Lee University Marketing Management Plan and Digital Communications Discussion

  

Using the same product we had in the previous assignment: (Copied for reference)This assignment is a section of an overall semester plan. The fictional product I am creating is a online contractor database that will be a one stop shop where contractors can sign in, accept transactions, decline transactions, invoice and receive payments, submit results, etc., for any type of courier and delivery service. The online database will also allow real time routing and tracking using geo coordinates from pinging the location of the contractors smart device (phone, tablet). The name of this platform will be called “Contractor Plus”. Products that we would be competing against, and combining the best qualities of would be

https://inspectorade.com

or

https://route4me.com

Using that information – design 3 sections of this product, as outlined below.

Chapter 21: Managing Digital Communications: Online, Social Media, and Mobile. Discuss how to market a product/service using digital communications if needed.

Chapter 22: Managing Personal Communications: Direct and Database Marketing and Personal Selling. Discuss how to market a product/service through direct market channels if needed.

Chapter 23: Managing a Holistic Marketing Organization for the Long Run. Explain how a marketing plan contains a holistic view of the marketing process.

Part 4 that has been completed is attached to use as a guide of how it is structured.

Running head: MARKETING
1
Marketing
Name
Institution
Course
Instructor
Date
MARKETING
2
Chapter 13: Setting Product Strategy
Product strategy refers to the advanced planning and documentation towards the
objectives of products and the mechanism through which an organization hopes to achieve those
objectives (Surya, 2019). In this strategy, the focus is to determine the individuals who will
benefit from this product and how this will be achieved. Additionally, it may encompass the
long-term targets for that product as it undergoes its Lifecycle. This strategy will be important
for our products in three ways; it will offer clarity to our company, aid in the prioritization of
certain practices in the product’s roadmap, and improve the tactical aspect of our team in
strategizing for company undertakings. Our products will majorly focus on startup companies.
These firms offer an open market due to the absence of standing ties between them and our
competitors.
With our tailor-made services, we believe we are equipped to compete for these clients
with our more established competitors. We will seek to address the disparity in customer focus
these clients receive from other organizations as they focus on their bigger clients. The services
offered at Contractor Plus are differentiated in several manners. Our applications enable
customers to receive SMS notifications as opposed to mailing services. Additionally, our clients
will receive a 24/7 support system. The reduced prices offered will also help with customer
persuasion. The goal we have for our product is to achieve global success. Even though the
current focus is on the local market, the eventual target is the worldwide industry. Limiting our
current scope will give us a learning platform and time to adopt a mechanism that can survive on
both local and international markets.
Chapter 14: Designing and Managing Services
MARKETING
3
A service is defined as an intangible item that is a result of a single or multiple
individuals’ output (Corporate Finance, 2019). Our company is predominantly service-based.
Common services we will offer include real-time tracking and routing. In this service, the option
to track the driver will be dependent on their employer company. These services will be tacked
on our company’s website and the employers can log in to their account to see the progress of
their deliveries. However, the tracking process should always be on at all the time. This can be
helpful in case of lost or delayed deliveries. Contractor Plus will also offer online payment
services. This will help save time and increase the efficiency of transactions. To achieve this, an
individual can either log into the company website or use the Contractor Plus application.
Available payment prompts on the forums will take the customer to their preferred
payment method and subsequent transaction features. Our courier services will be designed
differently from those available in the market. The localization of our services at the beginning
will help us focus on the shortcomings of our competitors. Managing the localized services is
easier for our startup organization as compared to the international market. Localization of our
services will allow us to serve routes and locations that have been previously ignored.
Additionally, we will offer training tour clients on the application of our app and websites when
making transactions. This will help familiarize them with key features and hence improve their
efficiency and accuracy when handling business online.
Chapter 15: Introducing New Market Offerings
Our products will be relatively new in the market. However, there exist similar products
in the market already. This necessitates that our products adopt effective strategies when being
introduced into the market (Yang, 2017). To help spread the message, social media will be key.
Our organization is still financially incapable of adopting the more expensive mechanisms of
MARKETING
4
advertising like television. The use of social media platforms is very cheap. Additionally, it gives
our organization a huge influx of traffic (Allan & Nimer Ali, 2017). The increased viewership
will subsequently increase the possibility of new clients. Currently, organizations, both
established and startup are focusing on this marketing technique due to its effectiveness and cost
friendliness. The use of word of mouth will also be utilized.
Through the quality services rendered to our clients, their satisfaction will be key to
marketing our company. They are more likely to refer their peers to us if they are satisfied with
our services. The focus of our product is early adopters. These organizations include those that
have been disgruntled by services rendered by other companies. They are more likely to adopt
new organizations in the hope of better services. Additionally, we will focus on new
organizations. Due to the low focus of the bigger companies on these clients, our affordable and
tailored services. Within the first two years, we hope to have attained full local adoption. This
will help us form a good base on which to improve our weaknesses before venturing into the
international market. By the third year, initial steps into the global markets should be made. In
the beginning, fewer locations will be adopted and gradually increased.
Chapter 16: Developing Pricing Strategies and Programs
Pricing strategies are the decisions on which a company bases its market price. These
strategies can be in five formats; cost-plus pricing where the organization bases its price on the
production cost and the profit margin desired, value-based pricing where the price depends on
the worth an organization puts on its products, competitive pricing where the product’s price is
designed to compete with the available market prices, price skimming where the initial prices are
usually high but are reduced with time and penetration pricing where the initial price is very low
but increases as the product establishes itself in the market (Sammut-Bonnici & Channon, 2015).
MARKETING
Contractor Plus will adopt penetration pricing. In this format, our initial prices will be very low
but gradually increase as the services advance and our organization establishes itself in the
market.
Our prices will further be subject to discounts and bonuses. The viability of this method
is in the marketing perspective. The low prices will help attract more clients than adopting the
highly competitive prices offered at our established competitors. The establishment of the
product in the market will oy necessarily lead to higher prices. We target to offer affordable
prices to keep on tapping the new market entries. However, some of the services will demand
higher prices when the company separates the regular services from the premium ones.
5
MARKETING
6
References
Allan, M., & Nimer Ali, N. (2017). Employing social media websites and their role in
determining the targeted audience for marketing within the cloth manufacturing sector in
Jordan. Innovative Marketing, 13(2), 47–55. https://doi.org/10.21511/im.13(2).2017.05
CorporateFinance. (2019). Products and Services – Definitions, Examples, Differences.
Corporate Finance Institute.
https://corporatefinanceinstitute.com/resources/knowledge/other/products-and-services/
Sammut-Bonnici, T., & Channon, D. F. (2015). Pricing Strategy. Wiley Encyclopedia of
Management, 1–3. https://doi.org/10.1002/9781118785317.weom120162
Surya, A. P. (2019). CUSTOMER LOYALTY FROM PERSPECTIVE OF MARKETING MIX
STRATEGY AND CUSTOMER SATISFACTION A study from Grab – Online
Transportation in Era of Industrial Revolution 4.0. MIX: JURNAL ILMIAH
MANAJEMEN, 9(3), 394. https://doi.org/10.22441/mix.2019.v9i3.001
Yang, Young Ik. (2017). The Study on the Relationships of Market Orientation, Resource
Orientation, Marketing Innovation, Competitive Advantage, and Performance in the
Domestic Firms. Journal of Product Research, 35(3), 163–172.
https://doi.org/10.36345/kacst.2017.35.3.018
21
Managing Digital
Communications: Online,
Social Media, and Mobile
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 PepsiCo has engaged the consumer in marketing communications for its
various brands.1
PepsiCo 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 dollars 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, PepsiCo runs the “Crash the Super Bowl”
contest every year, giving contestants a chance to develop an ad to be
The newest and fastest-growing channels for comrun during the game broadcast and receive $1 million in the process.
municating and selling directly to customers are digital. The
In 2014, anyone from Dorito’s 35 global markets was allowed to enter
Internet provides marketers and consumers with opportunities
the competition, resulting in more than 3,000 submissions. The winfor much greater interaction and individualization. Very few
ning ad, “Time Machine,” had a man humor a small kid by taking a ride
marketing programs can be considered complete without a
in the kid’s cardboard time machine—with unexpected results. It cost
meaningful digital component. In this chapter, we consider how
only $200 to make and one day to film, but it was one of the most posimarketers can use online marketing, social media, and mobile
tively received Super Bowl ads by viewers that year. During the contest, marketing to create loyal customers, build strong brands,
Doritos always enjoys a healthy uptick in Twitter, Facebook, and other
and generate profits. We also consider the broader topic of
word-of-mouth marketing.
social media activity.
Online Marketing
As described in Chapter 1, marketers distinguish paid and owned media from earned (or free) media.
includes company-generated advertising, publicity, and other promotional efforts.
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
consists of online marketing communications, which we review next.
637
M21_KOTL2621_15_GE_C21.indd 637
09/03/15 6:40 PM
638
PART 7
|
COMMUNICATING VALUE
Source: Weng lei-Imaginechina
AdvAntAGes And dIsAdvAntAGes
of onlIne MArketInG
CoMMunICAtIons
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 engage 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 advantage of
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 softwarepowered 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 products, 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
Estee Lauder has always relied on word of mouth to build its brands but online. Of the time U.S. consumers spend with all media, almost half is
now has added a sizable digital component.
spent online (see Figure 21.1).5 Customers define the rules of engagement, 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
| Fig. 21.1 |
Share of Time
Spent per Day with
Major Media by
U.S. Adults, 2014
(hrs:mins)
Radio
01:20
TV
04:28
Source: eMarketer, April 2014, accessed
at http://www.emarketer.com/Article/
Digital-Set-Surpass-TV-Time-Spent-with-US
-Media/1010096.
Newspapers
00:14
Magazines
00:12
Other
00:14
Mobile
(nonvoice)
02:51
Other
digital
00:43
Desktop &
laptop
02:12
M21_KOTL2621_15_GE_C21.indd 638
09/03/15 6:40 PM
MANAGING DIGITAL COMMUNICATIONS: ONLINE, SOCIAL MEDIA, AND MOBILE
|
639
CHAPTER 21
Source: © David Buzzard/Alamy
Tough Mudder used only
Facebook advertising and
word of mouth to launch its
brand.
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.
onlIne MArketInG CoMMunICAtIon optIons
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 SITES 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
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.
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 comScore 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
M21_KOTL2621_15_GE_C21.indd 639
09/03/15 6:40 PM
640
PART 7
|
COMMUNICATING VALUE
| Fig. 21.2 |
Seven Key Design
Elements of an
Effective Web Site
Source: Jeffrey F. Rayport and Bernard
J. Jaworski, e-commerce (New York:
McGraw-Hill, 2001), p. 116.
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
Companies must also be sensitive to online security and privacy-protection issues. One set of researchers recommends 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
individual Web pages or clusters of pages that function 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 usedcar sites that offers advice for buyers of used cars and a good insurance deal at the same time.
SEARCH ADS An important component of online marketing is
or
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, Yahoo!, or Bing,
the marketer’s ad may appear above or next to the results, depending on the amount the company bids and an algorithm 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.
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 crucial 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
identifying a particular product model or service (“Apple iPod classic 160GB”) are useful for generating and
converting sales leads.
easily identify them.
keyword according to its likely return on revenue. It also helps to have popular sites link back to the marketer’s
Web site.
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
DISPLAY ADS
or
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
M21_KOTL2621_15_GE_C21.indd 640
09/03/15 6:40 PM
MANAGING DIGITAL COMMUNICATIONS: ONLINE, SOCIAL MEDIA, AND 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 influential, better targeted, and more closely tracked.24
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 consumers 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.
Source: FTD
With a customer’s
permission, flower
retailer FTD sends
email reminders for
important events.
M21_KOTL2621_15_GE_C21.indd 641
09/03/15 6:41 PM
642
PART 7
|
COMMUNICATING VALUE
marketing
memo
How to Maximize the Marketing Value of E-mails
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,” McKinsey Quarterly, January 2014; “Email Marketing Central for
U.S. Retailers,” www.warc.com, December 20, 2012; Richard Westlund, “Success Stories in eMail Marketing,” Adweek Special Advertising Section, February 16, 2010;
Suzanne Vranica, “Marketers Give E-mail Another Look,” Wall Street Journal, July 17, 2006.
Social Media
An important component of digital marketing is 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
dOLLar ShaVe 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 YouTube 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.
M21_KOTL2621_15_GE_C21.indd 642
09/03/15 6:41 PM
MANAGING DIGITAL COMMUNICATIONS: ONLINE, SOCIAL MEDIA, AND MOBILE
|
CHAPTER 21
643
Source: Dollar Shave Club
CEO Michael Dubin’s
online video to launch
Dollar Shave Club was
an Internet sensation.
soCIAl MedIA plAtforMs
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 YouTube).
ONLINE COMMUNITIES AND FORUMS 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, hardto-get customer information and insights. When GlaxoSmithKline 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
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
PopSugar has spawned a family of breezy blogs on fashion (FabSugar), beauty (BellaSugar), and romance and culture (TrèsSugar), 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 TreeHugger 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 representative’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
M21_KOTL2621_15_GE_C21.indd 643
09/03/15 6:41 PM
644
PART 7
|
COMMUNICATING VALUE
SOCIAL NETWORKS 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; LinkedIn, 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 CafeMom did for Playskool.41
CafeMOM
Started in 2006, CafeMom has 20 million users across its flagship CafeMom 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.
usInG soCIAl MedIA
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
most likely to engage with media, charities, and fashion and least likely to engage with consumer goods.43
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
consumers want to engage with
brands, and, even then, only
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.
M21_KOTL2621_15_GE_C21.indd 644
09/03/15 6:41 PM
MANAGING DIGITAL COMMUNICATIONS: ONLINE, SOCIAL MEDIA, AND MOBILE
|
CHAPTER 21
645
Source: Invision for Frito-Lay
Frito-Lay used a social
media campaign for
new consumer-created
flavors it introduced.
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
Source: Photo courtesy of SodaStream
SOdaSTreaM SodaStream, a product that allows
consumers to carbonate regular tap water at home to replace storebought sodas, was built with minimal media spend due to the power of
word of mouth. To help promote conversations about the brand, the company 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 SodaStream’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, SodaStream 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, SodaStream had a 2014 market cap of more than
$1 billion.
SodaStream benefited from PR and word of mouth in launching its brand.
M21_KOTL2621_15_GE_C21.indd 645
09/03/15 6:41 PM
646
PART 7
|
COMMUNICATING VALUE
forMs of Word of Mouth
Contrary to popular opinion, most word of mouth is
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 impossible to separate online and offline.”48
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 YouTube, 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
bLendTeC 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
iPhone was launched with huge media fanfare, Blendtec aired a video in which Dickson smiled and said, “I love my
iPhone. It does everything. But will it blend?” After the blender crushed the iPhone to bits, Dickson lifted the lid on the
small pile of black dust and said simply, “iSmoke.” The clip drew more than 3.5 million views on YouTube. 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 “
try this
at home” category and developed another set showing how to grind up vegetables for soup, for instance, in the “
try this at home” category.
CreAtInG 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
Source: Blendtec
Blendtec built its
consumer brand in
part with a series of
clever “Will It Blend”
online videos.
M21_KOTL2621_15_GE_C21.indd 646
09/03/15 6:41 PM
MANAGING DIGITAL COMMUNICATIONS: ONLINE, SOCIAL MEDIA, AND MOBILE
|
CHAPTER 21
647
Research has shown that consumers tend to generate positive WOM themselves and share information about
their
positive consumption experiences. They tend to only transmit negative WOM and pass on information
they heard about
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 having 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 necessary 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. BzzAgent is one.58
bzzagenT Boston-based BzzAgent 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 opinionsharing throughout its own social media site, called BzzScapes, and within each member’s personal social circles. BzzAgent
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
BzzAgent. After being acquired by Dunhumby, BzzAgent 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 FireVision 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
YouTube; 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 recommendations 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 influenced 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
M21_KOTL2621_15_GE_C21.indd 647
09/03/15 6:41 PM
648
PART 7
|
COMMUNICATING VALUE
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
marketing
memo
How to Start a Buzz Fire
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 influential 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.
Source: Bloomberg via Getty Images
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 YouTube 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. Professionals 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.
To fuel buzz for its Chevy Volt electric car, Chevrolet gave 900 influential
consumers a free three-day rental.
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.
M21_KOTL2621_15_GE_C21.indd 648
09/03/15 6:41 PM
MANAGING DIGITAL COMMUNICATIONS: ONLINE, SOCIAL MEDIA, AND MOBILE
marketing
insight
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. DuPont 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 according 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.,
NIKEiD), forums and discussion boards, product reviews, social networks, 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 crossfunction of Gatorade digital, media, and social agencies, with six big
monitors providing data visualizations and dashboards.
The Gatorade team reviews blog conversations and tracks sentiment and feedback. The team also has to decide when it is appropriate
|
CHAPTER 21
649
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 misunderstanding 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 queries 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, LinkedIn, Pinterest,
and YouTube. 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, “NASAStyle 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 Wordof-Mouth Marketing?” Marketing NPV 3 (2006), www.marketingnpv.com, pp. 3–9.
Source: The Gatorade Company
Gatorade’s HQ-based
Mission Control
Center tracks brand
buzz 24/7.
M21_KOTL2621_15_GE_C21.indd 649
09/03/15 6:41 PM
650
PART 7
|
COMMUNICATING VALUE
lead to even greater loyalty and sales.70 Huba and McConnell describe the following rungs on the customer loyalty
ladder (in ascending order):71
—Sticks with your organization as long as expectations are met.
—Returns to your company to buy again.
—Puts his or her reputation on the line to tell others about you.
—Convinces others to purchase/join.
—Feels responsible for the continued success of your organization.
MeAsurInG the effeCts 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 communication tool is obvious.
the sCope of MoBIle MArketInG
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
—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
iPhone 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
MerriLL edge’S “faCe reTireMenT” aPP 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.
M21_KOTL2621_15_GE_C21.indd 650
09/03/15 6:41 PM
MANAGING DIGITAL COMMUNICATIONS: ONLINE, SOCIAL MEDIA, AND MOBILE
|
CHAPTER 21
651
Source: Bank of America Corporation
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.
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
developInG effeCtIve MoBIle MArketInG proGrAMs
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
take a toll on consumers’ battery and data availability as well as on their time.
bright color.
MoBIle MArketInG ACross MArkets
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.
M21_KOTL2621_15_GE_C21.indd 651
09/03/15 6:41 PM
652
PART 7
|
COMMUNICATING VALUE
Source: Weng lei-Imaginechina
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.
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.
Summary
1. Online marketing provides marketers with opportunities 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 Facebook, Twitter, and YouTube.
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
M21_KOTL2621_15_GE_C21.indd 652
the process. Social media are rarely the sole source of
marketing communications for a brand.
4. Word-of-mouth marketing finds ways to engage customers so they will choose to talk positively with others
about products, services, and brands. Viral marketing 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.
09/03/15 6:41 PM
MANAGING DIGITAL COMMUNICATIONS: ONLINE, SOCIAL MEDIA, AND MOBILE
|
CHAPTER 21
653
MyMarketingLab
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?
Marketing Discussion
Corporate Web Sites
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.
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?
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 exclusive to college students was critical to its early success.
It gave Facebook a sense of privacy, unity, and exclusivity
that social media competitors like MySpace did not offer.
In 2006, the site opened its doors to everyone.
Today, Facebook is the most popular social networking Web site in the world, with more than 1.3 billion active
M21_KOTL2621_15_GE_C21.indd 653
users. It allows users to create customized personal profiles with information such as their hometown, work experience, educational background, and relationship status as
well as an unlimited number of photos and albums. To interact 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 people’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, longlasting 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 environment where they can show a softer side than
they might in traditional marketing media. Marketers can
launch videos and trailers, unveil promotions, run contests, upload images, and post news. Some companies
09/03/15 6:41 PM
654
PART 7
|
COMMUNICATING VALUE
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 feedback. 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 opportunities with personalized messages. Ads—the company’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 advertiser’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,
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.
Marketing Excellence
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 unconventional 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 relevant 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 advertises 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 YouTube.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 consumers back to its Web site, TheAxeEffect.com.
>> Unilever (Axe and Dove)
Unilever—manufacturer of several home care, food, and
personal care brands—uses personal marketing communications strategies to target specific age groups,
demographics, and lifestyles. The company has developed some of the most successful brands in the world,
including Axe, a male grooming brand, and Dove, a personal 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
M21_KOTL2621_15_GE_C21.indd 654
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
iPods 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,” BusinessWeek, 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.
09/03/15 6:41 PM
MANAGING DIGITAL COMMUNICATIONS: ONLINE, SOCIAL MEDIA, AND MOBILE
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 spectrum, 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 featured 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, “ProAge,” featured older, nude women and asked questions
like, “Does beauty have an age limit?” Immediately, the
company heard positive feedback from its older consumers. 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 artists, 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
M21_KOTL2621_15_GE_C21.indd 655
|
CHAPTER 21
655
described her. The difference in language and descriptions
revealed how women are often their harshest beauty critics. 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 negative 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 billion to $4 billion. Axe is not only the most popular male
grooming brand in the world, but also Unilever’s bestselling 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 markets 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,” BusinessWeek, 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.
09/03/15 6:41 PM
In This Chapter, We Will Address
the Following Questions
Breaking new ground with database
marketing helped propel President
Barack Obama to re-election in 2012.
1. How can companies conduct direct marketing for competitive advantage?
(p. 657)
Source: © epa european pressphoto agency b.v./Alamy
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)
MyMarketingLabâ„¢
Improve Your Grade!
Over 10 million students improved
their results using the Pearson
MyLabs. Visit mymktlab.com for
simulations, tutorials, and
end-of-chapter problems.
656
M22_KOTL2621_15_GE_C22.indd 656
09/03/15 6:42 PM
22
Managing Personal
Communications: Direct
and Database Marketing
and Personal Selling
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 campaign 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 databases, as well as social media and mobile contacts, they created one comprehensive database. Sophisticated 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
Personalizing communications and saying and doing
Facebook campaign in which people who downloaded an app were sent
the right thing for the right person at the right time are critical for
messages with pictures of their friends in swing states and asked to click
marketing effectiveness. In this chapter, we consider how coma button to automatically urge those targeted voters to register to vote or
panies personalize their marketing communications to have more
get to the polls. As a result of all these efforts, 1.25 million more 18- to
impact. We begin by evaluating direct and database marketing,
24-year-old voters supported Obama in 2012 than 2008.
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
is the use of consumer-direct (CD) channels to reach and deliver goods and
club programs.2
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 marketing has been a fast-growing avenue, partly in response to the high and increasing costs of reaching business markets through a sales force. Sales produced through traditional direct marketing channels (catalogs,
M22_KOTL2621_15_GE_C22.indd 657
657
09/03/15 6:42 PM
658
PART 7
|
COMMUNICATING VALUE
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 BenefITs of DIrecT MarkeTInG
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 phoneorder 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
TiP TOP ice creaM 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.
Source: Fronterra
New Zealand’s Tip
Top ice cream used
social media and
video to connect its
brand with customers
to retain its market
leadership.
M22_KOTL2621_15_GE_C22.indd 658
09/03/15 6:42 PM
MANAGING PERSONAL COMMUNICATIONS
|
CHAPTER 22
659
We next consider some of the key issues that characterize different direct marketing channels.
DIrecT MaIl
Direct-mail marketing means sending an offer, announcement, reminder, or other item to an individual consumer. 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 PROSPECTS Most direct marketers apply the RFM (
) 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, incomplete 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 ELEMENTS The offer strategy has five elements—the
the
the
the
and the
.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 ELEMENTS 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
M22_KOTL2621_15_GE_C22.indd 659
09/03/15 6:42 PM
660
PART 7
|
COMMUNICATING VALUE
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 marketing on awareness, intention to buy, and word of mouth.
MEASURING CAMPAIGN SUCCESS: LIFETIME 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
caTaloG MarkeTInG
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 customer 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 customers, 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.
TeleMarkeTInG
is the use of the telephone and call centers to attract prospects, sell to existing customers, and provide service by taking orders and answering questions. It helps companies increase revenue, reduce selling costs,
and improve customer satisfaction. Companies use call centers for
—receiving calls from
customers—and
—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.
Source: © Cultura RM/Alamy
Raleigh Bicycles used
telemarketing to cuts
costs and drive sales.
M22_KOTL2621_15_GE_C22.indd 660
09/03/15 6:42 PM
MANAGING PERSONAL COMMUNICATIONS
|
CHAPTER 22
661
Source: HORST OSSINGER/EPA/Newscom
TV infomercials have
been used with great
success to sell the
George Foreman grill,
backed by the former
heavyweight boxing
champion.
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 expensive field sales calls.
oTher MeDIa for DIrecT-response MarkeTInG
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
to combine the selling
power of television commercials with the draw of information and entertainment. Infomercials promote products 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.
puBlIc anD eThIcal Issues In DIrecT MarkeTInG
Direct marketers and their customers usually enjoy mutually rewarding relationships. Occasionally, however, a
darker side emerges:
Many people don’t like hard-sell direct marketing solicitations. Firms have been popping up to
help block unwanted junk mail.14
Some direct marketers take advantage of impulsive or less sophisticated buyers or prey on the
vulnerable, especially the elderly.
Some direct marketers design mailers and write copy intended to mislead or exaggerate 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.
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 compa…
Purchase answer to see full
attachment