••• brand research
Combatting bad press before the ticker tanks
When a firm is the subject of a news story, its stock price is usually affected. Whether positive or negative, newly-publicized details attract investor attention and move the stock price based on the article’s sentiment. Research from the University of Georgia (UGA) Terry College of Business and published in the Journal of Marketing Research shows that two in-house tools can influence the effects of news reports on stock price: advertising and marketing capability. (Marketing capability refers to a firm’s capacity to understand consumers’ needs and influencers.)
The study examined 141 firms over about five years, finding that when news reports highlighted positive news, firms with higher advertising levels experienced a stronger increase in their stock prices.
“People have talked about the fact that investors tend to buy better-known stocks but nobody really talks about how that link happens,” said Sundar Bharadwaj, co-author of the paper and Coca-Cola Company chair professor of marketing at UGA. “When there’s good news and the company advertises that good news, we find that Google searches for the ticker symbol of the company go up but not for the company name. Unlike a big institutional buyer who is well aware of the symbol, it’s the individual buyer who searches for ticker symbol. So we can see that, all of a sudden, a lot more people are buying the stock.”
When negative articles are published, however, advertising doesn’t mitigate the dysfunctional effects. In those instances, firms with strong marketing capability can better calm customer and investor fears and soften the detrimental impact of such news on stock price. The article cites an example of how McDonald’s quashed a rumor about overcharging minority customers by immediately taking to Twitter and other online forums to assure the public that the rumor was untrue.
“Our contention is that if you have strong marketing capability, it’s important for you to let outsider investors also benefit,” said Bharadwaj. “Firms should use things such as investor forums to reassure current investors and explain their abilities, while at the same time ensuring that their competitive advantages are not revealed.”
••• hybrid research
Twitter hosts Hyatt’s WLFG
On September 26, 2013, Hyatt used Twitter to conduct the world’s largest focus group (WLFG) to answer a simple question: How do YOU travel? The WLFG is the second phase of Hyatt’s 18-month listening exercise, which kicked off with 40+ facilitated online group discussions around the world.
Hyatt used its social media presence – and the hashtag #HyattWLFG – to engage with guests around the globe in real time. Travel enthusiasts from the U.S., U.K., France, Hong Kong, Australia, Chile and Mexico, along with Hyatt associates, organized Twitter conversations on various travel-related topics, such as seamless travel, routines on the road, on the road rituals and traveling like a pro.
According to Hyatt CMO John Wallis, the endeavor yielded great insights. In a September 30 blog post, Wallis shared some of the findings. For example, sampling interesting local cuisine is one of the best parts of business travelers’ trips and women do the majority of packing for family vacations. Hyatt is brainstorming ways to connect travelers with the best each city has to offer and expand its Hyatt Has It program to cover frequently-forgotten items in vacation destinations. A few participants also expressed interest in selecting their guest room online and Hyatt is looking into what would be involved to add that technology into its systems.