MKTG 303: Advertising and Promotion Promotions Opportunity Analysis October 15-20, 2009 Zeynep Gürhan-Canlı

THE BIG PICTURE execute product service STP segment price business objective marketing objective source of volume evaluate target place position promotion

THE BIG PICTURE execute product service STP segment price business search experience credence segment price main variable dynamic variable business objective marketing objective source of volume evaluate value or competitive target entity goal competence retention acquisition steal share demand- stimulation TA description place position 5-box positioning statement length breadth depth promotion Awareness Information Image Behavior

THE BIG PICTURE execute product service STP segment price business objective marketing objective source of volume evaluate target entity goal competence place position promotion

Business Objective Who are we? What are we good at? Fundamental Entity (FE) Core Business What are we good at? Core competence Where are we going? Goal & Time Frame

Fundamental Entity (FE) Retail/Corporate Brand Citibank, Opet Umbrella Brand Arçelik, Beko, Motorola Distinct Branding Celebrex, Lipitor, Viagra, Visine Hybrid/Sub-branding Danone, Danone Vital, Petite Danone Tikveşli, Hayat, Şaşal, Birtat

Branding Example: Virgin Also: limos, cosmetics, bridalwear, wines, fitness clubs, balloon rides, virginstudent.com,…

Core Competence A skill that leads to a sustainable competitive advantage Requires significant resource investment Generates strategic assets that in turn generate products Refer to core competence article

Core Business Old: Industry/Product New: Benefit/Consumer Newspaper, Railroad New: Benefit/Consumer Transportation, Information

Core Competence

Business Objective Goal Time Frame share profit unit or dollar volume short or long-term In every box of the BP there will be a goal New name: Overarching goal Superordinate goal Top-level goal Highest order goal

Business Objective Goal Criteria measurable time frame realistic single-minded integrated with lower and higher-level goals Any goal in any box must meet these criteria We do quantitative analysis after the conceptual/strategic analysis Lay the tools on top of the conceptual goal Choosing a goal requires making tradeoffs – choose the goal that maximizes your future profits

THE BIG PICTURE: Marketing Objective execute product service STP segment price business objective marketing objective source of volume evaluate target entity goal competence retention acquisition place position promotion

A Customer-Based Model costs prospects new customers existing customers acquisition retention revenue

Relationship of FE to current customer definition Nike Golf Shoe purchaser Nike Umbrella Nike Individual Sports Nike Golf Nike Team Sports Nike Basketball Nike Running Nike Soccer Nike Fashion Nike Apparel Nike Casual Shoes

Customer Definition What constitutes a customer? purchase behavior purchase frequency purchase quantity purchase amount brand relationship commitment to brand knowledge/understanding of brand positioning

Customer Acquisition Acquiring or re-acquiring customers into our brand franchise new customers trier-rejectors former customers

Acquisition Activities Advertising (Awareness & trial) New product development Trial promotions Viral marketing

Retention Indicator of long-term viability of a firm product/service performance strong customer loyalty Less expensive to maintain estimated to be 4-10 times more expensive to acquire than to retain a customer awareness already achieved brand loyalty/inertia

Retention Activities Advertising (Brand Image) Continuity Promotions Loyalty Programs Customer Service Product improvements & line extensions Community building

Relationship to Business Objective Acquisition Retention Core Competence new product development, marketing customer service, market research Business Objective revenues, share profit Time Frame long-term short-term

THE BIG PICTURE execute product service STP segment price business objective marketing objective source of volume evaluate target entity goal competence retention acquisition steal share demand- stimulation place position promotion

Stimulate Primary Demand emphasize category benefit brand name not as important Leader benefits when category benefits “Consideration set” is important “

Stimulating Primary Demand new users new volume (same users, increased volume) new value (same users, higher price paid)

New Users

Stimulate Primary Demand

New Volume – New Use Situations

Arçelik Refrigerators New Value Arçelik Refrigerators

Steal Share Typically a #2 brand strategy Realistic assessment of relative strengths From whom? Dominate on what variable?

Source of Volume key activity: marketing objective source of volume acquisition retention increase consumption among current users attract new category users stimulate demand source of volume attract new brand users increase consumption occasions among multi-brand users steal share

THE BIG PICTURE execute product service STP segment price business main variable dynamic variable business objective marketing objective source of volume evaluate target entity goal competence retention acquisition steal share demand- stimulation TA description place position 5-box positioning statement promotion

Segmentation Variables Main Variable “Cost of entry” category variable Will become expected variable Dynamic Variable Category Leader: benefit/lifestyle Secondary Brand: “steal share” feature

Competitive Plot: Enter Data

Competitive Plot

Consumer Segments Demographics Psychographics Generations Geographic Geodemographics Benefit Usage

Generation Segmentation Generation Y (18-24) Generation X (25-34) Younger Boomers (35-44) Older Boomers (45-54) Empty Nesters (55-64) Seniors (65+)

Target Audience Target Audience Description Rich, complete description “The person in the chair” Leverage previous explorations of all types of variables

Target Customer: Acquisition Juan Paz… has never flown Turkish Airlines Juan Paz, 35, intl sales and marketing mgr., he is married. He has 2 kids, 1 dog. Lives in London in an apartment. His wife works but does not travel on business. His primary destinations are intra-Europe; ocassionally he flies to North and Central America. He normally flies BA, sometimes Iberia. He has heard of TA but has never flown it. He does not have an opinion about TA, feels indifferent about it. He thinks of himself as “European” (sophisticated, organized, open-minded, brand-conscious, health-conscious, likes good food, cultured) Attitudes: Juan Paz is concerned about time and quality of life. He looks for customized and differentiated service. Remains up to date and has knowledge of other airlines in the region which allows him to compare. He is demanding with himself and with the others. When he flies he wants to arrive home or to his meeting on time with his suitcase; he expects to have convenient frequent flights; he cares about the appearance and the age/technology of the airplanes he flies; he is technology-conscious and does not ever want to be out of date.

Select Position current belief consumer proposition desired belief currently do desired do

The Positioning Statement Snickers is a candy. current belief Snickers is a convenient way to satisfy your hunger. consumer proposition Snickers is a satisfying snack. desired belief Buy Snickers occasionally for a treat. currently do Eat Snickers as a snack when I’m hungry. desired do

Advertising Objective basic awareness top-of-mind awareness information image behavior $ $$$$$ increase aided awareness (recognition) among target from 5% to 25% increase % of “first mentions” from 25% to 60% among target increase awareness of <information> from 15% to 50% increase % agreement with “brand x is contemporary” from 10% to 40% increase retail inquiries from 100/week to 250/week

Promotion – Big Picture advertising objective marketing objective acquisition retention Awareness Information Image Behavior stimulate demand source of volume Information Behavior Top of Mind Information Behavior steal share

Creative Brief The Objective The Target Audience The Message Theme Advertising objective (consistent with business goals) The Target Audience Marketing objective, source of volume, segmentation, and target audience description The Message Theme Positioning strategy and 5-box positioning statement Review of previous campaigns The Support Consistent with competencies The Constraints Fundamental entity (Branding related constraints) Legal constraints

Factors Impacting Relationship Between Promotions and Sales Goal of promotion Threshold effects (sales response function curve) Carryover effects Wear out effects Decay effects Random events

Communications Budget Percentage of sales Meet-the-competition What we can afford Objective and task Payout planning (Ratio of advertising to sales or market share) Quantitative models

Marketing Budgets Advertising – 25% Consumer promotions – 25% Trade promotions – 50%