainable competitive advantage earlier, to its benefit by shifting effort away from the other segments to focus on the custom segment on one hand and the wholesale/online/on-site on the other. Later, in the recommendations section, this suggestion will be explored as MetaSpace would be split into “two” enterprises that make the marketing approaches more salient to the consumer – one up-market and the other in the concert flow (down-market). As of the time of this analysis, MetaSpace was caught trying to do all these things at once because that was historically how it had grown. No matter what, the common denominator has been lapel pins and those pins remain an important outlet for the company’s creative strength.

As MetaSpace grew, financing that growth was an area that required special attention. In the near-term, internal financing would be necessary for any asset growth initiatives. Internal financing was money that came from within the company, rather than from external sources such as loans or equity issues. The incoming profits from MetaSpace Designs’ operating activities had enabled the venture to grow organically. Increasing revenues and cutting costs were the most important ways to apply internal financing methods. While strength could be found in the agility of MetaSpace Designs’ size, an issue


would arise when the company would need a large cash infusion to take advantage of a growth opportunity. MetaSpace was poised to make at least some progress in achieving modest asset gains if it could keep its costs under control. In order to have better financial performance in the future, MetaSpace Designs should focus on long-term solvency, which is “a measure of the firm’s long-term survival” (Peavler, 2013). Paying attention to the higher costs and trying to reduce them as much as possible would help MetaSpace Designs survive in the long-term. However, the company’s ability to secure debt financing remained untested and the presented revenue levels were highly unlikely to generate the necessary security to obtain a loan. As a result, organic growth should be built into MetaSpace’s strategy.

QUESTION 2 – METASPACE COMPETENCIES

Although MetaSpace Designs was growing rather rapidly, the firm was still in the startup phase of the

business life cycle. Because of this position, the firm had some competencies that were typical of the value chain while other value chain elements such as human resources and technology development that would be considered less relevant to a small company (Barney, 1991). The findings were clear that MetaSpace was leading the jam band pin market in many ways and had competitive advantages in various functions throughout the value chain. Table 1 summarized these competencies and defined them as a disadvantage, parity with competition (Parity), a temporary competitive advantage (TCA), or a sustainable competitive advantage (SCA). The key to success was discovering which of these advantages were temporary and which were sustainable in order to develop a plan of action for the company’s future. The preceding discussion to Table 1 will give an in-depth explanation of each of the company’s competencies.

The support activities of MetaSpace included the company infrastructure and procurement. As a limited liability company (LLC), MetaSpace was nimble and could make rapid changes to policies and procedures in order to adapt to the market at any time. This structure also protected the owner from any legal action against MetaSpace should it have presented itself. Most other vendors and lapel pin producers in the market had not established an LLC, but could have done so rather easily if the other firm chose. In this regard, MetaSpace held a temporary competitive advantage. The ability to change strategies and develop new products was not unique and could only be considered parity amongst competitors.

A competency that fell into the procurement category for MetaSpace was its relationship with its overseas suppliers (Barney, 1991; Davenport et al, 2001). By fostering these relationships, MetaSpace could take advantage of pin production techniques not available in the U.S. and obtain lower costs. These relationships demonstrated an inherent symbiotic relationship between MetaSpace and its suppliers where Trace’s firm could only do well if its suppliers were doing well (Chertow, 2000). This competency would be considered a temporary competitive advantage because the common knowledge amongst competitors was that the least expensive and highest quality pins could only be produced overseas. Thus, it was only a matter of time before competitors established these types of relationships as well.

The primary activities of MetaSpace were similar to those in the typical value chain and held the key to MetaSpace’s core competencies. Succinctly, the firm’s primary value chain activities created MetaSpace’s sustainable competitive advantages (Barney, 1991). The company maintained parity with competition when it came to inbound logistics and had an advantage in outbound. As with any other company in this market, MetaSpace struggled with long lead-times for its custom pin orders. Lead-times were not a problem with wholesale or retail pins that were in stock and ready to ship, but custom pin orders took up to five weeks to be delivered. In turn, the long wait could be a turn off to potential customers. Although MetaSpace was not technically at a disadvantage when it came to the lead-time concerning custom pins (other companies faced the same problem), there was clearly room for improvement. Opportunities might lie in reaching out to other suppliers and investigating whether or not these lead-times could be reduced.

As for outbound logistics, MetaSpace performed admirably in ensuring stock orders were turned around the next day so that customers received their orders within a few days. Tracking numbers for orders were automatically generated to provide customers with real-time updates. Although tracking


numbers were not rare to any extent, the auto-generation aspect was rare within the market. Furthermore, the quick turnaround time was better than most of the competition. These practices gave MetaSpace a temporary competitive advantage (TCA) in this area, but could be replicated with relative ease (Barney, 1991).

MetaSpace Designs had a few key competencies in its operations activities of the value chain, the first being the unique way that MetaSpace packaged its products before shipping. The branded tin that protected the pins during shipping took extra time, resources, and effort but added value to the product for the customer. The tin was also something that no one else in the market was doing. This was a current advantage for MetaSpace, but would not be difficult to reproduce should a competitor elect to do so. Thus, the branded packaging tin was a temporary competitive advantage for MetaSpace.

The most important aspect of operations in MetaSpace was the time, effort, and research that went into determining and creating industry leading designs. MetaSpace used a combination of the latest in design software and knowledge of market trends to create one-of-a-kind designs for consumers. The designs were not only aesthetically pleasing, but were also relevant to what the consumer base was demanding. Moreover, Trace’s designs were very difficult to replicate. The years of design experience, in-depth market knowledge, and time spent on each design were what gave MetaSpace a competitive advantage that could be sustainable if the current effort was continued (Barney, 1991). Furthermore, MetaSpace’s creativity was unique in this market category, as its creativity was possessed solely by the enterprise. As a result, this core competency was a real asset to MetaSpace and a definite competitive advantage.

Marketing and sales practices at MetaSpace also held some advantages. The company’s brand image had grown stronger over the years due to proper marketing, design, and customer service initiatives. The MetaSpace Designs brand name was valuable in the industry and could not be reproduced by competitors, giving it a sustainable competitive advantage in this area. One reason the MetaSpace name had spread so quickly was the three-pronged approach through which the company marketed its products. The three-prongs included its website, its social media presence, and continued on-site vending. MetaSpace was one of the first to develop a website for buyers of jam band-themed lapel pins. The company also expertly deployed its expertise of using social media (Facebook) to market in real-time to consumers all over the globe. In this way, MetaSpace was able to stay on top of market trends and whims (Frahm, 2007). MetaSpace had come full circle and had even begun vending its uniquely designed products at select shows, which had been found not only to be profitable but also a good marketing tool to continue developing the MetaSpace name and brand. These three marketing and sales channels were a technique that no other company in the market was using and gave the organization a temporary competitive advantage to exploit, while it was able, to build the brand image further (Barney, 1991).

MetaSpace put customer service at the forefront of its business activities. Being friendly, approachable, and timely in responses were all ways that the company exceeded customers’ expectations. Many other competitors were not as diligent in their customer service approach and would fall short of their customers’ expectations. This attention to customer service put MetaSpace in a position to take advantage of another competency temporarily while the other competitors in the market worked to catch up. MetaSpace had many advantages over its competition, but most tended to be only temporary or on par with market standards. Because these advantages might only last a short while, new markets, products and ways to stay ahead of the competition should definitely be considered. The two sustainable competitive advantages, pin design and brand image, might be irrelevant if this market was simply a fad and declined in customer value.


TABLE 3 METASPACE DESIGNS’ COMPETENCIES AND VRIO ANALYSIS

QUESTION 3 - RECOMMENDATIONS

Students should be able to come up with recommendations which are the answer to question number

three. An “A” student will understand that there is not always one right answer. This student will also have a strong link from problems and opportunities identified in the preceding sections with the recommendation the student is considering.

A “B” student will have good recommendations. However, the student may have inappropriately applied some of the tools or there may not be a strong link from problem identification to the solution offered by the student. Some potential recommendations that the authors came up with are shown below:

As presented in the preceding sections, there were several areas in which MetaSpace could achieve some advantages over its rivals. In the immediate-term, managing demand, supply, and fulfillment were the most important aspects for MetaSpace’s focus. For demand, the suggestion would be made for MetaSpace to integrate its marketing effort throughout the enterprise by proactively using information technology and scalable Internet-based resources. In fact, MetaSpace had done just the same by deploying a new website that was more agreeable to the end-user’s experience and had a more logical flow than the old site. Further, the website was also integrated into the order/fulfillment process as it generated orders and shipping forms automatically (Leon-Sigg, Villa-Cisneros, Reyes, Cordova-Lara, and Canstaneda Ramirez, 2012). The website also alerted MetaSpace as to what had been ordered and how much remained available for purchase, thereby controlling inventory. This integration took a great deal of pressure off the information coder’s fingers and the constant toggling between different spreadsheets, which was the original information system.

Supply management was also an ongoing concern because of the distance of the production facilities from MetaSpace. Although the unique production capabilities of China, as opposed to the U.S., made it


an amenable alternative to producing closer to home, there remained several key challenges. For instance, the price per pin was rising steadily from the current partnered overseas supplier. As such, MetaSpace had to endeavor to research alternative facilities in order to achieve and ensure both the quality demanded by its customers and the lowest possible price per pin. Unfortunately, MetaSpace lacked any real bargaining power with its suppliers as the firm only represented a fraction of the production facility’s revenue. Although the argument could be made that if Trace’s firm were to leverage its relationships with suppliers more handily, a truly strong symbiotic relationship would develop thereby allowing MetaSpace a better bargaining position. In effect, by demonstrating MetaSpace’s importance to its suppliers, those suppliers would be more interested in continuing the mutually beneficial relationship (Chertow, 2000).

However, it was recommended that MetaSpace take a proactive role in discovering exactly how the production facilities operated and how those facilities conducted their business. With this thinking in mind, a plan had been laid for MetaSpace manager and owner, Trace, to visit China where his suppliers were located and discover exactly what was happening after he placed an order. If nothing else, Trace would return more informed about the process and be able to make better decisions if MetaSpace should need to change suppliers or increase its supplier network.

Moving from the immediate to near-term view, the importance of staying on top of the market cannot be understated. One of MetaSpace’s chief strengths has been its ability to scan the environment and identify opportunities. Trace has demonstrated an inherent agility in the way he conducts business, as was shown by his moving from selling a few t-shirts, to a few patches, to a few pins, to sourcing and selling many pins, and eventually selling to vendors who make large orders of produced pins; all these accomplishments within a couple of short years. This innate entrepreneurial skill allowed MetaSpace to remain ahead of the power curve, be viable, and grow into a profitable business. However, if steps were not taken to somehow distill this agility and put it into organizational and operational frameworks then the company might become unwieldy and unmanageable as it grows. This predicament could arise especially if MetaSpace decided to hire more personnel. In other words, the task of orienting a larger enterprise to the growing market was surpassing the abilities of one person to collect and organically analyze all the data and perform all the sales functions.

MetaSpace had answered this problem by using analytic software to support its website and used Facebook analytics to gain a better understanding of who had an interest in its products. In this way, MetaSpace could identify new areas in which to market and see where the growth was happening (McCormick, 2003). Once this data was collected and analyzed, real efforts could be made to capitalize on the opportunities in the market (Leon-Sigg et al., 2012). In effect, no longer was scanning the festival scene for potential buyers enough, but because of the growing salience of MetaSpace’s brand and online recognition, a more in-depth, sophisticated approach was required. This marketing initiative was yet another way MetaSpace had moved beyond its competitors who typically moved more slowly to capitalize on opportunities like integrated information technology systems related to customer relationship management. Important to note here was that the utility of any information technology resource was only as good as the information that could be derived from the data. As such, it was recommended that MetaSpace use a scaled approach in developing its marketing knowledge information system so as to not be both overburdened by too much information and too high a price tag (Leon-Sigg et al., 2012). As more questions arise more system capability could be acquired and the system could grow alongside the company instead of the system taking over the company.

Armed with a stronger foundation and control in demand, supply, and fulfillment management and market information system analytics, MetaSpace should be poised to be able to discern new opportunities in the market while also gaining some efficiency in its core operational processes. In sum, MetaSpace would be able to run leaner with more available resources, not least of which time, that can be devoted to innovating, adapting, and experimenting to grow the label and product offering. Lapel pins, as mentioned in the case, were recognized as a fad and as such had a limited market lifespan. Taken with this assessment, the recommendation was made that the company begin to promote itself not just as a lapel pin purveyor, but also as an apparel and accessories artist and production company. To this end, leading apparel designers had recognized MetaSpace’s prowess in creativity in design.


As of the writing of this case and analysis, Trace had been approached to design apparel for another company who would market the goods for MetaSpace branded as MetaSpace products at their stores. This was a win-win for MetaSpace as it had limited experience in producing textiles effectively and the company would have a larger product line to increase its name recognition. From Trace’s viewpoint, this development was a windfall for the company because it created an expansion in the scope of offered products and allowed a foot-in-the-door for getting branded apparel to market.

In the long-term, MetaSpace had to pay close attention to remaining in the black while growing into new markets. As mentioned, lapel pins were apt to cool off, so expanding into different product offerings that had an artistic bent would be best for MetaSpace to remain viable. Furthermore, it was recommended that all costs were watched and analyzed closely. Although this may seem simple or trite to mention, analyzing cost was a core component of MetaSpace’s success and had allowed it the financial wherewithal to be able to grow from internal financing. So, this recommendation cannot be undervalued or overlooked.

The case did point the reader in the direction of market segmentation. At present, MetaSpace was segmented into four customer groups, i.e. wholesale, custom, online retail, and on-site retail. These four groups were wholesalers who vend at concerts and festivals and direct sales online whether custom or otherwise. Less on-site selling by MetaSpace Designs occurred as a percentage of revenue; however, the wholesale segment was meant to continue the brand market penetration at music festivals. Unfortunately, as was also mentioned in the case, the vendors at the shows were not only misinformed about how to price products, but also lacked price confidence to start out. As a result, the lack of coherence in prices diluted the hoped for association of a high-quality goods to MetaSpace. Thus, the recommendation was made that the wholesale segment be served with a quick Frequently Asked Question (FAQ) sheet with the shipment that suggested prices to sell the wares, e.g. a manufacturer’s suggested retail price (MSRP) and how to go about doing it. Furthermore, hiring full-time, trained personnel to sell goods at shows was prohibitively expensive for such a small business; the FAQ sheet may create some marketing stability for MetaSpace’s vendors selling at shows. In the long-term, the recommendation was made that if further company growth demanded a firmer grip on forward-facing marketing efforts at shows, then hiring at least some trained and informed part-time salespeople would be the necessary path to take. Regardless of whether near- or long-term, it was very important for MetaSpace to remain a visible element at concerts and festivals in order to continue growing the brand and building the company’s image whether through wholesale merchandise or direct on-site sales.

In the long-term, further market segmentation was envisioned at MetaSpace. Instead of just wholesale and custom lapel pins based on “fan art” of certain bands, the market could be further segmented to include a larger potential pool of customers. To explain, Trace envisioned offering a high-quality generalized offering that users gained access to online and were presented with a sleek, business look. Whereas MetaSpace was more focused on the jam band fans, this new website would market and cater to businesses for their company’s pin and promotional product needs. It was recommended that if MetaSpace should decide to generalize and differentiate its marketing effort, then the company should separate the artistic, jam-band-scene-MetaSpace from the business-market-oriented-MetaSpace to the greatest extent possible. As was mentioned in the finance section, MetaSpace was poised to do so if it differentiated its custom offering enough. Potential strategies included changing the generalized offering to just “Superior Custom Pin” (SCP) and distancing itself from MetaSpace. In this way, SCP would take advantage of its higher profit percentage and real efforts could be undertaken to encourage and strengthen the venture. To the casual observer, the two entities would be distinct; however, both arms of the business would draw from the same pool of creative talent and sourcing plans. MetaSpace’s core creative talent would be the driver separating both entities from the rest of the competition.

IMPLEMENTATION PLAN

IMMEDIATE-TERM (NOW – 3 MONTHS) 1. Continue best practices and core competitive advantages


2. Deploy and update new website 3. Manage demand through website and analytics tools 4. Learn and fully incorporate IS tools for fulfillment integration 5. Travel to suppliers and become informed NEAR-TERM (3 – 6 MONTHS) 1. Continue to scan environment incorporating new IS tools 2. Ensure analytics work for MetaSpace, not other way around 3. Keep IS packages scalable to tamp down costs 4. Begin to experiment with larger product offering 5. Attempt to accent innovation and design competency over just lapel pins 6. Develop and include FAQ sheet in wholesale orders LONG-TERM (6 MONTHS – ANON) 1. Expand product offerings 2. Keep costs as low as possible 3. Seek out potential partners to increase product scope 4. Continue market segmentation and separation: generalized vs. jam band offerings 5. Continued presence of products at shows 6. Hire and train salespeople for shows REFERENCES Barney, J. (1991). Firms Resources and Sustained Competitive Advantage. Journal of Management.

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Marketing Athletic Clubs, Recreation Centers and Country Clubs: Recruiting

and Retaining Members Using Psychodemographics

Oscar T. McKnight Ashland University

Ronald Paugh

Ashland University

Jordan McKnight University of Akron

Lily Zuccaro

Miami University

Gina Tornabene Ashland University

Membership recruitment and retention is critical to fitness facilities managers and often the primacy of product and service offerings is overemphasized. This research indicates that consumer psycho-demographics are more important in determining membership. A ‘SIT-UPS’ routine is offered to assist managers in marketing and membership initiatives. INTRODUCTION

Membership recruitment and retention is a perennial challenge for fitness center directors and

marketing managers (Williams, Pedersen and Walsh, 2012). Membership dissatisfaction and attrition is of primary concern, and the commonly accepted explanation for member defection is poor service quality, not because the services are no longer perceived to be useful or needed (Tharrett and Peterson, 2008). Aaker (1997) and Keller (2001) suggested over fifteen years ago that the power of a brand is derived from an association and relationship consumers have with a product offering. Alexandris, et. al., (2008) argued that managers should actively monitor the brand associations relevant to their service offerings. Finally, for a better understanding of brand preferences and purchase intentions, researchers and practitioners have emphasized the use of consumers’ values, attitudes, beliefs and lifestyles as they relate specifically to product or service offerings (Sheth, Newman and Gross, 1991; Yankelovich and Meer, 2006).


CONCEPTUAL FRAMEWORK

Historically, athletic clubs and fitness centers focused primarily on weight training. However, over time, these facilities have been transmogrified into resort-style, luxurious offerings (Woolf, 2008). It is not uncommon to find hospitals, recreation centers, wellness clinics, nationally franchised fitness facilities and renowned country clubs offering a panoply of health and fitness service offerings. As a result, consumers are now free to develop a variety of brand expectations vis à vis an even greater variety of fitness facility product and service offerings. It is precisely at this point of difference between what the consumer expects to receive and what the consumer perceives they will receive from each type of fitness facility that creates the marketing opportunity for fitness facility marketers and membership managers.

It would be erroneous to assume that consumers do not differ in values, tastes, preferences and social groupings regarding purchase and consumption activities. Tajfel (1981) cautioned researchers to be cognizant of the finding that consumers are members of social groups and that they hold specific and identifiable emotional values of personal significance in relationship to consumption activities. Fournier, et.al., (1992) utilized lifestyle inventories to predict users for products and services. Orth, et.al., (2004) emphasized that consumers vary greatly and that they will react differently to marketing communications given their lifestyle and psychographic characteristics. And finally, Fournier and Lee (2009) encouraged the creation of brand communities because “in today’s turbulent world, people are hungry for a sense of connection” (p. 105) and can be more important “than the brands themselves” (p. 107).

It is this conceptual framework that researchers and practitioners recommend to health and fitness managers to measure and monitor consumer brand associations with their facility (Williams, Pedersen and Walsh, 2012; Alexandris, et.al., 2008). These brand associations then become the significant source of differentiation to be leveraged into a renewable and robust competitive advantage (Dickson and Ginter, 1987; Zook and Allen, 2011). The brand association and affiliation will become the foundation for a brand community exhibiting a shared collective consciousness.

Research Purpose And Questions Of Interest

Fitness facilities of all genre develop their marketing strategy around product and service offerings like technologically enhanced equipment, personalized service and price packages. However, both fitness facilities managers and researchers often neglect to fully assess the impact and influence of psychodemographics on membership probability over and above the influence of the product and service offerings. The purpose of this research is to identify unique product and service offerings that are likely to be desired by consumers who have been categorized into discrete psychodemographic segments. Psychodemographic segmentation as used for this research is a unique combination of two consumer psychological typologies (thinking vs. feeling and introvert vs. extrovert) and two key demographic characteristics of education and income levels. This technique effectively segments consumers into functional lifestyles reflecting purchasing patterns according to needs, wants and expectations. Therefore, two research questions are addressed: (1) Can consumer psychodemographics predict facility membership over and above the influence of product and service offerings?; and (2) Will the clustering of consumers into psychodemographic segments reveal unique bundles of product and service offerings? Methodology And Statistical Analysis

A sample of 276 adults was obtained from eight communities in Northwest Pennsylvania and two conterminous communities in Northeast Ohio. The communities’ total population was approximately 60,000 with 45,000 adults over 18 years of age. Trained field researchers personally interviewed adults who were passing by and who were exiting store locations in popular shopping districts. The participants were asked if they were currently a member of any athletic club, recreation center, or country club. Those individuals who responded “no”, and could identify a local facility that they would possibly join, were asked to participate in the research.


Participating adults responded to the following eight questions: (1) On a 9-point scale [1=Not Very Important; 9=Extremely Important], how would you rate the following in terms of influencing you to join a gym, recreation center, or country club? [Cost; Location; Safety; Cleanliness; Staff; Equipment; Environment; and Programs/Educational Opportunities]. Participants responded to basic education and income level questions; their answers were classified according to the U.S. Census Bureau (Florida, 2008). Finally, participants were asked to reflect upon and decide if they were more of a THINKING or FEELING person and if they were more of an INTROVERT or EXTROVERT. These two personality traits are commonly accepted psychometric classifications (see Briggs-Myers and Briggs, 1985).

The interviewers determined each participant’s gender by inspection and asked if they were under or over 40 years of age. The participants were then given the opportunity to respond to the following 9 open-ended questions: (1) What kinds of activities would you like to participate in or learn more about regarding what a gym, recreation center, or country club may or may not offer?; (2) In what season do you think the most about joining a club and why?; (3) If possible, in what month would you most likely join?; (4) What would you like to know about members?; (5) What special service would you want to have offered?; (6) What type of sport or activity would you like to participate in?; (7) What do you do now to stay healthy?; (8) What prevents you from joining a gym or fitness facility?; and (9) How do you receive information or become knowledgeable about gyms or fitness facilities? The tenth and final question asked participants to rank-order their probability of joining each type of fitness facility.

Following the personal interviewing and data collection process, all participants were assigned to categories. The demographic characteristics of education and income were assigned to one of four categories: (1) high education/high income (HE/HI); (2) high education/low income (HE/LI); low education/high income (LE/HI); and (4) low education/low income (LE/LI). Finally, all participants were assigned to a psychological typology, based upon their self-assessment of being either a THINKING or FEELING person and an INTROVERT or EXTROVERT.

Hypotheses were tested using the SPSS statistical package (Version 19), and specific statistical model comparisons, correlation analysis and multiple regression techniques were employed to determine statistical significance (.05 alpha). Finally, the open-ended responses were assessed, rank-ordered and assigned to categories utilizing a commonly accepted qualitative clustering technique (see Strauss, 1987). Research Findings And Discussion

Participants identified nine local organizations that offer athletic, recreation, or country club memberships. This corroborates Woolf’s (2008) findings that demonstrate the plethora of unrelated supporting services that have been developed by fitness organizations in their relentless pursuit of building their memberships. This research reveals four distinct types of fitness organizations, as measured by the frequency of participant responses: (1) a Local Country Club – LLC (26.4%); (2) a National Community Recreation Center – NCRC (26.1%); (3) a Local Community Recreation Center – LCRC (24.3%); and (4) a Franchised National Fitness Center – FNFC (21.7%). These percentages reflect the elimination of the five facilities that evoked low (less than 5%) brand saliency and recall. This finding suggests two major categories of fitness facilities — profit and non-profit. Moreover, each category was evenly split in brand awareness, suggesting that neither has achieved sufficient brand meaning and brand association to differentiate itself in the minds of the research participants.

However, a psychodemographic analysis of the participants reveals four distinct profiles. Regarding the demographic characteristics of education and income, participants self-identified in the following manner: (1) high education/high income (HE/HI = 11%); (2) high education/low income (HE/LI = 49%); (3) low education/high income (LE/HI = 5%); and (4) low education/low income (LE/LI = 16%). This suggests that although the two categories of facilities exhibit equivalent brand awareness, the distribution of consumers is not proportional, and therefore may influence the decision-making process to join or retain membership. Regarding the psychological typology exhibited, the results suggest proportional representation. Specifically, the ratio of participants who self-classified as THINKING or FEELING was 47% and 53%, respectively; the ratio of INTROVERT or EXTROVERT was 49% and 51%, respectively.


Therefore, it is reasonable to assume that brand recognition and psychological typology are proportional, whereas brand recognition and demographic characteristics vary significantly.

Testing The Research Questions

Two research questions are addressed. The first question is, “Can consumer psychodemographics predict facility membership over and above the influence of product and service offerings? Although a statistically significant relationship exists between product and service offerings and membership in three of the four types of facilities [NCRC; LCRC; LCC], results suggest that psychodemographics account for statistically significant variance over and above the variance accounted for by the offerings of all four types of facilities. In all the Tables (see Tables 1-4), the Restricted Model includes: Programs/Educational Opportunities; Location; Safety; Cost; Environment; Equipment; Cleanliness; and Staff. The Full Model includes the eight aforementioned product and service offerings plus the consumer psychodemographic characteristics of education and income (HE/HI; HE/LI; LE/HI; LE/LI) combined with the psychological typologies (THINKING/FEELING and INTROVERT/EXTROVERT).

This research suggests that product and service offerings are important as to why a consumer may join a fitness facility, but in all four tested statistical models, psychodemographics predicted facility type membership over and above the influence of product and service offerings. This suggests that all types of fitness facilities must provide an array of offerings, but these are “the price of entry” to gaining a leveragable competitive advantage. Fitness facilities will not be able to survive without them, but they are not the critical dimension on which consumers decide their membership. The more robust competitive advantages will arise instead from other sources of differentiation like a strong sense of community and attachment with the organization and its members. Please refer to Tables 1-4 for complete statistical detail.

The second question is, “Will the clustering of consumers into psychodemographic segments reveal unique bundles of product and service offerings?” The psychological typologies and the demographic characteristics were sorted into categories and the findings strongly suggest that discernible characteristics emerge by facility type. Moreover, once the psychodemographic characteristics were counted and rank-ordered, specific bundles of product and service offerings emerged. Specifically, two salient findings emerged from the cluster analysis: (1) most participants, regardless of their psychodemographic segment, stated that if they were to join a facility, it would be in the month of January; and (2) most participants receive facility information from their peers. Table 5 highlights key findings that pertain to the four facility types and participant membership. Also listed are desirable product and service offerings classified by facility type and psychodemographic segment. Given this information, a fitness manager at a specific type of facility can create a more targeted and timely marketing mix that will likely elicit brand responses and forge brand relationships with desired consumer niches.

TABLE 1 PSYCHODEMOGRAPHICS VS PRODUCT/SERVICE OFFERINGS

NATIONAL COMMUNITY RECREATION CENTER (NCRC)

MODEL R R Square

Adjusted R Square

R Square Change

F Change df1 df2 Sig. F

Change Sig.

Restricted Model

.417 .174 .15 .174 7.045 8 267 <.0001 S

Full Model

.772 .596 .574 .422 45.36 6 261 <.0001 S


TABLE 2 PSYCHODEMOGRAPHICS VS PRODUCT/SERVICE OFFERINGS

LOCAL COMMUNITY RECREATION CENTER (LCRC)

MODEL R R Square

Adjusted R

Square

R Square Change


Change Sig.

Restricted Model

.309 .096 .069 .096 3.52 8 267 <.001 S

Full Model

.598 .357 .323 .262 17.70 6 261 <.0001 S

TABLE 3

PSYCHODEMOGRAPHICS VS PRODUCT/SERVICE OFFERINGS FRANCHISED NATIONAL FITNESS CENTER (FNFC)

MODEL R R Square

Adjusted R

Square

R Square Change


Change Sig.

Restricted Model

.220 .049 .020 .049 1.70 8 267 <.098 NS

Full Model

.598 .357 .323 .309 20.87 6 261 <.0001 S

TABLE 4

PSYCHODEMOGRAPHICS VS PRODUCT/SERVICE OFFERINGS LOCAL COUNTRY CLUB (LCC)

MODEL R R Square

Adjusted R

Square

R Square Change


Change Sig.

Restricted Model

.378 .143 .117 .143 5.562 8 267 <.0001 S

Full Model

.925 .855 .847 .712 214.05 6 261 <.0001 S

TABLE 5

EXPECTED PRODUCT/SERVICE OFFERINGS BY PSYCHODEMOGRAPHIC SEGMENT

QUESTIONS NCRC LCRC FNFC LCC

Demographic Classification

Low Education – Low Income (LE/LI)

Low Education – High Income (LE/HI)

High Education – Low Income (HE/LI)

High Education - High Income (HE/HI)

Psych-Typology 1

Feeling Person Thinking Person Feeling Person Thinking Person

Psych-Typology 2

Extroverted Person Extroverted Person

Introverted Person

Introverted Person


What would you like to participate in or learn - that a facility/club may or may not offer? Learn

Basketball Camping Canoeing Horticulture/Gardening Martial Arts Antiquing Scrapbooking

Racquetball Handball Free-Weights Swimming Mountain biking Survival/ Hunting Beer Making

Running Machines Weight Machines Elliptical Machines Rowing Machines Rock Climbing Skydiving Painting

Golf Elliptical Machines Jogging Swimming Cycling Travel Wine Tasting

In what season do you think the most about joining a facility/ club?

Winter “Staying in the house for three months”

Summer “I should be in shape - peer comparison”

Spring “preparing for spring vacation or trip”

Fall “Thinking of golf and dining next year”

If possible, what month would you most likely join?

January

January

January

January

What would you like to know about members?

Where they live

Names/Surnames

Where people work

Professional titles

What special service would you want?

Medical related check-ups

Physical Fitness Test

Strength Testing

Health Screenings

What type of Sport/activity would you like to participate in?

Non-Competitive (No score)

Competitive Score/winner

Competitive Score/winner

Non-Competitive (No score)

What do you do now to stay healthy?

Diet/Nothing Weight-lift/Go outside

Jog/Diet Walk/Eat Healthy

What prevents you from joining?

Too expensive/Too tired

Family needs/Home Workout

No Time/work or school obligations

No one to go with/not necessary

How do you get information or know about a facility?

Peers (WOM);School System; Handouts; Brochures; Church; Physician; Web

Peers (WOM); Volunteers; Handouts; Church; Web

Peers (WOM); Web; Radio/TV; Paper Advertisement; Billboards.

Peers (WOM); Associations; Colleagues; Web; Media

Rank-order the probability of joining each facility.

LCRC - FNFC - LCC

FNFC - NCRC - LCC

LCC - LCRC - NCRC

FNFC - LCRC - NCRC


Research Implications This research reveals two key implications. First, psychodemographics are relatively more influential

in membership decision-making than product or service offerings. The R-Square values (variance explained) in the Full Models for the NCRC and LCC facilities are 60% and 86%, respectively, whereas the R-Square value (variance explained) for the LCRC and FNFC facilities, is 35% for each. Therefore, this significant gap in variance explained necessitates further research and analysis. And second, the qualitative clustering analysis strongly suggests that each psychodemographic segment desires facilities that “fit” their psychological profiles. Since these profiles are uncontrollable to marketers, it is imperative to hone your product and service offerings to a more precisely targeted niche, eschewing an “offer-it-all”, all benefits value proposition. Table 6 offers a ‘SIT-UPS’ routine to guide facilities managers in marketing and membership initiatives. Although there are certainly more than four types of fitness facilities, this framework can serve as a heuristic device for developing and implementing membership and marketing plans.

TABLE 6 A ‘SIT-UPS’ ROUTINE

Segment your niche using psychodemographics Investigate . . . do your offerings match your niche wants, desires and expectations? Target your offerings by known and established relationships like gender and age Understand that each niche has unique expectations beyond exercise Plan your promotions when consumers start deliberating membership decisions Start engaging consumers with peer WOM campaigns – get “social”

Limitations and Concluding Statement

The sample for this research was limited in geographic area, and no participants actually joined a fitness facility. However, population shrinkage estimates utilizing the difference between R-Square and Adjusted R-Square suggest a stable prediction model, but replication is ultimately the key to research validity. In conclusion, research findings strongly support Fournier’s and Lee’s 2009 assertion that the psychodemographics of community are more important than the brand itself. REFERENCES Aaker, J. L. (1997). Dimensions of Brand Personality. Journal of Marketing Research, 34 August, 347-

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Press. Tajfel, H. (1981). Human Groups and Social Categories, Cambridge, UK: Cambridge University Press. Tharrett, S. & Peterson, J. A. (2008). Fitness Management, Monterey, CA: Healthy Learning. Williams, A. S., Pedersen, P. M. & Walsh, P. (2012). Brand associations in the fitness segment of the

sports industry in the United States: extending spectator sports branding conceptualizations and dimensions to participatory sports. International Journal of Sports Marketing & Sponsorship, October, 34-50.

Woolf, J. (2008). Competitive Advantage in the Health and Fitness Industry: Developing Service Bundles. Sport Management Review, 11, 51-75.

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Zook, C. & Allen, J. (2011). The Great Repeatable Business Model. Harvard Business Review, November, 107-114.


Understanding Leadership: Let’s Put the Horse before the Cart

Robert W. Halliman Austin Peay State University

Leaders today lead in much the same way as those that preceded them. This begs the question, Why has our technology of leadership had such little impact? Our current "technology" of leadership presumes the existence of a leader/follower relationship. The problem is the presumption. If the leader/follower relationship does not exist, the application of the "technology" will be ineffective. A framework is established for a model which suggests the direction for a more effective "technology" of leadership. If we can effectively teach people how to get others to follow then we can more effectively concentrate on improving the leader/follower relationship. INTRODUCTION

Max Wortman(1982), professor of management at the University of Tennessee, once observed that "leaders" today do the same things, in the same manner, as "leaders" in decades past. Dr. Wortman made that statement more than 30 years ago and it is still true today. The question which must be asked is why has the current technology of leadership failed to have a significant impact on the practice of leadership? This paper attempts to provide some possible answers and suggest a direction in which we might find a solution. A Conceptual Gap

The first clue to the problem can be found in the typical history of leadership thought found in any college textbook on management, organization behavior, or other similar subject.

Most accounts begin with "trait theory." In reality, trait theory was not a "theory" as we know it, a conceptual model developed and articulated by a specific individual. Trait theory was more of a generic term to describe the common beliefs of the entire period prior to the introduction of the styles approaches to leadership. What was important about trait theory, however, is that it was a theory of determination; a theory of how a person became a leader. Behind trait theory was the belief that one was born to lead. In other words, the traits were genetically determined. Let’s understand the real issue here. Traits did not make someone a leader. Traits were only the outward manifestation of being born to lead. The traits made leading possible and probable. The driving motivation to identify the "traits" was so that leaders could be identified early so that the process of electing, appointing, promoting, or otherwise elevating a person to leadership could be more effective and avoid the frustration of elevating a person to leadership who could not lead. By identifying the potential leaders early in their lives, they could be given training to make them better at what they were destined to become.


Research on traits continued well into the sixties. However, beginning in the forties the popularity of trait theory began to wane significantly, as research tended to show a very weak link, at best, between traits and leadership.

While there was a mass exodus from the trait theory camp, one cannot completely discount the validity of trait theory. The evidence in natural animal societies and human history clearly indicates that leaders exhibited some traits in common. Take animal societies, for example. The one that becomes the leader is often the one that is able to defeat the current leader in battle and provide protection for the pack or society. So strength and size are traits that we can look to as precursors to being a leader in those societies in addition to some measure of aggressiveness. To some degree, we see the same thing in early human societies. We see this even in biblical accounts. Saul, was chosen as the first king of Israel because, among other things, he stood head and shoulders above the rest of the population (Bible, I Samuel 10: 23, 24). When David was preparing to go up against Goliath, King Saul offered David his body armor (Bible, I Samuel 17:38). This suggests that David was not a little boy but a strapping young man, close to the size of Saul himself. Other accounts of David indicate he had great physical power.

Perhaps the trait most common among leaders is an aggressive personality. Now the question becomes one of whether personality is genetic or a product of external development. The answer is probably both. Those involved in behavioral genetics seem to agree that personality genes exist but that we are likely decades away from isolating such genes (Azar, 2002). They also seem to agree that it would not be a single gene controlling personality but a combination of many genes and that environment plays a role as well (Reiss, 1977).We can put a bunch of toddlers in a room and watch as one or two become the dominant player in the group. How much of that dominance is genetic and how much is conditioning? What we do know is that those with dominant personalities are the ones who seek out leadership roles and become class presidents, group leaders, and such.

We also know that some people, who did not display aggressive personality in most of their lives, occasionally get thrust into a leadership role and do quite well. Corazon Aquino of the Philippines comes to mind. She was the meek wife of a popular activist politician in the Philippines and was thrust into the public spotlight when her husband was assassinated. She took her husband’s mantle, overthrew the dictator Marcos and became the President of the Philippines. She went from meek to powerful, almost overnight. She did not possess the typical “traits” of leaders and is a good example of the weakness of trait theory.

With trait theory on the wane, the need was felt to search for a model to replace trait theory. Ohio State University is often recognized as the place where the search began in 1945 and continued at the University of Michigan in 1950. Out of these beginning studies came what is now know as the “styles” theories of leadership; theories that dominate the literature to this day.

The styles theories evolved out of the desire to replace the belief that leaders were born with a theory which shows that leaders can be made. While the styles theories were quite successful in achieving acceptance and dominance in the popular literature of management and leadership, a subtle shift in emphasis occurred. The emphasis shifted from that which makes a person a leader to that which makes a leader effective. Thus, rather than having a new theory of determination, we have, instead, theories of practice. We were putting the cart before the horse.

Herein lies the first major problem. With the elimination of trait theory as a viable theory of leader determination we are left without a model to explain how people become leaders. Semantic Confusion

Another problem, which has added to the inability of current leadership theories to significantly impact the practice of leadership, is that we have allowed "leadership" to be confused with "management," and we have obscured the definition of leadership. We have focused so narrowly on styles that we forgot other aspects of leadership, and we have ignored the reasons people follow.

Ifone reads the dominant styles theories, in primary sources or secondary sources, one will get the impression that leadership is synonymous with management, supervisionor bossing behavior. A clear example of this is Robert Blake and Jane Mouton's Managerial Grid. This theory is listed among the


styles theories of leadership in most texts yet its title suggests it is a theory of management practice rather than leadership. In their book, The New Managerial Grid(1978), the word "manager" is used consistently throughout the book, and the styles are called "manager styles." In writing for another publication, Mr. Blake and Ms. Mouton switched terms, calling their grid a "leadership grid"(The Military Review, July, 1980).

Other theories and publications are no less confusing on this issue. Fiedler's Contingency Theory and Hersey and Blanchard's Situational Leadership Theory are called leadership theories yet both deal extensively with the act of "managing" human behavior in organizational contexts, i.e. supervising and managing subordinates effectively(Hersey & Blanchard, 1977; in Dunnette, 1965). Hersey and Blanchard's first book espousing their "leadership" theory was titled Managing Organizational Behavior(1977), House and Mitchell's Path-Goal Theory deals exclusively with supervisory or management behavior toward subordinates(in Johns, 1988), and Tannenbaum and Schmidt's Leadership Patterns speak of various decision making patterns used by "managers"(in Johns, 1988).

Definitions of leadership, commonly found in the literature, tend to be limiting as well as confusing. Typically, leadership is defined as "the process of influencing the activities of an individual or a group in efforts toward goal achievement in a given situation” (Hersey & Blanchard, 1977). The definition further implies that leadership is a function of the act rather than the office. Common usage would define leadership simply as what one does as a leader. Influence, then, becomes an outcome rather than the essence or objective of leadership.

One is not a leader because one influences others but rather one influences others because one is a leader.

It was said earlier that the styles theories are theories of practice rather than of leader determination. Many, however, tend to think that the styles theories are theories of determination. They believe that a person can be made a leader by training that person in the use of leadership styles which are believed to be most effective(Hersey & Blanchard, 1977). This position makes the very faulty assumption that the primary reason people choose to follow another is a person's "style." Why this assumption is in error will become clear when the leader-follower relationship is discussed in more detail later. Suffice it to say at this time, if leader "style" is not the reason people choose to follow another, then trying to "make" leaders by teaching people a good "style" is doomed to failure from the beginning.

Another difficulty with the way the current technology of leadership is used is that many practitioners of leadership development programs tend to make a value judgment about which style is “good” and which style is “not good.” Generally, an authoritarian style is considered not good and a more participative style is considered good. In reality, we can all probably recall authoritarian leaders that people loved and participative leaders that were not regarded so well. The bottom line is that the value judgments about authoritarian vs. participative are not beneficial and that best style to use is the one that works best for the individual.

Most of us are likely to be familiar with the DISC Personal Profile System, formerly published by Carlson Learning Company and the Meyers-Briggs Personality Inventory. While both instruments are different, they yield similar results. They tell us the predominant manner in which we tend to relate to others. The important lesson to be gained when these instruments are used in training, according to their literature, is that we should accept what we are. The behavioral style that we use predominantly is our strength, not a weakness. It is a strength, because it has been proven to work for us.

Massey (1979) suggests that our basic behavioral patterns are programmed into us by age 12 and that those patterns are not likely to change unless we experience a Significant Emotional Event (SEE). Corazon Aquino experienced a significant emotional event with the assassination of her husband that changed her from a meek housewife to an aggressive political activist. Back to Basics

Quite simply, a leader is one who leads. In its simplicity this definition has wide ranging implications regarding what makes a person a leader and the nature of leadership. Implied is that the essential ingredients which make one a leader is the presence of followers and some concept of where he or she is


going and what it takes to get there. Without followers "leader" is just an empty title and without a place to go leading cannot occur. It is further implied that a leader is out front, blazing the trail, setting the pace, setting the standard and determining the direction of movement.

Although the personal pronoun was used above, and will continue to be used as a generic term in the rest of this paper, the definition also implies that a leader is not necessarily an individual. A leader can be a group, a corporation/company, an industry or a country. How many times have we heard the United States referred to as the "leader" of the free world? That General Motors is a "leader" in the automobile industry? or, that United Airlines is a "leader" in the airline industry? These entities are leaders in exactly the same way as individuals--they have followers, they are going where others want to go, and they are out front of the followers blazing trails and setting standards. In short, they lead.

Our definition says nothing about having to be a boss, supervisor, an executive, or a manager in order to be a leader, or, for that matter, having to be a subordinate in order to be a follower. Ralph Nader is a "leader" in the consumer product safety movement but is not the boss, supervisor or manager of all those involved in the movement or the consumers he represents. Gloria Steinham was, and still is, a "leader" in the feminist movement but not, in any sense the boss, supervisor or manager of all those who look to her for leadership. If the key ingredient in being a leader is having followers, then the leader-follower relationship must be understood.

Following is an activity of choice; of free will as opposed to being pushed, pulled or prodded. Chester Barnard said that leadership is bestowed by the followers(in Dunnette, 1965). The follower chooses to follow because he or she wants or needs to go where the leader is going, believes the leader knows the way and what it takes to get there, and believes the leader will get him or her there. In other words, the follower chooses to follow based on a need to be led and the confidence in the leader's ability to satisfy that need. The follower does not necessarily have to like the leader, the leader's style, the leader's methods, or the leader's morals. These factors come into play only as the need to be led diminishes.

An example of this concept can be found by imagining a survival scenario. Visualize, if you can, a scenario where you are among a group of people who survive a plane crash in a very remote area with rugged terrain and subject to sudden temperature and other weather extremes. The leader that emerges will be the one who has the skills to be best able to help everyone survive the elements and get back to civilization. The leader’s style, personality and likeability will have little to do with choosing to follow his or her leadership. You have a need to survive and get back to civilization, and that person can get you there. Now, if there were more than one person capable of helping you to survive and get back to civilization, then style and likeability may be factors. However, the bottom line is still the ability to get you where you need to go.

Following decisions occur at two points in time. The first decision occurs when an individual decides whether or not to follow based on the need to be led and the confidence in the proposed leader to do the leading. This is consistent with Barnard's Acceptance Theory of leadership(in Dunnette, 1965) and Herzberg's Two Factor Theory of Motivation(Herzberg, 1966). The decision to follow constitutes an acceptance of the leader, thus, leadership is bestowed by the follower. The decision to follow is based on the internal motivation of the individual and not external factors such as the leader's style.

Positions of authority in an organizational setting are often called positions of leadership; the assumption being that authority gives one leadership over those below. It may be easy to confuse management authority with leadership because the activities and outcomes are similar. However, they are not the same.

Recognizing and accepting a person's authority to command is not the same as accepting that person as a leader because leadership and authority arise out of two different relationships. Authority arises out of the relationship between a person and a position whereas leadership originates out of the relationship between the leader and the led. A person may command because the position gives him or her the right to command. The subordinate obeys because he or she has a contractual obligation to obey and when the command and the obeying are within the "zone of indifference." A leader may command because the followers allow him or her to command as necessary to accomplish leading.


Toward a Broader Understanding of Leader Behavior Leadership was defined earlier as what one does in one's capacity, or role, as leader. Where most

definitions merely define leadership as influencing others, included in this definition are acts of responsibility as well as acts of influence. For example, the President of the United States, as the leader of this country, has certain responsibilities and duties that have nothing to do with influencing. He has a responsibility to provide for the nation’s security by protecting the borders and maintaining a standing army for our defense. He has a responsibility to stay informed on world events and read his intelligence briefings on a daily basis. When the President reads his daily briefings in the privacy of his office, he is exercising leadership by doing what a leader in his position is expected to do, although the act itself influences no one. TOWARD AN INTEGRATED MODEL OF LEADERSHIP

With an appropriate concept of leader, leadership and follower, a model of leadership can now be developed which incorporates leader determination as well as leadership practice. In other words, develop a model that puts the horse before the cart.

Considering that the decision to follow and the decision not to follow occur at two different points in time, and for different reasons, leadership can be viewed in terms of a time continuum.

The beginning of the continuum would be the point in time where the individual(group, organization, etc.) is not a leader. There is a period of time bounded by this point and the point in time where the individual is recognized or accepted as a leader, that is, when one or more persons decide to follow. Leader determination, therefore, is achieved in this period. Since the decision to follow is based on the follower's perception of the individual's ability and willingness to lead, it could be concluded that leader determination depends on specific behaviors of which directly and indirectly influence the decision to follow. This behavior cannot be labeled as "leadership" because the individual is not yet a leader. Getting the Nod

For many people, the role of leader is thrust upon them because of unique combinations of circumstance and the timing of pressures for social and political change. History is replete with the Lech Walessa's, the Corazon Aquino's, the Nelson Mandella's and the Martin Luther King's. Others intentionally seek to lead. They seek to become president of their school class or, chairperson of important committees. Some seek political office at the city, state, or national level. Some seek office in their local union, church, or civic organization. A young person may seek to be a leader in the military by entering ROTC in high school or college, or enlisting in the military and going to Officer Candidate School.

If we examine the behavior of people who became true leaders, we would find a consistent pattern of behavior that helped them achieve recognition as a leader.

Achieving behavior consists of a two-step process. The first step involves building a power base. Knowledge and expertise are a source of power thus, gaining the knowledge, competencies and vision to lead is essential. Corazon Aquino gained her preparation through her association with her husband and his activism. Martin Luther King gained his preparation through formal education and work in the church. Lech Walessa gained his through active membership in his country’s labor union.

The second step consists of letting others(potential followers) know that you have such knowledge, competencies and vision and convincing them that you are willing to take them where they want to go. This process would involve aggressive communication. You do this by visibly demonstrating one’s competence and ability to lead whenever possible. When others see in you what they want in a leader, they will flock to you. In other words, experts who are openly and visibly expert in what they do, get noticed and others come to them for leadership and guidance. All three leaders mentioned in the preceding paragraph became noticed through their activism.

Political campaigns offer an excellent example of this process. In preparation, candidates move through the education system, gain some real-world experiences in the workplace, and then learn as much


as they can about the issues of concern to their potential constituents, the possible solutions, the political processes involved in securing favorable actions and the levels of grass roots support. Assuming the candidate achieves an adequate level of preparation, he or she then seeks every opportunity to be seen and heard by the voters. Aggressively and visibly the candidate communicates his or her vision, ability and willingness to lead the fight for the voter's concerns at the appropriate levels of government. It is generally agreed that the successor is the one who is the most aggressive and visible.

When one receives a job promotion to a position of authority and responsibility one has achieved leadership but not as we often think of leadership. Mistakenly it is believed that the position means leadership of subordinates but it is not the subordinates who do the promoting. The organization, as represented by superiors, does the promoting and thus the bestowing of leadership. Since leadership is bestowed by followers, the organization and one's superiors are the followers in this situation.

Achieving a promotion is a classic example of "achieving" behavior as viewed in this model. Consider that in order to earn a promotion one must develop an expertise and distinctive competence in an area important to the organization and then make certain that one's superiors notice that competence and willingness to take on additional responsibility. With the promotion the organization is saying that it has needs and goals that it believes the individual being promoted can help it attain as a leader within his or her area of distinctive competence.

Leadership of subordinates does not come automatically with the position. It must be achieved separately. Because of the prevailing belief that leadership comes with the position, many never engage in "achieving" behavior with any intention and never achieve a true bestowal of leadership by subordinates unless by accident. Leadership of subordinates can only occur when one has the ability and the willingness to help subordinates get where they want to go professionally. IMPLICATIONS FOR LEADERSHIP DEVELOPMENT

The implications of this model for leadership development should be clear. One must achieve leadership before one can engage in leadership behavior. To teach leadership skills to those who have not achieved leadership would be to doom the process to certain failure. If we are to succeed in the development of leaders we must begin at the beginning. Help potential leaders develop "achieving" skills, teach them how to use those skills to get the desired following, then help them develop skills that make them more effective as leaders.

This model presents some challenges as well. As a general model of leadership it is not limited to individuals but is applicable to the full range of leader relationships. This means that the process of achieving and maintaining leadership is generally the same regardless of whether it is an individual, group, organization or other entity seeking to become a leader. The challenge for training and development is to think beyond the narrow focus of the individual and design leadership development programs with wider applications.

A workable technology of leadership has been elusive only because we have not understood the gap that kept it beyond our reach. We have been putting the cart before the horse and wondering why it did not go anywhere. With the recognition of this gap and the beginnings of a model to bridge that gap, we can now start putting the horse in its proper place. A workable technology of leadership can be a reality in a few years. REFERENCES Aldag, R.J. & Stearns, T.M.(1987) Management. Cincinnati: South-Western. Azar, B. (2002), Searching for genes that explain our personalities. American Psychological Association,

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Applied Behavioral Science, 3, 275-292.


Blake, R.R. & Mouton, J.S. (1978) The New Managerial Grid. Houston: Gulf Publishing Company. Blake, R.R. & Mouton, J.S. (1980) The Military Leadership Grid. Military Review, 7, 13-26. Blanchard, K. & Bowles, S. (1998) Gung Ho! Turn On the People in Any Organization. New York:

William Morrow and Company, Inc. Cohen, A.R., Fink, S.L., Gadon, H., & Willits, R.D. (1988) Effective Behavior in Organizations, 3rd

edition. Homewood, IL: Irwin. Department of the Army (1983) Military Leadership, FM 22-100. Washington, D.C.: Headquarters,

Department of the Army. Dubrin, A.J. (1990). Essentials of Management. Cincinnati: Southwestern. Dunnette, M.D. (Ed.) (1976) Handbook of Industrial and Organizational Psychology. Chicago: Rand

McNally College Publishing Company. Heller, T. & Van Til, J. (1982) Leadership and Followership: Some summary Propositions. Journal of

Applied Behavioral Science, 3, 394-405. Hersey, P. & Blanchard, K. (1977) Management of Organizational Behavior. Englewood Cliffs, NJ:

Prentice-Hall. Herzberg, F. (1966) Work and the Nature of Man. New York: World Publishing Co. Johns, G. (1988) Organizational Behavior. Glenview, IL: Scott, Foresman and Company. Kotter, J.P. (1985) Power and Influence. New York: The Free Press. Massey, M. (1979) The People Puzzle: Understanding Yourself and Others. Reston, VA: Reston

Publishing Company, Inc. Miner, J.B. (1982) The uncertain future of the leadership concept: Revisions and clarifications. Journal

of Applied Behavioral Science, 3, 293-309. Natemeyer, W.E. (ed.)(1978) Classics of Organizational Behavior. Oak Park, IL: Moore Publishing

Company. Nord, W.R.(ed.)(1976) Concepts and Controversy in Organizational Behavior. Santa Monica, California:

Goodyear Publishing Company. Reitz, H.J.(1987) Behavior in Organizations. Homewood, IL: Irwin. Reiss, D. (1977). Mechanisms linking genetic and social influences in adolescent development:

Beginning a collaborative search. Current Directions in Psychological Science, 6, 100-105. Robbins, S.P. (1988) Management. Englewood Cliffs, NJ: Prentice-Hall. Smircich, L. & Morgan, G. (1982) Leadership: The management of meaning. Journal of Applied

Behavioral Science, 3, 257-274. Scofield Reference Edition, The Holy Bible, King James Version, Oxford University Press, New York. Timm, P.R. & Peterson, B.D. (1989) People at Work. St. Paul: West Publishing Company. Vecchio, R.P. (1988) Organizational Behavior. Chicago: The Dryden Press. Wortman, M.S. Jr. (1982) Strategic management and changing leader-follower rules. Journal of Applied

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79.


Professional Sports Compete to Go Green

Marlene Blankenbuehler Morehead State University

Michelle B. Kunz

Morehead State University

Sports, professional and amateur, can have a major impact on our environment, including: land use, power consumption, construction of event facilities and venues, consumption of water and other natural resources. Professional sports teams and leagues have recognized the importance of reducing the negative impact their activities and facilities have on the environment, and began implementing sustainable programs and actions a decade ago. This paper investigates green initiatives of major league sports teams and examines the information regarding sustainable actions posted on their individual team website. Results identify categories of sustainable initiatives and compare the data across different sports.

INTRODUCTION

Sustainability has taken a prominent position on many corporate agendas. While many initiatives

focus on conservation, recycling and compliance, sustainability has come of age in recent years, to the point that companies now report their actions, and in many instances attempt to influence their customers as well as the public about how to be “greener.” Corporations often struggle with relaying the importance of sustainability efforts to consumers. Since sports activities and venues can have a major impact on the environment, there is a natural link between sports and environmental conservation. Professional sports teams have embraced environmental stewardship and encouraged fans as well (Henly, Hershkowitz, & Hoover, 2012). Because professional sports have a strong connection with the fans, major league sports teams can influence fans’ green behavior, both at sporting events, and within the community. The focus of this research will be to examine the progression and development of sustainable actions of major league professional sports. The research will then examine data collection results of what each major league sports team has posted on individual team websites regarding green initiatives.

WHY TEAMS GO GREEN

Dr. Allen Hershkowitz, director of the Natural Resource Defense Council’s (NRDC) green sports

project, said “the motivation for sports to engage in greening is simple, the games we love today were born outdoors, and without clean air to breathe, clean water and a healthy climate, sports would be impossible,” (Henly, et al., 2012, p. 9). The physical requirements of professional sports venues can negatively impact the environment, including new facilities, changes to city infrastructure, increased waste, pollution, and high energy consumption. The two goals of the environmental movement are to


reduce the ecological footprint of sports activities, and establish an awareness of environmental issues, both of which hold great potential to significantly impact our future environment (Schmidt, 2006). Professional sports teams continue to build their green efforts and the results attract sponsors, build community connections, create a competitive advantage, and enhance the fan experience. Not all reasons for going green are noble, as there can be economic and financial reasons as well. For example, Scott Jenkins, vice president of ballpark operations for the Seattle Mariners stated that reasons to go green “support a triple bottom line,” giving the team “an opportunity to drive financial performance, reduce costs, and green their brand; which allows for the ability to sell to more people and build a deeper relationship with customers” (Henly et al., 2012, p. 49). These environmental efforts give business an opportunity to do the right thing, by standing for change and environmental commitment (O'Brien, 2011). As the green movement is embraced by professional sports teams, they often address their efforts as a competition with other teams, just another aspect of the competitive nature of professional sports (Henly et al., 2012). This was evident when the Atlanta Hawks vied with the Miami Heat to be the first NBA team to have a LEED-certified home arena (Henley et al, 2012, p.98.). Another perspective was presented by Scott Jenkins, V.P. of ballpark operations for the Seattle Mariners when he referenced the “importance of statistics and where you are in the standings; that competitive nature and desire to know where you are translates to the environmental side as well,” (Henley et al., 2012, p.50).

RESEARCH ON COMMUNITY AND FAN IMPACT

The prominence and popularity of sports around the globe provides an enormous reach and potential

for their actions and message to influence millions of consumers (Miller, 2010). A 2008 survey conducted by Pro Green Sports indicated that 75 percent of fans surveyed felt green products were worth the additional cost and 90 percent of the fans surveyed appreciated the environmental initiative of professional sports teams. Another survey conducted in 2009 by Pro Green Sports indicated sustainability initiatives were a priority to 60 percent of professional sports teams. These findings would indicate that fans as well as professional sports teams support green initiatives and sustainable efforts. Professional sports teams have long been involved with community service, civic engagement, and social well-being. Increasing their sustainability initiatives can be seen as an extension of their social responsibility.

Several authors have used the term environmental social responsibility (ESR) when investigating green actions of sports teams (Babiak & Trendafilova, 2011; Mallen, Stevens, & Adams, 2011; Uecker-Mercado & Walker, 2012). Using the professional sports team’s webpage and additional communication vehicles, corporate social responsibility, including environmental responsibility has become an important component of business operations for these teams. Babiak and Trendafilova (2011) found environmental practices are diffusing rapidly through professional sports. Slightly more than half (57%) of survey participants reported that the emphasis their league placed on environmental initiatives placed this item on the top of their team agenda. However, executives and management indicated strategic and financial performance, rather than conforming to social pressures were at the forefront of their consideration regarding green actions. The authors conclude that while the financial payback to the team is valued, there is still the need to build goodwill with fans and the community. Support of environmental initiatives and promoting green actions has the potential to build the team’s customer base. Promoting sustainability and environmental efforts enables sports teams to connect to the fan because it builds a character for the team that the fans want; once that connection is made they can increase their fan following and create goodwill at the same time (Babiak & Trendafilova, 2011).

Recent research (Inoue & Kent, 2012), found the positive environmental practices of a professional sports team increased consumer internalization of the team’s values, and consumers are likely to show their intentions to support the team’s environmental initiative. Furthermore these consumers indicated that they intended to continue pro-environmental behavior in their daily lives. Specific findings indicated that even if they were not fans of a specific team, consumers were likely to adopt pro-environmental behavior if the team proactively incorporated environmental practices. Thus, professional sports teams can have a significant impact in reaching and influencing consumer adoption of green behavior. Finally, the authors


recommend that sports organizations should incorporate environmental practices in their operations, and communicate these efforts to consumers. By so doing, they expect a broad influence of consumer green actions, which eventually will lead to social change. It is predicted to also benefit the team.

The highly involved nature of sports is intrinsically suited to developing an online community and relationship between the fan and the team (Evans & Smith, 2004). Sports appear to have an advantage when it comes to internet marketing, including stickiness of the sports site, and the ability to hold a visitor for longer, which in turn builds an online community. This provides the ideal opportunity for sports organizations to leverage the Internet and their website to engage consumers and fans, as well as influence green fan behavior. Sports fans can enjoy involvement with the team online via web-streaming, live simulcasts, or via web portals (Hur, Ko, & Claussen, 2012). Since almost two-thirds (61%) of Americans consider themselves to be sports fans (Henly et al., 2012) and attendance at team games can range from 68,000 to 4 million per game, and up to 30 million visitors can view the website in a season, sports teams can leverage their sustainable activities by posting information on their respective teams’ websites.

THE GREENING OF PROFESSIONAL SPORTS

A decade ago, 2003, the Philadelphia Eagles were pioneers in the “green sports” movement, when

they implemented a green renovation for Lincoln Financial Field Stadium (Henly et al., 2012; O'Brien, 2011). Efforts there included: recycling, solar panel scoreboards, renewable energy sources, fan education initiatives as well as using environmentally friendly paper products. The next year the Natural Resources Defense Council (NRDC) became the principal advisor to all major North American professional sports leagues ("Greening Sports,"). Efforts of the NRDC over the next several years assisted in reducing the environmental impact of stadiums and arenas by commissioning energy, waste and water efficiency audits. Energy conservation efforts continued to focus on several professional sports teams, including solar installation at the Cleveland Indians Progressive Field (Henly et al., 2012) in 2007, 1727 solar panels installed in the LA Clippers Staples Center in 2008 and a five year sustainability plan by the Toronto Maple Leafs Air Canada Centere to divert 95% of waste, reduce energy consumption and the carbon footprint by 30%. In 2009 sustainable efforts continued with recycling efforts, but also added “Green Day” events, and public service announcements ("Angels team up with Fox sports west to host 'Green Day'," 2009) to engage fans in the effort. Additionally LEED certification of team facilities included the Minnesota Twins, Atlanta Hawks and the Miami Heat (Henly et al., 2012). The San Diego Padres also received several awards: EPA WasteWise Award, San Diego Partnership Sustainability Award and California Integrated Waste Reduction Award ("Green initiative for Petco Park,").

In 2010 the Green Sports Alliance was founded by Paul G. Allen’s Vulcan Inc. and the NRDC ("About Us," 2013), with the mission of helping sports teams, venues and leagues reduce their environmental impact. Also in 2010, continued efforts of professional sports included additional LEED certification for the Houston Rockets Toyota Center, Portland Trail Blazers, and the Pittsburgh Penguins Consol Energy Center. The National Hockey League also launched the “NHL Green” website: www.nhl.com/green, to educate fans and enhance the ecological profile of the league (Henly et al., 2012). In 2011, the L.A. Galaxy Home Depot Center was the first outdoor stadium to receive ISO 14001 certification for their environmental management system. LEED certification of facilities continued, and more activities were initiated which involved fans, including educational programs, collecting and recycling materials, community events and outreach programs.

Major league teams continued in 2012 to gain LEED certification (Henly et al., 2012): Chicago Bears Soldier Field, the first NFL stadium to be certified; Milwaukee Brewers’ Miller Park the first stadium with a retractable roof, and the highest certification for environmentally sustainable concession stands, lighting fixtures, and energy efficient scoreboard (Liu, 2013). Other stadiums installed solar panels, solar displays, wind turbines (Progressive Field, Cleveland Indians), as well as purchased paper supplies of recycled content, recycling paper, cooking oil, food waste, and reducing greenhouse gases. Most recently, in 2013, Earth Day-related events included the Oakland A’s purchase of renewable energy credits, for a


http://www.nhl.com/green�

carbon neutral game (Newman, 2013), e-waste recycling drives, fan rain gauge and Earth Day video give-aways, as well as environmental trivia on scoreboards during games. The Brooklyn Nets also launched the “B” Green program, to engage fans in sustainability efforts at the arena, which included: bicycle racks at the park, support of mass-transit, and recycling. The NBA Green Week was the first ever, week-long green initiative by a sports league. This initiative included: alternate transportation by bicycling to a game, composting, planting flowers and trees, water testing, recycling, and fan education at the game (Henly, 2013).

METHODOLOGY

To determine what information professional sports teams have posted on the respective teams’

website, a trained data collector reviewed a total of 141 team websites for each major league professional sports team during June and July of 2013. There were 30 Major League Baseball, National Basketball Association, and National Hockey League websites, while there were 32 National Football League and 19 Major League Soccer websites. The data collector used search terms on each site related to green activities including: environment, go green, recycle and sustainability. Additionally the site was reviewed for a page or area of pages dedicated to green activities, and web pages containing news items, which might contain relevant information. Each activity or sustainable initiative listed on the individual website was identified by reviewing information posted under team website community events, news archives, sustainability, blogs and other index links connected to the team site. These were recorded verbatim as they were posted online. After data collection, the researchers categorized these individual activities in four categories that were clearly evident: operations, food service, transportation and stadium (facilities). RESULTS

A total of 113 of the 141 (80%) of the team websites had information posted on at least one

sustainable initiative. Activities related to operations included the use of “green” cleaning products, energy efficiency, recycling, publication printing, and waste reduction. The activities identified which related to food service activities included composting, donation of food, purchasing eco-friendly supplies, recycling cooking oil and concession paper products. Sustainable transportation efforts included installation of bike racks or bike parking, alternative transportation or mass transit support, and preferred parking for hybrid or fuel efficient vehicles. Initiatives that related to the stadium or facility included LEED certification, solar or wind power, energy efficient signage and water conservation. The more frequently noted actions are listed in Table 1.

TABLE 1 FREQUENT GREEN INITIATIVES

Green Initiatives Number Teams Number Sports

Recycling 69 5 Energy efficiency 41 5 Water conservation 25 3 Alternate transportation 15 5 Waste reduction 15 4 LEED 14 5 Food-donated 14 3 Recycled paper products 14 4 Solar 12 4


Twenty teams mentioned carbon footprint, emissions, or offsetting, with half of them citing reduction of the team’s carbon footprint. This is less than 15% of all the teams participating in green efforts, but still worth noting. Other actions, such as supporting bike riding, or taking public transportation, and hybrid vehicles could be considered initiatives which also contribute to reduction of emissions and carbon footprint. Individually identified initiatives included eco-friendly products/supplies, LED signage, Field Turf, which reduces water consumption, as well as water reclamation and recycling. Other individually named activities are too numerous to identify in this discussion.

To determine if individual green initiatives were specific to one or more sport, a chi-square test of independence was performed, analyzing individual green initiative actions by sport. Results were statistically significant for one sustainable initiative, water conservation ( 2=10.689, df=4, p=.03). Analysis of the cross-tab frequencies found that baseball is more likely to have implemented water conservation efforts and mention energy efficiency in their operations. Baseball and basketball were more likely to mention recycling. Baseball and hockey were more likely to indicate waste reduction, and hockey also cited waste diversion. Baseball and soccer were more likely to use composting in food service actions, while baseball was more likely to recycle cooking oil. Hockey was more likely to donate food, but baseball and basketball also donated foot at expected levels.

A second chi-square test of independence tested the four categories of sustainable initiatives: stadium/facilities, transportation, food service and operations, across the individual sports. Results were statistically significant for stadium/facilities, ( 2=12.191, df=4, p=.016), and transportation, ( 2= 10.9774, df=4, p=.027). Analysis of the cross-tab frequencies indicated that baseball, soccer, and football were more likely to support stadium-related environmental initiatives. Because these sports have outdoor venues, the authors wonder if this could influence their choice to reduce the environmental impact of their stadiums. Further, cross-tab frequency analysis indicated baseball and basketball were more likely to support transportation efforts, while football and hockey were less likely to do so, though not statistically significant.

Chi-square results were not statistically significant for food service and operations initiatives, but cross-tab analysis indicated that baseball and hockey were more likely to employ food service actions, while soccer and football were less likely. Baseball, basketball, and hockey were also more likely to support operations-related environmental initiatives. A third chi-square test of independence was administered to determine if the number of different initiatives in each of the green categories was significant. Results were statistically significant for stadium initiatives, ( 2=30.043, df=16, p=.018), and cross-tab frequencies indicated basketball was more likely to cite four sustainable stadium initiatives, baseball and hockey three stadium-related initiatives, soccer two actions, and football only one initiative. One baseball team reported seven different stadium-related green initiatives. The results were not significant for the number of actions in operations, transportation and food services.

Every sport had at least one team supporting an effort in each of the four categories identified, however it seems that Major League Baseball is “greener” than the other sports. Major League Baseball is more likely to have enacted environmental initiatives across all categories of sustainable actions. At this point, it appears that baseball has “won” this round of the green competition. Also, sports which use outdoor facilities are more likely to have enacted stadium-related initiatives.

CONCLUSION

There are financial and strategic advantages for going green: monetary savings, local economic

growth, improved brand image, competitive advantage, attraction of new clientele and corporate partners (Henly et al., 2012). More importantly, green activities can enhance the fan experience and strengthen community ties. All of these advantages can be leveraged by marketing the team’s green actions and activities, and promoting the team’s commitment to environmental responsibility. The positive impact of sustainable efforts cited by team executives include attracting positive press and generating publicity, engagement with the city and community, selling to more customers, building deeper customer relationships and brand development, along with enhancing the overall fan experience, all things which


marketing efforts currently strive to accomplish. In conclusion, not only developing sustainable initiatives, but promoting them online and at the stadium via events, and fan-inclusive actions, position the team as a socially responsible corporate partner in the community and engage fans and build enthusiasm.

LIMITATIONS AND FUTURE RESEARCH

This study is exploratory in nature, and only investigated the sustainable actions reported on the professional league team websites. This in all likelihood does not include an exhaustive list of the green initiatives these teams are employing. While previous research indicates green actions of sport teams positively influence their reputation with fans, and encourage fans to be green, this study did not investigate the influence of team green actions on fans’ personal environmental behaviors. Further research could investigate if fans adopt green behavior in their daily lives.

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Inoue, Y., & Kent, A. (2012). Sport teams as promoters of pro-environmental behavior: An empirical study. Journal of Sport Management, 26(5), 417-432.

Liu, D. (2013, January 24). The champion of sustainable ballparks: SF Giants green AT&T Park. Retrieved June 10, 2013, from http://www.fourgreensteps.com/infozone/sustainability/the-champion-of-sustainable-ballparks-sf-giants-green-atat-park

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Miller, W. S. (2010). Changing playing fields: The sports attorney's obligation to learn green. Marquette Sports Law Review, 21(1).

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Global Communication Skills and Its Relationship with Emotional Intelligence

Teja Jadhav

The University of Findlay

Shiv K. Gupta The University of Findlay

Emotional Intelligence comprises of five components: Self-awareness, self-regulation, motivation, empathy and social skill. These components have a direct relationship on a person’s emotional intelligence that further drives a person’s performance and business. Communication skills vary globally. Collectively, we studied these components of Emotional Intelligence and our studies reveal that all five components have “communication skills” in common and that it is one of the chief requirements that will determine a leader’s effectiveness. This paper explains how Emotional Intelligence helps a person to communicate better and its benefits in understanding global communication skills.

INTRODUCTION

Globalization presents opportunities, but also possesses challenges for many professions (Martinez, 2012). Globalization refers to the “integration of the world economy into one large market” (Faber & Johnson-Eilola, 2002). It is the combination of knowledge, technology, and far-reaching communication like we have never experienced before, creating new opportunities for every country, and indeed every individual, in this world to compete for anything on any level (Martinez, 2012). With growing globalization and internationalization of higher education, it is becoming increasingly essential to develop global communication skills. Though a large number of people in the world interact with each other using the English language on a daily basis, there still are certain gaps in conveying and interpreting thoughts. This is majorly because communication encompasses a wide range of forms. Communication can be either in the spoken word, written word, or in non-verbal ways, such as facial expressions, speaking tempo, vocal pitch, intonational contours, gestures or body language. Another important aspect that causes a barrier in global communication is “culture”. The world is witnessing a vast variety of diverse cultures in every nook of the globe and it is certainly difficult for an individual to follow each and every culture. Even when two people are speaking the same language, cultural differences can affect vocabulary, colloquial expressions, voice tone and taboo topics. In Japanese business culture, for example, it can be considered rude to ask personal questions in an initial business meeting. In the U.S., on the other hand, asking personal questions and sharing personal information can display warmth and openness. American and Japanese businesspeople who understand this about each other can communicate in ways that resonate more effectively with each other (Ingram, n.d.).


“Global communication”, as a concept, is the practice of exchanging ideas, forums, cultures, institutions, etc. In order to match the increasing global communication demands, managers and leaders across the globe need to consider global communication skills of prime importance. Global communication starts with identifying and respecting cultural differences. Modern entrepreneurs and employees need the ability to catch subtle nuances of people's manner of speech when communicating across cultures (Ingram, n.d.). In the face of globalization, it can be difficult to understand non-verbal and hidden forms of communications across different cultures and hence there needs to be a common ground on which people can interact. EMOTIONAL INTELLIGENCE

In 1985 Wayne Leon Payne, then a graduate student at an alternative liberal arts college in the USA,

wrote a doctoral dissertation, which included the term "emotional intelligence" in the title (Hein, 2005). It was the first ever time the term "emotional intelligence" was used academically. Further, “emotional intelligence” grabbed the attention of two American university professors, John Mayer (University of New Hampshire) and Peter Salovey (University of Yale). They published two academic journal articles that discussed their findings on people’s emotions. One of their articles titled “Emotional Intelligence” (1990) defined emotional intelligence as

“…the ability to monitor one’s own and others’ feelings and emotions, to discriminate among them and to use this information to guide one’s thinking and actions” (Mayer & Salovey, 1990).

They also credited that “Emotional Intelligence” is a part of Howard Gardners’ view of social

intelligence, which he referred to as personal intelligences in his book Frames of Mind: The Theory of Multiple Intelligences (1983). However, the person most commonly associated with the term emotional intelligence is Daniel Goleman, a New York writer, psychologist, and science journalist (Hein, 2005). According to a Harvard Business Review article (2004), Goleman first applied the concept of “emotional intelligence” to business with his 1998 HBR article “What makes a leader”. In his research at nearly 200 large, global companies, Goleman found that while the qualities traditionally associated with leadership—such as intelligence, toughness, determination, and vision—are required for success, they are insufficient (Harvard Business Review, 2004). Truly effective leaders are also distinguished by a high degree of “Emotional Intelligence”, which includes self-awareness, self-regulation, motivation, empathy, and social skill (Harvard Business Review, 2004). Further, Goleman found direct ties between emotional intelligence and measurable business results and his article remains the definitive reference on the subject, with a description of each component of emotional intelligence and a detailed discussion of how to recognize it in potential leaders, how and why it connects to performance, and how it can be learned. GOLEMAN’S FIVE EI FACTORS

Goleman introduced the five components of emotional intelligence at work in his 1998 HBR article, What makes a leader. He identified the five components of Emotional Intelligence at work to be self- awareness, self- regulation, motivation, empathy and social skill. The first three components of emotional intelligence—self-awareness, self-regulation and motivation are all self- management skills, however the last two—empathy and social skill concern a person’s ability to manage relationships with others. Self-awareness, the first component of emotional intelligence, means having a deep understanding of one’s emotions, strengths, weaknesses, needs and drives. People who have high degree of self-awareness recognize how their feelings affect them, other people, and their job performance. Abrahams (2007) described self-awareness as “an individual’s ability to understand his feelings, even as they change from moment to moment.” Tjan (2012), in his HBR blog, wrote: “Without self-awareness, you cannot understand your strengths and weakness, your “super powers” versus your “kryptonite.” It is self-


awareness that allows the best business-builders to walk the tightrope of leadership: projecting conviction while simultaneously remaining humble enough to be open to new ideas and opposing opinions.”

“We all believe that our biggest mistakes and regrets are due to being overly emotional—the times when our emotions get the better of us. After all, emotions are remnants from 300 million years ago, when they were necessary for the survival of our species” (Darwin, 1998). Caruso & Salovey (2004) cite that emotions contain information-- they are signals to us about important events going on in our world, whether it’s our internal world, social world, or the natural environment. Because emotions contain information and influence thinking, we need to incorporate emotions intelligently into our reasoning, problem solving, judging, and behaving. This requires us to stay open to emotions, whether they are welcome or not, and to choose strategies that include the wisdom of our feelings.

The second component of emotional intelligence-- Self- regulation, as described by Goleman (1998a), is the component of emotional intelligence that frees us from being prisoners of our feelings. DeWall et al. (2011) cite that self- regulation involves overriding one response so as to make another possible. It is required in order to control emotions and feelings, impulses and manage time. Self-regulation is typically needed when motivational conflicts arise, and self-regulation is typically used to resolve these conflicts in a particular direction, namely in favor of long-term, enlightened rationality and social desirability at the expense of short-term selfish indulgence in tempting pleasures. A self-regulated leader is the one who is highly respected and trusted. Followers have an understanding of the leader’s principles and they (followers) make an attempt to abide to them (principles). Leaders who are self-regulated can easily respond to changes and plan likewise. Leaders who are in control of their feelings and impulses create an environment of trust and fairness, and are models of resiliency. In today’s business environment, rife with ambiguity, pressures, and change, being able to remain calm and keep your emotions under control is key to your success, your health, and the health of your team. Self- awareness combined with self-regulation helps a leader to have fairness towards his approach, actions and reactions. Such leaders are great motivators and highly ethical.

Motivation is a common trait that most successful leaders have. According to Greenberg and Baron (2000) the definition of motivation could be divided into three main parts. The first part looks at arousal that deals with the drive, or energy behind individual(s) action. People tend to be guided by their interest in making a good impression on others, doing interesting work and being successful in what they do. The second part refers to the choice people make and the direction their behavior takes. The last part deals with maintaining behavior clearly defining how long people have to persist at attempting to meet their goals. Motivated leaders are driven by passion, commitment and desire to excel in whatever they do. Goleman (1998a) states that those with leadership potential are motivated by a deeply embedded desire to achieve for the sake of achievement. Such leaders are highly energetic, optimistic, eager to learn and explore new approaches, open to creative challenges and to take calculative risks, proud about their achievements and are indifferent to external rewards like salary, status, power etc. Self-regulation combined with motivation can help in overcoming setbacks caused by failures.

Empathy plays a great role in relationship management. It is that quality of a leader which can win his followers’ trust and support. According to Voss, Gruber, and Reppel (2010), empathy skills allow leaders to understand better other peoples’ perspectives and opinions, making the work environment more enjoyable and productive. Empathy ensures that connections occur between people so that everybody is included and no employee feels left out, and as such, an empathic leader is perceived as an effective leader (Cockerell, 2009). Marques (2009) states that, to achieve leadership effectiveness, leaders must develop empathy skills to their fullest potential since empathy enhances a sense of leadership by providing leaders with the awareness to listen, serve their followers, and have greater understanding of interrelationships within the group. Thus, followers may be more likely to invest energy and commitment in their performance to the group. Empathy has become increasingly important to the success of leadership because empathic leaders are more likely to have an appropriate degree of openness about diversity and the differences between cultures (Atwater & Waldman, 2008; Choi, 2006). According to Rahman & Castelli (2013) and Martinovski, Traum & Marsella, (2007) state that empathy also plays an important role in developing trust in leader-employee relationships. According to Mahsud, Yukl, and


Prussia (2010), empathy enables leaders to have a better understanding of new social surroundings, and helps them quickly learn and adapt to new environments. In the same vein, empathy skills also help leaders have a positive attitude towards adapting to new environments and trends, which create a collaborative atmosphere. Empathy gives leaders the ability to read and be aware of people’s emotions; thus, leaders are able to perform critical leadership activities (Skinner & Spurgeon, 2005). Skinner and Spurgeon (2005) further point out that the importance of empathy in leadership behavior cannot be underestimated because empathy gives leaders the power to read between the lines; thus, they are able to make appropriate decisions.

Goleman (1998a) cited social skill as friendliness with a purpose. Riggio & Reichard, (2008) claimed that social skills represent a broader range of abilities that is most closely linked to the construct of social intelligence. Social skills that are key components of social intelligence include the following: the ability to express oneself in social interactions, the ability to “read” and understand different social situations, knowledge of social roles, norms, and scripts, interpersonal problem-solving skills, and social role-playing skills (Riggio & Reichard, 2008). Saporito (2009) explains that “social skill is the ability to leverage relationships toward the ideas and ideals a leader wants to promote, through likeability, trust and respect. But just as the line blurs between self-awareness, self-regulation, motivation and empathy, social skill also represents shades of the other four. Without social skill, the other four components of emotional intelligence may fall flat.” People with social skills can have a network when the time for action comes (Goleman, 1998a).

Building upon and integrating a great deal of research, Goleman presented a model of emotional intelligence in his book Working with emotional intelligence (1998b) with twenty-five competencies arrayed in five clusters (Boyatzis, Goleman & Rhee, 2000). They were:

a) The Self-awareness Cluster included Emotional Awareness; Accurate Self-assessment; and Self-confidence;

b) The Self-regulation Cluster included Self-control, Trustworthiness, Conscientiousness, Adaptability, and Innovation;

c) The Motivation Cluster included Achievement Drive, Commitment, Initiative, and Optimism; d) The Empathy Cluster included Understanding Others, Developing Others, Service Orientation,

Leveraging Diversity, and Political Awareness; e) The Social Skills Cluster included Influence, Communication, Conflict Management, Leadership,

Change Catalyst, Building Bonds, Collaboration and Cooperation, and Team Capabilities (Boyatzis, Goleman & Rhee, 2000).

COMMUNICATION SKILLS: A SUBSET OF GOLEMAN’S FIVE EI FACTORS

President and CEO of National Semiconductor Corporation, Gilbert Amelio, said that “Developing excellent communication skills is absolutely essential to effective leadership. The leader must be able to share knowledge and ideas to transmit a sense of urgency and enthusiasm to others. If a leader can’t get a message across clearly to motivate others to act on it, then having a message doesn’t even matter.” According to a study conducted by The Ken Blanchard companies, about 41% of the respondents identified the inappropriate use of communication as the number one mistake that leaders make. Too often leaders either don’t communicate, over-communicate, communicate inappropriately through outbursts, anger, or blaming, or simply don’t communicate clearly.

Goleman introduced “communication skills” as a part of the Social Skills cluster in his EI model. However, there is a strong presence of “Communication skills” in other clusters as well. Several research and studies have shown significant ties between communication skills, self-awareness, self-regulation, motivation and empathy. Communication skills as most describe, is simply the process in which people share information, ideas, and feelings. It can be either in the spoken word, written word, or in non-verbal ways, such as facial expressions, gestures or body stance. It can even be pure silence. The communication process is made up of various elements: sender and receivers, messages, channels, noise, feedback, and setting. Conrad and Poole (1998), point out that people who understand how to communicate functions in


an organization, who have developed a wide repertoire of written and oral communication skills, and who have learned when and how to use those skills seem to have more successful careers and contribute more fully to their organizations than people who have not done so. Facey (n.d.) writes in his magazine article, “Superficially, communication appears to be deceptively simple - write an email or send a memo. In fact, it's a complex process that must be addressed from many angles to achieve the best results. Leaders must understand all components of the communication process to apply them effectively.” O’toole (2012) cited Crystal (2007) who mentioned, effective communication occurs in many forms, including vocalizing without words (e.g. laughing or crying), non-verbal cues (e.g. eye contact, facial expressions, gestures and signing) and material forms (e.g. pictures, photographs, picture symbols, logos and written words), it requires consideration of multiple factors.

In order to successfully send a message to someone, one needs to be sure that both his/her words and actions properly announce that message. And to do that one has to recognize what that message is, the best way to send the message and where one stands in terms of sending that message (that is where self awareness ties into communication). Self-awareness is also often a prerequisite for effective communication and interpersonal relations, as well as for developing empathy for others. When one possesses self-awareness he/she is able to practice effective communication because one is cognizant of how he/she comes across to people. Leaders who don’t understand their own behavior, and how they’re perceived by others, create communication glitches like misunderstandings or hurt feelings ("Personal development, leadership," n.d.).

If you have low self-awareness, you may communicate so that your true meaning is unclear. By working on your self-awareness, you will improve your communication skill. Many organizations, leaders and managers; today, use the Johari Window Model to analyze themselves so that they can communicate better with the external world. The Johari window model is a tool for illustrating and improving self-awareness, and mutual understanding between individuals within a group. As discussed earlier, self-regulation helps human to regulate emotions, feelings and moods. It also facilitates balance in the dynamics of a thought process. Verbal communication is the most obvious form of communication. However, research has shown people pay much less attention to the words that are said and much more attention to the actions and nonverbal cues that accompany those words. Nonverbal cues include facial expressions, use of hand motions, body posture and eye movements. Leaders should strive to always match their nonverbal cues to their words; when they do so, they are more believable and trustworthy. Self-regulation is extremely important in dealing with paralingual communications, which is a set of non-phonemic properties of speech, such as speaking tempo, vocal pitch, and intonational contours, that can be used to communicate attitudes or other shades of meaning. A self- regulated person is able to interpret the external situation and make modifications to his/her thought process or mood or emotions and thus communicate effectively.

Our ideas and concepts are deeply based on our thought process and the condition of our mind. If one thinks negatively, his/her communication exhibits shades of negative remarks in the form of verbal communication, body language, discussions etc. Such negativities have to be controlled within before they are demonstrated externally. This comes from high levels of self-motivation. A person who is self-motivated displays strong optimism, which further reflects in his personality and communication. A motivated individual is often looked up on as a confident individual and a go-getter. Such individuals maintain a positive aura around them and ensure they deal optimistically with other individuals, which further inculcates positivity in others. A leader who is self-motivated often deals humbly with his team and is good at communicating both verbally and non-verbally. A gifted communicator always expresses empathy toward the people they are communicating with (Bachelder, 2013). Even if a person is naturally empathetic, empathy in business communication can often be lost in the process of getting the job done. After all, business decisions and management issues are based on facts, not emotions. Therefore, leaders have to be very careful while connecting with their followers. One can demonstrate empathy by exercising general interpersonal and communication skills. “Picking the right words” and “word filtering” are often the keys to the right way of communicating, especially when empathetic. Leaders exhibiting


good empathetic skills are often type casted to be “too emotional”, therefore, it becomes important to demonstrate correct levels of empathy keeping in mind the rationale of the task.

Allen et al. (2002) cite that social skills are often referred to as social competence or interpersonal competence or communication competence. Social skill usually implies high quality, or proficiency with social interactions and communications. Communication skills are the key to developing connections and to building a strong social support network. Building good relationships with other people can greatly reduce stress and anxiety in ones’ life ("Effective communication," n.d.). Most of the individuals possessing good social skills are often extroverted and outgoing; however, it is not necessary that introverted people do not posses good social skills. Social skills, like any other skills, can be developed through experience and practice. One needs to have strong communication skills (both verbal and non-verbal) in order to maintain social skills.

Mastering the emotional intelligence skills can, thus, help an individual to communicate better. In this era of globalization, where we meet people from different backgrounds every day, it is essential to connect with them and make them feel comfortable. This can be achieved with good emotional intelligence skills. Even if a person does not understand other person’s language, speech, culture, body language, etc… he/she can communicate with the other on basis of emotional intelligence. Thus, emotional intelligence serves as a common ground in understanding global communications.

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