Chapter 19

Public Policy Issues in Direct and Digital Marketing

Irritation includes annoying and offending customers Unfairness includes taking unfair advantage of impulsive or less-sophisticated buyers Deception includes 'heat merchants' who design mailers and write copy designed to mislead consumers Fraud includes identity theft and financial scams Consumer privacy involves concerns that marketers may have too much information and use it to take unfair advantage

Steps in Developing Effective Marketing Communication

Identify the target audience, Determine the communication objectives, Design the message, Choose the media to send the message, Select message source, Collect feedback

Two economic factors reflect the country's attractiveness as a market

Industrial structure : The country's industrial structure shapes its product and service needs, income levels, and employment levels Subsistence vs. industrial economies Income distribution : Industrialized nations may have low-, medium-, and high-income households Countries with subsistence economies consist mostly of households with very low family incomes Other countries may have households with either very low or very high incomes Even poor or emerging economies may be attractive markets for all kinds of goods - 'bottom of the economic pyramid'

Integrated marketing communications (IMC)

Integrating and coordinating communications channels to deliver a clear, consistent, and compelling message Why IMC? Conflicting content from different sources result in confused company images, brand positions, and customer relationships

Advertising

any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor

Six major decisions in international marketing

- Looking at the global marketing environment - Deciding whether to go global - Deciding which markets to enter - Deciding how to enter the market - Deciding on the global marketing program - Deciding on the global marketing organization.

The International Trade System

- Tariffs are taxes on certain imported products designed to raise revenue or to protect domestic firms - Quotas are limits on the amount of foreign imports a country will accept in certain product categories to conserve on foreign exchange and protect domestic industry and employment - Exchange controls are a limit on the amount of foreign exchange and the exchange rate against other currencies - Non-tariff trade barriers are biases against bids or restrictive product standards that go against American product features

Global value delivery network

-international seller -channels between nations -channels within nations -final user or buyer Channels between nations move company products from points of production to the borders of countries within which they are sold Channels within nations move products from their market entry points to the final consumers

Competitor analysis steps

1. Identifying the company's competitors 2. Assessing competitors' objectives, strategies, strengths and weaknesses, and reaction patterns 3. Selecting which competitors to attack or avoid

Advertising Budget

A brand's advertising budget often depends on its stage in the product life cycle Brands in a market with many competitors and high advertising clutter must be advertised more heavily to be noticed above the marketplace noise Undifferentiated brands—those that closely resemble other brands in their product class (e.g. soft drinks)—may require heavy advertising to set them apart When the product differs greatly from those of competitors, advertising can be used to point out the differences to consumers

Competitor Myopia

A company is more likely to be "buried" by its latent competitors than its current ones (Means only looking at ones that are in front of their face instead of hidden ones).

Strategic Group

A group of firms in an industry following the same or a similar strategy in a given target market

Three problems

Acquisitions of competitors Marketing practices that create barriers to entry Unfair competitive marketing practices

Objective

Advertising objective - specific communication task to be accomplished with a specific target audience during a specific period of time Informative advertising - used when introducing a new product category to build primary demand Persuasive advertising - important with increased competition to build selective demand Reminder advertising - important with mature products to help maintain customer relationships and keep customers thinking about the product

Strategy

Advertising strategy consists of two major elements: Creating advertising messages Selecting advertising media Media planning & message creation are both important Creating the advertising message and brand content Advertising can succeed only if it engages consumers and communicates well To break through the clutter, marketers are merging advertising and entertainment which takes: Advertainment - making ads and brand content so entertaining or useful that people want to watch them Brand integrations - making the brand an inseparable part of some other form of entertainment or content (product placement). Message and Content Strategy First step in creating effective advertising content is to plan a message strategy—the general message that will be communicated to consumers The message strategy should follow directly from the company's broader positioning and customer value-creation strategies Develop a compelling creative concept that will bring the message strategy to life in a distinctive and memorable way Advertising appeals should have three characteristics: Meaningful - pointing out benefits that make the product more desirable or interesting to consumers Believable - consumers must believe that the product or service will deliver the promised benefits Distinctive - tell how product is better than other brands.

Setting promotion budget (4 Types)

Affordable - level company can afford Percentage-of-sales - percentage of current or forecasted sales Competitive-parity - match competitor spend Objective-and-task - based on what you want to accomplish with promotion

DTC

Avoid direct competition with established traditional brands by selling and shipping directly to consumers only through online and mobile channels By eliminating intermediaries, DTC companies can cut costs and lower prices, offer greater convenience, build direct relationships, and deliver more personalized offerings Interestingly, DTC brands are adding traditional channels

Five As of the customer journey

Awareness - I know about the product Appeal - I like the product Ask - I want to know more about the product and be more engaged with the brand Act - I'm buying and relating to the product Advocacy - I'm telling others about the product

Direct Investment

Biggest involvement in a foreign market Development of foreign-based assembly or manufacturing facilities Advantages: Firm may have lower costs in the form of cheaper labor or raw materials, foreign government investment incentives, and freight savings Firm may improve its image in the host country because it creates jobs Firm develops a deeper relationship with the government, customers, local suppliers, and distributors, allowing it to adapt its products to the local market better Firm keeps full control over the investment and therefore can develop manufacturing and marketing policies that serve its long-term international objectives Disadvantage: Firm faces many risks, such as restricted or devalued currencies, falling markets, or government changes

Catalog Marketing

Catalog marketing involves printed and web-based catalogs More and more catalogs are going digital and mobile A variety of online-only catalogers have emerged, and most print catalogers have added web-based catalogs and mobile catalog apps to their marketing mixes Digital catalogs let sellers add or remove products and features as needed and adjust prices Online catalogs offer an unlimited amount of merchandise Customers can carry digital catalogs anywhere they go, even when shopping in stores Digital catalogs can be interactive, and they can offer a broader assortment of presentation formats, including search, video, and augmented reality (AR) Paper catalogs create emotional connections with customers Printed catalogs are one of the best ways to drive in-store, online, and mobile sales.

Market Challenger

Challenge the market leader and other competitors in an aggressive bid for more market share (market challengers), Full frontal attack by matching competitor's product, advertising, price, and distribution efforts. Attack competitor's strengths rather than its weaknesses. Indirect attack on the competitor's weaknesses or on gaps in the competitor's market coverage. Carve out toeholds using tactics that established leaders have trouble responding to or choose to ignore.

Alternative to standardizing their advertising globally

Communication adaptation - a global communication strategy of fully adapting advertising messages to local markets

Contract manufacturing

Company makes agreements with manufacturers in the foreign market to produce its product or provide its service Decreased control over the manufacturing process and loss of potential profits on manufacturing Start faster with less risk and the later opportunity either to form a partnership with or buy out the local manufacturer

Benchmarking

Comparing the company's products and processes to those of competitors or leading firms in other industries to identify best practices and find ways to improve quality and performance.

Five sustainable marketing principles

Consumer-oriented marketing - company should view and organize its marketing activities from the consumer's point of view Customer value marketing - company should put most of its resources into customer value-building marketing investments Innovative marketing - company should seek real product and marketing improvements Sense-of-mission marketing - company should define its mission in broad social terms rather than narrow product terms Societal marketing - a company makes marketing decisions by considering consumers' wants, the company's requirements, and consumers & society's long-run interests

Benefits of Direct Marketing

Convenient, easy, and private Give buyers anywhere, anytime access to an almost unlimited assortment of goods and a wealth of product and buying information Direct marketing allows buyers to interact with sellers to create exactly the configuration of information, products, or services they want Digital marketing provides a sense of brand engagement and community. Direct marketing often provides a low-cost, efficient, speedy alternative for reaching markets Direct marketers can target small groups or individual customers Companies can interact with customers one-one-one to personalize products and services Direct and digital marketing offer sellers greater flexibility - make adjustments or create immediate, timely, and personal engagement and offers Direct marketing is a powerful tool for moving customers through the buying process or for simply building ongoing customer engagement, community, and personalized relationships.

Culture

Countries must be aware of culturally norms in other countries.

Societal Classification of Products

Deficient products - neither immediate appeal nor long-run benefits Pleasing products - high immediate satisfaction but may hurt consumers in the long run Salutary products - low immediate appeal but may benefit consumers in the long run Desirable products - high immediate satisfaction and high long-run benefits Product opportunity is to add long-run benefits without reducing the product's pleasing qualities Challenge posed by salutary products is to add some pleasing qualities so that they will become more desirable in consumers' minds

Competitive Advantage

Delivering more value and satisfaction to target consumers than competitors. Step 1) Competitor analysis is the process of identifying, assessing, and selecting key competitors Step 2) Competitive marketing strategies are how companies analyze their competitors and develop value-based strategies for profitable customer relationships Key to CA is to examine how a company's offer compares to that of its major competitors in each customer segment

Indicators of Market Potential

Demographic characteristics Geographic characteristics Economic factors Sociocultural factors Political and legal factors

Customer Value Analysis

Determines the benefits that target customers value and how customers rate the relative values of various competitors' offers.

Direct and Digital Marketing

Direct and digital marketing have become the fastest-growing form of marketing Direct marketing continues to become more internet-based, and digital direct marketing is claiming a surging share of marketing spending and sales Direct and digital marketing model provides opportunities for new, smaller brands, Direct and digital marketing involve engaging directly with carefully targeted individual consumers and customer communities to both obtain an immediate response and build lasting customer relationships. Companies use direct marketing to tailor their offers and content to the needs and interests of narrowly defined segments or individual buyers In this way, they build customer engagement, brand community, brand advocacy, and sales.

Direct-mail marketing

Direct-mail marketing involves an offer, announcement, reminder, or other item to a person at a particular address Permits high target market selectivity, can be personalized, is flexible, and allows the easy measurement of results Although direct mail costs more per thousand people reached than mass media such as television or magazines, the people it reaches are much better prospects Well suited to direct, one-to-one communication Mail marketing offers some distinct advantages over digital forms. It provides something tangible for people to hold and keep, and it can be used to send samples Direct mail can be part of a broader integrated marketing campaign

Direct-response television (DRTV)

Direct-response television (DRTV) marketing is direct marketing via television that persuasively describes a product and give customers a toll-free number or an online site for ordering 60 to 120 second advertisements that describe products 30-minute infomercials such as home shopping channels Successful direct-response television advertising campaigns can ring up big sales Large companies have used infomercials to sell their wares, refer customers to retailers, recruit members, or attract buyers to their online, mobile, and social media sites DRTV can also be effective in launching new brands or in building brands that are trying to move beyond digital and social media channels Direct response ads and infomercials are appearing not just on TV but also on mobile, online, and social media platforms.

Management contracting

Domestic firm provides the management knowhow to a foreign company that supplies the capital Domestic firm exports management services rather than products Low-risk method of getting into a foreign market, and yields income from the beginning The arrangement is even more attractive if the contracting firm has an option to buy some share in the managed company later on The arrangement is not sensible, however, if the company can put its scarce management talent to better uses or if it can make greater profits by undertaking the whole venture

Competitive Strategies

Entrepreneurial marketing - individuals who live by their wits Formulated marketing - small companies move toward more-formulated marketing and develop formal marketing strategies Intrapreneurial marketing - encouraging employees to be more entrepreneurial within the larger corporation Overall cost leadership - lowest production and distribution costs Differentiation - highly differentiated product line and marketing program Focus - serving a few market segments well rather than going after the whole market Operational excellence - provide superior value by leading the industry in price and convenience Customer intimacy - provide superior value by precisely segmenting markets and tailoring products or services to exactly match the needs of targeted customers Product leadership - provide superior value by offering a continuous stream of leading-edge products or services

Different ways of entering Global Market

Exporting (direct or indirect), Joint Venturing (Licensing, Contract manufacturing, management contracting, joint ownership), and Direct Investment (Assembly facilities, and manufacturing facilities). As you go through the list the reward and risk increases.

Market Leader

Find ways to expand total demand, Protect their current market share through good defensive and offensive actions, Try to expand their market share further, even if market size remains constant

Customer-centered

Focuses more on customer developments in designing its strategies Better position to identify new opportunities and set long-run strategies that make sense

Market Follower

Follower can gain many advantages: Market follower can learn from the market leader's experience It can copy or improve on the leader's products and programs, usually with much less investment Although the follower will probably not overtake the leader, it often can be as profitable Following is not the same as being passive or a carbon copy of the market leader Market follower must maintain customer value, through either lower costs and prices or higher quality and better services that justify higher prices It must also enter new markets as they open

Kiosk Marketing

Kiosk marketing Many companies are placing information and ordering machines in stores, airports, hotels, college campuses, and other locations Many modern 'smart kiosks' are now wireless-enabled Some machines can even use facial recognition software that lets them guess gender and age and make product recommendations based on those data Retailers can also use kiosks inside their stores to improve the customer shopping experience or assist their salespeople

Public Actions to Regulate Marketing

Legislation affecting business around the world has increased steadily over the years Laws cover issues such as competition, fair-trade practices, environmental protection, product safety, truth in advertising, consumer privacy, packaging and labeling, pricing, selling, Understanding the public policy implications of various marketing activities is no easy matter There are many complex laws created at the national, state, and local levels, and these regulations often overlap. The task is to translate these laws into a language that marketing executives understand as they make decisions about marketing strategy, competitive relations, marketing research, products, price, promotion, and distribution channels.

Types of Competitors

Make the same product or class of products Make products that supply the same service Compete for the same consumer dollars

Content marketing

Many marketers now view themselves as content marketing managers who create, inspire, share, and curate marketing content

Competitive Positions

Market leader - largest market share Market challenger - runner-up who is fighting for market share Market follower - runner-up who wants to hold market share and not rock the boat Market nicher - serves small segments not being pursued by other firms

Concepts

Marketing concept recognizes that organizations thrive by determining the current needs and wants of target customers and fulfilling them more effectively and efficiently than competitors do Societal marketing concept considers the future welfare of consumers Strategic planning concept considers future company needs Sustainable marketing concept considers both the future welfare of consumers and future company needs

Marketing tools

Marketing websites engage consumers to move them closer to a direct purchase or other marketing outcome Branded community websites present brand content that engages consumers and creates customer community around a brand Online advertising is advertising that appears while consumers are browsing online and includes display ads, search-related ads, online classifieds, and other forms. Email marketing involves sending highly targeted, highly personalized, relationship-building marketing messages via email. Online video marketing involves posting digital video content on brand websites or social media sites such as YouTube, Facebook, and others. Blogs are online journals where people and companies post their thoughts and other content, usually related to narrowly defined topics. Spam is unsolicited, unwanted commercial email messages Viral marketing is digital marketing content that is so infectious that customers will seek it out or pass it along to friends.

Market Nicher

Nichers try to find one or more market niches that are safe and profitable Nichers thrive by meeting in depth the special needs of well-targeted customer groups A market nicher can specialize along any of several market, customer, product, or marketing mix lines By developing two or more niches, a company increases its chances for survival

Joint ownership

One company joining forces with foreign investors to create a local business in which they share possession and control A company may buy an interest in a local firm, or the two parties may form a new business venture May be needed for economic or political reasons companies form joint ownership ventures to merge their complementary strengths in developing a global marketing opportunity Partners may disagree over investment, marketing, or other policies

What principle should guide companies and marketing managers on issues of ethics and social responsibility?

One philosophy is that the free market and the legal system should decide such issues A second philosophy puts responsibility not on the system but in the hands of individual companies and managers

Global Firm

Operates in more than one country, gains marketing, production, R&D, and financial advantages not available to purely domestic competitors, and sees the world as one market.

Consumerism

Organized movement of citizens and government agencies to improve the rights and power of buyers in relation to sellers Consumer advocates call for the following additional consumer rights: Right to be well informed about important aspects of the product Right to be protected against questionable products and marketing practices Right to influence products and marketing practices in ways that will improve "quality of life" Right to consume now in a way that will preserve the world for future generations of consumers Sustainable marketing applies not only to businesses and governments but also to consumers. Consumers have not only the right but also the responsibility to protect themselves.

Environmentalism

Organized movement of concerned citizens, businesses, and government agencies designed to protect and improve people's current and future living environment Environmentalists are not against marketing and consumption; they simply want people and organizations to operate with more care for the environment Companies are adopting policies of environmental sustainability (i.e. generating profits while helping to save the planet) Design for environment (DFE) and cradle-to-cradle practices - designing products that are easier to recover, reuse, recycle, or safely return to nature after usage

Four major types of media (POES)

Paid media - promotional channels paid for by the marketer including traditional media and online and digital media Owned media - promotional channels owned and controlled by the company including company websites, blogs, social media pages Earned media - PR media channels not directly paid for or controlled by the marketer but that include the content because of viewer, reader, or user interest Shared media - media shared by consumers with other consumers such as social media, blogs, and viral channels as well as traditional word of mouth

Two broad types of communication channels

Personal Two or more people communicate directly with each other Face-to-face; on the phone; mail or email; texting or chat Allow for personal addressing and feedback. Nonpersonal Carry messages without personal contact or feedback Include major media, atmospheres, and events Major media - broadcast; print; display; online & digital Atmospheres - designed environments that create or reinforce the buyer's leanings toward buying a product Events - staged occurrences that communicate messages to target audiences

Pull

Producer directs its marketing activities toward final consumers to induce them to engage with and buy the product

Push

Producer directs marketing activities toward channel members to induce them to carry the product and promote it to final consumers

What's going on in global marketing today

Products and services developed in one country have found enthusiastic acceptance in other countries. The world is shrinking rapidly with the advent of faster digital communication, transportation, and financial flows. American brands in other countries and Other countries' brands in America.

Global Company

Raises capital, obtains materials and components, and manufactures and markets its goods wherever it can do the best job

Blue-ocean strategy

Rather than competing head-to-head with established competitors, many companies seek out unoccupied positions in uncontested market spaces. They try to create products and services for which there are no direct competitors.

Communication Process

Sender - party sending the message Encoding - process of putting thought into symbolic form Message - set of symbols that the sender transmits Media - communication channels Decoding - process by which the receiver assigns meaning to the symbols encoded by the sender Receiver - party receiving the message Response - reactions of the receiver Feedback - receiver's response to sender Noise - unplanned static or distortion during communication process which results in the receiver getting a different message than the one the sender sent

Four important decisions when developing an advertising program

Setting advertising objectives, Setting the advertising budget, Developing advertising strategy (message decisions and media decisions), Evaluating advertising effectiveness

Licensing

Simple way for a manufacturer to enter international marketing Company enters into an agreement with a licensee in foreign market Company gains entry into a foreign market at little risk; licensee gains production expertise or a well-known product or name without starting from scratch Firm has less control over the licensee than it would over its own operations If licensee is very successful, the firm has given up these profits, and if and when the contract ends, it may find it has created a competitor

Exporting

Simplest way to enter a foreign market The company may passively export its surpluses from time to time, or it may make an active commitment to expand exports to a particular market. The company produces all its goods in its home country. It may or may not modify them for the export market Exporting involves the least change in the company's product lines, organization, investments, or mission Companies typically start with indirect exporting, working through independent international marketing intermediaries. Indirect exporting involves less investment because the firm does not require an overseas marketing organization or network. Sellers may eventually move into direct exporting, whereby they handle their own exports

Sustainable Marketing

Socially and environmentally responsible marketing that meets the present needs of consumers and businesses while also preserving or enhancing the ability of future generations to meet their needs

Market-centered

Spends most of its time focusing on both competitor and customer developments in designing strategies

Competitor-centered

Spends most of its time tracking competitors' moves and market shares and trying to find strategies to counter them On the positive side, the company develops a fighter orientation, watches for weaknesses in its own position, and searches out competitors' weaknesses On the negative side, the company becomes too reactive

Types of Global marketing

Standardized global marketing - using the same marketing strategy approaches and marketing mix worldwide Adapted global marketing - producer adjusts the marketing strategy and mix elements to each target market, resulting in more costs but hopefully producing a larger market share and return

Five Global Product and Communications Strategies

Straight product extension - marketing a product in a foreign market without making significant changes to the product Product adaptation - changing the product to meet local requirements, conditions, or wants Product invention - creating something new to meet the needs of consumers in a given country

Overall Sustainable marketing

Sustainable marketing provides the context in which companies can engage customers and build profitable relationships with them by creating value for customers in order to capture value from customers in return—now and in the future. Sustainable marketing goes beyond caring for the needs and wants of today's customers. It means having concern for tomorrow's customers in ensuring the survival and success of the business, shareholders, employees, and the broader world in which they all live.

Social Media Tools

Targeted and personal - they allow marketers to create and share tailored brand content with individual consumers and customer communities. Interactive - making them ideal for starting and participating in customer conversations and listening to customer feedback Immediate and timely - They can be used to reach customers anytime, anywhere with timely and relevant marketing content regarding brand happenings and activities Real-time marketing - real-time marketing, allowing marketers to create and join consumer conversations around situations and events as they occur. Cost effective - many social media are free or inexpensive to use Engagement and social sharing capabilities - social media are well suited to creating customer engagement and community—for getting customers involved with the brand and with each other

Telemarketing

Telemarketing involves using the telephone to sell directly to consumers and business customers Outbound telephone marketing sells directly to consumers and businesses Inbound telephone marketing uses toll-free numbers to receive orders from television and print ads, direct mail, and catalogs Properly designed and targeted telemarketing provides many benefits, including purchasing convenience and increased product and service information Unsolicited outbound telephone marketing over the years annoyed many consumers Two major forms of telemarketing—inbound consumer telemarketing and outbound B-to-B telemarketing—remain strong and growing

Major Media Types

Television Digital, mobile, and social media Newspapers Direct mail Magazines Radio Outdoor

Political-legal environment factors

The country's attitudes toward international buying Government bureaucracy, Political stability, Monetary regulations

Promotion Mix

The specific blend of promotion tools that the company uses to persuasively communicate customer value and build customer relationships Advertising - any paid form of nonpersonal presentation and promotion by an identified sponsor Sales promotion - short-term incentives to encourage purchase or sale of a product or service Personal selling - interactions by a sales force to engage customers, make sales, and build customer relationships Public relations (PR) - activities designed to engage the company's various publics and build good relations with them Direct and digital marketing - engaging directly with carefully targeted individual consumers and customer communities to both obtain an immediate response and build lasting customer relationships

Certain forces that help trade between nations

World Trade Organization (WTO) : Replaced General Agreement on Tariffs and Trade (GATT), Designed to promote world trade by reducing tariffs and other international trade barriers Only international organization dealing with global rules of trade Main function is to ensure that trade flows as smoothly, predictably and freely as possible Regional Free Trade Zones : European Union (EU) - reducing barriers to the free flow of products, services, finances, and labor among member countries and developing policies on trade with nonmember nations. North American Free Trade Act (NAFTA) - eliminated trade barriers and investment restrictions among the three countries

Public relations (PR)

consists of activities designed to engage the company's various publics and build good relations with them. PR may include any or all of the following functions: Press relations or press agency. Creating and placing newsworthy information in the media to attract attention to a person, product, or service. Product and brand publicity. Publicizing specific products and brands. Public affairs. Building and maintaining national or local community relationships. Lobbying. Building and maintaining relationships with legislators and government officials to influence legislation and regulation. Investor relations. Maintaining relationships with shareholders and others in the financial community. Development. Working with donors or members of nonprofit organizations to gain financial or volunteer support.

Omni-channel retailing

seamless cross-channel buying experience that integrates in-store, online, and mobile shopping — it creates a single shopping experience