Download Marketing of High-Technology Products and Innovations

Marketing of High-Technology
Products and Innovations
Chapter 10:
Advertising and Promotion in
High-Tech Markets:
Tools to Build and Maintain
Customer Relationships
Chapter Overview
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Advertising and Promotion Mix: An
Overview
The Importance of Branding in High-Tech
Markets
New Product PreAnnouncements
The Role of Marketing Communications in
Customer Relationships
© Mohr, Sengupta, Slater 2005
Advertising and Promotion
Pyramid
Coverage of Target Audience (Reach)
HIGH
Salesperson
Cost per Contact
Telemarketing
Catalog Literature
and Manuals
Trade Show Seminars,
Training
Direct Mail
Public Relations Publicity
Media Advertising
LOW
Narrow
Broad
Coverage of Target Audience (Reach)
© Mohr, Sengupta, Slater 2005
Integrated Marketing
Communications
The use of different promotional tools such as advertising,
public relations, events, and the Internet in a planned,
coordinated campaign to deliver a clear and consistent
message to a target audience.
© Mohr, Sengupta, Slater 2005
Media Advertising
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Select media vehicle
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Mass media or trade journals
Audience overlap with firm’s target market
Cost efficiency (CPM)
“Fit” of editorial climate with brand message
Size/Frequency of ads
Ad agency or not?
SRDS, CMP Media, media kits
Select message strategy
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Break through clutter/gain attention
Reinforce brand message
© Mohr, Sengupta, Slater 2005
Public Relations
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Event sponsorship
Charitable events/cause marketing
Corporate advertising
Publicity
Press conferences, press releases
Positive image, good media relations are vital
© Mohr, Sengupta, Slater 2005
Direct Mail
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Effectiveness is a function of
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List quality
Appropriate mailing volume/frequency
Message
© Mohr, Sengupta, Slater 2005
Trade Shows
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To launch new products, reach sales
prospects, compare competitors’ products
Investment versus return
Attract traffic to booth
Follow-up on leads
© Mohr, Sengupta, Slater 2005
Catalogs, Literature, Brochures
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Build on earlier communications
Showcase key benefits in terms of
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Relative advantage
Compatibility
Scalability
Service/warranty
Total cost of ownership
© Mohr, Sengupta, Slater 2005
Telemarketing
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Outbound
Inbound
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Assign people to specific customer
accounts
Do Not Call list
© Mohr, Sengupta, Slater 2005
Personal Selling
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Effectiveness of this most expensive
tool is a function of the foundation
established by lower-level tools in the
pyramid.
© Mohr, Sengupta, Slater 2005
Internet Advertising
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Can be used in a complementary fashion at
all levels of the pyramid
Banner ads
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Live banners
Interstitial ads
Search engine
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Optimization (SEO)
Paid search
Contextual ads
© Mohr, Sengupta, Slater 2005
Internet Promotional Tools
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Affiliates
Viral marketing
Permission marketing (email,
newsletters) versus spam
Mobile advertising
© Mohr, Sengupta, Slater 2005
Branding in High-Tech Markets
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Short product life cycle and customer
fear, uncertainty, and doubt put a
premium on having brand equity
© Mohr, Sengupta, Slater 2005
Brand Equity
Power of a brand to positively affect
consumer response to marketing
© Mohr, Sengupta, Slater 2005
Advantages of Strong Brands
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Advantages of strong brands to firms
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Command premium prices
Financial performance and stock valuation
Credibility in new markets
Reduce risks in new product introductions
Advantages of strong brands to customers
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Safe choice
Simplify decision-making
© Mohr, Sengupta, Slater 2005
Strategies to Develop Strong Brands
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Supply steady stream of innovations
that deliver value
Emphasize traditional media advertising
and PR tools rather than sales
promotion
“Influence the influencers” to stimulate
word-of-mouth
© Mohr, Sengupta, Slater 2005
Strategies to Develop Strong
Brands (Continued)
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Brand the company, platform, or idea (rather
than the individual product)
Rely on symbols and imagery to create brand
personality
Effectively manage all points of customer contact
Work with partners (co-branding, ingredient
branding)
Use the Internet effectively
© Mohr, Sengupta, Slater 2005
The Internet as a Branding Tool
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Use when Internet is part of the
company’s value proposition
Coordinate online and offline campaigns
Take advantage of the “viewer’s” active
role
Focus on the customer experience at
the Web site
© Mohr, Sengupta, Slater 2005
Ingredient Branding
Supplier
OEM/Manufacturer
Retailer
-raw materials
-components
-production equipment
-services
© Mohr, Sengupta, Slater 2005
Customers
personal
consumption
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-business use
Ingredient Branding
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Stimulates derived demand for
ingredient
Relies on cooperative advertising
© Mohr, Sengupta, Slater 2005
Pros/Cons of Ingredient Branding
Supplier
Pros
Cons
Creates competitive advantage
Costly
Possible risk if OEM has product problem
Conflict with large OEMs
Large OEM
Small OEM
Erodes ability to differentiate
Risky if supplier's product has
performance problems
If it doesn't cobrand, consumers might
question product quality
Lends credibility to its product
Gets advertising support
Risky if supplier's product has
performance problems
© Mohr, Sengupta, Slater 2005
Branding for Small Business
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Resource constraints
May enter market with no brand
Develop relationships with one or two
large customers
Improve quality, customer experience
Creativity can compensate for low
budget
© Mohr, Sengupta, Slater 2005
Pros/Cons of New Product
Preannouncements
Pros
Cons
Pioneering advantage: Preempt competitors
Stimulate demand
Cue competitors
Product delays damage reputation
or jeopardize firm survival
Encourage customers to delay purchase
Cannibalize current products
Help customers plan
Confuse customers
Gain customer feedback
Create internal conflict
Stimulate development of complementary products Generate antitrust concerns
Provide access to distribution
Pursue a leadership position
© Mohr, Sengupta, Slater 2005
Tactical Considerations in
Preannouncements
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Timing is a function of
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New product innovativeness, complexity
Customer buying considerations
Timing of product design decisions
© Mohr, Sengupta, Slater 2005
Timing of Preannouncements
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Use EARLIER preannouncements when
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Product complements are needed from third
parties
Products are novel or complex (engender
buyer uncertainty)
Long buying process
High buyer switching costs
© Mohr, Sengupta, Slater 2005
Timing of Preannouncements
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Use LATER preannouncements when
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Need to keep development information secret from
competitors
Product features not known till late in the product
development process
Want to minimize risks of cannibalization
Time preannouncements to coincide with
purchase cycle of customers
© Mohr, Sengupta, Slater 2005
Tactical Considerations in
Preannouncements
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Nature and Amount of Information
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Reveal product attributes?
Reveal how product works?
Reveal how it compares to existing
products?
Reveal pricing/delivery?
© Mohr, Sengupta, Slater 2005
Tactical Considerations in
Preannouncements
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Communication Vehicles
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Trade shows
Advertisements
Press releases/press conferences
© Mohr, Sengupta, Slater 2005
Tactical Considerations in
Preannouncements
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Target audiences
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Customers
Competitors
Distributors
Partners
Shareholders
Employees
Industry Experts
Media
© Mohr, Sengupta, Slater 2005
Preannouncements Useful When
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Firm has low market dominance
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Firm believes competitors not likely to
respond
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Faces lower cannibalization risks
Faces fewer antitrust concerns
Ex: specialized technology/patent protection
To advance the customer decision process
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Product requires customer learning or
customers face switching costs
© Mohr, Sengupta, Slater 2005
Avoid Preannouncements When
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Cannibalization might be high
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Firm has strong portfolio of products
Customers would postpone current
purchases
Firm is large and might be accused of
predatory intent
© Mohr, Sengupta, Slater 2005
Customer Relationship Marketing
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Use database marketing to categorize
customers on volume and profitability
and/or on share of customer purchases
and consumption level
Decide on level of marketing effort and
expenditure for each category
Tailor marketing communications
appropriately
© Mohr, Sengupta, Slater 2005
Categories of Customers
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Low share of purchases/Low consumption
in category
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Absent compelling reason, avoid the
customers
Risk of alienating wrong customers
© Mohr, Sengupta, Slater 2005
Categories of Customers (Cont.)
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High share of purchases/Low consumption in
category
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Reasonably profitable, but not compelling
Sustain with occasional offers
Low share of purchases/High consumption in
category
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Major opportunity
Grow firm’s share of business
Aggressive marketing
© Mohr, Sengupta, Slater 2005
Categories of Customers (Cont.)
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High share of purchases/High
consumption in category
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Bread and butter customers
Attractive to competitors!
Maintain loyalty; don’t be complacent
© Mohr, Sengupta, Slater 2005
Other Strategies for CRM
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Capture the customer
Event oriented prospecting
Extended organization
Manage by wire
Mass customization
Yield management
© Mohr, Sengupta, Slater 2005
CRM Software
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Automate the sales force
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Track accounts and prospects
Automate call centers
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Create customer profiles
Provide scripts
Cross-sell
Coordinate communication
© Mohr, Sengupta, Slater 2005
CRM Software (Cont.)
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Analyze customer purchase history
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Design targeted campaigns
Measure results
Develop Web interface
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Product catalog, shopping cart, credit-card
purchases
Web configurator, for custom products
Web analysis of shopping activity
© Mohr, Sengupta, Slater 2005