Download EVENT MARKETING PLANNING Course handbook

S CIENCE E CONOMY C OHESION
EUROPEAN UNION
Creating the Future of Lithuania
UNIVERSITY OF APPLIED
SOCIAL SCIENCES
SMK University of Applied Social Sciences
Indre Radaviciene
EVENT MARKETING PLANNING
Course handbook
Klaipeda, 2015
Indre Radaviciene
Event marketing planning
Course handbook
Approved by the decision of the Academic Board of SMK University of
Applied Social Sciences, 15th April 2014, No. 4.
The publication is financed within project „Joint Degree Study
programme “International Marketing and Branding “ preparation and
implementation“ No. VP1-2.2-ŠMM-07-K-02-086 funded in accordance
with the means VP1-2.2-SMM-07-K “Improvement of study quality,
development of Internationalization” of priority 2 “Lifelong Learning” of
the Action Programme of Human Relations Development 2007 – 2013.
© Indre Radaviciene, 2015
© SMK University of Applied Social Sciences, 2015
ISBN 978-9955-648-71-0
CONTENTS
INTRODUCTION ..................................................................................... 7
Part 1: Environment of event marketing ................................................ 8
Part 2: Strategy of event marketing. Market researching ...................... 25
Part 3: Segmentation of event marketing
and selections of target markets ................................................ 35
Part 4: Strategies of event marketing positioning ................................. 45
Part 5: Event marketing sponsorship .................................................... 54
Part 6: Marketing elements in event marketing .................................... 66
Part 7: Promotion mix in event marketing ............................................ 89
Part 8: Efficiency of event planning ..................................................... 118
TASKS FOR INDIVIDUAL/GROUP WORKS ........................................... 136
REFERENCE OUTLINE .......................................................................... 144
LITERATURE ........................................................................................ 174
INTRODUCTION
This course unit aims at expanding and deepening the knowledge on the
theory of sales promotion and event marketing as well as the knowledge
on methods, also developing their skills of a problem based perception
and thinking. Students will get acquainted with the environment of an
event marketing, the types of the environment, and strategy of event
marketing when choosing the right target segment, an effective strategy
of positioning. Students will have an opportunity to get acquainted with
the efficiency of the processes of event planning, the main methods of
event support.
The aim of course is to provide students with knowledge on marketing
while distinguishing the factors determining its specifics, the significance
of conception to the success of the entities of business system, to
develop abilities to make strategic and tactical decisions in the context
of the EU market and global processes; to develop skills and abilities to
do significant marketing research; assess the results of expression of
marketing communication, image and organizational culture, and the
risk of strategic management of marketing; to make decisions on the
funding of marketing activity when implementing business development
in both international and local markets; to provide knowledge on sales
promotion distinguishing the factors determining the specifics of their
selection.
Learning outcomes of a Course Event marketing planning:
1. To be able to identify the functions, conceptions, strategies of event
marketing, the created types of benefits and assess the validity of
certain decisions.
2. To be able to correctly select target markets and ways of product
positioning for market or advertising research, to make maps of
competitiveness.
3. To be able to assess decisions on the necessity, methods and means
of support of event support and assess their efficiency.
4. To be able to appropriately prepare advertising project on the needs
of a customer.
5. To be able to plan independently decisions on the management
of the marketing complex of events and other occurrences and its
elements.
6. To be able to correctly choose a suitable set of the means of sales
promotion.
7
Part 1
ENVIRONMENT OF EVENT MARKETING
Objective outline:
1. To introduce students to the elements of marketing analysis:
marketing environment analysis, customer analysis, competitor
analysis, and company analysis;
2. To familiarize students to the generic event marketing strategies
and strategic marketing decisions for profitable delivery of superior
value to the customers.
3. To enhance their problem-solving and decision-making abilities in
strategic areas of marketing.
Chapter Key Terms:
Marketing
Upstream marketing activities
Downstream marketing activities
Customer
Marketing concept
Without a research orientation, communication practitioners cannot
play a part in Issues or Risk Management and therefore in the formulation
of emergent strategy. There are two types of research in communication:
environmental scanning, which provides information needed for strategy
formulation; and evaluation research, which assesses the achievement
of communication objectives. In practice, the focus is on the latter.
However, it is by conducting environmental scanning and analysis
that the Communication function will make its biggest contribution to
strategy formulation at the Board and top management level.1
The credibility and impact of the Communication function in the
strategic management process is increased by continuous scanning of
the internal and external environment. This may entail the following:
•
Conducting advanced media analysis at regular intervals, to
understand the agenda and behavioural patterns of key decisionmakers (editors and journalists) and publications (electronic and
print) in the mass media.
8
•
Engaging in rigorous monitoring of relevant government decisionmakers on all identified issues.
•
Conducting opinion audits (formal or informal surveys) amongst
strategic stakeholders, influencers and opinion leaders to determine
their opinions on identified issues. Creating channels to track the
opinions of stakeholders on these issues over time.
•
Identifying any (all) interest groups or activists that campaign for,
or against, or have a vested interest in any of the identified issues.1
Issue analysis
Resulting from environmental scanning, analysis of an issue consists of:
•
Showing insight into the main problem and/or opportunity inherent
to the issue (e.g. How does this issue affect the organisation now, or
will it impact on the organization in future?).
•
Understanding the issue in the context of its life cycle development
in order to indicate its status (the Traffic Light Status tool may be
used to indicate status).
•
An honest assessment of the type of issue/ risk we’re dealing with, as
not all identified issues can be solved solely through communication
interventions (the Issue Typology tool of Steyn & Puth, 2000 is often
used to manage expectations upfront and lay the foundation for
realistic goals and objectives to follow).2
View an example of Issues Analysis.
Stakeholder assessment
If environmental scanning is a starting point for the formulation of
emergent strategy, then stakeholder assessment is its control focus.
The first step in setting communication goals and themes is to identify
the relevant stakeholders to an issue. Any issue without an affected
stakeholder group is really not an issue at all. The motivation to constantly
analyse the internal and external environments of an organization lies
in tracking stakeholder reactions to current issues and detecting new
issues.2
9
Intelligence gained from environmental scanning may entail:
• The opinions, knowledge and expectations of both internal and
external stakeholders such as employees, communities, and
customers.
• The agenda of the media as gatekeepers and advocates of particular
viewpoints.
• The agendas of interest groups and activists, who directly seek to
influence public policy.
• The government’s position.2
In linking issues to stakeholders, there are four important elements
to consider:
• The implications of an issue on a stakeholder group and the likely
behaviour of the stakeholder group as a result. (What are the
implications on stakeholder X? What is the likely behaviour of
stakeholder X? Possible actions they may take?).
• The degree to which a stakeholder is already aware of the existence
of an issue (usually rated on a 5-point Likert scale).
• The extent to which the organisation is vulnerable to the likely
stakeholder reaction (usually rated on a 5-point Likert scale). It is
important to determine the amount of power a stakeholder group
has in relation to a specific issue. The amount of power depends on
the organisation’s dependency on that stakeholder group as well as
the access that the group has to political processes and to the mass
media.
• The relative strategic importance of the stakeholder to the
organisation. (Is the stakeholder labelled as a primary or secondary
stakeholder?).2
View an example of Stakeholder Interpretation.
Stakeholder relationships
There are four approaches in dealing with stakeholders:
Approach 1 - Inactivity: The first approach, inactivity, involves ignoring
the opinions and values of stakeholder groups and continuing “business
as usual”. For instance, this would be the case when a company starts
receiving complaints from customers about defective tyres that they are
10
manufacturing. The company however decides to ignore the complaints
and continues selling the tyres.2
Approach 2 - Reactivity: The second approach, reactivity, involves waiting
for something to occur (usually stimulated by a stakeholder group) and
responding to that. Continuing the example: After a series of accidents
and the loss of lives the Government (Dept. of Transport) commissions
an inquiry. Only now does the organisation withdraw its tyres from the
market.2
Approach 3 – Pro-activity: The third approach, pro-activity, is
anticipatory. It involves trying to predict the behaviour of stakeholder
groups, the external changes that may occur and positioning the
organisation appropriately. In the above example, if the organisation had
been in touch with its customers or dealers through research, they could
have investigated the matter before it became public knowledge. This
could have resulted in fixing the problem or recalling the tyres. However,
government intervention led to a loss of credibility and reputation.2
Approach 4 – Interactivity: The fourth approach in dealing with
stakeholders is the interactive mode that entails active involvement
with the stakeholder groups that can influence the future of the
organization. If the organization had good two-way communication with
their stakeholders, they would have identified the problem in its early
stages. Even more effective would have been to follow a partnership
approach with stakeholders. Partnering would have involved the
affected customers, dealers or government in the problem-solving and
decision-making processes of the company with regards to the defective
tyres. A partnering approach could have strengthened relationships with
stakeholders, rather than antagonising them.2
And as if this is not enough for marketers to deal with, consumers have
changed their ways in recent years as well by becoming more and more
fickle, unpredictable and increasingly “immune” to common marketing
practices (Brown 1995).3 Indeed, the growing affluence in industrialised
societies is having profound residual effects on the societal value
system and its dominant consumption ethic. In particular, the shift from
maintenance consumption (the compulsory shopping for necessities)
towards experiential consumption (shopping as a pleasurable end in
itself) is exemplifying the current drift towards a romantic consumption
11
in Western societies, where the emphasis on living your life right here
and now (Campbell 1987).4 Social trends, such as increasing orientation
towards leisure and recreation as well as a desire for individualism, are
leading to significant changes in consumer behaviour (Opaschowski
2000; Schulze 2000; Firat and Shultz 1997; Cova 1997).5;6;7;8 Whether one
agrees or disagrees with the philosophical idea of postmodernism or its
value and implications for marketing practice (Brown 1999, 1994),9;10
there is no denying that a number of the conditions proposed by Firat
(1991)11 determine consumer behaviour and the way of doing business
in today’s affluent societies (Brown 2002; Cova and Cova 2002; Patterson
1998).12;13;14 Those conditions, which are briefly discussed in this paper,
include among others the fragmentation of mass-markets, the age of the
(self-)image by mixing playfully elements of existing styles and blurring
distinctions between high and low culture (Cova 1996),15 the nostalgic
preoccupation with the past (Brown 2001; Holbrook 1995)16;17 or the
search for hyperreal experiences (Opaschowski 2000; Schulze 2000).18;19
Therefore, as (in the spirit of management guru Tom Peters) crazy
times call for crazy and creative measures, marketers need to consider
the design of marketing strategies that provide consumers with a
platform where they can experience brands in a way that contributes to
their subjectively perceived quality of life. In other words, the emphasis
of branding should be placed on stimulating hyperreal experiences
for consumers to meet the changing needs in affluent (postmodern)
societies (Whelan and Wohlfeil 2005).20 In light of these demands,
event-marketing has already become an increasingly popular alternative
for marketers in Continental Europe. Event-marketing is defined in the
context of this paper as the staging of interactive marketing-events as
3-dimensional hyperreal brand experiences for consumers, which would
result in an emotional attachment to the brand. Thus, consumers are
actively involved on a behavioural level as participants and encouraged
to experience the brand values multi-sensually in a 3-dimensional hyper
reality. Furthermore, as a pull strategy within marketing communications,
the participation of consumers is voluntarily and subsequently not
perceived as an invasion of privacy as it is the case with classic marketing
communications. In fact, the irony is that consumers participate on
their own free will in those brand hyper realities, even though they are
specifically designed to communicate the same commercial messages
they usually tend to avoid (Whelan and Wohlfeil 2005).20
12
This, however, leads inevitably to the question: Is event-marketing just
another postmodern craze or is it an exciting new way for marketers to
reach their target audiences in the changing marketing communication
landscape of affluent societies? Why should marketing managers should
stretch their creative imagination to the limits to create and stage unique
brand hyper realities for consumers, when it would be much easier,
convenient and “less risky” to exploit the commercial propriety of an
existing external event (event sponsorship)? And, anyway, why should
marketers care about making a contribution to consumers subjectively
experienced quality of life, when their primary concern and sole purpose
should be to sell products and to make profits for their shareholders
(Friedman 1970/2001).21 Thus, the objective of this paper is to introduce
the concept of event-marketing first to a broader audience and then to
discuss its role within marketing communications as well as its impact
on consumers in the changing (postmodern) marketing communications
landscape. As a consequence, the research obviously raises some key
academic and managerial implications. By presenting empirical evidence
from a qualitative field experiment conducted at the Guinness Storehouse
in Dublin, the paper will outline how brands can be communicated to
both external and internal target audiences as 3-dimensional real-lived
experiences, which would strengthen the emotional attachment to
the brand, and how marketers can build mutually beneficial customerbrand relationships by using their imagination in the development and
implementation of creative event-marketing strategies. The findings will
not only narrow the identified information gap, but also demonstrate
how the staged brand hyper reality could contribute to consumers’
subjective quality of life as an enchantment of experiential consumption.
When explaining the concept of event-marketing as an innovative
marketing communication strategy, the authors always encounter
immediately a variety of disbelief and confusion. One of most uttered
arguments, the authors are on a regular basis confronted with, is the idea
that event-marketing is not new and the marketers have always managed
a seminar, a sales stand in the shopping mall, a competition or a product
testing of some kind. These points are then either complemented
or contradicted by the argument that event-marketing de facto is the
sponsorship of a concert, the World Cup or a street festival. Given the
general generosity and liberty by which the term event marketing has
been used to describe all kinds of phenomena in marketing practice and
literature (Cornwell and Maignan 1998)22 ranging from the marketing of
13
events within the framework of event management (Goldblatt 1997)23
to event sponsorships (Cunningham et al. 1993)24 and even sales
promotions (Andersson and Weslau 2000)25, those responses should
come as no surprise. However, to make it quite clear from the start, the
concept of event-marketing that is discussed by the authors in this paper
has nothing to do with the sponsorship of any events nor with running
sales promotions in the shopping mall or the professional marketing
of an event – although to be fair, the management of the marketingevent obviously plays a certain role in the operational implementation
of the event-marketing strategy. Instead, event-marketing is defined as
the staging of interactive marketing-events as 3-dimensional hyper real
brand experiences for consumers, which would result in an emotional
attachment to the brand.3
As an experiential marketing communication strategy in the context
of this definition, event-marketing first emerged in the late 1980s in
response to the significant changes in both the marketing environment
and consumer behaviour in Germany (Wohlfeil and Whelan 2005a).26
By communicating brand values as “real-lived” experiences, eventmarketing strategies are designed to take in particular advantage of
the shift from maintenance to experiential consumption in the societal
value system of affluent societies (Weinberg and Gröppel 1989)27 and
the consumers’ desire for idealised simulations of reality (Firat 1991).28
Experiential consumption refers to obtaining enriching experiences
through emotional benefits, by which consumers attempt to improve the
subjectively experienced quality of their lives right here and now (Wohlfeil
2005; Weinberg and Gröppel 1989).29;27 This romantic consumption
ethic has not only led to an increasing orientation towards and active
participation in leisure, recreation, entertainment and subcultural neotribes (Cova and Cova 2002; Opaschowski 2000; Campbell 1987),13;5;4
but has also demonstrated the urgent need for experiential brand
communications to gain consumers’ attention.
To achieve this objective, the communicative innovation of eventmarketing derives from its four constitutive features:
• Experience-orientation:
As personal lived experiences tend to be stronger than “secondhand” media experiences in determining consumers’ notion of reality,
consumers are encouraged to experience the brand reality as active
participants rather than being passive recipients and, subsequently, are
offered a contribution to their subjective quality of life (Weinberg and
Nickel 1998).30
14
• Interactivity:
In difference to the monological provision of information in classic
marketing communications, event-marketing offers a platform for
interactive and personal dialogues between participants, spectators and
brand representatives (Zanger and Sistenich 1996).31
• Self-initiation:
Because event-marketing is aimed at influencing consumers
emotionally by staging self-initiated marketing-events, the marketer is in
full control of the way in which sensual brand experiences are anchored
in the world of consumer feelings and experiences (Wohlfeil and Whelan
2005b; Weinberg and Nickel 1998).32;33
• Dramaturgy:
In order for consumers to emotionally experience the lived brandreality, it requires a unique and creative dramaturgy that, similar to a
theatre play, brings the brand image to life and captures the imagination
of the target audience. Therefore, the more the event-marketing
strategy differs from consumers’ everyday life experiences, the higher is
the degree of activation among consumers (Sistenich 1999; Zanger and
Sistenich 1996).34;35
Thus, in contrast to event sponsorship, event-marketing is aimed
at positively influencing customers’ familiarity, image, attitude and
emotional attachment to the brand by staging self-initiated marketingevents as a 3-dimensional, interactive brand-related hyper reality for
consumers. Because personally “lived” experiences tend to be stronger
in determining people’s notion of reality than the “second-hand”
experiences as traditionally communicated by advertising (Weinberg
and Nickel 1998)33, marketing-events are better equipped to anchor
multi-sensual brand experiences in the world of customer feelings and
experiences (Weinberg and Gröppel 1989)27. Furthermore, in comparison
to classic marketing communication strategies, where customers
generally remain passive and distant recipients of brand messages, the
major peculiarity of event-marketing is the fact that target audiences
are encouraged to experience the brand values actively by becoming
part of its hyper reality (Wohlfeil and Whelan 2004)36. For instance, at
the Red Bull Flugtag consumers are invited to “stimulate their body and
mind” and “give themselves wings” by building their own home-made
flying machines and then leaping off a 6-metre high ramp to get as far
as possible over a river. And while in advertising or sales promotions a
contact remains rather accidental, consumers actively seek to engage
with various event-marketing strategy. However, in order to utilise its
full potential, any event-marketing strategy must be designed in a way
15
that consumers do not want to miss taking part in a brand’s experiential
hyper reality. Thus, marketers must have a thorough understanding of
what needs consumers seek to satisfy by participating in marketingevents. By meeting the growing need for romantic simulations of
reality and experiential consumption, marketing managers not only
make a contribution to consumers’ subjectively perceived quality of
life, but also succeed in establishing brand values through a unique
communication proposition and building mutually beneficial customerbrand relationships, as outlined in the following example of the Guinness
Storehouse in Dublin.
DISCUSSION
Study case: Guinness storehouse, Dublin
Guinness is probably the most famous Irish brand in the world. In
fact, such is the global fame of the Guinness brand that it is already
recognised as an essential element of the Irish heritage and culture.
In particular, the infamous Irish pub culture is unimaginable without
a pint of Guinness. At least, that is the image the many tourists have
in their mind and that is displayed in nearly every available tourist
guidebook. Unfortunately, people at Diageo, the parent company that
owns the Guinness brand, had to learn the hard way that having one
of the best-known brands in the world does not necessarily translate
in people’s consumption of that brand. Although the Guinness brand
has historically always been all about community, where people come
together and share their stories, it was increasingly perceived in Ireland
as a brand choice of the older, rural generations. In fact, the younger
generations in Ireland and abroad increasingly opted increasingly for
the more fashionable lagers or alcopops rather than the traditional Irish
stouts and ales. Therefore, in order to reconnect Guinness with younger
Irish drinkers, who were switching more often to lagers and alcopops,
the Guinness Storehouse in Dublin was opened to the public as a brand
land in December 2000. Within the concept of event-marketing, brand
lands are immobile corporate theme parks that provide an interactive
mixture of entertainment and information around brand-related themes
to consumers (Wohlfeil and Whelan 2005a; 2004). Located in a former
fermentation building, the dull industrial brick exterior leads into a foyer
with a modern glass-and-steel interior symbolising a bridge between the
heritage of the past and the demands of the future.
16
The 30 metres high glass atrium in the core of the building is shaped
as a giant pint glass rising from the foyer up to the roof. Similar to the
pouring of a Guinness pint, visitors now play the role of the settling
Guinness drop, which they receive as an entry ticket. In other words,
they experience the Guinness Storehouse by slowly working their way
over seven floors, incorporating ten different areas, up to the Gravity Bar
at the top. Each of the ten areas contains a range of displayed artefacts,
graphic designs and interactive multimedia-shows that engage all the
visitors’ senses from visuals and sounds to smell, taste and touch. After
a big screen welcomed the visitors to the world of Guinness with video
clips, the first area at the ground floor interactively introduces visitors
to the four raw ingredients barley, water, hops and yeasts and their
special qualities as the basics on which Guinness is made. The next level
contains a graphically designed multimedia-show that is designated to
Arthur Guinness, the foundation of Guinness and the Guinness family’s
contributions to the people of Dublin. This is followed by interactive
areas covering the brewing process, life as an interpretation of what
happens when Guinness and people are mixed together, the art of
cooperage, transportation, Guinness’s global success, its popular world
of advertising and Diageo’s drink-sensibly campaign by engaging visitors
interactively in middle of the processes. Finally, like a Guinness drop, they
settle at the top to enjoy their personal pint of Guinness in the Gravity
bar with a view over Dublin City.
For internal marketing purposes, the Guinness Storehouse is not only
home to the visitor experience, but houses a number of other facilities as
well. One of the key areas is the Learning Centre, which features state-ofthe-art training (How to pour the perfect pint...) and conference facilities
for holding motivation and training seminars. An events centre provides
a number of first class venues catering for 20 to 1000 people for concerts,
fashion shows, product launches or lectures. The Guinness Achieve,
where records and artefacts dating back to 1759 are collected, preserved
and stored, is also located in the Guinness Storehouse to document the
history of Guinness. Finally, in the spirit of the experience economy (Pine
and Gilmore 1998), a retail store is located at the exit offering a wide
range of Guinness branded merchandise to “brand tourists”. Despite not
being the primary business, the success speaks for itself. Since December
2001, the Guinness Storehouse has already become the Number One
tourist attraction in Dublin with more than 700,000 visitors per year.
Furthermore, it has won several awards worldwide for “best brand
experience” and “corporate themed entertainment”.
17
QUESTIONS
1. Write a one-page essay on your thoughts about how you would
classify your behaviour and orientation to products you buy?
2. Use the consumer decision-making process to describe a recent
purchase you made. Make comments on each stage of the process.
3. Can you think of situational effects that would make the purchase
of a new sports-coat a high involvement purchase? Explain.
4. Identify and fully describe one of each of the types of reference
groups discussed in this chapter.
5. Give an example of a low involvement, a medium involvement,
and a high involvement purchase you have made recently.
Describe how your decision-making behaviour was different for
each purchase.
6. Explain how situational effects might impact a person’s decisionmaking in each of the following examples:
a) Mark has a job interview on Friday and is wondering what
to wear
b) Janie is driving across Utah to visit her parents and, due to
a broken radiator hose, her car overheats on the interstate.
c) The Marvin family is headed to Texas to visit relatives and
wants to stop at a restaurant for lunch.
d) You have a first date tonight with a person to whom you are
very attracted and are thinking about where to buy dinner.
7. “Learning always changes behaviour. Otherwise, it is not learning
and not important to marketers.” Agree or disagree and explain.
8. Compare and contrast consumer-buying behaviour and
organizational behaviour.
9. Identify the principal type of risk involved in each of the following:
a) Janet undergoes a lab test for a health problem.
b) Adam buys a new mini-compact car and is not sure about
what his friends will say.
c) Glenn misses a marketing exam and fails to contact anyone
beforehand.
d) Jerri decides to take a vacation and plans a trip to Africa.
e) Jamie invests her tip income every week in a local ‘.com’
company.
18
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The context of this part has been adapted from the following
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19
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20
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Event Marketing in Order to Change Brand Image and Increase
Sales, International Management Master Thesis No. 2000:44,
Graduate Business School, University of Götheborg, Sweden.
26. Wohlfeil, Markus and Susan Whelan (2005a), “Event-Marketing
as Innovative Marketing Communications: Reviewing the
German Experience”, Journal of Customer Behaviour, Vol. 4,
(forthcoming).
27. Weinberg, Peter and Andrea Gröppel (1989), “Emotional
Benefits in Marketing Communication”, Irish Marketing Review,
Vol. 4, No. 1, pp. 21-31.
28. Firat, A. Fuat (1991), “The Consumer in Postmodernity”,
Advances in Consumer Research, Vol. 18, pp. 70-76.
29. Wohlfeil, Markus (2005), When Brands Become “Real-Lived”
Experiences: Consumer Motivations to Participate in MarketingEvents, Unpublished Master-Thesis at the Waterford Institute of
Technology.
30. Weinberg, Peter and Oliver Nickel (1998), “Grundlagen
für die Erlebnisvermittlungen von Marketing-Events”. In:
Eventmarketing: Grundlagen und Erfolgsbeispiele. (Ed.) Nickel,
Oliver (München), Vahlen, pp. 61-75.
31. Zanger, Cornelia and Frank Sistenich (1996), “Eventmarketing:
Bestandsaufnahme, Standortbestimmung und ausgewählte
theoretische Ansätze zur Erklärung eines innovativen
21
Kommunikationsinstruments”, Marketing – Zeitschrift für
Forschung und Praxis, Vol. 18, No. 4, pp. 233-242.
32. Wohlfeil, Markus and Susan Whelan (2005b), “Consumer
Motivations to Participate in Marketing-Events: The Role of
Predispositional Involvement”, European Advances in Consumer
Research, Vol. 7, (forthcoming).
33. Weinberg, Peter and Oliver Nickel (1998), “Grundlagen
für die Erlebnisvermittlungen von Marketing-Events”. In:
Eventmarketing: Grundlagen und Erfolgsbeispiele. (Ed.) Nickel,
Oliver (München), Vahlen, pp. 61-75.
34. Sistenich, Frank (1999), Eventmarketing: Ein innovatives
Instrument zur Metakommunikation in Unternehmen, Doctoral
Thesis at Technische Universität Chemnitz, Wiesbaden: DUV.
35. Zanger, Cornelia and Frank Sistenich (1996), “Eventmarketing:
Bestandsaufnahme, Standortbestimmung und ausgewählte
theoretische Ansätze zur Erklärung eines innovativen
Kommunikationsinstruments”, Marketing – Zeitschrift für
Forschung und Praxis, Vol. 18, No. 4, pp. 233-242.
36. Wohlfeil, Markus and Susan Whelan (2004), “Investigating
Consumers’ Motivations to Participate in Marketing-Events”, in
Proceedings of the Irish Academy of Management 2004, Trinity
College Dublin, on CD-Rom.
FURTHER READING
1. Ghemawat, Pankaj (Spring 2002). “Competition and
Business Strategy in Historical Perspective”. Business History
Review (Harvard Business Review).
2. Hill, Charles W.L., Gareth R. Jones, Strategic Management
Theory: An Integrated Approach, Cengage Learning, 10th edition
2012
3. Lamb, Robert, Boyden Competitive strategic management,
Englewood Cliffs, NJ: Prentice-Hall, 1984
4. Porter, Michael E. (1996). “What is Strategy?”. Harvard Business
Review(November–December 1996).
22
5. Kvint, Vladimir (2009). The Global Emerging Market: Strategic
Management and Economics. Routeledge.
6. Chaffee, E. “Three models of strategy”, Academy of Management
Review, vol 10, no. 1, 1985.
7. Chandler, Alfred Strategy and Structure: Chapters in the history
of industrial enterprise, Doubleday, New York, 1962.
8. Mintzberg, Henry (1987). “Why Organizations
Strategy”. California Management Review (Fall 1987).
Need
9. Mintzberg, Henry and, Quinn, James Brian (1996). The Strategy
Process: Concepts, Contexts, Cases. Prentice Hall. ISBN 978-013-234030-4.
10. Drucker, Peter (1954). The Practice of Management. Harper &
Row. ISBN 0-06-091316-9.
11. Henderson, Bruce (January 1, 1981). “The Concept of
Strategy”. Boston Consulting Group. Retrieved April 18, 2014.
12. Mintzberg, Henry “Crafting Strategy”, Harvard Business Review,
July/August 1987.
13. Mintzberg, Henry and Quinn, J.B. The Strategy Process, PrenticeHall, Harlow, 1988.
14. Mintzberg, H. Ahlstrand, B. and Lampel, J. Strategy Safari : A
Guided Tour Through the Wilds of Strategic Management, The
Free Press, New York, 1998.
15. Porter, Michael E. (1980). Competitive Strategy. Free
Press. ISBN 0-684-84148-7.
16. Kiechel, Walter (2010). The Lords of Strategy. Harvard Business
Press.ISBN 978-1-59139-782-3.
17. Drucker, Peter The Practice of Management, Harper and Row,
New York, 1954.
18. Selznick, Philip Leadership in Administration: A Sociological
Interpretation, Row, Peterson, Evanston Il. 1957.
19. Ansoff, Igor Corporate Strategy McGraw Hill, New York, 1965.
20. Henderson, Bruce (1970). Perspectives on Experience. Boston
Consulting Group.ISBN 0-684-84148-7.
23
21. Porter, Michael E. (1985). Competitive Advantage. Free
Press. ISBN 0-684-84146-0.
22. Michael Porter-What is Strategy?-Harvard Business ReviewNovember 1996
23. Hamel, G. & Prahalad, C.K. “The Core Competence of the
Corporation”, Harvard Business Review, May–June 1990.
24. Drucker, Peter F. (1994). “The Theory of the Business”. Harvard
Business Review(September–October 1994).
25. Henry Mintzberg-The Fall and Rise of Strategic Planning-Harvard
Business Review-January 1994
26. Beaufre, Andre (1965). An Introduction to Strategy. Translated
by R.H. Barry. With a pref, by B.H. Liddell Hart. Frederick A.
Prager. OCLC 537817. Unknown ID 65-14177.
27. Mulcaster, W.R. “Three Strategic Frameworks,” Business Strategy
Series, Vol 10, No1, pp68 – 75, 2009.
28. Scwhartz, Peter The Art of the Long View, Doubleday, New York,
1991.
29. Wack, Pierre “Scenarios: Uncharted Waters Ahead”, Harvard
Business review, September October 1985.
30. Cameron, Bobby Thomas. Using responsive evaluation in
strategic management. Strategic Leadership Review 4 (2), 22-27
31. Woodhouse, Edward J. and David Collingridge, “Incrementalism,
Intelligent Trial-and-Error, and the Future of Political Decision
Theory,” in Redner, Harry, ed., An Heretical Heir of the
Enlightenment: Politics, Policy and Science in the Work of Charles
E. Limdblom, Boulder, C.: Westview Press, 1993, p. 139
32. Elcock, Howard, “Strategic Management,” in Farnham, D. and S.
Horton (eds.), Managing the New Public Services, 2nd Edition,
New York: Macmillan, 1996, p. 56.
33. Hamel, Gary Leading the Revolution, Plume (Penguin Books),
New York, 2002.
34. Moore, Mark H., Creating Public Value: Strategic Management
in Government, Cambridge: Harvard University Press, 1995.
35. Lindblom, Charles E., “The Science of Muddling Through,” Public
Administration Review, Vol. 19 (1959), No. 2
36. Tichy, Noel Managing Strategic Change: Technical, political, and
cultural dynamics, John Wiley & Sons, New York, 1983.
24
Part 2
STRATEGY OF EVENT MARKETING.
MARKET RESEARCHING
Objective outline:
1. Explain the importance of understanding customers and
marketplace.
2. Discuss customer relationship management.
3. Identify event marketing strategies for creating value for
customers and capturing value from customers in return.
Chapter Key Terms:
Strategy
Customer
Communication
Targets
Targeting
Event management is the application of project management to
the creation and development of large scale events such as festivals,
conferences, ceremonies, formal parties, concerts, or conventions. It
involves studying the brand, identifying the target audience, devising
the event concept, planning the logistics and coordinating the technical
aspects before actually launching the event.1
The process of planning and co-ordinating the event is usually
referred to as event planning and can include budgeting, scheduling, site
selection, acquiring necessary permits, coordinating transportation and
parking, arranging for speakers or entertainers, arranging decor, event
security, catering and emergency plans.
The events industry now includes events of all sizes from
the Olympics down to business breakfast meetings. Many
industries, charitable organizations, and interest groups hold events in
order to market themselves, build business relationships, raise money or
celebrate achievement.1
What is event planning?3
This question actually breaks down into two questions: What kinds of
events are we talking about? What is event planning? First, what kinds of
events are we talking about? They include:
25
•
Celebrations (fairs, parades, weddings, reunions, birthdays,
anniversaries, bar and bat mitzvahs, first communions, sweet 16s)
• Education (conferences, conventions, meetings, graduations)
• Promotions (product launches, political rallies, fashion shows,
conventions)
• Commemorations (memorials, civic events) The above list is not
an exhaustive one, but as the examples illustrate, special events
may be business related, purely social, or somewhere in between.
The advice in this book is relevant to the planning of both business
and social events. Now we move to the second What question:
What is event planning?
Planners of an event may handle any or all of the following tasks
related to that event:
• Conduct research
• Create an event design
• Find a site
• Arrange for food, decor, and entertainment
• Plan transportation to and from the event
• Send invitations to attendees
• Arrange any necessary accommodations for attendees
• Coordinate the activities of event personnel
• Hire employees to work the event
• Supervise at the site
• Conduct evaluations of the event
How many of these activities your business engages in will depend on
the size and type of a particular event, which will, in turn, depend on the
specialization you choose. Your specialization will, of course, depend on
your areas of expertise, but also will depend on your location. If you live
in rural Iowa, for instance, you may be planning to develop a social event
planning business since you may not have a strong corporate presence
in your town.
The new rules for event management2
As much as stunt can seem like a dirty word, marketing through
stand-out events has never been so maverick. Whether you call it
event marketing, experiential marketing, live marketing, participatory
advertising, or any other moniker, this is a brave new world of blowing
things up, building in a technological overlay to real-world places, and
convincing otherwise sane passes-by to dance or change clothes in the
street—all with the motive of engaging consumers. We talked with some
26
of the smartest minds in experiential marketing to find out how they
pull off memorable events—and make sure there’s significant consumer
engagement long after the event is over. Here’s what they told us.
1. Create an event within an event. “We try to create an event
within an event where we can touch a consumer one-on-one, where
you can engage directly, and teach them about your product, and do so
by interacting in a quality way. I just got back from Sundance, and we
were doing VIP and celebrity shuttling to events in our vehicles, and the
goal for us is to create an event within the vehicle. For Ray Ban we did
a truth-or-dare themed campaign. We have video within the shuttles,
and asked the passengers truth-or-dare questions, and were giving away
free sunglasses. We had people dancing in the middle of the street, we
had people telling us their biggest secrets. And that was not only fun
for participants, but became a huge hit online after the event. We try to
make it almost mass media, where they’re telling their friends to go here,
or watch this video, and we create a whole social-media event around it.
Why does it work? People go to these things to experience new things,
and we’re giving them that. They want to share it with their friends
naturally when they see something cool.” —Ian Greenberg, senior vice
president of Show Media, an advertising agency based in New York City,
which ranked No. 236 on the 2010 Inc. 500 | 5000
2. Employ GPS and real-time event tracking. “I think one of
the things that we’ve been playing around with Real Good Chair [a
documentary in which 25 chairs by Blu Dot were placed around New
York City and tracked by GPS and film crews] is location and GPS. It’s
something that someone can participate in and watch and see in
real-time. You don’t have to be there in the streets of New York to
see it—you have a whole other community that can go along with
that experience. That connection with another event, is really new
and the power of new is huge. If it feels like a different experience—
if it captures your fascination, that’s what really gets passed along,
and builds the press and community around it. It’s what flash parades
were two years ago—that’s the scramble in many ways. Has anyone
done this before? Will this be felt like a copycat? It’s all about staying
new.”—Michael Hart, founder of Mono, an agency based in Minneapolis
3. Add another dimension. “A lot of the technologies that are potentially
transformative to events today are essentially invisible. People have gotten
used to 3-D technology, projections, and augmented reality that to have
them at events feels a lot more natural today. I’d say augmented reality is a
27
great technology you can use in the live space for project demonstrations.
A couple of years ago it would have felt a lot more awkward, forced,
and generally very Minority Report. QR codes are pretty invisible at this
point, too, becoming much less awkward, more natural, and that lets
them become sparks for natural interactivity. H&M and Samsung have
done very beautiful projection mapping on buildings in Europe. It’s the
kind of thing that’s not what people think of as traditional event, but it’s
experience in the public domain that gets attention, and really can have
the potential to get the attention online just because it’s cool to watch.”
—Liz Bigham, senior vice president and director of marketing for Jack
Morton Worldwide
4. Use ubiquitous social networking as a conduit for exclusivity. “The
giant gorilla in the room is how do you use Facebook through your event
and on-site activity? The first thing that’s happening is that I’m seeing a lot
of brands encouraging people to become fans right there on site. It used
to be that you’d have to have a computer there and encourage people
to sign directly on your machine. Now, you can offer a direct reward, a
prize, a premium, for fanning the product right then and there on their
smartphone or mobile device. It’s giving them some real immediate value.
Immediate liking and friending is becoming more popular. I’ve also seen
a lot of exclusive access to existing fans. You promote the event you’re
going to be at on Facebook—and you say, ‘hey, if you’re going to be there,
here’s an exclusive thing for our fans,’ whether it’s parking, a free T-shirt,
meeting a musician or DJ. We’re beginning to see, taking whatever’s
happening at your event, a video game event, a concert, a snowboarding
contest, you’re seeing not only being able to have physical access to
it, but there would be content exclusive to Facebook. You can pick up
about a million new brand fans by a good strategy of creating exclusive
Facebook content. Do you want to see an interview with Sean White,
or some neat snowboard footage? You can only see that on Facebook.”
—Issa Sawabini, a partner and owner at Fuse, a youth-marketing agency
based in Burlington, Vermont
5. Hire outside experts. Lots of them. When working on a campaign
for Mafia Wars, in which an explosion of an armoured truck would be
staged in the Nevada desert, David Moranville, creative director and
executive vice president of Davis Elen Advertising, said: “We were hoping
to get MythBusters involved with us so they’d do a show. In the meantime,
we started looking into different detonations and different companies
that obliterate things.” Turns out, Los Angeles has quite a variety of
28
companies that detonate blasts for hire. Moranville picked a company
in Burbank called WESTefx, which had worked with special effects and
blast technology in Apollo 13, Transformers, and Batman. The first thing
Davis Elen learned was their armoured truck … didn’t actually need to
be armoured. It was stripped of a lot of the interior weight, including
armour, engine, and interior detailing. Blasting caps were added to the
interior of all the doors, so at detonation each flies 20 or 30 feet. The
truck was filled with artificial money, also rigged to blast away at the
first explosion. Also, he knew that when there’s fire, there should be fire
officials. And an EMT. And some hired police. The number of officials
you’ll need to hire depends on geography and how many civilians will be
nearby the stunt. In this case, where about 75 people would be present,
Moranville needed between two and four Fire Marshalls, between four
and six hired law enforcement agents, and an EMT. The total cost was
less than $10,000.
6. Don’t fear consumers’ brutal honesty. “We did a ride and drive
campaign for Hundai Sonata this part year, which was part of a bigger
campaign called Sonata Uncensored. The cars had cameras in them,
and we invited people to give the cars test drives. So the drivers and
passengers, once inside, could record themselves giving uncensored
feedback on the car. It was used as part of a Facebook campaign,
and a lot of that content—and content like it—was used for TV ads.
The insight: Events are not just a moment in time, they are content
that can be used in lots of ways, whether that’s online, or on TV.”
—Liz Bigham, senior vice president and director of marketing for Jack
Morton Worldwide
7. Mash-up your technology. “You have to be in tune to what has
been done before. It’s trying to mash up things that haven’t been mashed
up before. Bringing a couple of technologies and mediums together that
haven’t been brought together before is the key. Old media with new
media, or new tech with more comfortable older tech. And with that, you
build a fascination with a new way the world can work. It’s increasingly
true that tech and creativity are becoming one in the same. I think they
was a period of time where technology was a platform, and it was a
group of people who solved problems for systems and machinery. There
was a creative group, separately. They didn’t get together. Now there
are minds that come from a technology background and have creativity.
The great melding of those worlds is right now. Geek has been cool for
a while, and is only getting cooler.”—Michael Hart, founder of Mono, an
agency based in Minneapolis
29
8. Tweeting the deal. “Almost every brand that has an audience
in the Twitter age group—young adults who aren’t too young—and is
becoming used to making constant updates from the on-site/booth/
whatever it is. It used to be you put up a sign up outside your booth
when something was happening. Now you post updates online. Brands
are also getting good at creating on-site experiences over Twitter. It could
be an on-site scavenger hunt. It could be taking a photo—something
fun and challenging, and if they bring that back they win a prize.”—Issa
Sawabini, a partner and owner at Fuse, a youth-marketing agency based
in Burlington, Vermont
Conducting market research3
Many interviewees told us that their market research was very informal
in nature, consisting of knowledge gained through years of involvement
in the industry. Deborah Williams, Kim Quigley, and David Granger all
have years of experience in the event planning or supply industry. Their
target market is the Dallas-Ft. Worth area. However, they also operate
nationally, producing corporate events in Florida, Oklahoma, and Ohio.
Most of their clients come to them through organizations they belong to
or because they have been involved in the industry for many years. “So
you know the resources and the people,” Quigley says. If you already
have experience in event planning or a related industry, you may be
starting your own business partly because discussions with colleagues
make you aware that a need exists. This kind of knowledge is valuable,
but Goldblatt points out that competition is now global as well as local,
and all event planners should do market research. With this idea in mind,
we now offer some suggestions on how to conduct this type of research.
The market analysis3
One of your first tasks is to determine the market limits or trading
area of your business. These limits will vary depending upon the type
of event planning service you offer. For example, if you plan parties, you
may limit your market to your county. If you plan corporate meetings,
however, you may have a national client base.
Studies show that a population base of at least 50,000 is needed to
support an event planning service. Keep in mind that the higher the
income level of that population, the more potential clients there will be
for your business. If you live in an area with a population base of less than
50,000, consider your goals. Perhaps you are a mother of young children
and are hoping to earn $5,000 a year, keeping your business small while
30
rearing your children. Then a smaller population base may work for you.
Many event planners put their hats into this business, planning to earn
only a part-time salary to supplement other family income. This is one
of the real strengths of this field. You can choose to create a successful
part-time or full-time business in event planning. To conduct a market
analysis you need to ask and answer the following questions:
• Is the population base large enough to support your event planning
service?
• Does the community have a stable economic base that will provide
a healthy environment for your business?
• Are the area’s demographic characteristics compatible with the
market you wish to serve?
Many chambers of commerce have offices that track their area’s
economic development. These offices are usually called either Office of
Economic Development or Economic Development Council. Find an office
in your area, and look for the above information. In addition, look at
reports and studies conducted by trade associations. You can also contact
the Census Bureau at www.census.gov. You can also access www.bls.gov/
cex/ to read the Bureau of Labor’s Consumer Expenditure Survey. This
survey includes information about how individuals and families spend
their money. If you’ll be planning corporate events, you also need to
know the number of corporations in your service area that hold regular
conventions and meetings, the size of these companies, their budgets
for these events, and if they are using outside services. You will be able
to find answers to many of these questions on a company’s website. As
you conduct your market research, memberships in industry-related
associations can be well worth the investment. Associations usually offer
networking opportunities and a wealth of industry-specific information,
such as market statistics, member lists, books, and reference materials.
They may also offer discounts on purchases from certain suppliers. There
are several associations specific to the event planning industry, including
the International Special Events Society and Meeting Professionals
International. For information on contacting an industry association,
please see the Appendix at the end of this guide.
Interview Prospective Clients3
The next step is to interview prospective clients. What are their
needs? How likely are they to use a service like yours? If you are planning
corporate events, interview meeting planners and directors of marketing
31
and public relations, as well as event directors at convention halls and
hotels. If your business will focus on social events, interview women
in affluent households (studies show women do most social planning).
Whatever your specialization, also consider interviewing professionals in
related fields. Photographers and caterers know a lot about the nature
of the special events occurring in the area. You can survey your targeted
market by direct mail, by telephone, by e-mail, or in person. Next,
Goldblatt suggests, try to get a few clients. “If people are not willing to
pay you, they’re not fully committed,” he says.
Analyse The Competition3
Competition in the event planning market is fierce, but it is not
insurmountable. If you are targeting the corporate market, your
competition will consist not only of other event planning entrepreneurs,
but also of in-house meeting planners hired by corporations. Many
corporations choose to outsource event planning responsibilities to
keep costs low. You may be able to assess the competition by asking
corporations about the planners they work with. Trade associations such
as ISES or MPI may not be able to disclose members’ names, but they
might be willing to tell you how many of their members are located in
your area. In the social arena, your main competition will be other event
planning entrepreneurs, as well as some caterers, florists, etc., who have
taken on the responsibilities of planning events as a side-line function.
Most of the competition you’ll face will be local; try checking in your
phone book under Event Planners or Party Planners to see how many
others there are. Be aware, however, that many event planners do not
buy advertising, preferring to rely solely on word-of mouth to do their
advertising for them. This means you may have to get creative to figure
out how much local competition you face. Ask vendors which planners
they work with. Go to party supply stores and see if you can find out
who their major customers are. Ask all your questions face-to-face,
rather than by phone. If you are friendly and explain that you are trying
to figure out if there is enough demand for another planning business,
most people will cooperate. If you find a large amount of competition
in your area, don’t be discouraged. Instead, look for a niche you can fill
and think about what will make your event planning company stand
out in the crowd. Social event planning is the ideal place from which
to launch your career. Social planning is a growth industry—there are
more opportunities out there than those planners in the marketplace
can handle. Social event planners also will be able to find plenty of work
32
in areas with a smaller population base. Remember that if you strive to
be the best, research your market, promote yourself, and develop a good
business plan, you will find your spot in the marketplace.
DISCUSSIONS
View an example of key priorities.
Close the vision-culture gap
In order to develop strategies to close this gap, the Corporate
Communication strategist, as a starting point, has to have a clear
understanding of the organisation’s strategic intent and priorities. Merely
repeating to employees the words used to capture the leadership’s
thinking in the corporate strategy document is not enough. The idea is
to delve deeper and to unpack the underlying intent of the vision and
each of the strategic goals (sometimes called business plan objectives
or a variety of other terms) so that employees can truly understand and
therefore support it.
Another step towards closing this gap is to define enterprise values
that are in support of the vision and strategic goals and to develop a Code
of Conduct that captures the desired behaviours for living those values.
The communication strategy will seek to create maximum understanding
and enterprise-wide buy-in for the values and behaviours.
Close the vision-reputation gap
The primary focus of the communication strategy in closing this gap is
effective stakeholder relationship management. To perform this function
effectively, the Communication strategist needs to be involved in the
formulation of the vision (organisation’s strategic intent) and strategic
priorities as these have to be informed by insights on stakeholder needs,
expectations and perceptions.
Once the organisation’s strategy is developed and the vision and
strategic goals are clearly articulated (or implicitly understood), it
becomes a function of the communication strategy to identify the most
relevant stakeholders, not only for the organisation as a whole, but more
importantly for each of the strategic goals. The communication strategy
then has to specify the ways in which the relationship with each of
those stakeholders will be managed to ensure common understanding
among stakeholders and the organisation of where it is heading and
what it will focus on to get there. It is part of the communication
strategy development phase to specify the measurement tools that will
33
be employed to determine and track stakeholder perceptions, thereby
determining the size and nature of the gap that still needs to be closed.
Close the reputation-culture gap
This becomes almost a natural consequence of the success achieved
in closing the other two gaps. When employees behave in a way that
is congruent with the organisation’s vision and strategic goals (closing
the vision-culture gap) and the organisation and its key stakeholders
have a commonly shared view and understanding of the vision and
strategic goals (closing the vision-reputation gap), there should be no
gap between what the stakeholders expect of the organisation and how
they experience the behaviour of its employees.
REFERENCES
The context of this part has been adapted from the following
product(s):
1. Ramsborg, G.C.; B Miller, D Breiter, BJ Reed & A Rushing
(eds.), Professional meeting management: Comprehensive
strategies for meetings, conventions and events, 2008, 5th ed,
Kendall/Hunt Publishing, Dubuque, Iowa. ISBN 0-7575-5212-9
2. The new rules for event management. Access via Internet: http://
www.inc.com/guides/201102/new-rules-of-event-marketing.
html
3. The Event Planning Industry. Access via Internet: http://www.
entrepreneur.com/downloads/guides/1313_Event_Planning_
ch1.pdf
FURTHER READING
1. Ayuba B. (2005), Marketing: Principles and Management,
Kaduna:Shukrah Printing
2. David L. and Albert J.D. (2002), Consumer Behaviour, New Delhi:
Tata McGraw Hill.
3. Del I.H. Roger J.B. and Kenneth A.C. (2001), Consumer Behaviour;
Building Marketing Strategy, New York: McGraw-Hill Irwin.
4. Edward, J. and William J. (1963):
of Marketing; NewYork, Mc Graw- Hill, Inc.
34
Fundamentals
Part 3
SEGMENTATION OF EVENT MARKETING AND
SELECTIONS OF TARGET MARKETS
Objective outline:
1. Define the major steps in designing a customer – driven marketing
strategy: market segmentation, targeting, differentiation and
positioning.
2. List and discuss the major bases for segmenting consumer and
business markets.
3. Explain how companies identify attractive market segments and
choose a market – targeting strategy.
4. Describe the environmental forces that affect the company’s
ability to serve its customers.
Chapter Key Terms:
Target
Segmentation
Position
Why audience segmentation is important1
For many in the artistic community, marketing is a nine-letter dirty
word. To some artists, marketing seems to represent the ultimate
compromise of their creative principles. Marketing, they believe, means
pandering to the tastes of the audience, rather than expressing their
own artistic vision.
Experienced marketers, in and outside of the arts, recognize this
fear as a narrow and incorrect interpretation of marketing principles. In
fact, appropriate and insightful market segmentation analysis can help
artists thrive. When arts organizations find and attract the right audience
for each artistic effort, more artists can connect with audiences that
appreciate and value their individual talents and ideas.
Market segmentation analysis and the selection of the particular
audience segments you will target are essential parts of a strong
marketing plan. When you analyse your potential audience to identify
key segments, you consciously select groups of people you will try to
attract to your organization. Your marketing goal is no longer just filling
35
seats or getting people to walk in the door, but attracting the right people
with the right message through the right media at the right time with the
right product at the right price. When you commit to target marketing,
you tell yourself, your artists, your management and your board that
some potential audience members are more important than others.
Excluding anyone may strike some as a risky and controversial strategy.
However, when target marketing succeeds, you don’t just sell tickets. You
build a strong and satisfied audience that values the artistic product you
provide, and keeps coming back for more. In the arts, successful market
segmentation is based on the premise of “different strokes for different
folks.” It begins by recognizing that every person is not equally drawn to
every work of art.
The purpose of audience segmentation analysis is to identify those in
the over-all population who will be most likely to appreciate and value
the particular art in question so you can promote the work directly to
them. In other words, in arts marketing, the goal of segmentation is to
find audience members who will be most satisfied by the artistic product
you have to offer. Market segmentation protects artists from pressures
to shape works to fit the needs and tastes of an undefined mass of
potential audience members.
Another word for segmentation is grouping. When you look for
segments of your overall audience, or your potential audience, you are
searching for groups of people who are similar in some way to each
other, and different from everybody else.
For a segment to be meaningful for your marketing strategy, the ways
the individuals are similar should relate to your organization or artistic
product. Your goal in market segmentation is to appeal to each group’s
particular needs and interests in much the same way you would if you
were meeting and talking to one person at a time.
As soon as marketers began to use television as a major advertising
medium, they realized that “mass” communication must direct itself to
a particular target consumer or it is lost in the clutter. In today’s world,
potential audiences are besieged with information everywhere they go.
They see flyers on their doorsteps, brochures in their mail boxes, ads on
their grocery carts, e-mail at their jobs, TV channels at airports when
they travel, as well as the television, radio, newspapers and magazines
they invite into their homes. We’ve all developed an ability to “tune out”
most marketing, and devote our energy and attention to the things we
find interesting, intriguing or otherwise worth our time.
36
Market segmentation lets you see and know your audience members
as individuals, so you can identify their needs and more effectively
communicate the ways they can benefit from what you have to offer.
Armed with this knowledge, you’ll find it easier to develop creative
marketing strategies that reach and motivate your target, making the
most of your always too-scarce promotional resources.
How to find important new audience segments1
Before you begin your search for new audience segments, make
sure you understand the characteristics of your current audience and
any segments it may already include. Then, you can look beyond your
present audience to find new people to target with special marketing
efforts.
How would you characterize the people who now support your
organization? Who comes to your performances? Who are your donors?
Your volunteers? Think about these groups, refer to any research you
may have done in the past, consult with others in your organization,
and try to formulate a current audience profile, using the checklist of
IDENTIFYING CHARACTERISTICS as a guide.
Demographics are a good place to start1
One of the easiest and most obvious ways to describe an audience
is in terms of demographic characteristics. How old are your typical
audience members? Are they mostly female, mostly male or an even
mix? Are they married or single? Do they have children? Where do they
live? Where do they work? What races or ethnic groups predominate?
What is the typical occupation? The typical level of income? The level of
education?
You probably have a general idea of the demographic characteristics
of your audience. Some demographic traits are easy to observe just
by looking at your audiences or the people who visit your facility. You
may even have a written profile that describes your audience members
demographically. But, demographics are only a start. They can provide
a broad general outline, but don’t really help you pinpoint the qualities
that turn undifferentiated people into individual persons.
Get the picture? The point is, you only get part of the picture. While
Steve Jobs and Arnold Schwarzenegger are alike in some ways, they are
37
different in many other ways. Demographic profiles are so broadly drawn,
that they describe many people -including people who don’t fit into your
customer segments. Demographics are only a starting point. They can
provide a broad general outline, but don’t really help you pinpoint the
qualities that make people into individuals. Demographics can sketch
the outlines of an audience, but if demographics are your only tool, you
won’t be able to fill in the finer details.
For real insight, reach inside to identify needs1
To get beyond demographics, you need to think about what makes one
person different from another. For the most part, the demographic facts
are not what really distinguish us. What makes each of us an individual
is what goes on below the surface in our hearts and in our heads. That’s
where you’ll find the most powerful information about your present
audience and the groups you can target to develop new audiences. In
defining audience segments, your primary goal should be to identify a
group of people who share a common need that your organization or
your programming can satisfy.
The need might be expressed in terms of the artistic product you
deliver, i.e. you might be looking for people who seek out “innovative
presentations of classic dramas” or “modern music from around the
world.” The need can also be expressed in non-artistic terms, such
as opportunities for socializing with friends, family entertainment,
relaxation or other end benefits. When you define segments based on
their needs, you remain focused on how your artistic product can find
the audience most likely to appreciate and value it.
Mining for underlying needs1
To begin your journey below the demographic surface, think about
other “facts” you know or can find out about your audience or your
prospects. What are their behaviour patterns relative to your organization,
or relative to the arts overall? Are they frequent arts participants, or do
you attract people who are not very involved in the arts? Do you get
repeat attendance, or is most of your audience attending only once? Do
different programs or performances attract different types of people? Do
you have a core of subscribers or members? Are your audience members
the subscribers or members of other arts organizations? Which ones?
38
What Are They After? Then ask yourself what underlying needs may
be motivating these behavioural patterns. Is your audience seeking
variety? New experiences? Reliable entertainment? Exposure to the
classics? Opportunities to learn? By trying to understand why people
behave as they do, you may be able to identify the important needs your
marketing program should address.
What Will They Do Next? Consider, too, what audience members or
prospects are likely to do in the future. Analyse your historical records,
or ask directly. Do they intend to come again, or do they plan to move
on to something new? Are they willing to consider a membership or
subscription? If not, what other kind of commitment are they willing to
make?
What Are Their Beliefs? Another way to understand prospect needs is
to look for the attitudes, opinions and beliefs that motivate what people
do. Ask yourself what your existing audience members or your prospects
like about the arts. What do they expect from their arts activities?
Are they looking for education? Inspiration? Social status? Could their
expectations provide a basis for meaningful segmentation?
What Are Their Priorities? Think about what role the arts play in your
prospects’ lives. How much do they know about the arts? Is art a high
priority, or are other things more important? Where do the arts “fit” into
their leisure time and other life responsibilities?
What Do They Think of You? What do your audience members or
prospects know or believe about your organization? What do they like
about what you do? What do they believe you do best? What don’t
they like? Are the differences in what people know or believe about you
enough to create genuinely different audience segments?
QUESTIONS AND DISCUSSION
EXAMPLE: Identify specific individuals based on records kept of their
behaviour.
Dance Company Y’s primary targets for a special Subscription
renewal effort are first-year subscribers. The Company refers to its
Database to provide the information needed to identify the people who
fit the definition of the targeted customers (i.e. all the people who are
listed in the Database as first-year subscribers). Note: Your Database
records must be clean and up-to-date for the customer information
39
to be accurate. In other situations you won’t be able to identify Target
Prospects on an individual name-and-address basis. That’s when you’ll
need to learn more about the characteristics that prospective customers
have in common. These details will help you single out these prospective
customers with advertising or other marketing efforts, by “talking” to
them as if you were talking one-on-one to each person individually.
PSYCHOGRAPHIC EXERCISE:
A good way to pull segmentation information together is to create
“stories” about hypothetical customers who fit into each customer
segment you have identified. The purpose of the exercise is to get
your creative juices flowing toward understanding your customers’
perspectives. This is an example of what a Chicago-based chamber
ensemble came up with:
“Drs. Wayne and Jean Smith are an affluent professional couple
who have lived in the Hyde Park neighbourhood since 1966. Their only
child, Samuel, has long since moved away. Wayne and Jean love their
community and plan to continue living there after they retire from
their jobs at the University of Chicago. They are also classical music
fans and began subscribing to Music of the Baroque concerts when the
organization first started in Hyde Park in 1972. Wayne and Jean know
quality when they hear it, and they were thrilled to have such fine
performances in close proximity to their home (within 1 mile). When the
organization made the decision to leave Hyde Park in 1999, Wayne and
Jean felt betrayed, and they decided not to subscribe to the downtown
Chicago series that was offered in exchange. Maybe Hyde Park wasn’t
good enough for Music of the Baroque, but it’s good enough for Wayne
and Jean. Two years later, they’re starting to miss the concerts a little,
and their friends who still attend say that the series at Old St. Patrick’s
Church in the Loop is convenient.”
EXAMPLE: Using psychographic research in a practical way.
Based on a combination of research and insight your organization
decides that people who have attended your organization’s performances
at least three times in the past two years are likely to value your
organization as an important presenter of new works by established
dramatists. You can reasonably assume that these people would consider
subscribing to your season program to support your efforts.
40
Now match demographic information to the needs of each group you
are targeting. Attendance, in this case, is the demographic behaviour
of this particular segment. Your organization’s brand new season is the
benefit provided by your organization that fills that segment’s need.
First-time attendees and first-time repeaters are excluded from
the customer segment targeted for subscriptions. Hold on to these
segments–they may represent good targets for other Marketing efforts.
Since your organization knows what motivates its returning
customers, it focuses its Subscription Marketing effort on customers
who have attended its performances at least three times in the past two
years. To further entice this segment your organization emphasizes the
“world premiere” performances that will be included in its season.
Market segmentation is a marketing strategy which involves
dividing a broad target market into subsets of consumers, businesses,
or countries who have, or are perceived to have, common needs,
interests, and priorities, and then designing and implementing strategies
to target them. Market segmentation strategies are generally used to
identify and further define the target customers, and provide supporting
data for marketing plan elements such as positioning to achieve
certain marketing plan objectives. Businesses may develop product
differentiation strategies, or an undifferentiated approach, involving
specific products or product lines depending on the specific demand and
attributes of the target segment.
Marketers can segment according to geographic criteria—nations,
states, regions, countries, cities, neighbourhoods, or postal codes. The
geo-cluster approach combines demographic data with geographic data
to create a more accurate or specific profile.2 With respect to region,
in rainy regions merchants can sell things like raincoats, umbrellas
and gumboots. In hot regions, one can sell summer clothing. A small
business commodity store may target only customers from the local
neighbourhood, while a larger department store can target its marketing
towards several neighbourhoods in a larger city or area, while ignoring
customers in other continents. Geographic Segmentation is important
and may be considered the first step to international marketing, followed
by demographic and psychographic segmentation.2
Segmentation according to demography is based on variables such as
age, gender, occupation and education level or according to perceived
benefits which a product/service may provide. Benefits may be
perceived differently depending on a consumer’s stage in the life cycle.
41
Demographic segmentation divides markets into different life stage
groups and allows for messages to be tailored accordingly.3
A variant of this approach known as ‘firmographic’ or ‘feature based’
segmentation is commonly used in business-to-business markets (it’s
estimated that 81% of B2B marketers use this technique). Under this
approach the target market is segmented based on features such as
company size (either in terms of revenue or number of employees),
industry sector or location (country and/or region).4
Psychographic segmentation, which is sometimes called Lifestyle.
This is measured by studying the activities, interests, and opinions (AIOs)
of customers. It considers how people spend their leisure, and which
external influences they are most responsive to and influenced by.
Psychographic is highly important to segmentation, because it identifies
the personal activities and targeted lifestyle the target subject endures, or
the image they are attempting to project. Mass Media has a predominant
influence and effect on Psychographic segmentation. Lifestyle products
may pertain to high involvement products and purchase decisions, to
speciality or luxury products and purchase decisions.5
Occasion segmentation focuses on analysing occasions, independent
of the customers, such as considering Coke for occasions of being
thirsty, having dinner or going out, without taking into consideration the
differences an affluent and middle-class customer would have during
these occasions.
‘Occasional customer segmentation’ merges customer-level and
occasion-level segmentation models and provides an understanding of
the individual customers’ needs, behaviour and value under different
occasions of usage and time. Unlike traditional segmentation models,
this approach assigns more than one segment to each unique customer,
depending on the current circumstances they are under.6
Cultural Segmentation7 is used to classify markets according to
cultural origin. Culture is a strong dimension of consumer behaviour and
is used to enhance customer insight and as a component of predictive
models. Cultural segmentation enables appropriate communications
to be crafted to particular cultural communities, which is important
for message engagement in a wide range of organisations, including
businesses, government and community groups. Cultural Segmentation
can be applied to existing customer data to measure market penetration
in key cultural segments by product, brand, channel as well as traditional
measures of recency, frequency and monetary value. These benchmarks
42
form an important evidence-base to guide strategic direction and tactical
campaign activity, allowing engagement trends to be monitored over
time.7
Cultural Segmentation can also be mapped according to state, region,
suburb and neighbourhood. This provides a geographical market view of
population proportions and may be of benefit in selecting appropriately
located premises, determining territory boundaries and local marketing
activities.
Census data is a valuable source of cultural data but cannot
meaningfully be applied to individuals. Name analysis (onomastics) is
the most reliable and efficient means of describing the cultural origin
of individuals. The accuracy of using name analysis as a surrogate for
cultural background in Australia is 80-85%,8 after allowing for female
name changes due to marriage, social/political reasons or colonial
influence. The extent of name data coverage means a user will code a
minimum of 99 percent of individuals with their most likely ancestral
origin.9
REFERENCES
The context of this part has been adapted from the following
product(s):
1. Finding your audience through market segmentation. Access
via Internet: http://racc.org/sites/default/files/buildingblocks/
defining/Finding%20your%20Audience%20through%20
Market%20Segmentation.pdf
2. What is geographic segmentation’ Kotler, Philip, and Kevin Lane
Keller. Marketing Management. Prentice Hall, 2006. ISBN 978-013-145757-7
3. Riley, Jim (2012-09-23). “Market Segmentation - Demographics”.
Tutor2u.net. Retrieved 15 July 2014.
4.
Fripp, Geoff.“Market Segmentation Bases” Market Segmentation
Study Guide
5. Marketing Padawan Designing Marketing Strategies With the
Help of STP
43
6. Philip Kotler and Gary Armstrong : Principles of Marketing
Pearson Education Limited 2014, 2012
7. “Market Segmentation and Targeting”. Academic.brooklyn.cuny.
edu. 2011. Retrieved 15 July 2014.
8. “Occasional Customer Segmentation”. Forte Consultancy Group.
2010. Retrieved 8 May 2015.
9. Dove, Michael (2013-09-05). “Cultural Segmentation - Customer
Segmentation”. OriginsInfo.com.au. Retrieved 6 October 2014.
Cultural Segmentation
FURTHER READING
1. Ayuba B. (2005), Marketing: Principles and Management,
Kaduna:Shukrah Printing
2. David L. and Albert J.D. (2002), Consumer Behaviour,
New Delhi: Tata McGraw Hill.
3. Edward, J. and William J. (1963): Fundamentals
of Marketing; NewYork, Mc Graw- Hill, Inc.
44
Part 4
STRATEGIES OF EVENT MARKETING POSITIONING
Objective outline:
1. Explain the importance of information in gaining insights about
the marketplace and customers.
2. Define the marketing information system and discuss its parts.
3. Outline the steps in the positioning process.
4. Explain how companies analyse using positioning map.
Chapter Key Terms:
Positioning
Target
Competitors
Competitive advantage
Market position
Market change
Value
For almost two decades, managers have been learning to play by
a new set of rules. Companies must be flexible to respond rapidly to
competitive and market changes. They must benchmark continuously
to achieve best practice. They must outsource aggressively to gain
efficiencies. And they must nurture a few core competencies in the race
to stay ahead of rivals.1
Positioning-once the heart of strategy-is rejected as too static for
today’s dynamic markets and changing technologies. According to the
new dogma, rivals can quickly copy any market position, and competitive
advantage is, at best, temporary.1
But those beliefs are dangerous half-truths, and they are leading more
and more companies down the path of mutually destructive competition.
True, some barriers to competition are falling as regulation eases and
markets become global. True, companies have properly invested energy
in becoming leaner and more nimble. In many industries, however, what
some call hyper competition is a self-inflicted wound, not the inevitable
outcome of a changing paradigm of competition.1
45
The root of the problem is the failure to distinguish between
operational effectiveness and start edgy. The quest for productivity,
quality, and speed has spawned a remarkable number of management
tools and techniques: total quality management, `benchmarking, timebased competition, outsourcing, partnering, reengineering, change
management. Although the resulting operational improvements have
often been dramatic, many companies have been frustrated by their
inability to translate those gains into sustainable profitability. And bit
by bit, almost imperceptibly, management tools have taken the place of
strategy. As managers push to improve on all fronts, they move farther
away from viable competitive positions.1
Finding new positions: the entrepreneurial edge1
Strategic competition can be thought of as the process of perceiving
new positions that woo customers from established positions or draw
new customers into the market. For example, superstores offering
depth of merchandise in a single product category take market share
from broad-line department stores offering a more limited selection in
many categories. Mail-order catalogues pick off customers who crave
convenience. In principle, incumbents and entrepreneurs face the same
challenges in finding new strategic positions. In practice, new entrants
often have the edge.
Strategic positioning are often not obvious, and finding them requires
creativity and insight. New entrants often discover unique positions that
have been available but simply overlooked by established competitors.
Ikea, for example, recognized a customer group that had been ignored or
served poorly. Circuit City Stores’ entry into used cars, CarMax, is based
on a new way of performing activities - extensive refurbishing of cars,
product guarantees, no-haggle pricing, sophisticated use of in-house
customer financing that has long been open to incumbents.
New entrants can prosper by occupying a position that a competitor
once held but has ceded through years of imitation and straddling. And
entrants coming from other industries can create new positions because
of distinctive activities drawn from their other businesses. CarMax
borrows heavily from Circuit City’s expertise in inventory management,
credit, and other activities in consumer electronics retailing.
Most commonly, however, new positions open up because of change.
New customer groups or purchase occasions arise; new needs emerge
46
as societies evolve; new distribution channels appear; new technologies
are developed; new machinery or information systems become available.
When such changes happen, new entrants, unencumbered by a long
history in the industry, can often more easily perceive the potential for
a new way of competing. Unlike incumbents, newcomers can be more
flexible because they face no trade-offs with their existing activities.
Positioning is a marketing strategy that aims to make a brand occupy
a distinct position, relative to competing brands, in the mind of the
customer. Companies apply this strategy either by emphasizing the
distinguishing features of their brand (what it is, what it does and how,
etc.) or they may try to create a suitable image (inexpensive or premium,
utilitarian or luxurious, entry-level or high-end, etc.) through advertising.
Once a brand is positioned, it is very difficult to reposition it without
destroying its credibility. It is also called product positioning.2
Positioning was first introduced by Jack Trout in 1969 (“Industrial
Marketing” Magazine- June/1969) and then popularized by Al Ries and
Jack Trout in their bestselling book “Positioning - The Battle for Your
Mind.” (McGraw-Hill 1981).3
This differs slightly from the context in which the term was first
published in 1969 by Jack Trout in the paper “Positioning” is a game
people play in today’s me-too market place” in the publication Industrial
Marketing, in which the case is made that the typical consumer is
overwhelmed with unwanted advertising, and has a natural tendency
to discard all information that does not immediately find a comfortable
(and empty) slot in the consumer’s mind. It was then expanded into
their ground-breaking first book, “Positioning: The Battle for Your Mind,”
in which they define Positioning as “an organized system for finding a
window in the mind. It is based on the concept that communication
can only take place at the right time and under the right circumstances”
(p. 19 of 2001 paperback edition).3
What most will agree on is that Positioning is something (perception)
that happens in the minds of the target market. It is the aggregate
perception the market has of a particular company, product or service
in relation to their perceptions of the competitors in the same category.
An important concept in positioning is that it expects that consumers
compare and analyse products in the marketplace, whether based on
features of the product itself (quality, multiple uses, etc.), price, and/
or packaging and image.4 It will happen whether or not a company’s
management is proactive, reactive or passive about the ongoing process
47
of evolving a position. But a company can positively influence the
perceptions through enlightened strategic actions.4
A company, a product or a brand must have positioning concept
in order to survive in the competitive marketplace. Many individuals
confuse a core idea concept with a positioning concept. A Core Idea
Concept simply describes the product or service. Its purpose is merely to
determine whether the idea has any interest to the end buyer. In contrast,
a Positioning Concept attempts to sell the benefits of the product or
service to a potential buyer. The positioning concepts focus on the
rational or emotional benefits that buyer will receive or feel by using the
product/service. A successful positioning concept must be developed
and qualified before a “positioning statement” can be created. The
positioning concept is shared with the target audience for feedback and
optimization; the Positioning Statement (as defined below) is a business
person’s articulation of the target audience qualified idea that would be
used to develop a creative brief for an agency to develop advertising or
a communications strategy.5
Positioning Statement As written in the book Crossing the Chasm
(Copyright 1991, by Geoffrey Moore, HarperCollins Publishers), the
position statement is a phrase so formulated: For (target customer) who
(statement of the need or opportunity), the (product name) is a (product
category) that (statement of key benefit – that is, compelling reason to
buy). Unlike (primary competitive alternative), our product (statement
of primary differentiation).5
Differentiation in the context of business is what a company can hang
its hat on that no other business can. For example, for some companies
this is being the least expensive. Other companies credit themselves
with being the first or the fastest. Whatever it is a business can use to
stand out from the rest is called differentiation. Differentiation in today’s
over-crowded marketplace is a business imperative, not only in terms of
a company’s success, but also for its continuing survival.5
More generally, there are three types of positioning concepts:
1. Functional positions
48
•
Solve problems
•
Provide benefits to customers
•
Get favourable perception by investors (stock profile) and
lenders
2. Symbolic positions
•
Self-image enhancement
•
Ego identification
•
Belongingness and social meaningfulness
•
Affective fulfilment
3. Experiential positions
•
Provide sensory stimulation
•
Provide cognitive stimulation6
In volatile markets, it can be necessary - even urgent - to reposition
an entire company, rather than just a product line or brand. When
Goldman Sachs and Morgan Stanley suddenly shifted from investment
to commercial banks, for example, the expectations of investors,
employees, clients and regulators all needed to shift, and each company
needed to influence how these perceptions changed. Doing so involves
repositioning the entire firm.6
This is especially true of small and medium-sized firms, many
of which often lack strong brands for individual product lines. In a
prolonged recession, business approaches that were effective during
healthy economies often become ineffective and it becomes necessary
to change a firm’s positioning. Upscale restaurants, for example, which
previously flourished on expense account dinners and corporate events,
may for the first time need to stress value as a sale tool.6
Repositioning a company involves more than a marketing challenge.
It involves making hard decisions about how a market is shifting and
how a firm’s competitors will react. Often these decisions must be
made without the benefit of sufficient information, simply because the
definition of “volatility” is that change becomes difficult or impossible to
predict.7
Positioning is however difficult to measure, in the sense that customer
perception of a product may not have been tested on quantitative
measures.8
49
DISCUSSION
Case study
Brand Positioning and Market Segmentation
Brand positioning is an important strategy for achieving differential
advantage. Essentially, positioning reflects “the place” a product
occupies in a market or segments. GAP has a wide range of products
that are reflected in multi-segments. Initially, as a specialty clothing
retailer, GAP segmented the market using price as the sole criterion. GAP
strategically decided to serve three major segments, which can be seen
from price differences among GAP’s three brands: Old Navy (discount/
value), Gap (mid-price), and Banana Republic (high-end). In the past
decades GAP’s differential strategy worked successfully, and this allowed
GAP to enjoy phenomenon growth. Part of the success was clearly to
due to GAP’s ability to play on its brand names. As stated by Grant,
“brand names and the advertising that supports them are especially
important as signals of quality and consistency”. GAP brand names
provide a guarantee by GAP to customers of the quality of GAP products.
Nevertheless, in the recent years competition intensified as new players
also targets some of the same market segments aimed by GAP brands.
GAP’s major competitors included vast array of companies from three
market segments. In the discount/value market the main competitor is
Wal-Mart, who is capturing shares in the apparel market as it is striving
to target more fashion-conscious consumers. In the mid-priced market,
the major players that Gap faces are Abercrombie & Fitch and American
Eagles Outfitters. All three brands target the same age group. Thirdly, in
the high-end apparel segments, J. Crew and Urban Outfitters are Banana
Republic’s biggest opponents. Based on the information, a positioning
map can be constructed to show GAP’s current position relative to its
competitors. EXHIBT is a diagram that shows GAP’s three brands and its
competitors in terms of the price and the targeted age group.
Beside the three original market segments, GAP also explored a new
segment: more mature group of customers, who were underserved
before. The creation of Forth & Towne allows GAP to transfer brand
equity from the three original brands to this new brand. In addition, GAP
would also be able to relate its previous brands’ experiences to the new
brand in order to increase the chances of success. However, the ability
of Forth & Towne to contribute to the overall financial condition of GAP
is still questionable.
50
Please find:
Old Navy
Target Segments
Selling Points
Opportunities
Threats
Answer - study case Gap
Target Segments
Although people of various ages shops at Gap, but Gap specifically
targets 18- to 30-year-old. The sub-brands of Gap also targets shoppers
for shop for intimate apparels, babies, and kids.
Selling Points
Gap products include modern and stylish wardrobes for work or going
and casual weekend wear. It appealed to people who want to have sense
of modern fashion.
Opportunities
Gap has competent people in both of its management and design
team. They all have strong business experience prior to joining Gap.
This increases the likelihood that the two teams would lead Gap into
the right direction. The redesigning of stores has a favourable impact on
customers’ shopping experience, which can ultimately maximize sales.
China served as a both demand of supply market for Gap, which also
true for the other two brands. The international market is risky as was
shown in Gap’s exit of the German market, but at the same time it is
rewarding. If Gap is able to capture the opportunities in China, it just
opened the door for huge growth.
Threats
Continuous research and customer surveys are needed in order to
keep pace with the apparel industry. Customers feedback to Gap’s offering
are really important. Gap is risking losing businesses to competitors if
it ignores customer feedbacks and insights. Also, maintaining Gap’s
identity can also be an issue as some people believed that Old Navy was
51
cannibalizing Gap. If customers see no difference between Gap and Old
Navy, they would be indifferent between two brands and simply buy
the cheaper one. In that case maintaining separate brand would be a
complete waste.
REFERENCES
The context of this part has been adapted from the following
product(s):
1. What is strategy? Access via Internet: https://hbr.org/1996/11/
what-is-strategy
2. Business Dictionary. (n.d.) Definition of Positioning. Retrieved
from http://www.businessdictionary.com
3. Lamb, C. (2013). e-Study Guide for MKTG 7. Retrieved
from https://books.google.com/books
4. Trout, J., (1969) “”Positioning” is a game people play in today’s
me-too market place”, Industrial Marketing, Vol.54, No.6, (June
1969), pp. 51–55.
5. Ries, A. and Trout, J. (1981) Positioning, The battle for your mind,
Warner Books - McGraw-Hill Inc., New York, 1981, ISBN 0-44634794-9
6. Trout, J. and Rivkin, S. (1996) The New Positioning : The latest
on the worlds #1 business strategy, McGraw Hill, New York,
1996, ISBN 0-07-065291-0
7. Moore, G. (1991) Crossing the Chasm, HarperCollins Publishers,
1991.
8. Levi, K. (2007) “Differentiate or Diminish: The Art and Necessity
of Business Positioning”, (March 2007), p. 9
FURTHER READING
1. Dove, Michael (2013-09-05). I have census data. How does
Origins add value? “Data Reliability”. OriginsInfo.com.au.
Retrieved 8 October 2014.
2. Dove, Michael (2013-09-05). “Cultural Segmentation - How Does
Origins Work”. OriginsInfo.com.au. Retrieved 6 October 2014.
52
3. “CHAPTER 14 - Time, Territory, and Self-Management: Keys to
Success”. People.tamu.edu. Retrieved 15 July 2014.
4. Gupta, Sunil. Lehmann, Donald R. Managing Customers as
Investments: The Strategic Value of Customers in the Long Run,
pages 70-77 (“Customer Retention” section). Upper Saddle River,
NJ: Pearson Education/Wharton School Publishing, 2005. ISBN
0-13-142895-0
5. Goldstein, Doug. “What is Customer
Segmentation?” MindofMarketing.net, May 2007. New York,
NY.
53
Part 5
EVENT MARKETING SPONSORSHIP
Objective outline:
1. Understand sponsorships and how they relate to segmentation,
target marketing and integrated marketing communication
2. Understand how to develop and sell sponsorships to organizations
3. Learn techniques for financial evaluation, quantifying impact
and recommending decisions regarding sponsorship purchases
based on marketing and financial targets.
Chapter Five Glossary
Sponsorship
Event strategy
Event bugged
Financial evaluation
Planning
Over the years we have identified sponsorship assistance as a real
need for athletes. Following the 2008 Olympics an athlete review was
undertaken by SPARC, the review highlighted the need for athletes to
secure increased funding to assist them achieve their goals. As a result,
in partnership with SPARC and Academy South Island, we have been
piloting sponsorship workshops for athletes including 1-1 sessions with
identified 2012 athletes.1
We are working to help you improve your skills and your approach
to sponsors and sponsorship. It is tough to get sponsorship especially
when everyone is facing increasingly difficult economic times, it takes
planning, effort and sometimes it isn’t enough to meet the growing cost
of your budgets.1
In this article we share what athletes have said about their approach
to sponsorship in the past, and provide you practical tips and advice:
Here are some of the areas athletes have highlighted:
• They have developed proposals that are poor;
• They don’t realise they have skills to offer in conjunction with their
sporting talents or how to demonstrate them in a proposal;
54
•
•
•
They are all very worried about $$ and it is effecting them;
They are unsure what their brand is and how to promote
themselves;
Unaware of their wider support network and how they can
leverage it.1
The matching process involves sorting and assessing the background
work in order to find out who are the most suitable sponsors for your
funding project. It involves putting together the following information.
Seeking out companies whose project image can be associated with
your project. It is helpful if the people who benefit from your project
are also the same people who the businesses target their products to.
This provides a common interest which increases your chances of being
considered for sponsorship. The business can see it as a publicity benefit.
An example of this would be Danyon Loader (Olympic Gold Medallist)
and breakfast cereal.1
Suggested process for attracting sponsorship
 Identify benefits to Sponsor
 Value benefits to Sponsor
 Identify suitable Sponsoring Companies
 Tailor proposal to demonstrate benefits (To Sponsor!)
 Identify decision makers and influencers
 Lobby influencers
 Present proposal
 Negotiate proposal
 Use altruistic benefits as “icing”
 Leverage media coverage2
First of all Consider the sponsors perspective and the criteria they will
use to judge your proposal:






How will they see your group in comparison to others
What do you want to achieve through your activities or events?
Do your activities or events achieve the sponsor’s marketing
objectives?
Is it a good fit with their product image?
What profile does it give their business?
How reliable is your group? Your people. Your board. Will you
deliver?
55

How does the sponsorship help their business? How does it help
sell their product/service? Your proposal must address these
concerns to have any chance of being taken seriously.2
You should also consider the brand platform of the sponsor:
The Brand platform tells you what the company is trying to get across
to the public and you should look at this before you decide whether this
is a company you want to approach.2
When you are looking at a company as a possible sponsor ask:
 Is there a natural association
 Is there a strategic fit
 Are your core values similar
 What can you offer a company
 What makes the partnership successful e.g. is it because you
treat them with the respect and professionalism any business
partner deserves.2
Don’t forget that you can approach small business as well as large
corporates, and you may be able to do more for a local business than you
can the Americas Cup, for instance.2
Timing is crucial - identify their timing criteria and make sure you
meet it.2
Networks are invaluable, think about how to build them and work
with them. How do you put a value on your skills?
Knowing how to value yourself isn’t easy, but once you have a formula
that works for you, the more confident you will feel marketing yourself.
People in your network…
The Coffee Meeting/Networking at Functions2
Opportunities may happen by chance. Always have your campaign plan
in your ‘back pocket’ i.e. know your brand and be able to verbalise it in
brief, as you never know when you will have to step into ‘selling your
brand.’
56
Close the deal effectively2
Maintain the relationship and be realistic about your time frame. Don’t
forget the contract and seek some legal advice.
What is your time frame?
Manage the relationship and plan how you will do this
• Keep in contact – remember to share all your experiences (the good
and not so good)
• Take the time to learn and understand their business
What do you know about
their business?
How will you manage the
relationship?
Working with NSO/SPARC/NZOC
Your NSO and SPARC may be your biggest sponsor- value and treat
them as one. What can you do for them?
National Sporting
Organisation (NSO)
SPARC
NZOC
57
Ongoing activities and programmes.
Who and how many people are involved?
What opportunities exist for the sponsors’
involvement here?
Special events. Shows, conferences, etc.
Who and how many people are involved?
Is the event successful and what
opportunities exist for the sponsors’
involvement?
Communications tools, newsletters,
magazines, direct mail, etc.
How and to whom do you communicate:
members, the public etc.?
What tools do you use and what are you
planning?
How many copies and readers? Who gets it,
reads it etc.
What are your Marketing assets?
What do you own?
What relationships, partnerships have you
established and what influential members
and unique appeal do you have?
Clearly define your needs
What is the money required for and how
will it be spent?
58
The prospective sponsor needs to know (and may require evidence)
that their money will be spent wisely in the area you claim your
organisation is sound and reputable. Is your sponsorship request for cash
only?2
Have you considered the use of other arrangements? For instance,
requesting supplies products or services that your group would normally
purchase or could on-sell.2
Develop a list of benefits2
 Exposure and awareness: How can you expose the sponsor,
their products, logos, e.g. signage, programmes, flyers,
advertisements, vehicles, tickets, uniforms, bumper stickers,
badges, posters, media kits, banners? Will they have access to
your logo?
 Product/Service Use: How can you sell or use the sponsor’s
products or service?
 What opportunities can you provide and what target markets can
you access?
 The Sponsor’s Marketing Objectives: What is their philosophy?
 Does their Managing Director have a personal objective?
 Can you provide the means to entertain or involve their
customers or clients?
 Can you involve their staff distributors or retailers?
Using the above notes you can now develop a list of benefits you can
offer in return for the sponsorship. Keep in mind that the more ways a
sponsor can promote their firm, product or service, the more agreeable
they will be to lending their support.
Sponsor benefits:
Sponsors need to benefit from being involved with you. Be as specific
as possible. You should aim to give sponsors sufficient data so that they
can evaluate the Cost effectiveness of your project alongside other
promotional opportunities.
As you proceed further in your approach to potential sponsors you
will need to tailor the benefits you offer to match the company you are
approaching and the nature and extent of your request. However, as part
of developing your strategy you should think through all the types and
possible packages of benefits.1
59
Ways to recognise sponsors are:
 Sponsors name on all clothing
 all stationery. Can be done simply with a self-inking stamp.
 all promotional material e.g. entry or registration forms posters
tickets
 noticeboards at clubrooms or offices
 cups, medals and ribbons
 displays requesting members to give the sponsor their business
support.
 Club banner
 advertising in programmes and newsletters
 promote and foster sponsors name and produce on the PA system
during the event
 team or individual players to lend themselves to promotional
activities for the sponsor
 give the sponsor the opportunity to market products at the venue
or to the participants
 distribution of sponsors advertising material to all participants
 venue advertising
 use of photos of the event by the sponsor for own promotions.1
What can you offer: think outside the square
Where can you transfer your skills? (e.g. coaching sessions)
What can you offer?
60
This is often the sticking point for local clubs and events but there
will be opportunities if you appoint a PR person who chases media
coverage. Do not promise what you are not certain can be delivered.
A few points to remember:
 Do not use media material showing a participant, whether the
manager or a volunteer, using an oppositions logo brand or
equipment
 Do not use a photograph of any one in any media unless wearing
something identifying sponsor or subject.
 All press releases to use full event or club title i.e. always include
the sponsors name if they have naming rights.
 Community newspaper and radio stations often welcome articles
or items on local clubs and events.
 Keep a record of all coverage received.1
Project sponsorship
Project sponsorship is the ownership of projects on behalf of the
client organization.[1]
There are two main differences between project sponsorship
and project management. Firstly project sponsorship includes the
identification and definition of the project whereas project management
is concerned with delivering a project that is already defined, if only quite
loosely. Secondly the project sponsor is responsible for the project’s case
and should not hesitate to recommend cancellation of the project if the
business case no longer justifies the project.
Project sponsors can encourage separation of decision making
responsibilities between project manager and project sponsor,
accountability for the realisation of project benefits, oversight of the
project management function and can carry out senior stakeholder
management.[2]
The project sponsor or executive sponsor needs a range of skill sets,
or at least access to skill sets which include appreciation of corporate
strategy; ability to prepare a business case and profound knowledge of
the organization’s operations. The project sponsor also needs to know
61
his or her way around the organization and command respect within
it. The project sponsor and project manager should form an effective
partnership with the project manager orchestrating all players involved
in delivering the project e.g. designers, manufacturers and contractors,
whilst the project sponsor coordinates all departments of the client
organization and associated stakeholders so as to integrate the delivered
project into the client organization and take full benefits from it such
that the business case is fulfilled.[3]
Because the project sponsor is the ‘owner’ of the project from
conception to commissioning and operation it is particularly important
to achieve continuity of sponsor throughout the project[4] yet
correspondingly difficult to achieve because of the extended duration of
sponsorship compared to project management.
PRACTICAL TASK
Write your proposal using these folowing recommendations and
structure
•
An opening letter, clear and concise which summarises some key
points:
•
Your introductory paragraph should state you are submitting the
proposal to the company and that you would like to be ‘business
partners’ (or other suitable words).
•
Provide a simple outline of your group, event or activity, what you
can offer the sponsor and the ongoing benefit for the sponsor.
•
Conclude with a paragraph on some of the business benefits to
them and close the letter with an indication of the next step (i.e.
you will call for a meeting with them). Keep the whole thing to
less than one page.
.
A 3-4 page proposal. This document should capture their interest and
be clear and concise. The proposal should include:
Organisation history and future:
Name, location, size, nature of client base nature of group, profile of
executive, affiliations, special features of group, etc.
62
Sponsorship Outline:
What activity is being proposed?
What are the purposes and objectives?
How many participants?
What location?
Is there a history of success?
Features and Benefits of the Sponsorship:
Summarise the features (signs, attendees, advertisements, coupons,
flyers, etc.) and benefits to the sponsor based on your brainstorming
notes. How will the features meet the sponsor’s need for sales, exposure
etc. Link the benefits to the outlined features.
Investment and Term
List the price of the sponsorship (GST exclusive) and indicate any
options you are offering (i.e. cash or kind).
Suggest a term for the sponsorship (i.e. 1 to 3 years).
A longer term may indicate you are committed to investing time and
effort into building a relationship with the sponsor.
Budgets/Timetable:
How will you spend the money?
Provide a realistic budget for your activity (GST excl.)
Show you too are investing money in your activities.
Include a timetable and schedule of critical dates. This demonstrates
you are organised and professional.
Appendices
Including annual reports, media clippings, referral letters, etc. are
useful once your sponsor becomes interested.
Make your proposal simple in design and easy to read (i.e. bullet points,
lists, etc.). Try to keep key aspects to one page or less. Make sure the
proposal is proof-read, spelling mistakes and use of the wrong names or
titles can be damaging. Do ask how many copies they want.
Once you have a successful sponsorship, ensure you:
 discuss and plan what you need to do to keep it
 keep your strategic planning and your funding portfolio up to date
63
 treat your sponsor with the respect and professionalism any
business partner deserves
 have a clear understanding from the sponsor of a timeframe for
the partnership
 know what you will do/how you will cope if the sponsorship
finishes
REFERENCES
The context of this part has been adapted from the following
product(s):
1. Sponsorship ideas. Access via Internet: hpsnz.org.nz/sites/
all/.../files/...Athletes/Athlete.../Sponsorship_ideas.doc
2. Attracting funding and sponsorship. Access via Internet: http://
www.100ways.org.uk/attracting-funding-and-sponsorship-a.
html
3. West, D. (2010) ‘Project Sponsorship: An Essential Guide for
Those Sponsoring Projects Within Their Organizations’, Gower
Publishing, Farnham, ISBN 978-0-566-08888-9
4. Sponsoring change - A guide to the governance aspects of project
sponsorship, Association for Project Management, 2009. ISBN
978-1-903494-30-1
5. “What to expect from a Project Sponsor”. ProjectManager.com.
Retrieved 24 May 2013.
6. Englund, R.L. and Bucero, A. (2006) Project Sponsorship:
Achieving Management Commitment for Project Success, San
Francisco, Jossey-Bass
FURTHER READING
1. Lovelock, Christopher; Reynoso, Javier; D’Andrea, Guillermo;
Huete, Luis (2004). Lovelock, Christopher; Reynoso,
Javier; D’Andrea, Guillermo et al., eds. Administración de
Servicios[Service’s Administration] (in Spanish). Pearson
Educación Times. p. 760. ISBN 978-0-273-68826-6.
64
2. Beech, John; Chadwick, Simon (2006). Beech, John; Chadwick,
Simon, eds. The marketing of Sport. Prentice Hall and Financial
Times. p. 592. ISBN 978-0-273-68826-6.
3. Lynn R. Kahle, Angeline G. Close (2011). Consumer Behavior
Knowledge for Effective Sports and Event Marketing. New York:
Routledge. ISBN 978-0-415-87358-1.
4. NSW Government. “ (2010) Marketing - Sports Clubs”. (of
publish, if any). Retrieved (27, September 2011). Check date
values in: |accessdate= (help)
5. Business dictionary.com (5 November 2010). “Event marketing”
[Definicion de marketing de un evento]. Bisnessdictionary.com.
Retrieved November 5, 2010.
6. Luis Maram”La NFL en Cinemex” [The NFL in Cinemex] (in
Spanish). Luis Maram. Retrieved November 5, 2010.
7. Puromarketing (6 October 2010). “El BBVA amplia su acuerdo
como patrocinador de la liga profesional de fútbol hasta el 2013”
[BBVA expands the contract that it had with as a sponsor with
the Spanish league until 2013] (in Spanish). Puromarketing.
Retrieved October 17, 2010.
8. Orange.Online. (2010). “Adidas renueva con la selección
Mexicana de futbol.” [Adidas renews its contract with the
Mexico national football team] (in Spanish). Orange.Online.
Retrieved October 17, 2010.
9. Luis Marentes (2010). “Representacion y derechos de imagen”
[Rights of image and representations] (in Spanish). periodismo y
marketing deportivo. Retrieved October 17,2010.
65
Part 6
MARKETING ELEMENTS IN EVENT MARKETING
Objective outline:
1. Describe the decisions companies make regarding their
individual products or service and services, product lines and
product mixes.
2. Identify and define the other important external and internal
factors affecting a firm’s pricing decisions
3. Explain why companies use marketing channels and discuss the
functions these channels perform
4. Define the five promotion mix tools for communicating
customer value
Chapter Key Terms:
Product/service
Price
Place
Promotion
Marketing elements in event marketing
In this chapter we begin a series of chapters on the components
of the marketing mix: Product, Price, Distribution, and Promotion.
Our emphasis in this chapter will be the product or service that the
organization markets and how products are envisioned, created and
commercialized.1
We will define ‘product’ as all things the buyer receives in an
exchange, bad and good, intended and unintended. Products include
all things the buyer receives including the physical attributes (a new car)
and the intangible attributes (a warranty and a financing contract). It is
sometimes helpful to list the main (sometimes called ‘salient’) attributes
for purposes of performing both upstream activities (for example, concept
development) and downstream activities (for example, advertising and
personal sales presentations).1
In this chapter we will discuss the following areas related to managing
new product development (NPD):
66
-
the ideal climate for NPD
the NPD process
pitfalls in the NPD
the role of product positioning in NPD1
Idea generation1
The idea generation stage is the first stage in the NPD. However, in
an organization with a healthy environment for creative thinking, new
ideas abound, and only rarely is it necessary to have a formal meeting
to generate ideas. New ideas flow from every day activities within the
organization.
Ideally, idea generation should be fun and naturally occurring. This
is why a ‘formal meeting for idea generation’ should be somewhat of an
oxymoron in healthy, creative organizations. There are many creative
problem-solving (CPS) techniques that provide extra stimulation for
generating ideas for new products and services. The Couger Center
for the Study of Creativity and Innovation has applied over thirty CPS
techniques in organizations with success. CPS approaches fall along
a continuum from intuitive to analytical. For example, a commonly
used analytical CPS technique is the “5 W’s and H” technique. Rudyard
Kipling even wrote a poem about this technique. The ‘wishful thinking’
technique is a more intuitive CPS approach. The appendix to this chapter
describes how to use each of these two techniques.
Idea assessment1
Most organizations have extensive guidelines concerning the criteria
for new product ideas. Some typical criteria are: potential estimated
demand for the product, cost/revenue expectations, fit with the
organization’s business and marketing strategy (you may want to go
back and review compatibility in the discussion of requirements for
effective segmentation in Chapter Three.) Many product ideas may not
match with the firm’s current product line and there should be guidance
about what to do if this happens. Some organizations broker or sell
new product ideas that don’t entail serving current or planned future
customer segments.
Creative ideas are judged on two criteria: Novelty and Value (or utility).
We have found that business firms primarily put more importance on
67
the expected economic returns (value) of a new idea than whether
the idea is particularly novel or new. However, in a context of the arts,
this emphasis is usually reversed. That is, in the arts, judges often look
to novelty first and value later. This point brings about an underlying
problem in judging new ideas. Novelty can usually be judged fairly early
on, whereas, value is sometimes difficult to assess for some time.
In order to have a steady flow of new ideas, organizations must
establish a clear understanding with personnel responsible for new
product development how these two dimensions will be assessed.
Concept testing1
In this stage, employees play with the idea and have fun considering
its potential.
The rationale underlying concept testing is that organizations are
much wiser to explore the idea thoroughly before actually building a
physical prototype. Often the ‘Five W’s and H’ technique, described in
Chapter Eleven, can be helpful in fleshing out the new product idea. If
customers are involved in this stage, ‘projective techniques’ can often
be used to illicit the opinions of customers about new product ideas
without asking the customers directly.
We have mentioned two types of thinking: convergent and divergent.
Convergent thinking is the type of thinking with which most people in the
U.S. culture are most familiar. In this approach to thinking the mind or
minds of those involved follows a linear process of reasoning ultimately
arriving at a point of conclusion. Divergent thinking is quite different in
that it requires the participant or participants to ‘play’ with ideas going
off in unexpected directions. De Bono is well known for coining the term
“lateral thinking” which is a type of divergent thinking (see: http://www.
edwdebono.com/ and review De Bono’s “Six Hats Method”).
Note that when involved in the ideal approach to creative thinking,
people feel they have time to ‘play’ with ideas and forget about ‘hard
work’ or “the expected conclusion.” This fact might trouble some
managers, but the endeavour is usually well worth the time expended.
Particularly, in the U.S. we constantly and incorrectly equate ‘hard work’
with ‘no fun’ and something to be feared or dreaded.
The NPD process should begin with divergent thinking and then
apply convergent thinking with a careful recording of all new ideas as
the process proceeds.
68
Unfortunately, in the U.S. culture, people who are expert ‘idea
destroyers’ are often rewarded informally and formally in many
organizations. That is, in our culture there is often more reward for
observing what is wrong with an idea, rather than stating what right
about it. Many great ideas with considerable positive potential are
rejected every day in organizations, not because the idea isn’t any
good, but because people in the organization are more oriented to idea
destruction than idea construction.
Idea Choice1
During this stage, the organization decides where its resources are
best invested. A multi attribute model similar to the one we discussed in
chapter three is often used to make such decisions. The major criteria for
choice are listed and an importance weight is assigned to each attribute.
Then competing ideas are assessed on this basis. Obviously, this process
requires a healthy climate for creativity and innovation within which
employees can ‘let go’ of personal ownership of ideas and judge the
ideas on an objective basis.
Price conception1
How is the pricing decision made?
The price variable in the marketing mix is a critical element. Price
can, by itself, communicate much about a product or service. For
example, what would you think of buying an engagement ring at Bob’s
Really Good, But Cheap, Jewelry Store, or for that matter, at a yard sale?
Most consumers link price with quality and there are many organizations
that carefully reinforce the quality of their product, using price as a
surrogate cue (or substitute indicator) for quality. For example, check
out the websites of marketers of prestige items and observe how the
price variable is used to indicate quality).
When the pricing decision is made, the organization must consider
several factors. These factors are as follows:
a. Supply (or cost)
b. Demand (or revenue)
c. Perceptions in the marketplace
69
d. Competition and Competitors’ pricing strategies
e. Government Regulation
f. Company’s desired pricing position
Supply (or cost)
If there is an abundant supply of a product or service, it may not be
a candidate for being approached as a product or service for sale. For
example, we don’t consider air to breathe as being a commodity we must
buy. Of course, that is only because there is a plentiful supply. Of course,
in Colorado, many people find that the air supplied by the great outdoors
is not sufficient in oxygen, thus, they must buy air that is rich in oxygen
by renting oxygen tanks to enhance their respiratory systems. Native
Americans had to locate close to a water supply, but didn’t worry about
having to purify the water. Hence, time can change most everything,
particularly how we perceive certain goods and services as candidates
for commercial products. Just a few years ago, people consumed very
little bottled water throughout most of the United States. Today, demand
for bottled water is growing rapidly. So, think about the things you
consume that you presently don’t pay for, and consider that commodity
is a candidate for a product in the future (fresh air and open space, for
example).
Demand (or revenue)
To justify commanding a positive price in the marketplace, there
must be some demand for a product or service. We have seen above
where many products traditionally considered as free, have given way
to other identical or similar products for which there is now a strong
consumer demand, and a price to pay. Thus, the nature of demand
changes constantly for goods and services. Consider the amount of
demand today for ‘ice boxes’ (products for keeping perishable food
cool). These products were heavily demanded before the advent of the
electric refrigerator. Thus, we often see that demand for a product can
decrease or even disappear if substitute products are introduced that
are perceived as being superior in their ability to provide the benefits
being sought. For example, eight track audiotapes were popular for a
few years in the late 1960’s and early 1970’s until a newer technology in
the form of cassette tapes was introduced and vinyl records of recorded
music have largely given way to the Compact Disk (CD) as the preferred
70
medium. Will the internet and MP3 technology eclipse CD technology
eventually?
Perceptions in the marketplace can set both a positive price and a
normative price in the marketplace. A positive price simply describes
how much something costs whereas a normative price describes what
something ‘should cost’ based on an individual’s or a group’s opinion.
For example, the positive price was so high for selected drugs used to
treat AIDS that some groups protested that the normative price was
simply too high gaining societal support and eventual price decreases
from the manufacturers of these pharmaceuticals.
Also, consider the recent higher prices for gasoline and the various
protests put forth by individuals and groups that the gasoline prices were
“too high” and “not right.” These protest essentially were observing that
gasoline had reach a price that was above the normative price for most
people.
In the U.S., a branch of government often sets normative prices,
particularly in the case where there is only one supplier (a monopoly).
For example, most states have a public utilities commission or board that
is responsible for overseeing the pricing practices of firms that provide
the populace with utility service for natural gas, water, and electricity.
However, there are notable exceptions to this rule. Normative prices do
not have to be specific. Usually there are consumer expectations that
help guide the normative price. For example, how many times have you
heard that, ‘my water bill is too high!”
This interaction between positive price and normative price is an
ongoing phenomenon and of particular interest to marketers who
attempt to create and sustain customer satisfaction.
While the marketer does not usually have control over the normative
price, s/he can usually control the positive price. Setting price can be
a time-consuming process and we will discuss setting price later in this
chapter. However, this discussion should have already made the reader
aware of the importance of understanding whether by custom of the
marketplace, there is already a normative price for a product or service
above which a price may be considering ‘unfair’ or ‘price-gouging.’
Competition and Competitors’ pricing strategies
First, if the firm is the only seller of a product considered essential
to public welfare, the firm may have to function in a heavily regulated
environment.
71
This type of environment is called a monopoly (one seller).
Second, a firm may function in an industry in which there is an
established price leader that perennially sets a price that other firms
follow, although this may not always be the case. This type of competitive
structure is called an oligopoly (few sellers).
Third, if the firm functions in a market where there are many
competitors offering similar products, the firm may not have a choice
about what level price to seek. (pure competition).
Fourth, the firm may compete in an industry or market in which
although products are physically similar, sellers are able to draw
differences in perception of such things as quality and prestige among
products. This competitive model is called ‘monopolistic competition’
and is applicable for most everyday consumer purchases as well as
business-to-business purchases in the U.S.
The Pricing Decision
As pointed out above, the pricing decision is impacted by many
different factors. Thus, the initial pricing decision can be time-consuming
although there are exceptions. In pricing livestock, for example, the
pricing decision can be quite simple. A cattle rancher may take his or
her cattle to the local auction house once a year to ‘thin his/her herd of
older cows and young calves.” In this case, the rancher will be forced to
accept whatever price his/her cattle bring at the auction. In this case, the
pricing decision is reduced to answering the question: “Can I accept the
price being offered at the local auction?” If the answer to this question
is ‘no,’ the rancher then has to decide whether to seek another auction
or liquidate his/her herd. However, usually the pricing decision is much
more complicated and should involve a careful consideration of all five
factors listed above.
Cost and Demand Oriented Pricing Models
We may use cost or demand as a basis for setting pricing. Traditionally,
this orientation is applied in microeconomic theory by creating demand
curves based a summation of individual utility functions for buyers in
the marketplace. Thus, we first assess buyers’ perception of how much
they would expect to pay for a product or service based on the utility
(or usefulness) they would expect to derive from product or service and
72
combine these individual utility functions to create a demand curve
for the product in question. While, this approach is straightforward
theoretically, it often defies practical application. However, the general
lesson we learn from the approach is an important one. That is, the
price based on a demand-oriented model, can be based on the expected
utility (benefits) that customers in the marketplace expect to receive
from acquiring our product as compared to other available products.
Pricing models based on cost
Probably the oldest model used, this approach uses cost to the seller
to determine a selling price. For example, for years a ‘keystone’ or ‘keystoning’ pricing policy has been used by many retailers to set price.
This approach simply doubles the cost and arrives at the selling price.
Many other models used cost as a pricing basis, for example, internal
rate of return pricing usually begins with cost determination and then
computes different projected levels of return on investment for future
time periods. This pricing method was adopted by General Motors
early in the company’s history and was applied for decades with their
products. Why not just use cost-pricing always? While the approach is
simple and has the advantage of ‘guaranteeing’ some profit margin, the
approach ignores the most important factor in pricing; demand. Thus,
by using solely a cost-based approach the seller my miss opportunities
for additional profit or set a price too high to realize adequate sales to
even cover cost.
Pricing models based on demand
Witness salaries paid to professional athletes. How are these ‘prices’
for athletic talent determined? Usually, based on demand and what
others will similar skills can expect to receive in a free market. Prices
can also set using demand for the product or service as a guide. For
example, if an analysis of demand indicates that buyers, based on the
benefits they would derive from it, would expect to pay $30,000 dollars
for a new kind of testing device, this at least gives the seller some
guidance in setting price. This approach is known as ‘the expected
price approach’ and, theoretically, is the basis for setting price based on
demand in Microeconomics. Of course, this approach requires a time
consuming analysis and it not as simple as just setting the price based on
73
cost. However, if a seller focuses only on cost to set a price, s/he might
be either setting price so high there will be no demand, or foregoing
considerable profits.
For example, if demand is very high there are times when we can
virtually ignore cost structures. For example, if a professional athlete
has a remarkable season of performance, s/he can sometimes demand
an incredibly high salary based on his/her performance the previous
season.
In some cases, there may be ‘an expected price.’ The expected price
is a price that consumers would anticipate being reasonable for the
benefits derived from using the product. There may also be a ‘customary
price’ for a product or service. The customary price is a price level that
consumers are used to paying based history or normal expectations. For
example, if consumer testers try out a new, revolutionary vacuum cleaner,
when asked they indicate that they would pay normally anticipate paying
$500 or less for the product, although the seller cost structure would
mean losing money at a price of less than $500.
Prestige pricing is often applied by organizations that attempt to
create a sense of exclusivity for their product or service. This pricing
approach assumes that the product or service faces a market structure
characterized by ‘monopolistic competition.’ Thus, prospective buyers
perceive a difference in products based on the distinction or reputation
of particular brands. Many product categories this factor to set price.
For example, wristwatches, liquor, and automobiles all have a ‘prestige’
segment created through the perception of exclusivity and distinction.
Of course, in order to create and sustain such a market position, the
organization must commit to a long-term strategy.
Distribution channels, marketing logistics1
How do producers get their products and services to their target
customers?
This area of the marketing mix is usually called ‘distribution’ simply
because its main concern is to distribute goods and services to the target
customers.
Organizations typically use a large number of strategies to get their
goods and services to target customers rather than only one. Critical to
understanding and managing distribution are the concepts of time and
74
place utility. Time utility can be defined as having the product available
when the customer would prefer to acquire it and place utility is having
the product available where the customer would prefer to acquire it.
While the internet can provide the ultimate in time utility for some
products or services (for example, e-mail), for many products, it does
not provide sufficient time utility. Buying a book over the internet still
requires that the book be delivered to the buyer before ‘consumption of
the product’. Therefore, it is generally faster to buy a book from a local
retailer than to obtain the same book through the internet. However,
the development of the market for e-books may change this situation.
For example, this e-book is delivered to the user instantly anytime the
user desires to access it.
A marketer may adopt a broadcast strategy in which products are sent
out to customers in as wide a manner as possible. This strategy is usually
not efficient or effective for most firms, particularly small firms due to the
cost. The strategy is typically adopted by many organizations that have
not done sufficient research to understand the specific characteristics
their target customer and how the customer would generally prefer to
obtain the product or service in question. For example, organizations
that are production-oriented concentrate primarily on manufacturing
their products efficiently (with the underlying assumption that there
will be a demand for the product). Sales-oriented organizations focus
on promotion and personal selling and are not typically concerned with
the ideal product solution that the customer is seeking. Technology
oriented firms assume that customers are seeking the most advanced
technology, thus these firms focus on the most advanced way of doing
things whether the customer is seeking this solution or not. All of the
organizations above often adopt these respective orientations because
they have insufficient knowledge of customers or concern for customers
to engage in a focused distribution strategy.
We use the terms goods to refer to tangible products (those that
can be seen and touched, for example a new pair shoes) and the term
services to refer to intangible products (for example a visit to the dentist),
those that cannot be seen or touched during the process of providing
the service. Although traditionally services have been delivered through
a ‘direct’ marketing channel or directly from the seller to the buyer, as
technology develops, many services are now be delivered directly to the
customer. Previously, these services required personal contact between
seller and buyer. For example, investment decisions (in stocks, bonds,
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or other investment options) historically required a face-to-face meeting
between the investor and his investment advisor. Today, many people
manage their investments through the internet and never work face-toface with another human being. Financial services offered by banks are
similar in that, since the introduction of the Automatic Teller Machine
(ATM), it is not necessary for customers of banks to meet face-to-face
with bank representatives. As the practice of “direct deposit” and
other electronic forms of banking grow, there will less and less need for
personal interactions between financial institutions and their customers.
This is not to the say that there will no longer be a need for ‘bricks and
mortar’ banks, because some segments of customers will still feel it
necessary to visit personally with the bank’s representations.
Event-driven marketing (EDM)
Event-driven marketing (EDM) is a discipline within marketing,
where commercial and communication activities are based upon the
measurement of relevant and identifiable changes in a customer’s
individual needs. It is a distinct and different approach to direct
marketing and traditional Database marketing which typically use
statistical methods.2
In this context, an “Event” is defined as a detectable change in an
Individual’s circumstances, today, which is relevant and significant, either
in fact or in their mind.3
A “Significant Event” is a major happening in a customer’s life. They
can lead to a measurable change in a customer’s normal behaviour, state
of mind, personal circumstance, or interaction pattern. It offers a reason
to communicate with the customer, with a relevant proposal, at the right
time. Events increase the knowledge, understanding and information
about a customer that enables the marketer to make better, more
informed decisions.3
Event-driven marketing is synonymous with and exactly the same
as event-based marketing (EBM). In some cases it is also referred to
as Trigger-based marketing. The definition above is consistent for all of
these terms.3
The theory behind event-driven marketing is that the most productive
message is one that is relevant to the Customer and based on what’s
going on in their life at that moment in time.3
EDM expands the relationship with customers by monitoring them
(and their personal or commercial situation) on a constant basis and
76
responding immediately to relevant changes in their circumstances.
This includes monitoring both their transactional behaviour (as is done
in direct marketing) as well as their life or business circumstances beyond
your immediate transactional relationship.
The results from implementing EDM are notably spectacular and
have a positive effect on several common marketing KPIs and metrics.
It is common to achieve average positive Customer response rates to
communications of 34%.4 This compares to normal targeted direct
marketing response rates of 1%-4%.4
Other metrics affected include Customer Satisfaction and Churn/
Retention
Event-driven marketing was first implemented in Australia in 19951996 at National Australia Bank. This project was the brainchild of a Ray
O’Brian (Teradata) and Fernando Riccardo (NAB).
Their idea was based on the fact that the then current marketing
approaches were using limited amounts of data of variable quality and
that these returned pitiful results (1-4%). They postulated that, if only
they could monitor a customer’s activities in a more timely and dynamic
way, they could accurately determine any changes and hence customer
needs.
Two things enabled this approach to come to fruition, Teradata’s at
that time unrivalled ability to load and process large volumes of data,
and NAB providing the source of customer transactions.
The results were so spectacular that NAB decided to maintain secrecy
over this new approach, fearing replication and competition from their
rivals. However in 1999-2000 the bank had a change of policy and
decided to publicise their results. Since that time they have been a major
presenter of EDM at marketing conferences around the world.5
By 2000 there were still only a very few exponents of EDM. This was
due to the fact that large amounts of transactional data were required,
which in turn demanded high end and specialised database machines.
The other factor was that there were no EDM ‘products’ in the market and
thus each project tended to be a consultative, bespoke implementation
lasting years and costing millions. During this period all implementations
tended to be in very large multi-national banks.
By 2003 database and server technology had advanced to the level
that EDM could be performed on more modest machines and this
opened the market up to other implementations. At around the same
time, three EDM products were launched:
77
•
eventricity’s Timeframe
•
SynapseEBM (now part of Conclusive Marketing)
•
Unica’s Detect (now called IBM Opportunity Detection).5
More recently Teradata, who employ a purely consultative approach,
have released: Teradata’s Relationship Manager (now branded as
Aprimo Relationship Manager). NB. Teradata’s own blurb on this product
does NOT mention Events or event-driven marketing. It appears to be
a perfectly good example of a campaign management tool and not an
EDM product like those mentioned above.
Until recently there has been no empirical research into EDM and all
information has been derived from conference presentations. A synopsis
of the different results presented can be found on eventricity’s site. 6
In 2009 a large CRM survey was conducted on behalf of EFMA[7] and
Atos Origin.[8] The objective was to provide a clear, unbiased ‘state of the
union’ on differing CRM approaches and techniques. It was conducted
with 65 Banks from 29 different countries. Below is an excerpt of the
research, covering the results obtained from the differing Database
marketing techniques used to create targeted Customer leads / contact
lists.7
These included:
•
Ad-Hoc (lists generated spontaneously without in-depth analysis)
•
Data Mining
•
Segments
•
Models
•
Events
•
Inbound (selling to the Customer as part of an inbound call).
Event Attributes
An Event was defined as a detectable change in an Individual’s
circumstances, today, which is significant, either in fact or in their mind.
The three key words in this definition are: individual, today and significant.
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Individual:
Events are assessed against individuals not groups of people or
segments. Analysing a customer’s data individually, determines their
individual levels and values which is used to determine significance (see
below). This analysis shows historical levels, trends and patterns that are
specific to each particular person.
Significance:
Significance is a test applied to an ‘Event’ to determine if the fact that
it has happened to a customer is relevant and noteworthy. Significance
in this context is therefore a measure of the variance from the norm for
that particular individual.
Today:
Once a significant Event has been detected the timeliness of
customer communication is crucial. In fact, if the company is not able
to communicate with a customer within 48 hours of detecting an Event,
they probably should not bother. Research has shown that the customer
response rate decreases by about 66% for each 24-hour delay. An average
response rate of 70% for contact within 24 hours is common. This drops
to around 25% within 48 hours and less than 10% in 72 hours.
Types of Event
Events can be classified into several different types. These include:
•
Triggers:
•
Simple (predicted) Events
•
Significant Events
•
Behavioural Events and Lifecycle Events
Triggers
A Trigger is a circumstance that has happened to a Customer today
but which is not necessarily significant. It is this lack of significance that
differentiates a Trigger from a Significant Event.
Triggers are not very accurate and as such their use is not generally
advocated. However they can be extremely useful when considered in
combination with other Triggers or Events.
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Triggers can be very valuable for activation of straightforward business
processes. Their best use is for actions that are completely automated and
which require no human intervention. Thus they can be programmed to
fire whenever a defined circumstance occurs, and provide a clear result.
In such situations they are a very cheap and effective tool. Examples can
include things such as:
• Triggering the issue of a new cheque book when the penultimate
one is issued
•
Sending an SMS offering a new mobile top-up when the current
one has 10 minutes left
•
Sending an SMS offering an overdraft facility when an ATM max
payment is made, etc.
The key to using effective Triggers is that the resulting action is binary,
i.e. Situation A results in Action B. They can be very effective for Service
based offers.
Thus a Trigger satisfies the standard Event criteria of Individual and
Today but fails in terms of Significance. Numerous studies have shown
that the trigger based emails can double the response rate of direct
marketing communications.8
It should be noted that the timescale for communication of a Trigger
can be anything from instantaneous to the maximum of a day or so. After
this, it is not worthwhile.
Simple (predicted) Events
Most Events are reactive, i.e. based on what has previously happened.
But with some Events we can predict situations that will occur in the
future. For example, a customer will finish his loan in 30 days.
Undoubtedly, this is important to the customer and a good reason
for communication. It is hardly a surprise and there is no urgent need to
communicate today. In fact we can schedule a call anytime over a twoweek period and get the same result.9
Thus the event satisfies the standard Event criteria of Individual and
Significant but fails on Today. We call this type of Event a Predicted or
Scheduled Event. Examples include
• End of contract,
•
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End of loan
•
Significant Birthday and
•
any kind of Customer activity for which there is a known,
scheduled date.
The timescale for communication of a scheduled Event can be a
window anything from 5 to 30 days or even more.
Significant Events
A single, significant event tells us something about the Customer. It
is an excellent indicator of real / potential change. Customers are very
responsive and accepting of communication at this time. Examples
include.
• Large Deposit,
• Salary start / stop, etc.
The timescale for communication of a Significant Event is usually
quite short – usually only 1 to 2 days. After this, the effectiveness drops
rapidly (typically response rates drop at 60% per day).
Behavioural (Super) Events
A single, significant event may tell us something about a customer, but
sometimes Events happen in groups and the sequence and combination
of these events can tell us a lot about the behaviour and circumstances
of the Customer.
For example, a Customer may have a Large Deposit and this would be
of interest, but a Large Deposit followed by a Large Withdrawal and then
a Salary Stop (within a short period of time) may signify something much
more important such as ‘Redundancy’.
A Super (or behavioural) Event is a situation where a series of
circumstances happen to a customer within a specific period of time and
possibly in a certain sequence.
These circumstances can be combinations of such things as Events,
Scheduled Events, Triggers (see above) and even other Super Events.
Examples of circumstances that Super Events can potentially detect
include:
• Redundancy,
• Churn,
• Moving house / job
• Marriage, etc.10
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Lifecycle Events
Lifecycle Events are very similar to behavioural Events and can
sometimes be detected in the same way. Their value is undoubted, with
one Dutch bank claiming that 55% of ALL product sales they made were
from customer Events based on Lifecycle changes. Examples include:
• First job
• First apartment
• Getting married
• First child, etc.10
EXERCISES
1. Visit a Saturn dealership and another new car dealership and
write a one-page summary of your experiences paying particular
attention to sales-driven versus customer-driven behaviour on
the part of the salesperson or salespersons you met.
2. Obtain a magazine advertisement for which you think the target
market is clearly defined and comment on what you believe are
the characteristics of that target market.
3. Obtain three magazine ads, one that primarily is designed to
‘inform,’ one that tries to ‘persuade,’ and one that ‘reminds.’
4. Visit the Nick at Night website described in your chapter and
view two ‘retromercials’ on that site. Write a one-page essay
on how you believe advertising has changed since your chosen
retromercial aired.
5. Go to a grocery store and interview the manager there. Ask the
manager about his/her promotion mix and what components
are in it and how they are managed. Write a one-page essay
describing the results of your interview.
6. Use the keyword ‘Professional selling’ to search the internet.
Write a one-page essay on your findings.
7. Agree or disagree with the following statement and explain your
answer using materials found in Chapter Ten. “If everyone is
your customer, then no one is your customer.”
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Case study
An easy guide to audience measurement
Overview of basic terms used in audience measurement
Radio and TV audience measurement
Situation description: – A consumer packaged goods company runs
a campaign on television for a new soap product – “Germ Buster Hand
SoapÒ.” The market for this product is estimated to be around 20 million
people who are particularly concerned about the presence of germs on
their hands during food preparation. The campaign will be targeted to
this market throughout the holiday season of 2000. The product is to be
introduced through a television ad campaign beginning October 2000
and running through December 2000.
1. Reach – “the percentage of target prospects exposed to one or more
ads for a brand during some stated period.” During the company’s
initial advertising campaign, half of the people (10 million people) in
this target market will be exposed to the ad during the three-month
life of the campaign. Thus the Reach is 50 (that is 50% of the target
market will see the ad. That is, fifty percent of the people in the
target market will be exposed to the ad at least one or more times.)
Concerning reach, some people subscribe to the ‘three-hit theory.”
That is, it takes three effective exposures to move the prospect
through the hierarchy of effects. (Attention, Interest, Desire, and
Action). Three effective exposures usually requires much greater
than three total exposures. Why?
2. Frequency –“the average number of exposures to advertisements
received by all prospects who were reached during the given
time period.” In the preceding example, your campaign reached
10 million prospects or half the target market. Suppose that media
research indicates that the 5 million people in the target market will
be exposed to this ad six times while 5 million people will be exposed
four times during the campaign. Thus, the frequency or average
number of exposures for the target market will be five.
GRP’s or gross rating points-the GRP level is a rule of thumb used
by media personnel to assess the relative strength of the campaign.
83
In our example, the GRP’s would be 250. GRP’s yield a comparison of
different options for reach and frequency through examining the relative
exposure schedule of different campaign options (their relative ‘bang for
the buck.’) While this measure has obvious shortcomings (that is, is an
exposure more powerful if it occurs previous to the food preparation
period versus after the food preparation period) it has been applied
traditionally in TV and radio advertising. There is the growing question of
effectiveness. For example, we can run ten second spots or sixty second
spots and end up with the same “GRP’s” (an exposure is an exposure)
but do they have the same ‘selling power.” I think not. That is, while
your GRP’s have increased with ten second spots, does that mean have
you necessarily increased the communication and learning that has
taken place with the target market? However, the measure is helpful for
comparing competing media schedules.
In our example above, need to decide which is more important for
our situation, reach or frequency. That is, is it more important for a
larger proportion of the target market to be exposed at least once, or is
it more important for prospects to be exposed to our message several
times. This debate finds little agreement, except to say the ‘more is
better.’ Of course, ad agencies and media representatives are glad to
have you spend more money always. However, you need to analyse and
think about what is needed to convey your message. That is, are the
benefits the product delivers relatively easy to understand? If so, which
would you prefer to emphasize in a campaign: reach or frequency? On
the other hand, if product benefits are difficult to convey would your
answer be different?
Think about different schedules and how they impact your
communication potential. Remember that you are spreading the amount
of dollars over different communication objectives. Can’t do it all! For
example, if you emphasize reach over frequency that means that “more
people will receive fewer exposures.” Compare this to emphasizing
frequency over reach so that “fewer people will receive more exposures.”
Funds are always limited and you will asked to make decisions of this
sort that trade off resources and people in your organization expect to
be able to trust your answers. After all, you are the marketer with the
MASTER OF BUSINESS ADMINISTRATION DEGREE!
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Measures of television audiences and their relationships to each
other
Coverage
(number of TV households in signal
range of TV station or network)
□
□
□
□
□
□
□
□
□
□
HUT (homes using TV)
Percentage of coverage
with sets turned on
Rating
Percentage of
coverage tuned to a particular
program, station, or network
Audience Share
(percentage of HUT tuned
to a particular program,
station or network)
HUT X Audience share = Rating
Brief example
A recent infomercial for Suzanne Somers’ Depression Cure aired on the
local cable TV station in Out There, Kansas, had the following viewership:
Coverage – this local cable channel can provide a coverage of 2 million
households
HUT – for the 12 midnight to 1 a.m. time slot, the percentage of
coverage with TV sets turned on is one out of twenty or five percent or
.05
Audience Share – during that time slot the percentage of homes using
TV that is tuned to this cable channel is sixty percent
Rating – the rating for this infomercial would be .05 X .60 = .03
Thus the percentage of total coverage tuned to this particular program
was .03 or said another way, the program reached 60,000 households or
three percent of the total coverage.
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There are many other resources for assessing markets and audience
measurement that are easily accessed on the internet and you might
want to see what you can find in your own search.
Newspaper and magazine audience measurement
The Basic CPM formula is used to compare different media options.
That is, we compare the cost of reaching one thousand viewers across
different stations. For example, if we used the basic CPM formula (cost
of one unit of time)/number of households reached).
REFERENCES
The context of this part has been adapted from the following
product(s):
1. Principles of marketing. Access via Internet: www.
principlesofmarketing.com/htm/Chapter-Six.htm
2. van Bel, Sander, Weber. “Follow that Customer”. Racom
Communications; http://www.failsafe.nl/followthatcustomercom/
3. Holtom, Mark. “What is an Event”. http://www.eventricity.biz/
What_is_an_Event.php
4. Holtom, Mark. “EDM KPIs”. http://www.eventricity.biz/Marketing_
KPIs_for_Event_Driven_Marketing.php
5. Ricardo, Fernando. “NAB National Leads”. http://www.nab.com.
au/
6. Holtom, Mark. “EDM Infographic”. http://www.eventricity.biz/
EDM_Infographic.php
7. Holtom, Mark. “EDM Research”. http://www.eventricity.biz/
Research.php
8. EFMA. “EFMA CRM Research”. http://www.efma.com/index.php/
init/home/index/EN/0/0
9. Atos Origin. “EFMA EDM research”. http://www.efma.com/index.
php/init/home/index/EN/0/0
10. Ingalls, Neil. “Triggered Email Marketing – The Stats Speak for
Themselves”. http://www.sproutloud.com. Retrieved 2014-03-18.
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FURTHER READING
1. Kotler, Philip; Kevin Lane Keller (2009). “1”. A Framework for
Marketing Management (4th ed.). Pearson Prentice Hall. ISBN
0-13-602660-5.
2. Adcock, Dennis; Al Halborg; Caroline Ross (2001). “Introduction”.
Marketing: principles and practice (4th ed.). Xavier Thomas. p.
15. ISBN 9780273646778. Retrieved2009-10-23.
3. Kotler, Philip & Keller, L. Kevin (2012). Marketing Management
14e. Pearson Education Limited 2012
4. Adcock, Dennis; Al Halborg; Caroline Ross (2001). “Introduction”.
Marketing: principles and practice. p. 16. ISBN 9780273646778.
Retrieved 2009-10-23.
5. Strategic Marketing by David W. Cravens and Nigel F. Piercy
6. “Marketing Management: Strategies and Programs”, Guiltinan et
al., McGraw Hill/Irwin, 1996
7. Dev, Chekitan S.; Don E. Schultz (January–February 2005). “In
the Mix: A Customer-Focused Approach Can Bring the Current
Marketing Mix into the 21st Century”. Marketing Management
14 (1).
8. “Swarming the shelves: How shops can exploit people’s herd
mentality to increase sales”. The Economist. 2006-11-11. p. 90.
9. Kerin, Roger A. (2012). Marketing: The Core. McGaw-Hill Ryerson.
p. 31.
10. Kotler, Armstrong, Philip, Gary. Principles of Marketing. Pearson
education.
11. Hochbaum, Dorit S. (2011). “Rating Customers According to
Their Promptness to Adopt New Products”. Operations Research
59 (5): 1171–1183. doi:10.1287/opre.1110.0963.edit
12. “Segmentation, Targeting, and Positioning”. University of
Southern California. Retrieved 21 May 2013.
13. Stolley, Karl. “Primary Research”. Purdue Online Writing Lab.
Retrieved 21 May 2013.
87
14. Kardes et al.; 2015; Consumer Behavior; 2nd edition; Cengage
Learning, Stamford
15. Developing Business Strategies, David A. Acker, John Wiley and
Sons, 1988
16. Mittal, Vikas and Frennea, Carly, Customer Satisfaction: A
Strategic Review and Guidelines for Managers (2010). MSI Fast
Forward Series, Marketing Science Institute, Cambridge, MA,
2010. Available at SSRN: http://ssrn.com/abstract=2345469
17. “Chapter 6: Organizational markets and buyer behaviour”.
Rohan.sdsu.edu. Retrieved2010-03-06.
18. Goldstein, D.; Lee, Y. (2005). “The rise of right-time
marketing”. The Journal of Database Marketing & Customer
Strategy Management 12 (3): 212–225.doi:10.1057/palgrave
dbm.3240258.
19. Dacko, Scott G. (2008). The advanced dictionary of marketing.
pp. 377–378. ISBN 0-19-928600-0.
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Part 7
PROMOTION MIX IN EVENT MARKETING
Objective outline:
1. Define the five promotion mix tools for communicating
customer value.
2. Discuss the changing communications landscape.
3. Outline the communication process and the steps in developing
effective marketing communications.
4. Explain the methods for setting the promotion budget and
factors that affect the design of the promotion mix.
Chapter Key Terms:
Advertising
Personal selling
Sales promotion
Merchandising
Public relations (PR)
The promotion mix or the marketing communications mix
Promotion refers to raising customer awareness of a product or
brand, generating sales, and creating brand loyalty. It is one of the four
basic elements of the market mix, which includes the four P’s: price,
product, promotion, and place.1
Promotion is also defined as one of five pieces in the promotional
mix or promotional plan. These are personal selling, advertising,
sales, direct marketing, and publicity. A promotional mix specifies how
much attention to pay to each of the five factors, and how much money
to budget for each.2
Fundamentally, there are three basic objectives of promotion. These
are:3
1. To present information to consumers and others.
2. To increase demand.
3. To differentiate a product.
The purpose of a promotion and thus its promotional plan can have a
89
wide range, including: sales increases, new product acceptance, creation
of brand equity, positioning, competitive retaliations, or creation of
a corporate image.2
Promoters have used newspapers, special events, endorsements,
Promotions can be held in physical environments at special events such
as concerts, festivals, trade shows, and in the field, such as in grocery or
department stores. Interactions in the field allow immediate purchases.
The purchase of a product can be incentive with discounts (i.e., coupons),
free items, or a contest. This method is used to increase the sales of
a given product. Interactions between the brand and the customer are
performed by a brand ambassador or promotional model who represents
the product in physical environments. Brand ambassadors or promotional
models are hired by a marketing company, which in turn is booked by the
brand to represent the product or service. Person-to-person interaction,
as opposed to media-to-person involvement, establishes connections
that add another dimension to promotion. Building a community through
promoting goods and services can lead to brand loyalty.
Promotion can be done by different media, namely print media
which includes newspaper and magazines, electronic media which
includes radio and television, digital media which includes internet,
social networking and social media sites and lastly outdoor media which
includes banner ads, OOH (out of home). Digital media is a modern way
of brands interacting with consumers as it releases news, information
and advertising from the technological limits of print and broadcast
infrastructures.4 Mass communication has led to modern marketing
strategies to continue focusing on brand awareness, large distributions
and heavy promotions.5 The fast-paced environment of digital media
presents new methods for promotion to utilize new tools now available
through technology. With the rise of technological advances, promotions
can be done outside of local contexts and cross geographic borders to
reach a greater number of potential consumers. The goal of a promotion
is then to reach the most people possible in a time efficient and a cost
efficient manner.5
Promotional activities to push a brand enabling social media channels
to spread content making something viral, such as the advertising by
Coke. Using the release of a new Bond film creating attention which
then gets promoted across all social channels by people spreading the
information due to excitement. Social media, as a modern marketing
tool, offers opportunities to reach larger audiences in an interactive way.
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These interactions allow for conversation rather than simply educating
the customer. Facebook, Twitter, LinkedIn, Pinterest, Google Plus, Tumblr
and Instagram are rated as some of the most popular social networking
sites.6 As a participatory media cultures, social media platforms or social
networking sites are forms of mass communication that through media
technologies allow large amounts of product and distribution of content
to reach the largest audience possible.7 However, there are downsides
to virtual promotions as servers, systems, and websites may crash, fail,
or become overloaded.8 With promotion through participatory media,
there is an opportunity to gain Social capital.
Promotion, has its own mix of communication tools which are
sometimes called the promotion mix or the marketing communications
mix.
A company’s total promotion mix consist of specific blend of five (5)
major promotion tools as follows:
-
Advertising
-
Sales promotion
-
Personal selling
-
Public relations and
-
Direct – marketing tools
The company uses these tools to persuasively communicate customer
value and build customer relations.
Traditionally, we employ a promotion mix to effectively budget
and distribute funds for promotion. The promotion mix includes the
following components:
a) Advertising – paying for space in a medium such as a newspaper
or trade journal
b) Personal Selling – a face to face contact with a customer
c) Sales Promotion – any program that provides additional incentive
for the customer to make a purchase
d) Publicity – obtaining space in a medium such as a newspaper
in which we do not have to pay for the space based on the
newsworthiness, or other characteristic of the article printed.
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When creating a promotion program we attempt to meld the four
elements together in a cogent way so that each element supports the
other and provides the target audience with a consistent message
over time. This practice is call ‘integrated promotion management’ or
‘integrated marketing communications.’
For organizations marketing convenience goods in consumer markets,
advertising usually accounts for the largest proportion of the promotion
mix, whereas, personal selling traditionally comprises the largest
expenditure for organizational markets.
Let us look at the definition of these 5 major promotion tools as
follows;
Advertising:
Advertising in a nutshell is any paid form of non – personal presentation
of ideas, goods and services by an identified sponsor. Its functions are to
attract attention, inform, motivate or persuade, inspire convictions and
provoke action and satisfaction.
Sales promotion
Sales promotion is defined as the short term incentives to encourage
the purchase or sales of a product or service. For example, buy one at
a regular price and get the next one free of charge, special offer deals.
Personal selling:
Personal selling is defined as personal presentation by the firm’s sales
force for the purpose of selling and making customer relations. It is one
of the means through which marketing programmes are implemented.
The purpose of personal selling is to bring the right product into contact
with the right customer and make sure that ownership transfer takes
place.
It is a means which sellers use in their attempts to create awareness,
motivate or persuade the prospective buyer to buy. Both advertising and
personal selling makes use of the salesmanship skills.
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Public relations:
Public relation here is defined as building and maintaining good
relationships with different company public’s through obtaining
favourable publicity, building up a good “corporate image (corporate
PR), product/brand publicity (product PR) and handling unfavourable
rumours, stories and events.
Direct marketing:
Direct marketing is defined as having direct connections with carefully
targeted individual consumers to obtain an immediate response as well
as cultivate lasting customer relationships. Tools of direct marketing
includes; telemarketing, direct mail, online marketing. Direct marketing
share some characteristics in common;
- it is non – public, the message is directed to a specific person
-
it is immediate and customized
-
it is interactive, it allows dialogue between the team and the
customer.
Publicity means positive editorial coverage in the media. It does not
include “bad press”.
We have already discussed the importance of performing upstream
marketing activities prior to performing downstream marketing activities.
Promotion takes place in the intermediate and later stages of marketing
planning because promotion requires:
1. first a definition of the target audience
2. second, a description of the benefits to be delivered to that
target audience
3. third, clear objectives about what the program aims to
accomplish, and
4. fourth, a strategy to be employed to communicate with that
target audience and accomplish the objectives.
This process may seem backwards to some who would expect to
make the media decision first. That is, if an organization is sales-driven, it
would first attempt to perform number four above. However, a marketdriven firm realizes that is must perform the first three steps prior to
media choice.
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Definition of the target audience9
Traditionally, the role of promotion has been identified as to ‘inform,
persuade, and remind.’ While these stages are always necessary, often
one or the other has taken place prior to the creation of a promotion
program. For example, most consumers in the U.S. culture are aware
of and understand the benefits of Coca-Cola and where to find the
product, so informational advertising may not be necessary (http://
www.cocacola.com/). However, Coca-Cola must continually work
hard to keep its name in front of consumers and remind them that the
product is available and that it will provide the consumer with certain
benefits. “Reminder advertising” is often placed by market leaders to
support other promotional campaigns that are in progress. Thus, CocaCola is committed to constant advertising, although most consumers are
aware of the product in over two hundred countries (see http://www.
cocacola.com/). When you think of target markets, realize that they are
always changing. People age and change over time, therefore, target
markets do the same thing. So, new Coca-Cola ads while persuading
and reminding a portion of the target market, also continually inform a
certain part of the target market who due to age or culture are not aware
of the product yet.
History shows that market leaders can quickly lose their competitive
position if they don’t constantly keep their name in front of their target
market. This is particularly true with today’s media saturation and intense
competition. As we discussed in Chapter Three, the target audience
for consumer products is usually defined in terms of demographic,
psychographic, geographic, and behaviouristic attributes. Once we have
clearly defined the target market, we create marketing programs to
communication with members of the target market.
Description of benefits to be delivered to the target market
It is imperative to understand what benefits (not product features)
the target market will receive by buying our product or service and this
description should be crafted in words that communicate these benefits
to members of the target market. Thus, the notion of “empathy” with
the target market becomes critical. If we don’t really understand our
customers well, it will show in our attempts to communicate with them.
For example, if our target market first seeks the minimization of financial
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risk in their purchase, we might choose to provide a thirty-day money
back guarantee. Whereas, if our target market is more interested in
minimizing technological risk in their purchase, we might choose to
decrease this perceived risk by providing a twelve-month ‘technology
trade-up program’ or adopting promotion comprised of user testimonials
dealing with the product.
Clear objectives about what the program aims to accomplish9
Setting objectives for promotion programs is a critical part of achieving
success.
However, in practice, setting objectives sometimes destroys creativity
associated with the promotion program. Thus, while we strongly
recommend formulating objectives that will guide the promotion
program, we caution promotion managers to avoid an approach that is
too rigid and quells the creative process.
Objectives for promotion programs can be either sales-oriented
objectives or communication-oriented objectives. That is, we can either
identify specific targets we wish to meet in terms of increased sales or
specific targets we want to attain in terms of communicating with the
target audience for the program.
Strategy to be employed to communicate with the target audience9
Just as in planning, the word ‘strategy’ is used in several different
ways in promotion management. First, strategy can refer to an overall
game plan or orientation to the promotion program. For example, a
company might discover through research that their target customers
seek reliability above all other attributes thus the organization might
adopt a strategy of ‘emphasis on reliability.’
On the other hand, an organization might adopt a ‘direct mail strategy’
if it finds that direct mail would be the best way to reach its customers.
Hence, use of the word ‘strategy’ has no guidelines and can confuse the
issue. We recommend that when the reader uses the word strategy,
the reader provide an explanation regarding how the strategy would
be implemented. This leaves no doubt regarding the word’s meaning.
Communication objectives can be driven by measures such as product
awareness, knowledge (of certain attributes or benefits) or preference.
Each of these measures can be used to assess how effective promotional
efforts have been in attaining their objectives.
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Creating Successful Promotion Programs9
As discussed above, there are four steps to creating successful
promotion programs:
1) a definition of the target audience
2) a description of the benefits to be delivered to that target
audience
3) clear objectives about what the program aims to accomplish,
4) a strategy to be employed to communicate with that target
audience
For example, Marie’s Gift Shop is a small store in downtown Manitou
Springs, Colorado. Marie’s parents opened the shop and named it for their
new-born daughter in 1968 and the shop has operated continuously since
then. Marie, after earning a college degree with a major in marketing,
was asked by her parents to manage the gift shop so that her parents
could retire. Marie accepted this challenge although she had two small
children and was a single mother. Marie realized any funds spent for
promotion must yield results in the form of increased sales. The first step
for Marie was to determine who the target audience for any promotion
would be. Having worked in the shop part-time for many years, Marie
believed that most her customers were from the local Manitou Springs
area although a significant proportion of customers in the summer were
tourists. She commissioned a small marketing research study with her
former university to explore her customer base. Two of the research
questions for this study were “(1) Who are our present customers and
(2) why do they buy from us?” The marketing research study found the
answers to these questions were that over seventy percent of the current
customers were from the Manitou Springs area and had been customers
of Marie’s Gift Shop for over two years. The study also indicated that
most of the customers purchased gifts for immediate family and friends
for traditional gift-giving occasions including birthdays, weddings, and
Christmas. Thus, after the marketing research study, Marie defined her
target audience as ‘Present customers with a ZIP code in the Manitou
Springs city limits and ZIP codes contiguous to the Manitou Springs ZIP
codes. Marie also realized that she should begin to keep a Customer
Information System that would enable her to communicate regularly
with her present customer.
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Another of the questions in Marie’s study was ‘Why do you make
purchases from Marie’s Gift Shop?’ One of the responses to this question
on the survey was “I am familiar with the Ruohonen family.” Over sixty
percent responded affirmatively to this question indicating that one of
their main buying motives was to ‘support local businesses’ and that the
customer ‘enjoyed visiting with members of the Ruohonen family.’ Thus,
most customers were already familiar with Marie’s Gift Shop before
buying from the shop.
Therefore, the three primary benefits customers were seeking were
determined to be:
a. experience personalized service from a familiar source
b. support local merchants like the Ruohonen family
c. obtain a unique gift
After a meeting with a local marketing communications firm, these
benefits were used as a guide for creating a promotion strategy for
Marie’s Gift Shop. Marie’s decided to adopt this approach as a longterm strategy and committed to this strategy for a three year period,
thus, adoption of a promotion strategy should not usually be seen as
short-term.
We will discuss this promotion program in more detail in a later
chapter.
Overview of Advertising9
As indicated above, advertising can be defined as communicating
with target audiences through paid, non-personal messages, usually
placed in a mass medium. Advertising is the easiest but absolutely, more
expensive alternative for marketing communications. That is, the initial
outlay for an advertising campaign may be the most expensive option
for promotion. However, advertising may possibly provide the lowest
‘cost per contact.’ For example, usually audiences are measured by using
a figure known at CPM or cost per thousand (the ‘M’ denotes use of the
Roman numeral designation for one thousand.) See the appendix to this
chapter: An easy guide to audience measurement.
If you do an internet search on the word, ‘advertising’, you will
find many different references and categories presented there. Some
researchers estimate that by the age of eighteen the average person in
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the U.S. was viewed well over one million advertisements and that figure
is probably very low if we consider all commercial messages to which
we are exposed in the U.S. What are the implications of this staggering
statistic? First, most of us consider ourselves ‘experts’ in advertising
because we have seen so many ads. However, to be truly expert, one
must understand and develop the attribute of ‘empathy.’ Empathy is
simply being able to understand another person’s feelings are reactions
to events in his or her environment. It is easy to feel sympathy for
someone who is only twenty-one years old but dying of cancer. However,
it is much more challenging to understand how that person must feel.
This example demonstrates how fundamentally unimportant most
advertising is to the average person. However, advertising is sometimes
very important to us as individuals. Why? First, we often use advertising
as a way to identify right and wrong behaviours: both fundamental and
minor behaviours in society. For example, some ads give us cues about
‘what is cool’ and what is ‘not cool’ in everyday behaviours. Can you
identify how ‘cool behaviour’ and ‘uncool behaviour’ have changed in
the last few decades?
The tobacco industry continues to advertise heavily through alternative
means that avoid regulations of the Federal Trade Commission (FTC), thus
easily avoiding the law, while continuing to advertise a product proven
hazardous the health of its users. For example, note how the motion
picture industry continues to accept money to feature its products in
films.
Also, the reader might want to review the website of a company that
has as its core business the ‘placement’ of products in various media
vehicles.
Overview of Personal Selling9
Personal selling is the worst nightmare most of my marketing students
have about a career in marketing. Why? I think they see personal selling
as a low status, low paid career full of disappointments and lack of
personal freedom. In one way the students are correct, almost any career
in personal selling is going have many disappointments if one defines
a customer not saying ‘yes’ instantly as a disappointment. However, a
career in personal selling can yield a most rewarding professional life if a
person can develop a strong self-esteem and truly believes in what s/he is
selling. As Peter Drucker, a leading writer in marketing and management,
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has said: “(true)…. marketing involves almost no selling.” Mr. Drucker
refers to the fact that if a marketer does his or her job and understands
and delivers a product or service solution that the customer is truly
seeking, it only remains for the marketer to explain how this solution will
provide the benefits sought, and the customer is then willing and eager
to buy. Why does this sound so unrealistic to many of us? Because, as
consumers, we rarely experience a solution that is so well researched
or a seller who values the customer this much. As mentioned earlier
in the text, most companies in the U.S. are sales driven and not market
driven, so that their primary concern is not customer satisfaction but
selling the customer what the company has available to sell. Therefore,
it is no surprise that many consumers are dissatisfied with the product
and services they buy. However, as competition forces organizations to
be more customer-oriented, the remaining firms that are solely salesdriven will eventually disappear from the economic landscape.
Traditionally in personal selling, organizations follow a process from
the time preceding customer contact to the time following the sale,
including some follow-up activity. In many organizational markets, this
follow-up stage is called ‘post-sales support’ and is one of the most
effective methods for keeping customers. Investing in retaining current
customers is much more cost-efficient than ignoring current customers
in search of new customers. This approach, used historically with many
consumer products is called ‘churning’ and is adopted by sales driven
firms. New and used car sales are examples of product categories that
used the churning method for decades, although, due in some cases
to the efforts of new car manufacturers, this practice is becoming less
popular. New car manufacturers are recognizing that their long-term
success depends on building and nurturing a diverse customer base.
This requires on-going customer research and an honest commitment to
customers in all production and services systems that are responsible for
delivering customer satisfaction. Today this commitment is still rare, but
in the future it will be essential.
Many firms view the personal selling process as a ‘sales funnel,’ that is,
the process begins with many different possible customers, and narrows
over time to more specific customers who are first identified as ‘qualified
prospects.’ A qualified prospect can be defined as an individual, family,
or organization that is likely to be seeking the benefits we seek to provide
and has the ability to obtain those benefits by entering into a relationship
with our organization. Thus, locating and identifying qualified prospects
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becomes a primary function of the marketing or sales effort. However,
we must remember that if an organization is truly marketing oriented,
this process is made much easier because the customer profile created
early on in product or service development has already given clear
definition to our target customers.
After identifying qualified prospects, it remains to contact these
prospects and consult with them about our chosen solution to their
product needs in terms of the benefits they are seeking which we
aspire to provide. Thus, while the ‘sales funnel’ begins with a profile
of our target customer and the benefits that s/he wants, the number of
prospects decreases as we proceed through the sales process. As we
gather more information about what customers we can better satisfy,
we continually use this information as feedback to more precisely align
our solution with the benefits sought by our target market. The ‘delivery
system’ of the organization must strive to maintain flexibility throughout
the personal selling process and be capable of adjusting the product
solution to meet needs of customers as the organization gains better
resolution about what those needs are exactly.
Most traditional models of the selling process have the process
culminate in a ‘presentation’ and then proceed to a ‘feedback’ stage
that occurs after a presentation and purchase. While this approach to
modelling the process if helpful, it denies the required dynamic nature of
customer relationships and often is too inflexible to be of maximum use.
That is, as we learn more about exactly what benefits our customers
are seeking, we must continually adjust our product or service offering
to better provide those benefits. For example, a response to feedback
from customers in a restaurant that ‘this place it too smoky,’ must be
forthcoming very quickly if the restaurant is to be successful. While this
response is not as easy with tangible products, especially high technology
products, organizations marketing such goods must always aspire to
solicit this kind of feedback and respond to it as quickly as possible.
For more information on personal selling and sales management
consult the two topics at the following website:
Overview of Sales Promotion9
Because we define sales promotion as “any added incentive designed
to inform, persuade or remind a certain portion of the target market,”
sales promotion ends up being a large, catch-all category including
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coupons, special offers, customer sweepstakes, and many other
promotional activities. These activities are used both in consumer
markets and organizational markets although the methods often differ.
For example, if one reviews the local Sunday paper, one will find almost
countless coupons included by advertisers to encourage customers to
buy. However, only a very small percentage of these coupons are ever
even seen let alone exchanged by consumers. In organizational markets,
companies often spend large amounts of money on trade shows which
are regional, national, and international expositions that usually share a
common theme such as an industry.
Overview of Publicity9
Publicity differs from advertising in that the advertiser does not pay
for the space in the medium or publication with publicity. That is, a new
feature is placed because it ostensibly will be of interest to the readers
of the publication.
There are also public service announcements that often attain similar
objectives. The challenge with publicity is preparing an article that is
newsworthy and of interest to the readers of a publication. Obtain a
copy of a local newspaper, and see if you can find an article included in
the newspaper that you believe was published without a charge to the
advertiser based on its interest to readers.
The main requirement of obtaining publicity in most media is that the
article placed should be newsworthy and credible and of special interest
to viewers or readers.
Formulating an Integrated Marketing Communications Plan9
The primary challenge in promotion management is the integration
of all activities directed at communicating with one’s various audiences
so that the organization presents a consistent understandable image
to those groups. We say ‘audiences’ because at any given time, the
organization may be communicating with its customers, suppliers,
employees, competitors, and the general public in several different
contexts. It is imperative that the organization create and reinforce a
clear image in the marketplace. Thus, all communications should be
centrally produced and managed. This is not to say that there will be
no creativity in individual marketing communications efforts, only that
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these efforts will have agreed upon guidelines so that all of the different
groups with which the organization communicates are given a consistent
image of the organization.
After different parts of the organization agree upon what image the
organization seeks to attain, an integrated marketing communications
(MARCOM) program can be established and implemented. All
components of the promotion mix then have some underlying concept
to reinforce. For example, in the example of Marie’s Gift Shop described
above, Marie wanted to make sure that all communications with
customers, employees, and suppliers used the same logo and letterhead.
Marie also realized that an emphasis on personal service, the availability
of unique products, and the consistency of local ownership would be
critical to maintain her chosen organizational image. We will describe
Marie’s chosen MARCOM program at length later on.
A Note on Positioning9
As we have indicated, it is essential to know who the target customer
is and what benefits s/he is seeking. For example, there is usually a
temptation to ignore this requirement and attempt to ‘be all things to all
people.’ For example, recently a group of MBA students at a university
decided to enter into a business venture together. Several students in
the group had managed to save some funds through various means. Two
students had recently left military service and two others had received
a ‘departure bonus’ from a high technology firm. The students agreed
that they wanted to open a restaurant together. When asked who their
target market would be the students responded “Well, everyone who
eats.” Obviously, this definition of a target market is too broad and
provides insufficient guidance about the “Five W’s and H” (who, what,
when, where, why, and how) of the whole concept of the business. The
students needed to more clearly define the concept of the restaurant
and precisely who they were expecting to serve in the business. For
example, the needs of those who are searching for ‘a fast lunch’ will
differ significantly from those who aspire to ‘relax and talk’ over their
lunch. It would be difficult to position a restaurant to simultaneously
meet all of these needs well.
Promotion is the communications part of marketing. It is the way
we tell the world our product. Promotion provides consumers with
information and knowledge in an informative and persuasive manner.
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This, we hope, will sooner or later result in sales of our services or
products. The information and knowledge can be communicated using
one or more of the five promotional techniques - advertising, personal
selling, sales promotion, merchandising, and public relations. Taken
together, these techniques are referred to as the promotional mix.
Goals of Promotion9
The ultimate purpose of promotion is to modify behaviour through
communication. This requires helping customers at the various buying
process stages so they eventually purchase or repurchase a particular
service. Promotion achieves this by informing, persuading, and
reminding - the three principal goals of promotion. Promotions usually
fit into one of these categories; they are either informative, persuasive,
or reminders.
Informative promotions work best with new services or products
(early product-life-cycle stages) and with customers in early buying
process stages (need awareness and information search). These types
of promotions tend to communicate data or ideas about the key features
of services.
Persuasive promotions are harder. They are aimed at getting
customers to select one particular company or “brand” over those of
competitors, and to actually make the purchase. Advertisements that
compare one company’s services to another, and most sales promotions,
fit into this category. Persuasive promotions work best in intermediate/
late stages of product life cycle (growth and maturity) and the buying
process (evaluation of alternatives and purchase).
Reminder promotions are used to push customers’ memories about
advertising they may have seen, and to stimulate repurchases. They are
most effective in the late product-life-cycle (maturity and decline) and
buying process stages (post purchase evaluation).
The five communications mix elements are;
1. Advertising
2. Personal selling
3. Sales promotion
4. Merchandising
5. Public relations (PR)
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Advertising in event marketing
Advertising is any paid form of non-personal presentation and
promotion of ideas, goods, or services by an identified sponsor. The three
key words in this definition are “paid”, “nonpersonal” and “identified
sponsor.” Paid - hospitality and travel organizations always have to pay
for advertising, either in money or in some form of barter (e.g., free meals
from a restaurant in exchange for a radio ad). Nonpersonal - neither
the sponsors nor their representatives are physically present to give the
message to customers. Identified sponsor - the paying organization is
clearly identified in the advertisement.
The media advertising is mainly two types as printed media advertising
(newspapers, magazines, brochures, direct mail and billboards), and
broadcast media advertising (radio and television). Direct mail which
is used extensively by tour operators, is postal communication by an
identified sponsor. And this promotional tool is classified as direct
marketing.
Because event is an intangible service, a great deal of promotion
includes the production of printed communications such as brochures
or sales leaflets. The design, organization and printing of tourism
brochures is one of the most important promotion functions. Printed
communications are often costly. In fact, the printing and distribution
costs of brochures comprise the largest part of most marketing budgets
within the tourism industry.
Advertising is used to achieve a whole range of objectives which may
include changing attitudes or building image as well as achieving sales.
However, advertising messages do not always have to be aimed directly
at creating a sale. Sometimes it’s the sponsor’s goal simply to convey
a positive idea or a favourable image of the organization (often called
“institutional” advertising). (Sponsorship is the material or financial
support of a specific activity which does not form part of the sponsor
company’s normal business) For example, IBM has sponsored ads during
the Atlanta 96 Olympics.
Advertising is often described as above-the-line promotion (where the
media space is paid by the company) with all other forms of promotion
(where space is not paid) being termed below-the-line.
Personal Selling in event marketing
Personal selling involves oral conversations. These are, either by
telephone or face-to-face, between salespersons and prospective
customers. This sort selling may be used by a non-profit-making museum
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as well as by a conference manager of a large hotel. Personal selling is
very important in the sense that it has the ability to close a sale.
Sales Promotion in event marketing
Sales promotions are approaches where customers are given a short
term incentive (encouragement) to make an immediate purchase. Sales
promotion campaigns add value to the product because the incentives
does not normally accompany the product. Like advertising, the sponsor
is clearly identified and the communication is nonpersonal. Examples
include discount coupons, contests (trial), samples and premiums (prize,
bonus). Free wine or free accommodation offers are frequently used in
sales promotion campaigns for hotel restaurants which need to increase
demand at certain periods.
Merchandising (point-of-purchase advertising)
Merchandising, or point-of-purchase “advertising” includes materials
used in-house to stimulate sales. These include menus, wine lists, signs,
posters, displays, and other point-of-sale promotional items (in-room
materials). It is a common practice to categorize merchandising as a sales
promotion technique, because it does not include media advertising,
personal selling, or public relations. In this course, merchandising
is separated from other sales promotion techniques because of its
uniqueness and its importance to the industry. Merchandising is
important as a means of creating impulse purchase or remind the
consumer of what is on offer.
Public Relations (PR) in event marketing
Public relations includes all the activities that an event management
organization engages in to maintain or improve its relationship with
other organizations and individuals. In other words, public relations try
to provide commercially significant news about the product or service
in a published medium, or obtaining favourable presentation in a
medium that is not paid by the sponsor. Publicity is one public relations
technique that involves nonpaid communication of information about
an organization’s services.
Characteristics of each promotion
Each of the above promotional elements has capacity to achieve a
different promotional objective. Personal selling has high potential for
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achieving communication objectives, however, only a small number of
people can be contacted. Therefore advertising is a better method of
reaching a high number of people at low cost. Public relations is more
credible than advertising, but there is more control over advertising
messages and they can be repeated on a regular basis. When it is difficult
to raise advertising budgets, public relations is a lower cost alternative,
but it is difficult to control the timing and consistency of PR coverage.
Sales promotion may produce an initial trial for a product, but this type
of promotion can only be used over a short period.
Each part of the promotion mix has its own strengths and weaknesses.
While these may include the factors of cost, ability to target different
groups, and control, there are other important considerations. On the
following figure, they are compared on the basis of the level of awareness
of the communication, and its comprehension (understanding,
realization), as well as on whether it can build conviction (confidence,
certainty) and succeed in creating action.
Factors affecting the promotional mix
Choosing a promotional program for a coming period requires very
careful research and planning. The stage of customers’ decision processes
and product life cycle stages affect the promotional campaign decisions.
However, there are some other factors that also affect promotional mix
decisions.
The effectiveness of the five promotional mix elements varies
according to the target market. For example, in promoting its convention/
meeting facilities, a lodging property might find that personal selling to
key meeting planners is much more effective than advertising. On the
other hand, using personal selling to attract individual pleasure travellers
would not be feasible. The geographic location of potential customers
also has an impact. Where they are widely dispersed, advertising may
be the most efficient and effective way to reach them.
The promotional mix selected should flow directly from the
objectives for each target market. For example, if the objective is to
build awareness by a certain percentage, the emphasis may be placed on
media advertising. If, on the other hand, it is to build sales significantly in
a short time period, the focus may be put on sales promotion.
There is a distinct tendency in certain parts of the hospitality and
travel industry for most competitive organizations to use the same
“lead element” in promotional mixes. Fast-food chains focus on heavy
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television advertising, hotels and airlines focus on frequent-traveller
award programs, and cruise lines put a heavy emphasis on personal selling
to travel agents. It is difficult and extremely risky for one competitor to
“break from the pack” in this respect.
Obviously the funds available for promotion have a direct impact
on choosing promotional mix elements. Smaller organizations with
more limited budgets usually have to place greater emphasis on lowercost promotions, including publicity and sales promotions. Larger
organizations can better afford to use media advertising and personal
selling.
Creating specific promotional messages10
When the objectives which promotion is to fulfil have been decided
in relation to an identified segment of buyers, the crucial step in the
advertising process is to create memorable pictures and words. Creative
execution captures attention, expresses the essence of a product in a
few words that say it all, and provides key information. In travel and
tourism good examples of creative executions are:
“We try harder” (Avis)
“We speak your language” (British Tourist Authority in the USA
market)
“I love New York” (New York State)
“The World’s favourite airline” (British Airways)
“Only one hotel chain guarantees your room will be right” –
“Everything in your Holiday Inn room will be right.
Or we will make it right.
Or we will refund the cost of your room for that night”
One of the member of an international advertising agency quoted;
... people can’t believe you if they don’t know what you’re saying, and
they can’t know what you’re saying if they don’t listen to you, and they
won’t listen to you if you’re not interesting.
And you won’t be interesting unless you say things freshly, originally,
and imaginatively.
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EXERCISE
Congratulations, your Advertising Firm has just been hired by a
new company to create a one-month promotional plan! Your firm
will write a marketing plan and create all of the promotional elements
for the company that has hired your Advertising firm. The four-week
promotional campaign can be for any of the businesses listed below or
can be for a business of your choice in the Monona-Cottage Grove area,
with approval.
The promotional campaign must achieve the following objectives:
 Increase sales for the chosen time period (4 Weeks)
 Increase the preferred customer base for the chosen business
 Increase customer awareness of the chosen business
In addition your firm must develop a budget for the four-week
campaign. The developed marketing campaign must include all four
parts of the promotional mix: advertising, sales promotion, personal
selling, and publicity. Your team must detail all expenses as they relate
to the four components of the promotional mix.
Your firm can choose to work with the following companies:
Kat’s Coffee House
Studio 27 Aveda Concept Salon
Grand Atlantic Hotel and Resort
Monona Area business of your choice
2-Group’s for School Store!
1-Group for Eagle Eye Café!
Budget = $3,000
Budget = $5,000
Budget = $75,000
Budget = ___________
Budget = $100
Budget= “0”
Your marketing plan along with all promotional elements is due May
10th
Your team should be prepared to do an informal presentation on
your marketing plan and promotional elements on the due date. (Show
us your items ELECTRONICALLY)
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Promotional Mix Elements
Your advertising firm must develop plans for a one-month marketing
campaign for a local business that has hired your firm. Your firm is
required to create the following.
 Design a Logo for the new business
 Create a grand opening theme/slogan/concept/integrated
campaign that is incorporated into ALL elements of the
promotional mix, Write a 1 page summary of what your plan is
and why you are doing it!
 Develop a one-month promotional mix budget
In addition to creating the above, your firm must create 8 of the
following promotional activities. You must have at least 1 activity from
each area.
*(Make sure you consider your target market, media reach, and
budget when making your selections, not just, which are easiest for
you.)*
Advertising…(pick 3)
Create a newspaper advertisement
Create a magazine advertisement
Write & create a radio commercial script…30-60 seconds
Write & create a story board for a television commercial…30-60
seconds
*EC For actual TV or Radio Commercial.
Create a billboard
Create transit advertising
Create a yellow pages advertisement
Create a direct mail piece
Create an outdoor sign for the business
Create a web page for the business
Sales Promotions…(pick 3)
Create a coupon
Create a contest
Create a sweepstakes
Create a way to give free samples
Create a factory pack
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Create a self-liquidating premium
Create a window display
Public Relations…
Coordinate an event that is newsworthy with a press-release.
Advertising Costs…
You may spend any amount during the month, but your total may not
exceed your budgeted amount.
Indicate what you will spend on each element of promotion
Be very specific. For example…6-30 second radio spots @ 40 EUR
each = 240 EUR
Advertising Media Costs…
Radio spot (locally) 30 seconds PM Drive Time 80.00 EUR
Radio spot (locally) 30 seconds AM Drive Time 120.00 EUR
Billboard (one month)
1000.00 EUR
Billboard (production)
500.00 EUR
Local Magazine (one month) full colour
975.00 EUR
National Magazine (one month) full colour
20,000.00 EUR
Direct Mail (per piece includes postage)
1.25 EUR /item
Local Network Television (30 seconds)
575.00 EUR
Local Cable Television (30 seconds)
140.00 EUR
Television (production)
2,500.00 EUR
Yellow pages (1/8 page ad, one month)
50.00 EUR
Newspaper (1/8 page, Rhythm Section) each 500.00 EUR
Local Newspaper (1/8 page, weekly)
75.00 EUR
State-wide (1/8 page, daily)
300.00 EUR
Sunday Insert (local)
150.00 EUR
Sunday Insert (State-wide)
500.00 EUR
*See your marketing instructor for sales promotion costs
SAMPLE
Promotional Budget
Radio
10-30 second spots @ 120 EUR each
AM drive time on WZEE, WIBA
5-30 second spots @ 80 EUR each
PM drive time on WZEE, WMAD
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1200.00 EUR
400.00 EUR
Television—Local cable
Product costs
2500.00 EUR
25-60 second spots @ 40 EUR
1,000.00 EUR
Prime time rotation MTV, USA, ESPN, WB, and TBS
Billboard
Production Costs
975.00 EUR
4 @ 975 EUR each
Locations… East Wash, Hwy 51, Hwy 113, Hwy 12 3,900.00 EUR
Newspaper
4 – ¼ page @ 500.00 EUR
Every Thursday Rhythm section for one month 2,000.00 EUR
Sales Promotion
Contest Prize…1-month FREE cup of coffee
Giveaway…100 coffee mugs FREE
7.50 EUR
250.00 EUR
Sales
Staff Grand Opening Training Luncheon
300.00 EUR
Public Relations
Press Release
Sent to Herald Independent, State Journal,
WZEE, WMAD, WIBA
Total Promotional Budget
0.00 EUR
12,532.50 EUR
Monona – Cottage Grove Business of Your Choice
 Choose the business that you will be creating a marketing plan for
.......................................................................................................................



Find out what the business offers
Get Business Approved by your Marketing Teacher
History
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.......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
......................................................................................................................
 Products Offered
 Pricing
 Promotional Budget for one month ..............................................
 You may NOT use any promotional material or campaigns they
have used in the past or will be using in the future.
 All of the same requirements apply. You just add the business.
Introduction to Marketing
Promotional Mix Project Checklist
Put your items in this order….
 Cover page
o Should include:
 name of company
 partners names
 date
 theme/slogan of campaign
 logo of business
 Summary of your theme and the justification for your choice of
the promotional mix. Explain why you chose each element that
you did and your rationale.
(1-2 pages)
 8 promotional activities, including one from each of the 3
elements
 One month Promotional budget
o Including specifics of where each element will be
distributed
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Grading Rubric- Promotional Project
Cover Page
Summary
Advertising
Promotional
Items
Sales
Promotional
Items
Public
Relations
Promotional
Items
Budget
Presentation
Missing a
Required
Element
4 3
Detailed,
explained
most
Had Required
Elements
5
Detailed, explained
all projects (1-2 pgs.)
15 14
At least 3 types of
advertising were
shown with proper
formatting of each
and displayed
creatively as it would
be published
20
19
At least 2 types of
sales promotion
were shown with
proper formatting of
each and displayed
creatively as it would
be published
13 12
2 types of
advertising
were shown
and displayed
and were
18
17
16
2 types
of sales
promotion
were
shown and
displayed with
formatting
20
19
Press release was
included with
specific details
to the business.
Newsworthy event
18 17
16
Press Release
was created
10
Formatted with
specifics identifying
all sources and
realistic pricing
9 8
7
Identified
most sources
and realistic
pricing
10
Presentation
was detailed and
professional. Budget
was shown with
1 slide for each
promotional item
9 8 7
Presentation
was given.
Budget and
promotional
item was
shown
20
19
18
17
16
Missing Some
Elements
Not existent
2 1
Ok, included a
summary
0
No summary
11 10
2 types of
advertising
were shown
and displayed
1
Advertising
Promotional
item(s) were
not present
15 14
13
2 types of sales
promotion were
shown and
displayed
0
Sales
Promotional
item(s) were
not present
15
14
13
Many
components
were missing
10
0
Publicity
Promotional
item(s) were
not present
0
9
Ok, included a
budget
No Budget
6 5
Presentation
was given.
Budget and
promotional
item were weak
and/or missing
areas
1
Presentation
with
budget and
promotional
items were
not present
15
14
13
0
Total points ___________/100
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Promotional Mix Project
Partner Evaluation form
Your name
How much time did
your partner put into
this project
When assigned a
task did your partner
complete it?
Did your partner ad
creative Ideas to the
group
Was your partner
available to meet and
work on the project
Just as much as I did,
if not more
10
9
8
Yes, completely and
with creativity
10
9
8
Yes, they had some
great promotional
ideas
10
9
8
Yes, we met several
times outside of
class to work on the
project
10
9
8
Your partners
name
Almost as much as
I did.
7
6
5
Yes they finished it
Hardly any effort at all
4
3
2
They finished but not on
time nor was it creative
7
6
5
Yes, they helped
me think of ideas
for the project
7
6
5
Yes, they were able
to meet
4
3
2
No, I had to think of all
the ideas for the project
7
4
6
5
4
3
2
No, they had no time to
meet outside of class for
this project.
3
2
Total Points
_____/40 = _____% x your group grade for project ______/100 = your score
_______
Promotional Mix Project
Partner Evaluation form
Your name
How much time did
your partner put into
this project
When assigned a
task did your partner
complete it?
Did your partner ad
creative Ideas to the
group
Was your partner
available to meet and
work on the project
Just as much as I did,
if not more
10
9
8
Yes, completely and
with creativity
10
9
8
Yes, they had some
great promotional
ideas
10
9
8
Yes, we met several
times outside of
class to work on the
project
10
9
8
Your partners name
Almost as much as
I did.
7
6
5
Yes they finished it
7
6
5
Yes, they helped
me think of ideas
for the project
7
6
5
Yes, they were able
to meet
7
6
5
Hardly any effort at all
4
3
2
They finished but not on
time nor was it creative
4
3
2
No, I had to think of all
the ideas for the project
4
3
2
No, they had no time to
meet outside of class
for this project.
4
3
2
Total Points
_____/40 = _____% x your group grade for project ______/100 = your score
_______
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REFERENCES
The context of this part has been adapted from the following
product(s):
1. McCarthy, Jerome E. (1964). Basic Marketing. A Managerial
Approach. Homewood, IL: Irwin. p. 769. ISBN 0256025339.
2. Rajagopal. (2007) Marketing Dynamics: Theory and Practice.
New Delhi, India: New Age International. Retrieved April 5, 2010,
from NJIT EBook Library:http://www.njit.eblib.com.libdb.njit.
edu:8888/patron/FullRecord.aspx?p=437711
3. Kurtz, Dave. (2010). Contemporary Marketing. Mason, OH:
South-Western Cengage Learning.
4. Mulhern, Frank (2009). “Integrated marketing communications:
From media channels to digital connectivity”. Journal of
Marketing Communications 15 (2-3): 87.
5. Mulhern, Frank (2009). “Integrated marketing communications:
From media channels to digital connectivity”. Journal of
Marketing Communications 15 (2-3): 85.doi:10.1080/13527260
902757506.
6.
“Top 15 Most Popular Social Networking Sites”. eBizMBA - The
eBusiness Guide. Retrieved 3 April 2014.
7. Flew, Terry (2008). New Media: an introduction. Melbourne:
Oxford University Press. p. 107. ISBN 9780195431810.
8. Flew, Terry (2008). New Media: an introduction. Melbourne:
Oxford University Press.ISBN 9780195431810.
9. What are the options for promoting products and services.
Access via Internet: www.principlesofmarketing.com/htm/
Chapter-Ten.htm
10. Promotion mix. Access via Internet: www.tourism.bilkent.edu.
tr/~eda/promotion%20mix.DOC
FURTHER READING
1. Maria Carlton and David Blaise, 2004 (2013). “The Exceptional
Marketing Power of Promotional Products, excerpt from the
book The Power of Promotional Products” (PDF). Australia:
Promotion Products Pty Ltd. p. 13. Retrieved 1 May 2014.
115
2.
Evans, Stuart. (2007) “No Such Thing as Loyalty”, iclployalty.
com, 2007.
3. Fred Reichheld (1996) Loyalty Rules!, Harvard Business School
Press, Boston, 2001.
4. Lonto, Jeff R. (2004a). “THE TRADING STAMP STORY (or When
Trading Stamps Stuck) Part 1”. STUDIO Z•7 PUBLISHING.
5.
Lonto, Jeff R. (2004b). “THE TRADING STAMP STORY (or When
Trading Stamps Stuck) Part 2”. STUDIO Z•7 PUBLISHING.
6. Phil Ament. “Corn Flakes History - Invention of Kellogg’s Corn
Flakes”. Ideafinder.com. Retrieved 2010-12-27.
7. “Kellogg’s Offers First Cereal Premium Prize”. Timelines.com.
Retrieved 2010-12-27.
8. Widner, James F. (1998). “Captain Midnight — History”. Old Time
Radio.
9. Fred Reichheld (1996) The Loyalty Effect, Harvard Business
School Press, Boston, 1996.
10. Philip Kotler. According to Kotler: The World’s Foremost Authority
on Marketing Answers Your Questions. AMACOM Div American
Mgmt Assn. 2005. ISBN 0-8144-7295-8
11. American Airlines AAdvantage | Frequent Flyer Points | Airline
Mileage | AA.com
12. Kopecki, Dawn [1] “AmEx Facebook Page Lets Users Get
Customized Discounts, Offers”, “Bloomberg”, July 19, 2011.
Retrieved on July 29, 2011
13. Neff, Jack, [2] “In a First, Unilever, Supervalu Pair for Groupon
Deal,” “Advertising Age”, July 29, 2011. Retrieved on July 29,
2011
14. Future Banking [3] “Get smart: reviving loyalty in retail banking”,
“Future Banking - 21st-century strategies and solutions for
Europe”, Winter 2014
15. Kutz, Erin [4] “Cartera Commerce Eyes Local Merchants to Drive
Card-Linked Loyalty Program Business”, “Xconomy”, August 23,
2011
116
16. Geron, Tomio [5] “Womply Adds Loyalty Rewards Via Credit
Cards”, “Forbes.com”, December 7, 2011
17. Wauters, Robin [6] “Bain Capital Ventures Believes In ‘Loyalty
2.0ʹ, Invests $8.3 Million In Clovr Media”, “TechCrunch”, March
10, 2011. Retrieved on July 12, 2011
18. McDermid, Riley [7] “Group-buying startup Offermatic pulls in
$4.5M”, “VentureBeat”, March 9, 2011. Retrieved on July 12,
2011
19. Walsh, Mark.[8] “Startup Clovr Touts Card-Linked Offers”,
MediaPost News, October 19, 2010. Retrieved on July 12, 2011
20. Chris X. Moloney (2006) “Winning Your Customer’s Loyalty: The
Best Tools, Techniques and Practices” AMA Workshop Event(s).
Misc. materials distributed related to event(s). San Diego, 2006.
21. Carrol, P. and Reichheld, F. (1992) “The fallacy of customer
retention”, Journal of Retail Banking, vol 13, no 4, 1992.
117
Part 8
EFFICIENCY OF EVENT PLANNING
Objective outline:
1. Answer the question “What is an efficiency?” and discuss the
importance of efficiency in event planning marketing campaign.
2. Identify the major efficiency strategies and discuss the
importance of understanding customer – value perceptions,
company costs and competitor strategies when setting prices.
3. Identify and define the other important external and internal
factors affecting a firm’s efficiency measurement instruments.
Chapter Key Terms:
Efficiency
Risk management
External and internal factors
Planning
Efficiency measurement instruments
Effectiveness
Managing Special Event Risks1
In Managing Special Event Risks we discuss “ten steps to safety” as
a way of providing practical guidance on the planning and staging of a
special event. The steps give a framework for the planners to follow to
prevent and manage risk as well as finance losses associated with special
events. This article explores the first two of these vital “steps.”
STEP 1—Establish Goals
The first step in the development of a special events risk management
program is to identify the organization’s purpose in creating and
sponsoring the event and to ensure that:
⇒ the purpose and execution of the special event advance the
mission of the organization. This can happen by providing service
to the community (e.g. a blood drive), increasing awareness of
the organization and its goals, raising funds for the achievement
of those goals or a combination of these purposes.
⇒ the special event and its activities are mission-appropriate. If
118
something goes wrong at your event, the media coverage and
community response to the event should not be “What were
they thinking?”
⇒ the organization has the resources and the skills to create and
manage the special event. TIP: failure to plan = planning to fail.
Once you have established the overall purpose and goals of the
special event and have confirmed that it will advance the non-profit’s
mission and is mission-appropriate, you should identify event specific
risk management goals. These may include:
⇒ Prevent injury—including injuries to staff, spectators, participants
and others—in the activity and ensure rapid, effective and
appropriate response to any injury.
⇒ Operate legally and in compliance with agreements with facility
owners and service providers.
⇒ Reduce the cost of insurance and avoid jeopardizing eligibility
for insurance coverage.
⇒ Meet financial goals—for many non-profits a key goal of special
events is to generate net income that can be used for mission
fulfilment.
⇒ Avoid event cancellation—for example, an event planned by a
non-profit may be key to sustaining interest in a particular cause.
Cancelling the event could be disastrous to an ongoing advocacy
effort or cause unnecessary ill will among stakeholders.
⇒ Fulfil social responsibilities—risk management is sometimes
perceived as part of a non-profit’s responsibility in offering
programs which meet community needs.
⇒ Reduce anxiety about risk—many non-profits look at sound
risk management practices as one way to manage the anxiety
about mishaps that may be expressed by dedicated staff, board
members and community members.
⇒ By determining your risk management objectives before
undertaking a special event, you can guide the process of
planning and managing the event to increase the odds of success
on many levels.
119
STEP 2—Organize to Manage the Special Event and Assign Key
Functions
People are the key to success for most non-profit programs, including
special events. Organizing a team is a big step to ensure a successful event.
Irrespective of how a team is organized, it is important to remember that
each member of the group should view themselves as a team member.
The organizational structure used successfully for emergency
response operations provides a simple and responsive functional model
for a special events management team:
Special Event Director
⇒ Overall leadership, responsibility, direction and control of the
special event
⇒ Public Information—Media
⇒ Liaison—communication & coordination with representatives
from other entities
⇒ Safety for entire event, all operations
Operations Coordinator
⇒ Services and activities involving attendees and participants
⇒ Food, beverages, seating, lighting, communications
⇒ Sanitation, trash, restrooms
Safety Coordinator
⇒ Risk management, emergency response, evacuation, rain or
rescheduling/relocation planning and coordination
⇒ Incident and status reports during event, post-event evaluation
Logistics Coordinator
⇒ Contracting with vendors providing supplies and services
⇒ Coordinating services for event staff and volunteers
Finance Coordinator
⇒ Registrations, sales and donations
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⇒ Insurance claims reporting and coordination
⇒ For a small event or activity all five functions can be managed
by a person or two. For larger events, each of the primary
functions should be assigned to a member of the special event
management team. As a special event increases in size and
complexity, additional people should be assigned specific tasks.
⇒ Creating a special events management team has the benefit of
focusing on the planning and management of the special event
and establishing who is specifically responsible for each function.
Important information regarding the planning or management
of the event can be handled by the team. This can be critical in
emergency situations that require decisive action.
⇒ This structure is referred to as the “Incident Command
System.” More information is available on this topic.
⇒ While some large non-profits have a fulltime risk manager, most
small to mid-sized agencies use a team approach to identify and
control risks in their day to day operations and special events.
This approach has advantages when people from different units
become advocates for safety. The likelihood of spotting hazards
increases when more than one person is involved in the effort.
⇒ Managing special event risks requires equal measures of
awareness, planning, diligence and team work. The time spent
on this aspect of your special event is certain to contribute to the
event’s success and the favourable reputation your non-profit
enjoys in the community it serves.
Measurement and evaluation of efficiency of event planning2
The common thread that runs through discussions on measurement
and evaluation appears to be the question of accountability. Wellmanaged organisations that are accountable to their shareholders,
members or taxpayers, view expenditure on Communication, Marketing
and Human Resources as an investment. As such, these functions should
yield a ROI.
From the perspective of senior management and shareholders,
the most desired and attractive form of ROI has always been a direct
monetary return demonstrated in increased sales, share price, market
share or increased membership, sponsorship, funding and other financial
121
criteria. Given these criteria, some management disciplines such as
the Communication function preferred to think about themselves as
“intangible” and therefore, not subject to ROI expectations.
However, mounting pressure for increased accountability and the
robust shift towards triple bottom line performance not only introduced
new forms of ROI measurement, but extended the ROI criteria beyond
the financial bottom line. Systems such as Key Performance Indicators
(KPIs) or Key Results Areas (KRAs), Benchmarking and Balanced Score
Cards used widely by organisations, are no longer concerned with
financial results only. Sound social and environmental performance is
becoming prerequisites to obtain and maintain a ‘licence to operate’.
Intangible assets of organisations such as intellectual capital, customer
satisfaction and loyalty, corporate reputation, positive stakeholder
relations, employee satisfaction and loyalty, and corporate culture are
now estimated to account for 70% of an organisation’s worth. For some
companies, the estimation is even higher.
The current concept of bottom-line, a 15th century method of
accounting for an organisation’s tangible assets (land, buildings
machinery, raw materials, an inventory of finished products, capital etc.)
cannot recognise intangible assets or, for that matter, the contribution of
any function towards intangible assets.
If growth and prosperity in present-day business no longer depend on
financial performance alone, and if value creation in the new economy is
fuelled less by physical or tangible assets and more by intangible assets,
then clearly delivery on Reputation Risk Management, Corporate Social
Responsibility and Stakeholder Relationship Management resides within
the core of this ‘new ROI criteria’.
This argument does not only make the evaluation of a Communication
Function possible, it puts building a ROI case through the systematic
accumulation of measurement results well within the reach of users of
this software system.
The comPro Performance Measurement System
Borrowing from thought leaders on communication measurement
and evaluation, a performance measurement system has been
developed consisting of a generic framework for evaluation that can be
customised for an organisation’s strategic intent, own context or specific
organisational needs.
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The system asks of the user to choose from a list of metrics and
methods to evaluate (1) effectiveness and (2) efficiency on three levels:
⇒ Level 1: Evaluating communication activities, products and
events (against pre-specified deliverables).
⇒ Level 2: Evaluating communication plans, programmes and
campaigns (against objectives).
⇒ Level 3: Evaluation the communication strategy (against goals).
The primary aim of the performance measurement management
system is continuous improvement and organisational learning through
constant feedback. Involvement of all practitioners is important and
therefore the system is designed to be accessible, transparent and easy
to understand and use. There are three critical principles:
Principle 1: Evaluation is not research
Some of the main reasons offered for the lack of communication
evaluation are ‘lack of research budget’, ‘lack of time to do research’
and ‘lacking research skills’ suggesting some kind of confusion between
research and evaluation. Evaluation does not equate formal research.
There are many evaluation techniques such as self-assessment, peer
group ratings and one-on-one client or management feedback that can
fairly, and easily, be applied without any formal research.
While the importance of formal, structured research is not to be
debated, it is not evaluation per se. If measurement and evaluation can
only take place when research is possible, ROI will forever be elusive.
Research is a strategic tool that feeds into planning, implementation and
evaluation and a valid and reliable tool it can indeed be.
Measurement and evaluation on the other hand is a management
process, not a once-off or bi-annual project. In the absence of a research
budget or time, measurement and evaluation should still carry on.
Principle 2: Evaluation is an ongoing, systematic process
By evaluating activities, plans and strategies in a continuous,
integrated and systematic process, and by using a range of formal and
informal methods, evaluation can be more strategic and valuable to
management. Instead of attempting one large research project when
money and time is available, ‘lots of little bits of evaluation’ make the
process more valuable, manageable and cost effective.
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Principle 3: Evaluation is a forward looking activity
The reason we systematically measure everything boils down
to reducing uncertainties, improving effectiveness, and enhancing
decisions. The purpose and focus of evaluation is learning to improve
future performance. Naturally the collection of historical data is an
essential prerequisite, but when perceived simply as looking back to
judge past performance, evaluation can be threatening. When used as
a process to gather information in order to advise management and
contribute to the cycle of continuous improvement, measurement
and evaluation are much more constructive. Practitioners may feel
uncomfortable if they have the perception that they are being “judged”
by their immediate managers, but seldom object to having a process
measured by a tool. This shift in focus to see evaluation as a forward
looking activity is important to resolve the ‘fear of being evaluated’ which
has kept many communication practitioners from embracing evaluation
more enthusiastically.
Levels of evaluation
A question often asked is “Why ‘setting an evaluation methodology’
should be part of planning?” The answer to this question lies in the
essence of strategic alignment.
Strategic alignment is a process whereby the imperatives in the
organisation’s top-level strategies (e.g. Enterprise and Corporate strategy)
are translated into a functional strategy (e.g. Communication strategy).
Consecutively, the functional strategy is deployed into cascading levels
of planning and implementation. The number of levels in the planning
system is of little importance as long as every subsequent plan, project,
programme or activity is in line with the strategic intent.
In the process of strategic alignment, planning is ‘rolled down’ and
evaluation is ‘rolled up’ along the same strategic line.
Therefore strategy development and planning are integral parts
of the performance measurement system. The evaluation process to
measure the success of a Communication function cannot be initiated at
the end of the financial or calendar year, or even half way through. The
measurement criteria must be built into the strategy development and
planning.
Without ‘something to measure against’, measurement provides
results in isolation, with little or no value for evaluation. Measurement
becomes evaluation only when compared to a specific norm such as a
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communication goal, objective, target, or deliverable. The yardstick
for performance measurement will always be imbedded in the
communication function’s planning architecture.
Metrics and Methods
The first step in evaluation is to determine ‘what’ to measure? The
strong emphasis in existing literature on measurement techniques,
methods and tools is concerning, as too much energy is spent on discussing
the ‘how to’ of communication measurement instead of focusing on the
‘what’ that should be measured. All too often, instead of conceptualizing
the ‘what’ of measurement, practitioners seem to be locked in
discussions on the merits of focus groups, media content analysis and
opinion surveys, or defending the objectivity and randomness or timing
of methodologies deployed. The ‘what’ to measure in communication
evaluation is referred to as metrics. Metrics are therefore the various
constructs (things) that are to be measured.
View list of metrics.
Methods, on the other hand, describe the ‘how to’ (techniques)
of communication measurement. In most cases the ‘how to’ of
communication measurement involves ‘asking the relevant stakeholders’,
be it with a focus group, or survey, or interview.
View list of methods.
To set realistic metrics, communication practitioners need lots
of common sense and at least an elementary understanding of
communication theory. Measuring intangible assets like corporate
reputation, brand equity, relationships and corporate citizenship is not
an easy task. Clustered within terms such as reputation and relationships
are many different, more basic constructs like loyalty, trust, satisfaction,
faith and admiration. We need to understand what we want to measure
before we can ask. Ill-conceived assumptions about what communication
can achieve sometimes lead to misguided and overly optimistic goals
that make evaluation risky and problematic.
This is best achieved with a conceptual construct that displays the
full ‘what’ of measurement in a framework (Likely, 2000:24). The ‘how’
(techniques of measurement) is an operational matter, for which external
advice can be sought.
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Level 3 Evaluation
The third level of evaluation, planned in this step of the Communication
strategy, measures the performance of the function against its set
strategic goals in the longer term. Usually these measures cannot
be linked to one specific activity or plan, but relates to the collective
performance of the function over time. Movement on indicators such
as reputational value and relationship health is a consequence of the
value created by Communication Management over a longer period of
time. It therefore is known as the measurement of ‘outgrowths’ or the
cumulative effects of the performance of Communication Management
on the previous two levels (activities and plans).
Measurement of the Communication function’s effectiveness is
critical to link its performance with organisational goal achievement. The
majority of communication goals do not directly contribute to increased
market penetration, market share, sales and ultimately profitability
(the bottom line). Communication Management is often called upon
to influence areas important to long-term sustainable success such as
key stakeholders’ perceptions of the organisation. If a communication
goal was set in a ‘straight strategic line’ with an organisational goal, then
achieving that communication goal will positively impact on achievement
of the organisational goal – thereby contributing to the new ROI criteria
or triple bottom line. Accordingly, the contribution of Communication
Management must be measured in more than direct monetary returns,
even in financially–orientated public and private companies.
View an example of selected metrics and methods for measuring
effectiveness.
Efficiency metrics comprise the areas in which top management
would like to see improvement of the overall management (time, cost
and quality) of the function. Metrics can include process improvements,
productivity improvements, cost containment or people development –
culminating in a process of continuous improvement.
View an example of selected metrics and methods for measuring
efficiency.
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DISCUSSION
STUDY CASE – NIKE SUCSSES STORY
(Source: web.unbc.ca/~chenj/course/project/Nike.doc)
Introduction
The athletic footwear industry is a highly competitive environment
where the top four manufacturers hold over 70% of the market share.
The barriers to entry into the industry are comparatively low, as anyone
with new creative design ideas can produce and market their product,
but the success of smaller companies is oftentimes shaky. Brand loyalty,
ample capital, and broad based sourcing create an environment where
the bigger companies such as Nike and Reebok have little trouble
maintaining market share. Nike enjoys the largest share, with 42.3% of
the nearly $8 billion market in the year 2000. Reebok was second with
11.9%, Adidas had 10.8%, and New Balance had 9.6% of the market. The
remaining 25% must be divided among the numerous smaller companies
fighting for a shot at survival.
NIKE Corporation
NIKE Corporation was incorporated in 1968. NIKE has primarily
been in the business of designing, developing, and marketing athletic
footwear, apparel, equipment and accessories. NIKE Corporation is a
well-managed company in an attractive industry, the company has a
strong brand image, and they are effectively capturing the value created
from their investment. NIKE is dependent upon high technology in their
effort to stay ahead of their competitors and produce products and
machines that actually make the shoes. Its success had been fuelled by
the use of low wage labour in developing countries, accompanied by
highly acclaimed marketing strategies and advertising campaigns.
Key factors that influence success of NIKE
If a company is able to establish brand awareness, they will have a
significant advantage in grabbing consumer’s attention and, therefore,
market share. In today’s society where consumers have significantly
less time to shop and compare, brand awareness is critical. If an
established brand name effectively conveys the messages of quality and
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dependability, consumers will automatically go to that brand relying on
the image that has been created when they don’t have time to shop
around.
Manufacturing efficiency is something that companies are constantly
striving for as well. Athletic shoe manufacturers must balance the costs
of labour, raw materials, shipping, import tariffs, and technological
advancements. In an effort to keep costs down, the industry has been
looking to overseas sourcing. This reduces the risk of losing revenue if
one region which a manufacturer incurs problems. Favourable legislation
regarding foreign manufacturing has led to a huge increase in foreign
sourcing. Overseas production and sourcing can lower material, and
labour costs.
The footwear companies must choose their distribution channels
carefully because they want to make the product available, yet
remain true to their image and goals. Retailers account for the largest
percentage of sales, so manufacturers must be especially careful with
their relationships with them.
Technological advancement is becoming more and more of a player
in the footwear industry. With computer-aided design (CAD), companies
have been able to successfully shorten their design to distribution cycle
to only a few months. Also, new technology has facilitated new quickresponse programs that link retailers with manufacturers to allow the
retailer to have the correct inventory when it is needed called electronic
data interchange (EDI). Immediately after a sale is made, electronic point
of sale scanners read the information related to the sale such as price,
product, size, etc. and notify the manufacturer of the sale. With this, the
manufacturer is able to accurately modify production to fit consumer
demand.
Demand cycles
Due to the largely subjective nature of athletic footwear purchasing,
the success of the industry is dependent on the current economic cycle.
When consumers are concerned about future economic conditions, they
will put off their purchases until their confidence rebounds.
In addition to the amount of confidence that consumers have for
the future, the amount of disposable income available to them directly
affects how much is spent on athletic footwear. When consumers
experience a drop in disposable income, discretionary purchases such as
footwear are put off.
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Advertising campaigns
Companies spend a large portion of their revenue on advertising. A lot
of pressure is put on the companies to come up with new and successful
advertising campaigns. If a campaign fails, the companies’ sales suffer as
a result.
NIKE has always been an industry leader when it comes to advertising.
Their advertising campaigns are known all over the world as being widely
successful. NIKE is truly a trendsetter when it comes to advertising, not
just for shoes, but for the advertising industry as well. The company was
all about the clarity of matching technology to athletic performanceand, in the ads, showing the passion that resulted. By going against the
norms in advertising, NIKE was able to distance itself from other shoe
makers and thus establish strong customer core.
Main customers
The industry of footwear can be broken up into three main customer
groups, which are the Baby Boomers, Generation X, and Generation Y.
These three generations are broken down as follows: Baby Boomers are
from ages 35-53, Generation Y are consumers from 4-21, and Generation
X is consumers from 22-32. As we develop ideas about the main customer
groups within the footwear industry we can conclude that the Baby
Boomers account for 31% of the population, which is equal to about
81 million consumers. Generation Y is the second largest group that
accounts for 28% of the population which represents about 75 million
consumers. The smallest customer group is Generation X, they comprise
about 17% of the population, which equals about 46 million consumers.
Nike has become more appealing among younger consumers and has
shifted away from the Generation of the Baby Boomers.
Nike and many other large shoe industry retailers are shifting their
marketing direction from the Baby Boomers to the younger consumers
of Generation X and Generation Y. There are many reasons to why the
industry is trying to change their target market to younger viewers.
As people become older many of their attitudes, priorities, and time
obligations have decreased their ambition for shopping. Now that many
of the Baby Boomers are within their forties and fifties, many of their
priorities have shifted towards the future, in a sense that they need to
save for retirement, different tuition payments for their children, and
also different healthcare necessities that are important to them and
their families.
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SWOT Analysis
Strengths
NIKE is the largest manufacturer of athletic footwear and apparel in
the world. In terms of footwear, NIKE enjoyed control of nearly 42.3% of
the entire footwear market in 2000 at nearly 8 billion dollars. That is more
than both its number two and number three competitors combined.
NIKE has virtually invented the notion of the celebrity endorsement with
the likes of Pete Sampras and Andre Agassi in Tennis; Michael Jordan
in Basketball; and the acquisition of teen basketball sensation Lebron
James who signed with NIKE for a reported $90 million. In addition,
NIKE’s financial soundness has proven stable through economic cycles.
Weakness
There are weaknesses that NIKE has gained for a couple of different
reasons. Labour practices are one issue that really attached to the Nike
Corporation. Activist groups and student organizations have made
Nike symbol of labour exploitation. These groups blame Nike for poor
conditions in its third world factories, under-paying workers, employing
children, and ignoring the basic rights of its workers.
Nike efforts toward global expansion have become a weakness in the
company’s reputation. Nike has operated in the Asian region and uses
subcontractors throughout the globe to manufacture their products.
Nike has a little control over its extended product line because it is such
a large company with the majority of its operations overseas. In addition,
many people in the United States see Nike outsourcing as taking away
jobs from Americans.
Opportunities
Nike has new opportunities and markets that they must penetrate
and take advantage of to continue to be a world leader and sustain
profits and growths. Nike not only has the ability to succeed in the
basketball shoe market, but in virtually every other athletic market from
golf apparel to women’s workout gear. This diversity of products presents
Nike with a great opportunity to build up strength in all of its product
lines and also to be flexible when the market shifts, making demand
in some areas higher than others. Nike must also continue to expand
into current international markets while penetrating into new ones.
The company must continue to create new technologies and systems to
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compete internationally. Another opportunity is expanding promotions
to include entertainment and other non-sports venues, since the line
between entertainment and sports has become popular.
Nike advertisements make waves. People enjoy them and wait for
new ones. The hype of Nike advertising brings with it the opportunity
to reach the public through the promotion of Nike newest advertising
endeavour. The Nike massive web site will prove to be an opportunity
for Nike consumers to get up to update consumers about new and
innovative products and services that Nike has. Nike should be able to
capitalize on its web and emphasize those issues that Nike publics would
not otherwise be exposed to by other media.
Threats
Competition is always a threat to a competitive company both
domestically and internationally. The rivalry is very fierce with many
companies competing for sales. Lots of money is spent on marketing and
promotions through different channels in order to communicate to the
young demographic group of consumers who spend the most money on
their products. Growth has also slowed in the athletic footwear industry,
however new markets are emerging with high growth rates. Nike
currently dominates the market, but Nike competitors pose a potential
threat to the company’s reputation If Nike cannot stay one step ahead of
their competitors in terms of product design and customer satisfaction
the corporation could flounder.
Current Strategies and Goals:
Nike has in placed several strategies that encompass improving
growth and profits in a variety of areas. The struggling economy has not
changed Nike’s attitude towards growth. One strategy that Nike focuses
on, in continuing to help the company grow is Person Marketing. Nike
has been using the best athletes, and sports teams (or clubs) all over the
world to help market their products. The regenerative nature of sports
has allowed Nike to sign new upcoming stars like LeBron James, Carmelo
Anthony and others. These are the athletes that will push Nike beyond
their expectations and will set the standards for the next generation to
exceed. Nike’s second greatest source of potential lies with the products
the company is working on. Nike’s design team is constantly developing
new concepts in speed and agility to give athletes the latest innovative
equipment to improve performance. The third strategy that Nike uses,
perhaps the most important, is advertising and marketing. These two
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components capture the essence of the product and the attention of
consumers around the world. These strategies support the financials
especially profit margin and market share. Under consumer measures
Nike’s strategies also support the percentage of customers who purchase
Nike products based on image.
Price and Earnings
To find out how much the market is actually willing to pay for each
dollar of annual earnings of Nike, we look at the Price/Earnings ratio.
Currently the ratio is 17.9 showing that Nike is not a risky investment.
This is very valuable in comparing companies within the same industry.
The price/sales ratio uses the invested capital of the company and
then divided by sales over the past 12 months. This figure is usually
seen as the lower the better for investors. Granted there are far more
competitors up and coming these days, we think Nike has a solid place in
the market and will only be growing in the next years and years to come.
The return on assets ratio has been considerably increasing from 10.37
in 2002 to 15 in 2007. The ratio is higher than industry average which is
at 14.1. Creditors, bondholders, and shareholders like to see high return
on their investment. This indicates that the business is sufficiently using
its assets. Nike Inc. is an efficient company as it boasts a higher gross
profit margin than its competitors and industry. During fiscal 2007, Nike
Inc. gross margin has increased from 44% in 2006 to 45.9% in 2007. It is
higher than the industry average of 41.83%.
Analytical Theory Comparison
Project investment can be determined by using an analytical theory
of project investment.
“The Analytical theory enables us to make precise calculations of
returns of difference projects under different kinds of environments.”
(Chen, 37) We will examine the relationship between fixed cost and
variable cost at different levels of uncertainty. In NIKE’s case, as fixed
costs are increased, variable costs decrease rapidly in a low uncertainty
environment (see exhibit 1). In relation to NIKE the high fixed cost
represent the large amount of marketing expenditures, and the variable
costs are related to the low labour and manufacturing costs.
This analytical theory differs from the real option theory because it
is an initial value problem, valuing the outcome as a variable cost to the
project (C). Furthermore, after determining the variable cost of a project
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(C) , the profit of a project can be determined based on the variables of
S (present value of the projects cash flows), K (fixed cost of the project),
Q (market size or output of the project), and C.
Exhibit 1:
1
Variable Cost
High Volatility
Low Volatility
0
5
10
15
20
Level of fixed Cost
A project with a high fixed cost will generate high returns if the
level of uncertainty is stable and the market size is large, and a project
with a low fixed cost will benefit largely from a small, unstable market.
(see exhibit 2) “When an industry becomes mature and uncertainty
decreases, increased in fixed costs, K, (capital investments and
accumulated human capital), drive down variable cost rapidly, which
permits leading companies to lower product prices and drive out small
high variable cost companies. In a mature industry only very few big
companies can stay in business. Also, large companies often develop
highly optimized structures to reduce uncertainty and bring down
variable costs in producing particular products” (Chen, 40). In Nike’s case,
the company is able to use highly advanced technologies, such as EDI’s
and CAD’s to reduce variable cost. While using the analytical theory of
project investment.
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Rate of return
Exhibit 2:
Low Fixed Cost
High Fixed Cost
Market size
Discuss about Nike success story in groups of 4 students.
REFERENCES
The context of this part has been adapted from the following
product(s):
1. Joe Risser and Melanie Lockwood Herman. Managing Special
Event Risks. https://www.nonprofitrisk.org/library/articles/
rmbasics060709.shtml
2. Communication strategy, Access via Internet: http://
expertresearchers.blogspot.com/2014/02/communicationstrategy.html
FURTHER READING
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1.
Ambler, Tim, Marketing and the Bottom Line (2004) FT Press. ISBN
0-273-66194-9
2.
American Productivity & Quality Center, Maximizing Marketing
ROI (2001) American Productivity Center. ISBN 1-928593-57-7
3.
Aspatore Books Staff, Improving Marketing ROI: Leading CMOs on
Adding Value, Calculating Return on Investments, and Creating a
Financial Impact (2006) Aspatore Books.ISBN 1-59622-434-7
4.
Briggs, Rex, Stuart, Greg, What Sticks: Why Most Advertising
Fails and How to Guarantee Yours Succeeds (2006) Kaplan
Business. ISBN 1-4195-8433-2
5.
Farris, Paul W., Bendle, Neil T., Pfeifer, Phillip E. and Reibstein,
David J., Marketing Metrics: 50+ Metrics Every Executive Should
Master (2006) Wharton School Publishing.ISBN 0-13-187370-9
6.
Kotler, Philip.; Kevin Lane Keller (2006). Marketing Management,
12th ed.. Pearson Prentice Hall. ISBN 0-13-145757-8.
7.
Laermer, Richard; Simmons, Mark, Punk Marketing, New York :
Harper Collins, 2007. ISBN 978-0-06-115110-1 (Review of the
book by Marilyn Scrizzi, in Journal of Consumer Marketing 24(7),
2007)
8.
Lenskold, James, Marketing ROI: The Path to Campaign,
Customer, and Corporate Profitability (2003) McGraw-Hill. ISBN
0-07-141363-4
9.
Li, Charlene & Bernoff, Josh Groundswell (2008)
10. Lilien, Gary L., Rangaswamy, Arvind, Marketing Engineering (2004)
Trafford Publishing. ISBN 1-4120-2252-5
11. Mann, Don, Brand Ecosystems, the relative harmony among all
marketing elements that support brands (2008)
12. Powell, Guy R., Return on Marketing Investment: Demand
More From Your Marketing And Sales Investments (2003) RPI
Press. ISBN 0-9718598-1-7
13. Schultz, Don E., Measuring Brand Communication ROI (1997)
Assn of Natl Advertisers. ISBN 1-56318-053-7
14. Thaler, Linda Kaplan, Koval, Robin, Marshall, Delia, Bang!
Getting Your Message Heard in A Noisy World (2003) Doubleday
Publishing. ISBN 0-385-50816-6
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TASKS FOR INDIVIDUAL/GROUP WORKS
Following the event marketing plan example please prepare plan for
your chosen event.
EVENT MARKETING PLAN OUTLINE - EXAMPLE
Executive Summary
The Challenge
Situation Analysis
Company Analysis
Customer Analysis
Competitor Analysis
Collaborators
Climate
Political Factors
Economic Factors
Social Factors
Technological Factors
SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats
The SWOT Matrix
Market Segmentation
Consumer Market Segmentation
Business Market Segmentation
Profiling the Segments
Goals
Selected Marketing Strategy
Product
Price
Distribution (Place)
Promotion
Short & Long-Term Projections
Conclusion
Appendix
Exhibits
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Executive Summary
A high-level summary of the marketing plan.
The Challenge
Brief description of product to be marketed and associated goals,
such as sales figures and strategic goals.
Situation Analysis
Company Analysis
• Goals
• Focus
• Culture
• Strengths (see SWOT Analysis)
• Weaknesses (see SWOT Analysis)
• Market share
Customer Analysis
• Number
• Type
• Value drivers
• Decision process
Competitor Analysis
• Market position
• Strengths
• Weaknesses
• Market shares
Collaborators
• Subsidiaries, joint ventures, and distributors, etc.
Climate
Macro-environmental PEST analysis:
Political Factors
Political factors include government regulations and legal issues
and define both formal and informal rules under which the firm must
operate. Some examples include:
• tax policy
• employment laws
• environmental regulations
• trade restrictions and tariffs
• political stability
137
Economic Factors
Economic factors affect the purchasing power of potential customers
and the firm’s cost of capital. The following are examples of factors in the
macroeconomy:
• economic growth
• interest rates
• exchange rates
• inflation rate
Social Factors
Social factors include the demographic and cultural aspects of the
external macroenvironment. These factors affect customer needs and
the size of potential markets. Some social factors include:
• health consciousness
• population growth rate
• age distribution
• career attitudes
• emphasis on safety
Technological Factors
Technological factors can lower barriers to entry, reduce minimum
efficient production levels, and influence outsourcing decisions. Some
technological factors include:
R&D activity
• automation
• technology incentives
• rate of technological change
SWOT Analysis
A scan of the internal and external environment is an important
part of the strategic planning process. Environmental factors internal to
the firm usually can be classified as strengths (S) or weaknesses (W),
and those external to the firm can be classified as opportunities (O) or
threats (T). Such an analysis of the strategic environment is referred to
as a SWOT analysis.
The SWOT analysis provides information that is helpful in matching
the firm’s resources and capabilities to the competitive environment in
which it operates. As such, it is instrumental in strategy formulation and
selection. The following diagram shows how a SWOT analysis fits into an
environmental scan:
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SWOT Analysis Framework
Environmental Scan
Internal Analysis
External Analysis
Strengths Weaknesses
Opportunities Threats
SWOT Matrix
Strengths
A firm’s strengths are its resources and capabilities that can be used
as a basis for developing a competitive advantage. Examples of such
strengths include:
• patents
• strong brand names
• good reputation among customers
• cost advantages from proprietary know-how
• exclusive access to high grade natural resources
• favourable access to distribution networks
Weaknesses
The absence of certain strengths may be viewed as a weakness. For
example, each of the following may be considered weaknesses:
• lack of patent protection
• a weak brand name
• poor reputation among customers
• high cost structure
• lack of access to the best natural resources
• lack of access to key distribution channels
In some cases, a weakness may be the flip side of a strength. Take
the case in which a firm has a large amount of manufacturing capacity.
While this capacity may be considered a strength that competitors do
139
not share, it also may be a considered a weakness if the large investment
in manufacturing capacity prevents the firm from reacting quickly to
changes in the strategic environment.
Opportunities
The external environmental analysis may reveal certain new
opportunities for profit and growth. Some examples of such opportunities
include:
• an unfulfilled customer need
• arrival of new technologies
• loosening of regulations
• removal of international trade barriers
Threats
Changes in the external environmental also may present threats to
the firm. Some examples of such threats include:
• shifts in consumer tastes away from the firm’s products
• emergence of substitute products
• new regulations
• increased trade barriers
The SWOT Matrix
A firm should not necessarily pursue the more lucrative opportunities.
Rather, it may have a better chance at developing a competitive
advantage by identifying a fit between the firm’s strengths and upcoming
opportunities. In some cases, the firm can overcome a weakness in order
to prepare itself to pursue a compelling opportunity.
S-O strategies pursue opportunities that are a good fit to the
company’s strengths.
W-O strategies overcome weaknesses to pursue opportunities.
S-T strategies identify ways that the firm can use its strengths to
reduce its vulnerability to external threats.
W-T strategies establish a defensive plan to prevent the firm’s
weaknesses from making it highly susceptible to external threats.
Market Segmentation
Present a description of the market segmentation as follows:
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Description
Percent of sales
What they want
How they use product
Support requirements
How to reach them
Price sensitivity
Description
Percent of sales
What they want
How they use product
Support requirements
How to reach them
Price sensitivity
…
Segment 1
Segment 2
Segment 3
Market segmentation is the division of a market into different
homogeneous groups of consumers. Rather than offer the same
marketing mix to vastly different customers, market segmentation makes
it possible for firms to tailor the marketing mix for specific target markets,
thus better satisfying customer needs. Not all elements of the marketing
mix are necessarily changed from one segment to the next. For example,
in some cases only the promotional campaigns would differ.
A market segment should be:
•
•
•
•
•
measurable
accessible by communication and distribution channels
different in its response to a marketing mix
durable (not changing too quickly)
substantial enough to be profitable
A market can be segmented by various bases, and industrial markets
are segmented somewhat differently from consumer markets, as
described below.
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Consumer Market Segmentation
A basis for segmentation is a factor that varies among groups within
a market, but that is consistent within groups. One can identify four
primary bases on which to segment a consumer market:
•
•
•
•
Geographic segmentation is based on regional variables such as
region, climate, population density, and population growth rate.
Demographic segmentation is based on variables such as age,
gender, ethnicity, education, occupation, income, and family
status.
Psychographic segmentation is based on variables such as
values, attitudes, and lifestyle.
Behavioural segmentation is based on variables such as usage
rate and patterns, price sensitivity, brand loyalty, and benefits
sought.
The optimal bases on which to segment the market depend on the
particular situation and are determined by marketing research, market
trends, and managerial judgment.
Business Market Segmentation
While many of the consumer market segmentation bases can be
applied to businesses and organizations, the different nature of business
markets often leads to segmentation on the following bases:
•
•
•
Geographic segmentation - based on regional variables such
as customer concentration, regional industrial growth rate, and
international macroeconomic factors.
Customer type - based on factors such as the size of the
organization, its industry, position in the value chain, etc.
Buyer behaviour - based on factors such as loyalty to suppliers,
usage patterns, and order size.
Profiling the Segments
The identified market segments are summarized by profiles, often
given a descriptive name. From these profiles, the attractiveness of each
segment can be evaluated and a target market segment selected.
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Goals
What do we want to achieve? The goal statement(s) should be
challenging and yet, attainable. Is it important to increase the number
of departments served? Which departments? Do you intend to provide
more training programs? Sample goal statements might read:
Establish relationship with Legal and Regulatory Departments in first
quarter.
Reduce staff time spent on call-in, ad hoc requests for help with
Internet searching
Selected Marketing Strategy
Discuss why the strategy was selected, then the marketing mix
decisions (4 P’s) of product, price, place (distribution), and promotion.
Product
The product decisions should consider the product’s advantages and
how they will be leveraged. Product decisions should include:
• Brand name
• Quality
• Scope of product line
• Warranty
• Packaging
Price
Discuss pricing strategy, expected volume, and decisions for the
following pricing variables:
• List price
• Discounts
• Bundling
• Payment terms and financing options
• Leasing options
Distribution (Place)
Decision variables include:
• Distribution channels, such as direct, retail, distributors &
intermediates
• Motivating the channel - for example, distributor margins
• Criteria for evaluating distributors
• Locations
• Logistics, including transportation, warehousing, and order
fulfilment
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Promotion
• Advertising, including how much and which media.
• Public relations
• Promotional programs
• Budget; determine break-even point for any additional spending
• Projected results of the promotional programs
Short & Long-Term Projections
The selected strategy’s immediate effects, expected long-term
results, and any special actions required to achieve them. This section
may include forecasts of revenues and expenses as well as the results of
a break-even analysis.
Conclusion
Summarize all of the above.
Appendix
Exhibits
Any calculations of market size, commissions, profit margins, breakeven analyses, etc.
REFERENCE OUTLINE
EVENT MARKETING PLANING COURSE TEST - EXAM
MULTIPLE CHOICE QUESTIONS
1. At one time, firms scattered their marketing efforts (a “shotgun”
approach) to reach consumers. Today, a firm is more likely to use:
a. a “bazooka” approach, where special effects are used to “explode”
into the buyer’s consciousness.
b. a “knife” approach, where the firm tries to “cut” to the most
important product advantage.
c. a “rifle” approach, where the firm focuses on the buyers who have
greater interest in the values that the firm creates the best.
d. a “pistol” approach, where the firm realizes that it has multiple
chances to gain consumer interest.
144
Answer: (c) Difficulty: (2) Page: 235
2. ________________ is the process of dividing a market into smaller
groups of buyers with distinct needs, characteristics, or behaviours who
might require separate products or marketing mixes.
a. Mass marketing
b. Market segmentation
c. Target marketing
d. Market positioning
Answer: (b) Difficulty: (1) Page: 235
3. __________________ is the process of evaluating each market
segment’s attractiveness and selecting one or more segments to enter.
a. Mass marketing
b. Market segmentation
c. Market targeting
d. Market positioning
Answer: (c) Difficulty: (2) Page: 235
4. Setting the competitive positioning for the product and creating a
detailed marketing mix is called:
a. mass marketing.
b. target marketing.
c. market segmentation.
d. marketing positioning.
Answer: (d) Difficulty: (1) Page: 235
5. During which step of the marketing segmentation, targeting, and
positioning process does the firm “develop a marketing mix for each
segment?”
a. market segmentation
b. market targeting
c. market positioning
d. The firm does not go through the “development” during any of the
above steps.
Answer: (c) Difficulty: (2) Page: 235, Figure 7-1
145
6. During one of the steps in the marketing segmentation, targeting,
and positioning process, the marketer develops measures of segment
attractiveness. This procedure belongs in the category of:
a. market segmentation.
b. market targeting.
c. market massing.
d. market positioning.
Answer: (b) Difficulty: (2) Page: 235, Figure 7-1
7. When companies divide large, heterogeneous markets into smaller
segments that can be reached more efficiently with products and
services that match their unique needs, they are conducting a
___________________ process.
a.
b.
c.
d.
marketing aggregation
marketing positioning
marketing target
marketing segmentation
Answer: (d) Difficulty: (1) Page: 236
8. Market segmentation can be carried out at several different levels.
Which of the following WOULD NOT BE among these levels?
a. micromarketing
b. segment marketing
c. competition marketing
d. niche marketing
Answer: (c) Difficulty: (1) Page: 236
9. Another word for complete segmentation is:
a. macromarketing.
b. micromarketing.
c. niche marketing.
d. mass marketing.
Answer: (b) Difficulty: (2) Page: 236
146
10. For most of the 20th century, firms practiced which of the following
forms of marketing?
a. mass marketing
b. micromarketing
c. niche marketing
d. segment marketing
Answer: (a) Difficulty: (2) Page: 236
11. Which of the following marketers epitomized the mass marketing
strategy?
a. Henry Ford
b. Bill Gates
c. F.W. Woolworth
d. Thomas A. Edison
Answer: (a) Difficulty: (3) Page: 236
12. Which of the following statements is closest to the traditional
argument for mass marketing?
a. Find a need and fill it.
b. The largest potential market can lead to the lowest costs, which
translates into either lower prices or higher margins.
c. The rifle approach rarely hits what it is aiming at.
d. The consumer is king. Long live the king.
Answer: (b) Difficulty: (2) Page: 236
13. Isolating broad segments that make up a market and adapting
the marketing to match the needs of one or more segments is called
_________________.
a.
b.
c.
d.
niche marketing
mass marketing
segment marketing
micromarketing
Answer: (c) Difficulty: (1) Page: 237
147
14. When General Motors designs specific models for different income
and age groups, it is practicing which of the following marketing formats?
a. micromarketing
b. macromarketing
c. mass marketing
d. segment marketing
Answer: (d) Difficulty: (1) Page: 237
15. Segment marketing offers several benefits over mass marketing. All
of the following would be among those benefits EXCEPT:
a. the company can market more efficiently and target its
programs toward only those consumers that it can serve best.
b. the company can fine-tune its programs to meet the needs of
carefully defined segments.
c. the company can reduce costs because of the ability to sell to
customers one-on-one.
d. the company may face fewer competitors if fewer competitors
are focusing on the company’s chosen market segment.
Answer: (c) Difficulty: (3) Page: 237
16. A company is practicing ________________ if it focuses on
subsegments with distinctive traits that may seek a special combination
of benefits.
a. micromarketing
b. niche marketing
c. mass marketing
d. segment marketing
Answer: (b) Difficulty: (2) Page: 237
17. As an example of _______________, a company could build sport
utility vehicles and direct marketing efforts towards the luxury SUV
market (as does Lexus).
a. micromarketing
b. niche marketing
c. mass marketing
d. segment marketing
Answer: (b) Difficulty: (3) Page: 237
148
18. American Express offers not only its traditional green cards but also
gold cards, corporate cards, and even a black card, called the Centurian,
with a $1,000 annual fee aimed at a small group of “superpremium
customers.” Which of the following marketing efforts is American
Express following with their credit card policies?
a. macromarketing
b. segment marketing
c. niche marketing
d. self-marketing
Answer: (c) Difficulty: (2) Page: 237
19. _________________ is the practice of tailoring products and
marketing programs to suit the tastes of specific individuals and locations.
a. Niche marketing
b. Micromarketing
c. Segment marketing
d. Mass marketing
Answer: (b) Difficulty: (2) Page: 238
20. Micromarketing includes:
a. segment marketing and niche marketing.
b. mass marketing and demographic marketing.
c. local marketing and individual marketing.
d. individual marketing and self-marketing.
Answer: (c) Difficulty: (2) Page: 238
21. ______________ involves tailoring brands and promotions to the
needs and wants of specific small groups such as cities, neighbourhoods,
and even specific stores.
a. Niche marketing
b. Local marketing
c. Detail marketing
d. Individual marketing
Answer: (b) Difficulty: (1) Page: 238
149
22. All of the following are considered to be drawbacks of local marketing
EXCEPT:
a. it can drive up manufacturing and marketing costs by reducing
economies of scale.
b. it can create logistical problems when the company tries to
meet varied requirements.
c. it can attract unwanted competition.
d. it can dilute the brand’s overall image.
Answer: (c) Difficulty: (3) Page: 238
23. ________________ is tailoring products and marketing programs to
the needs and preferences of individual customers.
a. Niche marketing
b. Local marketing
c. Self-marketing marketing
d. Individual marketing
Answer: (d) Difficulty: (1) Page: 238
24. Individual marketing is known by a variety of names. All of the
following would appropriately be called individual marketing EXCEPT:
a. mono-marketing.
b. one-to-one marketing.
c. customized marketing.
d. markets-of-one marketing.
Answer: (a) Difficulty: (2) Page: 238
25. ______________ is the process through which firms interact oneto-one with masses of customers to create customer-unique value by
designing products and services tailor-made to individual needs.
a. Mass marketing
b. Detail marketing
c. Mass globalization
d. Mass customization
Answer: (d) Difficulty: (2) Page: 239
150
26. The move toward individual marketing mirrors the trend in consumer
_________.
a. backlash
b. self-marketing.
c. dialog marketing
d. niche marketing
Answer: (b) Difficulty: (1) Page: 242
27. All of the following are considered to be major variables for
segmenting markets EXCEPT:
a. geographic variables.
b. trait variables.
c. demographic variables.
d. psychographic variables.
Answer: (b) Difficulty: (2) Page: 243, Table 7-1
28. If a marketer attempts segmentation of a market by dividing the
market into different units based on nations, regions, states, counties,
cities, or even neighbourhoods, then the marketer is practicing
____________ segmentation.
a. demographic
b. geographic
c. political
d. cartographic
Answer: (b) Difficulty: (1) Page: 243, Table 7-1
29. When Campbell Soup makes Cajun gumbo soup for Louisiana and
Mississippi and nacho cheese soup for Texas and California, it is practicing
_______________ segmentation.
a. geographic
b. demographic
c. psychographic
d. behavioural variable
Answer: (a) Difficulty: (2) Page: 242
151
30. All of the following would be ways to segment within the category of
psychographic segmentation EXCEPT:
a. social class.
b. occupation.
c. lifestyle.
d. personality.
Answer: (b) Difficulty: (3) Page: 243, Table 7-1
31. All of the following would be ways to segment within the category of
behavioural variable segmentation EXCEPT:
a. occasions.
b. user status.
c. loyalty status.
d. lifestyle.
Answer: (d) Difficulty: (3) Page: 243, Table 7-1
32. _______________ factors are the most popular bases for segmenting
customer groups.
a. Geographic
b. Demographic
c. Psychographic
d. Behavioural
Answer: (b) Difficulty: (3) Page: 244
33. _________________ factors or variables are generally easier to
measure than most of the other types of variables or factors.
a. Geographic
b. Demographic
c. Psychographic
d. Behavioural
Answer: (b) Difficulty: (3) Page: 244
34. Age is often a poor predictor of a person’s life-cycle, health, work, or
family status. Therefore, when using age and life-cycle segmentation, the
marketer must guard against:
152
a.
b.
c.
d.
stereotyping.
gender bias.
racial bias.
intellectual bias.
Answer: (a) Difficulty: (2) Page: 244-245
35. Proctor & Gamble joined a growing list of marketers who use
__________ segmentation when they developed Secret, a brand
specially formulated for a woman’s chemistry.
a. geographic
b. income
c. benefit
d. gender
Answer: (d) Difficulty: (1) Page: 245
36. All of the following Web sites would be examples of sites wishing
to make gender segmentation appeals as their primary marketing
segmentation strategy EXCEPT:
a. www.iVillage.com.
b. www.girlson.com.
c. www.playboy.com.
d. www.neimanmarcus.com.
Answer: (d) Difficulty: (1) Page: 246
37. ___________________ is the process of dividing a market
into different groups based on social class, lifestyle, or personality
characteristics.
a. Gender segmentation
b. Behavioural segmentation
c. Psychological segmentation
d. Psychographic segmentation
Answer: (d) Difficulty: (2) Page: 247
153
38. Many marketers believe that ________________ are the best starting
point for building market segments and programs.
a. behavioural variables
b. geographic variables
c. demographic variables
d. psychographic variables
Answer: (a) Difficulty: (3) Page: 247
39. “Coke in the morning” is an attempt to segment according to which
of the following?
a. gender segmentation
b. psychographic segmentation
c. benefit segmentation
d. occasion segmentation
Answer: (d) Difficulty: (2) Page: 248
40. The orange juice manufacturers know that orange juice is most often
consumed in the mornings. However, they would like to change this
and make the drink acceptable for other time periods during the day.
Which form of segmentation would they need to work with to establish
a strategy reflective of their desires?
a. gender segmentation
b. benefit segmentation
c. occasion segmentation
d. age and life-cycle segmentation
Answer: (c) Difficulty: (2) Page: 248
41. When companies market products on the basis of what the product’s
attributes will do for a given segment of consumers, they are using a
powerful form of behavioural segmentation known as:
a. occasion segmentation.
b. benefit segmentation.
c. user status segmentation.
d. usage rate segmentation.
Answer: (b) Difficulty: (2) Page: 249
154
42. If people that take cruise ship vacations do so because of “gambling,”
“fun,” or “for adventure or educational purposes,” then it is possible to
segment this market based on what might be called:
a. psychographic segmentation.
b. benefit segmentation.
c. demographic segmentation.
d. gender segmentation.
Answer: (b) Difficulty: (1) Page: 249
43. A marketing firm classifies customers as nonusers, ex-users, potential
users, first-time users, and regular users. Which of the following
classifications is the firm most likely using to segment its market and
devise strategies for selling its products and services?
a. user status
b. user rate
c. loyalty status
d. benefit status
Answer: (a) Difficulty: (1) Page: 249
44. One of the most promising developments in multivariable
segmentation is called _________________, where a host of demographic
and socioeconomic factors are used.
a. terragraphic segmentation
b. fermagraphic segmentation
c. geothermal segmentation
d. geodemographic segmentation
Answer: (d) Difficulty: (2) Page: 250
45. All of the following are major variables that can be used to segment
business markets EXCEPT:
a. operating characteristics.
b. psychographics.
c. demographics.
d. situational factors.
Answer: (b) Difficulty: (2) Page: 250
155
46. ____________________ is forming segments of consumers who
have similar needs and buying behaviour even though they are located
in different countries.
a. External segmentation
b. International segmentation
c. Intermarket segmentation
d. Enriched segmentation
Answer: (c) Difficulty: (2) Page: 253
47. When Mercedes-Benz targets the world’s well-to-do, regardless of
their country, they are most likely following a segmentation strategy
called:
a. external segmentation.
b. international segmentation.
c. enriched segmentation.
d. intermarket segmentation.
Answer: (d) Difficulty: (2) Page: 253
48. Clearly, there are many ways to segment markets. However, not all
segmentations are effective or successful. To be useful, market segments
must have all the following characteristics EXCEPT being:
a. measurable.
b. plausible.
c. accessible.
d. actionable.
Answer: (b) Difficulty: (2) Page: 254
49. It is a fact that there are 32.5 million left-handed people in the United
States. However, most marketers do not attempt to appeal to or design
products for this group because there is little in the way of census data
about this group. Therefore, this group fails in one of the requirements
for effective segmentation. Which of the following is most likely to apply
in this case?
a. actionable
b. substantial
c. differentiable
d. measurable
156
Answer: (d) Difficulty: (2) Page: 254
50. Knowing the size, purchasing power, and profiles of a market segment
are all part of which of the following characteristics?
a. substantiality
b. measurability
c. actionability
d. accessibility
Answer: (b) Difficulty: (2) Page: 254
51. The ability to reach and serve a market segment defines the
characteristic of:
a. measurability.
b. actionability.
c. accessibility.
d. substantiality.
Answer: (c) Difficulty: (1) Page: 254
52. Married and unmarried women may use the same perfume, and
might respond in a similar way to promotional sales of this fragrance. It
might, therefore, be difficult to consider that marital status designates
separate segments in this case. Which of the following requirements of
effective segmentation would probably rule out segmentation based on
marital status in this case?
a. actionable
b. substantial
c. differentiable
d. measurable
Answer: (c) Difficulty: (2) Page: 254
53. Stephanie Cross has a small clothing store, and has identified
seven separate categories of clothing buyers that form the general
market for clothing stores in her city. Her problem is that because of a
limited advertising budget, she cannot effectively reach these various
segments (especially since several of the segments are distant from her
store). Which of the following requirements of effective segmentation
157
would probably rule out segmentation based on Stephanie’s current
segmentation classification scheme?
a. actionable
b. substantial.
c. differentiable
d. measurable
Answer: (a) Difficulty: (3) Page: 254
54. In market targeting, a firm looks at all of the following factors EXCEPT:
a. segment size and growth.
b. segment structural attractiveness.
c. company objectives and resources.
d. segment public relations value.
Answer: (d) Difficulty (2) Page: 255
55. All of the following factors can affect the attractiveness of a market
segment EXCEPT:
a. the presence of many strong and aggressive competitors.
b. the likelihood of government monitoring.
c. actual or potential substitute products.
d. the power of buyers in the segment.
Answer: (b) Difficulty: (2) Page: 256
56. A(n) __________________ is a set of buyers sharing common needs
or characteristics that the company decides to serve.
a. undifferentiated market
b. market segment
c. target market
d. differentiated market
Answer: (c) Difficulty: (1) Page: 255
57. A market-coverage strategy in which a firm decides to ignore market
segment differences and go after the whole market with one offer is
called:
a. undifferentiated marketing.
b. differentiated marketing.
158
c. concentrated marketing.
d. turbo marketing.
Answer: (a) Difficulty: (1) Page: 255, 256, Figure 7-3
58. Deciding to target several market segments and design separate
offers for each is called:
a. undifferentiated marketing.
b. differentiated marketing.
c. concentrated marketing.
d. turbo marketing.
Answer: (b) Difficulty: (1) Page: 256, Figure 7-3
59. A growing number of firms have adopted differentiated marketing.
However, one drawback to this approach is that it:
a. is hard for managers to understand.
b. increases the costs of doing business.
c. alerts competitors as to your strategy.
d. is a poor strategy internationally.
Answer: (b) Difficulty: (2) Page: 256
60. The practice of going after a large share of a smaller market or subsets
of a few markets is called:
a. undifferentiated marketing.
b. differentiated marketing.
c. concentrated marketing.
d. turbo marketing.
Answer: (c) Difficulty: (1) Page: 257, Figure 7-3
61. All of the following would be among the chief factors to consider
when choosing a market-coverage strategy EXCEPT:
a. organizational culture.
b. product variability.
c. product’s life-cycle.
d. market variability.
Answer: (a) Difficulty: (1) Page: 258
159
62. The way the product is defined by consumers on important attributes
is called ________________.
a. market segmentation
b. image psychology
c. product position
d. market targeting
Answer: (c) Difficulty: (1) Page: 260
63. The positioning task consists of three steps. Which of the following
does not belong?
a. Identifying a set of possible competitive advantages upon which
to build a position.
b. Choosing the right competitive advantages.
c. Comparing the position with ethical and legal guidelines
established by the trade.
d. Selecting an overall positioning strategy.
Answer: (c) Difficulty: (2) Page: 260
64. The key to winning and keeping customers is to understand their
needs and buying processes better than competitors do and:
a. advertise constantly to let customers know about changes in
products and services.
b. hire the best sales people.
c. have an updated Web presence.
d. to deliver more value.
Answer: (d) Difficulty: (1) Page: 260
65. Product differentiation can be along all of the following lines EXCEPT:
a. consistency.
b. durability.
c. reliability.
d. competitive parity.
Answer: (d) Difficulty: (2) Page: 261
66. Gaining competitive advantage through speedy or careful delivery is
an example of which type of differentiation?
160
a.
b.
c.
d.
product
services
personnel
image
Answer: (b) Difficulty: (2) Page: 261
67. The strategy of choosing one attribute to excel at to create competitive
advantage is known as (the):
a. unique selling proposition.
b. underpositioning.
c. overpositioning.
d. confused positioning.
Answer: (a) Difficulty: (1) Page: 262
68. In general, a company needs to avoid three major positioning errors.
Which of the following is NOT one of those errors?
a. underpositioning
b. repositioning
c. overpositioning
d. confused positioning
Answer: (b) Difficulty: (2) Page: 263
69. In determining which differences to promote, focusing on a
difference that delivers a highly valued benefit to target buyers would
mean selecting the difference that is most:
a. important.
b. distinctive.
c. superior.
d. communicable.
Answer: (a) Difficulty: (3) Page: 263
70. Choosing a product difference that competitors cannot easily copy
would be which kind of differentiation criterion?
a. important
b. distinctive
c. superior
d. preemptive
Answer: (d) Difficulty: (3) Page: 263
161
71. A brand’s _____________ is the full positioning of the brand—the
full mix of benefits upon which it is positioned.
a. distinctive proposition
b. preemptive proposition
c. value proposition
d. superior proposition
Answer: (c) Difficulty: (2) Page: 263
72. The text describes a series of value propositions. Of these propositions,
Southwest Airlines has chosen to adopt the:
a. more for less proposition.
b. less for much less proposition.
c. same for less proposition.
d. more for more proposition.
Answer: (b) Difficulty: (3) Page: 263-269, Figure 7-4, Marketing at
Work 7-3
TRUE/FALSE QUESTIONS
73. Companies today realize that they can appeal to all buyers in the
marketplace by using concentrated marketing.
Answer: (False) Difficulty: (2) Page: 235
74. Because of profit pressures and the threat of the Internet, most
companies have now moved away from market segmentation and
targeting and toward mass marketing.
Answer: (False) Difficulty: (2) Page: 235
75. With respect to markets, the “shotgun” approach in marketing efforts
seems to be better than the “rifle” approach.
Answer: (False) Difficulty: (2) Page: 235
76. Market segmentation is the process of taking a market and dividing
the buyers into distinct groups for which marketing mixes can be
constructed.
Answer: (True) Difficulty: (1) Page: 235
162
77. Today, most companies are rushing toward mass marketing because
of the changing nature of the marketplace.
Answer: (False) Difficulty: (2) Page: 236
78. A good illustration of the niche marketing approach was when Henry
Ford said (with respect to cars) “they can have any colour they want as
long as it’s black.”
Answer: (False) Difficulty: (2) Page: 236
79. Micromarketing is focusing on subsegments or niches with distinctive
traits that may seek a special combination of benefits.
Answer: (False) Difficulty: (2) Page: 237
80. If a marketer were to tailor products and marketing programs to the
needs and wants of specific individuals and local customer groups, the
marketer would be practicing micromarketing.
Answer: (True) Difficulty: (1) Page: 238
81. One of the drawbacks for adopting a policy of local marketing is that it
can drive up manufacturing and marketing costs by reducing economies
of scale.
Answer: (True) Difficulty: (1) Page: 238
82. Because buyers have unique needs and wants, each buyer is
potentially a separate market.
Answer: (True) Difficulty: (1) Page: 238
83. Customized marketing is often called individual marketing.
Answer: (True) Difficulty: (1) Page: 238
84. An example of a firm that practices individual marketing is Mattel,
with its My Design page of its Barbie Web site.
Answer: (True) Difficulty: (2) Page: 240-242, Marketing at Work 7-1
163
85. The move toward individual marketing mirrors the trend in consumer
concentration strategy.
Answer: (False) Difficulty: (3) Page: 239
86. The most popular base for segmenting markets and customer groups
is geographic segmentation.
Answer: (False) Difficulty: (2) Page: 242, 243
87. Demographic variables are easier to measure than most other types
of variables with respect to segmentation.
Answer: (True) Difficulty: (1) Page: 244
88. Income segmentation is used not only with the affluent, but also with
the consumers with lower spending power.
Answer: (True) Difficulty: (2) Page: 247
89. Psychographic segmentation occurs when a market is divided
into different groups based on social class, lifestyle, or personality
characteristics.
Answer: (True) Difficulty: (1) Page: 247
90. One of the forms of behavioural segmentation would be lifestyle
segmentation.
Answer: (False) Difficulty: (2) Page: 243, 247, Table 7-1
91. If a marketer were to link U.S. Census data with lifestyle patterns to
better segment markets, this would be an example of geodemographic
segmentation.
Answer: (True) Difficulty: (2) Page: 250
92. A common way to segment a business market would be to segment
based on operating characteristics and situational factors.
Answer: (True) Difficulty: (2) Page: 250
164
93. Segmenting international markets on the basis of geographic,
economic, political, cultural, and other factors is called international
psychographics.
Answer: (False) Difficulty: (2) Page: 253
94. To be useful, a market segment must be substantial.
Answer: (True) Difficulty: (1) Page: 254
95. To be useful, a market segment must be conspicuous.
Answer: (False) Difficulty: (1) Page: 254
96. A market segment is a set of buyers sharing common needs or
characteristics that the company decides to serve.
Answer: (False) Difficulty: (3) Page: 255
97. Concentrated marketing is a market-coverage strategy in which a firm
decides to ignore market segment differences and go after the whole
market with one offer.
Answer: (False) Difficulty: (2) Page: 255
98. If a firm decides to go after a large share of one or a few segments or
niches, then the firm will probably be following a concentrated marketing
strategy.
Answer: (True) Difficulty: (2) Page: 257
99. In market targeting, the issue is not how and for what, but who is
targeted.
Answer: (False) Difficulty: (3) Page: 259
100. A product’s position is the way the product is defined by consumers
on important attributes.
Answer: (True) Difficulty: (1) Page: 260
165
101. One of the major positioning errors that a company needs to avoid
is that of confused positioning.
Answer: (True) Difficulty: (1) Page: 263
102. A difference is worth establishing to the extent that it satisfies the
criterion of cultural imperative.
Answer: (False) Difficulty: (2) Page: 263
103. According to the nine cell matrix that describes possible value
propositions, the cell that produces a higher price for reduced benefits
should be pursued by the marketer.
Answer: (False) Difficulty: (2) Page: 264, Figure 7-4
104. According to the value proposition presented by Southwest Airlines,
the customer gets “less for much less.”
Answer: (True) Difficulty: (2) Page: 267, Marketing at Work 7-3
ESSAY QUESTIONS
105. Proctor & Gamble makes eight brands of laundry detergent (Tide,
Cheer, Bold, Gain, Era, Dreft, Febreze, and Ivory Snow). Each of these
brands is directed toward a different segment of the vast laundry
detergent market. Comment on Proctor & Gamble’s strategy for this
market. Describe the company’s attitude toward intracompany brand
competition and competition from other competitors. Finally, give
examples of how the various laundry detergent brands are directed
toward specific market segments by Proctor & Gamble.
Answer:
The various Proctor & Gamble brands compete with one another on
the same supermarket shelves. Why would the company allow this to
happen? The answer lies in the fact that different people want different
mixes of benefits from the products that they buy. For example, laundry
detergent customers want several different things: to get clothes clean,
166
economy, bleaching power, fabric softening, fresh smell, strength or
mildness (depending on the cleaning chore), and lots of suds. The
various Proctor & Gamble products address these issues. The company
will accept intracompany brand competition (and by doing so, it will keep
all the money from the various brands in one common pocket rather than
giving it to competition). The company has also developed a separate
brand for each of the eight important laundry detergent segments. For
example (for other information see the introductory comments in the
chapter where all eight segments are identified):
a) Tide—an all-purpose family detergent that is “tough on greasy
stains.”
b) Cheer—guards against fading, colour transfer, and fuzzy build-up.
c) Bold—has a built-in fabric softener.
d) Gain—the “enzyme” fresh smelling detergent.
e) Era—built-in stain removers.
f) Dreft—removes baby stains.
g) Febreze Clean Wash—gets out difficult odours.
h) Ivory Snow—mild product for cleaning fine washables and baby
clothes.
Difficulty: (2) Page: 233-235
106. Define market segmentation, market targeting, and market
positioning. Demonstrate through the steps of a model how these
concepts fit together to aid the decision maker in his or her attempt to
use market segmentation in the marketing process.
Answer:
Market segmentation is the process of dividing a market into distinct
groups of buyers with different needs, characteristics, or behaviour who
might require separate products or marketing mixes. Market targeting
involves evaluating each segment’s attractiveness and deciding which
segment(s) to enter. Market positioning is arranging for a product to
occupy a clear, distinctive, and desirable place relative to competing
products in the minds of target consumers. The marketer formulates a
competitive position for a product and a detailed marketing mix.
A model that might show the relationships between these three
terms is found in Figure 7-1 in the chapter. The steps shown in this
model are: (1) Identify bases for segmenting the market, (2) Develop
167
profiles of resulting segments—these two steps are related to market
segmentation; (3) Develop measures of segment attractiveness, (4)
Select the target segment(s)—these two steps are related to market
targeting; (5) Develop positioning for each target segment, and (6)
Develop marketing mix(es) for each target segment—these two steps
are related to marketing positioning.
Difficulty: (2) Page: 235, Figure 7-1
107. Identify the differences between the mass marketing, segment
marketing, niche marketing, and micromarketing strategies.
Answer:
For most of this century, businesses practiced mass marketing. They
mass produced, mass distributed, and mass promoted the same product
in almost the same ways to all consumers. The argument for this approach
was that mass marketing creates the largest potential market, which
leads to lower costs, which in turn can translate into either lower prices
or higher margins. This approach has given way to segment marketing,
where marketers isolate broad segments that make up a market and
adapt the marketing to match the needs of one or more segments.
The benefits of this approach are that the company can market more
effectively and efficiently by creating programs that are directed only
toward those consumers that can be most effectively served. In niche
marketing, there is a focus on subsegments or niches with distinctive
traits that may seek a special combination of benefits. Niche marketers
presumably understand their niches’ needs so well that their customers
willingly pay a price premium. The newest form of segmentation is called
micromarketing, where the marketer tailors products and marketing
programs to suit the tastes of specific individuals and locations. This can
take the form of either local or individual marketing.
Difficulty: (2) Page: 236-243, Figure 7-2
108. List and briefly discuss the major bases for segmenting consumer
markets. Demonstrate how these major bases would compare to the
bases used in segmenting business markets (what are the differences
and similarities?).
168
Answer:
The major bases for segmenting consumer markets are (1) geographic,
(2) demographic, (3) psychographic, and (4) behavioural. Examples
within these categories might be: geographic (country, region, density, or
climate), demographic (age, gender, family size, income, occupation, or
race), psychographic (social class, lifestyle, or personality), or behavioural
(occasions, benefits, user status, usage rate, loyalty, readiness stage, or
attitude toward the object). These bases are contrasted to the major
bases for segmenting business markets, which include (1) demographics,
(2) operating variables, (3) purchasing approaches, (4) situational
factors, and (5) personal characteristics. Examples within these
categories might be demographics (industry, company size, or location),
operating variables (technology, user/nonuser status, or customer
capabilities), purchasing approaches (purchasing function organization,
power structure, nature of existing relationships, or purchasing policies),
situational factors (urgency, specific application, or size of order), and
personal characteristics (buyer-seller similarity, attitudes toward risk, or
loyalty). Notice that similarities exist between some of the demographic
and personal characteristics (behavioural) categories.
Difficulty: (3) Page: 243-254, Table 7-1
109. Consumer and business markets use many of the same variables to
segment their markets. However, there are also differences. Using the
approach suggested in the text, list and briefly describe the additional
variables that would be important to the business marketer who wished
to segment markets.
Answer:
Some additional variables would include:
a). Operating characteristics—how does the customer operate within
the industry?
b). Purchasing approaches—are buying centres used?
c). Situational factors—are there certain times of the year when the
buyer is more likely to purchase?
d). Personal characteristics—are there characteristics about the
purchasing unit or the senior managers that might impact the purchase
decision?
Difficulty: (3) Page: 250-252
169
110. Define and give a specific example of intermarket segmentation.
Answer:
To conduct intermarket segmentation, an international marketer
forms segments of consumers who have similar needs and buying
behaviour even though they are located in different countries. The
text uses the examples of MTV (who targets the world of the teen) and
Mercedes-Benz (who targets the affluent no matter where they live).
Difficulty: (2) Page: 253-254
111. As demonstrated in the text, there are several ways to segment a
market. However, not all of these ways are always effective. To be useful
and effective, market segments should have five different characteristics.
List these and briefly explain each.
Answer:
Market segments must be (1) measurable (in terms of size, purchasing
power, and clear profiles), (2) accessible (can be effectively reached and
served), (3) substantial (large or profitable enough), (4) differentiable
(the segments are distinguishable and respond differently to different
marketing mixes), and (5) actionable (can design programs for attracting
customers effectively).
Difficulty: (2) Page: 254
112. A firm can adopt one of three market-coverage strategies when
attempting to market its goods and services. List and describe each of
these possible market-coverage strategies and provide and example of
each.
Answer:
Undifferentiated marketing—a market-coverage strategy in which
a firm decides to ignore market segment differences and go after the
whole market with one offer. It relies on mass marketing techniques.
Distributing salt might be an example of this form.
Differentiated marketing—a market-coverage strategy in which a firm
decides to target several market segments and designs separate offers
for each. Automobiles might be examples of this strategy.
170
Concentrated marketing—a market-coverage strategy in which a firm
goes after a large share of one or a few sub-markets. A specialty truck
producer might be an example of this strategy.
Difficulty: (2) Page: 255-258, Figure 7-3
113. What factors might a company need to consider when choosing a
market-coverage strategy? Explain and justify your choices.
Answer:
The text suggests the following factors:
a). company resources
b). product variability
c). the product’s life cycle
d). market variability
e). competitor’s marketing strategies
If students present others, make sure they are justified.
Difficulty: (2) Page: 258
114. In general, a company needs to avoid three major positioning errors.
What are these errors? Present a brief description and illustration of
each.
Answer:
The major errors are:
a). Underpositioning—failing to really position the company at all.
b). Overpositioning—giving buyers too narrow a picture of the
company.
c). Confused positioning—leaving buyers with a confused image of
a company.
Students are free to suggest their own illustrations. If you would like
more structure, suggest this structure prior to assigning this question.
Difficulty: (2) Page: 264
171
115. Companies are often faced with the problem of deciding which
differences of a product or service to promote. This is especially relevant
to product positioning. According to the text, a difference is worth
promoting if it satisfies seven criteria. What are those criteria? Briefly
explain each.
Answer:
The seven criteria suggested by the text include:
a). Important—the difference delivers highly valued benefit to target
buyers.
b). Distinctive—competitors do not offer the difference, or the
company can offer it in a more distinctive way.
c). Superior—the difference is superior to other ways that customers
might obtain the same benefit.
d). Communicable—the difference is communicable and visible to
buyers.
e). Preemptive—competitors cannot easily copy the difference.
f). Affordable—buyers can afford to pay for the difference.
g). Profitable—the company can introduce the difference profitably.
Difficulty: (3) Page: 263
APPLICATION QUESTION
116. New Balance athletic shoe company has a difficult problem—how
to compete in the highly competitive athletic shoe market against such
industry giants as Nike and Reebok. The company does have certain
advantages (it makes a quality product, has a good reputation with
distributors, and is the only athletic shoe that offers width sizes as well
as length sizes) that it hopes will help meet the challenges of the industry
giants. Your job as a strategic planning consultant is to formulate a
market-coverage strategy for New Balance. You have three options—
undifferentiated marketing, differentiated marketing, and concentrated
marketing. Choose one of these methods and support your choice with
a logical explanation.
172
Answer:
Students are free to pick any method they wish, however, considering
the competition, the undifferentiated marketing method would be hard
to support. This mass-marketing strategy focuses on what is common
in the needs of consumers, rather than what is different. The company
designs a product and a marketing program that will appeal to the largest
number of buyers. It relies on mass distribution and mass advertising,
and it aims to give the product a superior image in people’s minds.
With the differentiated approach (the method most likely chosen by
Nike and Reebok), a firm decides to target several market segments or
niches and designs separate offers for each. By offering product and
marketing variations, the company using this method hopes for higher
sales and a stronger position within each market segment. The student
could make a case for this method, however, this method requires
expensive outlays such as extra marketing research, forecasting, sales
analysis, promotion planning, and channel management.
With the concentrated approach (which generally appeals to
companies with limited resources), the company goes after a large
share of a small market rather than a small share of a large market. This
method allows small companies to get a foothold against larger, more
resourceful competitors. The company is usually able to achieve a strong
market position because of its greater knowledge of the segment’s needs
and special requirements. The company may also achieve economies in
the various 4P areas. However, the segment that the company selects
for attention must be carefully chosen because “all the eggs are in one
basket.” New Balance currently sells well in specialized shoe stores (such
as orthopaedic stores) because of their width feature, their response to
dealer needs, and a limited but quality line. Mass merchandisers do not
tend to carry this brand.
Lastly, students should consider (when selecting the strategy) a
company’s resources, the degree of product variability, the stage in
the product’s lifecycle, market variability, and competitor’s marketing
strategies when making a final selection.
Difficulty: (3) Page: 255-259, Figure 7-3
173
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1. Ramsborg, G.C.; B Miller, D Breiter, BJ Reed & A Rushing
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Part 8
1. Joe Risser and Melanie Lockwood Herman. Managing Special
Event Risks. https://www.nonprofitrisk.org/library/articles/
rmbasics060709.shtml
2. Communication strategy, Access via Internet: http://
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181
Indre Radaviciene
EVENT MARKETING PLANNING
Course Handbook
ISBN 978-9955-648-71-0
This Course Handbook was prepared with support from the European
Structural Funds. This publication reflects the views only of the author,
and the SMK University of Applied Social Sciences cannot be held
responsible for any use which may be made of the information contained
therein.
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