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Marketing Channel Management Price Product Target & Position Place Promo Distribution Channels Media Channels SMC IMC thru Supply Chain Management thru Integrated Marketing Communication The Changing Worlds of Distribution & Promotion Channel Integration Supply Chain Mgt- Shared Info replaces inventory Integrated Marketing Communication Developing Creative & Media Strategy The “New” Media & Advertising-Promotional techniques… Changing World of Distribution Old World Marketer’s distribution decisions not extend much beyond level of intensity(Convenience, Selective or Exclusive) Levels of distribution intensity Mfgr. Channel Strategy Exclusive Distribution When mfgr. restricts distribution to single/ select few retailer(s) Specialty Products Expensive Infrequently purchased Sought after by consumers Require considerable aftersale servicing Levels of distribution intensity Mfgr. Channel Strategy Selective Distribution Product available in multiple retail outlets Shopping goods Buy less frequently High-Mod. price Comparison shop i.e Clothing, appliances Levels of distribution intensity Mfgr. Channel Strategy Intensive Distribution Convenience products - sold thru virtually every available retail outlet in a particular market Buy frequently, immediately Low priced Mass advertising i.e Candy, soda, newspapers- anything in a convenience store Changing World of Distribution Old World Independent Middlemen New World Supply Chain Team Separate functions handled by separate businesses Integrate all members of SC thru shared info- system Focus only on your link in the chain Coordinate supplyproductiontransportation & Distribution Changing World of Promotion Old World New World Mass Media & Mass Middlemen Integrated Marketing Communication Communication Separate functions Dominated Advertising handled byby“experts” in & Ad Agencies separate departments Integrate all channels of promotional mix under one strategic umbrella Focus on Focus on mass massmedia media Mass media advertising serves supportive role in overall Marketing Communications effort SCM & IMC Getting the Right Things to the Right Places at the Right Times w/ Minimum cost & Maximum levels of Customer service Getting the Right Messages to the Right people at the Right Times w/ Minimum waste & Maximum effect Product & Message Distribution Commonalities To get Product out: Effective Communication w/ distributors Effective Distribution Channel strategy & mgt. To get the Message out: Effective Communication w/ consumers Effective Media Channel strategy & mgt. Advertising Webvertising Direct Marketing In Sync Public Relations Events & Sponsorships Packaging Sales Promotion Personal Selling Manufacturers Transporters In Sync Distributors Shippers Warehouses Suppliers Retailers Supply chain team Logistics information system Free & Immediate movement of Information up & down supply chain Sourcing & procurement Production scheduling Order processing Inventory control Warehouse & materials handling Transportation Information Distortions and the “Bullwhip Effect Sales rate volatility Production rate volatility The “Bullwhip Effect” 1200 Customer Demand 900 600 300 0 4 8 12 16 20 24 Mo. 1200 Retailer Orders To Distributor 900 600 300 4 8 12 chain 16 20 24 Mo. Inventory is insurance0 against supply uncertainties 1200 Distributor Orders To Manufacturer 900 600 300 0 4 8 12 16 20 24 Mo. Supply chain management substitutes information for inventory Standard Deviation, 10-yr Moving Average 20% Production Growth Volatility 18% 16% 14% 12% 10% Sales Growth Volatility 8% 6% '68 '70 '72 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 Logistics Costs Continue to Fall Costs as a percent of GDP 16 14 Total Logistics Costs 12 10 8 Transportation Costs 6 4 Inventory Carrying Costs 2 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 Wireless/Mobile IMS Key Point: Distribution functions can be improved w/ INFOintegration (“compunication”, Scanning & RFID technologies) Receiving Product storage/ “putaways” Order Fulfillment/ “Picks” Inventory Shipping Increased productivity Increased accuracy Increased space efficiencies – Better customer service=satisfaction– order processing time & effort; Better (fresher) product shipped; Less damage Integrated Marketing Communications Wherein a Company Integrates & Coordinates all its Communications Co-ordinate, Synthesize, Orchestrate all Marketing Communications… Mass Media campaign strategy Creative Concept PR Cust. Service Execution of single strategy & concept across all communication channels In-store New Media Broader Perspective of Promotion Conceptualize IMC in terms of “All Contacts” between customer & brand Integrated Marketing Communication More Continuous Maximum Impact! More Consistent More Impact IMC helps Cut Thru Message Clutter IMC Strategy More Continuity & Impact Integrate Comm. Across Time & Channels High Personal selling Importance Sales promotion Advertising Low Pre-purchase Purchase Post-purchase Stage of consumer’s purchase decision “IMC Simple in Concept Need only 1. Have something interesting & compelling to say 2. Have an effective means of reaching logical prospects Developing IMC Campaigns Need only 1. Have something interesting & compelling to say 2. Have an effective means of reaching logical prospects (Media Strategy) Creative Strategy Campaign Concept- “the big idea” Message Executionstyle & format Can’t be pulled out of a hat … …nor from of a book The Creative Work-plan The Situation The Target The Product The Message Developing the Communication Campaign Concept Suits-- “Its not creative unless it sells” Director of Marketing Brand Manager Ad Agency AE Creative Director Copy Chief Copywriter Art Director Poets– Artistic; value entertainment & originality Artist The Situation Key fact- major problem / opportunity to emerge from sit. analysis Marketing Goals- sales, votes, memberships… Advertising Goalscommunication based The Target Prospect Definitionall relevant descriptors Key Dimensionsmost relevant descriptors The Product Benefits & Attributesreal, imagined, inuse,result-use, social, psycho… Competition— what/how are they selling Position- in consumer’s evoked set - - - The Message Concept- “The Big Idea” Promise / USP — what “really” offering Support- words, facts, reasons, images backingup promise Slogo- visual/verbal ID We’re ready to go when you are… That’s why We’re #1 in the #2 Business Johnny-on the Spot Having developed WHAT your going to say– next decide HOW to say it User-Testimonial Scientific/Technical Expert Animated-Personality Unique Character, Image, Persona—that represents Celebrity Endorsement the Brand— (Leo Burnett School: Slice of Life Tony the Tiger The Keebler Elf FORMATS Fantasy Jolly Green Giant Charlie the Tuna Morris the CatDemonstration Music Video Creative Brief Del Monte • The Objective – Increase awareness of the smaller-size cans with pull-top lid. • Target Audience – senior citizens, especially those that live alone and suffer from arthritis. • Message Theme – The new cans not only contain a smaller portion but are easier to open. • Support – 30 cent introductory coupon to encourage usage. • Constraints – copyright logo, toll free number, website address, legal requirements of a The message theme of this milk advertisement was that milk will provide calcium. The calcium will provide the customer with benefit of strong bones. Humor Humor Evaluating Campaign Two Measures of Success Demonstrates process of Communication Testing Communication Effects Sales Effects What makes message Effective Tell A Story The Ultimate Evaluative Criteria: You Know you have succeeded when: You get people to buy things they don’t need… With money they don’t have… To impress people they don’t like! Developing Marketing Communication Campaigns Creative strategy – Campaign Concept & Execution Media Channel strategy – Media Planning Basic Media Decisions 1. Deciding on Message Weight: Reach, Frequency, Continuity & Budget & Message WeightGRP’s & CPM 2. Choosing Media Channels & Vehicles Media-Plan Metrics Reach Frequency Continuity Cost GRP CPM What % of market – target sees -reads, hearsMessage Media-Plan Metrics Reach Frequency Continuity Cost GRP CPM How often target audience exposed to message Media-Plan Metrics Reach Frequency Continuity Cost GRP CPM When are the best times to reach the target audience? Media-Plan Metrics Reach Frequency Continuity Cost GRP CPM -Spend 1.What can afford 2.% of sales 3.What need to spend to achieve certain level R&F 4.What competitors spending Media-Plan Metrics Reach Frequency Continuity Cost GRP CPM (Message Weight) Gross Rating Points= Reach x Frequency Media-Plan Metrics Reach Frequency Continuity Cost GRP CPM Cost- Per Thousand Cost * (x1000) (Audience size) Statistic allows comparison of cost efficiency of different media vehicles Basic Media Decisions 1. Deciding on Message Weight: Reach, Frequency, Continuity & Budget & Message Weight- GRP’s & CPM 2. Choosing Media Channels & Vehicles Established Channels & Methods There’s an old adage … “Half of my $ spent on advertising is wastedThe only question is what half?” w/ U.S. advertisers spending $200+ billion each year & Worldwide spending exceeding $400+ billion…that’s a lot a $$$$$ And it could be getting a whole lot worse… The “old & established” methods of promotion ain’t what they used to be…. “Mass reach” is giving way to a world of niches… • Everybody has multi comm devices & consume what they want - when they want - where they want Agents of Change are Everywhere: DVRs , PDA’s & Smart- phones Wireless hot spots “Branded entertainment” Word-of-mouth, viral marketing Podcasts, online video Pervasive usage of GPS assisted content delivery Rapid deployment of addressable advertising technology The media universe has shattered mfgrs. are losing their simple connection to the consumer... In 1995 it took 3 TV commercials to reach 80% of 18- to 49-year-old women. Today- takes > 10 times # Ads to reach the same group. Even if could reach w/ 1 ad…. …effectiveness is questionable Given increased consumer resistance to and skepticism of advertising AdsAdult no evening longerTVsecure customer attention viewers able to name, without prompting, a brand or product advertised in show just seen Source: Newspaper Association of America, Cabletelevision Advertising Bureau, and Nielsen Media Research don’t TRUST! believe that Beware of 76% eroding companies tell the truth in advertisements --Yankelovich, 2005 Consumer trust in advertising has plunged 41% over the past three years Only 10% of consumers say they “trust” ads today 20th Cent. Media Business Model on Its Last Legs! “Emerging digital technologies are wresting power from the hands of the content provider and placing it with the consumer, forever changing the traditional paid-media advertising model” _____________ “Madison Ave. melds pitches and content,” Advertising Age ; Chicago; Oct 7, 2002; Hank Kim The DVR: consumers control programming, content & time • From 2000 – to date— The % of HH’s w/ DVR’s gone from 0% to 40% (projected -2008) Marketing Professionals Vary in Awareness The Rush to Second Life 23% 39% 49% “SAW IT COMING” 50% 54% 58% 65% 75% 77% 80% 86% The Rise of YouTube 61% Popularization of “Mash-ups” 51% 50% Newspapers Moving to Tabloid Format 52% Issue-Specific Print Audience Measures 48% 53% 77% 47% TV Commercial Rating System 46% Growth of Free Daily Newspapers 42% Restructuring of Traditional Media Explosion of Consumer Content 35% Emergence of Podcasting 25% Social Media in Communication Plans Mass Adoption of Text Messaging TV Programs on the Internet Media Investment Survey 2007 23% 20% 14% “TOOK ME BY SURPRISE” New Communication technology has & continues to alter Consumer preferences & patterns of media consumption And as a consequence- has & will continue to render long established business methods & models obsolete! Mass Media Out - Mass Channel In It's the Mass Channel…Not the Mass Media that is attracting bulk of marketing dollars 10 biggest Mega-Retailers: account for ~ 80% of mfgrs biz vs. ~ 30% decade ago ~ 60% of mfgrs' marketing $$ go to retailers compared with 36% two decades ago PUSH STRATEGY Manufacturer promotes to wholesaler Wholesaler promotes to retailer Retailer promotes to consumer Consumer buys from retailer Orders to manufacturer PULL STRATEGY Manufacturer promotes to consumer Consumer demands product from retailer Retailer demands product from wholesaler Orders to manufacturer Wholesaler demands product from manufacturer Thus Increased importance of Packaging Protection Containment, storage, recycling Information Ingredients, UPC, Instructions, Promotion Readily noticed & recognized (Brand ID) Facilitate, use & convenience Changing World of Marketing Communication Old World New World “Talking At” Consumers Two-way Two-wayDialogue DialogueWith W/ Consumers Consumers Focus on Winning New Customers Focus Focus on - Building Building Long Long Term Term Relationships RelationshipsWith W/ Consumers Consumers Marketers Relied Primarily on Advertising and Promotions Marketers Use & Coordinate Many Different Forms of Communication Mass Marketing One-to-Many Many-to-Many Social Network Marketing Your network of friends/associates One-to-One W3 Marketing Their network of friends/associates IMC- Integrating the Buzz w/ other Marketing Comm. Vehicles The New (and not so new) WOM Marketing Techniques • Buzz Marketing • Brand Blogging • CGM- Consumer Generated Media • Product Placement • Viral Marketing • Stealth Marketing • Guerilla Marketing • Conversation Marketing • Grassroots Marketing • Evangelist Marketing • Referral Marketing • Influencer Marketing • 2Step Flow Marketing • Many-to Many Viral Marketing Creating entertaining / infotaining messages designed to be passed along … Example: Go Elf Yourself- Stats Radian6 http://www.tremor.com/ •250,000+ teen Connectors screened & opted in http://www.bzzagent.com/ 80,000 members Cost: 1,000 agents -12 weeks ~$100K BUZZ Marketing: Using high Profile entertainment or news to get people talking about your product Halo : WOM Campaign Buzz Generator= On-line- Community interactive-immersive mystery story that allowed advance play of Halo2 600,000 full-time players 2.3 million participants 1million+ blog posts Media coverage w/ CNN, USA Today, NYT, etc. = $125 million opening day salesbiggest opening day revenue in entertainment history Halo3=$170M vs. &151M Spiderman Evangelist Marketing Cultivating advocates volunteers who will take a leadership role in actively spreading the good word about your product/service Video - ClipList V-8 Communication Test Top Ten Super Bowl Ads 2009 – Best SB ad all time- Herding cats