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598 PART 7 | Communi CATing V Alue contribute to building a “Smarter Planet. ” It was then rolled out with unconventional long-form, content-rich print ads, targeted TV ads, and detailed online interactive ads. A “Smarter Cities” tour hosted major events at which IBM and other experts discussed and debated challenges all cities face: transportation, energy, health care, educa-tion, and public safety. The success of the campaign was evident in the significant improvements in IBM's image as a company that was “making the world better” and “known for solving its clients' most challenging problems. ” Despite a recession, significant increases occurred in new business opportunities and the number of compa-nies interested in doing business with IBM, and the company's stock price soared from $80 at the start of the campaign to more than $200 five years later. On the flip side, personal selling can also make a strong contribution in consumer-goods marketing. Some consumer marketers use the sales force mainly to collect weekly orders from dealers and to see that sufficient stock is on the shelf. Y et an effectively trained company sales force can make four important contributions: 1. Increase stock position— Sales reps can persuade dealers to take more stock and devote more shelf space to the company's brand. 2. Build enthusiasm— Sales reps can build dealer enthusiasm by dramatizing planned advertising and communications support for the company's brand. 3. Conduct missionary selling— Sales reps can sign up more dealers. 4. Manage key accounts— Sales reps can take responsibility for growing business with the most important accounts. buyer-readiness s Tage Communication tools vary in cost-effectiveness at different stages of buyer readiness. Figure 19. 4 shows the relative cost-effectiveness of three communication tools. Advertising and publicity play the most important roles in the awareness-building stage. Customer comprehension is primarily affected by advertising and personal selling. Customer conviction is influenced mostly by personal selling. Personal selling and sales promotion are most helpful in closing the sale. Reordering is also affected mostly by personal selling and sales promotion and somewhat by reminder advertising. Note too that online activities can affect virtually any stage. IBM's “Smarter Planet” corporate ad campaign improved the company's image and drove sales. Source: Reprint Courtesy of International Business Machines Corporation, © International Business Machines Corporation Stages of Buyer Readiness Cost Effectiveness Awareness Advertising and publicity Ad Sales promotion Sa Personal selling Pe Comprehension Conviction Order Reorder| Fig. 19. 4 | Cost-Effectiveness of Three Different Communication Tools at Different Buyer-Readiness Stages | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
Designing An D m An Aging in Teg RAT e D m AR ke Ting Communi CAT ions | chapter 19 599 Produc T life-cycle s Tage In the introduction stage of the product life cycle, advertising, events and experiences, and publicity have the highest cost-effectiveness, followed by personal selling to gain distribution coverage and sales promotion and direct marketing to induce trial. In the growth stage, demand has its own momentum through word of mouth and interactive marketing. Advertising, events and experiences, and personal selling all become more important in the maturity stage. In the decline stage, sales promotion continues strong, other communication tools are reduced, and salespeople give the product only minimal attention. Measur In G Co MMun ICa TIon resul Ts Senior managers want to know the outcomes and revenues resulting from their communications investments. Too often, however, their communications directors supply only inputs and expenses: press clipping counts, numbers of ads placed, or media costs. In fairness, communications directors try to translate inputs into intermediate outputs such as reach and frequency (the percentage of target market exposed to a communication and the number of exposures), recall and recognition scores, persuasion changes, and cost-per-thousand calculations. Ultimately, though, behavior-change measures capture the real payoff. After implementing the communications plan, the communications director must measure its impact. Members of the target audience are asked whether they recognize or recall the message, how many times they saw it, what points they recall, how they felt about the message, and what are their previous and current attitudes toward the product and the company. The communicator should also collect behavioral measures of audience response, such as how many people bought the product, liked it, and talked to others about it. Figure 19. 5 provides an example of good feedback measurement. We find 80 percent of the consumers in the total market are aware of brand A, 60 percent have tried it, and only 20 percent who tried it are satisfied. This indi-cates that the communications program is effective in creating awareness, but the product fails to meet consumer expectations. In contrast, 40 percent of the consumers in the total market are aware of brand B and only 30 percent have tried it, but 80 percent of them are satisfied. In this case, the communications program needs to be strength-ened to take advantage of the brand's potential power. Managing the Integrated Marketing Communications Process The American Marketing Association defines integrated marketing communications (IMC) as “a planning process designed to assure that all brand contacts received by a customer or prospect for a product, service, or organization are relevant to that person and consistent over time. ” When done well, this planning process evaluates the strategic roles of a variety of communications disciplines and combines them seamlessly to provide clarity, consistency, and maximum impact of messages. The wide range of communication tools, messages, and audiences available to marketers makes it imperative that companies move toward integrated marketing communications. They must adopt a 360-degree view of con-sumers to fully understand all the different ways communications can affect behavior. 37 100% market100% market 80% aware 60% tried80% disappointed Total Awareness Brand Trial Satisfaction Total Awareness Brand Trial Satisfaction20% not aware 40% did not try60% not aware 40% aware80% satisfied20% satisfied 20% disappointed 30% tried70% did not try Brand A Brand B | Fig. 19. 5 | Current Consumer States for Two Brands | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
600 PART 7 | Communi CATing V Alue To facilitate one-stop shopping for marketers, media companies and ad agencies have acquired promotion agencies, public relations firms, package-design consultancies, Web site developers, social media experts, and direct-mail houses. They are redefining themselves as communications companies that help clients improve their overall communications effectiveness by offering strategic and practical advice on many forms of communication. These expanded capabilities make it easier for marketers to assemble various media properties—as well as related marketing services—in an integrated communication program. Table 19. 3 lists the different lines of businesses for marketing and advertising services giant WPP, for example. Table 19. 3 WPP's Lines of Businesses Advertising Global, national, and specialist advertising services from a range of top international and specialist agencies, among them Bates CHI & Partners, Grey, JWT, Ogilvy & Mather, United Network, and Y&R Media Investment Management Above-and below-the-line media planning and buying and specialist sponsorship and branded entertainment services from Group M companies Media Com, MEC, Mindshare, Maxus, plus tenthavenue and others Consumer Insight WPP's Kantar companies, including TNS, Millward Brown, The Futures Company, and many other specialists in brand, consumer, media, and marketplace insight, work with clients to generate and apply great insights Public Relations & Public Affairs Corporate, consumer, financial, and brand-building services from PR and lobbying firms Burson-Marsteller, Cohn & Wolfe, Hill+Knowlton Strategies, Ogilvy Public Relations Worldwide, RLM Finsbury, and others Branding & Identity Consumer, corporate, and employee branding and design services, covering identity, packaging, literature, events, training, and architecture from Addison Group, Brand Union, FITCH, Lambie-Nairn, Landor Associates, The Partners, and others Direct, Promotion, & Relationship Marketing The full range of general and specialist customer, channel, direct, field, retail, promotional, and point-of-sale services from AKQA, Geometry Global, Ogilvy One, RTC Relationship Marketing, VML, Wunderman, and others Health Care Communications GCI Health, ghg, Ogilvy Common Health Worldwide, Sudler & Hennessey, and others provide integrated health care marketing solutions from advertising to medical education and online marketing Specialist Communications A comprehensive range of specialist services, from custom media and multicultural marketing to event, sports, youth, and entertainment marketing; corporate and business-to-business; media, technology, and production services WPP Digital Through WPP Digital, WPP companies and their clients have access to a portfolio of digital experts including 24/7 Media, Blue State Digital, and POSSIBLE Source: Adapted from WPP, “What We Do,” www. wpp. com/wpp/about/whatwedo, as of June 28, 2014. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
Designing An D m An Aging in Teg RAT e D m AR ke Ting Communi CAT ions | chapter 19 601 Coord Ina TIn G Med Ia Media coordination can occur across and within media types, but marketers should combine personal and nonpersonal communications channels through multiple-vehicle, multiple-stage campaigns to achieve maximum impact and increase message reach and impact. Promotions and online solicitations can be more effective when combined with advertising, for example. 38 The awareness and attitudes created by advertising campaigns can increase the success of more direct sales pitches. Advertising can convey the positioning of a brand and benefit from online display advertising or search engine marketing that sends a stronger call to action. 39 Most companies are coordinating their online and offline communications activities. Web addresses in ads (especially print ads) and on packages allow people to more fully explore a company's products, find store locations, and get more product or service information. Even if consumers don't order online, marketers can use Web sites in ways that drive them into stores to buy. IMPle Men TIn G IMC Many international clients such as IBM (Ogilvy), Colgate (WPP's Red Fuse), and GE (BBDO) have opted to place a substantial portion of their communications work with one full-service agency. The result is integrated and more effective marketing communications at a much lower total cost. Integrated marketing communications can produce stronger message consistency and help build brand equity and create greater sales impact. 40 It forces management to think about every way the customer comes in contact with the company, how the company communicates its positioning, the relative importance of each vehicle, and timing issues. It gives someone the responsibility—where none existed before—to unify the company's brand images and messages as they are sent through thousands of company activities. IMC should improve the company's ability to reach the right customers with the right messages at the right time and in the right place. 41 “Marketing Memo: How Integrated Is Y our IMC Program?” provides some guidelines. How Integrated Is Your IMC Program? In assessing the collective impact of an IMC program, the marketer's overriding goal is to create the most effective and efficient communications program possible. The following “six Cs” criteria can help determine whether communications are truly integrated. Coverage. Coverage is the proportion of the audience reached by each communication option employed as well as the amount of overlap among those options. In other words, to what extent do different communication options reach the designated target market and the same or different consumers making up that market? Contribution. Contribution is the inherent ability of a marketing communication to create the desired response and communication effects from consumers in the absence of exposure to any other communication option. How much does a communication affect consumer processing and build awareness, enhance image, elicit responses, and induce sales? Commonality. Commonality is the extent to which common associations are reinforced across communication options; that is, the extent to which different communication options share the same meaning. The consistency and cohesiveness of the brand image are important because they determine how easily existing associations and responses can be recalled and how easily additional associations and responses can become linked to the brand in memory. Complementarity. Communication options are often more effective when used in tandem. Complementarity relates to the extent to which different associations and linkages are emphasized across communication options. For effective positioning, brands typically need to establish multiple brand associations. Different marketing communication options may be better suited to establishing a particular brand association; for example, sponsorship of a cause may improve perceptions of a brand's trust and credibility, but TV and print advertising may be needed to communicate its performance advantages. Conformability. In any integrated communication program, the message will be new to some consumers and not to others. Conformability refers to the extent to which a marketing communication option works for such different groups of consumers. The ability to work at two levels—effectively communicat-ing to consumers who have and have not seen other communications—is critically important. Cost. Marketers must evaluate marketing communications on all these criteria against their cost to arrive at the most effective and most efficient com-munications program. Source: Adapted from Kevin Lane Keller, Strategic Brand Management, 4th ed. (Upper Saddle River, NJ: Pearson, 2013). marketing memo | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
602 PART 7 | Communi CATing V Alue 6. Designing the communication requires answering three questions: what to say (message strategy), how to say it (creative strategy), and who should say it (message source). Communications channels can be personal (advocate, expert, and social channels) or nonpersonal (media, atmospheres, and events). 7. Although other methods exist, the objective-and-task method of setting the communications budget, which calls upon marketers to develop their budgets by defin-ing specific objectives, is typically most desirable. 8. In choosing the marketing communications mix, mar-keters must examine the distinct advantages and costs of each communication tool and the company's market rank. They must also consider the type of product market in which they are selling, how ready consumers are to make a purchase, and the prod-uct's stage in the company, brand, and product life cycle. 9. Measuring the effectiveness of the marketing commu-nications mix requires asking members of the target audience whether they recognize or recall the commu-nication, how many times they saw it, what points they recall, how they felt about the communication, and what are their previous and current attitudes toward the com-pany, brand, and product. 10. Managing and coordinating the entire communica-tions process calls for integrated marketing commu-nications (IMC): marketing communications planning that recognizes the added value of a comprehensive plan to evaluate the strategic roles of a variety of com-munications disciplines and that combines these dis-ciplines to provide clarity, consistency, and maximum impact through the seamless integration of discrete messages. Summary 1. Modern marketing calls for more than developing a good product, pricing it attractively, and making it accessible to target customers. Companies must also communi-cate with present and potential stakeholders and with the general public. 2. The marketing communications mix consists of eight major modes of communication: advertising, sales promotion, public relations and publicity, events and experiences, online and social media marketing, mobile marketing, direct and database marketing, and personal selling. 3. The communications process consists of nine ele-ments: sender, receiver, message, media, encoding, decoding, response, feedback, and noise. To get their messages through, marketers must take into account how the target audience usually decodes messag-es. They must also transmit the message through efficient media that reach the target audience and develop feedback channels to monitor response to the message. 4. Developing effective communications requires eight steps: (1) identify the target audience, (2) choose the communications objectives, (3) design the communi-cations, (4) select the communications channels, (5) set the total communications budget, (6) choose the communications mix, (7) measure the communications results, and (8) manage the integrated marketing com-munications process. 5. In identifying the target audience, the marketer needs to close any gap that exists between current public perception and the image sought. Communications objectives can be to create a need for the category, brand awareness, brand attitude, or brand purchase intention. My Marketing Lab go to mymktlab. com to complete the problems marked with this icon as well as for additional Assisted-graded writing questions. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
Designing An D m An Aging in Teg RAT e D m AR ke Ting Communi CAT ions | chapter 19 603 Applications Marketing Debate Has TV Advertising Lost Its Power? Long deemed the most successful marketing medium, television advertising is increasingly criticized for being too expensive and, even worse, less effective than it once was. Critics maintain that consumers tune out too many ads and that it is difficult to make a strong impression. The future, claim some, is with online advertising. Supporters of TV advertising disagree, contending that the multisensory experience of TV is unsurpassed and that no other media option offers the same potential impact. Take a position: TV advertising has largely become unimportant versus TV advertising is still the most powerful advertising medium. Marketing Discussion Communications Audit Pick a brand and go to its Web site. Locate as many forms of communication as you can find. Conduct an informal communications audit. What do you notice? How consistent are the different communications? As the company continued to expand worldwide, it developed an integrated marketing communications plan that reached its target audience on many differ-ent levels and built its brand image of authenticity, originality, and community. First, Red Bull focused on pre-marketing, sponsoring events like the Red Bull Snowthrill of Chamonix ski contest in France to help build word-of-mouth excitement around the brand. Once the company entered a new market, it built buzz through its “seeding program,” micro-targeting trendy shops, clubs, bars, and stores. This enabled the cultural elite to access Red Bull's product first and influence other consumers. As one Red Bull executive explained, “We go to on-premise accounts first, because the product gets a lot of visibility and attention. It goes faster to deal with individual accounts, not big chains and their authorization process. ” The company also targeted opinion leaders likely to influence consumers' purchases, including action sports athletes and enter-tainment celebrities. Once Red Bull gained some momentum in bars, it moved into gyms, health food stores, restaurants, con-venience stores near colleges, and eventually supermar-kets. The company's primary point-of-purchase tool has always been its refrigerated sales units, prominently dis-playing the Red Bull logo. These set the brand apart from other beverages and ensure a prominent location in every retail environment. To guarantee consistency and qual-ity in its point-of-purchase displays, the company hired teams of delivery van drivers whose sole responsibility was stocking Red Bull. Marketing Excellence >> Red Bull Red Bull's integrated marketing communications mix has been so successful that the company has created an entirely new billion-dollar drink category—energy drinks. In addition, Red Bull has become a multibillion-dollar beverage brand among fierce competition from bever-age kings like Coca-Cola, Pepsi, and Anheuser-Busch. To date, the company has sold more than 40 billion cans of energy drinks across 166 countries. How? Red Bull became the energy drink market leader by skillfully con-necting with youth around the globe and doing it differ-ently than anyone else. Dietrich Mateschitz founded Red Bull with a sin-gle product in Austria in 1987. By 1997, the slender silver-and-blue can was available in 25 markets globally, including Western and Eastern Europe, New Zealand, and South Africa. Its size and style immediately signaled to consumers that its contents were different from tradi-tional soft drinks. Red Bull's ingredients—amino acid tau-rine, B-complex vitamins, caffeine, and carbohydrates— were specifically formulated to make the drink highly caffeinated and energizing. In fact, some users have referred to it as “liquid cocaine” or “speed in a can. ” Over the past decade, the company introduced other products and flavors, many of which did not succeed. Today, Red Bull offers the original Red Bull Energy Drink, Red Bull Total Zero, Red Bull Sugar Free, and special editions infused with berry, lime, and cranberry flavors. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
604 PART 7 | Communi CATing V Alue explained, “Media is not a tool that we use to estab-lish the market. It is a critical part. It's just later in the development. ” Red Bull's “anti-marketing” marketing communica-tions strategy has been extremely successful connecting with its young consumers. It falls directly in line with the company's mission to be seen as unique, original, and rebellious—just as its Generation Y consumers want to be viewed. Questions 1. What are Red Bull's greatest strengths as more companies (like Coca-Cola, Pepsi, and Monster) enter the energy drink category and gain market share? What are the risks of competing against such powerhouses? 2. Discuss the pros and cons of Red Bull's nontradi-tional marketing tactics. Should the company do more traditional advertising? Why or why not? 3. Discuss the effectiveness of Red Bull's sponsorships. Where should the company draw the line in terms of novelty and risk? Sources: Kevin Lane Keller, “Red Bull: Managing a High-Growth Brand,” Best Practice Cases in Branding, 3rd ed. (Upper Saddle River, NJ: Prentice Hall, 2008); Peter Ha, “Red Bull Stratos: Man Will Freefall from Earth's Stratosphere,” Time, January 22, 2010; “Red Bull to Go on Sale in U. S. with Fruity Flavors,” Businessweek, October 8, 2012; www. redbull. com. Another essential aspect of Red Bull's marketing communication mix is product trial. Whereas traditional beverage marketers attempt to reach the maximum num-ber of consumers with sampling, the company seeks to reach consumers only in ideal usage occasions, namely when they feel fatigue and need a boost of energy. As a result, its sampling campaigns take place at concerts, parties, festivals, sporting events, beaches, highway rest areas (for tired drivers), and college libraries and in limos before award shows. Red Bull also aligns itself with a wide variety of extreme sports, athletes, and teams and artists in music, dance, and film. From motor sports to mountain biking, snowboarding to surfing, rock concerts to extreme sail-ing, there is no limit to the craziness of a Red Bull event or sponsorship. A few company-sponsored events are notorious for taking originality and extreme sporting to the limit. For example, at the annual Flugtag, contestants build homemade flying machines that must weigh less than 450 pounds, including the pilot. Teams launch their contraptions off a specially designed Red Bull-branded ramp, 30 feet above a body of water. Crowds of as many as 300,000 young consumers cheer as the contestants and their craft try to stay true to the brand's slogan: “Red Bull gives you wings!” Red Bull uses traditional advertising once the market has grown mature and the company needs to reinforce the brand to its consumers. As one executive communications mix across television, print, events, experiences, interaction, and social media to promote the brand's universal message of the power of beauty. More than 40 years ago, L'Oreal Paris revolutionized the ad-vertising world with the legendary slogan, “Because I am worth it. ” Written in 1973 by a 23-year-old female copy-writer from Mc Cann Erickson, when the idea of feminism was at its peak, the slogan spread the message of respect and recognition for women. The slogan's positive and empowering sentiment helped develop a line of celebrity endorsements supported by 35 diverse international am-bassadors like Jane Fonda, Jennifer Lopez, Beyoncé, and Aishwarya Rai. The timeless appeal of the slogan is used across many brands sold under the L'Oreal Paris umbrella, and has been tweaked to “Because you are worth it” and “Because we are worth it” to adapt to the changing times. L'Oreal believes that events bring brands to life and are a key component of its IMC strategy. It effectively in-tegrates promotional events with the celebrity power of its brand ambassadors from nearly 20 international red carpets including the Cannes Film Festival. L'Oreal also aligns its communications strategy with fashion events by sponsoring global events like Graduate Fashion Weeks and Fashion Weeks in London, Toronto, and Melbourne. Marketing Excellence >> L'Oreal L'Oreal is one of the leading beauty and cosmetic compa-nies in the world with well-segmented product offerings in 130 countries. Headquartered in Paris, France, L'Oreal's origins date back to 1909, when the young entrepre-neur Eugene Schueller formed a company that sold hair dyes to hairdressers. Growing through successful brand launches and acquisitions, the company became the L'Oreal Group. In 2013, L'Oreal had a market capitaliza-tion of $94. 76 billion with $9 billion spent on advertising and promotion. It markets 27 global brands and operates across five divisions selling high-end luxury cosmetics, professional hairstyling products, specialized dermatologi-cal products, mass-marketed consumer beauty products, and the Body Shop brand. Some of its iconic brands are YSL, Ralph Lauren, Lancôme, Kerastase, Redken, Vichy, L'Oreal Paris, Maybelline, and Garnier. L'Oreal Paris is the innovative brand from the compa-ny's consumer product division that sells high-end mass marketed hair care, hair color, skin care, and makeup products. L'Oreal uses a rich integrated marketing | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
Designing An D m An Aging in Teg RAT e D m AR ke Ting Communi CAT ions | chapter 19 605 to reach relevant audiences by offering creative point-of-purchase displays, sales presentations, demonstrations, sampling, exhibits, and experiences within these shopping malls. Following its worldwide approach, L'Oreal uses ce-lebrity endorsements in the Middle East. In 2012, L'Oreal named Najwa Karam, a top Lebanese artist and, known as the “shining sun” of the Arab music world, as its first brand ambassador in the Middle East. L'Oreal develops specific promotional campaigns for popular festivals in the Middle East as well. For example, the So Couture Eid Look cam-paign in 2014, promoted the idea of celebrating the festival of Eid by dressing up with the “most awaited L'Oreal Paris Eid look,” endorsed by its latest brand spokesperson. L'Oreal has also partnered with the online fashion store Mooda. com to launch its first e-commerce platform in the Middle East. This exclusive beauty-meets-fashion Web site offers a distinctive mix of content and commerce to con-sumers in the Middle East. L'Oreal is changing the face of beauty marketing by transforming its marketing model through complete integration of its traditional and digital media. It uses content-based marketing incorporating education, em-powerment, and aspiration to develop creative messages that increase its brand equity. With more than 4 billion searches on the Web on the subject of beauty, consum-ers are increasingly using digital and social media. L'Oreal takes such consumer insights and the digital revolution seriously. By developing content using how-to videos, information on trends, fashion tips, virtual makeup trials, celebrity appeals, and covering glamorous awards and fashion events, L'Oreal stays relevant to the subject of beauty globally. Questions 1. Discuss L'Oreal Paris's message strategy and creative strategy in light of its slogan and use of brand am-bassadors. Do you think L'Oreal Paris has adapted its IMC strategy effectively in the Middle East? 2. Evaluate L'Oreal's approach to events, experiences, and sponsorships. Has L'Oreal been effective in selecting its partners? 3. What are the benefits of content-based marketing for a beauty brand like L'Oreal? Do you think L'Oreal is right in completely integrating its traditional and digital media? Sources: L'Oreal, www. loreal. com ; L'Oreal Paris, www. lorealparisusa. com ; L'Oreal Partnerships, www. lorealparis. com ; News release, “Project Runway Season 10 multi-platform Social Media Campaign Unveils 'Real-time Runway' and 'Favorite Fan' to Complement 'Fan Favorite',” PR Newswire, July 19, 2012; News release, “Rent the Runway Announces L'Oreal Paris as the First Ever Presenting Sponsor of RTR on Campus,” PR Newswire, August 26, 2013; Kelly Liyakasa, “L'Oreal CMO: Digital is Changing Our Content, Creative and Conversation,” Ad Exchanger, September 13, 2013; Caroline Winter, “L'Oreal's Makeup Genius App: The Cosmetics Counter Goes Digital,” Businessweek, September 11, 2014; Kisten Comings, “3 Keys to L'Oreal's Content Marketing Strategy,” i Media Connection, September 30, 2013; Rachel Mc Arthur, “Najwa Karam, L'Oreal's First Arab Ambassador is Worth it,” Gulf News, June 7, 2012; Press release, “Celebrate this Eid by dressing up in L'Oréal Paris' most awaited Eid look—Arwa's So Couture Nude Look,” Go Dubai, September 4, 2014. The L'Oreal Paris's Powder Room, a pop-up brand experi-ence, is set up during the fashion events where experts provide professional advice, beauty tips, and gifts that help in delivering synchronized brand messages to audiences. L'Oreal also works on partnerships to gain visibility across strategic traditional and digital media in develop-ing its marketing communications. It successfully associ-ated with the Emmy award-winning fashion reality show, Project Runway that regularly featured its products on the show. In addition to mass media sponsorships, L'Oreal's IMC strategy uses partnerships that work on more direct communications. In 2013, L'Oreal partnered with Rent the Runway, a leading online rental fashion store, for its campus program that had a presence in more than 200 college campuses in the U. S. with a reach of over 1. 1 million fe-male students. RTR's network of 1,000 brand ambassa-dors used its digital catalogs, social media, and organized grassroots events to promote the brand. The program was supported by L'Oreal in its nationally syndicated television programs and on social media. Through such associations, L'Oreal delivers a coordinated message of beauty and self-worth to women at specifically targeted levels. L'Oreal creatively uses interactive marketing as part of its IMC to engage its consumers in online loyalty programs, such as the L'Oreal Paris Gold Rewards. Consumers can earn credit online and get free products upon collecting enough points. Responding to the growth of online beauty videos and utilizing the concept to build a stronger com-munications strategy, L'Oreal teamed up with You Tube to produce a one-stop beauty channel. The online channel, called Destination Beauty offered its audience information on latest trends, looks, and provided tutorials. In 2014, offering a unique e-beauty experience, L'Oreal Paris intro-duced its digital innovation app, Makeup Genius, a virtual makeup tester that allows women to try different looks and products through smart devices. L'Oreal believes this will revolutionize the way women shop for makeup. L'Oreal has also adapted its global communication strategy in different local markets. For example, in the Middle East, L'Oreal considers the region's distinct concept of beauty and cultural norms in developing communica-tion messages. L'Oreal recognizes that Middle Eastern women are becoming more sophisticated in their beauty choices with easy access to international trends through the Internet. L'Oreal has developed a careful blend of the IMC tools to connect with the women in the Middle East, and at the same time maintain synergy with its global com-munication themes. Key elements of L'Oreal's IMC strategy in the Middle East include traditional advertising, sales promotion, events, experiences, interactive marketing, and personal selling. Each tool is implemented keeping in view local preferences and customs. Many countries in the Middle East, like the United Arab Emirates and Qatar, host world-class malls that are the main entertainment destina-tions for local families. L'Oreal uses these retail facilities | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
606 My Marketing Lab™ Improve Y our Grade! Over 10 million students improved their results using the Pearson My Labs. Visit mymktlab. com for simulations, tutorials, and end-of-chapter problems. In This Chapter, We Will Address the Following Questions 1. What steps are required in developing an advertising program? (p. 608) 2. How should marketers choose advertising media and measure their effectiveness? (p. 615) 3. How should sales promotion decisions be made? (p. 622) 4. What are the guidelines for effective brand-building events and experiences? (p. 626) 5. How can companies exploit the potential of public relations? (p. 629)Backed by a fully-integrated communications program, P&G's “Thank You Mom” Olympic sponsorship has connected with customers and improved sales worldwide. Source: Xin yu tj-Imaginechina | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
607 Managing Mass Communications: Advertising, Sales Promotions, Events and Experiences, and Public Relations20 Despite the enormous increase in marketers' use of personal communications due to the pervasive nature of the Internet, mass media are still a vitally important component of most market-ing communications programs. The old days in which “If you build a great ad, they will come” are long gone, however. To generate consumer interest and sales, mass media must often be supplemented and carefully integrated with other communications. P&G has struck gold with its fully integrated Olympic-themed “Thank You Mom” campaign. 1 After its sponsorship of the U. S. national team at the 2010 Winter Olympics in Vancouver led to an estimated $100 million in increased revenue, Procter & Gamble signed up to be an official Olympic sponsor for the next five Summer and Winter Games from 2012 to 2020. Targeting women in their roles as “caregivers and family anchors,” the company backed its sponsorship with the multimedia “Thank You Mom” global marketing campaign. The “Best Job” online and broadcast ad campaign for the 2012 Summer Olympics in London emotionally portrayed the crucial roles played by mothers whose children went on to become Olympic champions. Each ad finished by showing the P&G corporate logo and some of its billion-dollar-plus brands, such as Pampers, Gillette, Duracell, and Bounty. More than 70 million U. S. viewers watched at least one digital ad or video during the fully integrated campaign. It also combined promotions, PR, cause marketing, and other communications to “immerse the consumer with the brands and the message at every level, on every plat-form, from smartphones to stores in 204 international markets. ” P&G marketers estimated the firm received $200 million in added sales from the campaign. For the 2014 Winter Olympics in Sochi, Russia, it launched the “Pick Them Back Up” campaign, which “paid homage to moms of athletes from across the globe, bringing to life the daily lessons all mom teach ... and the unconditional love moms give kids no matter what. ” Additional online videos told the real-life stories of Olympians from different countries. Although P&G clearly has found great success with its multimedia Olympics campaign, other marketers are trying to come to grips with how to best use mass media in the new— and still changing—communication environment. 2 In this chap-ter, we examine the nature and use of four mass-communication tools—advertising, sales promotion, events and experiences, and public relations and publicity. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
608 PART 7 | Communi CATing V Alue Developing and Managing an Advertising Program Advertising can be a cost-effective way to disseminate messages, whether to build a brand preference or to educate people. Even in today's challenging media environment, good ads can pay off. GEICO has succeeded by keeping both its ad campaigns and their executions fresh. 3 Geic O GEICO has spent hundreds of millions of dollars on TV advertising. Has it been worth it? Warren Buffet, chairman and CEO of GEICO's parent company Berkshire Hathaway, thinks so. GEICO has more than quintupled its revenue over the past decade, from slightly under $3 billion in 1998 to more than $17 billion in 2013—making it the fastest-growing auto insurance company in the United States. The company sells directly to consumers with a basic message, “15 Minutes Could Save You 15% or More on Your Car Insurance. ” Partnering with The Martin Agency, GEICO has run a series of highly creative and award-winning ad campaigns to emphasize different aspects of the brand. Four ran concurrently in 2014. TV ads featuring the Cockney-speaking Gecko lizard spokes-character reinforce GEICO's brand image as credible and accomplished. The “Happier Than” campaign comes up with exaggerated situations to describe how happy GEICO customers are, such as a camel on Wednesday (hump day) or Dracula volunteering at a blood drive. A third campaign featuring Maxwell, a talking pig, focuses on specific products and service features. The fourth campaign, “Did You Know,” starts with a person commenting on the com-pany's famous 15-minute slogan to a companion, who replies, “Everyone knows that. ” The first speaker then tries to save face with a twist on some other conventional wisdom, such as that Pinocchio was a poor motivational speaker or Old Mc Donald was a really bad speller. The multiple campaigns complement each other and build on each other's success; the company dominates the TV airwaves with so many varied car insurance messages that competitors' ads are lost. In developing an advertising program, marketing managers must always start by identifying the target market and buyer motives. Then they can make the five major decisions known as “the five Ms”: 1. Mission: What are our advertising objectives? 2. Money: How much can we spend and how do we allocate our spending across media types? 3. Message: What should the ad campaign say? Fast-growing auto insurance provider Geico runs multiple ad campaigns at the same time, each emphasizing different aspects of its brand and service. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging m Ass Communi CAT ions | chapter 20 609 4. Media: What media should we use? 5. Measurement: How should we evaluate the results? These decisions are summarized in Figure 20. 1 and described in the following sections. Sett In G the Advert ISIn G Object Ive S Advertising objectives must flow from earlier decisions about target market, brand positioning, and the market-ing program. An advertising objective (or goal) is a specific communications task and achievement level to be accomplished with a specific audience in a specific period of time:4 To increase among 30 million homemakers who own automatic washers the number who identify brand X as a low-sudsing detergent, and who are persuaded that it gets clothes cleaner, from 10 percent to 40 percent in one year. We classify advertising objectives according to whether they aim to inform, persuade, remind, or reinforce. These goals correspond to stages in the hierarchy-of-effects model discussed in Chapter 19. Informative advertising aims to create brand awareness and knowledge of new products or new features of existing products. 5 Consumer packaged goods companies like Colgate, General Mills, and Unilever will often focus on key product benefits. Persuasive advertising aims to create liking, preference, conviction, and purchase of a product or service. Some persuasive advertising is comparative advertising, which explicitly compares the attributes of two or more brands, such as the Chrysler TV ad for the Dodge Ram that asks, “What if you were to take away horsepower, torque and warranty coverage from a Ram? Well, you' d end up with a Ford F-150. ”6 Comparative advertising works best when it elicits cognitive and affective motivations simultaneously and when consumers are processing advertising in a detailed, analytical mode. 7 Reminder advertising aims to stimulate repeat purchase of products and services. Expensive, four-color Coca-Cola ads in magazines remind people to purchase Coca-Cola. Reinforcement advertising aims to convince current purchasers they made the right choice. Automobile ads often depict satisfied customers enjoying special features of their new car. The advertising objective should emerge from a thorough analysis of the current marketing situation. If the product class is mature, the company is the market leader, and brand usage is low, the objective is to stimulate more usage. If the product class is new, the company is not the market leader, and the brand is superior to the leader, the objective is to convince the market of the brand's superiority. dec Id In G On the Advert ISIn G bud Get How does a company know it's spending the right amount? Although advertising is treated as a current expense, part of it is really an investment in building brand equity and customer loyalty. When a company spends $5 mil-lion on capital equipment, it can call the equipment a five-year depreciable asset and write off only one-fifth of Message Message generation Message evaluation and selection Message execution Social-responsibility review Measurement Communication impact Sales impact Money Factors to consider: Stage in PLC Market share and consumer base Competition and clutter Advertising frequency Product substitutability Mission Sales goals Advertising objectives Media Reach, frequency, impact Major media types Specific media vehic les Media timing Geographical media allocation| Fig. 20. 1 | The Five Ms of Advertising | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
610 PART 7 | Communi CATing V Alue the cost in the first year. When it spends $5 million on advertising to launch a new product, however, it must write off the entire cost in the first year, reducing its reported profit, even if the benefits will persist for many years to come. Factors a FFecting Budget decisions Here are five specific factors to consider when setting the advertising budget:8 1. Stage in the product life cycle —New products typically merit large advertising budgets to build awareness and gain consumer trial. Established brands usually are supported by lower advertising budgets, measured as a ratio to sales. 2. Market share and consumer base —High-market-share brands usually require less advertising expendi-ture as a percentage of sales to maintain share. Building share by increasing market size requires larger expenditures. 3. Competition and clutter —In a market with a large number of competitors and high advertising spending, a brand must advertise more heavily to be heard. Even advertisements not directly competitive to the brand cre-ate clutter and a need for heavier advertising. 4. Advertising frequency —The number of repetitions needed to put the brand's message across to consumers has an obvious impact on the advertising budget. 5. Product substitutability —Brands in less-differentiated or commodity-like product classes (beer, soft drinks, banks, and airlines) require heavy advertising to establish a unique image. advertising elasticity The predominant response function for advertising is often concave but can be S-shaped. When it is S-shaped, some positive amount of advertising is necessary to generate any sales impact, but sales increases eventually flatten out. 9 One classic study found that increasing the TV advertising budget had a measurable effect on sales only half the time. The success rate was higher for new products and line extensions than for established brands and when there were changes in copy or in media strategy (such as an expanded target market). When advertising increased sales, its impact lasted up to two years after peak spending. Long-term incremental sales were approximately double those in the first year of an advertising spending increase. 10 Other research reinforces these conclusions. In a 2004 IRI study of 23 brands, advertising often didn't increase sales for mature brands or categories in decline. A review of academic research found that advertising elasticities were estimated to be higher for new (. 3) than for established (. 1) products. 11 Research has also found that what you say (ad copy) is more important than the number of times you say it (ad frequency). 12 devel Op In G the Advert ISIn G c Amp AIGn Advertisers employ both art and science to develop the message strategy or positioning of an ad— what it attempts to convey about the brand—and its creative strategy—how it expresses the brand claims. They use three steps: message generation and evaluation, creative development and execution, and social-responsibility review. Message generation and evaluation Advertisers are always seeking “the big idea” that connects with consumers rationally and emotionally, distinguishes the brand from competitors, and is broad and flexible enough to translate to different media, markets, and time periods. Fresh insights are important for creating unique appeals and position. 13 GOt Mi Lk? After a 20-year decline in milk consumption among Californians, in 1993 milk processors from across the state formed the California Milk Processor Board (CMPB) with one goal in mind: to get people to drink more milk. The ad agency commissioned by the CMPB, Goodby, Silverstein & Partners, developed a novel approach to pitching milk's benefits. Research had shown most consumers already believed milk was good for them. So the campaign reminded them of the inconvenience of running out of it, which became known as the “milk deprivation” strategy. The “got milk?” tagline reminded consumers to make sure they had enough milk in their refrigerators. A year after the launch, sales volume had increased 1. 07 percent. In 1995, the “got milk?” campaign was licensed to the National Dairy Board. In 1998, the National Fluid Milk Processor Education Program, which had been using the “milk mustache” campaign since 1994 to boost sales, bought the rights to the “got milk?” tagline, which it used for the next 15 years. The “got milk?” campaign paid strong divi-dends by halting the decline in sales of milk in California, even more than a decade after its launch. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging m Ass Communi CAT ions | chapter 20 611 A good ad normally focuses on one or two core selling propositions. As part of refining the brand position-ing, the advertiser should conduct market research to determine which appeal works best with its target audience and then prepare a creative brief, typically one or two pages. This is an elaboration of the positioning strategy and includes considerations such as key message, target audience, communications objectives (to do, to know, to believe), key brand benefits, supports for the brand promise, and media. How many ad themes should the advertiser create before choosing one? The more themes explored, the higher the probability of finding an excellent one. Fortunately, an ad agency's creative department can inexpensively com-pose many alternatives in a short time by drawing still and video images from computer files. Marketers can also cut the cost of creative dramatically by using consumers as their creative team, a strategy sometimes called “open sourcing” or “crowdsourcing. ”14 c Onsu Mer-Generated ad Vertisin G One of the first major marketers to feature consumer-generated ads was Converse, whose award-winning campaign “Brand Democracy” used films created by consum-ers in a series of TV and Web ads. H. J. Heinz ran a “Top This TV Challenge,” inviting the public to create the next commercial for its Heinz Ketchup brand and win $57,000. More than 6,000 submissions and 10 million online views resulted, and sales rose more than 13 percent year over year. In addition to creating ads, consumers can help disseminate advertising. A UK “Life's for Sharing” ad for T-Mobile in which 400 people break into a choreographed dance routine in the Liverpool Street Station was shown exactly once on the Celebrity Big Brother television show, but it was watched more than 15 million times online when word about it spread via e-mail messages, blogs, and social networks. Mc Donald's similarly ran a popular user-generated cam-paign for its 2012 London Olympics sponsorship. Academic researchers have shown that consumer-generated ads can create more emotional and personal appeal, be deemed more credible and authentic, and lead to higher levels of brand loyalty and purchase intentions among viewers than company-produced ads, at least as long as consumers are not overly skeptical. Although entrusting consumers with a brand's marketing effort can be pure genius, it can also be a regrettable failure. When Kraft sought a hip name for a new flavor of its iconic Vegemite product in Australia, it labeled the first 3 million jars “Name Me” to enlist consumer support. From 48,000 entries, however, the marketer selected one that was thrown in as a joke—i Snack 2. 0—and sales plummeted. The company had to pull i Snack jars from the shelves and start from scratch in a more conventional fashion, choosing the new name Cheesybite. 15 creative develop Ment and execution The ad's impact depends not only on what it says but, often more important, on how it says it. Creative execution can be decisive. 16 Every advertising medium has advantages and disadvantages. Here, we briefly review television, print, and radio advertising media. Television Ads Television is generally acknowledged as the most powerful advertising medium and reaches a broad spectrum of consumers at low cost per exposure. TV advertising has two particularly important strengths. First, it can vividly demonstrate product attributes and persuasively explain their corresponding consumer benefits. Second, it can dramatically portray user and usage imagery, brand personality, and other intangibles. Because of the fleeting nature of the ad, however, and the distracting creative elements often found in it, product-related messages and the brand itself can be overlooked. Moreover, the high volume of nonprogramming material on television creates clutter that makes it easy for consumers to ignore or forget ads. Nevertheless, prop-erly designed and executed TV ads can still be a powerful marketing tool that improves brand equity, sales, and profits. In the highly competitive insurance category, advertising can help a brand to stand out. 17 af Lac Aflac, the largest supplier of supplemental insurance, was relatively unknown until a highly creative ad campaign made it one of the most recognized brands in recent history. (Aflac stands for American Family Life Assurance Company. ) Created by the Kaplan Thaler ad agency, the lighthearted campaign features an irascible duck incessantly squawking the company's name, “Aflac!” while consumers or celebrities discuss its products. The duck's frustrated bid for attention appealed to consumers. Sales were up 28 percent in the first year the duck aired, and name recognition went from 13 percent to 91 percent. Aflac has stuck with the duck in its advertising, even incorporating it into its corporate logo in 2005. Social media have allowed marketers to further develop the duck's personality—it has 515,000 Facebook fans and counting. The Aflac duck is not just a U. S. phenomenon. It also stars in Japanese TV ads—with a somewhat brighter disposition—where it has been credited with helping drive sales in Aflac's biggest market. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
612 PART 7 | Communi CATing V Alue Print Ads Print media offer a stark contrast to broadcast media. Because readers consume them at their own pace, magazines and newspapers can provide detailed product information and effectively communicate user and usage imagery. At the same time, the static nature of the visual images in print media makes dynamic presentations or demonstrations difficult, and print media can be fairly passive. The two main print media—magazines and newspapers—share many advantages and disadvantages. Although newspapers are timely and pervasive, magazines are typically more effective at building user and usage imagery. Newspapers are popular for local—especially retailer—advertising. On an average day, roughly one-half to three-quarters of U. S. adults read a newspaper, though increasingly online. Print advertising has steadily declined in recent years. 18 Although advertisers have some flexibility in designing and placing newspaper ads, relatively poor reproduction quality and short shelf life can dimin-ish the impact. Researchers report that the picture, headline, and copy in print ads matter in that order. The picture must draw attention. The headline must reinforce the picture and lead the person to read the copy. The copy must be engaging and the brand's name prominent. Even then, less than 50 percent of the exposed audience will notice even a really out-standing ad. About 30 percent might recall the headline's main point, 25 percent register the advertiser's name, and fewer than 10 percent read most of the body copy. Ordinary ads don't achieve even these results. Some clear managerial implications emerge, as summarized in “Marketing Memo: Print Ad Evaluation Criteria. ” A print ad should be clear, consistent, and well branded. In an award-winning campaign, ads for the i Pad Mini on the back covers of Time and The New Yorker com-pared the actual sizes of the device and the magazine. 19 To celebrate its 75th anniversary, Ray-Ban's award-winning “Never Hide” print ad campaign featured seven ads showing how Ray-Ban wearers flouted convention and stood out from the crowd through seven different decades. 20 Radio Ads Radio is a pervasive medium: Ninety-three percent of all U. S. citizens age 12 and older listen daily and for about 20 hours a week on average, numbers that have held steady in recent years. Much radio listening occurs in the car and out of home. To be successful, radio networks are going multi-platform with a strong digital presence to allow listeners to tune in anytime, anywhere. In judging the effectiveness of a print ad, marketers should be able to answer yes to the following questions about its execution: 1. Is the message clear at a glance? Can you quickly tell what the ad is all about? 2. Is the benefit in the headline? 3. Does the illustration support the headline? 4. Does the first line of the copy support or explain the headline and illustration? 5. Is the ad easy to read and follow? 6. Is the product easily identified? 7. Is the brand or sponsor clearly identified? Source: Adapted from Scott C. Purvis and Philip Ward Burton, Which Ad Pulled Best, 9th ed. (Lincolnwood, IL: NTC Business Books, 2002). Print Ad Evaluation Criteria marketing memo The success of the Aflac duck has led to the character being incorporated into the brand's logo and appearing in many different communications like its sponsorship of NASCAR driver Carl Edwards. Source: SMI/Newscom | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging m Ass Communi CAT ions | chapter 20 613 Perhaps radio's main advantage is flexibility—stations are very targeted, ads are relatively inexpensive to produce and place, and short closings for scheduling them allow for quick response. Radio can engage listeners through a combination of popular brands, local presence, and strong personalities. 21 It is a particularly effective medium in the morning; it can also let companies achieve a balance between broad and localized market coverage. Radio's obvious disadvantages are its lack of visual images and the relatively passive nature of the consumer processing that results. Nevertheless, radio ads can be extremely creative. Clever use of music, sound, and other creative devices can tap into the listener's imagination to create powerfully relevant images. Here is an example:22 MOte L 6 Motel 6, the nation's largest budget motel chain, was founded in 1962 when the “6” stood for $6 a night. After its business fortunes hit bottom in 1986 with an occupancy rate of only 66. 7 percent, the company made a number of marketing changes, including the launch of humorous 60-second radio ads featuring folksy writer Tom Bodett delivering the clever tagline “We'll Leave the Light on for You. ” Named one of Advertising Age's Top 100 Ad Campaigns of the Twentieth Century, the campaign continues to receive awards, including the 2009 Radio Mercury Awards grand prize for an ad called “DVD. ” In this ad, Bodett introduces the “DVD version” of his latest commercial, utilizing his trademark self-deprecating style to provide “behind the scenes” commentary on his own performance. Still going strong, the campaign is credited with a rise in occupancy and a revitalization of the brand that continues to this day. legal and social issues To break through clutter, some advertisers believe they have to push the boundaries of what advertising consumers are used to seeing. They must be sure, however, not to overstep social and legal norms or offend the general public or ethnic, racial, or special-interest groups. A substantial body of U. S. laws and regulations governs advertising. Advertisers must not make false claims, use false demonstrations, or create ads with the capacity to deceive, even if no one is actually deceived. A floor wax advertiser can't say the product gives six months' protection unless it does so under typical conditions, and a diet bread baker can't say its product has fewer calories simply because its slices are thinner. The challenge is telling the difference between deception and “puffery”—simple exaggerations that are not meant to be believed and that are permitted by law. “Marketing Insight: Off-Air Ad Battles” describes a few recent legal disputes about what should be permissible in a brand's advertising. Sellers in the United States are legally obligated to avoid bait-and-switch advertising that attracts buyers under false pretenses. Suppose a seller advertises a sewing machine at $149. When consumers try to buy the advertised machine, the seller cannot then refuse to sell it, downplay its features, show a faulty one, or promise unreasonable delivery dates in order to switch the buyer to a more expensive machine. 23 Magazine advertising can be an effective way to build or reinforce user imagery for a brand, as with Ray-Ban's “Never Hide” campaign. Source: Luxottica | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
614 PART 7 | Communi CATing V Alue Off-Air Ad Battles In a highly competitive environment, perhaps it is not surprising that not everyone sees eye to eye on what is suitable advertising. Here are two notable recent disputes. Splenda Splenda's tagline for its artificial sweetener was “Made from sugar, so it tastes like sugar,” with “but it's not sugar” in small writing almost as an afterthought. Mc Neil Nutritionals, Splenda's manufacturer, does begin production of Splenda with pure cane sugar but burns it off in the manufacturing process. Merisant, maker of Equal, claimed that Splenda's advertising confused consumers who were likely to conclude that a product “made from sugar” is healthier than one made from aspartame, Equal's main ingredient. A document from Mc Neil's own files and used in court says consumers' perception of Splenda as “not an artificial sweetener” was one of the biggest triumphs of the company's marketing campaign, which began in 2003. Splenda became the runaway leader in the sugar-substitute cat-egory with 60 percent of the market, leaving roughly 14 percent each to Equal and Sweet'N Low. Although Mc Neil eventually agreed to settle the lawsuit and pay Merisant an undisclosed but “substantial” award (and change its advertising), it may have been too late to change consumers' perception of Splenda as something sugary and sugar-free. POM Wonderful In May 2012, the Federal Trade Commission (FTC) issued a “cease-and-desist” order against POM Wonderful, saying the company had spread deceptive claims in print publications and billboards and online that its POM pomegranate juice could treat or prevent erectile dysfunc-tion, prostate cancer, and heart disease. The ruling came after two years of legal back and forth. Oddly, however, POM appeared to declare victory, running a full-page ad in the New York Times lauding the fact that the ruling did not force it to seek re-approval from the Food and Drug Administration (as drug companies must do). A later appeal was rejected as the FTC continued to rule against POM ads using headlines such as “Cheat Death” without stronger evidence. POM was not the only one to run into trouble over pomegranates. Welch's settled two class-action suits for $30 million because labels on its 100% Juice White Grape Pomegranate Flavored 3 Juice Blend claimed more pomegranate than it really had—only 1 ounce in a 64-ounce bottle. Sources: Sarah Hills, “Mc Neil and Sugar Association Settle Splenda Dispute,” Food Navigator-usa. com, www. foodnavigator-usa. com, November 18, 2008; James P. Miller, “Bitter Sweets Fight Ended,” Chicago Tribune, May 12, 2007; Avery Johnson, “How Sweet It Isn't: Maker of Equal Says Ads for J&J's Splenda Misled; Chemistry Lesson for Jurors,” Wall Street Journal, April 6, 2007; “In Lawsuit Brought by POM Wonderful, a Federal Jury Finds Juice Maker Welch's Intentionally Misled Consumers,” Reuters, September 15, 2010; Ily Goyanes, “Welch's Lies about Its Juice, Pays $30 Million and No One Notices,” Miami New Times, February 24, 2011; Charlie Minato, “POM Wonderful Is Bragging about Loss to FTC in Full Page Ads in the NY Times,” Business Insider, May 24, 2012; Alicia Mundy, “FTC Bars Pom Juice's Health Claims,” Wall Street Journal, January 16, 2013. For a discussion of the possible role of corrective advertising, see Peter Darke, Laurence Ashworth, and Robin J. B. Ritchie, “Damage from Corrective Advertising: Causes and Cures,” Journal of Marketing 72 (November 2008), pp. 81-97. marketing insight POM Wonderful has tangled with the FTC over its ad claims. Source: © Presselect/Alamy Advertising can play a more positive broader social role. The Ad Council is a nonprofit organization that uses top-notch industry talent to produce and distribute public service announcements for nonprofits and government agencies. From its early origins with “Buy War Bonds” posters, the Ad Council has tackled innumerable pressing social issues through the years, from drunk driving to AIDS prevention to its current focus on domestic violence. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging m Ass Communi CAT ions | chapter 20 615 ch OOSI n G med IA After choosing the message, the advertiser's next task is to select media to carry it. The steps here are deciding on desired reach, frequency, and impact; choosing among major media types; selecting specific media vehicles; and setting media timing and geographical allocation. Then the marketer evaluates the results of these decisions. reach, Frequency, and i Mpact Media selection is finding the most cost-effective media to deliver the desired number and type of exposures to the target audience. What do we mean by the desired number of exposures? The advertiser seeks a specified advertising objective and response from the target audience—for example, a target level of product trial. This level depends on, among other things, level of brand awareness. Suppose the rate of product trial increases at a diminishing rate with the level of audience awareness, as shown in Figure 20. 2(a). If the advertiser seeks a product trial rate of T *, it will be necessary to achieve a brand awareness level of A*. The next task is to find out how many exposures, E *, will produce a level of audience awareness of A*. The ef-fect of exposures on audience awareness depends on the exposures' reach, frequency, and impact: Reach (R). The number of different persons or households exposed to a particular media schedule at least once during a specified time period Frequency (F). The number of times within the specified time period that an average person or household is exposed to the message Impact (I). The qualitative value of an exposure through a given medium (thus, a food ad should have a higher impact in Bon Appetit than in Fortune magazine) Figure 20. 2(b) shows the relationship between audience awareness and reach. Audience awareness will be greater the higher the exposures' reach, frequency, and impact. There are important trade-offs here. Suppose the planner has an advertising budget of $1,000,000 and the cost per thousand exposures of average quality is $5. This means 200,000,000 exposures ($1,000,000 ÷ [$5/1,000]). If the advertiser seeks an average exposure frequency of 10, it can reach 20,000,000 people (200,000,000 ÷ 10) with the given budget. But if the advertiser wants higher-quality media costing $10 per thousand exposures, it will be able to reach only 10,000,000 people unless it is willing to lower the desired exposure frequency. The relationship between reach, frequency, and impact is captured in the following concepts: Total number of exposures (E). This is the reach times the average frequency; that is, E = R × F, also called the gross rating points (GRP). If a given media schedule reaches 80 percent of homes with an average exposure frequency of 3, the media schedule has a GRP of 240 (80 × 3). If another media schedule has a GRP of 300, it has more weight, but we cannot tell how this weight breaks down into reach and frequency. Weighted number of exposures (WE). This is the reach times average frequency times average impact, that is WE = R × F × I. Reach is most important when launching new products, flanker brands, extensions of well-known brands, and infrequently purchased brands or when going after an undefined target market. Frequency is most important where there are strong competitors, a complex story to tell, high consumer resistance, or a frequent-purchase cycle. 24 T* A*Trial Awareness A* E*Awareness Reach Frequency = 5, Impact = 1. 5 Frequency = 5, Impact = 1 Frequency = 3, Impact = 1(a) Relationship between Product Trial Rate and Audience Awareness Level(b) Relationship between Audience Awareness Level and Exposure Reach and Frequency| Fig. 20. 2 | Relationship among Trial, Awareness, and the Exposure Function | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
616 PART 7 | Communi CATing V Alue A key reason for repetition is forgetting. The higher the forgetting rate associated with a brand, product cat-egory, or message, the higher the warranted level of repetition. However, advertisers should not coast on a tired ad but insist on fresh executions by their ad agency. 25 choosing a Mong Major Media types The media planner must know the capacity of the major advertising media types to deliver reach, frequency, and impact. The major advertising media along with their costs, advantages, and limitations are profiled in Table 20. 1. Media planners make their choices by considering factors such as target audience media habits, product characteristics, message requirements, and cost. place advertising options Place advertising, or out-of-home advertising, is a broad category including many creative and unexpected forms to grab consumers' attention where they work, play, and, of course, shop. Popular options include billboards, public spaces, product placement, and point of purchase. Billboards Billboards use colorful, digitally produced graphics, backlighting, sounds, movement, and unusual— even 3D—images. 26 In New Y ork, manhole covers have been reimagined as steaming cups of Folgers coffee; in Belgium, e Bay posted “Moved to e Bay” stickers on empty storefronts; and in Germany, imaginary workers toiling inside vending machines, ATMs, and photo booths were justification for a German job-hunting Web site to proclaim, “Life Is Too Short for the Wrong Job. ”27 New “Eyes On” measurement techniques allow marketers to better understand who has seen their outdoor ads. 28 A strong creative message can make all the difference. Chang Soda in Bangkok had enough money in its budget for only one digital billboard. To maximize impact, it built a giant bubbling bottle onto the billboard to illustrate the product's carbonation. Word-of-mouth buzz quintupled bottle sales from 200,000 to 1 million. 29 Public Spaces Ads are appearing in such unconventional places as movie screens, airplane bodies, and fitness equipment, as well as in classrooms, sports arenas, office and hotel elevators, and other public places. 30 Transit ads on buses, subways, and commuter trains have become a valuable way to reach working women. “Street furniture”— bus shelters, kiosks, and public areas—is another fast-growing option. ta Ble 20. 1 Profiles of Major Media Types Medium Advantages Limitations Newspapers Flexibility; timeliness; good local market coverage; broad acceptance; high believability Short life; poor reproduction quality; small “pass-along” audience Television Combines sight, sound, and motion; appealing to the senses; high attention; high reach High absolute cost; high clutter; fleeting exposure; less audience selectivity Direct mail Audience selectivity; flexibility; no ad competition within the same medium; personalization Relatively high cost; “junk mail” image Radio Mass use; high geographic and demographic selectivity; low cost Audio presentation only; lower attention than television; nonstandardized rate structures; fleeting exposure Magazines High geographic and demographic selectivity; credibility and prestige; high-quality reproduction; long life; good pass-along readership Long ad purchase lead time; some waste in circulation Outdoor Flexibility; high repeat exposure; low cost; low competition Limited audience selectivity; creative limitations Yellow Pages Excellent local coverage; high believability; wide reach; low cost High competition; long ad purchase lead time; creative limitations Newsletters Very high selectivity; full control; interactive opportunities; relative low costs Costs could run away Brochures Flexibility; full control; can dramatize messages Overproduction could lead to runaway costs Telephone Many users; opportunity to give a personal touch Relative high cost; increasing consumer resistance | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging m Ass Communi CAT ions | chapter 20 617 Advertisers can buy space in stadiums and arenas and on garbage cans, bicycle racks, parking meters, airport luggage carousels, eleva-tors, gasoline pumps, the bottom of golf cups and swimming pools, airline snack packages, and supermarket produce in the form of tiny labels on apples and bananas. They can even buy space in toilet stalls and above urinals, which office workers visit an average of three to four times a day for roughly four minutes per visit. 31 Product Placement Marketers pay $100,000 to $500,000 so their products will make cameo appearances in movies and on television. 32 Sometimes such product placements are the result of a larger network advertising deal, but small product-placement shops also maintain ties with prop masters, set designers, and production executives. Some firms get product placement at no cost. Nike does not pay to be in movies but often supplies shoes, jackets, bags, and so on. Increasingly, products and brands are being woven directly into the story, as when a new i Pad for the gadget-loving dad of Modern Family became the story arc of a whole episode. In some cases, however, brands pay for the rights to appear in a movie, as with Skyfall. 33 skyfa LL With Skyfall, the 23rd film in the franchise, Heineken reportedly paid almost $40 million for the rights to have James Bond drink its beer instead of his traditional vodka martini, covering a third of the film's estimated production budget. Marketers with the most on-screen presence beyond Heineken's in the film included Adidas, Aston Martin, Audi, Omega, Sony, and Tom Ford. One research firm estimated that brands in the film received more than $7. 6 million worth of exposure during its opening week-end. Some brands featured their movie promotion off-screen too. Heineken shot an extravagant 90-second ad featuring an inventive chase on a train that ended with a cameo appearance by Daniel Craig, the British actor cur-rently playing Bond. More than 22 million people viewed the campaign on-line, and Heineken's “Crack the Case” promotion invited consumers in major cities to demonstrate their Bond-like skills in a game. Product placement is not immune to criticism; lawmakers fault its stealth nature, threatening to force more explicit disclosure of participating advertisers. 34 Point of Purchase Chapter 18 discussed shopper marketing and in-store marketing efforts. The appeal of point-of-purchase advertising is that consumers make many brand decisions in the store—74 percent according to one study. 35 There are many ways to communicate at the point of purchase ( P-O-P), including ads on shopping carts, cart straps, aisles, and shelves and in-store demonstrations, live sampling, and instant coupon machines. 36 Some supermarkets are selling floor space for company logos and experimenting with talking shelves. Mobile marketing reaches consumers via smart phones when in store. P-O-P radio provides FM-style programming and commercial messages to thousands of food stores and drugstores nationwide. Video screens in some stores, such as Walmart, play TV-type ads. 37 Wa LMart s Mart net WOrk Walmart, an in-store advertising pioneer, replaced its original program with a new SMART network in 2008 playing on 27,000 individual screens in its 2,700 stores nation-wide. Programming reaches 160 million viewers every four weeks with large welcome screens at the entrance of the store, a category screen in departments, and endcap screens on each aisle. Advertisers pay $325,000 for 30-second spots per two-week cycle in the grocery section and $650,000 per four-week run in the health and beauty department. Five-second ads running every two minutes for two weeks on the welcome screens are $80,000, and 10-second spots Heineken was a big sponsor of the popular James Bond film Skyfall, using product placement, ads, and a promotion as support. Source: © Photos 12/Alamy | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
618 PART 7 | Communi CATing V Alue running twice every six minutes on the full network cost $50,000 per week. By linking the time when ads were shown and when product sales were made, Walmart can estimate how much ads increase sales by department (from 7 percent in Electronics to 28 percent in Health & Beauty) and by product type (mature items increase 7 percent, seasonal items 18 percent). evaluating alternate Media Nontraditional media can often reach a very precise and captive audience in a cost-effective manner, with ads anywhere consumers have a few seconds to notice them. The message must be simple and direct. Outdoor advertising, for example, is often called the “15-second sell. ” It's more effective at enhancing brand awareness or brand image than at creating new brand associations. Unique ad placements designed to break through clutter may also be perceived as invasive and obtrusive, how-ever, especially in traditionally ad-free spaces such as in schools, on police cruisers, and in doctors' waiting rooms. Nevertheless, perhaps because of their sheer pervasiveness, some consumers seem less bothered by nontraditional media now than in the past. “Marketing Insight: Playing Games with Brands” describes the how brands have be-come infused in gaming. The challenge for nontraditional media is demonstrating its reach and effectiveness through credible, indepen-dent research. But there will always be room for creativity, as when Intel struck a five-year deal with the famed FC Barcelona soccer team to place its Intel Inside logo on the inside of players' jerseys, so when they lifted their shirts after scoring a goal, a customary gesture, the logo would appear. 38 selecting speci Fic Media vehicles The media planner must choose the most cost-effective vehicles within each chosen media type. The advertiser who decides to buy 30 seconds of advertising on network television can pay $75,000 for a new show, $350,000 for a popular prime-time show such as Sunday Night Football, The Big Bang Theory, or The Voice, or almost $4 million for the Super Bowl. 39 These choices are critical: The average cost to produce a national 30-second television commercial is about $300,000,40 so it can cost as much to run an ad once on network TV as to create and produce it to start with! “Marketing Memo: Winning The Super Bowl of Advertising” describes how marketers approach the biggest event on the U. S. sports scene. Media planners rely on measurement services that estimate audience size, composition, and media cost and then calculate the cost per thousand persons reached. A full-page, four-color ad in Sports Illustrated cost ap-proximately $412,500 in 2014. If Sports Illustrated 's estimated readership was 3 million people, the cost of expos-ing the ad to 1,000 persons was $13. 75. The same ad in People cost approximately $337,400 and reached 3. 475 Playing Games with Brands More than half of U. S. adults and virtually all teens (97 percent) play video games, and about one in five play every day or almost every day. About 40 percent of gamers are women, who prefer puzzles and col-laborative games, whereas men seem more attracted to competitive or simulation games. Given this explosive popularity, many advertisers have gotten on board. A top-notch “advergame” can cost between $100,000 and $500,000 to develop. The game can be played on the sponsor's corporate homepage, on gaming portals, or even at public locations such as restaurants. Apple Jacks has an advergame on its Web site called Race to the Bowl Rally that targets kids and gives point bonuses for picking up Apple Jacks on the race course. In the M&M Chocolate Factory game, users help the M&M characters make their way through 12 different game levels inside a candy factory and can share content via Facebook and Twitter. Marketers collect valuable customer data upon registration and often seek permission to send e-mail. Among players of a game sponsored by Ford Escape SUV, 54 percent signed up for e-mail. Marketers are also starring in popular games. Gatorade appears in NBA 2k13, AXE body spray in Splinter Cell: Chaos Theor y, and White Castle in Homefront. Mainstream marketers such as Apple, Procter & Gamble, Toyota, and Visa have all developed games. By integrating branded structures into a city-building game called We City for mo-bile devices, Century 21 increased brand awareness with key 25-to 34-year-old targets. Research suggests gamers are fine with ads and the way they af-fect the game experience. One study showed 70 percent of gamers felt dynamic in-game ads “contributed to realism,” “fit the games” in which they served, and looked “cool. ” Sources: Lauren Johnson, “Mars Ups Brand-Building Efforts through Mobile Game,” Mobile Marketer, December 12, 2012; Molly Soat, “Virtual Development,” Marketing News, May 31, 2103; Michelle Kung, “We Interrupt This Video Game for a Word from Our Sponsor,” Wall Street Journal, June 13, 2011; www. applejacks. com/games/race-to-the-rally; Amanda Lenhart, “Video Games: Adults Are Players Too,” Pew Internet & American Life Project, www. pewresearch. org, December 7, 2008; Erika Brown, “Game On!” Forbes, July 24, 2006, pp. 84-86. marketing insight | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging m Ass Communi CAT ions | chapter 20 619 The Super Bowl attracts the largest audience on television; 111 million viewers watched Fox's broadcast in 2014. With an audience that large, a 30-second ad slot sold for a pricey $4 million. From the first game in 1975, Super Bowl advertising has grown in importance as football has become more popular. Apple's iconic “1984” spot launch-ing Macintosh computers featured a futuristic Orwellian world shot by famed film director Ridley Scott and ushered in a new world of Super Bowl advertising. Appearing just once during a one-sided victory by the Los Angeles Raiders over the Washington Redskins, the ad became the talk of the game, and marketers and ad agencies began to look at advertising in the game in a more ambitious way. The introduction of the USA Today ad meter in 1989 focused even more consumer attention on the ads and their entertainment value. While the normal rate of audience tune-out during a commercial is 4 percent, Super Bowl ads average less than 1 percent. They have been shown to be more memorable and likable than typical ads and can even give a firm's stock price a bump. Many Super Bowl ads now have a new purpose: to create curiosity and interest so consumers will go online and engage in social media and word of mouth to uncover more detailed information. The most popular—like a Honda CR-V ad with Matthew Broderick spoofing his Ferris Bueller film role and a VW ad with a young kid playing Darth Vader—drew tens of millions of You Tube views. Increasingly, ads are released online before the game as firms attempt to maximize their social media and PR power. Given the large and diverse audience, many Super Bowl advertisers try to please as many people as possible, employing cute babies, playful animals, and slapstick humor. But Paul Venables, a Super Bowl ad veteran, recommends being as clear as possible about the strategic goal sought. Is it to generate social media buzz, online product searches, or store or dealer visits? As he says, “There are a million metrics and you have to decide what you are measuring. ” Another agency leader, Brad Kay, advocates a holistic approach, leveraging the high-profile TV spot to create more conversion opportunities online. Sources: Ellen Killoran, “Super Bowl Ads 2014: What Does $4 Million Really Buy You?,” International Business Times, January 30, 2014; Jin-Woo Kim, Traci H. Freling, and Douglas B. Grisaffe, “The Secret Sauce for Super Bowl Advertising,” Journal of Advertising Research 53 (June 2013), pp. 134-49; Noreen O'Leary, “How to Win the Super Bowl,” Adweek, January 28, 2013; Lucia Moses, “Ad Play,” Adweek, January 28, 2013; Alex Konrad, “5 Ways the Super Bowl Ad Playbook Has Changed,” www. tech . fortune. cnn. com, February 2, 2012; Michael Learmonth, “How USA Today's Ad Meter Broke Super Bowl Advertising,” Advertising Age, January 30, 2012; Bruce Horovitz, “Super Bowl Marketers Go All Out to Create Hype, Online Buzz,” USA Today, February 8, 2010. Winning The Super Bowl of Advertising marketing memo The Super Bowl is a media extravaganza that many advertisers covet, even its halftime shows as with Super Bowl XLVIII in 2014 featuring Bruno Mars and special guests Red Hot Chili Peppers. Source: © Tribune Content Agency LLC/Alamy | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
620 PART 7 | Communi CATing V Alue million people—at a lower cost-per-thousand of $9. 71. 41 Magazines often put together a “reader profile” for their advertisers, describing average readers' age, income, residence, marital status, and leisure activities. Marketers need to adjust the cost-per-thousand measure. First, consider audience quality. For a baby lotion ad, a magazine read by 1 million young parents has an exposure value of 1 million; if read by 1 million teenagers, it has an exposure value of almost zero. Second, look at audience-attention probability. Readers of Vogue may pay more attention to ads than do readers of Sports Illustrated. Third is the medium's editorial quality, meaning its prestige and believability. People are more likely to believe a TV or radio ad when it appears within a program they like. Fourth, consider the value of ad placement policies and extra services, such as regional or occupational editions and lead-time requirements for magazines. Media planners are using more sophisticated measures of effectiveness and employing them in mathematical models to arrive at the best media mix. 42 Many advertising agencies use software programs to select the initial me-dia and make improvements based on subjective factors. selecting Media ti Ming and allocation In choosing media, the advertiser makes both a macroscheduling and a microscheduling decision. The macroscheduling decision relates to seasons and the business cycle. Suppose 70 percent of a product's sales occur between June and September. The firm can vary its advertising expenditures to follow the seasonal pattern, to oppose the seasonal pattern, or to be constant throughout the year. The microscheduling decision calls for allocating advertising expenditures within a short period to obtain maxi-mum impact. Suppose the firm decides to buy 30 radio spots in September. The left side of Figure 20. 3 shows that advertising messages for the month can be concentrated (“burst” advertising), dispersed continuously throughout the month, or dispersed intermittently. The top side shows they can be beamed with a level, rising, falling, or alter-nating frequency. The chosen pattern should meet the marketer's communications objectives and consider three factors. Buyer turnover expresses the rate at which new buyers enter the market; the higher this rate, the more continuous the advertising should be. Purchase frequency is the number of times the average buyer buys the product during the period; the higher the purchase frequency, the more continuous the advertising should be. The forgetting rate is the rate at which the buyer forgets the brand; the higher the forgetting rate, the more continuous the advertising should be. In launching a new product, the advertiser must choose among continuity, concentration, flighting, and pulsing. Continuity means exposures appear evenly throughout a given period. Generally, advertisers use continuous advertising in expanding markets, with frequently purchased items, and in tightly defined buyer categories. Concentration calls for spending all the advertising dollars in a single period. This makes sense for products with one selling season or related holiday. Flighting calls for advertising during a period, followed by a period with no advertising, followed by a second period of advertising activity. It is useful when funding is limited, the purchase cycle is relatively infrequent, or items are seasonal. (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)Level Concentrated Continuous Intermittent Rising Falling Alternating Number of Messages per Month Month| Fig. 20. 3 | Classification of Advertising Timing Patterns | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging m Ass Communi CAT ions | chapter 20 621 Pulsing is continuous advertising at low levels, reinforced periodically by waves of heavier activity. It draws on the strengths of continuous advertising and flights to create a compromise scheduling strategy. Those who fa-vor pulsing believe the audience will learn the message more thoroughly and at a lower cost to the firm. 43 A company must allocate its advertising budget over space as well as over time. It makes “national buys” when it places ads on national TV networks or in nationally circulated magazines. It makes “spot buys” when it buys TV time in just a few markets or in regional editions of magazines. These markets are called areas of dominant influence (ADIs) or designated marketing areas (DMAs). The company makes “local buys” when it advertises in local newspapers, radio, or outdoor sites. ev Alu At In G Advert ISIn G effect Ivene SS Most advertisers try to measure the communication effect of an ad—that is, its potential impact on aware-ness, knowledge, or preference. They would also like to measure its sales effect. co MMunication-e FFect research Communication-effect research, called copy testing, seeks to determine whether an ad is communicating effectively. Marketers should perform this test both before an ad is put into media and after it is printed or broadcast. Table 20. 2 describes some specific advertising pretest research techniques. Pretest critics maintain that agencies can design ads that test well but may not necessarily perform well in the marketplace. Proponents maintain that useful diagnostic information can emerge and that pretests should not be used as the sole decision criterion anyway. Widely acknowledged as one of the best advertisers around, Nike is known for doing very little ad pretesting. Many advertisers use posttests to assess the overall impact of a completed campaign. If a company hoped to increase brand awareness from 20 percent to 50 percent and succeeded in increasing it to only 30 percent, then it is not spending enough, its ads are poor, or it has overlooked some other factor. sales-e FFect research What sales are generated by an ad that increases brand awareness by 20 percent and brand preference by 10 percent? The fewer or more controllable other factors such as features and price are, the easier it is to measure advertising's effect on sales. The sales impact is easiest to measure in direct marketing situations and hardest in brand or corporate image-building advertising. Companies want to know whether they are overspending or underspending on advertising. One way to answer this question is to work with the formulation shown in Figure 20. 4. A company's share of advertising expenditures produces a share of voice (proportion of company advertising of that product to all advertising of that product) that earns a share of consumers' minds and hearts and, ultimately, a share of market. ta Ble 20. 2 Advertising Pretest Research Techniques For Print Ad S Starch and Gallup & Robinson Inc. are two widely used print pretesting services. Test ads are placed in magazines, which are then circulated to consumers. These consumers are contacted later and interviewed. Recall and recognition tests are used to determine advertising effectiveness. For Bro Adc ASt Ad S In-home tests: A video is taken or downloaded into the homes of target consumers, who then view the commercials. Trailer tests: In a trailer in a shopping center, shoppers are shown the products and given an opportunity to select a series of brands. They then view commercials and are given coupons to be used in the shopping center. Redemption rates indicate commercials' influence on purchase behavior. Theater tests: Consumers are invited to a theater to view a potential new television series along with some commercials. Before the show begins, consumers indicate preferred brands in different categories; after the viewing, consumers again choose preferred brands. Preference changes measure the commercials' persuasive power. On-air tests: Respondents are recruited to watch a program on a regular TV channel during the test commercial or are selected based on their having viewed the program. They are asked questions about commercial recall. Share of expenditures Share of voice Share of mind and heart Share of market | Fig. 20. 4 | Formula for Measuring Different Stages in the Sales Impact of Advertising | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
622 PART 7 | Communi CATing V Alue Researchers can measure sales impact with the historical approach, which uses advanced statistical techniques to correlate past sales to past advertising expenditures. 44 Other researchers use experimental data to measure advertising's sales impact. A growing number of researchers measure the sales effect of advertising expenditures instead of settling for communication-effect measures. 45 Millward Brown International has conducted tracking studies for years to help advertisers decide whether their advertising is benefiting their brand. 46 Sales Promotion Sales promotion, a key ingredient in marketing campaigns, consists of a collection of incentive tools, mostly short term, designed to stimulate quicker or greater purchase of particular products or services by consumers or the trade. 47 Whereas advertising offers a reason to buy, sales promotion offers an incentive. Advert ISIn G ver Su S pr Om Ot IOn Although sales promotion expenditures increased as a percentage of budget expenditure for a number of years, their growth has recently slowed. Consumers began to tune out promotions: Coupon redemption peaked in 1992 at 7. 9 billion coupons but dropped to 2. 9 billion by 2013. 48 Incessant price reductions, coupons, deals, and pre-miums can also devalue the product in buyers' minds. Having turned to 0 percent financing, hefty cash rebates, and special lease programs during sluggish economic times, auto manufacturers have found it difficult to wean consumers from discounts ever since. 49 Some sales promotion tools are consumer franchise building. They impart a selling message along with the deal, such as free samples, frequency awards, coupons with a selling message, and premiums related to the product. Sales promotion tools that are typically not brand building include price-off packs, consumer premiums not related to a product, contests and sweepstakes, consumer refund offers, and trade allowances. Sales promotions in markets of high brand similarity can produce a high sales response in the short run but little permanent gain over the longer term. In markets with high brand dissimilarity, they may be able to alter market shares permanently. In addition to brand switching, consumers may engage in stockpiling— purchasing earlier than usual (purchase acceleration) or buying extra quantities. But sales may then hit a post-promotion dip. 50 Price promotions also may not build permanent total-category volume. One study of more than 1,000 pro-motions concluded that only 16 percent paid off. 51 Small-share competitors may benefit from sales promotion because they cannot match market leaders' advertising budgets, nor can they obtain shelf space without offering trade allowances or stimulate consumer trial without offering incentives. Dominant brands offer deals less fre-quently because most deals subsidize only current users. Consumer franchise-building promotions can offer the best of both worlds—building brand equity while mov-ing product. Mc Donald's, Dunkin' Donuts, and Starbucks have given away millions of samples of their new prod-ucts because consumers like them and they often lead to higher long-term sales for quality products. 52 Gain's “Love at First Sniff ” campaign used direct mail and in-store scented tear-pads and Shelf Vision TV to entice consumers to smell the product, resulting in an almost 500 percent increase in shipments over the goal. 53 The fastest-growing area in sales promotions is digital coupons, redeemed via smart phone or downloaded to a consumer's printer. Digital coupons eliminate printing costs, reduce paper waste, are easily updatable, and have higher redemption rates. Coupons. com gets 620,000 unique daily visitors looking for money-saving deals, and Cool Savings. com gets 120,000 seeking money-saving coupons and offers from name brands as well as helpful tips and articles, newsletters, free recipes, sweepstakes, free trials, free samples, and more. Many retailers are now offering customized coupons based on consumer purchase histories. 54 One firm has devised a very different way for firms to offer discounts. 55 Gr Ou POn Groupon launched in 2008 to help businesses leverage the Internet and e-mail to use promo-tions as a form of advertisement. Specifically, the company sends its large base of subscribers a humorously worded daily deal—a specific percentage or dollar amount off the regular price—for a specific client's branded product or service. Through these e-mailed discounts, Groupon offers client firms three benefits: increased consumer exposure to the brand, the ability to price discriminate, and the creation of a “buzz factor. ” Groupon takes 40 percent to 50 percent of the revenues in each deal in the process. Many promotions are offered on behalf of local retailers such as spas, fit-ness centers, and restaurants, but Groupon also manages deals on behalf of some national brands. Some businesses | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging m Ass Communi CAT ions | chapter 20 623 have complained that Groupon attracts only deal-seekers and is not as effective in converting regular customers. One study found that 32 percent of companies lost money and 40 percent said they would not utilize such a promotion again, with restaurants faring the worst among service businesses and spas and salons being the most successful. Groupon has tried to innovate in several ways. Leveraging its massive sales force to sell Groupon Now, the company enlists local businesses to offer time-and location-specific deals via the Web or smart phones. The i Phone app for the new service has two buttons, “I'm Bored” and “I'm Hungry,” to trigger deals in real time. For businesses, the service is a way to boost traffic at otherwise slow times. Even a popular restaurant might still consider some midday and midweek discounts knowing it is rarely full then. After a heavily hyped IPO, its stock has not performed well as Groupon struggles to find the right business formula. m Aj Or dec ISIOn S In using sales promotion, a company must establish its objectives, select the tools, develop the program, imple-ment and control it, and evaluate the results. esta Blishing o Bjectives Sales promotion objectives derive from communication objectives, which derive from basic marketing objectives for the product. For consumers, objectives include encouraging more frequent purchases or purchase of larger-sized units among users, building trial among nonusers, and attracting switchers away from competitors' brands. If some of the brand switchers would not have otherwise tried the brand, promotion can yield long-term increases in market share. 56 Ideally, consumer promotions have short-run sales impact and long-run brand equity effects. 57 For retailers, objectives include persuading retailers to carry new items and more inventory, encouraging off-season buying, encouraging stocking of related items, offsetting competitive promotions, building brand loyalty, and gaining entry into new retail outlets. For the sales force, objectives of promotion include encouraging their support of a new product or model, encouraging more prospecting, and stimulating off-season sales. selecting consu Mer pro Motion tools The promotion planner should take into account the type of market, sales promotion objectives, competitive conditions, and each tool's cost-effectiveness. The main consumer promotion tools are summarized in Table 20. 3. Manufacturer promotions in the auto industry, for instance, are rebates, gifts to motivate test-drives and purchases, and high-value trade-in credit. Retailer promotions include price cuts, feature advertising, retailer coupons, and retailer contests or premiums. 58 selecting trade pro Motion tools Manufacturers use a number of trade promotion tools (see Table 20. 4). 59 They award money to the trade (1) to persuade the retailer or wholesaler to carry the brand; (2) to persuade the retailer or wholesaler to carry more units than the normal amount; (3) to induce retailers to promote the brand by featuring, display, and price reductions; and (4) to stimulate retailers and their sales clerks to push the product. The growing power of large retailers has increased their ability to demand trade promotion. 60 The manufac-turer's sales force and its brand managers are often at odds here. The sales force says local retailers will not keep the company's products on the shelf unless they receive more trade promotion money, whereas brand managers want to spend their limited funds on consumer promotion and advertising. Manufacturers often find it difficult to police retailers to make sure they are doing what they agreed to do and increasingly insist on proof of performance before paying any allowances. Manufacturers face several challenges in managing trade promotions. Some retailers are doing forward buying —that is, buying a greater quantity during the deal period than they can immediately sell. The manufacturer must then schedule more production than planned and bear the costs of extra work shifts and overtime. Some retailers are diverting, buying more than needed in a region where the manufacturer offers a deal and shipping the surplus to their stores in non-deal regions. Manufacturers handle forward buying and diverting by limiting the amount they will sell at a discount or by producing and delivering less than the full order in an effort to smooth production. 61 Ultimately, many manufacturers feel trade promotion has become a nightmare. It contains layers of deals, is complex to administer, and often leads to lost revenues. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
624 PART 7 | Communi CATing V Alue ta Ble 20. 3 Major Consumer Promotion Tools Samples: Offer of a free amount of a product or service delivered door to door, sent in the mail, picked up in a store, attached to another product, or featured in an advertising offer. Coupons: Certificates entitling the bearer to a stated saving on the purchase of a specific product: mailed, enclosed in other products or attached to them, inserted in magazine and newspaper ads, or emailed or made available online. Cash Refund Offers (rebates): Provide a price reduction after purchase rather than at the retail shop: Consumer sends a specified “proof of purchase” to the manufacturer who “refunds” part of the purchase price by mail. Price Packs (cents-off deals): Offers to consumers of savings off the regular price of a product, flagged on the label or package. A reduced-price pack is a single package sold at a reduced price (such as two for the price of one). A banded pack is two related products banded together (such as a toothbrush and toothpaste). Premiums (gifts): Merchandise offered at a relatively low cost or free as an incentive to purchase a particular product. A with-pack premium accompanies the product inside or on the package. A free in-the-mail premium is mailed to consumers who send in a proof of purchase, such as a box top or UPC code. A self-liquidating premium is sold below its normal retail price to consumers who request it. Frequency Programs: Programs providing rewards related to the consumer's frequency and intensity in purchasing the company's products or services. Prizes (contests, sweepstakes, games): Prizes are offers of the chance to win cash, trips, or merchandise as a result of purchasing something. A contest calls for consumers to submit an entry to be examined by a panel of judges who will select the best entries. A sweepstakes asks consumers to submit their names in a drawing. A game presents consumers with something every time they buy—bingo numbers, missing letters—which might help them win a prize. Patronage Awards: Values in cash or in other forms that are proportional to patronage of a certain vendor or group of vendors. Free Trials: Inviting prospective purchasers to try the product without cost in the hope that they will buy. Product Warranties: Explicit or implicit promises by sellers that the product will perform as specified or that the seller will fix it or refund the customer's money during a specified period. Tie-in Promotions: Two or more brands or companies team up on coupons, refunds, and contests to increase pulling power. Cross-Promotions: Using one brand to advertise another noncompeting brand. Point-of-Purchase (P-O-P) Displays and Demonstrations: P-O-P displays and demonstrations take place at the point of purchase or sale. ta Ble 20. 4 Major Trade Promotion Tools Price-Off (off-invoice or off-list): A straight discount off the list price on each case purchased during a stated time period. Allowance: An amount offered in return for the retailer's agreeing to feature the manufacturer's products in some way. An advertising allowance compensates retailers for advertising the manufacturer's product. A display allowance compensates them for carrying a special product display. Free Goods: Offers of extra cases of merchandise to intermediaries who buy a certain quantity or who feature a certain flavor or size. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging m Ass Communi CAT ions | chapter 20 625 selecting Business and sales Force pro Motion tools Companies spend billions of dollars on business and sales force promotion tools (see Table 20. 5) to gather leads, impress and reward customers, and motivate the sales force. 62 They typically develop budgets for tools that remain fairly constant from year to year. For many new businesses that want to make a splash to a targeted audience, especially in the B-to-B world, trade shows are an important tool, but the cost per contact is the highest of all communication options. developing the progra M In planning sales promotion programs, marketers are increasingly blending several media into a total campaign concept, such as the following award-winning promotion. 63 sa Msun G To promote its pricy ($450) Galaxy camera brand, Samsung developed a clever mobile and social campaign, “Life's a Photo: Take It. ” A two-month contest asked 32 of the most popular Instagram influencers from eight international markets to trade their favorite camera phone app for the Samsung Galaxy camera. Their task was to use the new camera to showcase their city on Instagram and Tumblr to prove it was the most photogenic. Each week a different feature of the camera was showcased and fans voted on their favorite photos. A video outlining the campaign was viewed 1. 3 million times, brand awareness of the Galaxy camera improved 58 percent, and purchase intent increased 115 percent. In deciding to use a particular incentive, marketers must first determine its size. A certain minimum discount is necessary if the promotion is to succeed. Second, the marketing manager must establish conditions for par-ticipation. Incentives might be offered to everyone or to select groups. Third, the marketer must decide on the duration of the promotion. Fourth, the marketer must choose a distribution vehicle. A 50-cents-off coupon can be distributed in the product package, in stores, by mail, online, or in advertising. Fifth, the marketing manager must establish the timing of promotion and, finally, the total sales promotion budget. The cost of a particular promo-tion consists of the administrative cost (printing, mailing, and promoting the deal) and the incentive cost (cost of premium or cents-off, including redemption costs), multiplied by the expected number of units sold. The cost of a coupon deal recognizes that only a fraction of consumers will redeem the coupons. i Mple Menting and evaluating the progra M Marketing managers' implementation and control plans must cover lead time and sell-in time for each individual promotion. Lead time is the time necessary to prepare the program prior to launching it. Sell-in time begins with the promotional launch and ends when approximately 95 percent of the deal merchandise is in the hands of consumers. Manufacturers can evaluate the program using sales data, consumer surveys, and experiments. Sales (scanner) data help analyze the types of people who took advantage of the promotion, what they bought before the promotion, and how they behaved later toward the brand and other brands. Sales promotions are most successful when they attract competitors' customers who then switch. ta Ble 20. 5 Major Business and Sales Force Promotion Tools Trade Shows and Conventions: Industry associations organize annual trade shows and conventions. These are a multibillion-dollar business, and business marketers may spend as much as 35 percent of their annual promotion budget on them. Attendance can top 70,000 for large shows held by the restaurant or hotel-motel industries. The International Consumer Electronics Show is one of the largest in the world, with more than 150,000 attendees in 2013. Participating vendors can generate new sales leads, maintain customer contacts, introduce new products, meet new customers, sell more to present customers, and educate customers with publications, videos, and other audiovisual materials. Sales Contests: A sales contest aims at inducing the sales force or dealers to increase sales results over a stated period, with prizes (money, trips, gifts, or points) going to those who succeed. Specialty Advertising: Specialty advertising consists of useful, low-cost items bearing the company's name and address, and sometimes an advertising message, that salespeople give to prospects and customers. Common items are ballpoint pens, calendars, key chains, flashlights, tote bags, and memo pads. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
626 PART 7 | Communi CATing V Alue Consumer surveys can uncover how many consumers recall the promotion, what they thought of it, how many took advantage of it, and how it affected later brand-choice behavior. 64 Experiments vary such attributes as incentive value, duration, and distribution media. For example, coupons can be sent to half the households in a consumer panel. Scanner data can track whether they led more people to buy the product and when. Additional costs include the risk that promotions might decrease long-run brand loyalty or be more expensive than they appear. Some are inevitably distributed to the wrong consumers. Special production runs, extra sales force effort, and handling requirements bring other costs. Finally, certain promotions irritate retailers, who may demand extra trade allowances or refuse to cooperate. Events and Experiences The IEG Sponsorship Report estimated that marketers spent $19. 8 billion on sponsorships in North America during 2013, with 70 percent going to sports; another 10 percent to entertainment tours and attractions; 4 percent to festivals, fairs, and annual events; 4 percent to the arts; 3 percent to associations and membership organiza-tions; and 9 percent to cause marketing. 65 Becoming part of a personally relevant moment in consumers' lives through sponsored events and experiences can broaden and deepen a company's or brand's relationship with the target market. Daily encounters with brands may also affect consumers' brand attitudes and beliefs. Atmospheres are “pack-aged environments” that create or reinforce leanings toward product purchase. Law offices decorated with Oriental rugs and oak furniture communicate “stability” and “success. ”66 A five-star hotel will use elegant chandeliers, marble columns, and other tangible signs of luxury. event S Object Ive S Marketers report a number of reasons to sponsor events: 1. To identify with a particular target market or lifestyle —Customers can be targeted geographically, demographically, psychographically, or behaviorally according to events. Old Spice sponsors college sports— including its college basketball Old Spice Classic in late November—to highlight product relevance and sample among its target audience of 16-to 24-year-old males. 2. To increase salience of company or product name —Sponsorship offers sustained exposure for a brand, a necessary condition for reinforcing brand salience. Top-of-mind awareness for soccer World Cup sponsors Emirates, Hyundai, Kia, and Sony benefited from the repeated brand and ad exposure over the month-long tournament. 3. To create or reinforce perceptions of key brand image associations —Events themselves have associations that help to create or reinforce brand associations. 67 To toughen its image and appeal to the heartland, Toyota Tundra sponsors B. A. S. S. fishing tournaments and has sponsored Brooks & Dunn country music tours. Major sporting events like the FIFA World Cup in soccer attract enormous sponsorship dollars. Source: © ZUMA Press, Inc. /Alamy | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging m Ass Communi CAT ions | chapter 20 627 4. To enhance corporate image —Sponsorship can improve perceptions that the company is likable and prestigious. Although Visa views its long-standing Olympic sponsorship as a means of enhancing interna-tional brand awareness and increasing usage and volume, it also engenders patriotic goodwill and taps into the emotional Olympic spirit. 5. To create experiences and evoke feelings —The feelings engendered by an exciting or rewarding event may indirectly link to the brand. Audi models featured prominently in the 2010 blockbuster Iron Man 2, includ-ing main character Tony Stark's personal R8 Spyder and the A8, Q5 and Q7 SUVs, and A3 hatchback. After a month-long marketing blitz, positive word of mouth doubled for the brand. 68 6. To express commitment to the community or on social issues —Cause-related marketing sponsors nonprofit organizations and charities. Firms such as Timberland, Stonyfield Farms, Home Depot, Starbucks, American Express, and Tom's of Maine have made their support of causes an important cornerstone of their marketing programs. 7. To entertain key clients or reward key employees —Many events include lavish hospitality tents and other special services or activities only for sponsors and their guests. These perks engender goodwill and establish valuable business contacts. From an employee perspective, events can also build participation and morale or serve as an incentive. BB&T Corp., a major banking and financial services player in the South and Southeast United States, used its NASCAR Busch Series sponsorship to entertain business customers and its minor league baseball sponsorship to generate excitement among employees. 69 8. To permit merchandising or promotional opportunities —Many marketers tie contests or sweepstakes, in-store merchandising, direct response, or other marketing activities with an event. Ford and Coca-Cola have used their sponsorship of the popular TV show American Idol in this way. Despite these potential advantages, the result of an event can still be unpredictable and beyond the sponsor's control. And although many consumers credit sponsors for providing the financial assistance to make an event possible, some may resent its commercialization. m Aj Or Sp On SOr Sh Ip dec ISIOn S Making sponsorships successful requires choosing the appropriate events, designing the optimal sponsorship program, and measuring the effects of sponsorship. 70 choosing events Because of the number of sponsorship opportunities and their huge cost, many marketers are becoming more selective. The event must meet the marketing objectives and communication strategy defined for the brand. It must have sufficient awareness, possess the desired image, and be able to create the desired effects. The audience must match the target market and make favorable attributions for the sponsor's engagement. An ideal event is also unique but not encumbered with many sponsors, lends itself to ancillary marketing activities, and reflects or enhances the sponsor's brand or corporate image. 71 designing sponsorship progra Ms Many marketers believe the marketing program accompanying an event sponsorship ultimately determines its success. At least two to three times the amount of the sponsorship expenditure should be spent on related marketing activities. Event creation is a particularly important skill in publicizing fund-raising drives for nonprofit organizations. Fund-raisers have developed a large repertoire of special events, including anniversary celebrations, art exhibits, auctions, benefit evenings, book sales, cake sales, contests, dances, dinners, fairs, fashion shows, phonathons, rummage sales, tours, and walkathons. More firms are now using their names to sponsor arenas, stadiums, and other venues that hold events, spend-ing billions of dollars for naming rights to major North American sports facilities. But as with any sponsorship, the most important consideration is the additional marketing activities. Measuring sponsorship activities It's a challenge to measure the success of events. “Marketing Memo: Measuring High-Performance Sponsorship Programs” offers some guidelines from industry experts IEG. Supply-side methods for measuring an event's success assess the media coverage, for example, the number of seconds the brand is clearly visible on a television screen or the column inches of press clippings that mention it. These potential “impressions” can translate into the dollar cost of actually advertising in the particular vehicle. Some industry consultants estimate that 30 seconds of logo exposure during a televised event can be worth 6 percent, 10 percent, or as much as 25 percent of a 30-second TV ad spot. Although supply-side methods provide quantifiable measures, equating media coverage with advertising exposure ignores the content of the respective communications. The advertiser uses media space and time to | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
628 PART 7 | Communi CATing V Alue communicate a strategically designed message. Media coverage and telecasts only expose the brand and don't necessarily embellish its meaning in any direct way. Although some public relations professionals maintain that positive editorial coverage can be worth five to 10 times the equivalent advertising value, sponsorship rarely provides such favorable treatment. The demand-side method identifies the sponsorship's effect on consumers' brand knowledge. Marketers can survey spectators to measure their recall of the event and their resulting attitudes and intentions toward the sponsor. cre At In G exper Ience S A large part of local, grassroots marketing is experiential marketing, which not only communicates features and benefits but also connects a product or service with unique and interesting experiences. “The idea is not to sell something, but to demonstrate how a brand can enrich a customer's life. ”72 Many firms are creating their own events and experiences to create consumer and media interest and involvement. Consumers seem to appreciate that effort. In one survey, four of five respondents found participating in a live event was more engaging than all other forms of communication. The vast majority also felt experiential marketing gave them more information than other forms of communication and would make them more likely to tell others about the experience and be receptive to other marketing for the brand. 73 Companies can even create a strong image by inviting prospects and customers to visit their headquarters and factories. 74 Ben & Jerry's, Boeing, Crayola, and Hershey's all sponsor excellent company tours that draw millions of visitors a year. Hallmark, Kohler, and Beiersdorf (maker of NIVEA) have built corporate museums at or near their headquarters that display their history and the drama of producing and marketing their products. Many firms are also creating off-site product and brand experiences. There are the World of Coca-Cola in Atlanta and Las Vegas and M&M's World in Times Square in New Y ork City. 1. Measure outcomes, not outputs. Focus on what a sponsorship actually produced rather than what a sponsor got or did—rather than focus on 5,000 people sampled at an event, how many of those people would be classified as members of the target market and what is the likely conversion rate between their trial and future behaviors? 2. Define and benchmark objectives on the front end. Specific objectives help to identify what measures should be tracked. An objective of motivating the sales force and distributors suggests different measures than one of building brand image and key brand benefits. Contrast measures in terms of sponsorship effects and what might have happened if the sponsorship had not occurred. 3. Measure return for each objective against prorated share of rights and activation fees. Rank and rate objectives by importance and allocate the total sponsorship budget against each of those objectives. 4. Measure behavior. Conduct a thorough sales analysis to identify shifts in marketplace behavior as a result of the sponsorship. 5. Apply the assumptions and ratios used by other departments within the company. Applying statistical methods used by other departments makes it easier to gain acceptance for any sponsorship analysis. 6. Research the emotional identities of customers and measure the results of emotional connections. In what ways does a sponsorship psychologically affect consumers and facilitate and deepen long-term loyalty relationships? 7. Identify group norms. How strong of a community exists around the sponsored event or participants? Are their formal groups that share interests that will be impacted by the sponsorship? 8. Include cost savings in ROI calculations. Contrast expenses that a firm has typically incurred in the past achieving a particular objective from those expenses allocated to achieve the objective as part of the sponsorship. 9. Slice the data. Sponsorship affects market segments differently. Breaking down a target market into smaller segments can better identify sponsorship effects. 10. Capture normative data. Develop a core set of evaluation criteria that can be applied across all different sponsorship programs. Source: “Measuring High Performance Sponsorship Programs,” IEG Executive Brief, IEG Sponsorship Consulting, www. sponsorship. com, 2009. Measuring High-Performance Sponsorship Programs marketing memo | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging m Ass Communi CAT ions | chapter 20 629 Public Relations Not only must the company relate constructively to customers, suppliers, and dealers, it must also relate to a large number of interested publics. A public is any group that has an actual or potential interest in or impact on a com-pany's ability to achieve its objectives. Public relations (PR) includes a variety of programs to promote or protect a company's image or individual products. The wise company takes concrete steps to manage successful relationships with its key publics. Most have a public relations department that monitors the attitudes of the organization's publics and distributes information and communications to build goodwill. The best PR departments counsel top management to adopt positive pro-grams and eliminate questionable practices so negative publicity doesn't arise in the first place. They perform the following five functions: 1. Press relations —Presenting news and information about the organization in the most positive light 2. Product publicity —Sponsoring efforts to publicize specific products 3. Corporate communications —Promoting understanding of the organization through internal and external communications 4. Lobbying —Dealing with legislators and government officials to promote or defeat legislation and regulation 5. Counseling —Advising management about public issues as well as company positions and image during good times and bad m Arket In G publ Ic rel At IOn S Many companies are turning to marketing public relations (MPR) to support corporate or product promotion and image making. MPR, like financial PR and community PR, serves a special constituency, the marketing department. The old name for MPR was publicity, the task of securing editorial space—as opposed to paid space—in print and broadcast media to promote or hype a product, service, idea, place, person, or organization. MPR goes beyond simple publicity and plays an important role in the following tasks: Launching new products. The amazing one-time commercial success of toys such as Leap Frog, Beanie Babies, and Silly Bandz owes a great deal to strong publicity. Repositioning mature products. In a classic PR case study, New Y ork City had extremely bad press in the 1970s until the “I Love New Y ork” campaign. Building interest in a product category. Companies and trade associations have used MPR to rebuild interest in declining commodities such as eggs, milk, beef, and potatoes and to expand consumption of such products as tea, pork, and orange juice. Influencing specific target groups. Mc Donald's sponsors special neighborhood events in Latino and African American communities to build goodwill. Defending products that have encountered public problems. PR professionals must be adept at managing crises, such as those weathered by such well-established brands as Tylenol, Toyota, and BP in recent years. Building the corporate image in a way that reflects favorably on its products. The late Steve Jobs's heav-ily anticipated Macworld keynote speeches helped to create an innovative, iconoclastic image for Apple Corporation. As the power of mass advertising weakens, marketing managers are turning to MPR to build awareness and brand knowledge for both new and established products. MPR is also effective in blanketing local communities and reaching specific groups, and it can be more cost-effective than advertising. Increasingly, MPR takes place online, but it must be planned jointly with advertising and other marketing communications. 75 Clearly, creative public relations can affect public awareness at a fraction of the cost of advertising. The com-pany doesn't pay for media space or time but only for a staff to develop and circulate stories and manage certain events. An interesting story picked up by the media can be worth millions of dollars in equivalent advertising. Some experts say consumers are five times more likely to be influenced by editorial copy than by advertising. The following is an example of an award-winning PR campaign. 76 Me OW Mix A heritage brand, Meow Mix Cat Food decided to tap into its roots and bring back one of its most identifiable brand elements—a jingle with repetitive meow refrain that had been off the air for 16 years. Marketers chose singer and TV reality coach Cee Lo Green and his Persian cat Purrfect to do the honors. The video with Green singing | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
630 PART 7 | Communi CATing V Alue a remixed version of the jingle in a duet with Purrfect garnered attention from all kinds of outlets. The story received 1,200 media placements and 535 million media impressions, including exclusives with AP and Access Hollywood. Web traffic for the brand rose 150 percent, and more than 10,000 fans downloaded the song or ringtone. For each download, a pound of Meow Mix was donated to a local pet charity in Los Angeles. m Aj Or dec ISIOn S In m Arket In G pr In considering when and how to use MPR, management must establish the marketing objec-tives, choose the PR messages and vehicles, implement the plan, and evaluate the results. The main tools of MPR are described in Table 20. 6. esta Blishing o Bjectives MPR can build awareness by placing stories in the media to bring attention to a product, service, person, organization, or idea. It can build credibility by communicating the message in an editorial context. It can help boost sales force and dealer enthusiasm with stories about a new product before it is launched. It can hold down promotion cost because MPR costs less than direct-mail and media advertising. A good MPR campaign can achieve multiple objectives. With its reputation slipping, Cisco launched “The Comeback Kid Initiative” to rebuild faith in its corporate vision and leadership. Raising the profile of key global executives, creating two timely global research studies, and showcasing some of its own technological products and solutions contributed to a 25 percent increase in stock valuation, an 11 percent increase in sales revenue, and a 15 percent boost in employee confidence. 77 choosing Messages and vehicles Suppose a relatively unknown college wants more visibility. The MPR practitioner will search for stories. Are any faculty members working on unusual projects? Are any new and unusual courses being taught? Are any interesting events taking place on campus? If there are no interesting stories, the MPR practitioner should propose newsworthy events the college could sponsor. Here the challenge is to create meaningful news. PR ideas include hosting major academic conventions, inviting expert or celebrity speakers, and developing news conferences. Each event and activity is an opportunity to develop a multitude of stories directed at different audiences. Meow Mix cat food reintroduced its famous ad jingle in a comprehensive PR campaign featuring singer Cee Lo Green and his Persian cat Purrfect. Source: © AF archive/Alamy ta Ble 20. 6 Major Tools in Marketing PR Publications: Companies rely extensively on published materials to reach and influence their target markets. These include annual reports, brochures, articles, company newsletters and magazines, and audiovisual materials. Events: Companies can draw attention to new products or other company activities by arranging and publicizing special events such as news conferences, seminars, outings, trade shows, exhibits, contests and competitions, and anniversaries that will reach the target publics. Sponsorships: Companies can promote their brands and corporate name by sponsoring and publicizing sports and cultural events and highly regarded causes. News: One of the major tasks of PR professionals is to find or create favorable news about the company, its products, and its people and to get the media to accept press releases and attend press conferences. Speeches: Increasingly, company executives must field questions from the media or give talks at trade associations or sales meetings, and these appearances can build the company's image. Public Service Activities: Companies can build goodwill by contributing money and time to good causes. Identity Media: Companies need a visual identity that the public immediately recognizes. The visual identity is carried by company logos, stationery, brochures, signs, business forms, business cards, buildings, uniforms, and dress codes. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging m Ass Communi CAT ions | chapter 20 631 Whereas PR practitioners reach their target publics through the mass media, MPR is increasingly borrow-ing the techniques and technology of online and direct-response marketing to reach target-audience members one on one. i Mple Menting the plan and evaluating results MPR's contribution to the bottom line is difficult to measure because MPR is used along with other promotional tools. The easiest gauge of its effectiveness is the number of exposures carried by the media. Publicists supply their client with a clippings book showing all the media that carried news about the product and a summary statement such as the following: Media coverage included 3,500 column inches of news and photographs in 350 publications with a combined circulation of 79. 4 million; 2,500 minutes of air time on 290 radio stations and an estimated audience of 65 million; and 660 minutes of air time on 160 television stations with an estimated audience of 91 million. If this time and space had been purchased at advertising rates, it would have amounted to $1,047,000. 78 This measure is not very satisfying because it contains no indication of how many people actually read, heard, or recalled the message and what they thought afterward; nor does it contain information about the net audience reached because publications overlap in readership. It also ignores the effects of electronic media. Publicity's goal is reach, not frequency, so it would be more useful to know the number of unduplicated exposures across all media types. A better measure is the change in product awareness, comprehension, or attitude resulting from the MPR campaign (after accounting for the effect of other promotional tools as well as possible). For example, how many people recall hearing the news item? How many told others about it (a measure of word of mouth)? How many changed their minds after hearing it? 5. Events and experiences are a means to become part of special and more personally relevant moments in consumers' lives. Events can broaden and deepen the sponsor's relationship with its target market, but only if managed properly. 6. Public relations (PR) includes a variety of programs designed to promote or protect a company's image or its individual products. Marketing public relations (MPR), to support the marketing department in cor-porate or product promotion and image making, can affect public awareness at a fraction of the cost of advertising and is often much more credible. The main tools of PR are publications, events, news, commu-nity affairs, identification media, lobbying, and social responsibility. Summary 1. Advertising is any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identi-fied sponsor. Advertisers include not only business firms but also charitable, nonprofit, and government agencies. 2. Developing an advertising program is a five-step pro-cess: (1) set advertising objectives, (2) establish a bud-get, (3) choose the advertising message and creative strategy, (4) decide on the media, and (5) evaluate com-munication and sales effects. 3. Sales promotion consists of mostly short-term incentive tools, designed to stimulate quicker or greater purchase of particular products or services by consumers or the trade. 4. In using sales promotion, a company must establish its objectives, select the tools, develop the program, imple-ment and control it, and evaluate the results. My Marketing Lab Go to mymktlab. com to complete the problems marked with this icon as well as for additional assisted-graded writing questions. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
632 PART 7 | Communi CATing V Alue Applications Marketing Debate Should Marketers Test Advertising? Advertising creatives believe ad pretesting inhibits their creative process and results in too much sameness in com-mercials. Marketers, on the other hand, believe it ensures the ad campaign will connect with consumers and be well received in the marketplace. Take a position: Ad pretesting is often an unneces-sary waste of marketing dollars versus Ad pretesting provides an important diagnostic for marketers as to the likely success of an ad campaign. Marketing Discussion Television Advertising What are some of your favorite TV ads? Why? How effective are the message and creative strategies? How are they creating consumer preference and loyalty and building brand equity? In 1998, Evian in association with its advertiser BETC Paris launched the hugely successful ad campaign “Water Babies” that had babies swimming in synchronic-ity, a metaphor through which the brand evoked youth. In France, the approval rating for this ad was 94 percent and the recognition score was 91 percent. This television commercial had a very strong impact on the collective conscious of people. Globally, the brand focused on purity and used the slogan, “the Original. ” Press advertisements portrayed, for example, a beautiful black angel lying on a white cloud who brought down rain with a bottle of Evian, or a mermaid quenching her thirst with Evian water. Despite the differences in product-positioning based on markets, the brand has always been conscious of its upscale image. The economic crisis of 2007-2009 had a negative effect on the market for mineral water. Sales dropped as more and more consumers turned to less expensive water. During this time, the brand went through a restruc-ture to keep from losing its market share. As a result, Evian has a premium and popular positioning in France, Switzerland, the UK, and Belgium, while it is a luxury brand in almost all the other countries. This is due to the fact that in Europe, the brand is sold in every supermar-ket, whereas in many other countries across the world, the brand is sold only in urban centers. Evian generates 50 percent of its sales outside of France. Marketing Excellence >> Evian Evian is one of the most famous mineral water brands owned by the French food-products group Danone. Each year, approximately 1. 5 billion bottles are sold in more than 140 countries across the world. According to the market research company Millward Brown, the Evian brand can be valued at $1,027 million. The success of the brand is a result of continuous innovation and power-ful and original communication. At the end of the 19th century, Evian water, which was sourced from a natural spring, became known for its “miraculous” healing properties and was being sold in pharmacies. By mid-1930s, Evian was recommended as the perfect water for babies. Campaigns designed to target mothers, midwives, and doctors were developed consequently. In the 1950s, Evian was still catering to this segment but its communication added a new reference to health, and the theme of the Alps was introduced. In the 1980s, the brand decided to go in a different direction and the concept of equilibrium (“the force of bal-ance”) was dropped. The theme of purity was chosen to differentiate the brand from competitors and enable high-end positioning of the product. The company adopted a new slogan to reflect this change—“the water you drink is as important as the air you breathe. ” | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging m Ass Communi CAT ions | chapter 20 633 strong presence outside the Internet. Since 2007, it has carried out several promotional operations with limited edition glass bottles signed by major designers, such as Paul Smith in 2009, Issey Miyake in 2010, and Kenzo in 2014. Evian has also been credited with creating the first Women's Golf Open Championship. Today, it is consid-ered to be one of the major tournaments in Europe and is broadcast live on television in 167 countries. Evian is the official water brand for the Wimbledon tennis tournament. The brand is also a sponsor for the Paris fashion shows. In addition to this, Evian supports a variety of causes linked to its brand territory. It is committed to the protec-tion of the environment through creation of schools of water to help populations manage their water resources in an autonomous and sustainable way. It has developed partnerships with the Red Cross, and offers fellowships in pediatrics, thereby affirming its positioning on health and children. Questions 1. Evian is a global mineral water brand that is sold to millions of people across the world. Analyze the rea-sons for its success. 2. What will be the strategic evolution of the brand's communication? 3. Can any other mineral water brand ever take over Evian's market share? Sources: Natalie Zmuda, “Evian Seeking Return to Relevance, New Head Marketer,” Advertising Age, August 7, 2013; “Saga Evian,” Prodimarques, January, 2002; “Evian: le marketing comme élixir de jeunesse,” Dynamique-Mag, October 19, 2012; Alexandre Debouté, “Les bébés d'Évian font un carton sur Internet,” Le Figaro, September 5, 2013; Lauren Johnson, “Evian's Real-Time Marketing Reaps Big Social Stats: Targets New Yorkers with Twitter-enabled service,” Adweek, September 5, 2014; Effie France, www. effie. fr. A bottle of Evian can reach three times the price of a regular soft drink. The brand caters to a very narrow urban market, and it therefore felt the need to unify its brand communication in favor of something more global. It is in this regard that Evian and BETC decided to pick up from where the water babies left off and launched the “Roller Babies” campaign. Health and purity of the Alps were abandoned in favor of a single message, “Live young. ” This advertisement was broadcast around the world and went on to become one of the most-watched ads ever on You Tube with 254 million views, and held the Guinness world record in this category at one point. It was the advert of the year for Time Magazine, Wall Street Journal, and The Guardian. It was also the 20 percent most effec-tive ad ever (source: Gf K France, Belgium, and Germany). In Asia, however, consumers did not understand quite well the relationship between Evian, seen as the pinnacle of luxury, and babies on rollers dancing to hip-hop music. BETC, then, had the idea of creating T-shirts with images of baby bodies and launched a campaign showing people of all ages dressed in these tees. With this, the advertisers wanted to represent their brand as one that keeps adults young at heart. The T-shirts were a huge success globally and created the desired brand awareness. In 2013, Evian launched “Baby & Me,” its third major campaign with BETC since 1998. This commercial used a baby-and-adult mirrored-dancing concept to highlight their “Live Young” slogan. The idea behind this video was to allow consumers to reconnect with their inner child, in line with the brand promise. Since 2009, Evian's global brand communication strategy has been focused on both digital and tradi-tional media. With the Web, Evian can target precisely and reach masses easily, and is one of the top brands viewed online. The brand has also always cultivated a | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
634 PART 7 | Communi CATing V Alue EVP for Major League Baseball, explains, “Gillette is a sports marketing pioneer that paved the way for modern day sports sponsorship and endorsements. ” Gillette has formed strong ties to football as well. The company has sponsored the Orange Bowl, Sugar Bowl, Cotton Bowl, and Rose Bowl. Today, it spends $7 million annually to sponsor Gillette Stadium, home of the New England Patriots, and is a corporate sponsor of the NFL. Gillette has also sponsored boxing matches, NCAA Basketball, NCAA Football, NASCAR, PGA Tour, Champions Tour, LPGA Tour, and the National Hockey League. Internationally, the company has sponsored events such as the FIFA World Cup, the UK Tri-Nations rugby tournament, the Gillette Cup in Cricket, and Formula One racing. Greg Via, Global Director of Sports Marketing, explains, “We have an 18-month cycle that starts with a brand strategy. We produce a lot of prod-ucts on a global basis, and we try to holistically leverage our major partnerships. That requires a lot of planning and work. We're not a company that is going to lever-age a partnership with one commercial and one SKU. We wrap our arms around a partnership with TV, digital, social media and in-store promotions. ” The company often integrates creativity into its sponsorships as well. For example, it transformed Zambonis into giant Fusion razors at NHL games to create the illusion that a Gillette razor had just given the ice a perfectly smooth shave. Gillette also partners with individual athletes to com-municate its marketing messages and reflect the brand's image. In 2004, the company signed soccer star David Beckham to appear in its advertising and promotional campaigns around the world. In 2007, it launched the Gillette Champions program, highlighting the athletic accomplishments of Roger Federer, Thierry Henry, and Tiger Woods. It has featured baseball superstar Derek Jeter, soccer star Park Ji-Sung, motorcycle champion Kenan Sofuoglu, cricketer Rahul Dravid, and several NFL players. While sports marketing is a critical element of Gillette's marketing strategy, the brand aims to reach every man and therefore also aligns with musical acts, video games, and movies. In one James Bond film, Goldfinger, a Gillette razor contained a homing device. Marketing Excellence >> Gillette Gillette knows men. Not only does the company un-derstand what products men desire for their grooming needs; it understands how to market to men in different countries, cultures, and languages around the world. Today, Gillette holds a commanding lead in the shaving and razor business with a 70 percent global market share and $8 billion in annual sales. More than 800 million men use Gillette products, helping to generate a brand value of $22. 9 billion. Gillette's mass appeal is a result of several factors, including high-quality innovation, extensive con-sumer research, and successful mass communications. Since the invention of the safety razor by King C. Gillette in 1901, Gillette has made a number of break-through product innovations. These include the Trac II, the first twin-blade shaving system in 1971, a razor with a pivoting head called the Atra in 1977, and the first razor with spring-mounted twin blades dubbed the Sensor in 1989. In 1998, Gillette introduced the first triple-blade system, Mach3, which became a billion-dollar brand sur-passed only by the 2006 launch of the six-blade Fusion, promoted as “the best shave on the planet. ” Today, the Fusion and Fusion Pro Glide account for approximately 45 percent of men's razors sold in the United States. While Gillette has launched high-quality products, the company's impressive marketing knowledge and mass marketing campaigns have helped it achieve international success. Traditionally, it uses one global marketing mes-sage rather than individual targeted messages for each country or region. This message is backed by a wide spectrum of advertising support, including athletic spon-sorships, television campaigns, in-store promotions, print ads, online advertising, and direct marketing. Perhaps the most critical element is sports market-ing. Gillette ads have featured baseball heroes such as Hank Aaron, Mickey Mantle, and Honus Wagner since 1910, and the company's sponsorship of Major League Baseball dates to 1939. The brand's natural fit with base-ball and tradition has helped the company connect emo-tionally and literally with its core audience. Tim Brosnan, | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging m Ass Communi CAT ions | chapter 20 635 2. Explain why Gillette's sports marketing partnerships have been so successful. 3. Some of Gillette's spokespeople such as Derek Jeter and Tiger Woods have run into controversy af-ter becoming endorsers for the brand. Does this hurt Gillette's brand equity or marketing message? Explain. 4. Will Gillette ever become as successful at marketing to women as to men? Why or why not? Sources: Gillette press release, “Gillette Launches New Global Brand Marketing Campaign,” July 1, 2009; Major League Baseball press release, “Major League Baseball Announces Extension of Historic Sponsorship with Gillette Dating Back to 1939,” April 16, 2009; Gillette, 2009 Annual Report ; Jeremy Mullman and Rich Thomaselli, “Why Tiger Is Still the Best Gillette Can Get,” Advertising Age, December 7, 2009; Louise Story, “Procter and Gillette Learn from Each Other's Marketing Ways,” New York Times, April 12, 2007; Dan Beucke, “A Blade Too Far,” Business Week, August 14, 2006; Jenn Abelson, “And Then There Were Five,” Boston Globe, September 15, 2005; Jack Neff, “Six-Blade Blitz,” Advertising Age, September 19, 2005, pp. 3, 53; Editorial, “Gillette Spends Smart on Fusion,” Advertising Age, September 26, 2005, p. 24; “World's Most Valuable Brands,” Fortune, November 2013; “Five Questions: Greg Via, Gillette Global Director of Sports Marketing,” IEG Sponsorship Report, November 18, 2013; “Gillette Enlists Top NFL Players and Sport Science's John Brenkus to Highlight the Importance of Precision in Football and Shaving,” P&G corporate press release, September 3, 2013; P&G 2013 Annual Report. Gillette's advertising has resonated well with consum-ers over the years and left behind some of the most famil-iar taglines in advertising history. Two of the best known are “Look Sharp, Feel Sharp” and the current “The Best a Man Can Get. ” When Procter & Gamble acquired Gillette in 2005 for $57 billion (a record 5-times sales), it aimed to gain more than sales and profit. P&G, an expert on marketing to women, wanted to learn about marketing to men on a global scale, and no one tops Gillette. Today, shaving and grooming make up 9 percent of P&G's total revenues, and razors are one of its most profitable businesses, with operating margins of 31 percent. Questions 1. Gillette has successfully convinced the world that “more is better” in terms of number of blades and other razor features. How did it do it? Why has that worked in the past? Will it continue to work in the future? Why or why not? | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
636 My Marketing Lab™ Improve Y our Grade! Over 10 million students improved their results using the Pearson My Labs. Visit mymktlab. com for simulations, tutorials, and end-of-chapter problems. In This Chapter, We Will Address the Following Questions 1. What are the pros and cons of online marketing? (p. 637) 2. How can companies carry out effective social media campaigns? (p. 642) 3. What are some tips for enjoying positive word of mouth? (p. 645) 4. What are important guidelines for mobile marketing? (p. 650)With its “Crash the Super Bowl” contest, Frito-Lay gives participants a chance to win $1 million and have their home-made ad aired during the game broadcast. Source: Used with permission of Daved Wilkins (talent) and Frito-Lay, Inc. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
637 Managing Digital Communications: Online, Social Media, and Mobile21 In the face of the Internet revolution, marketing communications today increasingly occur as a kind of personal dialogue between the company and its customers. Companies must ask not only “How should we reach our customers?” but also “How should our customers reach us?” and “How can our customers reach each other?” New technologies have encouraged companies to move from mass communication to more targeted, two-way communications. As a result, consumers can now play a much more participatory role in the marketing process. Consider how Pepsi Co has engaged the consumer in marketing communications for its various brands. 1 Pepsi Co has been an early champion of digital marketing. For its Mountain Dew soft drink, its first “Dewmocracy” contest had consumers go online to determine the flavor, color, packaging, and name of a new Mountain Dew product. The winning flavor, Voltage, generated several hundred million dol-lars in revenue for the company in its first year. The second contest, Dewmocracy 2, expanded voting through Facebook, Twitter, and a private online Dew Labs Community and crowned White Out as the winner. For its Doritos brand, Pepsi Co runs the “Crash the Super Bowl” contest every year, giving contestants a chance to develop an ad to be run during the game broadcast and receive $1 million in the process. In 2014, anyone from Dorito's 35 global markets was allowed to enter the competition, resulting in more than 3,000 submissions. The win-ning ad, “Time Machine,” had a man humor a small kid by taking a ride in the kid's cardboard time machine—with unexpected results. It cost only $200 to make and one day to film, but it was one of the most posi-tively received Super Bowl ads by viewers that year. During the contest, Doritos always enjoys a healthy uptick in Twitter, Facebook, and other social media activity. The newest and fastest-growing channels for com-municating and selling directly to customers are digital. The Internet provides marketers and consumers with opportunities for much greater interaction and individualization. Very few marketing programs can be considered complete without a meaningful digital component. In this chapter, we consider how marketers can use online marketing, social media, and mobile marketing to create loyal customers, build strong brands, and generate profits. We also consider the broader topic of word-of-mouth marketing. Online Marketing As described in Chapter 1, marketers distinguish paid and owned media from earned (or free) media. Paid media includes company-generated advertising, publicity, and other promotional efforts. Earned media is all the PR and word-of-mouth benefits a firm receives without having directly paid for anything—all the news stories, blogs, and social network conversations that deal with a brand. 2 Social media play a key role in earned media. A large part of owned media consists of online marketing communications, which we review next. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
638 PART 7 | Communi CATing V Alue Adv Ant AGes And d Is Adv Ant AGes of onl Ine M Arket In G Co MMun ICAt Ions Four of the main categories of online marketing communications, which we discuss here, are: (1) Web sites, (2) search ads, (3) display ads, and (4) e-mail. The variety of online communication options means companies can offer or send tailored information or messages that en-gage consumers by reflecting their special interests and behavior. Online marketing communications have other advantages. Marketers can easily trace their effects by noting how many unique visitors or “UVs” click on a page or ad, how long they spend with it, what they do on it, and where they go afterward. 3 The Internet also offers the advan-tage of contextual placement, which means marketers can buy ads on sites related to their own offerings. They can also place advertising based on keywords customers type into search engines to reach people when they've actually started the buying process. Going online has disadvantages too. Consumers can effectively screen out most messages. Marketers may think their ads are more effective than they really are if bogus clicks are generated by software-powered Web sites. 4 Advertisers also lose some control over their online messages, which can be hacked or vandalized. But the pros clearly can outweigh the cons, and the Internet is attracting marketers of all kinds. Beauty pioneer Estée Lauder, who, in a reflection of times gone by, famously said she relied on three means of communication to build her multimillion-dollar cosmetics business— “telephone, telegraph, and tell a woman”—would now have to add the Internet, where the company's official site describes new and old prod-ucts, announces special offers and promotions, and helps customers locate stores where they can buy Estée Lauder products. Marketers must go where the customers are, and increasingly that's online. Of the time U. S. consumers spend with all media, almost half is spent online (see Figure 21. 1). 5 Customers define the rules of engage-ment, however, and insulate themselves with the help of agents and intermediaries if they so choose. They define what information they need, what offerings they're interested in, and what they're willing to pay. 6 Magazines 00:12 Other 00:14 Mobile (nonvoice) 02:51 Desktop & laptop 02:12Other digital 00:43TV 04:28Radio 01:20 Newspapers 00:14 Estee Lauder has always relied on word of mouth to build its brands but now has added a sizable digital component. Source: Weng lei-Imaginechina | Fig. 21. 1 | Share of Time Spent per Day with Major Media by U. S. Adults, 2014 (hrs:mins) Source: e Marketer, April 2014, accessed at http://www. emarketer. com/Article/ Digital-Set-Surpass-TV-Time-Spent-with-US -Media/1010096. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging Digi TAl Communi CAT ions: online, so Ci Al me Di A, An D mobile | chapter 21 639 Digital advertising continues to show much more rapid growth than traditional media. In fact, total digital ad spending in 2013 was estimated to have grown to $42. 8 billion, which meant it surpassed TV advertising (at $40. 1 billion) for the first time. Search ads made up 43 percent of the total at $18. 4 billion; display-related advertising was 30 percent with $12. 8 billion; mobile 17 percent with $7. 1 billion; and digital video 7 percent with $2. 8 billion. 7 More brands are being built by online means. Consider Tough Mudder. 8 TOugh Mudder Tough Mudder is a challenging obstacle race for teams, designed in the spirit of British Special Forces, that features 29 different obstacles with such creative names as the Devil's Beard, Shocks on the Rocks, and Funky Monkey. Competitors encounter hazards such as walls, 15-foot planks, ice baths, nightmare monkey bars, greased halfpipes, and electrified army crawls. Funded with $20,000 in seed capital in 2010, Tough Mudder spent its entire $8,000 communication budget at launch on Facebook advertising, which generated plenty of word of mouth. The first race was a hit, and word quickly spread. By 2013, more than 750,000 competitors were participating in 53 scheduled events. With entry fees of about $155 per person, the company's margin is about 48 percent. onl Ine M Arket In G Co MMun ICAt Ion opt Ions A company chooses which forms of online marketing will be most cost-effective in achieving communication and sales objectives. 9 The options include Web sites, search ads, display ads, and e-mail. Web Site S Companies must design Web sites that embody or express their purpose, history, products, and vision and that are attractive on first viewing and interesting enough to encourage repeat visits. 10 Jeffrey Rayport and Bernard Jaworski propose that effective sites feature seven design elements they call the 7Cs (see Figure 21. 2). 11 To encourage repeat visits, companies must pay special attention to context and content factors and embrace another “C”—constant change. 12 Visitors will judge a site's performance on ease of use and physical attractiveness. 13 Ease of use means: (1) The site downloads quickly, (2) the first page is easy to understand, and (3) it is easy to navigate to other pages that open quickly. Physical attractiveness is ensured when: (1) Individual pages are clean and not crammed with content, (2) typefaces and font sizes are very readable, and (3) the site makes good use of color (and sound). J. D. Power found that consumers who were “delighted” with an automotive manufacturer's Web site were more likely to test drive one of its vehicles as a result. 14 As we describe in more detail below, firms such as com Score and Nielsen Online track where consumers go online through measures like number of page views, number of unique visitors, length of visit, and so on. 15 Tough Mudder used only Facebook advertising and word of mouth to launch its brand. Source: © David Buzzard/Alamy | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
640 PART 7 | Communi CATing V Alue Companies must also be sensitive to online security and privacy-protection issues. One set of researchers recom-mends transforming various “touch points” related to privacy on the Web site into a positive customer experience by: (1) developing user-centric privacy controls to give customer control, (2) avoiding multiple intrusions, and (3) preventing human intrusion by using automation whenever possible. 16 Besides their Web sites, companies may employ microsites, individual Web pages or clusters of pages that func-tion as supplements to a primary site. They're particularly relevant for companies selling low-interest products. People rarely visit an insurance company's Web site, for example, but the company can create a microsite on used-car sites that offers advice for buyers of used cars and a good insurance deal at the same time. Search a DS An important component of online marketing is paid search or pay-per-click ads. Thirty-five percent of all searches are reportedly for products or services. In paid search, marketers bid in a continuous auction on search terms that serve as a proxy for the consumer's product or consumption interests. When a consumer searches for any of the words with Google, Y ahoo!, or Bing, the marketer's ad may appear above or next to the results, depending on the amount the company bids and an algo-rithm the search engines use to determine an ad's relevance to a particular search. 17 Advertisers pay only if people click on the links, but marketers believe consumers who have already expressed interest by engaging in search are prime prospects. Average click-through in terms of the percentage of consumers who click on a link is about 2 percent, much more than for comparable online display ads, which range from. 08 for standard banner ads with graphics and images to. 14 for rich media (expandable banners) ads that incorporate audio and/or video. 18 The cost per click depends on how highly the link is ranked on the page and the popularity of the keyword. The ever-increasing popularity of paid search has increased competition among keyword bidders, significantly raising search ad prices and putting a premium on choosing the best possible keywords, bidding on them strategically, and monitoring the results for effectiveness and efficiency. Search engine optimization (SEO) describes activities designed to improve the likelihood that a link for a brand is as high as possible in the rank order of all nonpaid links when consumers search for relevant terms. SEO is a cru-cial part of marketing given the large amount of money marketers are spending on search. A number of guidelines have been suggested as part of SEO as well as paid search. 19 Broader search terms (“MP3 player” or “i Pod”) are useful for general brand building; more specific ones identifying a particular product model or service (“ Apple i Pod classic 160GB”) are useful for generating and converting sales leads. Search terms need to be spotlighted on the appropriate pages of the marketer's Web site so search engines can easily identify them. Any one product can usually be identified by means of multiple keywords, but marketers must bid on each keyword according to its likely return on revenue. It also helps to have popular sites link back to the marketer's Web site. Data can be collected to track the effects of paid search. Any size business can benefit from a well-executed search strategy. The owner of River Pools and Spas in Virginia and Maryland turned around his floundering business by posting question-and-answer articles that were picked up easily by search engines and drove traffic to the company's Web site. 20 Consumers are also influenced by the online opinions and recommendations of other consumers. The informal social networks that arise among consumers complement the product networks set up by the company. 21 Online “influentials” who are one of a few or maybe even the only person to influence certain consumers are particularly important and valuable to companies. 22 Di Splay a DS Display ads or banner ads are small, rectangular boxes containing text and perhaps a picture that companies pay to place on relevant Web sites. 23 The larger the audience, the higher the cost. In the early days | Fig. 21. 2 | Seven Key Design Elements of an Effective Web Site Context. Layout and design Content. Text, pictures, sound, and video the site contains Community. How the site enables user-to-user communication Customization. Site's ability to tailor itself to different users or to allow users to personalize the site Communication. How the site enables site-to-user, user-to-site, or two-way communication Connection. Degree that the site is linked to other sites Commerce. Site's capabilities to enable commercial transactions Source: Jeffrey F. Rayport and Bernard J. Jaworski, e-commerce (New York: Mc Graw-Hill, 2001), p. 116. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging Digi TAl Communi CAT ions: online, so Ci Al me Di A, An D mobile | chapter 21 641 of the Internet, viewers clicked on 2 percent to 3 percent of the banner ads they saw, but as noted previously, that percentage has quickly plummeted, and advertisers have explored other forms of communication. Given that Internet users spend only 5 percent of their time online actually searching for information, display ads still hold great promise compared to popular search ads. But ads need to be more attention-getting and influ-ential, better targeted, and more closely tracked. 24 Interstitials are advertisements, often with video or animation, that pop up between page changes within a Web site or across Web sites. For example, ads for Johnson & Johnson's Tylenol headache reliever would pop up on brokers' Web sites whenever the stock market fell by 100 points or more. Because consumers find such pop-up ads intrusive and distracting, many use software to block them. e-mail E-mail allows marketers to inform and communicate with customers at a fraction of the cost of a d-mail, or direct mail, campaign. E-mails can be very productive selling tools. The rate at which they prompt purchase has been estimated to be at least three times that of social media ads, and the average order value is thought to be 17 percent higher. 25 Firms such as Kellogg, Whirlpool, and Nissan are emphasizing both e-mail and search marketing. 26 Consumers are besieged by e-mails, though, and many employ spam filters to halt the flow. Privacy concerns are also growing—almost half of British survey respondents said they would refuse to share any personal details with brands even if doing so would bring them better-targeted offers and discounts. 27 Some firms are asking con-sumers to say whether and when they would like to receive e-mails. FTD, the flower retailer, allows customers to choose whether to receive e-mail reminders to send flowers for virtually any holiday as well as specific birthdays and anniversaries. 28 E-mails must be timely, targeted, and relevant. The Gilt Groupe sends more than 3,000 variations of its daily e-mail for its flash-sale site based on recipient's past click-throughs, browsing history, and purchase history. 29 “Marketing Memo: How to Maximize the Marketing Value of E-mails” provides some important guidelines for launching productive e-mail campaigns. With a customer's permission, flower retailer FTD sends email reminders for important events. Source: FTD | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
642 PART 7 | Communi CATing V Alue Social Media An important component of digital marketing is social media. Social media are a means for consumers to share text, images, audio, and video information with each other and with companies, and vice versa. Social media allow marketers to establish a public voice and presence online. They can cost-effectively reinforce other communication activities. Because of their day-to-day immediacy, they can also encourage companies to stay innovative and relevant. Marketers can build or tap into online communities, inviting participation from consumers and creating a long-term marketing asset in the process. After reviewing the different social media platforms, we consider how to use social media and how social media can promote the flow of word of mouth. We then delve into more detail on how word of mouth is formed and travels. To start our discussion, consider how one company cleverly used social media to build its brand. 30 d OLL ar Sha Ve CLub E-commerce startup Dollar Shave Club sells a low-priced monthly supply of razors and blades online according to three different plans. The key to the company's launch was an online video. Dubbed the “best startup video ever” by some and the winner of multiple awards, the 90-second Dollar Shave Club video garnered millions of views on You Tube and gained thousands of social media followers in the process. In the quirky, irreverent video, CEO Michael Dubin rides a forklift, plays tennis, and dances with a fuzzy bear while touting the quality, convenience, and price of the company's razors and blades. Dubin has observed, “We are presenting a new business, a good idea, a funny video and tapped the pain point for a lot of consumers. ” While it was securing several hundred thousand customers, the company was also able to raise more than $20 million in venture capital. Give the customer a reason to respond. Offer powerful incentives for reading e-mail pitches and online ads, such as trivia games, scavenger hunts, and instant-win sweepstakes. Personalize the content of your e-mails. Williams-Sonoma reported a tenfold increase in response rates when it adopted personalized e-mail offerings based on individuals' on-site and catalog shopping behavior. An engaging subject line is especially critical. One expert notes, “You really have about five seconds to grab them or they are clicking out. ” Offer something the customer can't get via direct mail. Because e-mail campaigns can be carried out quickly, they can offer time-sensitive information. Travelocity sends frequent e-mails pitching last-minute cheap airfares, and Club Med pitches unsold vacation packages at a discount. Make it easy for customers to opt in as well as unsubscribe. Run controlled split tests to explore how location, color, and other factors affect “Sign Up Now” messages. Controlled split tests assemble online matched samples of consumers with one sample given a test message that manipulates one factor and the other being a status quo control. Online customers also demand a positive exit experience. Dissatisfied customers leaving on a sour note are more likely to spread their displeasure to others. Combine e-mail with other communications such as social media. Southwest Airlines found the highest number of reservations occurred after an e-mail campaign followed by a social media campaign. Papa John's was able to add 45,000 fans to its Facebook page through an e-mail campaign inviting customers to participate in a “March Madness” NCAA basketball tournament contest. To increase the effectiveness of e-mails, some researchers are employing “heat mapping,” which tracks eye movements with cameras to measure what people read on a computer screen. One study showed that clickable graphic icons and buttons that linked to more details of a marketing offer increased click-through rates by 60 percent over links that used just an Internet address. Sources: Nora Aurfreiter, Julien Boudet, and Vivien Weng, “Why Marketers Keep Sending You E-Mails,” Mc Kinsey Quarterly, January 2014; “Email Marketing Central for U. S. Retailers,” www. warc. com, December 20, 2012; Richard Westlund, “Success Stories in e Mail Marketing,” Adweek Special Advertising Section, February 16, 2010; Suzanne Vranica, “Marketers Give E-mail Another Look,” Wall Street Journal, July 17, 2006. How to Maximize the Marketing Value of E-mails marketing memo | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging Digi TAl Communi CAT ions: online, so Ci Al me Di A, An D mobile | chapter 21 643 so CIAl Med IA pl Atfor Ms There are three main platforms for social media: (1) online communities and forums, (2) blogs (individual blogs and blog networks such as Sugar and Gawker), and (3) social networks (like Facebook, Twitter, and Y ou Tube). Online c Ommunitie S an D FOrum S Online communities and forums come in all shapes and sizes. Many are created by consumers or groups of consumers with no commercial interests or company affiliations. Others are sponsored by companies whose members communicate with the company and with each other through postings, text messaging, and chat discussions about special interests related to the company's products and brands. These online communities and forums can be a valuable resource for companies and fill multiple functions by both collecting and conveying key information. A key for success in online communities is to create individual and group activities that help form bonds among community members. Apple hosts a large number of discussion groups organized by product lines and type of user (consumer or professional). These groups are customers' primary source of product information after warranties expire. Information flow in online communities and forums is two-way and can provide companies with useful, hard-to-get customer information and insights. When Glaxo Smith Kline prepared to launch its first weight-loss drug, Alli, it sponsored a weight-loss community. The firm felt the feedback it gained was more valuable than what it could have received from traditional focus groups. Research has shown, however, that firms should avoid too much democratization of innovation. One risk is that groundbreaking ideas can be replaced by lowest-common-denominator solutions. 31 bl Og S Blogs, regularly updated online journals or diaries, have become an important outlet for word of mouth. There are millions in existence, and they vary widely, some personal for close friends and families, others designed to reach and influence a vast audience. One obvious appeal of blogs is that they bring together people with common interests. Blog networks such as Gawker Media offer marketers a portfolio of choices. Online celebrity gossip blog Pop Sugar has spawned a family of breezy blogs on fashion (Fab Sugar), beauty (Bella Sugar), and romance and cul-ture (Très Sugar), attracting women ages 18 to 49. Corporations are creating their own blogs and carefully monitoring those of others. 32 Popular blogs are creating influential opinion leaders. At the Tree Hugger site—“the leading media outlet dedicated to driving sustainability mainstream”—a team of bloggers tracks green consumer products for 5 million unique visitors per month, offering an up-to-the minute blog, weekly and daily newsletters, and regularly updated Twitter and Facebook pages. 33 Because many consumers examine product information and reviews contained in blogs, the Federal Trade Commission has also taken steps to require bloggers to disclose their relationship with marketers whose products they endorse. At the other extreme, some consumers use blogs and videos as a means of getting retribution for a company's bad service or faulty products. Some customer retaliations are legendary. Dell's customer-service shortcomings were splashed all over the Internet through a series of blistering “Dell Hell” postings. AOL took some heat when a frustrated customer recorded and broadcast online a service represen-tative's emphatic resistance to his wish to cancel his service. Comcast was embarrassed when a video surfaced of one of its technicians sleeping on a customer's couch. 34 CEO Michael Dubin's online video to launch Dollar Shave Club was an Internet sensation. Source: Dollar Shave Club | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
644 PART 7 | Communi CATing V Alue SOcial net WOrk S Social networks have become an important force in both business-to-consumer and business-to-business marketing. 35 Major ones include Facebook, one of the world's biggest; Linked In, which focuses on career-minded professionals; and Twitter, with its 140-character messages or “tweets. ” Different networks offer different benefits to firms. For example, Twitter can be an early warning system that permits rapid response, whereas Facebook allows deeper dives to engage consumers in more meaningful ways. 36 Marketers are still learning how to best tap into social networks and their huge, well-defined audiences. 37 Given networks' noncommercial nature—users are generally there looking to connect with others—attracting attention and persuading are more challenging. Also, given that users generate their own content, ads may find themselves appearing beside inappropriate or even offensive material. 38 Advertising is only one avenue, however. Like any individual, companies can also join social groups and actively participate. Having a Facebook page has become a virtual prerequisite for many companies. 39 Twitter can benefit even the smallest firm. To create interest in its products and the events it hosted, small San Francisco bakery Mission Pie began to send tweet alerts, quickly gaining 1,000 followers and a sizable uptick in business. “Follow Me on Twitter” signs are appearing on doors and windows of more small shops. 40 And although major social networks offer the most exposure, niche networks provide a more targeted market that may be more likely to spread the brand message, as Cafe Mom did for Playskool. 41 Cafe M OM Started in 2006, Cafe Mom has 20 million users across its flagship Cafe Mom site and other properties such as The Stir (an “all-day, every day content destination for Moms”) and Mamás Latinas (the first bilingual site for Latina moms). Users can participate in 70,000 different group forums for moms. When the site started a forum for discussing developmentally appropriate play activities, toymaker Playskool sent toy kits to more than 5,000 members and encouraged them to share their experiences with each other, resulting in 11,600 posts at Playskool Preschool Playgroup. “The great thing is you get direct feedback from actual moms,” says the director of media at Hasbro, Playskool's parent company. This kind of feedback can be invaluable in the product-development process as well. The site's sweet spot is young, middle-class women with kids who love the opportunity to make friends and seek support, spending an average of 44 minutes a day on the site. us In G so CIAl Med IA Social media allow consumers to become engaged with a brand at perhaps a deeper and broader level than ever before. Marketers should do everything they can to encourage willing consumers to engage productively. But as useful as they may be, social media are rarely the sole source of marketing communications for a brand. 42 Social media may not be as effective in attracting new users and driving brand penetration. Research by DDB suggests that brands and products vary widely in how social they are online. Consumers are most likely to engage with media, charities, and fashion and least likely to engage with consumer goods. 43 Although consumers may use social media to get useful information or deals and promotions or to enjoy interesting or entertaining brand-created content, a much smaller percentage want use social media to engage in two-way “conversations” with brands. In short, marketers must recognize that when it comes to social media, only some consumers want to engage with some brands, and, even then, only some of the time. Embracing social media, harnessing word of mouth, and creating buzz also require companies to take the good with the bad. When Frito-Lay's “Do Us a Flavor” contest invited U. S. fans to suggest new potato chip flavors for a chance to win a huge cash prize, the Facebook app for submissions crashed the first day due to high traffic. The promotion got back on track, though, with the winner, Cheesy Garlic Bread-flavored chips, joining earlier winners from other countries such as Caesar salad-flavored chips in Australia and shrimp chips in Egypt. 44 The Frito-Lay example shows the power and speed of social media, but also the challenges they pose to companies. The reality, however, is that whether a company chooses to engage in social media or not, the Internet will always permit scrutiny, criticism, and even “cheap shots” from consumers and organizations. By using social media and the Internet in a constructive, thoughtful way, firms at least have a means to create a strong online presence and to better offer credible alternative points of view if negative feedback occurs. 45 And if the firm has built a strong online community, members of that community will often rush to defend the brand and play a policing role over inaccurate or unfair characterizations. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging Digi TAl Communi CAT ions: online, so Ci Al me Di A, An D mobile | chapter 21 645 Word of Mouth Social media are one example of online word of mouth. Word of mouth (WOM) is a powerful marketing tool. AT&T found it was one of the most effective drivers of its sales, along with unaided advertising awareness. Some brands have been built almost exclusively by word of mouth. 46 SOda STrea M Soda Stream, a product that allows consumers to carbonate regular tap water at home to replace store-bought sodas, was built with minimal media spend due to the power of word of mouth. To help promote conversations about the brand, the com-pany has sampled liberally, used product placement, and engaged with affinity groups that might be interested in home carbonation because of its environmental advantages, including various “green” organizations, or because it offers the convenience of not having to store bottles and cans, which appeals to boat and RV owners. CEO Daniel Birnbaum notes, “I would much rather invest in PR than in advertising, because with PR it's not me talking—it's someone else. ” One of Soda Stream's most successful marketing activities is “The Cage. ” The company calculates the average number of cans and bottles thrown away by a family in a year in a given country and then fills a giant cage-like box to hold them, placing it in high-traffic locations like airports to draw attention to it. After deciding to target Coke and Pepsi head on, Soda Stream did purchase advertising time in the 2013 and 2014 Super Bowls. Ironically, with this decision the company still benefited from PR and word of mouth because the networks banned its initial ads for being too aggressive. The banned ads received more attention than the ones that actually ran, racking up millions of views online and a barrage of media coverage. Purchased for $6 million in 2007, Soda Stream had a 2014 market cap of more than $1 billion. Frito-Lay used a social media campaign for new consumer-created flavors it introduced. Source: Invision for Frito-Lay Soda Stream benefited from PR and word of mouth in launching its brand. Source: Photo courtesy of Soda Stream | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
646 PART 7 | Communi CATing V Alue for Ms of Word of Mouth Contrary to popular opinion, most word of mouth is not generated online. In fact, research and consulting firm Keller Fay notes that 90 percent occurs offline, specifically 75 percent face to face and 15 percent over the phone. Keller Fay also notes how advertising and WOM are inextricably linked: “WOM has proven to be highly credible and linked to sales; advertising has proven to help spark conversation. ”47 Others note how well offline word of mouth works with social media. Consumers “start conversations in one channel, continue them in a second and finish them in a third. When the communication is happening in so many channels, it becomes almost impos-sible to separate online and offline. ”48 Viral marketing is a form of online word of mouth, or “word of mouse, ” that encourages consumers to pass along company-developed products and services or audio, video, or written information to others online. 49 With user-generated content sites such as Y ou Tube, Vimeo, and Google Video, consumers and advertisers can upload ads and videos to be shared by millions of people. 50 Online videos can be cost-effective—they can be made for as little as $50,000 to $200,000—and marketers can take more freedom with them, as Blendtec has done. 51 b Lend Te C Utah-based Blendtec used to be known primarily for its commercial blenders and food mills. The company wasn't really familiar to the general public until it launched a hilarious series of “Will It Blend?” online videos to promote some of its commercial products for home use. The videos feature founder and CEO Tom Dickson wearing a white lab coat and pulverizing objects ranging from golf balls and pens to beer bottles, all in a genial but deadpan manner. The genius of the videos (www. willitblend. com) is that they tie into current events. As soon as the i Phone was launched with huge media fanfare, Blendtec aired a video in which Dickson smiled and said, “I love my i Phone. It does everything. But will it blend?” After the blender crushed the i Phone to bits, Dickson lifted the lid on the small pile of black dust and said simply, “i Smoke. ” The clip drew more than 3. 5 million views on You Tube. Dickson has appeared on Today and other network television shows and has had a cameo in a Weezer video. One of the few items not to blend: A crowbar! Outrageousness is a two-edged sword. The Blendtec Web site clearly puts its comic videos in the “ Don't try this at home” category and developed another set showing how to grind up vegetables for soup, for instance, in the “ Do try this at home” category. Cre At In G Word-of-Mouth Buzz Products don't have to be outrageous or edgy to generate word-of-mouth buzz. Although more interesting brands are more likely to be talked about online, whether a brand is seen as novel, exciting, or surprising has little effect on whether it is discussed in face-to-face, oral communications. 52 Brands discussed offline are often those that are salient and visible and come easily to mind. 53 Blendtec built its consumer brand in part with a series of clever “Will It Blend” online videos. Source: Blendtec | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging Digi TAl Communi CAT ions: online, so Ci Al me Di A, An D mobile | chapter 21 647 Research has shown that consumers tend to generate positive WOM themselves and share information about their own positive consumption experiences. They tend to only transmit negative WOM and pass on information they heard about others' negative consumption experiences. 54 It's worth remembering that much online content is not necessarily naturally shared and does not go viral. One study found that only 4 percent of content “cascaded” to more than one person beyond the initial recipient. 55 In deciding whether to contribute to social media, consumers can be motivated by intrinsic factors such as whether they are hav-ing fun or learning, but more often they are swayed by extrinisic factors such as social and self-image considerations. 56 Harvard Business School viral video expert Thales Teixeira offers this advice for getting a viral ad shared: Utilize brand pulsing so the brand is not too intrusive within the video; open with joy or surprise to hook those fickle viewers who are easily bored; build an emotional roller coaster within the ad to keep viewers engaged throughout; and surprise but don't shock—if an ad makes viewers too uncomfortable, they are unlikely to share it. 57 Companies can help create buzz for their products or services, and media and advertising are not always neces-sary for it to occur. Proctor & Gamble (P&G) has enrolled more than half a million mothers in Vocalpoint, a group built on the premise that certain highly engaged individuals want to learn about products, receive samples and coupons, share their opinions with companies, and, of course, talk up their experiences with others. P&G chooses well-connected people—the Vocalpoint moms have big social networks and generally speak to 25 to 30 other women during the day, compared to an average of five for other moms—and their messages carry a strong reason to share product information with a friend. A campaign for P&G's Secret Clinical Strength Deodorant resulted in 42,000 click-throughs to an opt-in coupon redemption and 50,000 strong product reviews on the brand's Web site. Some agencies exist solely to help clients create buzz. Bzz Agent is one. 58 bzzagen T Boston-based Bzz Agent has assembled an international word-of-mouth media network powered by 1 million demographically diverse—but essentially ordinary—people who volunteer to talk up products they deem worth promoting. The company pairs consumers with its clients' products, information, and digital tools to activate widespread opinion-sharing throughout its own social media site, called Bzz Scapes, and within each member's personal social circles. Bzz Agent believes this unique combination of people and platform accelerates measurable word of mouth and fosters sustained brand advocacy. As one senior executive at the firm notes: “The bar is pretty low to be a fan and pretty high to be an advocate. ” The company claims the buzz is honest because being in the network requires just enough work that few people enroll solely for freebies, and members don't talk up products they don't like. Members are also supposed to disclose they're connected to Bzz Agent. After being acquired by Dunhumby, Bzz Agent launched its analytics dashboard Pulse, which combines social media information with actual sales data to trace the impact of word-of-mouth buzz. The company has completed hundreds of projects. For Hasbro, it helped launch the Nerf Fire Vision toys—which appear to glow in the dark when viewed with special glasses—by sampling the product among members of its panel who have younger children. For Green Mountain Coffee, it sent samples and information to 10,000 carefully chosen members to spread the word about the client's commitment to Fair Trade Coffee as one component of a bigger marketing program. More than 1. 8 million messages were shared about Green Mountain's Fair Trade program, increasing customers' understanding of Fair Trade certification by 61 percent and sales of the coffee by 14 percent. Viral marketing tries to create a splash in the marketplace to showcase a brand and its noteworthy features. Some believe viral marketing efforts are driven more by the rules of entertainment than by the rules of selling. Consider these examples: Quicksilver puts out surfing videos and surf-culture books for teens, Johnson & Johnson and Pampers both have popular Web sites with parenting advice; Walmart places videos with money-saving tips on Y ou Tube; Grey Goose vodka has an entire entertainment division; Mountain Dew has a record label; and Hasbro is joining forces with Discovery to create a TV channel. 59 Ultimately, however, the success of any viral or word-of-mouth buzz campaign depends on the willingness of consumers to talk to other consumers. 60 Customer reviews can be especially influential. 61 A recent Nielsen survey found that online customer reviews were the second-most trusted source of brand information (after recommen-dations from friends and family). 62 Many review sites are now using a Facebook login that attaches a review posted by someone to their Facebook profile. By attaching their review to their Facebook page, users can find out what friends or noteworthy celebrities deem positive or negative about a brand. 63 As Chapter 5 noted, however, online reviews can be biased or just plain fake. 64 Research has shown that social influence can lead to disproportionally positive online ratings, and subsequent raters are more likely to be influ-enced by previous positive ratings than negative ones. Consumers posting reviews are susceptible to conformity pressures and adopting norms of others. 65 On the other hand, positive online reviews or ratings are often not as influential or valued as much as negative ones. 66 | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
648 PART 7 | Communi CATing V Alue Companies can try to stimulate personal influence channels to work on their behalf. U. S. women's specialty retailer Chico's increased its revenue per visitor and average order value for its three brands after adding ratings, reviews, questions, and answers to the brands' sites. 67 “Marketing Memo: How to Start a Buzz Fire” describes some techniques to increase word of mouth. A customer's value to a company depends in part on his or her ability and likelihood of making referrals and engaging in positive word of mouth. 69 As useful as earning positive word of mouth from a consumer can be, though, getting consumers to directly engage with the company and provide it with feedback and suggestions can In analyzing the online success of different songs, media researcher Duncan Watts found their popularity was “incredibly unpredictable. ” The key to setting a song on the path to popularity was to achieve some early downloads—a phenomenon Watts dubs “cumulative advantage. ” Although many word-of-mouth effects are beyond marketers' control—as Watts' work suggests—certain steps can improve the likelihood of starting positive buzz: Identify influential individuals and companies and devote extra effort to them. In technology, influencers might be large corporate customers, industry analysts and journalists, selected policy makers, and early adopters. Companies can trace online activity to identify more influen-tial users who may function as opinion leaders. Supply key people with product samples. Chevrolet selected about 900 people with a Klout online influence score of more than 50 (of a possible 100) and gave them a free three-day rental of the Chevy Volt, resulting in 46,000 tweets and more than 20. 7 million largely positive blog posts about the electric car. Work through community influentials. Ford's prelaunch “Fiesta Movement” campaign invited 100 handpicked young Millennials to live with the Fiesta car for six months. Drivers were chosen based on their online experience with blogging and size and quality of their online social network as well as a video they submitted about their desire for adventure. After the six months of trial usage, the campaign had drawn 4. 3 million You Tube views, more than 500,000 Flickr views, more than 3 million Twitter impressions (the number of times a tweet is read), and 50,000 potential customers, 97 percent of whom were not already Ford owners. 68 Develop word-of-mouth referral channels to build business. Profes-sionals will often encourage clients to recommend their services. Weight Watchers found that word-of-mouth referrals from someone in the program had a huge impact on business. Provide compelling information that customers want to pass along. Companies shouldn't communicate with customers in terms better suited for a press release. Make it easy and desirable for a customer to borrow elements from an e-mail message or blog. Information should be original and useful. Originality increases the amount of word of mouth, but usefulness determines whether it will be positive or negative. Sources: Beth Saulnier, “It's Complicated,” Cornell Alumni Magazine, September/October 2013, pp. 45-49; Olga Kharif, “Finding a Haystack's Most Influential Needles,” Bloomberg Businessweek, October 22, 2012; Michael Trusov, Anand V. Bodapati, and Randolph E. Bucklin, “Determining Influential Users in Internet Social Networks,” Journal of Marketing Research 47 (August 2010), pp. 643-58; Matthew Dolan, “Ford Takes Online Gamble with New Fiesta,” Wall Street Journal, April 8, 2009; Sarit Moldovan, Jacob Goldenberg, and Amitava Chattopadhyay, “What Drives Word of Mouth? The Roles of Product Originality and Usefulness,” MSI Report No. 06-111 (Cambridge, MA: Marketing Science Institute, 2006); Karen J. Bannan, “Online Chat Is a Grapevine That Yields Precious Fruit,” New York Times, December 25, 2006. How to Start a Buzz Fire marketing memo To fuel buzz for its Chevy Volt electric car, Chevrolet gave 900 influential consumers a free three-day rental. Source: Bloomberg via Getty Images | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging Digi TAl Communi CAT ions: online, so Ci Al me Di A, An D mobile | chapter 21 649 Tracking Online Buzz Marketers have to decide what they are going to track online as well as how they are going to track it. What to track. Du Pont employs measures of online word of mouth such as scale (how far the campaign reached), speed (how fast it spread), share of voice in that space, share of voice in that speed, whether it achieved positive lift in sentiment, whether the message was understood, whether it was relevant, whether it had sustainability (and was not a one-shot deal), and how far it moved from its source. Other researchers focus more on characterizing the source of word of mouth. For example, one group seeks to evaluate blogs accord-ing to three dimensions: relevance, sentiment, and authority. Academic researchers Hoffman and Fodor advocate measuring the various types of investments customers make in engaging with brands in terms of their activity with blogs, microblogging (e. g., Twitter), cocreation (e. g., NIKEi D), forums and discussion boards, product reviews, social net-works, and video and photo sharing. How to track it. More firms are setting up technologically advanced central locations to direct their online tracking efforts. To monitor the Gatorade brand on social networks around the clock, Gatorade created a “Mission Control Center”—set up like a broadcast television control room—in the middle of the marketing department in its Chicago headquarters. Mission Control is staffed 24/7 by a cross-function of Gatorade digital, media, and social agencies, with six big monitors providing data visualizations and dashboards. The Gatorade team reviews blog conversations and tracks senti-ment and feedback. The team also has to decide when it is appropriate to intervene in an online conversation and when it is not. Any post that includes a query directly about the brand or that reflects a misunder-standing is usually an opportunity for the team to weigh in, but as one team member notes, “If they want to talk about working out, we let them have that conversation. ” Gatorade is just one of many firms that recognize the importance of keeping a finger on the digital pulse of the brand. Consider these efforts. Nestlé's Digital Acceleration Team is a 24/7 monitoring center that tracks real-time sentiment about its 2,000 brands. Dell's social media ground control and command center in Round Rock, Texas, has 70 employees and processes 25,000 daily social media events in 11 different languages, responding to most que-ries and complaints within 24 hours. Wells Fargo's social media command center tracks 2,000 to 4,000 mentions a day. The team monitors and posts to social media channels such as Facebook, Twitter, Linked In, Pinterest, and You Tube. When a rumor started that the bank was going to institute a new $5 fee on domestic direct deposits, the command center was able to quickly squash it. Sources: Wendy W. Moe and David A. Schweidel, Social Media Intelligence (New York: Cambridge University Press, 2014); Cotton Dello, “Wells Fargo Command Center to Handle Surge of Social Content,” Advertising Age, April 8, 2014; Ryan Holmes, “NASA-Style Mission Control Centers for Social Media Are Taking Off,” www. tech. fortune . cnn. com, October 25, 2012; Lionel Menchaca, “Dell's Next Step: The Social Media Listening Command Center,” www. en. community. dell. com/dell-blogs, December 8, 2010; Donna L. Hoffman and Marek Fodor, “Can You Measure the ROI of Your Social Media Marketing,” MIT Sloan Management Review, Fall 2010, pp. 41-49; “Valerie Bauerlin, “Gatorade's 'Mission': Sell More Drinks,” Wall Street Journal, September 13, 2010; Adam Ostrow, “Inside Gatorade's Social Media Command Center,” www . mashable. com, June 15, 2010; Rick Lawrence, Prem Melville, Claudia Perlich, Vikas Sindhwani, Steve Meliksetian, Pei-Yun Hsueh, and Yan Liu, “Social Media Analytics,” OR/MS Today, February 2010, pp. 26-30; “Is There a Reliable Way to Measure Word-of-Mouth Marketing?” Marketing NPV 3 (2006), www. marketingnpv. com, pp. 3-9. marketing insight Gatorade's HQ-based Mission Control Center tracks brand buzz 24/7. Source: The Gatorade Company | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
650 PART 7 | Communi CATing V Alue lead to even greater loyalty and sales. 70 Huba and Mc Connell describe the following rungs on the customer loyalty ladder (in ascending order):71 1. Satisfaction —Sticks with your organization as long as expectations are met. 2. Repeat purchase —Returns to your company to buy again. 3. Word of mouth/buzz —Puts his or her reputation on the line to tell others about you. 4. Evangelism —Convinces others to purchase/join. 5. Ownership —Feels responsible for the continued success of your organization. Me Asur In G the effe Cts of Word of Mouth Many marketers concentrate on the online effects of word of mouth, given the ease of tracking them through advertising, PR, and digital agencies. Through demographic information or proxies for that information and cookies, firms can monitor when customers blog, comment, post, share, link, upload, friend, stream, write on a wall, or update a profile. With these tracking tools it is possible, for example, for movie advertisers to target “1 million American women between the ages of 14 and 24 who had uploaded, blogged, rated, shared, or commented on entertainment in the previous 24 hours. ”72 “Marketing Insight: Tracking Online Buzz” describes some company efforts there. Mobile Marketing Given the presence of smart phones and tablets everywhere and marketers' ability to personalize messages based on demographics and other consumer behavior characteristics, the appeal of mobile marketing as a communica-tion tool is obvious. the s Cope of Mo BIle MArket In G Wharton's David Bell notes four distinctive characteristics of a mobile device: (1) It is uniquely tied to one user; (2) it is virtually always “on” given it is typically carried everywhere; (3) it allows for immediate consumption because it is in effect a channel of distribution with a payment system; and (4) it is highly interactive given it allows for geotracking and picture and video taking. 73 Six of every 10 U. S. consumers owned a smart phone in 2014, creating a major opportunity for advertisers to reach consumers on the “third screen” (TV and the computer are the first and second). 74 Perhaps not surprisingly, U. S. consumers spend a considerable amount of time on mobile—more than on radio, magazines, and newspapers combined (an average of two hours and 51 minutes versus one hour and 46 minutes). 75 Mobile ad spending was almost $18 billion worldwide in 2013. With the increased capabilities of smart phones, however, mobile ads can be more than just a display medium using static “mini-billboards. ” Much recent interest has been generated in mobile apps —bite-sized software programs that can be downloaded to smart phones. Apps can perform useful functions—adding convenience, social value, incentives, and entertainment and making consumers' lives a little or a lot better. 76 In a short period of time, thousands of apps have been introduced by companies large and small. Many companies are adding apps to their marketing toolkit. VW chose to launch its GTI in the United States with an i Phone app, which was downloaded 2 million times in three weeks. In Europe, it launched the VW Tiguan with a mobile app as well as text messages and an interstitial Web site. 77 A mobile app became an important part of a Bank of America campaign for one of its Merrill Lynch products. 78 Merri LL edge'S “ fa Ce re Tire Men T” a PP One challenge for many financial services firms is to motivate younger customers to think about their financial needs, especially in terms of retirement. A recent academic study found that aged-progressed renderings of themselves helped younger people better imagine their future selves and adopt a longer-term financial planning perspective. Based in part on this research, Bank of America developed the “Face Retirement” program for its Merrill Edge low-cost financial planning platform. Initially using the brand's Web site and later an app, the Face Retirement tool allowed users to snap pictures of themselves and, with the use of 3D “virtual makeover” imaging technology, see what they might look like when they were 47, 57, or even 107! Accompanying the photos was information about the expected prices of different items in those future years (bread, a gallon of gas, utilities) to provide additional context and motivation. Also present was a link to more information about investing for retirement. Almost 1 million individuals used the app, with 60 percent seeking more information. Many found the photos so intriguing they posted them on Facebook or shared them on Twitter. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging Digi TAl Communi CAT ions: online, so Ci Al me Di A, An D mobile | chapter 21 651 Smart phones are also conducive to boosting loyalty programs in which customers can track their visits to and purchases from a merchant and receive rewards. By tracking the whereabouts of receptive customers who opt in to receive communications, retailers can send them location-specific promotions when they are near shops or outlets. 79 Sonic Corp. used GPS data and proximity to cell towers in Atlanta to identify when those customers who had signed up for company communications were near one of roughly 50 Sonic restaurants in the area. When that was the case, the company sent customers a text message with a discount offer or an ad to entice them to visit the restaurant. 80 Because traditional coupon redemption rates have been declining for years, the ability of mobile to make more relevant and timely offers to consumers at or near the point of purchase has piqued the interest of many marketers. These new coupons can take all forms, and digital in-store signs can dispense them to smart phones. 81 Although the cookies that allow firms to track online activity don't typically work in wireless applications, technological advances are making it easier to track users across their smart phones and tablets too. With user privacy safeguards in place, marketers' greater knowledge of cross-screen identities (online and mobile) can permit more relevant, targeted ads. 82 New measurement techniques are also aiding the adoption of mobile marketing. Nielsen has added consumers' viewing of television programing on mobile devices to its Live+3 TV ratings system, which combines average live commercial ratings with three days of time-shifted viewing. 83 develop In G effe Ct Ive Mo BIle MArket In G pro Gr AMs Even with newer-generation smart phones, the Web experience can be very different for users given smaller screen sizes, longer download times, and the lack of some software capabilities. Marketers are wise to design simple, clear, and clean sites, paying even greater attention than usual to user experience and navigation. 84 Experts point out that being concise is critical with mobile messaging, offering the following advice:85 Mobile ad copy should occupy only 50 percent of the screen, avoiding complex viewing experiences that may take a toll on consumers' battery and data availability as well as on their time. Brands should limit their ads to a pair of phrases—the offer and the tagline. Brands should place their logo in the corner of the mobile ad frame. Ads should use at least one bright color, but no more than two. Calls to action should be highlighted with a bright color. Mo BIle MArket In G ACross M Arkets Although a growing population segment uses smart phones and tablets for everything from entertainment to banking, different people have different attitudes toward and experiences with mobile technology. U. S. marketers can learn much about mobile marketing by looking overseas. To motivate younger consumers to consider investing in retirement, Merrill Edge's “Face Retirement” program created a virtual makeover of consumers to show how they might look at progressively older ages. Source: Bank of America Corporation | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
652 PART 7 | Communi CATing V Alue In developed Asian markets such as Hong Kong, Japan, Singapore, and South Korea, mobile marketing is fast becoming a central component of customer experiences. 86 In developing markets, high smart-phone penetration also makes mobile marketing attractive. A pioneer in China, Coca-Cola created a national campaign asking Beijing residents to send text messages guessing the high temperature in the city every day for just over a month for a chance to win a one-year supply of Coke products. The campaign attracted more than 4 million messages over the course of 35 days. 87 As marketers learn more about effective mobile campaigns from all over the world, they are figuring out how to adapt these programs to work in their markets. There is no question that successful marketing in the coming years will involve a healthy dose of mobile marketing. Marketers like Coca-Cola are learning much about mobile marketing in China and other Asian countries given the high smart phone penetration and usage there. Source: Weng lei-Imaginechina the process. Social media are rarely the sole source of marketing communications for a brand. 4. Word-of-mouth marketing finds ways to engage cus-tomers so they will choose to talk positively with others about products, services, and brands. Viral market-ing encourages people to exchange online information related to a product or service. 5. Mobile marketing is an increasingly important form of interactive marketing by which marketers can use text messages, software apps, and ads to connect with consumers via their smart phones and tablets. Summary 1. Online marketing provides marketers with opportuni-ties for much greater interaction and individualization through well-designed and executed Web sites, search ads, display ads, and e-mails. 2. Social media come in many forms: online communities and forums, blogs, and social networks such as Face-book, Twitter, and You Tube. 3. Social media offer marketers the opportunity to have a public voice and presence online for their brands and reinforce other communications. Marketers can build or tap into online communities, inviting participation from consumers and creating a long-term marketing asset in | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging Digi TAl Communi CAT ions: online, so Ci Al me Di A, An D mobile | chapter 21 653 My Marketing Lab go to mymktlab. com to complete the problems marked with this icon as well as for additional assisted-graded writing questions. Applications Marketing Debate What Is the Value of Buzz? One of the classic debates in the popular press is whether all buzz or word of mouth—positive and negative—is good for a brand. Some feel that “any press is good press” and that as long as people are talking, that is a good thing. Others challenge that notion and say the content of the dialogue is what really matters. Take a position: “All news is good news” and any buzz is helpful for a brand versus The content of buzz can make or break a brand. Marketing Discussion Corporate Web Sites Pick one of your favorite brands and go to its Web site. How would you evaluate the Web site? How well does it score on the 7Cs of design elements: context, content, community, customization, communication, connection, and commerce? users. It allows users to create customized personal pro-files with information such as their hometown, work expe-rience, educational background, and relationship status as well as an unlimited number of photos and albums. To in-teract with each other, users send messages, “poke” each other, and “tag” or label people in their photos. They can post comments on friends' “walls,” join groups, upload and view albums, plan group events, and create status updates viewable by everyone. In summary, Facebook is on its way to fulfilling its mission: Give people the power to share and make the world more open and connected. Facebook is not only an important part of many peo-ple's lives but also a critical marketing component for just about any brand and company. Its pages provide a way to personally interact and communicate with consumers no matter the size of the company. In fact, Facebook is a great way for smaller companies to build strong, long-lasting one-to-one relationships with their initial consumer base and listen to consumer feedback. Even politicians use the site to push their campaigns and communicate with supporters on a local, personal level. Facebook provides companies a place to expand their personalities in an inviting and nonthreatening en-vironment where they can show a softer side than they might in traditional marketing media. Marketers can launch videos and trailers, unveil promotions, run con-tests, upload images, and post news. Some companies Marketing Excellence >> Facebook Facebook was founded in 2004 by Mark Zuckerberg, a Harvard University student at the time. Zuckerberg recalls, “I just thought that being able to have access to different people's profiles would be interesting. Obviously, there's no way you can get access to that stuff unless people are throwing up profiles, so I wanted to make an application that would allow people to do that, to share as much information as they wanted while having control over what they put up. ” Within 24 hours of its launch, nearly 1,500 Harvard students had registered on the site. A month later, half the campus had joined. Initially, only Harvard students could view and use the site, which had relatively simple profile and navigation tools at first. The early momentum was tremendous, though, and Facebook soon expanded to include students throughout the Ivy League and then other colleges. The initial decision to keep the site exclu-sive to college students was critical to its early success. It gave Facebook a sense of privacy, unity, and exclusivity that social media competitors like My Space did not offer. In 2006, the site opened its doors to everyone. Today, Facebook is the most popular social network-ing Web site in the world, with more than 1. 3 billion active | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
654 PART 7 | Communi CATing V Alue tied only with beer. The site offers a unique opportunity to engage consumers on a personal, meaningful level and even reach new ones through its targeted advertising options. Questions 1. Why is Facebook unique in the world of personal marketing? What are Facebook's greatest strengths? 2. Who are Facebook's biggest competitors? What are the greatest risks it faces in the future? 3. What does a company gain by having a Facebook page or advertising through Facebook? What would you think if a brand or company were not on Facebook? Sources: John Cassidy, “Me Media,” New Yorker, May 15, 2006; “Survey: College Kids Like i Pods Better than Beer,” Associated Press, June 8, 2006; Peter Corbett, “Facebook Demographics and Statistics Report 2010,” I Strategy Labs, www. istrategylabs. com; Brian Womack, “Facebook Sees Fourfold Jump in Number of Advertisers since 2009,” Business Week, June 2, 2010; Kermit Pattison, “How to Market Your Business with Facebook,” New York Times, November 11, 2009; Allen Adamson, “No Contest: Twitter and Facebook Both Play a Role in Branding,” Forbes, May 6, 2009; Eilene Zimmerman, “Small Retailers Open Up Storefronts on Facebook Pages,” New York Times, July 26, 2012; Andrew Adam Newman, “Online a Cereal Maker Takes an Inclusive Approach,” New York Times, July 24, 2013; “20 Best Company Facebook Pages,” Inc. com; www . facebook. com; Facebook 2012 Annual Report. tie into charitable causes through Facebook. Pacific Bioscience Laboratories, maker of Clarisonic face brushes, pledged to donate $1 to charity each time a Facebook user clicked the “Like” button on its page and raised $30,000 for women suffering from cancer. Burt's Bee's uses Facebook to introduce new products to its loyal consumer base first and hear their immediate feed-back. Old Spice has successfully used the site to take its humorous commercials viral. The brand has millions of fans and believes Facebook was one of the key factors in revitalizing a 70-plus-year-old product among young consumers. Facebook also offers highly targeted advertising op-portunities with personalized messages. Ads—the com-pany's major source of income—can target individuals by demographic or keywords based on the demographic and interest information they have placed in their profiles. Many ads include an interactive element such as polls or opportunities to comment or invite friends to an event. Facebook can include “social context” with the adver-tiser's marketing message, which highlights a friend's connection with that particular brand. In one survey, college students named Facebook the second-most popular thing in their undergraduate world, girls by the dozen, hundreds, or even thousands after dousing themselves with Axe. The result: The brand is aspirational and approachable, and the lighthearted tone appeals to young men. Axe has won numerous advertising awards not only for its creativity but also for its effective use of unconven-tional media channels. From edgy online videos to video games, mating game tool kits, chat rooms, and mobile apps, the Axe brand engages young adult males at rel-evant times, locations, and environments. In Colombia, for example, a female Axe Patrol scopes out the bar and club scene and sprays men with Axe body sprays. Unilever Marketing Director Kevin George explained, “This is all about going beyond the 30-second TV commercial to create a deeper bond with our guy. ” Axe knows where to reach its consumers. It adver-tises only on male-dominated networks such as MTV, ESPN, Spike, and Comedy Central. It partners with the NBA and NCAA, which draw young male audiences, and runs ads during big sporting events. After Axe's Super Bowl commercial ran in February 2014, it was viewed on You Tube. com more than 100 million times. Print ads appear in Playboy, Rolling Stone, GQ, and Maxim. Axe's online efforts via Facebook and Twitter help drive con-sumers back to its Web site, The Axe Effect. com. Marketing Excellence >> Unilever (Axe and Dove) Unilever—manufacturer of several home care, food, and personal care brands—uses personal marketing com-munications strategies to target specific age groups, demographics, and lifestyles. The company has devel-oped some of the most successful brands in the world, including Axe, a male grooming brand, and Dove, a per-sonal care brand aimed at women. The Axe brand launched in 1983, was introduced in the United States in 2002, and is now the most popular male grooming brand in the world, sold in more than 70 different countries. It offers young male consumers a wide range of personal care products such as body sprays, body gel, deodorant, and shampoo in a variety of scents. It effectively broke through the clutter by finding the right target group and delivering personal marketing messages that touched home. The biggest opportunity existed with males who might have felt a need for help in attracting the opposite sex and could easily be persuaded to buy products to help their appearance. Most Axe ads use humor and sex, often featuring skinny, average guys attracting beautiful | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging Digi TAl Communi CAT ions: online, so Ci Al me Di A, An D mobile | chapter 21 655 described her. The difference in language and descriptions revealed how women are often their harshest beauty crit-ics. The ad ended with the tagline “You are more beautiful than you think. ” The Sketches film has become the most watched video advertisement of all time and had more than 175 million views in its first year alone. Dove's latest effort to change the attitudes of women and promote positive self-esteem was called the Ad Makeover. The campaign appeared only on Facebook and gave women the power to replace negative ads (such as for plastic surgery or weight-loss products) on their friends' Facebook pages with positive messages from Dove like “Hello Beautiful” and “The Perfect Bum Is the One You Are Sitting On. ” Unilever in effect bought the ad space from Facebook for the positive ads to appear on the friend's site, effectively squeezing out the nega-tive ads. During the first week the Ad Makeover app was launched, 171 million banners with negative messages were replaced. Although the Axe and the Dove campaigns have both sparked much controversy and debate, they couldn't be more different. Yet both have effectively targeting their consumer base with personal marketing strategies and spot-on messages. In fact, in the 10 years that Dove has focused on changing women's attitudes and promoting positive self-esteem, sales have jumped from $2. 5 bil-lion to $4 billion. Axe is not only the most popular male grooming brand in the world, but also Unilever's best-selling brand. Questions 1. What makes personal marketing work? Why are Dove and Axe so successful at it? 2. Can a company take personal marketing too far? Explain. 3. Is there a conflict of interests in the way Unilever mar-kets to women and young men? Is it undoing all the good that might be done in the “Campaign for Real Beauty” by making women sex symbols in Axe ads? Discuss. Sources: Jack Neff, “Dove's 'Real Beauty' Pics Could Be Big Phonies,” Advertising Age, May 7, 2008; Catherine Holahan, “Raising the Bar on Viral Web Ads,” Business Week, July 23, 2006; Randall Rothenberg, “Dove Effort Gives Packaged-Goods Marketers Lessons for the Future,” Advertising Age, March 5, 2007; Laura Petrecca, “Amusing or Offensive, Axe Ads Show That Sexism Sells,” USA Today, April 18, 2007; Kim Bhasin, “How Axe Became the Top-Selling Deodorant by Targeting Nerdy Losers,” Business Insider, October 10, 2011; https://blogs. monash . edu/presto/2013/04/07/dove-flies-high-with-social-media-ii/; Jonathan Salem Baskin, “The Opportunity for Dove to Get Real with Its Branding,” Forbes, March 7, 2013; Danielle Kurtzleben, “Unilever Faces Criticism for Real Beauty Ad Campaign,” U. S. News, April 18, 2013; Jack Neff, “Campaign Has Won Lots of Awards, Sold Heap of Product. But Has It Changed Perceptions?” Ad Age, January 22, 2014; Dove, www. campaignforrealbeauty. com; www. unilever. com; Unilever 2013 Annual Report. Unilever understands that it must keep the brand fresh, relevant, and cool in order to stay current with its fickle young audience. As a result, the company launches a new fragrance every year and refreshes its online and advertising communications constantly, realizing that new young males enter and exit the target market each year. Axe's success in personal marketing has lifted the brand to become the leader in what many had thought was the mature deodorant category. On the other side of the personal marketing spec-trum, Unilever's Dove brand speaks to women with a different tone and message. In 2003, Dove shifted away from its historical advertising, which touted the brand's benefit of one-quarter moisturizing cream, and launched the “Real Beauty” campaign. “Real Beauty” celebrated “real” women and spoke personally to the target market about the notion that beauty comes in all shapes, sizes, ages, and colors. The campaign arose from research revealing that only 4 percent of women worldwide think they are beautiful. The first phase of the “Real Beauty” campaign fea-tured nontraditional female models and asked viewers to judge their looks online and decide whether they were “Wrinkled or Wonderful” or “Oversized or Outstanding. ” The personal questions shocked many but created such a large PR buzz that Dove continued the campaign. The second phase featured candid and confident images of curvy, full-bodied women. Again, the brand smashed stereotypes about what should appear in advertising and touched many women worldwide. The third phase, “Pro-Age,” featured older, nude women and asked questions like, “Does beauty have an age limit?” Immediately, the company heard positive feedback from its older consum-ers. Dove also started a Self-Esteem Fund, aimed at helping women feel better about their looks. In addition, Dove released a series of short Dove Films, one of which, Evolution, won both a Cyber and a film Grand Prix at the International Advertising Festival in Cannes in 2007. The film shows a rapid-motion view of an ordinary-looking woman transformed by makeup art-ists, hairdressers, lighting, and digital retouching to end up looking like a billboard supermodel. The end tagline is: “No wonder our perception of beauty is distorted. ” The film became an instant viral hit. Dove followed up with Onslaught, a short film that showed a fresh-faced young girl being bombarded with images of sexy, half-dressed women and promises of products to make her look “smaller,” “softer,” “firmer,” and “better. ” Dove's 2013 film called Sketches featured a police sketch artist who drew two pictures of the same woman. For one, the woman described herself to the sketch artist from behind a curtain, and for the other, a total stranger | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
656 My Marketing Lab™ Improve Y our Grade! Over 10 million students improved their results using the Pearson My Labs. Visit mymktlab. com for simulations, tutorials, and end-of-chapter problems. In This Chapter, We Will Address the Following Questions 1. How can companies conduct direct marketing for competitive advantage? (p. 657) 2. What are the pros and cons of database marketing? (p. 662) 3. What decisions do companies face in designing a sales force? (p. 664) 4. What are the challenges of managing a sales force? (p. 669) 5. How can salespeople improve their selling, negotiating, and relationship marketing skills? (p. 673)Breaking new ground with database marketing helped propel President Barack Obama to re-election in 2012. Source: © epa european pressphoto agency b. v. /Alamy | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
657 Managing Personal Communications: Direct and Database Marketing and Personal Selling22 Although mass and digital communications provide many benefits, there are times personal communications are needed to be relevant and close a sale—or perhaps even to elect a president! Many political pundits credit savvy database marketing as a crucial factor in the reelection of U. S. President Barack Obama in 2012. 1 After database marketing proved a key to winning the presidential election in 2008, the Obama cam-paign team vowed to exploit it even more during his 2012 reelection campaign. By merging the main Democratic voter files with information from pollsters, fund-raisers, field workers, and customer data-bases, as well as social media and mobile contacts, they created one comprehensive database. Sophis-ticated data analytics helped raise $1 billion and fine-tune the use of TV ads, phone calls, direct mail, door-to-door campaigning, and social media, especially in critical swing states. Much of the $690 million raised online resulted from carefully targeted and tested e-mails. Every day, the campaign used small groups of supporters to test as many as 18 different versions of e-mails varying in subject line, amounts requested, and sender. The winning combination went to the broad base of tens of millions of supporters. Campaign analysts found that a casual tone (such as the word hey) was often effective in subject lines and that supporters seemed to never tire of the e-mails. The campaign also broke new ground with a Facebook campaign in which people who downloaded an app were sent messages with pictures of their friends in swing states and asked to click a button to automatically urge those targeted voters to register to vote or get to the polls. As a result of all these efforts, 1. 25 million more 18-to 24-year-old voters supported Obama in 2012 than 2008. Personalizing communications and saying and doing the right thing for the right person at the right time are critical for marketing effectiveness. In this chapter, we consider how com-panies personalize their marketing communications to have more impact. We begin by evaluating direct and database marketing, then move on to consider personal selling and the sales force. Direct Marketing Today, many marketers build long-term relationships with customers. They send birthday cards, information materials, or small premiums. Airlines, hotels, and other businesses adopt frequency reward programs and club programs. 2 Direct marketing is the use of consumer-direct (CD) channels to reach and deliver goods and services to customers without using marketing middlemen. Direct marketers can use a number of channels to reach individual prospects and customers: direct mail, catalog marketing, telemarketing, interactive TV, kiosks, Web sites, and mobile devices. They often seek a measurable response, typically a customer order, through direct-order marketing. Direct marketing has been a fast-growing avenue, partly in response to the high and increasing costs of reach-ing business markets through a sales force. Sales produced through traditional direct marketing channels (catalogs, | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
658 PART 7 | Communi CATing V Alue direct mail, and telemarketing) have been growing rapidly, along with direct-mail sales, which include sales to the consumer market, B-to-B, and fund-raising by charitable institutions. Direct marketing has been outpacing U. S. retail sales. It produced $2. 05 trillion in sales in 2012, accounting for approximately 8. 7 percent of GDP. 3 The Benef ITs of D Irec T Marke TIn G Market demassification has resulted in an ever-increasing number of market niches. Consumers short of time and tired of traffic and parking headaches appreciate toll-free phone numbers, always-open Web sites, next-day delivery, and direct marketers' commitment to customer service. In addition, many chain stores have dropped slower-moving specialty items, creating an opportunity for direct marketers to promote these to interested buyers instead. Sellers benefit from demassification as well. Direct marketers can buy a list containing the names of almost any group: left-handed people, overweight people, or millionaires. They can customize and personalize messages and build a continuous relationship with each customer. New parents will receive periodic mailings describing new clothes, toys, and other goods as their child grows. Direct marketing can reach prospects at the moment they want a solicitation and therefore be noticed by more highly interested prospects. It lets marketers test alternate media and messages to find the most cost-effective approach. Direct marketing also makes the company's offer and strategy less visible to competitors. Finally, direct marketers can measure responses to their campaigns to decide which have been the most profitable. Direct marketing must be integrated with other communications and channel activities. 4 Eddie Bauer, Lands' End, and the Franklin Mint made fortunes building their brands in the direct marketing mail-order and phone-order business and then opened retail stores. They cross-promote their stores, catalogs, and Web sites, for example, by putting their Internet addresses on their shopping bags. Successful direct marketers view a customer interaction as an opportunity to up-sell, cross-sell, or just deepen a relationship. They make sure they know enough about each customer to customize and personalize offers and messages and develop a plan for lifetime marketing to each valuable customer, based on their knowledge of life events and transitions. They also carefully orchestrate each element of their campaigns. Here is an award-winning campaign that did just that. 5 Ti P TOP ice crea M New Zealand loves ice cream—the country has one of the highest per-capita consumption rates in the world. With fierce competition among brands, local brand Tip Top needed a way to maintain its leadership over its well-financed rivals. The “Feel Tip Top” campaign was a clever way to engage its customers. A Facebook app allowed people to nominate friends and family to receive ice cream delivered personally in the company's new truck. The happy reactions of some lucky recipients were captured on film for ads and viral videos. Winner of the Direct Marketing Association's Diamond Echo Award for 2013, the campaign generated 2,000 nominations in 24 hours, rising eventually to 30,000. Sales increased 5 percent. New Zealand's Tip Top ice cream used social media and video to connect its brand with customers to retain its market leadership. Source: Fronterra | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging Pe Rson Al Communi CAT ions | chapter 22 659 We next consider some of the key issues that characterize different direct marketing channels. DIrec T Ma Il Direct-mail marketing means sending an offer, announcement, reminder, or other item to an individual con-sumer. Using highly selective mailing lists, direct marketers send out millions of mail pieces each year—letters, fliers, foldouts, and other “salespeople with wings. ” Direct mail is a popular medium because it permits target market selectivity, can be personalized, is flexible, and allows early testing and response measurement. Although the cost per thousand is higher than for mass media, the people reached are much better prospects. The success of direct mail, however, has also become its liability—so many marketers are sending out direct-mail pieces that mailboxes are becoming stuffed, leading some consumers to disregard the blizzard of solicitations they receive. In constructing an effective direct-mail campaign, direct marketers must choose their objectives, target markets and prospects, offer elements, means of testing the campaign, and measures of campaign success. Objectives Most direct marketers judge a campaign's success by the response rate, measured in customer orders. An order-response rate for letter-sized direct mail averages 3. 4 percent to an internal company list and 1. 3 percent to a general public list. Although that can vary with product category, price, and the nature of the offering, it is much higher than e-mails' average response rates of 0. 12 percent and 0. 03 percent, respectively. 6 Direct mail can also produce prospect leads, strengthen customer relationships, inform and educate customers, remind customers of offers, and reinforce recent customer purchase decisions. target Markets and Pr Os Pects Most direct marketers apply the RFM ( recency, frequency, monetary amount ) formula to select customers according to how much time has passed since their last purchase, how many times they have purchased, and how much they have spent since becoming a customer. 7 Suppose the company is offering a leather jacket. It might make this offer to the most attractive customers—those who made their last purchase between 30 and 60 days ago, who make three to six purchases a year, and who have spent at least $100 since becoming customers. Points are established for varying RFM levels; the more points, the more attractive the customer. 8 Marketers also identify prospects on the basis of age, sex, income, education, previous mail-order purchases, and occasion. College freshmen will buy laptop computers, backpacks, and compact refrigerators; newlyweds look for housing, furniture, appliances, and bank loans. Another useful variable is consumer lifestyle or “passions” such as electronics, cooking, and the outdoors. Dun & Bradstreet provides a wealth of data for B-to-B direct marketing. Here the prospect is often not an individual but a group or committee of both decision makers and decision influencers. Each member needs to be treated differently, and the timing, frequency, nature, and format of contact must reflect the member's status and role. The company's best prospects are customers who have bought its products in the past. The direct marketer can also buy lists of names from list brokers, but these lists often have problems, including name duplication, incom-plete data, and obsolete addresses. Better lists include overlays of demographic and psychographic information. Direct marketers typically buy and test a sample before buying more names from the same list. They can build their own lists by advertising a promotional offer and collecting responses. Offer ele Ments The offer strategy has five elements—the product, the offer, the medium, the distribution method, and the creative strategy. 9 Fortunately, all can be tested. The direct-mail marketer also must choose five components of the mailing itself: the outside envelope, sales letter, circular, reply form, and reply envelope. A common direct marketing strategy is to follow up direct mail with an e-mail. testing ele Ments One of the great advantages of direct marketing is the ability to test, under real marketplace conditions, different elements of an offer strategy, such as products, product features, copy platform, mailer type, envelope, prices, or mailing lists. The Teaching Company mails 50 million catalogs and sends 25 million e-mails to sell educational DVDs of lectures and courses. Every element of the offer is tested. Changing the color and location of an “ Add to Cart” button on its Web site (from pale green to orange and from side to bottom) increased sales almost 6 percent. Replacing an image of Michelangelo's God's hand with one depicting the ruins of Petra improved sales more than 20 percent. 10 Response rates typically understate a campaign's long-term impact. Suppose only 2 percent of the recipients who receive a direct-mail piece advertising Samsonite luggage place an order. A much larger percentage became aware of the product (direct mail has high readership), and some percentage may have formed an intention to buy | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
660 PART 7 | Communi CATing V Alue at a later date (either by mail or at a retail outlet). Some may mention Samsonite luggage to others as a result of the direct-mail piece. To better estimate a promotion's impact, some companies measure the impact of direct market-ing on awareness, intention to buy, and word of mouth. Measuring ca MPaign success: lifeti Me value By adding up the planned campaign costs, the direct marketer can determine the needed break-even response rate. This rate must be net of returned merchandise and bad debts. A specific campaign may fail to break even in the short run but can still be profitable in the long run if we factor in customer lifetime value (see Chapter 5) by calculating the average customer longevity, average customer annual expenditure, and average gross margin, minus the average cost of customer acquisition and maintenance (discounted for the opportunity cost of money). 11 ca Talo G Marke TIn G In catalog marketing, companies may send full-line merchandise catalogs, specialty consumer catalogs, and business catalogs, usually in print form but also as DVDs or online. In 2010, three of the top B-to-C catalog sellers were Dell ($52 billion), Staples ($9. 8 billion), and CDW ($8. 8 billion). Three top B-to-B catalog sellers were Thermo Fisher Scientific lab and research supplies ($10. 8 billion), Henry Schien dental, medical, and vet supplies ($7. 5 billion), and WESCO International electrical and industry maintenance supplies ($5. 0 billion). 12 Thousands of small businesses also issue specialty catalogs. Many direct marketers find combining catalogs and Web sites an effective way to sell. Catalogs are a huge business—the Internet and catalog retailing industry includes 20,000 companies with combined annual revenue of $350 billion. 13 Successfully marketing a catalog business depends on managing cus-tomer lists carefully to avoid duplication or bad debts, controlling inventory, offering good-quality merchandise so returns are low, and projecting a distinctive image. Some companies add literary or information features, send swatches of materials, operate a special online or telephone hotline to answer questions, send gifts to their best cus-tomers, and donate a percentage of profits to good causes. Putting their entire catalog online also provides business marketers with better access to global consumers than ever before, saving printing and mailing costs. Tele Marke TIn G Telemarketing is the use of the telephone and call centers to attract prospects, sell to existing customers, and pro-vide service by taking orders and answering questions. It helps companies increase revenue, reduce selling costs, and improve customer satisfaction. Companies use call centers for inbound telemarketing —receiving calls from customers—and outbound telemarketing —initiating calls to prospects and customers. As Chapter 4 noted, because of the establishment of the National Do Not Call Registry in 2003, consumer telemarketing has lost much of its effectiveness. Business-to-business telemarketing is increasing, however. Raleigh Bicycles used telemarketing to cuts costs and drive sales. Source: © Cultura RM/Alamy | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging Pe Rson Al Communi CAT ions | chapter 22 661 Raleigh Bicycles used telemarketing to reduce the personal selling costs of contacting its dealers. In the first year, sales force travel costs dropped 50 percent and sales in a single quarter went up 34 percent. As it improves with the use of video conferencing, telemarketing will increasingly replace, though never eliminate, more ex-pensive field sales calls. o Ther Me DIa for D Irec T-response Marke TIn G Direct marketers use all the major media. Newspapers and magazines carry ads offering books, clothing, appliances, vacations, and other goods and services that individuals can order via toll-free numbers. Radio ads present offers 24 hours a day. Some companies prepare 30-and 60-minute infomercials to combine the selling power of television commercials with the draw of information and entertainment. Infomercials promote prod-ucts that are complicated or technologically advanced or that require a great deal of explanation. Some of the most successful are for Proactiv acne system, P90X workout DVDs, and the George Foreman grill. At-home shopping channels are dedicated to selling goods and services through a toll-free number or via the Internet for delivery within 48 hours. pu Bl Ic an D e Th Ical Issues In DIrec T Marke TIn G Direct marketers and their customers usually enjoy mutually rewarding relationships. Occasionally, however, a darker side emerges: Irritation. Many people don't like hard-sell direct marketing solicitations. Firms have been popping up to help block unwanted junk mail. 14 Unfairness. Some direct marketers take advantage of impulsive or less sophisticated buyers or prey on the vulnerable, especially the elderly. Deception and fraud. Some direct marketers design mailers and write copy intended to mislead or exagger-ate product size, performance claims, or the “retail price. ” The Federal Trade Commission receives thousands of complaints each year about fraudulent investment scams and phony charities. Invasion of privacy. It seems that almost every time consumers order products by mail or telephone, apply for a credit card, or take out a magazine subscription, their names, addresses, and purchasing behavior may be added to several company databases. As Chapters 3 and 5 discussed, critics worry that marketers may know too much about consumers' lives and that they may use this knowledge to take unfair advantage. 15 People in the direct marketing industry know that, left unattended, such problems will lead to increasingly negative consumer attitudes, lower response rates, and calls for greater state and federal regulation. Most direct marketers want the same thing consumers want: honest and well-designed marketing offers targeted only to those who appreciate hearing about them. TV infomercials have been used with great success to sell the George Foreman grill, backed by the former heavyweight boxing champion. Source: HORST OSSINGER/EPA/Newscom | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
662 PART 7 | Communi CATing V Alue Customer Databases and Database Marketing To conduct direct marketing, marketers must know their customers. 16 And to do that, they must collect information and store it in a database from which to conduct database marketing. A customer database is an organized collection of comprehensive information about individual customers or prospects that is current, accessible, and actionable for lead generation, lead qualification, sale of a product or service, or maintenance of customer relationships. Database marketing is the process of building, maintaining, and using customer databases and other databases (of products, suppliers, or resellers) to contact, transact, and build customer relationships. Chapter 3 reviewed “Big Data” and the analysis of massive data sets. Here we consider some additional issues in building customer databases and conducting database marketing. cus To Mer Da Ta Bases Many companies confuse a customer mailing list with a customer database. A customer mailing list is simply a set of names, addresses, and telephone numbers. A customer electronic mailing or e-mail list may literally be just names and e-mail addresses. A customer database, however, contains much more information, accumulated through customer transactions, registration information, telephone queries, cookies, and every customer contact. Ideally, a customer database also contains the consumer's past purchases, demographics (age, income, family members, birthdays), psychographics (activities, interests, and opinions), mediagraphics (preferred media), and other useful information. A typical business database contains business customers' past purchases; past volumes, prices, and profits; buyer team members' names (and ages, birthdays, hobbies, and favorite foods); status of current contracts; the supplier's estimated share of the customer's business; competitive suppliers; assessment of competitive strengths and weaknesses in selling and servicing the account; and relevant customer buying practices, pat-terns, and policies. A Latin American unit of the Swiss pharmaceutical firm Novartis keeps data on 100,000 of Argentina's farmers, knows their crop protection chemical purchases, groups them by value, and treats each group differently. Da Ta Warehouses an D Da Ta MIn In G Savvy companies capture information every time a customer contacts any of their depart-ments, whether via purchase, a service call, an online query, or a mail-in rebate card. 17 Banks and credit card companies, telephone companies, catalog marketers, and many other com-panies have a great deal of information about their customers, including transaction history and enhanced data on age, family size, income, and other demographics. These data are collected by the company's contact center and organized into a data ware-house where marketers can capture, query, and analyze them to draw inferences about an individual customer's needs and responses. Customer service reps inside the company can respond to customer inquiries based on a complete picture of the customer relationship, and customized marketing activities can be directed to individual customers. Some firms provide specialized help to support database marketing. 18 dunnhu Mby British research firm Dunnhumby has increased the profitability of retailers and other firms by gleaning insights from their loyalty program data and credit card transactions. The firm has helped British supermarket giant Tesco manage every aspect of its business: creating new shop formats, arranging store layouts, developing private label products, and tailoring coupons and special discounts to its loyalty card shoppers. Tesco decided against dropping a poor-selling type of bread after Dunnhumby's analysis revealed it was a “destina-tion product” for a loyal cohort that would shop elsewhere if it disappeared. U. S. clients of Dunnhumby have included Coca-Cola, Kroger, Macy's, and Home Depot. Based on data from In Argentina, Novartis keeps a detailed data base on its farmer customers so that it can market more effectively to them. Source: © Elena Elisseeva/Shutterstock | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging Pe Rson Al Communi CAT ions | chapter 22 663 350 million people in 28 countries, Dunnhumby's insights have aided decisions about product range, availability, space planning, and new-product innovations. For a major European catalog company, Dunnhumby found that not only did shoppers with different body types prefer different clothing styles, they also shopped at different times of the year: Slimmer consumers tended to buy early in a new season, whereas larger folks tended to take fewer risks and wait until later in the season to see which styles proved popular. Through data mining, marketing statisticians can extract from the mass of data useful information about individuals, trends, and segments. Data mining uses sophisticated statistical and mathematical techniques such as cluster analysis, automatic interaction detection, predictive modeling, and neural networking. Some observers believe a proprietary database can provide a company with a significant competitive advantage. 19 In general, companies can use their databases in five ways: 1. To identify prospects —Many companies generate sales leads by advertising their product or service and including a response feature, such as a link to a home page, a business reply card, or a toll-free phone number, and building a database from customer responses. The company sorts through the database to identify the best prospects, then contacts them by mail, e-mail, or phone to try to convert them into customers. 2. To decide which customers should receive a particular offer —Companies interested in selling, up-selling, and cross-selling set up criteria describing the ideal target customer for a particular offer. Then they search their customer databases for those who most closely resemble the ideal. By noting response rates, a company can improve its targeting precision. Following a sale, it can set up an automatic sequence of activities: One week later e-mail a thank-you note; five weeks later e-mail a new offer; 10 weeks later (if the customer has not responded) e-mail an offer of a special discount. 3. To deepen customer loyalty —Companies can build interest and enthusiasm by remembering customer preferences and sending appropriate gifts, discount coupons, and interesting reading material. 4. To reactivate customer purchases —Automatic mailing programs (automatic marketing) can send out birthday or anniversary cards, holiday shopping reminders, or off-season promotions. The database can help the company make attractive or timely offers. 5. To avoid serious customer mistakes —A major bank confessed to a number of mistakes it had made by not using its customer database well. In one case, the bank charged a customer a penalty for late payment on his mortgage, failing to note he headed a company that was a major depositor in this bank. The customer quit the bank. In a second case, two different staff members of the bank phoned the same mortgage customer offering a home equity loan at different prices. Neither knew the other had made the call. In a third case, the bank gave a premium customer only standard service in another country. Tesco uses insights gained from a massive customer data base to help make all kinds of business and marketing decisions. Source: © Alex Segre/Alamy | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
664 PART 7 | Communi CATing V Alue The Do Wns IDe of Da Ta Base Marke TIn G Database marketing is most frequently used by business marketers and service providers that routinely collect masses of customer data, like hotels, banks, airlines, and insurance, credit card, and phone companies. Other types of companies that invest in database marketing are those that favor cross-selling and up-selling (such as GE and Amazon. com) or whose customers have highly differentiated needs and are of highly differentiated value to the company. Although packaged-goods retailers and consumer packaged-goods companies use database marketing less frequently, many (such as Kraft, Quaker Oats, Ralston Purina, and Nabisco) are building databases for certain brands. Having covered the upside of database marketing, we also need to cover the downside. Five main problems can prevent a firm from effectively using database marketing. 1. Some situations are just not conducive to database marketing. Building a customer database may not be worthwhile when: (1) the product is a once-in-a-lifetime purchase (a grand piano); (2) customers show little loyalty to a brand (there is a lot of customer churn); (3) the unit sale is very small (a candy bar) so customer lifetime value is low; (4) the cost of gathering information is too high; and (5) there is no direct contact between the seller and ultimate buyer. 2. Building and maintaining a customer database require a large investment. Computer hardware, database software, analytical programs, communication links, and skilled staff can be costly. It's difficult to collect the right data, especially to capture all the occasions of company interaction with individual customers. Deloitte Consulting found 70 percent of firms experienced little or no improvement from implementing customer relationship management (CRM) because the system was poorly designed, it became too expensive, users didn't make much use of it or report much benefit, and collaborators ignored it. Sometimes companies mistakenly concentrate on customer contact processes without making corresponding changes in internal structures and systems. 20 3. Employees may resist becoming customer-oriented and using the available information. Employees find it far easier to carry on traditional transaction marketing than to practice CRM. Effective database marketing requires managing and training employees as well as dealers and suppliers. 4. Not all customers want a relationship with the company. Some may resent knowing the company has col-lected that much personal information about them. Online companies should explain their privacy policies and give consumers the right not to have their information stored. European countries do not look favorably on database marketing and are protective of consumers' private information. The European Union passed a law handicapping the growth of database marketing in its 28 member countries. 5. The assumptions behind CRM may not always hold true. 21 High-volume customers often know their value to a company and can leverage it to extract premium service and/or price discounts, so it may not cost the firm less to serve them. Loyal customers may also be jealous of attention lavished on other customers. When e Bay began to chase big corporate customers such as IBM, Disney, and Sears, some mom-and-pop businesses that helped build the brand felt abandoned. 22 Loyal customers also may not necessarily be the best ambas-sadors for the brand. One study found those who scored high on behavioral loyalty and bought a lot of a company's products were less active word-of-mouth marketers than customers who scored high on attitudinal loyalty and expressed greater commitment to the firm. 23 When it works, a data warehouse yields more than it costs, but the data must be in good condition, and the discovered relationships must be valid and acceptable to consumers. Designing the Sales Force The original and oldest form of direct marketing is the field sales call. To locate prospects, develop them into customers, and grow the business, most industrial companies rely heavily on a professional sales force or hire manufacturers' representatives and agents. Many consumer companies such as Allstate, Amway, Avon, Mary Kay, Merrill Lynch, and Tupperware use a direct-selling force. U. S. firms spend more than a trillion dollars annually on sales forces and sales force materials—more than on any other promotional method. In 2012, more than 10 percent of the total workforce worked full time in sales occupations, both nonprofit and for profit. 24 Hospitals and museums, for example, use fund-raisers to contact donors and solicit donations. In asserting that selling is the core function of every company, Boston Beer founder Jim Koch notes, “Without sales, there is no business to manage. ”25 For many firms, sales force performance is critical. 26 | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging Pe Rson Al Communi CAT ions | chapter 22 665 SObe John Bello, founder of So Be nutritionally enhanced teas and juices, has given much credit to his sales force for the brand's successful ascent. Bello claims that the superior quality and consistent sales effort from the 150 salespeople the company had at its peak was directed toward one simple goal: “So Be won in the street because our salespeople were there more often and in greater numbers than the competition, and they were more motivated by far. ” So Be's sales force operated at every level of the distribution chain: At the distributor level, steady communication gave So Be disproportionate focus relative to the other brands; at the trade level, most senior salespeople had strong personal relationships with retail-ers such as 7-Eleven, Costco, and Safeway; and at the individual store level, the So Be team was always at work setting and restocking shelves, cutting in product, and putting up point-of-sale displays. According to Bello, bottom-line success in any entrepreneurial endeavor depends on sales execution. Although no one debates the importance of the sales force in marketing programs, companies are sensitive to the high and rising costs of maintaining one, including salaries, commissions, bonuses, travel expenses, and benefits. Not surprisingly, companies are trying to increase sales force productivity through better selection, training, supervision, motivation, and compensation. 27 The term sales representative covers six positions, ranging from the least to the most creative types of selling:28 1. Deliverer —A salesperson whose major task is the delivery of a product (water, fuel, oil). 2. Order taker —An inside order taker (standing behind the counter) or outside order taker (calling on the su-permarket manager). 3. Missionary —A salesperson not permitted to take an order but expected rather to build goodwill or educate the actual or potential user (the medical “detailer” representing an ethical pharmaceutical house). 4. Technician —A salesperson with a high level of technical knowledge (the engineering salesperson who is pri-marily a consultant to client companies). 5. Demand creator —A salesperson who relies on creative methods for selling tangible products (vacuum clean-ers, cleaning brushes, household products) or intangibles (insurance, advertising services, or education). 6. Solution vendor —A salesperson whose expertise is solving a customer's problem, often with a system of the company's products and services (for example, computer and communications systems). Boston Beer founder Jim Koch is a firm believer that the selling function is essential to the success of its Samuel Adams brand. Source: Alexandra Schuler/dpa/picture-alliance/Newscom | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
666 PART 7 | Communi CATing V Alue Salespeople are the company's personal link to its customers. In designing the sales force, the company must develop sales force objectives, strategy, structure, size, and compensation (see Figure 22. 1). sales force o Bjec TIves an D s Tra Te GY The days when all the sales force did was “sell, sell, and sell” are long gone. Sales reps need to know how to di-agnose a customer's problem and propose a solution that can help improve the customer's profitability. The best salespeople even go beyond the customer's stated problems to offer fresh insights into the customer's business model and identify unrecognized needs and unstated problems. 29 In performing their jobs, salespeople complete one or more specific tasks: Prospecting. Searching for prospects or leads Targeting. Deciding how to allocate their time among prospects and customers Communicating. Communicating information about the company's products and services Selling. Approaching, presenting, answering questions, overcoming objections, and closing sales Servicing. Providing various services to the customers—consulting on problems, rendering technical assis-tance, arranging financing, expediting delivery Information gathering. Conducting market research and doing intelligence work Allocating. Deciding which customers will get scarce products during product shortages To manage costs, most companies are choosing a leveraged sales force that focuses reps on selling the company's more complex and customized products to large accounts and uses inside salespeople and online ordering for low-end selling. Salespeople handle fewer accounts and are rewarded for key account growth; lead generation, proposal writing, order fulfillment, and postsale support are turned over to others. This is far different from expecting sales-people to sell to every possible account, the common weakness of geographically based sales forces. 30 Companies must deploy sales forces strategically so they call on the right customers at the right time in the right way, acting as “account managers” who arrange fruitful contact between people in the buying and selling organiza-tions. Selling increasingly calls for teamwork and the support of others, such as top management, especially when national accounts or major sales are at stake; technical people, who supply information and service before, during, and after product purchase; customer service representatives, who provide installation, maintenance, and other services; and office staff, consisting of sales analysts, order expediters, and assistants. 31 To maintain a market focus, salespeople should know how to analyze sales data, measure market potential, gather market intelligence, and develop marketing strategies and plans. Especially at the higher levels of sales man-agement, they need analytical marketing skills. Marketers believe sales forces are more effective in the long run if they understand and appreciate marketing as well as selling. Too often marketing and sales are in conflict: the sales force complains marketing isn't generating enough leads, and marketers complain the sales force isn't converting them (see Figure 22. 2). Improved collaboration and com-munication between these two can increase revenues and profits. 32 Designing the Sales Force Sales force objectives Sales force strategy Sales force structure Sales force compensation Sales force size | Fig. 22. 1 | Designing a Sales Force | Fig. 22. 2 | A Hypothetical (Dysfunctional) Sales Marketing Exchange Sales: I need leads, but marketing never sends me any good leads. How am I supposed to get new business with no good leads? Marketing: We deliver tons of leads, and they just sit in the system. Why won't sales call on any of them? Sales: I have nothing new to sell. What is marketing doing? Why can't they figure out what customers want before they give it to us? Why don't they give me anything that's easy to sell? Marketing: Why won't sales get out and sell my new programs? How do they expect customers to place orders without sales contacts? Sales: My people spend too much time on administration and paperwork. I need them out selling. Marketing: We need information to get new ideas. How long does it take to type in a few words? Don't they know their own customers? Sales: How am I going to hit my number? Marketing is a waste of time. I'd rather have more sales reps. Marketing: How am I going to hit my number? Sales won't help, and I don't have enough people to do it myself. Source: Based on a talk by Scott Sanderude and Jeff Standish, “Work Together, Win Together: Resolving Misconceptions between Sales and Marketing,” talk given at Marketing Science Institute's Marketing, Sales, and Customers conference, December 7, 2005. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging Pe Rson Al Communi CAT ions | chapter 22 667 Jim Farley, CMO at Ford, notes that “the coolest thing about my job at Ford is that I'm in charge of both market-ing and sales” and maintains that it is a mistake to have separate people in charge. He sees the best salespeople at Ford as a cross between problem solvers, who help explain and customize all the sophisticated automobile electron-ics, and concierges, who help with all the steps in the complicated process of buying a car. 33 To improve mutual understanding, Honeywell moves marketers into sales and vice versa when appropriate, as well as getting them together for joint meetings throughout the year. 34 Once the company chooses its strategy, it can use a direct or a contractual sales force. A direct (company) sales force consists of full-or part-time paid employees who work exclusively for the company. Inside sales people conduct business from the office and receive visits from prospective buyers, and field sales people travel and visit customers. A contractual sales force consists of manufacturers' reps, sales agents, and brokers who earn a com-mission based on sales. sales force s Truc Ture The sales force strategy also has implications for its structure. A company that sells one product line to one end-using industry with customers in many locations would use a territorial structure. A company that sells many products to many types of customers might need a product or market structure. Some companies need a more complex structure and adopt some combination of four types of sales force: (1) a strategic market sales force assigned to major accounts (see below); (2) a geographic sales force calling on custom-ers in different territories; (3) a distributor sales force calling on and coaching distributors; and (4) an inside sales force marketing and taking orders online and via phone. Established companies need to revise their sales force structures as market and economic conditions change. SAS, seller of business intelligence software, reorganized its sales force into industry-specific groups to serve such customers as banks, brokerages, and insurers and saw revenue soar by 14 percent. 35 “Marketing Insight: Major Account Management” discusses a specialized form of sales force structure. Ford CMO Jim Farley believes that it is highly beneficial that he is in charge of both marketing and sales. Source: GEOFF ROBINS/AFP/Getty Images/Newscom | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
668 PART 7 | Communi CATing V Alue sales force s Ize Sales representatives are one of the company's most productive and expensive assets. Increasing their number in-creases both sales and costs. Once the company establishes the number of customers it wants to reach, it can use a workload approach to establish sales force size. This method has five steps: 1. Group customers into size classes according to annual sales volume. 2. Establish desirable call frequencies (number of calls on an account per year) for each customer class. 3. Multiply the number of accounts in each size class by the corresponding call frequency to arrive at the total workload for the country, in sales calls per year. 4. Determine the average number of calls a sales representative can make per year. 5. Divide the total annual calls required by the average annual calls made by a sales representative to arrive at the number of sales representatives needed. Suppose the company estimates it has 1,000 A accounts and 2,000 B accounts. A accounts require 36 calls a year, and B accounts require 12, so the company needs a sales force that can make 60,000 sales calls (36,000 + 24,000) a year. If the average full-time rep can make 1,000 calls a year, the company needs 60 reps. sales force co Mpensa TIon To attract top-quality reps, the company must develop an attractive compensation package. Sales reps want income regularity, extra reward for above-average performance, and fair pay for experience and longevity. Management wants control, economy, and simplicity. Some of these objectives will conflict. No wonder compen-sation plans vary tremendously among and even within industries. The company must quantify four components of sales force compensation. The fixed amount, a salary, satis-fies the need for income stability. The variable amount, whether commissions, bonus, or profit sharing, serves to Major Account Management Marketers typically single out for attention major accounts (also called key accounts, national accounts, global accounts, or house accounts). These are important customers with multiple divisions in many locations that use uniform pricing and coordinated service for all divisions. A major account manager (MAM) usually reports to the national sales manager and supervises field reps calling on customer plants within their territories. The average company manages about 75 key accounts. If a company has several such accounts, it's likely to organize a major account manage-ment division, in which the average MAM handles nine accounts. Large accounts are often handled by a strategic account manage-ment team with cross-functional members who integrate new-product development, technical support, supply chain, marketing activities, and multiple communication channels to cover all aspects of the relation-ship. Procter & Gamble has a strategic account management team of 300 staffers to work with Walmart in its Bentonville, Arkansas, head-quarters, with more stationed at Walmart headquarters in Europe, Asia, and Latin America. P&G has credited this relationship with saving the company billions of dollars. Major account management is growing. As buyer concentration increases through mergers and acquisitions, fewer buyers are account-ing for a larger share of sales. Many are centralizing their purchases of certain items, gaining more bargaining power. And as products become more complex, more groups in the buyer's organization participate in the purchase process. The typical salesperson alone might not have the skill, authority, or coverage to sell effectively to the large buyer. In selecting major accounts, companies look for those that purchase a high volume (especially of more profitable products), pur-chase centrally, require a high level of service in several geographic locations, may be price sensitive, and want a long-term partnership. Major account managers act as the single point of contact, develop and grow customer business, understand customer decision processes, identify added-value opportunities, provide competitive intelligence, negotiate sales, and orchestrate customer service. Many major accounts look for added value more than a price advantage. They appreciate having a single point of dedicated con-tact, single billing, special warranties, EDI links, priority shipping, early information releases, customized products, and efficient maintenance, repair, and upgraded service. And there's the value of goodwill. Personal relationships with people who value the major account's busi-ness and have a vested interest in its success are compelling reasons for remaining a loyal customer. Sources: Noel Capon, Dave Potter, and Fred Schindler, Managing Global Accounts: Nine Critical Factors for a World-Class Program, 2nd ed. (Bronxville, NY: Wessex Press, 2008); Peter Cheverton, Global Account Management: A Complete Action Kit of Tools and Techniques for Managing Key Global Customers (London, UK: Kogan Page, 2008); Malcolm Mc Donald and Diana Woodburn, Key Account Management: The Definitive Guide, 2nd ed. (Oxford, UK: Butterworth-Heinemann, 2007); Jack Neff, “Bentonville or Bust,” Advertising Age, February 24, 2003. More information can be obtained from SAMA (Strategic Account Management Association) and the Journal of Selling and Major Account Management. marketing insight | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging Pe Rson Al Communi CAT ions | chapter 22 669 stimulate and reward effort. 36 Expense allowances enable sales reps to meet the costs of travel and entertaining on the company's behalf. Benefits, such as paid vacations, sickness or accident benefits, pensions, and health and life insurance, provide security and job satisfaction. Fixed compensation is common in jobs with a high ratio of nonselling to selling duties and jobs where the selling task is technically complex and requires teamwork. Variable compensation works best where sales are cyclical or depend on individual initiative. Fixed and variable compensation give rise to three basic types of compensation plans—straight salary, straight commission, and combination salary and commission. One survey revealed that more than half of sales reps receive 40 percent or more of their compensation in variable pay. 37 Straight-salary plans provide a secure income, encourage reps to complete nonselling activities, and reduce incentive to overstock customers. For the firm, these plans deliver administrative simplicity and lower turnover. When semiconductor company Microchip dropped commissions for its sales force, sales actually increased. 38 Straight-commission plans attract higher performers, provide more motivation, require less supervision, and con-trol selling costs. On the negative side, they emphasize getting the sale over building the relationship. Combination plans feature the benefits of both plans while limiting their disadvantages. Plans that combine fixed and variable pay link the variable portion to a wide variety of strategic goals. One current trend deemphasizes sales volume in favor of gross profitability, customer satisfaction, and customer retention. Other companies reward reps partly on sales team or even company-wide performance, motivating them to work together for the common good. Managing the Sales Force Various policies and procedures guide the firm in recruiting, selecting, training, supervising, motivating, and evaluating sales representatives to manage its sales force (see Figure 22. 3). recru ITIn G an D selec TIn G represen Ta TIves At the heart of any successful sales force are appropriately selected representatives. One survey revealed that the top 25 percent of the sales force brought in more than 52 percent of the sales. It's a great waste to hire the wrong people. The average annual turnover rate of sales reps for all industries is almost 20 percent. Sales force turnover leads to lost sales, the expense of finding and training replacements, and often pressure on existing salespeople to pick up the slack. 39 Studies have not always shown a strong relationship between sales performance on one hand and background and experience variables, current status, lifestyle, attitude, personality, and skills on the other. More effective predictors of high performance in sales are composite tests and assessment centers that simulate the working environment and assess applicants in an environment similar to the one in which they would work. 40 Although scores from formal tests are only one element in a set that includes personal characteristics, refer-ences, past employment history, and interviewer reactions, they have been weighted quite heavily by companies such as IBM, Prudential, and Procter & Gamble. Gillette claims tests have reduced turnover and scores have cor-related well with the progress of new reps. Tra In In G an D superv Is In G sales represen Ta TIves Today's customers expect salespeople to have deep product knowledge, add ideas to improve operations, and be efficient and reliable. These demands have required companies to make a much greater investment in sales training. New reps may spend a few weeks to several months in training. The median training period is 28 weeks in industrial-products companies, 12 in service companies, and 4 in consumer-products companies. Training time varies with the complexity of the selling task and the type of recruit. New methods of training are continually emerging, such as the use of programmed learning, distance learning, and videos. Some firms use role playing and sensitivity or empathy training to help reps identify with customers' situations and motives. Reps paid mostly on commission generally receive less supervision. Those who are salaried and must cover definite accounts are likely to receive substantial supervision. With multilevel selling, which Avon, Sara Lee, Virgin, and others use, independent distributors are also in charge of their own sales force selling company prod-ucts. These independent contractors or reps are paid a commission not only on their own sales but also on the sales of people they recruit and train. Managing the Sales Force Recruiting and selecting sales representatives Training sales representatives Supervising sales representatives Motivating sales representatives Evaluating sales representatives | Fig. 22. 3 | Managing the Sales Force | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
670 PART 7 | Communi CATing V Alue sales rep pro Duc TIv ITY How many calls should a company make on a particular account each year? Some research suggests today's sales reps spend too much time selling to smaller, less profitable accounts instead of focusing on larger, more profitable ones. 41 n Or Ms f Or Pr Os Pect calls Left to their own devices, many reps will spend most of their time with current customers, who are known quantities. Reps can depend on them for some business, whereas a prospect might never deliver any. Companies therefore often specify how much time reps should spend prospecting for new accounts. 42 Spector Freight wants its sales representatives to spend 25 percent of their time prospecting and stop after three unsuccessful calls. Some companies rely on a missionary sales force to create new interest and open new accounts. using sales ti Me efficiently In the course of a day, reps plan, travel, wait, sell, and perform administrative tasks (writing reports and billing, attending sales meetings, and talking to others in the company about production, delivery, billing, and sales performance). It's no wonder face-to-face selling accounts for as little as 29 percent of total working time!43 The best sales reps manage their time efficiently. Time-and-duty analysis and hour-by-hour breakdowns of activities help them understand how they spend their time and how they might increase their productivity. Companies constantly try to improve sales force productivity. 44 To cut costs, reduce time demands on their outside sales force, and leverage technological innovations, many have increased the size and responsibilities of their inside sales force. Inside selling is less expensive and growing faster than in-person selling. Each contact made by an inside salesperson might cost a company $25 to $30 compared with $300 to $500 for a field staff person with travel expenses. Virtual meeting software such as Web Ex, communication tools such as Skype, and social media sites such as Linked In, Facebook, and Twitter make it easier to sell with few if any face-to-face meetings. And inside sellers don't even need to be in the office—a growing percentage work at home. 45 The inside sales force frees outside reps to spend more time selling to major accounts, identifying and converting new major prospects, and obtaining more blanket orders and systems contracts. Inside salespeople spend more time checking inventory, following up orders, and phoning smaller accounts. They typically earn a salary or salary-plus-bonus pay. sales techn Ol Ogy The salesperson today has truly gone electronic. Not only is sales and inventory information transferred much more quickly, but specific computer-based decision support systems have been created for sales managers and sales representatives. Going online with a tablet or laptop, salespeople can prime themselves on backgrounds of clients, call up prewritten sales letters, transmit orders and resolve customer-service issues on the spot, and send samples, pamphlets, brochures, and other materials to clients. One of the most valuable digital tools for the sales rep is the company Web site. It can help define the firm's relationships with individual accounts and identify those whose business warrants a personal sales call. It provides an introduction to self-identified potential customers and a way to contact the seller; it might even receive the initial order. Social media are another valuable digital selling tool. Social networking is useful in “front end” prospecting and lead qualification as well as in “back end” relationship building and management. When one B-to-B sales rep for virtual-meetings company PGi was monitoring Twitter tweets for various keywords, he noticed that someone from a company tweeted about dissatisfaction with “web conferencing. ” The sales rep got in touch with the company's CEO and was able to quickly convince him of the merits of PGi's products, securing an agreement within a few hours. 46 Mo TIva TIn G sales represen Ta TIves The majority of sales representatives require encouragement and special incentives, especially those in the field who encounter daily challenges. 47 Most marketers believe that the higher the salesperson's motivation, the greater the effort and the resulting performance, rewards, and satisfaction—all of which in turn further increase motivation. Avon was an early pioneer in multilevel selling, using women as sales reps to sell to other women. Source: ASSOCIATED PRESS | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging Pe Rson Al Communi CAT ions | chapter 22 671 intrinsic versus extrinsic rewards Marketers reinforce intrinsic and extrinsic rewards of all types. One research study found the employee reward with the highest value was pay, followed by promotion, personal growth, and sense of accomplishment. 48 Least valued were liking and respect, security, and recognition. In other words, salespeople are highly motivated by pay and the chance to get ahead and satisfy their intrinsic needs, and they may be less motivated by compliments and security. Some firms use sales contests to increase sales effort. 49 Compensation plans may even need to vary depending on the type of salespersons: stars, core or solid perform-ers, and laggards. 50 Stars benefit from no ceiling or caps on commissions, overachievement commissions for ex-ceeding quotas, and prize structures that allow multiple winners. 51 Core performers benefit from multi-tier targets that serve as stepping stones for achievement and sales contests with prizes that vary in nature and value. Laggards respond to consistent quarterly bonuses and social pressure. 52 sales Qu Otas Many companies set annual sales quotas, developed from the annual marketing plan, for dollar sales, unit volume, margin, selling effort or activity, or product type. Compensation is often tied to degree of quota fulfillment. The company first prepares a sales forecast that becomes the basis for planning production, workforce size, and financial requirements. Management then establishes quotas for regions and territories, which typically add up to more than the sales forecast to encourage managers and salespeople to perform at their best. Even if they fail to make their quotas, the company nevertheless may reach its sales forecast. Conventional wisdom says profits are maximized by sales reps focusing on the more important products and more profitable products. Reps are unlikely to achieve their quotas for established products when the company is launching several new products at the same time. The company may need to expand its sales force for new-product launches. Setting sales quotas can create problems. If the company underestimates and the sales reps easily achieve their quotas, it has overpaid them. If it overestimates sales potential, the salespeople will find it very hard to reach their quotas and be frustrated or quit. Another downside is that quotas can drive reps to get as much business as possible—often ignoring the service side of the business. The company gains short-term results at the cost of long-term customer satisfaction. For these reasons, some companies are dropping quotas. Even hard-driving Oracle has changed its approach to sales compensation. 53 Orac Le Finding sales flagging and customers griping, Oracle, the second-largest software company in the world, decided to overhaul its sales department and practices. Its rapidly expanding capabilities, with diverse applications such as hu-man resources, supply chain, and CRM, meant one rep could no longer be responsible for selling all Oracle products to certain customers. Reorganization let reps specialize in a few particular products. To tone down the sales force's reputation as overly aggressive, Oracle changed the commission structure from a range of 2 percent to 12 percent to a flat 4 percent to 6 percent and adopted guidelines on how to “play nice” with channels, independent software vendors (ISVs), resellers, integrators, and value-added resellers (VARs). Six principles instructed sales staff to identify and work with partners in accounts and respect their positions and the value they add in order to address partner feedback that Oracle should be more predictable and reliable. evalua TIn G sales represen Ta TIves We have been describing the feed-forward aspects of sales supervision—how management communicates what the sales reps should be doing and motivates them to do it. But good feed-forward requires good feedback, which means getting regular information about reps to evaluate their performance. s Ources Of inf Or Mati On The most important source of information about reps is sales reports. Additional information comes through personal observation, salesperson self-reports, customer letters and complaints, customer surveys, and conversations with other reps. Sales reports are divided between activity plans and write-ups of activity results. The best example of the former is the salesperson's work plan, which reps submit a week or month in advance to describe intended calls and routing. This report forces sales reps to plan and schedule their activities and inform management of their whereabouts. It provides a basis for comparing their plans and accomplishments, or their ability to “plan their work and work their plan. ” Many companies require representatives to develop an annual territory-marketing plan in which they outline their program for developing new accounts and increasing business from existing accounts. Sales managers study these plans, make suggestions, and use them to develop sales quotas. Sales reps write up completed activities on call reports. They also submit expense reports, new-business reports, lost-business reports, and reports on local business and economic conditions. These reports provide raw data from which sales managers can extract key indicators of sales performance: (1) average number of sales calls per salesperson per day, (2) average sales call time per contact, (3) average revenue | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
672 PART 7 | Communi CATing V Alue per sales call, (4) average cost per sales call, (5) entertainment cost per sales call, (6) percentage of orders per hun-dred sales calls, (7) number of new customers per period, (8) number of lost customers per period, and (9) sales force cost as a percentage of total sales. f Or Mal evaluati On The sales force's reports along with other observations supply the raw materials for evaluation. One type of evaluation compares current with past performance. An example is shown in Table 22. 1. The sales manager can learn many things about rep John Smith from this table. Total sales increased every year (line 3). This does not necessarily mean Smith is doing a better job. The product breakdown shows he has been able to push the sales of product B further than the sales of product A (lines 1 and 2), though A is more profitable for the company. Given his quotas for the two products (lines 4 and 5), Smith could be increasing product B sales at the expense of product A sales. Although he increased total sales by $1,100 between 2013 and 2014 (line 3), gross profits on total sales actually decreased by $580 (line 8). Sales expense (line 9) shows a steady increase, though total expense as a percentage of total sales seems to be under control (line 10). The upward trend in total dollar expense does not seem to be explained by any increase in the number of calls (line 11), though it might be related to success in acquiring new customers (line 14). Perhaps in prospecting for new customers, this rep is neglecting present customers, as indicated by an upward trend in the annual number of lost accounts (line 15). The last two lines show the level and trend in sales and gross profits per customer. These figures become more meaningful when compared with overall company averages. If Smith's average gross profit per customer is lower than the company's average, he could be concentrating on the wrong customers or not spending enough time with each customer. A review of annual number of calls (line 11) shows he might be making fewer annual calls than the average table 22. 1 Form for Evaluating Sales Representative's Performance Territory: Midland Sales Representative: John Smith 2011 2012 2013 2014 1. Net sales product A $251,300 $253,200 $270,000 $263,100 2. Net sales product B 423,200 439,200 553,900 561,900 3. Net sales total 674,500 692,400 823,900 825,000 4. Percent of quota product A 95. 6 92. 0 88. 0 84. 7 5. Percent of quota product B 120. 4 122. 3 134. 9 130. 8 6. Gross profits product A $50,260 $50,640 $54,000 $52,620 7. Gross profits product B 42,320 43,920 55,390 56,190 8. Gross profits total 92,580 94,560 109,390 108,810 9. Sales expense $10,200 $11,100 $11,600 $13,200 10. Sales expense to total sales (%) 1. 5 1. 6 1. 4 1. 6 11. Number of calls 1,675 1,700 1,680 1,660 12. Cost per call $6. 09 $6. 53 $6. 90 $7. 95 13. Average number of customers 320 24 328 334 14. Number of new customers 13 14 15 20 15. Number of lost customers 8 10 11 14 16. Average sales per customer $2,108 $2,137 $2,512 $2,470 17. Average gross profit per customer $289 $292 $334 $326 | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging Pe Rson Al Communi CAT ions | chapter 22 673 salesperson. If distances in the territory are similar to those in other territories, he might not be putting in a full work-day, might be poor at sales planning and routing, or might be spending too much time with certain accounts. Even if effective in producing sales, the rep may not rate highly with customers. Success may come because competitors' salespeople are inferior, the rep's product is better, or new customers are always found to replace those who dislike the rep. Managers can glean customer opinions of the salesperson, product, and service by mail questionnaires or telephone calls. Sales reps can analyze the success or failure of a sales call and how they would improve the odds on subsequent calls. Their performance could be related to internal factors (effort, ability, and strategy) and/or external factors (task and luck). 54 Principles of Personal Selling Personal selling is an ancient art. Effective salespeople today have more than instinct, however. Companies now spend hundreds of millions of dollars each year to train them in methods of analysis and customer management and to transform them from passive order takers into active order getters. Reps are taught the SPIN method to build long-term relationships by asking prospects several types of questions:55 1. Situation questions —These ask about facts or explore the buyer's present situation. For example, “What system are you using to invoice your customers?” 2. Problem questions —These deal with problems, difficulties, and dissatisfactions the buyer is experiencing. For example, “What parts of the system create errors?” 3. Implication questions —These ask about the consequences or effects of a buyer's problems, difficulties, or dissatisfactions. For example, “How does this problem affect your people's productivity?” 4. Need-payoff questions —These ask about the value or usefulness of a proposed solution. For example, “How much would you save if our company could help you reduce errors by 80 percent?” Most sales training programs agree on the major steps in any effective sales process. We show these steps in Figure 22. 4 and discuss their application to industrial selling next. 56 Note that application of these selling practices can vary in different parts of the world. Pfizer has to sell very differently in Latin America than in North America. 57 The s Ix s Teps Pr Os Pecting and Qualifying The first step in selling is to identify and qualify prospects. More companies are taking responsibility for finding and qualifying leads so salespeople can use their expensive time doing what they do best: selling. IBM qualifies leads according to the BANT acronym: Does the customer have the necessary budget, the authority to buy, a compelling need for the product or service, and a timeline for delivery that aligns with what is possible? Marketers these days are going beyond BANT and getting increasingly sophisticated in their pursuit of qualified leads. One software firm, Infer, uses 150 different signals—including dozens of online data feeds—to rate customer leads. Using inputs as diverse as prospects' hiring practices, job boards, and sample tweets from customers and employees, the company's software classifies prospects as worth a call or offer—or not. 58 Prea PPr Oach The salesperson needs to learn as much as possible about the prospect company (what it needs, who takes part in the purchase decision) and its buyers (personal characteristics and buying styles). How is the purchasing process conducted at the company? How is it structured? Many purchasing departments in larger companies have been elevated to strategic supply departments with more professional practices. Centralized purchasing may put a premium on having larger suppliers able to meet all the company's needs. At the same time, some companies are also decentralizing purchasing for smaller items such as coffeemakers, office supplies, and other inexpensive necessities. The sales rep must thoroughly understand the purchasing process in terms of who, when, where, how, and why in order to set call objectives: to qualify the prospect, gather information, or make an immediate sale. Another task is to choose the best contact approach—a personal visit, phone call, e-mail, or letter. The right approach is crucial given that it has become harder for sales reps to get into the offices of purchasing agents, physicians, and other time-starved and Internet-enabled potential customers. Finally, the salesperson should plan an overall sales strategy for the account. Presentati On and de MOnstrati On The salesperson tells the product “story” to the buyer, using a features, advantages, benefits, and value (FABV) approach. Features describe physical characteristics of a market offering, such as chip processing speeds or memory capacity. Advantages describe why the features give the Prospecting and qualifying Preapproach Presentation and demonstration Overcoming objections Closing Follow-up and maintenance | Fig. 22. 4 | Major Steps in Effective Selling | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
674 PART 7 | Communi CATing V Alue customer an edge. Benefits describe the economic, technical, service, and social pluses delivered. Value describes the offering's worth (often in monetary terms). Salespeople often spend too much time on product features (a product orienta-tion) and not enough time stressing benefits and value (a customer orientation), especially when selling individualized or premium-priced products and in highly competitive markets. 59 The pitch to a prospective client must be highly relevant, engaging, and compelling—there is always another company waiting to take that business. 60 Overc OMing Objecti Ons Customers typically pose objections. Psychological resistance includes resistance to interference, preference for established supply sources or brands, apathy, reluctance to give up something, unpleasant associations created by the sales rep, predetermined ideas, dislike of making decisions, and a neurotic attitude toward money. Logical resistance might be objections to the price, delivery schedule, or product or company characteristics. To handle these objections, the salesperson maintains a positive approach, asks the buyer to clarify the objection, questions in such a way that the buyer answers his own objection, denies the validity of the objection, or turns it into a reason for buying. Although price is the most frequently negotiated issue—especially in tight economic times—others include contract completion time, quality of goods and services offered, purchase volume, product safety, and responsibility for financing, risk taking, promotion, and title. Salespeople sometimes give in too easily when customers demand a discount. One company recognized this problem when sales revenues went up 25 percent but profit remained flat. The company decided to retrain its salespeople to “sell the price” rather than “sell through price. ” Salespeople were given richer informa-tion about each customer's sales history and behavior. They received training to recognize value-adding opportunities rather than price-cutting opportunities. As a result, the company's sales revenues climbed and so did its margins. 61 cl Osing Closing signs from the buyer include physical actions, statements or comments, and questions. Reps can ask for the order, recapitulate the points of agreement, offer to help write up the order, ask whether the buyer wants A or B, get the buyer to make minor choices such as color or size, or indicate what the buyer will lose by not placing the order now. The salesperson might offer specific inducements to close, such as an additional service, an extra quantity, or a token gift. If the client still isn't budging, perhaps the salesperson is not interacting with the right executive—a more senior person may have the necessary authority. The salesperson also may need to find other ways to reinforce the value of the offering and how it alleviates financial or other pressures the client faces. 62 f Oll Ow-u P and Maintenance Follow-up and maintenance are necessary to ensure customer satisfaction and repeat business. Immediately after closing, the salesperson should cement any necessary details about delivery time, purchase terms, and other matters important to the customer. He or she should schedule a follow-up call after delivery to ensure proper installation, instruction, and servicing and to detect any problems, assure the buyer of his or her interest, and reduce any cognitive dissonance. The salesperson should develop a maintenance and growth plan for the account. rela TIonsh Ip Marke TIn G The principles of personal selling and negotiation are largely transaction-oriented because their purpose is to close a specific sale. But in many cases the company seeks not an immediate sale but rather a long-term supplier-customer relationship. Today's customers prefer suppliers who can sell and deliver a coordinated set of products and services to many locations, who can quickly solve problems in different locations, and who can work closely with customer teams to improve products and processes. 63 Salespeople working with key customers must do more than email or call only when they think customers might be ready to place orders. They should get in touch at other times and make useful suggestions about the business to create value. They should monitor key accounts, know customers' problems, and be ready to serve them in a number of ways, adapting and responding to different customer needs or situations. 64 Relationship marketing is not effective in all situations. But when it is the right strategy and is properly imple-mented, the organization will focus as much on managing its customers as on managing its products. Pharma giant Pfizer sells its drug brands differently in different parts of the world. Source: © Kumar Sriskandan/Alamy | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging Pe Rson Al Communi CAT ions | chapter 22 675 mix of selling approaches. Structuring the sales force entails dividing territories by geography, product, or market (or some combination of these). To estimate how large the sales force needs to be, the firm esti-mates the total workload and how many sales hours (and hence salespeople) will be needed. Compensating reps requires identifying the types of salaries, commis-sions, bonuses, expense accounts, and benefits to give and how much weight customer satisfaction should have in determining total compensation. 8. There are five steps in managing the sales force: (1) re-cruiting and selecting sales representatives; (2) training the representatives in sales techniques and in the com-pany's products, policies, and customer-satisfaction orientation; (3) supervising the sales force and helping reps to use their time efficiently; (4) motivating the sales force and balancing quotas, monetary rewards, and supplementary motivators; and (5) evaluating individual and group sales performance. 9. Effective salespeople are trained in methods of analysis and customer management as well as the art of sales professionalism. No single approach works best in all circumstances, but most trainers agree that selling has six steps: prospecting and qualifying customers, preap-proach, presentation and demonstration, overcoming objections, closing, and follow-up and maintenance. Summary 1. Direct marketing is an interactive marketing system that uses one or more media to effect a measurable response or transaction at any location. Direct marketing, espe-cially electronic marketing, is showing explosive growth. 2. Direct marketers plan campaigns by deciding on objec-tives, target markets and prospects, offers, and prices. Next, they test and establish measures to determine the campaign's success. 3. Major channels for direct marketing include face-to-face selling, direct mail, catalog marketing, telemarketing, in-teractive TV, kiosks, Web sites, and mobile devices. 4. Customer relationship management often requires build-ing a customer database and data mining to detect trends, segments, and individual needs. A number of significant risks also exist, so marketers must proceed thoughtfully. 5. What are the pros and cons of database marketing? 6. Salespeople serve as a company's link to its customers. The sales rep is the company to many of its customers, and it is the rep who brings back to the company much-needed information about the customer. 7. Designing the sales force requires choosing objectives, strategy, structure, size, and compensation. Objectives may include prospecting, targeting, communicating, selling, servicing, information gathering, and allocating. Selecting strategy requires choosing the most effective My Marketing Lab Go to mymktlab. com to complete the problems marked with this icon as well as for additional assisted-graded writing questions. Applications Marketing Debate Are Great Salespeople Born or Made? One debate in sales is about the impact of training versus se-lection in developing an effective sales force. Some observers maintain the best salespeople are born that way and are effec-tive due to their personalities and interpersonal skills developed over a lifetime. Others contend that application of leading-edge sales techniques can make virtually anyone a sales star. Take a position: The key to developing an effective sales force is selection versus The key to developing an effective sales force is training. Marketing Discussion Role of the Salesperson Think about the last time you went to make a major pur-chase in a store. How important was the salesperson in that decision? What did he or she do that you liked or didn't like? | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
676 PART 7 | Communi CATing V Alue or changing insurers. The company has found that using a person to represent the brand helps consumers envi-sion the intangible act of buying and selling insurance as a tangible one. Its ads also often feature a large white-and-blue “insurance” package, again reinforcing the idea that Progressive sells something concrete rather than abstract. In every commercial, Flo goes out of her way to help customers and their businesses. She works along-side plumbers, lugs shrubbery with landscapers, and finds stranded cars and drivers in pouring rain. Flo, her packages of insurance, and the Progressive supercenters have all helped differentiate Progressive in a competitive industry. Flo is now one of the most recognized advertis-ing icons, and as Chief Marketing Officer Jeff Charney explained, “Flo has made us a household name. ” However, Progressive's marketing team is careful to keep her modern and relevant. She appears across all screens, including TV, the Internet, mobile devices, smart-phone apps, video games like Sims Social, and animated You Tube videos, and she even has her own Facebook page (along with millions of fans). The company's market-ing has also won multiple awards, including Adweek's “Brand Genius: Marketer of the Year Award” in 2011 and an Effie award for marketing efficiency. Progressive has experienced impressive growth over the past two decades thanks to its innovative and afford-able insurance solutions and direct marketing campaigns. Between 1996 and 2005, the company grew an average of 17 percent per year, from $3. 4 billion to $14 billion. In 2013, it wrote 17. 3 billion policies and earned $18. 2 bil-lion in revenue. Questions 1. What has Progressive done well over the years to at-tract new insurance customers? 2. Discuss Progressive's direct marketing campaign, which primarily revolves around the character Flo. Why does it resonant so well with consumers? 3. What else should Progressive be doing to ensure it stays top of mind in the competitive industry of insurance? Sources: Avi Dan, “How Progressive's CMO Jeff Charney Made 'Flo' More Loveable than Ducks and Geckos,” Forbes, May 3, 2012; Giselle Abramovich, “How Progressive Got Its Social Flow,” CMO. com, December 11, 2013; Stuart Elliott, “A Nomadic Insurance Pitchman, Luring New Consumers,” New York Times, November 30, 2010; Gary Strauss, “Progressive CEO Calls Flo 'Essential' to Its Marketing Plan,” USA Today, July 26, 2012; E. J. Schultz, “Progressive Goes Flo-less in Corporate Image Campaign,” Ad Age, September 23, 2013; “Bto B's Best—Integrated Campaign (more than $200,000): Progressive Commercial,” Ad Age, October 8, 2013; E. J. Schultz, “Flo Gets More Company as Progressive Rolls Out 'The Box,'” Ad Age, December 5, 2012; Progressive. com; Progressive Insurance 2013 Annual Report. Marketing Excellence >> Progressive Progressive Corporation is among the largest providers of auto, motorcycle, boat, and RV insurance in the United States. The company was founded in 1937 and is con-sidered one of the most innovative in the industry. From the beginning, its philosophy has been to approach auto insurance “like no other company had. ” Progressive attracts new customers through its unique product offerings and services. For example, it was the first insurance company to offer a drive-thru claim service, a 24-hour claim service, and reduced rates for low-risk drivers. In 1994, it introduced comparison in-surance shopping service, encouraging customers to call 800-AUTO-PRO (now 800-PROGRESSIVE) and receive a Progressive quote as well as comparison quotes from three other competitors. The company extended this ser-vice when it launched comparison rate shopping on the Internet. It was also the first insurance company to offer the Immediate Response Vehicle (IRV), a special vehicle that brought trained claims professionals to wherever customers needed them, including the scene of an ac-cident. Today, Progressive has thousands of IRVs located across the country. The insurance industry has changed a lot over the years as consumers have become more educated, more cost-conscious, and less likely to use an agent during the buying process. Jonathan Beamer, marketing strategy and innovation business leader at Progressive, explained the company's media strategy: “As a com-pany, we've always had the belief that customers should be able to interact with us in their channel of choice. In the past, that was by phone, online, or through an agent. Social media is another means for customers to engage with our brand. ” The company has a network of 35,000 independent agents but also gives customers the opportunity to interact with it via the Internet or mo-bile devices. It offers consumers several options to man-age their service claims as well. Policyholders can bring their damaged vehicle to a Progressive service center, or they can call Progressive for roadside assistance to take care of problems ranging from flat tires to locksmith needs. Consumers have responded positively Progressive's marketing campaigns in recent years thanks to the company's iconic character Flo, a quirky, witty employee dressed in a white uniform and white apron bearing the company's logo. Flo commercials are often set in an imaginary insurance superstore and aimed at consum-ers who are considering getting a new insurance policy | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
m An Aging Pe Rson Al Communi CAT ions | chapter 22 677 mailings in 1998. Today, Victoria's Secret spends approxi-mately $220 million a year and mails 390 million catalogs worldwide. Its catalog business has been so successful be-cause it accomplishes several things a retail store cannot. Most importantly, catalogs allow consumers to browse and shop for lingerie in the comfort and privacy of their homes. To accommodate them, Victoria's Secret takes telephone orders 24 hours a day. Before the Internet, this was a critical key to the company's success. Catalogs also provide the opportunity to extend and test different product offerings, including bathing suits, sweaters, and dresses. Another milestone in Victoria's Secret's marketing strategy was its shift to include supermodel fashion shows and television commercials in the 1990s. In 1999, the company's steamy 30-second Super Bowl ad re-sulted in millions of visits to the company's Web site. Each year, millions more tune in to watch the world's top super-models, including Victoria's Secret Angels, strut down the runway in diamond-studded lingerie, high heels, and the company's signature angel wings. Erika Maschmeyer, an analyst at Robert W. Baird & Co., explained that the TV show “is essentially an hour-long commercial. ... There are a lot of places to buy intimate apparel, but there's no other place that has such a strong brand connotation to it, and I think the fashion show is definitely a part of that. ” Victoria's Secret has accomplished what no company has: It took an intimate product and made it stylish, trendy, acceptable, and accessible through innovative and pitch-perfect direct marketing. The company recently expanded with the launch of Pink, a lingerie line targeted at 15-to 22-year-old women. The hope is that Pink consumers re-main loyal to the Victoria's Secret brand as they grow older. Today, Victoria's Secret sells its products through al-luring catalogs, through its Web site, and in more than 1,075 stores located primarily in shopping malls through-out the United States, Canada, and the United Kingdom. Annual sales topped $6 billion in 2013, and the company continues to grow the business, making lingerie trendy and stylish for women of all ages. Questions 1. Why has Victoria's Secret been so successful? How does the company reach its target audience? 2. What do you think are Victoria's Secret's biggest challenges? 3. What's next for Victoria's Secret? How does the com-pany grow? Sources: Carlye Adler, “How Victoria's Secret Made Lingerie Mainstream,” Newsweek, June 9, 2010; Carlye Adler, “Victoria's Secret's Secret—The Man behind the Company That Made Lingerie Mainstream and Mall-friendly,” Newsweek, October 15, 2012; Sapna Maheshwari, “Victoria's Secret Marketing Goes Own Way,” SFgate. com, November 12, 2013; Ashley Lutz, “How Victoria's Secret Gets Way with Marketing to Teenagers,” Business Insider, November 15, 2013; Victorias Secret. com; 2013 Limited Brands Annual Report. Marketing Excellence >> Victoria's Secret Victoria's Secret is the largest retailer of lingerie in the United States. Roy Raymond founded the company in 1977 because he thought retailers offered only “racks of terry-cloth robes and ugly floral-print nylon nightgowns. ” In 1982, Raymond sold the company to Leslie Wexner, creator of Limited Stores Inc., for $1 million. At the time, Victoria's Secret had expanded to four stores and a cata-log business. The company wasn't profitable, but Wexner recalled its attraction: “There wasn't erotic lingerie, but there was very sexy lingerie, and I hadn't seen anything like it in the U. S. ” Although Wexner knew nothing about lingerie at the time, he saw an opportunity to look at the market in a new light. He explained, “Most of the women that I knew wore underwear most of the time, and most of the women that I knew I thought would rather wear lingerie most of the time, but there were no lingerie stores. I thought if we could develop price points and products that have a broader base of customer, it could be something big. ” The market during the 1970s and early 1980s in fact of-fered women very few options for lingerie shopping. At one end, women could buy Fruit of the Loom, Hanes, or Jockey cotton underwear in three-pair packages just as men did. Department stores offered little in terms of design and style. And lacy lingerie could be found only in stores like Frederick's of Hollywood, whose products were considered provoca-tive, not for daily wear, and often embarrassing to shop for. Wexner took several steps to revamp Victoria's Secret. First, he realized the company should target female con-sumers who buy for themselves, rather than male cus-tomers who shop for their significant others. As a result, Victoria's Secret launched a range of new products in stylish colors, textiles, and patterns that made women feel sexy and glamorous in a tasteful manner. The company fo-cused on consistency of fit, which helped create customer loyalty, and stores were reconfigured to appeal to female shoppers. Bra displays and fitting rooms were moved to the back, for instance, to provide customers with more privacy. Next, Wexner reinforced the brand image of style and sophistication by evoking a European look and feel throughout the stores and catalogs. Catalogs bore a fake London address (the company was really headquartered in Columbus, Ohio), while storefronts resembled 19th-century England, complete with soft classical music and romantic-style details throughout. Within five years, Victoria's Secret had expanded from a handful of stores to 346 and a growing catalog business. Victoria's Secret's catalog business is considered one of the most successful in the retail industry. When Wexner bought the company in 1982, each catalog cost a hefty $3 to produce and distribute. Its customer database grew sig-nificantly over the next 20 years and peaked at 400 million | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
678 My Marketing Lab™ Improve Y our Grade! Over 10 million students improved their results using the Pearson My Labs. Visit mymktlab. com for simulations, tutorials, and end-of-chapter problems. In This Chapter, We Will Address the Following Questions 1. What are important trends in marketing practices? (p. 679) 2. What are the keys to effective internal marketing? (p. 680) 3. How can companies be socially responsible marketers? (p. 685) 4. What tools are available to help companies monitor and improve their marketing activities? (p. 697) 5. What do marketers need to do to succeed in the future? (p. 702)Environmental concerns impacts all that outdoor clothing and equipment provider Patagonia does, leading to some fairly unconventional advertising! Source: Patagonia, Inc. Conducting Marketing Responsibly for Long-term Success Part 8 Chapter 23 Managing a Holistic Marketing Organization for the Long Run | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
679 Managing a Holistic Marketing Organization for the Long Run23 Healthy long-term growth for a brand requires holistic marketers to engage in a host of carefully planned, interconnected marketing activities and satisfy a broad set of constituents and objectives. Marketers must also consider a wide range of short-and long-term effects of their actions. Corporate social responsibility and sustainability have become priorities for many. Some firms fully embrace this vision of corporate enlightenment. 1 Patagonia, maker of high-end outdoor clothing and equipment, has always put environmental issues at the core of what it does. Company founder Yvon Chouinard, also the author of The Responsible Company, actively promotes a post-consumerist economy in which goods are “high quality, recyclable and repairable. ” Under Chouinard's leadership, Patagonia even ran a full-page ad in the New York Times headlined “Don't Buy This Jacket. ” Below a photo of the retailer's R2 jacket was text explaining that despite its many positive features—“60% recyclable polyester, knit and sewn to high standards, and exceptionally durable”—the jacket still imposed many environmental costs (using 135 liters of water and 20 pounds of carbon dioxide to manufacture). The ad concluded by promoting the Common Threads Initiative asking con-sumers to engage in five behaviors: (1) reduce (what you buy); (2) re-pair (what you can); (3) reuse (what you have); (4) recycle (everything else); and (5) reimagine (a sustainable world). With $575 million in annual sales, privately held Patagonia is always trying to find bet-ter environmental solutions for everything it does and makes, such as offering the first wetsuits made from plant-based material as an alternative to neoprene. Brands such as Ben & Jerry's, Odwalla, Stonyfield Farm, Whole Foods, and Seventh Generation have embraced simi-lar philosophies and practices. Successful holistic marketing requires effective relationship marketing, integrated marketing, internal marketing, and performance marketing. In this chapter, we consider internal and performance marketing and how to conduct them responsibly. We begin by examining changes in the way companies conduct marketing today. Trends in Marketing Practices With globalization, deregulation, market fragmentation, consumer empowerment, environmental concerns, and all the remarkable developments in communication technology, the world has unquestionably become a very different place for marketers. 2 Table 23. 1 summarizes some important shifts in marketing realities. In making all these shifts in marketing and business practices, firms also face ethical dilemmas and perplexing trade-offs. Consumers may value convenience, but how can they justify disposable products or elaborate packag-ing in a world trying to minimize waste? Increasing material aspirations can defy the need for sustainability. Smart companies are creatively designing with energy efficiency, carbon footprints, toxicity, and disposability in mind. There have been some successes. 3 | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
680 PART 8 | Condu CTing M ARke Ting Res Ponsibly fo R long-Te RM su CCess Table 23. 1 Important Shifts in Marketing and Business Practices Reengineering. Appointing teams to manage customer-value-building processes and break down walls between departments Outsourcing. Buying more goods and services from outside domestic or foreign vendors Benchmarking. Studying “best practice companies” to improve performance Supplier partnering. Partnering with fewer but better value-adding suppliers Customer partnering. Working more closely with customers to add value to their operations Merging. Acquiring or merging with firms in the same or complementary industries to gain economies of scale and scope Globalizing. Increasing efforts to “think global” and “act local” Flattening. Reducing the number of organizational levels to get closer to the customer Focusing. Determining the most profitable businesses and customers and focusing on them Justifying. Becoming more accountable by measuring, analyzing, and documenting the effects of marketing actions Accelerating. Designing the organization and setting up processes to respond more quickly to changes in the environment Empowering. Encouraging and empowering personnel to produce more ideas and take more initiative Broadening. Factoring the interests of customers, employees, shareholders, and other stakeholders into the activities of the enterprise Monitoring. Tracking what is said online and elsewhere and studying customers, competitors, and others to improve business practices Uncovering. Using data mining and other analytical methods to develop deep insights into customers and how they behave TOy OTa Prius Some auto experts scoffed when Toyota predicted sales of 300,000 cars within five years of launching its gas-and-electric Prius hybrid sedan in 2001. But by 2004, the Prius had a six-month waiting list. Toyota's winning formula consists of a powerful electric motor and the ability to quickly switch power sources—resulting in 55 miles per gallon for city and highway driving—with the roominess and power of a family sedan and an eco-friendly design and look for a little more than $20,000. Some consumers also liked that the Prius's distinctive design allowed them to make a visible statement about their commitment to the environment. The lesson? Functionally successful products that consumers see as also being good for the environment can offer enticing options. In both 2012 and 2013, Consumer Reports rated the Toyota Prius as best overall value for the automotive dollar. Toyota is now rolling out hybrids throughout its auto lineup, and U. S. automakers have followed suit. Now more than ever, marketers must think holistically and use creative win-win solutions to balance conflict-ing demands. They must develop fully integrated marketing programs and meaningful relationships with a range of constituents. 4 They must do all the right things inside their company and consider the broader consequences in the marketplace, topics we turn to next. Internal Marketing Traditionally, marketers played the role of intermediary, charged with understanding customers' needs and trans-mitting their voice to various functional areas. 5 But in a networked enterprise, every functional area can interact directly with customers. Marketing no longer has sole ownership of customer interactions; it now must integrate all the customer-facing processes so customers see a single face and hear a single voice when they interact with the firm. 6 Internal marketing requires that everyone in the organization accept the concepts and goals of marketing and engage in identifying, providing, and communicating customer value. Only when all employees realize their job is to create, serve, and satisfy customers does the company become an effective marketer. 7 “Marketing Memo: Characteristics of Company Departments That Are Truly Customer Driven” presents a tool that evaluates which company departments excel at being customer-centric. Let's look at how marketing departments are being organized, how they can work effectively with other depart-ments, and how firms can foster a creative marketing culture across the organization. 8 | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
MAn Aging A Holis Ti C MARke Ting o Rg Aniz ATion fo R THe long Run | chapter 23 681 R&D ___ They spend time meeting customers and listening to their problems. ___ They welcome the involvement of marketing, manufacturing, and other departments on each new project. ___ They benchmark competitors' products and seek “best of class” solutions. ___ They solicit customer reactions and suggestions as the project progresses. ___ They continuously improve and refine the product on the basis of market feedback. Purchasing ___ They proactively search for the best suppliers rather than choose only from those who solicit their business. ___ They build long-term relationships with fewer but more reliable high-quality suppliers. ___ They do not compromise quality for price savings. Manufacturing ___ They invite customers to visit and tour their plants. ___ They visit customer factories to see how customers use the company's products. ___ They willingly work overtime when it is important to meet promised delivery schedules. ___ They continuously search for ways to produce goods faster, at lower costs, and with fewer adverse environmental consequences. ___ They continuously improve product quality, aiming for zero defects. ___ They meet customer requirements for “customization” where this can be done profitably. Marketing ___ They study customer needs and wants in well-defined market segments. ___ They allocate marketing effort in relationship to the long-run profit potential of the targeted segments. ___ They develop winning offerings for each target segment. ___ They measure company image and customer satisfaction and loyalty on a continuous basis. ___ They continuously gather and evaluate ideas for new products, product improvements, and services to meet customers' needs. ___ They influence all company departments and employees to be customer-centered in their thinking and practice. Sales ___ They acquire specialized knowledge of the customer's industry. ___ They strive to give the customer “the best solution” but make only promises they can keep. ___ They feed customers' needs and ideas back to those in charge of product development. ___ They serve the same customers for a long period of time. Logistics ___ They set a high standard for service delivery time and meet it consistently. ___ They operate a knowledgeable and friendly customer service department that can answer questions, handle complaints, and resolve problems in a satisfactory and timely manner. Accounting ___ They prepare periodic profitability reports by product, market segment, sales territory, order size, and individual customers. ___ They prepare invoices tailored to customer needs and answer customer queries courteously and quickly. Finance ___ They understand and support marketing investments (like image advertising) that produce long-term customer preference and loyalty. ___ They tailor the financial package to the customers' financial requirements. ___ They make quick decisions on customer creditworthiness. Public Relations ___ They disseminate favorable news about the company and handle damage control for unfavorable news. ___ They act as an internal customer and public advocate for better company policies and practices. Other Customer-Contact Employees___ They are competent, courteous, cheerful, credible, reliable, and responsive. Characteristics of Company Departments that Are Truly Customer Driven marketing memo | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
682 PART 8 | Condu CTing M ARke Ting Res Ponsibly fo R long-Te RM su CCess Or Gan Iz In G the Market In G Depart Ment Modern marketing departments can be organized in a number of different, sometimes overlapping ways: func-tionally, geographically, by product or brand, by market, or in a matrix. Func Tional organiza Tion In the most common form of marketing organization, functional specialists report to a marketing vice president who coordinates their activities. Figure 23. 1 shows five specialists. Others might include a customer service manager, a marketing planning manager, a market logistics manager, a direct marketing manager, and a digital marketing manager. The main advantage of a functional marketing organization is its administrative simplicity. It can be quite a challenge for the departments to develop smooth working relationships, however. This form also can result in inadequate planning as the number of products and markets increases and each functional group vies for budget and status. The marketing vice president constantly weighs competing claims and faces a difficult coordination problem. geographic organiza Tion A company selling in a national market often organizes its sales force (and sometimes its marketing) along geographic lines. 9 The national sales manager may supervise four regional sales managers, who each supervise six zone managers, who in turn supervise eight district sales managers, who each supervise 10 salespeople. Some companies are adding area market specialists (regional or local marketing managers) to support sales ef-forts in high-volume markets. One such market might be Miami-Dade County, Florida, where almost two-thirds of households are Hispanic. 10 The Miami specialist would know Miami's customer and trade makeup, help mar-keting managers at headquarters adjust their marketing mix for Miami, and prepare local annual and long-range plans for selling all the company's products there. Some companies must develop different marketing programs in different parts of the country because geography alters their brand development so much, as noted in Chapter 8. produc T-or brand-Manage Men T organiza Tion Companies producing a variety of products and brands often establish a product-(or brand-) management organization. This does not replace the functional organization but serves as another layer of management. A group product manager supervises product category managers, who in turn supervise specific product and brand managers. A product-management organization makes sense if the company's products are quite different or there are more than a functional organization can handle. This form is sometimes characterized as a hub-and-spoke sys-tem. The brand or product manager is figuratively at the center, with spokes leading to various departments repre-senting working relationships (see Figure 23. 2). The manager may: Develop a long-range and competitive strategy for the product. Prepare an annual marketing plan and sales forecast. Work with advertising, digital, and merchandising agencies to develop copy, programs, and campaigns. Increase support of the product among the sales force and distributors. Gather continuous intelligence about the product's performance, customer and dealer attitudes, and new problems and opportunities. Initiate product improvements to meet changing market needs. The product-management organization lets the product manager concentrate on developing a cost-effective marketing program and react more quickly to new products in the marketplace; it also gives the company's smaller brands a product advocate. However, it has disadvantages too: Product and brand managers may lack authority to carry out their responsibilities. They become experts in their product area but rarely achieve functional expertise. Marketing vice president Marketing administration manager Advertising and sales promotion manager Sales manager Marketing research manager New-products manager| Fig. 23. 1 | Functional Organization | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
MAn Aging A Holis Ti C MARke Ting o Rg Aniz ATion fo R THe long Run | chapter 23 683 The system often proves costly. One person is appointed to manage each major product or brand, and soon more are appointed to manage even minor products and brands. Brand managers normally manage a brand for only a short time. Short-term involvement leads to short-term planning and fails to build long-term strengths. The fragmentation of markets makes it harder to develop a national strategy. Brand managers must please regional and local sales groups, transferring power from marketing to sales. Product and brand managers focus the company on building market share rather than customer relationships. A second alternative in a product-management organization is product teams. There are three types: vertical, triangular, and horizontal (see Figure 23. 3). The triangular and horizontal product-team approaches let each major brand be run by a brand-asset management team (BAMT) consisting of key representatives from functions that affect the brand's performance. The company consists of several BAMTs that periodically report to a BAMT directors committee, which itself reports to a chief branding officer. This is quite different from the way brands have traditionally been handled. A third alternative is to eliminate product manager positions for minor products and assign two or more products to each remaining manager. This is feasible when two or more products appeal to a similar set of needs. A cosmetics company doesn't need product managers for each product because cosmetics serve one major need—beauty. A toiletries company needs different managers for headache remedies, toothpaste, soap, and shampoo because these products differ in use and appeal. In a fourth alternative, category management, a company focuses on product categories to manage its brands. Procter & Gamble (P&G), a pioneer of the brand-management system, and other top packaged-goods firms have made a major shift to category management, as have firms outside the grocery channel. 11 Diageo's shift to category management was seen as a means to better manage the development of premium brands. It also helped the firm address the plight of under-performing brands. 12 P&G cited a number of advantages to its shift to category management. By fostering internal competi-tion among brand managers, the traditional brand-management system had created strong incentives to excel, but also internal competition for resources and a lack of coordination. The new scheme was designed to ensure adequate resources for all categories. Another rationale is the increasing power of the retail trade, which has thought of profitability in terms of product categories. P&G felt it only made sense to deal along similar lines. Retailers and regional grocery chains such as Walmart and Dominick's embrace category management as a means to define a particular product category's strategic role within the store and address logistics, the role of private-label products, and the trade-offs between product variety and inefficient duplication. 13 Advertising agenc y Sales force Manufacturing and distribution Media Research and development Promotion services Legal Packaging Fiscal Purchasing Market research Publicity Brand/Product Manager| Fig. 23. 2 | The Product Manager's Interactions APM PA PM PM RC PM RC SD FE(a) V ertical Product T eam (b) Triangular Product T eam (c) Horizontal Product T eam = product manager = associate product manager = product assistant = market researcher = communication specialist = sales manager = distribution specialist = finance/accounting specialist = engineer PM APM PA R C S D F E | Fig. 23. 3 | Three Types of Product Teams | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
684 PART 8 | Condu CTing M ARke Ting Res Ponsibly fo R long-Te RM su CCess In fact, in some packaged-goods firms, category management has evolved into aisle management and encompasses multiple related categories typically found in the same sections of supermarkets and grocery stores. General Mills' Yoplait Yogurt has served as category advisor to the dairy aisle for 24 major retailers, boosting the yogurt base footprint four to eight feet at a time and increasing sales of yogurt by 9 percent and category sales in dairy by 13 percent nationwide. 14 Marke T-Manage Men T organiza Tion Canon sells printers to consumer, business, and government markets. Nippon Steel sells to the railroad, construction, and public utility industries. When customers fall into different user groups with distinct buying preferences and practices, a market-management organization is desirable. Market managers supervise several market-development managers, market specialists, or industry specialists and draw on functional services as needed. Market managers of important markets might even have functional specialists reporting to them. Market managers are staff (not line) people, with duties like those of prod-uct managers. They develop long-range and annual plans for their markets and are judged by their market's growth and profitability. Because this system organizes marketing activity to meet the needs of distinct customer groups, it shares many advantages and disadvantages of product-management systems. Many companies are reorganizing along market lines and becoming market-centered organizations. Xerox converted from geographic selling to selling by industry, as did IBM and Hewlett-Packard. When a close relationship is advantageous, such as when customers have diverse and complex requirements and buy an integrated bundle of products and services, a customer-management organization, which deals with indi-vidual customers rather than the mass market or even market segments, should prevail. 15 One study showed that companies organized by customer groups reported much higher accountability for the overall quality of relationships and greater employee freedom to take actions to satisfy individual customers. 16 Ma Trix-Manage Men T organiza Tion Companies that produce many products for many markets may adopt a matrix organization employing both product and market managers. The rub is that it's costly and often creates conflicts. There's the cost of supporting all the managers and questions about where authority and responsibility for marketing activities should reside—at headquarters or in the division?17 Some corporate marketing groups assist top management with overall opportunity evaluation, provide divisions with consulting assistance on request, help divisions that have little or no marketing, and promote the marketing concept throughout the company. relat IOnsh Ips w Ith Other Depart Ments Under the marketing concept, all departments need to “think customer” and work together to satisfy customer needs and expectations. Yet departments define company problems and goals from their own viewpoints, so con-flicts of interest and communications problems are unavoidable. The marketing vice president or the CMO must usually work through persuasion rather than through authority to coordinate the company's internal marketing activities and coordinate marketing with finance, operations, and other company functions to serve the customer. 18 Many companies now focus on key processes rather than on departments because departmental organization can be a barrier to smooth performance. They appoint process leaders, who manage cross-disciplinary teams that include marketing and salespeople. Marketers thus may have a solid-line responsibility to their teams and a dotted-line responsibility to the marketing department. Given the goal of providing positive customer experiences from start to finish, all areas of the organization need to work effectively together. In particular, because of the growing importance of “Big Data, ” marketers must work closely with those in the IT department to gain critical insights and updates. Bu Il DIn G a Creat Ive Market In G Or Gan Izat IOn Many companies realize they're not yet really market and customer driven—they are product and sales driven. Transforming into a true market-driven company requires, among other actions: (1) developing a company-wide passion for customers; (2) organizing around customer segments instead of products; and (3) understanding customers through qualitative and quantitative research. Source: © Jeff Greenberg “0 people images” / Alamy Sales in the dairy aisle increased once marketers for General Mills' Yoplait Yogurt became category advisors to a number of major retailers. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
MAn Aging A Holis Ti C MARke Ting o Rg Aniz ATion fo R THe long Run | chapter 23 685 The task is not easy, but the payoffs can be considerable. See “Marketing Insight: The Marketing CEO” for con-crete actions a CEO can take to improve marketing capabilities. Although it's necessary to be customer oriented, it's not enough. The organization must also be creative. 19 Companies today copy each others' advantages and strategies with increasing speed, making differentiation harder to achieve and lowering margins as firms become more alike. The only answer is to build a capability in strategic innovation and imagination. This capability comes from assembling tools, processes, skills, and measures that let the firm generate more and better new ideas than its competitors. 20 Companies also try to put together inspiring work spaces that help to stimulate new ideas and foster imagination. Companies must watch trends and be ready to capitalize on them. Nestlé was late seeing the trend toward cof-feehouses such as Starbucks. Coca-Cola was slow to pick up beverage trends toward fruit-flavored drinks such as Snapple, energy drinks such as Gatorade, and designer water brands. Market leaders can miss trends when they are risk averse, obsessed about protecting their existing markets and physical resources, and more interested in efficiency than innovation. 21 Socially Responsible Marketing Effective internal marketing must be matched by a strong sense of ethics, values, and social responsibility. 22 Taking a more active, strategic role in corporate social responsibility is thought to benefit not just customers, employees, community, and the environment but also shareholders. Firms feel they also benefit in different ways, as Figure 23. 4 illustrates. 6. Develop strong in-house marketing training programs. The company should design well-crafted marketing training programs for corporate management, divisional general managers, market-ing and sales personnel, manufacturing personnel, R&D personnel, and others. Many companies such as GE, Unilever, and Accenture have centralized training facilities to run such programs. 7. Install a modern marketing planning system. The planning format will require managers to think about the marketing environ-ment, opportunities, competitive trends, and other forces. These managers then prepare strategies and sales-and-profit forecasts for specific products and segments and are accountable for performance. 8. Establish an annual marketing excellence recognition pro-gram. Business units that believe they've developed exemplary marketing plans should submit a description of their plans and results. Winning teams should be rewarded at a special ceremony and the plans disseminated to the other business units as “models of marketing thinking. ” Procter & Gamble, SABMiller, and Becton, Dickinson and Company follow this strategy. 9. Shift from a department focus to a process-outcome focus. After defining the fundamental business processes that determine its success, the company should appoint process lead-ers and cross-disciplinary teams to reengineer and implement these processes. 10. Empower the employees. Progressive companies encourage and reward their employees for coming up with new ideas and empower them to settle customer complaints to save the cus-tomer's business. IBM lets frontline employees spend as much as $5,000 to solve a customer problem on the spot. marketing insight The Marketing CEO What steps can a CEO take to create a market-and customer-focused company? 1. Convince senior management of the need to become cus-tomer focused. The CEO personally exemplifies strong customer commitment and rewards those in the organization who do like-wise. Former CEOs Jack Welch of GE and Lou Gerstner of IBM famously spent 100 days a year visiting customers in spite of their many strategic, financial, and administrative burdens. 2. Appoint a senior marketing officer and marketing task force. The marketing task force should include the CEO; C-level executives from sales, R&D, purchasing, manufacturing, finance, and human resources; and other key individuals. 3. Get outside help and guidance. Consulting firms have consider-able experience helping companies adopt a marketing orientation. 4. Change the company's reward measurement and system. As long as purchasing and manufacturing are rewarded for keeping costs low, they will resist accepting some costs required to serve customers better. As long as finance focuses on short-term profit, it will oppose major investments designed to build satisfied, loyal customers. 5. Hire strong marketing talent. The company needs a strong chief marketing officer who not only manages the marketing department but also gains respect from and influence with the other C-level executives. A multidivisional company will benefit from establishing a strong corporate marketing department. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
686 PART 8 | Condu CTing M ARke Ting Res Ponsibly fo R long-Te RM su CCess The most admired—and most successful—companies in the world abide by high standards of business and market-ing conduct that dictate serving people's interests, not only their own. Procter & Gamble has made “brand purpose” a key component of the company's marketing strategies. The company has launched a number of award-winning cause programs to support its brands, such as with Downy fabric softener's “Touch of Comfort, ” Tide laundry detergent's “Loads of Hope, ” and Secret deodorant's “Mean Stinks. ”23 P&G is not alone, as the following demonstrates. 24 Fir Ms OF End Ear MEn T Researchers Raj Sisodia, David Wolfe, and Jag Sheth believe humanistic companies make great companies. They see “Firms of Endearment” as those with a culture of caring that serve the interests of their stakeholders, who are defined by the acronym SPICE: Society, Partners, Investors, Customers, and Employees. Sisodia and colleagues believe Firms of Endearment create a love affair with stakeholders. Their senior managers run an open-door policy, are passionate about customers, and earn modest compensation. They pay their em-ployees more, relate more closely to a smaller group of excellent suppliers, and give back to the communities in which they work. They actually spend less on marketing as a percentage of sales yet earn greater profits because customers who love the company do most of the marketing. The authors see the 21st-century marketing paradigm as creating value for all stakeholders and becoming a beloved firm. Table 23. 2 lists firms receiving top marks as Firms of Endearment from a sample of thousands of customers, employees, and suppliers. COrp Orate s OCI al resp Ons IBIl It Y Raising the level of socially responsible marketing calls for making a three-pronged attack that relies on proper legal, ethical, and social responsibility behavior. One company that puts social responsible marketing squarely at the center of all it does is Stonyfield Farm. 25| Fig. 23. 4 | Rationale for Investing in Corporate Social Responsibility Table 23. 2 Top Firms of Endearment Best Buy BMW Car Max Caterpillar Commerce Bank Container Store Costco e Bay Google Harley-Davidson Honda IDEO IKEA Jet Blue Johnson & Johnson Jordan's Furniture L. L. Bean New Balance Patagonia Progressive Insurance REI Southwest Starbucks Timberland Toyota Trader Joe's UPS Wegmans Whole Foods Source: Raj Sisodia, David B. Wolfe, and Jag Sheth, Firms of Endearment: How World-Class Companies Profit from Passion and Purpose (Upper Saddle River, NJ: Wharton School Publishing, 2007), p. 16, © 2007. Printed and electronically reproduced by permission of Pearson Education, Inc., Upper Saddle River, New Jersey. Rationale for Investing in Corporate Social Responsibility Companies need to differentiate themselves. Companies with civic virtues will be preferred. Companies need a decision framework for facing daily requests for sponsorships, improved health coverage, injury prevention, environmental protection, and community contributions. Corporate heads and boards need to understand the social pressures and opportunities facing their companies. Companies need to build a bank of public goodwill to offset potential criticisms. Employees, investors, and partners will be more motivated and loyal. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
MAn Aging A Holis Ti C MARke Ting o Rg Aniz ATion fo R THe long Run | chapter 23 687 s TOny Fi ELd Far M Stonyfield Farm was cofounded in 1983 by long-time “CE-Yo” Gary Hirshberg on the belief that there was a business opportunity in selling all-natural organic dairy products while “restoring the environment. ” The company's suppliers avoid the productivity practices of agribusiness, including the use of antibiot-ics, growth hormones, pesticides, and fertilizers. After calculating the amount of energy used to run its plant, Stonyfield decided to make an equivalent investment in environmental projects such as reforestation, wind farms, and the com-pany's own anaerobic wastewater digester. The company has modified the plastic lids on its yogurt, saving about a million pounds of plastic a year, and added on-package messages about global warming, the perils of hormones, and genetically modified foods. It has also added cultures or dietary supplements to help the immune system fight off ill-ness and makes low-fat versions of its products. Stonyfield donates 10 percent of profits “to efforts that help protect and restore the Earth. ” Although premium-priced, the brand still lacks the margins for big budget advertis-ing campaigns and relies on sampling (such as at the Boston marathon), PR, word of mouth, and guerilla tactics instead. Its progressive business practices have not hurt its financial performance. Stonyfield is the number-three yogurt brand in the United States and has added smoothies, milk, frozen yogurt, and ice cream. Hirshberg, now just chairman of the company, has also launched a nonprofit foundation called “Climate Counts” that scores companies annually on the basis of their voluntary actions to reverse climate change. The goal is to spur corporate responsibility and inform consumers about which compa-nies are more engaged. legal behavior Organizations must ensure every employee knows and observes relevant laws. 26 For example, it's illegal for salespeople to lie to consumers or mislead them about the advantages of buying a product. They may not offer bribes to purchasing agents or others influencing a B-to-B sale. Their statements must match advertising claims, and they may not obtain or use competitors' technical or trade secrets through bribery or industrial espionage. They must not disparage competitors or their products by suggesting things that are not true. Managers must make sure every sales representative knows the law and acts accordingly. Procter & Gamble has embraced cause marketing programs, such as Tide laundry detergent's “Loads of Hope,” to help its brands achieve their brand purposes. Source: Just Label It!Source: Getty Images North America Stonyfield Farm co-founder Gary Hirshberg is leading the charge in labeling products which use genetically modified organism (GMO) ingredients. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
688 PART 8 | Condu CTing M ARke Ting Res Ponsibly fo R long-Te RM su CCess e Thical behavior Business practices come under attack because business situations routinely pose ethical dilemmas: It's not easy to draw a clear line between normal marketing practice and unethical behavior. Some issues can generate controversy or sharply divide critics, such as acceptable marketing to children. 27 r Egu La Ting F OOd and B EVErag E Mark ETing T O Chi Ldr En Amid pressure from regulators and the threat of lawsuits, food and beverage manufacturers have cut back on marketing their least healthful products to kids; developed new recipes to reduce calories, sodium, sugar, and fat in thousands of products; and made changes to place nutrition information on the front of the package. Some watch groups feel that is still not enough, and with childhood obesity an administration priority being addressed by First Lady Michelle Obama's “Let's Move!” and other pro-grams, tight new government standards to further limit advertising to children and teens take effect in 2016. These standards require food marketed toward children ages 2 to 17 to make a “meaningful contribution” to a healthy diet by providing a certain amount of healthy items (fruits, vegetables, whole grains) and limiting unhealthy items (sodium, sugar, and saturated fat). Later regulation was proposed to ban in-school advertising for foods high in sugar, fat, and salt and to eliminate the tax deductions of advertising and marketing expenses for food and marketing companies if the products are of “poor nutritional quality” and mar-keted to kids. Although proposed regulations often change a great deal before taking effect, there will be increased government scrutiny of the way food and beverages are marketed to children. Of course, certain business practices are clearly unethical or illegal. These include bribery, theft of trade secrets, false and deceptive advertising, exclusive dealing and tying agreements, quality or safety defects, false warranties, inaccurate labeling, price-fixing or undue discrimination, and barriers to entry and predatory competition. Companies must adopt and disseminate a written code of ethics, build a company tradition of ethical behavior, and hold their people fully responsible for observing ethical and legal guidelines. In the past, a disgruntled customer might bad-mouth an unethical or poorly performing firm to 12 other people; today, via the Internet, he or she can reach thousands. The general distrust of companies among U. S. consumers is evi-dent in research showing the percentage of those who view corporations unfavor-ably is almost 40 percent. 28 Social re Spon Sibili Ty behavior Marketers must exercise their social conscience in specific dealings with customers and stakeholders. Some top-rated companies for corporate social responsibility are Whole Foods, Walt Disney, Coca-Cola, Johnson & Johnson, and Google. 29 Increasingly, people want information about a company's record on social and environmental responsibility to help them decide which companies to buy from, invest in, and work for. 30 Communicating corporate social responsibility can be a challenge. Once a firm touts an environmental initiative, it can become a target for criticism. Often, the more committed a company is to sustainability and envi-ronmental protection, the more dilemmas can arise, as Green Mountain Coffee Roasters has found. 31 gr EEn MOun Tain C OFFEE r Oas TErs Vermont-based Green Mountain Coffee Roasters prides itself on sustainability efforts that have helped it become one of the fastest-selling coffee brands around. The company sup-ports local and global communities by offsetting 100 percent of its greenhouse gas emis-sions, investing in sustainably grown coffee, and allocating at least 5 percent of its pre-tax profits to social and environmental projects. Through its C. A. F. E. Time or Community Action for Employees programs, employees are encouraged to volunteer as many as 52 hours annually of company-paid service to give back to local organizations and communities. All these activities help Green Mountain fulfill its purpose statement to “create the ultimate coffee experience in every life we touch, from tree to cup— transforming the way the world views business. ” The firm's 2006 purchase of Keurig and its popular single-cup brewing system posed a quandary, though: The K-Cups used with the Keurig brewing Source: ASSOCIATED PRESS A firm that prides itself on its sustainability efforts, Green Mountain Coffee Roasters is committed to reducing any adverse environmental impact of its popular K-cups. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
MAn Aging A Holis Ti C MARke Ting o Rg Aniz ATion fo R THe long Run | chapter 23 689 system were made of totally nonrecyclable plastic and foil. Although disposal makes up only about 5 percent of their total environmental impact—more significant effects are related to brewer use, coffee cultivation, and product packaging—Green Mountain has engaged in extensive R&D and explored numerous partnerships to find a more environmentally sound solution, vowing to make K-Cup packs recyclable by 2020 while also addressing their other environmental effects in different ways. Corporate philanthropy also can pose dilemmas. Merck, Du Pont, Walmart, and Bank of America have each donated $100 million or even more to charities in a year. Yet good deeds can be overlooked—even resented—if the company is seen as exploitive or fails to live up to a “good guys” image. Some critics worry that cause marketing or “consumption philanthropy” may replace virtuous actions with less thoughtful consumer buying, reduce emphasis on real solutions, or deflect attention from the fact that markets may create many social problems to begin with. 32 Su STainabili Ty Sustainability —the ability to meet humanity's needs without harming future generations— now tops many corporate agendas. Major corporations outline in great detail how they are trying to improve the long-term impact of their actions on communities and the environment. Coca-Cola, AT&T, and Du Pont have even installed Chief Sustainability Officers. 33 As one sustainability consultant put it, “There is a triple bottom line—people, planet, and profit—and the people part of the equation must come first. Sustainability means more than being eco-friendly, it also means you are in it for the long haul. ”34 Corporate actions toward achieving sustainability take all forms. For example, Whole Foods, Wegmans, Target, and Walmart no longer sell fish caught in areas subject to overfishing or in a manner likely to harm other marine life or habitats. 35 Sustainability ratings exist, but there is no consistent agreement about what metrics are appropriate. 36 One comprehensive study used 11 factors to assemble a list of the top 100 sustainable corporations in the world: energy, water, CO 2, and waste productivity; leadership diversity; CEO-to-average-worker pay; taxes paid; sustainability leadership; sustainability pay link; innovation capacity; and transparency. Some notable global firms in the top 10 include Statoil (Norway), Adidas (Germany), and Westpac Banking (Australia). 37 Some feel companies that score well on sustainability exhibit high-quality management in that “they tend to be more strategically nimble and better equipped to compete in the complex, high-velocity, global environment. ”38 Consumer interest is also creating market opportunities, such as for organic products (see “Marketing Insight: The Rise of Organic”). could remain private, in part so he could continue its focus on eco-friendly practices. Other small firms have not followed suit, however, and major corporations like Cargill, Con Agra, Kraft, and M&M Mars now control much of the nation's organic food industry. Farms with annual sales of $500,000 or more account for nearly 80 percent of all organic sales, even though such farms make up only 12. 5 percent of all farms. Many nonfood companies are embracing organic ingredients to avoid chemicals and pesticides. Apparel and other nonfood items make up the second-fastest-growing category of the organic products industry. Organic nonfood grew to $2. 8 billion in 2013—now 8 percent of the $35. 1 billion organic products industry. Organic cotton grown by farmers who fight boll weevils with ladybugs, weed crops by hand, and use manure for fertilizer has become a hot product at retail. Sources: Liz Webber, “USDA Survey Reveals Extent of Big Organic,” Supermarket News, October 18, 2012; Stephanie Strom, “Has 'Organic' Been Oversized?,” New York Times, July 7, 2012; George Avalos, “Annie's CEO Aims to Make Profit on Organic Mission,” Oakland Tribune, June 24, 2012; Michelle Wu, “A Company Fueled by Athletes' Sweat,” Wall Street Journal, March 22, 2010; Jessica Shambora, “The Honest Tea Guys Look Back,” Fortune, July 26, 2010; Megan Johnston, “Hard Sell for a Soft Fabric,” Forbes, October 30, 2006, pp. 73-80. See also Ram Bezawada and Koen Pauwels, “What Is Special about Marketing Organic Products? How Organic Assortment, Price, and Promotions Drive Retailer Performance,” Journal of Marketing 77 (January 2013), pp. 31-51. marketing insight The Rise of Organic Organic and natural products have become a strong presence in many food and beverage categories. Caster & Pollux's success with organic and natural pet foods led to its distribution in major specialty retail chains such as PETCO. All-organic Honest Tea grew 50 percent a year after its founding in 1998; the firm sold 40 percent of the business to Coca-Cola in 2008. Annie's Home Grown started as an organic farm in Connecticut in 1989, went public in 2012 with an IPO raising $95 million, and was bought by General Mills for $820 million in 2014. Many organic and natural products ground their brand position-ing in sustainability and social values. Started in 1990 by avid cyclist Gary Erickson and named to honor his father, CLIF Bar set out to offer a better-tasting energy bar with wholesome, organic ingredients. CLIF Bar relies on biodiesel-powered vehicles, supports the construction of farmer-and Native American-owned wind farms through carbon off-sets, and is active in its local community. Given their premium prices and profitability, organic food and beverage products have also become big business. Erickson turned down a $120 million offer from Quaker Oats in 2000 so his firm | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
690 PART 8 | Condu CTing M ARke Ting Res Ponsibly fo R long-Te RM su CCess Heightened interest in sustainability has also unfortunately resulted in greenwashing, which gives products the appearance of being environmentally friendly without living up to that promise. One study revealed that half the labels on allegedly green products focus on an eco-friendly benefit (such as re-cycled content) while omitting information about significant environmental drawbacks (such as manu-facturing intensity or transportation costs). 39 Stonyfield Farm's cofounder Gary Hirshberg is leading the charge with the “Just Label It!” campaign to provide more useful information on labels about the use of GMO (genetically modified organism) ingredients. 40 Because insincere firms have jumped on the green bandwagon, consumers bring a healthy skepti-cism to environmental claims. They are also unwilling to sacrifice product performance and quality, nor are they necessarily willing to pay a price premium for green products. 41 Unfortunately, green products can be more expensive because ingredients are costly and transportation costs are higher for lower ship-ping volumes. As Chapter 3 described, when the recession hit, sales of many green household products slid. Sales of the premium-priced Clorox Green Works line, for example, dropped from more than $100 million in 2008 to $60 million five years later. 42 s OCI all Y resp Ons IBle Bus Iness M ODels Companies that innovate solutions and values in a socially responsible way are most likely to suc-ceed. 43 Consider Timberland. 44 Ti MBEr Land Timberland, the maker of rugged boots, shoes, clothing, and gear, targets individuals who live, work, and play outdoors, so it only makes sense to do whatever it takes to protect the environment. The company's actions have blazed trails for green companies around the world. Its revolutionary initiatives include putting a “nutrition label” on its shoeboxes, measuring the brand's environmental footprint— from renewable energy used in its facilities to recycled, organic, and renewable materials in its products to trees planted around the globe. Timberland also introduced a new line of shoes called Earthkeepers, which in-corporates organic cotton, recycled PET, and recycled rubber (for the soles) and later expanded across multiple Timberland product categories. Outside of product, the brand has made a major commitment to reforestation, with nearly five million trees planted worldwide. With sales topping $1. 6 billion in 2013, its business accom-plishments prove that socially and environmentally responsible companies can be successful. Companies such as The Body Shop, Working Assets, and Smith & Hawken are also giving social responsibility a more prominent role, as has Newman's Own. Late actor Paul Newman's homemade salad dressing grew into a huge business. Newman's Own brand also includes pasta sauce, salsa, popcorn, and lemonade and is now sold in 15 overseas markets. The company has given away all its profits and royalties after tax—more than $400 million so far—to thousands of educational and charitable programs worldwide, including the Hole in the Wall Gang camps Newman created for children with serious illnesses. 45 Corporate philanthropy as a whole is on the rise. After years of steady growth, even during a recession, $16. 8 billion in cash and in-kind support was given in 2013. 46 In addition to these contributions, more firms are coming to believe corporate social responsibility in the form of cause marketing and employee volunteerism programs is not just the “right thing” but also the “smart thing to do. ”47 Cause-relate D Market In G Many firms blend corporate social responsibility initiatives with marketing activities. 48 Cause-related marketing links the firm's contributions toward a designated cause to customers' engaging directly or indirectly in revenue-producing transactions with the firm. Cause marketing is part of corporate societal marketing (CSM), which Minette Drumwright and Patrick Murphy define as marketing efforts “that have at least one noneconomic objective related to social welfare and use the resources of the company and/or of its partners. ”49 Drumwright and Murphy also include traditional and strategic philanthropy and volunteerism in CSM. One study showed that 90 percent of U. S. consumers have a more positive image of, are more loyal to, and trust more a company that supports a cause, and 54 percent have bought a product because it was associated with a cause. 50 After describing Dawn's successful cause marketing program, we next review pros and cons of such pro-grams and some important guidelines that apply to them. 51 Timberland has adopted practices to protect the environment across a broad range of its corporate activities. Source: Timberland | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
MAn Aging A Holis Ti C MARke Ting o Rg Aniz ATion fo R THe long Run | chapter 23 691 dawn Procter & Gamble's Dawn, the top dishwashing liquid in the United States, has an unusual side benefit—it can clean birds caught in oil spills. A report by the U. S. Fish and Wildlife Service called Dawn “the only bird-cleaning agent that is recommended because it removes oil from feathers; is non-toxic; and does not leave a residue. ” A Web site launched in 2006, www. Dawn Saves Wildlife. com, drew 130,000 people who formed virtual groups to encourage friends and others to stop gas and oil leaks from their cars. After the catastrophic BP oil spill in 2010, P&G donated thousands of bottles of Dawn as well as placing a code on bottles and donating $1 to Gulf wildlife causes for each code customers activated, eventually totaling $500,000. To date, the company has donated more than 50,000 bottles of Dawn to help rescue and release 75,000 animals harmed by oil pollution. Teaming up with the Marine Mammal Center and International Bird Rescue, P&G pledged $1 million for 2014, also launching the premiere of a seven-part documentary series narrated by actor Rob Lowe. cau Se-Marke Ting bene Fi TS and co STS A successful cause-marketing program can improve social welfare, create differentiated brand positioning, build strong consumer bonds, enhance the company's public image, create a reservoir of goodwill, boost internal morale and galvanize employees, drive sales, and increase the firm's market value. 52 Consumers may develop a strong, unique bond with the firm that transcends normal marketplace transactions. Specifically, from a branding point of view, cause marketing can (1) build brand awareness, (2) enhance brand image, (3) establish brand credibility, (4) evoke brand feelings, (5) create a sense of brand community, and (6) elicit brand engagement. 53 It has a particularly interested audience in socially minded 18-to 34-year-old Millennial consumers who, not surprisingly, are more likely than the general population to use social media to learn about cause activities and engage with companies about them. 54 Cause-related marketing could backfire, however, if consumers question the link between the product and the cause or see the firm as self-serving and exploitive. 55 Problems can also arise if consumers do not think a company is consistent and sufficiently responsible in all its behavior, as happened to KFC. 56 k FC KFC's “Buckets for the Cure” program was to donate 50 cents to the Susan G. Komen for the Cure Foundation for every $5 “pink” bucket of fried chicken purchased over a one-month period. It was slotted to be the single biggest cor-porate donation ever to fund breast cancer research—more than $8. 5 million. One problem: At virtually the same time, KFC also launched its Double Down sandwich with two pieces of fried chicken, bacon, and cheese. Critics immediately pointed out that KFC was selling a food item with excessively high calories, fat, and sodium that contributed to obesity. On the Susan G. Komen site, being overweight was flagged for increasing the risk of breast cancer by 30 percent to 60 percent in postmenopausal women, also leaving the foundation open to criticism over the partnership. P&G has created a series of cause-related activities around its Dove dishwashing liquid, taking advantage of its unusual side benefit to clean birds caught in oil spills. Source: © National Geographic Image Collection/Alamy | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
692 PART 8 | Condu CTing M ARke Ting Res Ponsibly fo R long-Te RM su CCess To avoid backlash, some firms take a soft-sell approach to their cause marketing. 57 One interesting recent cause program is the PRODUCT(RED) campaign. 58 Pr Odu CT(r Ed) The highly publicized launch of PRODUCT(RED) in 2006, championed by U2 singer and activist Bono and Bobby Shriver, chairman of DATA, raised awareness and money for the Global Fund by teaming with some of the world's most iconic brands—American Express cards, Motorola phones, Converse sneakers, Gap T-shirts, Apple i Pods, and Emporio Armani sunglasses—to produce (RED)-branded products. As much as 50 percent of the profits from sales of these products go to the Global Fund to help women and children affected by HIV/AIDS in Africa. Each company that becomes PRODUCT(RED) places its logo in the “embrace” signified by the parentheses and is “elevated to the power of red. ” Although some critics felt the PRODUCT(RED) project was either misguided or overmarketed, more than $275 million has been donated to date, an enormous increase over donations to the Global Fund prior before the program launch. Many well-known brands have joined the cause since then, such as Bank of America, Beats by Dr. Dre, Microsoft, and Starbucks. de Signing a cau Se progra M Firms must make a number of decisions in designing and implementing a cause-marketing program, such as how many and which cause(s) to choose and how to brand the cause program. “Marketing Memo: Making a Difference: Top 10 Tips for Cause Branding” provides some tips from a top cause-marketing firm. Some experts believe the positive impact of cause-related marketing is diluted if a company is only occasionally engaged in a number of causes. Cathy Chizauskas, Gillette's director of civic affairs, states: “When you're spreading out your giving in fifty-dollar to one-thousand-dollar increments, no one knows what you are doing. ... It doesn't make much of a splash. ”59 Many companies focus on one or a few main causes to simplify execution and maximize impact. Mc Donald's has focused on children and family health and well-being through three major programs:60 Ronald Mc Donald Houses in 35 countries and regions offer more than 8,000 rooms each night to families needing support while their child is in the hospital, saving them a total of $657 million annually in hotel costs. Ronald Mc Donald Family Rooms in 23 countries help 4,000 families each day with a place to rest and regroup at the hospital next to their sick child. Fifty-two Ronald Mc Donald Care Mobiles in nine countries provide neighborhood on-site medical care for children. Limiting support to a single cause, however, may limit the pool of consumers or other stakeholders who can transfer positive feelings from the cause to the firm. Many popular causes also already have numerous corporate sponsors. More than 130 companies, including American Airlines, Dell, Ford, Georgia Pacific, Merck, Samsung, and Walgreens, have become corporate partners of Susan G. Komen for the Cure. 61 Thus, a brand may find itself overlooked in a sea of symbolic pink ribbons. U2's Bono has been the spokes-person for the PRODUCT(RED) partnership, whereby major brands donate proceeds from sales of designated “red” products to fight HIV/AIDS in Africa. Source: © Daily Mail/Rex / Alamy | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
MAn Aging A Holis Ti C MARke Ting o Rg Aniz ATion fo R THe long Run | chapter 23 693 Cone, a Boston-based strategic communications agency specializing in cause branding and corporate responsibility, offers these tips for developing authentic and substantive programs: 1. Select a focus area that aligns with your mission, goals, and organization. 2. Evaluate your institutional “will” and resources. If you, your employees, and other allies don't believe or invest in your organization's cause, neither will your audience. 3. Analyze your competitors' cause positioning. There are few remaining wide, open spaces, but this may help you locate a legitimate societal need or an untapped element within a more crowded space that you can own. 4. Choose your partners carefully. Look for alignment in values, mission, and will. Carefully outline roles and responsibilities. Set your sights on a multiyear, sustainable relationship with annual measurement of accomplishments for both partners. 5. Don't underestimate the name of your program—it's key to the identity of your campaign. Develop a few words that say exactly what you do and create a visual identity that is simple yet memorable. The Avon Breast Cancer Crusade, American Heart Association's Go Red for Women, and Target Take Charge of Education are good examples. 6. To create a sustainable and effective program, start by developing a cross-functional strategy team. Include representatives from the office of the CEO, public affairs, human resources, marketing, public and community relations, research/measurement, and volunteer and program management, among others. If you're in silos, you will spend too much valuable time building bridges to other departments to get the real work done. 7. Leverage both your assets and those of your partner(s) to bring the program to life. Assets may include volunteers, cash and in-kind donations, special events, in-store presence, partner resources, and marketing/advertising support. And, remember, emotion is one of your greatest assets. It can help you to connect with your audience and differentiate your organization in a crowded marketplace. 8. Communicate through every possible channel. Craft compelling words and visuals because stirring images can penetrate the heart. Then take your messages beyond traditional media outlets and become multidimensional! Think special events, Web sites, workshops, PSAs, expert spokespersons, and even celebrity endorsements. 9. Go local. National programs reach the “grass tops,” but true transformation begins at the grassroots. Engage citizens/volunteers through hands-on activities at local events, cause promotions, and fund-raisers. 10. Innovate. True cause leaders constantly evolve their programs to add energy, new engagement opportunities, and content to remain relevant and to build sustainability. Sources: Carol C. Cone, “Top 10 Tips for Cause Branding,” www. coneinc. com/10-tips-cause-branding; see also Carol L. Cone, Mark A. Feldman, and Alison T. Da Silva, “Cause and Effects,” Harvard Business Review, July 2003, 95-101. Making a Difference: Top 10 Tips for Cause Branding marketing memo Mc Donald's has focused its cause marketing efforts on Ronald Mc Donald House Charities which includes its Ronald Mc Donald Care Mobiles to provide local medical care for children. Source: Richard Sennott/ZUMAPRESS/Newscom | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
694 PART 8 | Condu CTing M ARke Ting Res Ponsibly fo R long-Te RM su CCess Opportunities may be greater with “orphan causes”—diseases that afflict fewer than 200,000 people. 62 Another option is overlooked diseases; pancreatic cancer is the fourth-deadliest form of cancer behind skin, lung, and breast yet has received little or no corporate support. Diabetes is linked to the deaths of many more people than breast cancer but receives significantly less funding support. Even major killers such as prostate cancer for men and heart disease for women have been relatively neglected compared to breast cancer, though some firms have begun to fill the void. The American Heart Association launched a “Go Red for Women” program, with a red dress symbol and a national “Wear Red Day” sponsored by Macy's, to draw attention from corporations and others to a disease that kills roughly 12 times as many women a year as breast cancer. 63 Most firms choose causes that fit their corporate or brand image and matter to their employees and sharehold-ers. 64 Lens Crafters' Give the Gift of Sight program—rebranded One Sight after the company was purchased by the Italian firm Luxottica—is a family of charitable vision-care programs providing free vision screenings, eye exams, and glasses to millions of needy people in North America and developing countries around the world. Luxottica pays most of the overhead, so more than 90 percent of all donations goes directly to fund programming. 65 Barnum's Animal Crackers launched a campaign to raise awareness of endangered species and help protect the Asian tiger. Issuing special edition packaging and collaborating with the World Wildlife Fund, the Nabisco brand saw a “healthy lift in sales. ”66 Here is an example of a firm that used cause marketing in part to successfully build a new business. 67 TOMs Although Blake Mycoskie did not win the reality show contest Amazing Race, his return trip to Argentina in 2006 sparked a desire to start a business to help the scores of kids he saw who suffered for one simple reason—they lacked shoes. Shoeless children incur a health risk but are also disadvantaged by often being barred from school. Thus was born TOMS shoes, named to suggest “a better tomorrow,” with a pledge to donate a pair of shoes to a needy child for each pair sold. Picked up by stores like Whole Foods, Nordstrom, and Neiman Marcus and also sold online, TOMS shoes are based on the rope-soled, canvas-topped alpargata footwear of Argentina and can now be found on the feet of more than 1 million kids in developing countries. The donations were good marketing too. The firm has garnered heaps of publicity, and AT&T and American Express even featured Mycoskie in a commercial. TOMS also sponsored “A Day Without Shoes” promotion to help people imagine what life would be like shoeless. Some critics feel the brand is treating a symptom but not really addressing the root economic problem and that it could even be undermining the local shoe economy. Nevertheless, it has moved into eyewear with the same business model and is estimated to earn $250 million in revenues annually while giving away literally millions of shoes and now eyeglasses. s OCI al Market In G Cause-related marketing supports a cause. Social marketing by nonprofit or government organizations furthers a cause, such as “say no to drugs” or “exercise more and eat better. ”68 Some notable global social marketing suc-cesses are: A mass media campaign to promote oral rehydration therapy in Honduras significantly decreased deaths from diarrhea in children under 5. TOMS shoes puts cause marketing at the core of what it does, donating a pair of shoes to underprivileged children in developing countries for each pair it sells. Source: Handout/MCT/Newscom | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
MAn Aging A Holis Ti C MARke Ting o Rg Aniz ATion fo R THe long Run | chapter 23 695 Social marketers created booths in marketplaces where Ugandan midwives sold contraceptives at affordable prices. Population Communication Services created and promoted two extremely popular songs in Latin America, “Stop” and “When We Are Together, ” to help young adults learn sexual responsibility. The National Heart, Lung, and Blood Institute successfully raised awareness in the U. S. about cholesterol and high blood pressure, which helped significantly reduce deaths. Different types of organizations conduct social marketing in the United States. Government agencies include the Centers for Disease Control and Prevention, Departments of Health, Social, and Human Services, Department of Transportation, and the U. S. Environmental Protection Agency. The literally hundreds of nonprofit organiza-tions include the American Red Cross, the United Way, and the American Cancer Society. Choosing the right goal or objective for a social marketing program is critical. Should a family-planning cam-paign focus on abstinence or birth control? Should a campaign to fight air pollution focus on ride sharing or mass transit? Table 23. 3 illustrates the range of possible objectives. While social marketing uses a number of different tactics to achieve its goals, the planning process follows many of the same steps as for traditional products and services (see Table 23. 4). 69 Some key success factors for changing behavior include:70 Choose target markets that are most ready to respond. Promote a single, doable behavior in clear, simple terms. Explain the benefits in compelling terms. Make it easy to adopt the behavior. Develop attention-grabbing messages and media. Consider an education-entertainment approach. One organization that has accomplished many of these goals through the application of modern marketing practices is the World Wildlife Fund. 71 w Or Ld wi Ld Li FE Fund The World Wildlife Fund (WWF) is a Washington, D. C.-based nonprofit with 1. 2 million members in the United States and 5 million globally. Its annual budget does not allow for lavish marketing, so it relies primarily on creative direct marketing to solicit contributions. The organization sends about 36 million pieces of eco-friendly mail in the United States each year, garnering 65 percent of its membership revenue in the process. It has an award-winning Web site, is active on Facebook and Twitter, and earns revenue through partnerships with a host of firms including Avon, Disney, The Gap, and Build-A-Bear Workshop. Partnerships sometimes include joint marketing programs; Coca-Cola donated $2 million for a campaign to help create safe areas for polar bears in Canada and other Arctic regions. WWF also tackles important wildlife issues head on, as with its multimedia anti-poaching campaign, which used billboards, print ads, public service announcements, and online posters with the tagline “Stop Wildlife Crime—It's Dead Serious. ” Table 23. 3 Some Possible Social Marketing Program Objectives Cognitive Campaigns Explain the nutritional values of different foods. Demonstrate the importance of conservation. Action Campaigns Attract people for mass immunization. Motivate people to vote “yes” on a certain issue. Inspire people to donate blood. Motivate women to receive a Pap test. Behavioral Campaigns Demotivate cigarette smoking. Demotivate use of hard drugs. Demotivate excessive alcohol consumption. Value Campaigns Alter ideas about abortion. Change attitudes of bigoted people. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
696 PART 8 | Condu CTing M ARke Ting Res Ponsibly fo R long-Te RM su CCess Social marketing programs are complex; they take time and may require phased programs or actions. There were many steps involved in curbing the prevalence of smoking: release of cancer reports, labeling of cigarettes as harmful, bans on cigarette advertising, education about secondary smoke effects, bans on smoking in restau-rants and planes, increased taxes on cigarettes to pay for antismoking campaigns, and states' suits against tobacco companies. Social marketing organizations should evaluate program success in terms of their objectives, measuring criteria like incidence of adoption, speed of adoption, continuance of adoption, low cost per unit of adoption, and absence of counterproductive consequences. Table 23. 4 The Social Marketing Planning Process Where Are We? Choose program focus Identify campaign purpose Conduct an analysis of strengths, weaknesses, opportunities, and threats (SWOT) Review past and similar efforts Where Do We Want to Go? Select target audiences Set objectives and goals Analyze target audiences and the competition How Will We Get There? Product: Design the market offering Price: Manage costs of behavior change Distribution: Make the product available Communications: Create messages and choose media How Will We Stay on Course? Develop a plan for evaluation and monitoring Establish budgets and find funding sources Complete an implementation plan In addition to its popular Christmas ads featuring playful animated polar bears, Coca-Cola also partners with the World Wildlife Fund to protect real polar bears in their native regions. Source: ASSOCIATED PRESS | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
MAn Aging A Holis Ti C MARke Ting o Rg Aniz ATion fo R THe long Run | chapter 23 697 Marketing Implementation and Control Table 23. 5 summarizes the characteristics of a great marketing company, great not for what it is but for what it does. Great marketing companies know the best marketers thoughtfully and creatively devise marketing plans and then bring them to life. Marketing implementation and control are critical to making sure marketing plans have their intended results year after year. Market In G IMple Mentat IOn Marketing implementation is the process that turns marketing plans into action assignments and ensures they accomplish the plan's stated objectives. 72 A brilliant strategic marketing plan counts for little if not implemented properly. Strategy addresses the what and why of marketing activities; implementation addresses the who, where, when, and how. They are closely related: One layer of strategy implies certain tactical implementation assign-ments at a lower level. For example, top management's strategic decision to “harvest” a product must be translated into specific actions and assignments. Companies today are striving to make their marketing operations more efficient and their return on marketing investment more measurable (see Chapter 4). Marketing costs can amount to as much as a quarter of a company's total operating budget. Marketers need better templates for marketing processes, better management of marketing assets, and better allocation of marketing resources. Marketing resource management (MRM) software provides a set of Web-based applications that automate and integrate project management, campaign management, budget management, asset management, brand manage-ment, customer relationship management, and knowledge management. The knowledge management component consists of process templates, how-to wizards, and best practices. Software packages can provide what some have called desktop marketing, giving marketers information and decision structures on computer dashboards. MRM software lets marketers improve spending and investment decisions, bring new products to market more quickly, and reduce decision time and costs. Market In G COntr Ol Marketing control is the process by which firms assess the effects of their marketing activities and programs and make necessary changes and adjustments. Table 23. 6 lists four types of needed marketing control: annual-plan control, profitability control, efficiency control, and strategic control. Table 23. 5 Characteristics of a Great Marketing Company The company selects target markets in which it enjoys superior advantages and exits or avoids markets where it is intrinsically weak. Virtually all the company's employees and departments are customer- and market-minded. There is a good working relationship between marketing, R&D, and manufacturing. There is a good working relationship between marketing, sales, and customer service. The company has installed incentives designed to lead to the right behaviors. The company continuously builds and tracks customer satisfaction and loyalty. The company manages a value delivery system in partnership with strong suppliers and distributors. The company is skilled in building its brand name(s) and image. The company is flexible in meeting customers' varying requirements. | Keller Kevin Lane_ Kotler Philip - Marketing management-Pearson Education 2016 1.pdf |
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