MKTG 479 Final

Appeal - Best advertising does both of these:

the approach used to communicate the company's message 1. Information based (presentation of facts, demonstrations, storylines, testimonials) - Anything that gives the consumer info to help them make a decision (aka rational appeal) Great way to sell but boring way to get attention 2. Emotion based (humor, fear, love, etc.) - Attention getters, gets you in the door

Earned media:

word of mouth, facebook, twitter, Digg, Youtube, Flickr, Blogs, forums Result of doing a good job with paid and owned media Fans are messaging for us, part of messaging you have earned, your brand loyal people who are happy to help you because they like your story, no control over, can be negative or positive

New Product Development Steps:

(marketing is leader of this process) 1. Concept development Define attributes 2. Business analysis Identify target market, value proposition 3. Product development Design and manufacturing 4. Market testing Test viability small scale, make improvements 5. Commercial deployment Full scale

Execution style

(media specific) Print: copy, pictures, layout Radio: wording, audio, length Television: length, wording, actors, audience method used to convey a particular appeal using the language of selected media format. Style decisions are media specific

Types of Media Used by Marketers:

- paid media - owned media - earned media

Managing Product Adoption - New Customers How do you move the customer from first learning about product or service to get them to purchase it

1. Awareness How to create awareness Reflects customers knowledge of the offering 2. Attractiveness Benefits, competitiveness If what they become aware of is something they find attractive Reflects benefits buyers expect to receive from the offering 3. Affordability Monetary and non-monetary Reflects customers perceptions of the costs associated with the offering and their ability to cover these costs 4. Availability Distribution channel, in stock If not in stock, gonna go buy someone else's product Reflects degree to which customers have access to offering 5. Purchase Intent goal

Television Advertising in 2020

1. Before the pandemic, the TV networks were expecting a strong 2020. The presidential election and Toyo Olympics would keep people watching, and companies would spend more than usual a. Television advertising revenue is likely to drop 12% this year/ Networks will lose out on $25.5 billion in spending (this is HUGE) 2. Viewership is not the problem; millions of homebound people have limited entertainment options a. The economic fallout of the pandemic caused companies to slash TV ad budgets by more than 40%. In response, networks have offered commercial time at double-digit discounts 3. Before the pandemic" a. 30% of ad spending in the US went toward TV commercials b. 56% went to purely digital platforms c. By the end of the year, the gap will be greater with TV falling more dramatically 4. Changes in creation and production spending: a. In the new media landscape, big-budget TV commercials could become something of a rarity b. A watershed moment in history, where ad agencies or their clients are going to be forced to rethink how they product and how they create. i. Amount of advertising and type of advertising is declining (less big budget)

Manage the Customer Journey

1. Consideration Start with getting customer to put it in their consideration set by making them aware and making it attractive 2. Choice We choose 3. purchase As result of choice 4. Usage As result of purchase Messages to encourage customers to increase usage Ex: Baking soda multi use Create ideas and programs to get people to use your product on a lot of different things besides what it was intended to 5. Sharing Like and tell people 6. Repurchase As result

The degree of "newness" in a new product affects the amount of learning effort consumers exert to use the product

1. Continuous Innovation new flavors, new colors (customers don't have to learn anything) 2. Dynamic Continuous innovation Disrupts but doesn't require totally new learning 3. Discontinuous Innovation Requires new learning and patterns by consumers Newer inventions E.g. - electric cars like Tesla

Pioneering new markets, first mover

Can shape customer preferences Create switching costs Create barriers to entry Differentiating characteristics competitors can't copy Not a sure thing, has its risks Late entrants can benefit from pioneers mistake or shortcomings Very challenging, lots of new products fail before they get off the ground first company to establish its presence in a particular domain defined by a particular consumer need

Social Media Advertising

Facebook is #1 site for social media spending for BOTH b2b and b2c Twitter is pretty high Linkedin is really powerful for b2b

Communication as a Means of Creating Value

The strategic purpose of communication is to inform target customers, the company, and its collaborators about the company's offering Communication is one of the seven tactics that define the market offering Communication is the most visible aspect of marketing - Our messages, pictures, logan, slogan, jingle - the visual part of what we stand for

Why are Intermediaries Used?

The use of intermediaries results from their greater efficiency in making goods available to target markets - Purpose: match supply from producers to demand from consumers Offer the firm more than it can achieve on it's own - Contacts, experience, specialization, scale of operation Producers make narrow assortments of products in large quantities, while consumers want broad assortments of products in small quantities. - Manufacturers ship by the carton full, we don't buy cartons full of toothpaste - Retailers help you break down huge cartons on shelf, provide value and service, without them how else would you sell toothpaste? Our behavior is still to go to retail stores for toothpaste.

Strategy

Who is the target audience of the message? - Not necessarily only target customers but also those who influence the customers - Kids who influence parents to buy Value proposition - What value would we like to communicate to these members? - What benefits are included in the offering?

Goal of inbound marketing:

Find those strangers, turn them into visitors, find a lead to get them into your system, turn them into customers, delight them and turn them into promoters Hubspot charges you to do this, manage this workflow Usually inbound marketing is used for B2B because most B2B companies realize advertising doesn't work that well for them

Channel Structure

Flow of goods and services from manufacturer to target consumer -defines members of the distribution channel and the flow of goods and services from the manufacturer to customers. (can be direct, indirect, hybrid) - Direct channel: directly from company to customer (websites). manufacturer and end customer interact directly with each other without intermediaries. - Indirect channel: Have a retailer in between company and customer Ex: go to dealership to by ford car Ex: grocery stores and drugstores go through wholesalers first; a lot of time wholesaler take titles, can pass title much earlier up the chain manufacturer and the end customer interact with each other through intermediaries, such as wholesalers and retailers. - Hybrid channels/ omni channels: all of these manufacturer and end customer interact with each other through multiple channels, both directly and through intermediaries.

Breakeven Analysis of Cannibalization

Formula: BER(canb) = MARGIN (new offering) / MARGIN (old offering) Example: launch a new product with a price at $50 variable cost of $30 which cannibalizes the sales of a product with a price of $70 and a variable cost of $40 BER(canb) = $50-$30=$20/ $70-$40= $30 = 66% → no more than this should come from the new offering

Value Creation Customer Needs State

Problem Consumer aware of a problem as they are unsatisfied with existing Big problems create big opportunities, little problems don't always create opportunities Indifference Customer is reasonable happy and willing to stay the course Delight Extremely satisfied and no interest in exploring options

Developing the Message All areas that COULD be part of the message~

Product related- basic characteristics Brand related- the meaning associated with the brand Price related- price Incentives related- price reductions, volume discounts, rebates, coupons, sweepstakes, etc. Distribution related- how do we get the offering to people?

goal - benchmark

Quantitative (by how much?) Temporal (by when?)

goal - focus

Raise awareness of offering Generate interest; inform/education Strengthen buyer preference Provoke an action (purchase, contact company, solicit friends)

Product Adoption and Diffusion of Innovation How consumers make a decision (goal is to move them through awareness to confirmation)

Reinforce the customers choice through advertising, sales promotion, and other communications (confirmation) Make the product available (adoption) Provide product use information (trial) Demonstrations, samples, trial-size packages (evaluation) Provide information to customers about how the product can benefit them (interest) May use teaser advertising (awareness)

Marketing Mix During the PLC

Technology goes through decline stage Goal is to get your product to not decline Clothes, shoes, food can stay in the maturity stage for a very long time and not decline with good marketing and updating the product (e.g. cereal box - keeping the same product but updating the marketing on the box)

Purchase Funnel

a pictorial about how we move from becoming aware of something all the way to taking action Start at the top and move down Old ways- Used to rely on broadcast to do this New ways- rely on customer networks Using different methods to influence you at different levels of the funnel (color coded to match how you are influenced at each step)

Owned media:

brochure, retail stores, company website, microsite, community, facebook, fanpage, mobile app. Etc. Once message starts to resonate with people, once people are exposed to message then they go to your website The things we pay for, but we create ourselves

Core Competencies What is a core competency and why is it important to recognize?

expertise in an area essential to the company's business model, allowing the company to create market value To stay competitive, company must develop competencies in multiple areas Business innovation - AirBnB, Starbucks, Facebook Operations management - logistics - Costco, Ikea Technology Google, Microsoft Product development Apple, Tesla Service management Ritz Carlton, Nordstrom Brand building Harley Davidson, MINI Separate yourself because of the image you build around your brand, they way the brand makes your customer feel

Inbound communication

initiated by customers Focus customers' interest and lead to actions that benefit the company How can we get the customer to come to us to take action that we can benefit from?

Outbound communication

initiated by the company Generate interest and lead customer actions that benefit the company

Hubspot Inbound Marketing Tool

popular company today focused on inbound marketing Lots of companies use to manage their inbound marketing Use a system based on attracting customers, engaging them, and delighting them If you do this well, they will come to you instead of you going to them

Paid media:

print, television, radio, magazine, cinema, outdoor banners, direct mail, SEM/Paid Search, in-store media - The messages/items you pay for, advertisements that go out into mass media/apid media - Typically go to strangers, go out to target audience we haven't identified as customers or fans yet

Global Ad Spending

White- pre-covid Green- post-covid, less growth, lots of decline

Defending Market Position What to do? How will you defend your position?

1. Do nothing, stay the course Competitors come and go, ride out the storm -reflects company belief that these actions will have no material impact on the company's market position or that competitive threat is not sustainable. 2. Reposition existing offering To appeal to existing customers or to attract new ones Increasing benefits or decreasing costs Maybe add a feature or two, try to appeal Lowering price e.g. discounts, coupons, etc 3. Add new offerings: Extending product line - Vertical extensions Upscale, downscale, both Toyota, Lexus (higher end extension) ; Gap, Old Navy (lower end extension) - Horizontal extensions Colors, sizes, flavors Coke, Diet Coke, Cherry Coke

The Changing Communication Landscape

1. Evolution of communication from mass media such as print or television to personalized one-on-one a. Digital allows us to get more personal (social media) 2. Switch from traditional outbound to inbound communication a. Outbound- create messages to go out to the consumer b. Inbound - (today) How can we get the consumer to come to us? i . Come to our website, follow us on twitter, etc... 3. Growth in peer-to-peer communication a. We are influenced by our friends, family members, influencers 4. More messaging are being delivered to mobile devices

Product emphasis:

1. Existing products 2. New products

Speed of Adoption Speed of adoption is a function of:

1. Inherent value 2. Relative advantage Greater the value, the faster the adoption 3. Transparency Can you see and experience the benefits 4. Compatibility Way of doing things 5. Perceived risk Reduce the customers uncertainty 6. Promotional activities Advertising , social media 7. Availability

Market emphasis:

1. New markets 2. Existing markets

Value Creation Customer Value

1. Problem Solving offerings - Provide a solution to an important unmet need - Adopted quicker as a result - Big problems get quicker adoption rates, little problems get slower adoption rates Ex: consumer VR headsets being adopted very slowly bc not a lot of problems associated with the current way people are doing things 2. experiencing enhancing offerings Address a need that is not much of a problem As a result adopter slower More $$ to succeed

Net Promoter Score Create three categories

1. Promoters Very likely to recommend 2. Passivees Neutral 3. Detractors Not likely

Implementation

1. Setting up collaborators/organizational infrastructure: advertising, public relations, social media agencies - Most companies do not rely on internal expertise to do all ths; companies that are experts in advertising are not necessarily experts in media 2. Setting up processes: technical aspects, production, post-production, legal aspects, distribution (airing, printing,shipping) -identifying the specific actions needed to be taken during pre production, production, post production, and distribution 3. Scheduling: timing for effective and cost efficient release -deciding on the timing and optimal sequence in which individual tasks should be performed to ensure effective and cost efficient execution of the communication campaign

Factors Affecting Channel Choice (dont confuse with channel structure)

1. Which channel and intermediaries will provide the best coverage of the target market? Intensive - everywhere, convenience products (beverage, food) Exclusive - products at very few outlets (designer products) Selective - shopping products (tv, ipod, Shoes, clothes) not in every 7-11 on the corner Make this decision based on what type of product you have. 2. Which channel and intermediaries will best satisfy the buying requirements of the target market? Information Convenience Variety pre/post sale services 3. Which channel and intermediaries will be the most profitable?

Product Life Cycle What is the PLC?

A pattern-based approach to tracking and identifying stages in the sales history of a product or service from inception to decline Logic is that there are distinct strategic marketing implications/requirements associated with each stage Products have limited life in which they pass through distinct stages Product strategies vary across an offering's life cycle Communication varies across life cycle stages

Net Promoter Score

A person's true feelings about a product or service is reflected in the likelihood of recommending to others Are you willing to promote the brand? To the degree you promote it you will increase sales Calculated by asking customers how likely they are to recommend to others

Marketing channel decisions influence the rest of the marketing mix. Channel decisions determine:

A products market presence - A product that is consistent with retailers? Out of alignment? Distribute high end? Etc.. Buyers accessibility to the product - Accessibility is extensive bc so much of what we purchase is online

Fighting Brand Strategy

An offering that matches or undercuts a competitors price Two tier market - those that care about quality and those that care about To remain successful in terms of positioning, you come out with fighting brand - To undercut low cost competitors - Only works when you have a two tiered market with those who care about quality and those who care about price

The Evolution of the Telephone

At some point a whole new curve is started because the phone looks so different Separate mobile phone from landline phone

Closing Adoption Gaps

Awareness Gap - Increase communicate More advertising, more social media content - Broaden communication Tell more people, cost more money Attractiveness Gap - Benefits are inadequate? - redesign benefits - Customers do not see benefits? - samples, demos Affordability gap - Lowering price - Communicate value Availability gap - Better accessibility - Reduce out of stock Purchase gap - Reduce time - short term incentives e.g. coupons that expire - Eliminate time consumer takes to actually buy it - Not enough that they made the purchase, want them to buy it over and over again - Use more of our product, the more they use the more they will have to buy

Identifying Adoption Gaps

Awareness gap - All target customers - Aware of the offerings existence - Yellow = this much is not aware Attractiveness gap - Perceive the offering to be attractive - Yellow = does not see it as attractive, want blue as big as possible Affordability gap - Perceive the offering to be affordable - Gap keeps growing Availability gap - Have access to the offering Purchase gap Purchase the offering Fraction of original target audience

More Channel Considerations

Channel type: - Breadth specialized (Footlocker, Office Depot) or Broad (Costco, Target) carry relatively narrow assortment focus on relatively few product categories - Depth- limited: carry relatively small number of items within each category (7-Eleven) or Extensive: carry fairly large number of items in each category (Best Buy, PetSmart) category killers: specialized retailers carrying extensive assortments of items. Extensive inventory in the category they sell (pet stuff, home depot- hardware) Channel coverage - number of outlets at which offerings are made available to target customers Intensive, selective, etc. Channel Exclusivity - To what degree is the offering made available through multiple distribution channels Or do you want to keep it more exclusive? - Can alleviate channel conflict by not offering same version through multiple channels (channel specific product variants) Extensive coverage: offering readily accessible to fairly large portion of customers in a given market - Downside- comes at high cost and leads to channel conflicts Limited coverage: offering is likely only available in select markets and/or through specialized retailers Downside- runs risk of offering being unavailable for some customers

Product development strategy

Create growth by selling new products in existing markets New products to your current customers Could be new colors, new products itself, anything new targeted to existing market..

Sandwich Strategy

Develop both high end and low end Go even higher price and make your original brand middle of the road Introducing a two-tier product line comprising high-quality offerings and a low-priced offering, effectively sandwiching low-priced competitors. Achieved by launching downscale extension while simultaneously moving existing offering upscale

Delivering the Offering

Distribution is one of the least sexy elements of marketing but is the key final price - Way you distribute should be in line with 4 Ps and 7 Ts Collaboration among company and distribution partners- retailers, wholesalers, distributors - to get the offering from your facility to the target customer - At the right time, at the right place, and at the right price Reduced distribution costs as much as you can to get the right price - Everyone gets percentage of money- your helpers

The Validated Learning Approach

Each time you pass through the stages you learn as you go and retooling as you go Learning and retooling as you go

Diversification strategy

Emphasize both new products and new markets to achieve growth If you're going to attract a new market a lot of times you need a new product because the current product won't work. Not black and white

Managing Market Position

Gaining market share. How? (challenging) Steal share from competitors (much easier to get brand new customer because consumers already developed brand loyalty in steal share) - Narrow focus - Crest steals share from Colgate challenging - Broad - Toms steals share from all toothpaste companies Not going after particular competitor, gain traction in whole industry Easier if you have a unique value proposition - Must be able to deliver a value proposition that exceeds competitors - Lyft vs Uber? Give the consumer a reason to try you and stay with you - Selective demand strategy Grow share from others - Benefit-differentiation strategy vs. price differentiation

G-STIC Components:

Goal: key outcome to be achieved by the campaign Strategy: identifying target audience and value proposition to that audience Message: Information to be communicated (ex: benefits of product, brand, price, incentives, etc...) Media: how to get the word out (budget, media, type, scheduling) - where Creative Solution: type (humorous, informative, fear-based) and execution style (text, format) Implementation: logistics and timeline for message, media and creative decisions Control: (measure) evaluate success relative to goals

Where Mobile Ad Monies Are Being Spent

Google - paid search

Market Growth Strategy

Grow share by attracting new customers to the category This is not steal share basically grows the whole category, not just your share General benefits the market leader Known as primary demand strategy Grow the category itself Got Milk Ad campaign (just get people to drink more milk, growth across the board) CA cheese

New Product Development

Have to continue to go forward with new problems to continue to exist Each stage has a gate As you move through the gate you go into a new stage Today you need to speed up your development process Embrace concept of simultaneous development Can work on many of these tasks at once to speed up things In 1990s US was falling behind because we were too slow, needed to speed up product development

Evaluation (control)

How do we know if our communications are effective? - If it's not working, it's time to change it. Don't spend money on things that don't work Measure exposure - how many times is an ad seen? -# of times a given advertisement has been seen by target audience If its not doing these its not working: 1. Comprehension - do consumers know what is being communicated? -reflects degree to which target audience understands the message embedding in the ad 2. Recall- can they remember what is being shown/said? -Aided recall- given a list of brand names and asked to recall if they have seen - Unaided recall - simply asked to recall all brands you have seen 3. Persuasion - strengthen or change your attitude/preference 4. Intent- what do customers plan to do? -customers mental disposition to act favorably toward that offering 5. Behavior- what do customers actually do? -impact of ad on respondents actual behavior Digital has become so popular because it is a good way to quantify See what kind of an impact your social media is having

idea Generation Bottom Up (Invention Driven)

Invention > to Market opportunity Invention drives the product Engineers and R&D people Problem: invention without a home; great idea but nobody wants or has a need for it

Market penetration strategy

Increase sales of existing products to existing markets These strategies typically include: Price change for the lower Advertising, promotion, anything new to convince people in current market to buy more of, celebrity endorsers, social media campaigns, get customer engaged Common, popular- when trying to increase sales but don't have new products to do it with, become a default strategy to keep growth and revenue flowing

Changing Landscape of Advertising

Internet advertising is expected to grow to be a huge proportion As we increase digital advertising, we are decreasing traditional advertising Television still has its place in advertising because there is still a large percentage of people who watch tv in a traditional way, not disappearing yet!

Market development strategy

Introduce existing products to new markets Going into new markets with the same products Ex: geographical expansion, any opening of new retail stores around the globe, launching into new countries Ex: could start attracting babies with a product for adults. (could market adult blankets to babies with same material and smaller blanket- small alteration) Looking for ways to go into new markets, very slight change

Good-better-best strategy

Introducing a high end and a low end while preserving the core brand Can go hand in hand with sandwich strategy Works best when: In tiered markets comprising three key segments: quality focused, price focused, and segment seeking compromise btw the 2

Reasons for Growth in Line Extensions

Line extensions - new products in the same line (vertical or horizontal) 1. Way to capitalize on brand equity and introduce new products more easily by taking advantage of established brands a. Make more products 2. More consumer brand switching which requires keeping consumers loyal to brand franchise a. The more you provide them the less they'll be inclined to switch 3. Way to get more shelf space and take advantage of point-of-purchase decision making a. Provide more products that people want 4. Way to appeal to more price points in market with established brand name 5. Way to utilize excess capacity that is resulting from more efficient production processes 6. Pressure from retailers who may want special packages sizes, or models for their stores Example: manufacturer making smaller versions so people could take on airplanes after regulations changed on flying industry after 9/11

idea Generation Top Down (Market Driven)

Market opportunity > to invention Looking at the consumer and their unmet needs Looking at the consumer to fully understand their problems, the product/invention becomes the solution Problem - find an invention which takes a long time

Changing Television Landscape

More dollars spent on digital, TV ads are more flat Cord cutting: people don't even use cable anymore, more and more of us are cutting our cord - Great concern to content providers

Disruptive Strategic Innovations Biggest disruptors of each industries

Music - Apple iPod/iTunes, Pandora, Spotify Online brokerage services - E*Trade, Charles Schwab Books- eReader, Amazon Kindle, tables Personal computers - Dell, Gateway (build-to-order) Mobile computers - iPad (tablet PCs)/smartphones Advertising - Google (paid search) Facebook (social) Online retailing - Amazon Travel - PriceLine, Expedia, Travelocity Movie rentals - NetFlix Financial industry being disrupted by cryptocurrency

Category Extensions SUCCESSFUL

Nike golf shoes and apparel; Nike SB Colgate toothbrushes Gillette personal care products Old Spice deodorant and body wash Swiss Army Watch

Negative Earned Media

No control over Negative consumer comments Ex: United breaks guitar: angry man makes Twitter post after his guitar got broken on plane, United Airlines turned it around into positive ads

Managing Usage - Customer Gaps

Satisfaction gap - Improve experience - Make them more satisfied - Could use advertising programs with celebrity, "don't you love this" Usage frequency gaps - How often should you encourage usage? E.g. moisturizer, toothpaste, deodorant - Get them to use it more often, put deodorant on more times in a day Usage quantity gaps - How much should you encourage? Serving size, packaging size, e.g. shampoo, ketchup - Ex: shampoo- wash, rinse, repeat (way to get you to use greater quantity) Repurchase gaps - How often should products be replaced? Razor blades, toothbrushes - Buy before you need...dollar shave club - Any program that has consumer ordering on a regular basis is potentially setting you up to buy before you need

Identifying Usage Gaps

Satisfaction gap - Satisfied with the offering - Not satisfied enough Usage-frequency gap - Use the offering frequently - How can we get them to use it more Usage-quantity gap - Use large quantity per occasion - When they use it, how can we get them to use more of it? - Ex: more toothpaste on toothbrush Repurchase gap - Repurchase the offering Those who do and do not repurchase

Diffusion of Innovation

Shape of curve is the most important How fast does your new innovation diffuse through society Typically will diffuse with a bell shaped curve Innovators (small part) → early adopters → early majority (big part)→ late majority (big part) → laggards (won't budge) 85% of population is what we call full market penetration Don't look for 100% - laggards are too slow and don't market to them. Very slow to make any change. Laggards are older and doing their own thing and aren't bothered by outsiders No reason to bring technology or new things into their lives (some grandparents)

Product Lines Creating Value

Shift in focus beyond product to create value through the entire line Each offering should be optimized with respect to the product line Vertical extensions - adding in different price tiers Horizontal extensions - same tier, new benefits Ex: Levi Jeans- tight fit, baggy fit Cannibalization

Market creation

Similar to market growth except it defines an entirely new category in which direct competitors are absent - eBay, Netflix, Facebook, fitness technology is new right now Leads to high profit margin and rapid growth Attracts new market entrants Need to create a sustainable competitive advantage

Category Extensions UNSUCCESSFUL

Swatch clothing - Fashion watch, took successful name and tried to come up with line of clothing Levi's Tailored Suits Dell Printers Mountain Dew Sport Rossignol tennis racquets - Originally associated with skiis

Media

The communication media identities the touch points of the companies offering with its target customers - Where to put the message, how often, how much to spend, evaluate if it was a good media buy, etc..

Net Promoter Score math

The difference between the % of promoters and % of detractors is the net promoter score Example: 40% customers are promoters 15% customers are detractors Net promoter score = 25% The higher the score the better 60% would be really good

Managing Product Line Extensions

Upscale product line extensions - Higher priced, higher featured Downscale product line extensions - Lower priced, lower featured Horizontal product line extensions - Across the board