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Advertising ManagementAdvertising ManagementAdvertising ManagementAdvertising Management
Objectives setting:
Communication Sales
Budget Decisions:
Affordable approach % of sales Competitive parity Objectives & tasks
Message Decision:
Generation Evaluation &
Selection Execution
Media Decision:
Reach, frequencyimpact
Major media types Specific media
vehicles Media timing
Advertising
Evaluation:
Communicationimpact
Sales impact
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AdvertisingAdvertisingAdvertisingAdvertising
ObjectivesObjectivesConsumer awareness - thinking vs. feelingConsumer awareness - thinking vs. feeling
products and central vs. peripheral routes toproducts and central vs. peripheral routes tomemory; awareness needed for high involvement;memory; awareness needed for high involvement;attitude needed for low involvementattitude needed for low involvement
Positive reinforcement after purchasePositive reinforcement after purchase
Exposure oriented objectives - reach andExposure oriented objectives - reach andfrequencyfrequency
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The Purpose of AdvertisingThe Purpose of AdvertisingThe Purpose of AdvertisingThe Purpose of Advertising
To informTo inform
To persuadeTo persuade
To remindTo remind
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To InformTo InformTo InformTo Inform
Tell the market about a new productTell the market about a new product
Suggest new uses for a productSuggest new uses for a product
Inform the market of a price changeInform the market of a price changeExplain how the product worksExplain how the product works
Describe available servicesDescribe available services
Correct false impressionsCorrect false impressionsReduce buyers fearsReduce buyers fears
Build company imageBuild company image
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To PersuadeTo PersuadeTo PersuadeTo Persuade
Build brand preferenceBuild brand preference
Encourage switching to your brandEncourage switching to your brand
Change buyers perception of productChange buyers perception of productattributesattributes
Persuade buyers to purchase nowPersuade buyers to purchase now
Persuade buyers to receive a sales callPersuade buyers to receive a sales call
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To RemindTo RemindTo RemindTo Remind
Remind buyers that the product may beRemind buyers that the product may be
needed in the near futureneeded in the near future
Remind buyers where to buy itRemind buyers where to buy itKeep it in the buyers mind during offKeep it in the buyers mind during off
seasonsseasons
Maintain its top-of-mind awarenessMaintain its top-of-mind awareness
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Purpose:Purpose: To reach a highly targeted group within a specificTo reach a highly targeted group within a specificgeography as cost-efficiently as possible.geography as cost-efficiently as possible.
Strengths:Strengths:TargetabilityTargetability: Specific groups by location, product usage, interests: Specific groups by location, product usage, interests
CostCost: Controlling costs; generally very low: Controlling costs; generally very low
TimingTiming: No outside media deadlines: No outside media deadlines
VersatilityVersatility: Personalized; conveyed detailed message: Personalized; conveyed detailed message
ReachReach: All households: All households
MeasurementMeasurement: Response rate is easily measured: Response rate is easily measured
EnvironmentEnvironment: Tangible; saves consumer time: Tangible; saves consumer time
Media Options - Direct MarketingMedia Options - Direct Marketing
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Media DefinitionsMedia DefinitionsMedia DefinitionsMedia DefinitionsReachReach: the number of different persons or: the number of different persons or
households exposed to a particular mediahouseholds exposed to a particular mediaschedule at least once during a specifiedschedule at least once during a specifiedtime period.time period.
FrequencyFrequency
: the number of times within the: the number of times within the
specified time period that an average personspecified time period that an average person
or household is exposed to the message.or household is exposed to the message.
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Gross Rating Points (GRP)Gross Rating Points (GRP): the reach: the reachmultiplied by the average frequency.multiplied by the average frequency.
Cost Per ThousandCost Per Thousand: the calculated cost: the calculated costit takes to reach one thousand people init takes to reach one thousand people inthe target audience from that mediathe target audience from that media
vehicle.vehicle.
Media DefinitionsMedia Definitions
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Media DefinitionsMedia DefinitionsMedia DefinitionsMedia Definitions
FlightingFlighting: calls for advertising for some period,: calls for advertising for some period,
followed by a hiatus with no advertising, and thenfollowed by a hiatus with no advertising, and then
followed by a second flight.followed by a second flight.
PulsingPulsing: a continuos advertising at low weight: a continuos advertising at low weightlevels reinforced periodically by waves of heavierlevels reinforced periodically by waves of heavier
activity. Pulsing draws upon the strength ofactivity. Pulsing draws upon the strength of
continuous advertising and flights to create acontinuous advertising and flights to create a
compromise scheduling strategy.compromise scheduling strategy.
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Advertising TestsAdvertising TestsAdvertising TestsAdvertising Tests
An advertising testing program may includeAn advertising testing program may includetests to assess:tests to assess:
copycopymedia placementmedia placement
budgetingbudgeting
At the pre-introductory product testing stage,At the pre-introductory product testing stage,advertising testing will focus on copy tests.advertising testing will focus on copy tests.
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Copy Tests: ObjectivesCopy Tests: ObjectivesCopy Tests: ObjectivesCopy Tests: Objectives
Does the copy achieve the objectives setDoes the copy achieve the objectives set
out in the copy strategy?out in the copy strategy?
Assess recall of ad(s)Assess recall of ad(s) Assess communicationAssess communication
Assess effect of ad(s) on attitudes towardAssess effect of ad(s) on attitudes toward
thethe brandbrand and theand the advertisementadvertisement.. Assess impact on purchase intention.Assess impact on purchase intention.
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Purpose:Purpose: To reach a highly targeted group within a specificTo reach a highly targeted group within a specificgeography as cost-efficiently as possible.geography as cost-efficiently as possible.
Strengths:Strengths:TargetabilityTargetability: Specific groups by location, product usage, interests: Specific groups by location, product usage, interests
CostCost: Controlling costs; generally very low: Controlling costs; generally very low
TimingTiming
: No outside media deadlines: No outside media deadlines
VersatilityVersatility: Personalized; conveyed detailed message: Personalized; conveyed detailed message
ReachReach: All households: All households
MeasurementMeasurement: Response rate is easily measured: Response rate is easily measured
EnvironmentEnvironment: Tangible; saves consumer time: Tangible; saves consumer time
Media Options - Direct MarketingMedia Options - Direct Marketing
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Direct Marketing (contd.)Direct Marketing (contd.)Direct Marketing (contd.)Direct Marketing (contd.)
Weaknesses:Weaknesses:
Consumer Avoidance: Almost half of all mail gets thrown awayConsumer Avoidance: Almost half of all mail gets thrown away
unopenedunopened
Image: Referred to as junk mailImage: Referred to as junk mail
Timing: Bulk mail takes 3-10 days to be deliveredTiming: Bulk mail takes 3-10 days to be delivered
Cost: Mailing costs continue to riseCost: Mailing costs continue to rise
Reach: Difficult to get new customers.Reach: Difficult to get new customers.
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Purpose:Purpose: A mass media used to reachA mass media used to reachadults 35+ with a complex, detailedadults 35+ with a complex, detailedmessage or to advertise product.message or to advertise product.
Strengths:Strengths: Reach: Large mass audienceReach: Large mass audience
Delivery Form: TangibleDelivery Form: Tangible
Prestige: Traditional medium with wide acceptance;Prestige: Traditional medium with wide acceptance;somewhat targetable; credible; readers tend tosomewhat targetable; credible; readers tend to
have higher income & education levelshave higher income & education levels
Versatility: Ad size and timingVersatility: Ad size and timing
Message: Illustrations; detailed messageMessage: Illustrations; detailed message Tar etabilit : Sections; zone editionsTargetability: Sections; zone editions
Media Options - NEWSPAPERMedia Options - NEWSPAPER
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Purpose: To reach a narrow target withPurpose: To reach a narrow target withfrequency to build awareness.frequency to build awareness.
Strengths:Strengths:
Frequency: Top of the mind awareness; low unit cost
Demographically Selective: Combine age/sex and
listening preferences to better target Emotional: One on one relationship
Timing: Flexible message; 24-hour air time
Cost: Negotiable; efficient; low cost
Media Options - RADIOMedia Options - RADIO
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RADIO (Contd..)RADIO (Contd..)RADIO (Contd..)RADIO (Contd..)
Weaknesses:Weaknesses:
Reach:Reach: Cannot reach broad demographicsCannot reach broad demographics
Clutter:Clutter: Mat be too many advertisersMat be too many advertisers
Senses:Senses: No visualNo visual
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Purpose:Purpose: Reach narrow target groups with singleReach narrow target groups with singleexposure in chosen geography. Able to buildexposure in chosen geography. Able to buildfrequency.frequency.
Strengths:Strengths: Growing Medium:Growing Medium: Increased subscribersIncreased subscribers
Frequency:Frequency: Top-of-the-mind awarenessTop-of-the-mind awareness
Senses:Senses: Includes both visual and audioIncludes both visual and audio
Cost:Cost: Low; local mediumLow; local medium
Versatility:Versatility: Tie-in opportunitiesTie-in opportunities
Geographically Selective:Geographically Selective: Customized to market areaCustomized to market area
Demographically Selective:Demographically Selective: Target specific consumerTarget specific consumer
groupsgroups
Media Options - CABLEMedia Options - CABLE
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CABLE (Contd.)CABLE (Contd.)CABLE (Contd.)CABLE (Contd.)
Weaknesses:Weaknesses:
ReachReach: Fragmented; rural; areas not: Fragmented; rural; areas notwiredwired
ClutterClutter: More commercial air time: More commercial air time
MeasurementMeasurement: Limited research: Limited research
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Purpose:Purpose: A mass reach medium designed to reach AdultsA mass reach medium designed to reach Adults18+ with a reminder or directional message.18+ with a reminder or directional message.
Strengths:Strengths:
Cost: LowCost: Low Reach: Large mass audiencesReach: Large mass audiences
Environment: Size demands attention; 24-hours,Environment: Size demands attention; 24-hours,7 days a week7 days a week
Frequency: Highly visibleFrequency: Highly visible
Versatility: Target specific geography;Versatility: Target specific geography;
variety of messagesvariety of messages
Mass Media - Outdoor BillboardMass Media - Outdoor Billboard
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Billboards (Contd.)Billboards (Contd.)Billboards (Contd.)Billboards (Contd.)Weaknesses:Weaknesses:
Environment: Negative image; no message detailEnvironment: Negative image; no message detail
Availability: LimitedAvailability: Limited
Impact: Minimal viewing; low recallImpact: Minimal viewing; low recall
Targetability: Not efficient for small, narrow target audiencesTargetability: Not efficient for small, narrow target audiences
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Other Media ConsiderationsOther Media ConsiderationsOther Media ConsiderationsOther Media ConsiderationsYellow PagesYellow Pages
Evidence people look hereEvidence people look here
Costs for display ads may be quiteCosts for display ads may be quite
highhigh
Reduced reliance due to otherReduced reliance due to other
information search tools (e.g.,information search tools (e.g.,Internet)Internet)
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TelemarketingTelemarketing
Set outbound call objectives ahead of timeSet outbound call objectives ahead of time
Motivate staff through direct incentivesMotivate staff through direct incentivesConsider training staff on handling rejectionsConsider training staff on handling rejections
Other Media ConsiderationsOther Media ConsiderationsOther Media ConsiderationsOther Media Considerations
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Event MarketingEvent Marketing
Helps build relationshipsHelps build relationships
Examples:Examples:Sponsoring local sports teamsSponsoring local sports teams
Running seminars on financial planningRunning seminars on financial planning
No sales at time of event leads only.No sales at time of event leads only.
Other Media ConsiderationsOther Media ConsiderationsOther Media ConsiderationsOther Media Considerations
C tC t
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CostsCostsTelevisionTelevision
Late News Spot(30 second spot)
Large market $2,000 $3,500
Medium market $600 $1,000
Small market $200 $400
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RadioRadio
Morning drive time (30 second spot)
Large market $1,000 $2,000
Medium market $400 $800
Small market $50 $200
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Out-of-Home/BillboardsOut-of-Home/Billboards
14 x 48 painted bulletin
Large market $8,000 $12,000 per month
Medium market $1,500 $3,000 per month
Small market $800 $1,500 per month
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NewspaperNewspaper
Space is reserved on a
column inch basisLarge market $300 $700
Medium market $60 $90Small market $10 $50
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Yellow PagesYellow Pages
Quarter page display with color
Bold LineCost of Ad Listing
arge market $546/Mo
$14.60/Mo
Medium market $532/Mo$17.40/Mo
mall market $425/Mo
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PromotionPromotionPromotionPromotion
Designed to achieve an active response over a short period ofDesigned to achieve an active response over a short period oftime.time.
Has been increasing relative to advertising 57% in 1981 in 1994Has been increasing relative to advertising 57% in 1981 in 1994
72% of A/P.72% of A/P. Trade and consumer promotion target different players.Trade and consumer promotion target different players.
Promotions can be offensive (trial) or defensive (Stove Top).Promotions can be offensive (trial) or defensive (Stove Top).
Promotion used to bridge trial gap.Promotion used to bridge trial gap.
Objectives: Buy more, buy now, loyality, capture switchers, getObjectives: Buy more, buy now, loyality, capture switchers, get
nonuser trial, awareness and build image.nonuser trial, awareness and build image.
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PromotionPromotionPromotionPromotion Tracking - Pre-post anlysis withTracking - Pre-post anlysis with
controlcontrol
Trend analysisTrend analysis
Redemption ratesRedemption rates
Payback analysisPayback analysis
Modeling - PROMOTER BaslineModeling - PROMOTER Baslinevolume vs. actual sales on promotionvolume vs. actual sales on promotion
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PromotionPromotionPromotionPromotion
When do brands spend a lot.When do brands spend a lot.Standard productStandard product
Many end usersMany end users
Purchase amount is smallPurchase amount is small sales made through channelssales made through channels
Premium pricePremium price
High contribution marginHigh contribution marginSmall market shareSmall market share
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PromotionPromotionPromotionPromotion
Types of PromotionsTypes of PromotionsProduct based - bonus pack,Product based - bonus pack,
sampling, onpack, inpacksampling, onpack, inpack
Price based - sale, coupons,Price based - sale, coupons,refunds, rebates, frquency, termsrefunds, rebates, frquency, terms
PremiumsPremiums
DisplaysDisplays
GamesGames
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Global MarketingGlobal MarketingGlobal MarketingGlobal Marketing
Moving from single country to dual country to regional to globalMoving from single country to dual country to regional to globalincreases complexityincreases complexity
Lots of opportunites to do dumb things:Lots of opportunites to do dumb things:
Clairol mMist Stick meant Manure Stick in GermanyClairol mMist Stick meant Manure Stick in Germany
Pepsis Come alive with the Pepsi generation was translatdPepsis Come alive with the Pepsi generation was translatd
into Pepsi brings your ancestors back from the grave ininto Pepsi brings your ancestors back from the grave inChinaChina
The Coca-Cola name in China was read as Ke-kou-ke-laThe Coca-Cola name in China was read as Ke-kou-ke-lameaning Bite the was tadpole later changed to Ko-kou-ko-meaning Bite the was tadpole later changed to Ko-kou-ko-le meaning happiness in the mouth.le meaning happiness in the mouth.
In Italy Schweppes Tonic water was translated intoIn Italy Schweppes Tonic water was translated intoSchweppes Toilet waterSchweppes Toilet water
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Phases of Global MarketingPhases of Global MarketingPhases of Global MarketingPhases of Global MarketingMarket extension (Intl is secondary)Market extension (Intl is secondary)
P&G, Poloroid, WhirlpoolP&G, Poloroid, WhirlpoolMulti-domestic (Intl equal domestic)Multi-domestic (Intl equal domestic)
Ford prior to 1996Ford prior to 1996
Global (no difference Intl and domestic)Global (no difference Intl and domestic)
IBM, Coke, McDonaldsIBM, Coke, McDonalds
Global marketing forces companies to communicate and think globally.Global marketing forces companies to communicate and think globally.
Knowledge is centralized to some degree.Knowledge is centralized to some degree.
Less local autonomyLess local autonomy
Global product teamsGlobal product teams
Global ad agencyGlobal ad agency
High coordination across marektsHigh coordination across marekts
Systematically developing intermarket segmentsSystematically developing intermarket segments
Global cadre of managers; cultural relativityGlobal cadre of managers; cultural relativity
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Global SegmentationGlobal SegmentationGlobal SegmentationGlobal SegmentationSES FORMATION
(CLUSTERING OF FACTOR SCORES)
High
Sweetness
Low
Sweetness
Low
Information
Search
High
Information
Search
C1
3
E2
H3
A3
C1Segment 5
C2
C3
7
9
5
2
4
8
F1A3
A3
A3A3
F2
6
1B3
D1
H1
D2
D3
B1
A2
E1Segment 2
Segment 4
F2
G2
G1
Segment 1
A1
Segment 3
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Major Decisions inMajor Decisions in
International MarketingInternational MarketingMajor Decisions inMajor Decisions in
International MarketingInternational MarketingDeciding whether
to go abroad
Deciding which
markets to enter
Deciding how toenter the market
Deciding on themarketing program
Deciding on the
marketing organization
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Internationalization ProcessInternationalization ProcessInternationalization ProcessInternationalization Process
No Export
Export via Agents
Sales Subsidiaries
Production Abroad
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Challenges in Going GlobalChallenges in Going GlobalChallenges in Going GlobalChallenges in Going Global
Shifting bordersShifting borders
Unstable governmentsUnstable governments
Foreign-exchangeForeign-exchange
CorruptionCorruption
Technological piratingTechnological pirating
Cultural differencesCultural differences
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Five International ProductFive International Product
and Promotion Strategiesand Promotion StrategiesFive International ProductFive International Product
and Promotion Strategiesand Promotion Strategies
Dualadaptation
PromotionPromotion
ProductProduct
Productadaptation
AdaptAdapt
productproduct
Straightextension
Do not changeDo not change
productproduct
Do not changeDo not changepromotionpromotion
Communi-cation
adaptation
AdaptAdaptpromotionpromotion
Develop newDevelop new
productproduct
Productinvention
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Directinvest-ment
JointventuresLicensing
Five Models of EntryFive Models of Entry
Into Foreign MarketsInto Foreign MarketsFive Models of EntryFive Models of Entry
Into Foreign MarketsInto Foreign Markets
Directexporting
IndirectExporting
Amount of commitment, risk, control, and profit potential
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Marketing OrganizationMarketing OrganizationMarketing OrganizationMarketing Organization
Export Department
International Division
Global Organization
RUS S IA
AS IA
EURO PE
M I D D LE EAST
AF RICA
USA
SO UTH
AM ERI CA
AUSTRALI A
CAN AD A
ANTARCTICA
G REEN LAN D
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Five Product LevelsFive Product LevelsFive Product LevelsFive Product Levels
Potential product
Augmented product
Expected productBasic product
Core benefit
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Product MixProduct MixProduct MixProduct Mix
WidthWidth - number ofdifferent product
lines
WidthWidth - number ofdifferent product
lines
LengthLength - totalnumber of itemswithin the lines
LengthLength - totalnumber of itemswithin the lines
DepthDepth - number ofversions of each
product
DepthDepth - number ofversions of each
product
Product Mix -Product Mix -all the product
lines offered
Product Mix -Product Mix -all the product
lines offered
Co
nsistency
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Product-Line LengthProduct-Line LengthProduct-Line LengthProduct-Line Length
Line StretchingLine Stretching
DownmarketDownmarket
UpmarketUpmarket
Two-wayTwo-way
Line FillingLine Filling
Line ModernizationLine Modernization
Line PruningLine Pruning
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Two-Way Product-LineTwo-Way Product-Line
Stretch: Marriott HotelsStretch: Marriott HotelsTwo-Way Product-LineTwo-Way Product-Line
Stretch: Marriott HotelsStretch: Marriott Hotels
QualityEconomy SuperiorStandard Good
Price
Price
High
Aboveaverage
Average
Low Fairfield Inn(Vacationers)
Courtyard(Salespeople)
Marriott(Middle
managers)
MarriottMarquis
(Topexecutives)
O fA O i f
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An Overview ofAn Overview of
Branding DecisionsBranding DecisionsAn Overview ofAn Overview of
Branding DecisionsBranding Decisions
BrandingDecision
Brand
No brand
Brand-SponsorDecision
Manu-facturerbrand
Distribu-tor
(private)brand
Licensedbrand
Brand-Name
Decision
IndividualbrandnamesBlanketfamilynameSeparatefamilynamesCompany-individualnames
Brand-Repositioning
Decision
Reposi-tioning
Noreposi-tioning
Brand-StrategyDecision
Lineextension
Brandextension
Multi-
brandsNewbrands
Cobrands
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Brand StrategiesBrand StrategiesBrand StrategiesBrand Strategies
BrandExtension
New
BrandName
Product Category
LineExtension
Existing
Existing
MultibrandsNew NewBrands
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Good Brand Names:Good Brand Names:Good Brand Names:Good Brand Names:
SuggestProductBenefits
Distinctive
Lack PoorForeign
LanguageMeanings
SuggestProductQualities
Easy to:
PronounceRecognizeRemember
CWh P k C i lWh P k C i lWh P k C i l
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Why Package Crucial as aWhy Package Crucial as a
Marketing ToolMarketing ToolWhy Package Crucial as aWhy Package Crucial as a
Marketing ToolMarketing Tool
Self-service - usage eg. boil in bagSelf-service - usage eg. boil in bag
Company & brand image - LeggsCompany & brand image - Leggs
Opportunity for innovation - ColgateOpportunity for innovation - Colgatepumppump
Point of sale impact - reaches the rightPoint of sale impact - reaches the right
people at the right time - Wine bottlepeople at the right time - Wine bottle
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LabelsLabelsLabelsLabels
IdentifyIdentifyIdentifyIdentify
DescribeDescribeDescribeDescribe
PromotePromotePromotePromote
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PurePure
ServiceService
Categories of Service MixCategories of Service MixCategories of Service MixCategories of Service Mix
TangibleTangible
GoodGood
w/w/
ServicesServices
MajorMajor
ServiceService
w/ Goodsw/ GoodsHybridHybrid
PurePure
TangibleTangible
GoodGood
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ServicesServices
Inseparability
Services cannotbe separated
from theirproviders
InseparabilityServices cannot
be separatedfrom theirproviders
Perishability
Services cannotbe stored for
later sale or use
Perishability
Services cannotbe stored for
later sale or use
Intangibility
Services cannotbe seen, tasted,
felt, heard, orsmelled before
purchase
Intangibility
Services cannotbe seen, tasted,
felt, heard, orsmelled before
purchase
Variability
Quality ofservices dependson who providesthem and when,where, and how
Variability
Quality ofservices dependson who providesthem and when,where, and how
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ServicesServices
InseparabilityIncrease
productivity ofproviders
InseparabilityIncrease
productivity ofproviders
PerishabilityMatch supplyand demand
PerishabilityMatch supplyand demand
IntangibilityUse cues to
make it tangible
Intangibility
Use cues tomake it tangible
Variability
Standardizeservice
production& delivery
VariabilityStandardizeservice
production& delivery
Th T f M k tiTh T f M k tiTh T f M k tiTh T f M k ti
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Three Types of MarketingThree Types of Marketing
in Service Industriesin Service IndustriesThree Types of MarketingThree Types of Marketing
in Service Industriesin Service Industries
Internalmarketing
CompanyCompany
CustomersCustomers
Externalmarketing
EmployeesEmployees Interactive
marketing
Cleaning/maintenance
services
Financial/bankingservices
Restaurantindustry
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Service-Quality ModelService-Quality ModelService-Quality ModelService-Quality Model
Expected service
Management perceptions
of consumer expectations
Markete
r
Markete
r
Co
nsumer
Co
nsumer
Gap 1Service delivery (including
pre- and post-contacts)
Gap 3Translation of perceptions
to service-quality specifications
Gap 2
Gap 5 Perceived service
Externalcommuni-cations to
consumers
Gap 4
Personal needs Past experienceWord-of-mouthcommunications
D t i t f S iD t i t f S iD t i t f S iD t i t f S i
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Determinants of ServiceDeterminants of Service
QualityQualityDeterminants of ServiceDeterminants of Service
QualityQuality
ReliabilityReliability
AssuranceAssurance
TangiblesTangiblesEmpathyEmpathy
ResponsivenessResponsiveness
I t P fI t P fI t P fI t P f
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A. Concentrate here B. Keep up the good work
D. Possible overkillC. Low priority
Importance-PerformanceImportance-Performance
AnalysisAnalysisImportance-PerformanceImportance-Performance
AnalysisAnalysisExtremely important
Slightly important
Excell
entperform
ance
Fairperformance
1 2
9
11
13 12 14
34
5 678
10
# = Attributes
S iS iS iSer ice
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ServiceService
ExcellenceExcellenceServiceService
ExcellenceExcellence
Strategic ConceptStrategic Concept Top-Management CommitmentTop-Management Commitment
High StandardsHigh StandardsMonitoring SystemsMonitoring SystemsSatisfying Customer ComplaintsSatisfying Customer Complaints
Satisfying Both Employees & CustomersSatisfying Both Employees & CustomersManaging ProductivityManaging Productivity
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Complaint ResolutionComplaint ResolutionComplaint ResolutionComplaint Resolution
Excellent service recovery can increaseExcellent service recovery can increaseloyalty (perfection not expected)loyalty (perfection not expected)
Hiring Criteria & Training for EmployeesHiring Criteria & Training for EmployeesDevelop Guidelines for FairnessDevelop Guidelines for Fairness
Remove Complaint BarriersRemove Complaint Barriers
Analyze Types & Sources ofAnalyze Types & Sources of
ComplaintsComplaints
PLANNING, CREATING, AND DELIVERING SERVICESPLANNING, CREATING, AND DELIVERING SERVICESPLANNING, CREATING, AND DELIVERING SERVICESPLANNING, CREATING, AND DELIVERING SERVICES
Figure 1
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CORPORATE OBJECIVES AND RESOURCES
MARKET OPPORUNITYANALYSIS
RESOURCE ALLOCATIONANALYSIS
MARKET POSITIONING STATEMENT
What product(s)
With what distinguishing characteristics
To what target market segments
SERVICE MARKETING CONCEPT
What customer benefits
-Core product
-Supplementary services
-Service reliability levels
-Accessibility (where and when)
At what cost-Money
-Time
-Mental effort
-Physical effort
OPERATING ASSETS STATEMENT
What physical facilities
What equipment
What information and communicationstechnology
What human resources (numbers andskills)
SERVICE OPERATIONS CONCEPTGeographic Scope of Operation
-Area(s) served
-Single site versus multi-site
-Facilities location-Telecommunications linkages
Scheduling-Hours/days/seasons of service-Continuous versus intermittent
-If intermittent, what frequency
Facilities design and layout
Operating assets deployment
-What task, Where, When
Leverage through intermediaries operating assets
Leverage through customers assets (partnerships and self-service)
Specific tasks assigned to front stage and backstageoperations
SERVICE DELIVERY PROCESS(See Figure 2)
SERVICE DELIVERY AND EVALUATIONSERVICE DELIVERY AND EVALUATIONSERVICE DELIVERY AND EVALUATIONSERVICE DELIVERY AND EVALUATION
Figure 2
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SERVICE MARKETING CONCEPT SERVICE OPERATIONS CONCEPT
SEVICE DELIVERY PROCESS
Sequencing of service delivery steps
what steps, in what order, where, when, and how quickly?
Extent of delegation
Should the firm take responsibility for all steps or delegate some to intermediaries?
Nature of contact between customers and provider
-Customer comes to provider
-Provider comes to customer
-Arms length transactions
Nature of process
-Customers served in batches
-Customers served individually
-Customers serve themselves (self-service)
Protocol for allocating limited capacity
-reservations procedures
-Queuing procedures
Imagery and atmosphere
-Employee scripts and protocols
-Variations in dcor, lighting, and music
Performance Evaluation-By customers
-By managers-By employees
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Key Concepts in Services PositioningKey Concepts in Services PositioningKey Concepts in Services PositioningKey Concepts in Services Positioning Internal Company AnalysisInternal Company Analysis
Involvement of Functional Areas Especially OperationsInvolvement of Functional Areas Especially Operations
Training in the Service ConceptTraining in the Service Concept
More Segmentation PossibleMore Segmentation Possible
Ex AmexEx Amex
Temporal Separation and Physical SeparationTemporal Separation and Physical Separation
AttributesAttributes
Experience QualitiesExperience Qualities
Credence Qualities FaithCredence Qualities Faith
Positioning, Choice Criteria and PreferencePositioning, Choice Criteria and Preference
Communicating the Concept SymbolsCommunicating the Concept Symbols
Merrill LynchMerrill Lynch Bullish Bullish
AllstateAllstate Good hands people Good hands people
State FarmState Farm Like a good neighbor Like a good neighbor
NationwideNationwide Is on your side Is on your side
PrudentialPrudential The rock The rock
Fuzzy Positioning in Services Anti-MarketingFuzzy Positioning in Services Anti-Marketing
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Asset Utilization and YieldAsset Utilization and Yield
ManagementManagementAsset Utilization and YieldAsset Utilization and Yield
ManagementManagement Service capacity is a function of resourceService capacity is a function of resource
HumanHuman
PhysicalPhysical
FinancialFinancial
Most services build a service delivery system with an inherent constraintsMost services build a service delivery system with an inherent constraints
on capacityon capacity DisneyDisney - Wait times- Wait times
HotelHotel - Number of rooms- Number of rooms
Trains and airlines - Seats, schedules, vehicles, parts inventory, etcTrains and airlines - Seats, schedules, vehicles, parts inventory, etc
FedExFedEx - Planes, route drivers, etc- Planes, route drivers, etc
Service firms try to maximize Asset Revenue Generating EfficiencyService firms try to maximize Asset Revenue Generating Efficiency
(ARGE)(ARGE)ARGE = % Capacity UtilizationARGE = % Capacity Utilization XX Actual Price/ Maximum PriceActual Price/ Maximum Price
OrOrTotal Revenue/ Maximum RevenueTotal Revenue/ Maximum Revenue
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Portfolio of CustomersPortfolio of CustomersPortfolio of CustomersPortfolio of Customers
Customers are not necessarily equally loyal, profitable or ofCustomers are not necessarily equally loyal, profitable or ofequal statusequal status
Pacesetters, bread and butter, busyworkPacesetters, bread and butter, busywork Understand price sensitivity and cost drivers (ABC)Understand price sensitivity and cost drivers (ABC)
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Maximizing ARGEMaximizing ARGEMaximizing ARGEMaximizing ARGE
Advance sales decisionsAdvance sales decisions Divide capacity ahead of time and set targetsDivide capacity ahead of time and set targets
Groups and conventionsGroups and conventions
Allocate capacity over time by segmentAllocate capacity over time by segment Set ideal mix at different times of yearSet ideal mix at different times of year
Set pricing guidelines and matrixSet pricing guidelines and matrix
Rewarding the most valuable customersRewarding the most valuable customers Profit per customer changes over time ( increase purchases,Profit per customer changes over time ( increase purchases,
reduce cost, referral, premium pricing)reduce cost, referral, premium pricing) Frequent usersFrequent users
Track usageTrack usage
Be careful of perceptions of short-term advantage and ill-willBe careful of perceptions of short-term advantage and ill-will
R l ti hi M k tiRelationship MarketingR l ti hi M k tiRelationship Marketing
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Relationship MarketingRelationship MarketingRelationship MarketingRelationship Marketing
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IdentifyIdentify
CustomersCustomers
IdentifyIdentify
CustomersCustomersProvide an incentive to customers to identifyProvide an incentive to customers to identifythemselves and provide informationthemselves and provide information
Define how you will use the information beforeDefine how you will use the information beforelaunching the programlaunching the program
Train your contact people - make it easy to do andTrain your contact people - make it easy to do and
hard not to dohard not to do
Collect information each timeCollect information each time
Use information strategically to increase quality ofUse information strategically to increase quality of
the relationship (more loyalty, sales, referrals)the relationship (more loyalty, sales, referrals)
Diff iDiff ti tDiff ti tDiff ti t
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DifferentiateDifferentiate
CustomersCustomers
DifferentiateDifferentiate
CustomersCustomers
Differentiate valueDifferentiate value
Most profitable customers (highest Lifetime value)Most profitable customers (highest Lifetime value)
Best growth opportunity (most unrealized futureBest growth opportunity (most unrealized future
value)value)
UnprofitableUnprofitable
DifferentiateDifferentiate by needsby needs
Desired service level - define valueDesired service level - define value
Preferred contact methodPreferred contact method
GGGG
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GrouGrou
pp
GrouGrou
pp
Define buckets of similar customers to make tailoringDefine buckets of similar customers to make tailoringactionableactionable
Blue collar locals with kidsBlue collar locals with kids
Auto only singlesAuto only singles
Profile each segment and define key elements toProfile each segment and define key elements to
enhancing the relationship: more loyal, more share ofenhancing the relationship: more loyal, more share of
wallet, more referrals, more positive word of mouthwallet, more referrals, more positive word of mouth
R l tR l tR l tR l t
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RelatRelat
ee
RelatRelat
ee
Organize to cater to individual needsOrganize to cater to individual needs
Use your knowledge of the customer to alter theUse your knowledge of the customer to alter the
way you treat the customerway you treat the customer
Improve convenienceImprove convenience
Provide a benefitProvide a benefit
Increase confidence and assuranceIncrease confidence and assurance
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Relate toRelate to
LoyalizeLoyalize
Relate toRelate to
LoyalizeLoyalize Implementation of Frequency MarketingImplementation of Frequency MarketingPromote the program with all customersPromote the program with all customers
Define how you will use the information beforeDefine how you will use the information before
launching the programlaunching the program
Train the people in your office you are at keyTrain the people in your office you are at key
contact points - make it easy to do and hard notcontact points - make it easy to do and hard notto doto do
RelatRelatRelatRelat
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RelatRelat
eeRelatRelat
ee
How to RelateHow to Relate
Have an objectiveHave an objective
Only ask onceOnly ask once
Use the customers mode of interactionUse the customers mode of interaction
Lead with the customer not a saleLead with the customer not a sale
Positive reinforcement of desired behaviors -Positive reinforcement of desired behaviors -referralsreferrals
Make sure the customer gets perceived valueMake sure the customer gets perceived value
C t Lif ti V lCustomer Lifetime ValueC t Lif ti V lCustomer Lifetime Value
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Customer Lifetime ValueCustomer Lifetime ValueCustomer Lifetime ValueCustomer Lifetime ValueBasic Nice Relationshi
MarketingAnnualPremium
$1,000 $1,000 $1,000
First Year
Commisions
$600 $600 $600
SubsequentYear Commisons
$100 $100 $125
Years with
Company3 5 7
TotalCommisions
$800 $1000 $1,300
% Gain vs. Basic N/A 25% 90%
PR TOOLSPR TOOLS
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PR TOOLSPR TOOLSPR TOOLSPR TOOLS
Written materials ( brochures, newsletters,Written materials ( brochures, newsletters,pamphlets, research reports, magazines)pamphlets, research reports, magazines) Tangiblize (Brochure)Tangiblize (Brochure)
Need internal communicationNeed internal communication
Quality imagemakes a statementQuality imagemakes a statement
Doesnt work as stand alone tactic; should have a roleDoesnt work as stand alone tactic; should have a role
in overall marketing programin overall marketing program
Consistent with positioningConsistent with positioning
Copy test before useCopy test before use
Customer oriented, not firm orientedCustomer oriented, not firm oriented ExamplesExamples
State farm outlookState farm outlook
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Public RelationsPublic Relations
Evaluating publics and executing programsEvaluating publics and executing programs
to influence themto influence them Communications ToolCommunications Tool
Influence attitudes, behavior changeInfluence attitudes, behavior change
secondarysecondary ProcessProcess
Identify relevant publicsIdentify relevant publics
measure image and attitudesmeasure image and attitudes
establish goalsestablish goals
develop tacticsdevelop tactics
evaluate resultsevaluate results
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PR Tools (Continued)PR Tools (Continued)PR Tools (Continued)PR Tools (Continued)
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PR Tools (Continued)PR Tools (Continued)PR Tools (Continued)PR Tools (Continued)
SpeechesSpeeches
Influence/Impress large potential customerInfluence/Impress large potential customer News releasesNews releases
EventsEvents
Sponsorship (ex Conf. Board)Sponsorship (ex Conf. Board)
Convert into PR New releasesConvert into PR New releases
NewsNews
Press ReleasesPress Releases
Hire publicist contactsHire publicist contacts
News worthinessNews worthiness
AtmosphericsAtmospherics Buildings, Equipment, etc. (FedEx, Time AOLBuildings, Equipment, etc. (FedEx, Time AOL
Opportunity to establish image and brand recognitionOpportunity to establish image and brand recognition
Price - Quality StrategiesPrice - Quality StrategiesPrice - Quality StrategiesPrice - Quality Strategies
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PriceHigh Medium Low
High
LowProd
uctQuality
Med
PremiumValue
PremiumValue
MediumValue
Economy
Overcharging
Rip-OffFalse
Economy
HighValue
SuperValue
Good-Value
Price Quality StrategiesPrice Quality StrategiesPrice Quality StrategiesPrice Quality Strategies
Setting Pricing PolicySetting Pricing Policy
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Setting Pricing PolicySetting Pricing Policy
1. Selecting the pricingobjective
2. Determining demand
3. Estimating costs
4. Analyzing competitorscosts, prices, and offers
5. Selecting a pricingmethod
6. Selecting final price
Types of CostsTypes of Costs
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Types of CostsTypes of Costs
Total CostsSum of the Fixed and Variable Costs for a Given
Level of Production
Total CostsSum of the Fixed and Variable Costs for a Given
Level of Production
Fixed Costs(Overhead)
Costs that dontvary with sales orproduction levels.
Executive SalariesRent
Fixed Costs(Overhead)
Costs that dontvary with sales orproduction levels.
Executive SalariesRent
Variable Costs
Costs that do varydirectly with the
level of production.
Raw materials
Variable Costs
Costs that do varydirectly with the
level of production.
Raw materials
The Three Cs ModelThe Three Cs Model
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for Price Settingfor Price Setting
Costs Competitorsprices andprices ofsubstitutes
Customersassessmentof uniqueproductfeatures
Low PriceNo possible
profit atthis price
High PriceNo possibledemand atthis price
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Some important pricing definitionsSome important pricing definitionsSome important pricing definitionsSome important pricing definitions
Utility: The attributeUtility: The attribute
that makes it capablethat makes it capableof want satisfactionof want satisfaction
Value: The worth inValue: The worth interms of other productsterms of other products
Price: The monetaryPrice: The monetary
medium of exchange.medium of exchange.
Value ExampleValue Example:: CaterpillarCaterpillarTractor isTractor is $100,000$100,000 vs.vs.
MarketMarket $90,000$90,000
$90,000 if equal$90,000 if equal7,000 extra durable7,000 extra durable6,000 reliability6,000 reliability5,000 service5,000 service
2,0002,000 warrantywarranty$110,000 in benefits -$110,000 in benefits -
$10,000 discount!$10,000 discount!
P ti l P i i
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Promotional PricingPromotional PricingPromotional PricingPromotional Pricing
Loss-leader pricingLoss-leader pricing
Special-event pricingSpecial-event pricing
Cash rebatesCash rebates Low-interest financingLow-interest financing
Longer payment termsLonger payment terms
Warranties & service contractsWarranties & service contracts
Psychological discountingPsychological discounting
P h l i l P i iP h l i l P i i
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Psychological PricingPsychological Pricing
Most Attractive?Most Attractive?
Better Value?Better Value?
PsychologicalPsychologicalreason to price thisreason to price this
way?way?
A
32 oz.
$2.19
B26 oz.
$1.99
Assume Equal Quality
Discriminatory PricingDiscriminatory PricingDiscriminatory PricingDiscriminatory Pricing
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VariablesVariablesVariablesVariables
Time
Product-form
CustomerSegment
Location
Price-Reaction Program forPrice-Reaction Program for
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Meeting a Competitors Price CutMeeting a Competitors Price Cut
Has competitorcut his price?
NoNoHold our priceat present level;
continue to watchcompetitors
price
Is the pricelikely to
significantlyhurt our sales?
YesYes
Is it likely to bea permanent
price cut?YesYes
By more than 4%Drop price tocompetitors
By 2-4%Drop price by
half of the
How much hashis price been
cut?YesYes
NoNo NoNo
By less than 2%Include a
cents-off coupon