Marketing of High-Technology Products and Innovations Jakki J. Mohr Chapter 10: Advertising and Promotion in High-Tech Marketing: Tools to Build and Maintain Customer Relationships

Chapter Agenda The Advertising and Promotion Pyramid Branding Concerns in High-Tech Markets New Product PreAnnouncements Using Marketing Communications to Manage Customer Relationships © 2000 Jakki Mohr

Advertising and Promotion Pyramid © 2000 Jakki Mohr

Media Advertising Select media vehicle Select message strategy Audience overlaps with firm’s target market Cost efficiency (CPM) “Fit” of editorial climate with brand message Size/Frequency of ads SRDS, CMP Media, media kits Select message strategy Break through clutter/gain attention Reinforce brand message © 2000 Jakki Mohr

Public Relations/Publicity Event sponsorship Charitable events/cause marketing Corporate advertising Press conferences, press releases Product announcements Positive image is vital, yet hard to quantify © 2000 Jakki Mohr

Direct Mail Effectiveness a function of: List quality Appropriate mailing size/frequency Message strategy © 2000 Jakki Mohr

Trade Shows To launch new products, reach sales prospects, compare competitor’s products Expense vs. return Attract traffic to booth Follow-up on leads © 2000 Jakki Mohr

Catalogs, Literature, Brochures Build on earlier communications Showcase key benefits in terms of Relative advantage Compatibility Scalability Service/warranty Total cost of ownership © 2000 Jakki Mohr

Telemarketing Outbound Inbound Way to manage customer relationships efficiently © 2000 Jakki Mohr

Personal Selling Effectiveness of this most expensive tool a function of foundation established by lower-level tools in the pyramid. Premise of the pyramid: Use the more cost-efficient/wider-reach tools at the base of the pyramid to establish foundation with prospects and to more effectively leverage more expensive/narrower reach tools. © 2000 Jakki Mohr

Internet Can be used at all levels of the pyramid Focused attention in Chapter 11 © 2000 Jakki Mohr

Branding in High-Tech Markets Advantages of strong brands to firms: Command premium prices Have credibility which can be leveraged in new markets Can lower customer acquisition costs Reduces risks with new product introductions Advantages of strong brands to customers: Signal of a safe choice: trustworthy and long-lived Decision-making heuristic © 2000 Jakki Mohr

Branding in High-Tech Markets Short product life cycle and customer fear, uncertainty, and doubt put a premium on having strong brand names. © 2000 Jakki Mohr

Strategies to Develop Strong Brands Supply steady stream of innovations that deliver value Emphasize traditional media advertising and PR tools rather than sales promotion “Influence the influencers” to credibly stimulate word-of-mouth via opinion leaders © 2000 Jakki Mohr

Strategies to Develop Strong Brands (Cont.) 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 in co-branding Effectively use the Internet © 2000 Jakki Mohr

The Internet as a Branding Tool Use when Internet is part-and-parcel of the company’s value proposition Accounts for the “viewer’s” active role (vs. passive viewing) Focuses on the customer experience at the Web site “Rational branding:” emotion + meaningful experience © 2000 Jakki Mohr

Branding Strategies for On-Line Companies Brands very important where switching is easy. Make customer experience meaningful Understand importance of speed and response time Deliver on their promise © 2000 Jakki Mohr

Ingredient Branding Suppliers OEM/Manufacturers Dealers -business use Customers -personal consumption -business use -raw materials -components -production equipment -services © 2000 Jakki Mohr

Ingredient Branding Stimulates “derived demand” Rely on cooperative advertising © 2000 Jakki Mohr

Pros/Cons of Ingredient Branding © 2000 Jakki Mohr

Pros/Cons of New Product Preannouncements © 2000 Jakki Mohr

Tactical Considerations in PreAnnouncements Timing: Function of the innovativeness, complexity, customer buying considerations, timing of product design decisions © 2000 Jakki Mohr

Timing of PreAnnouncements Use EARLIER preannouncements when: Product complements are needed Products are novel or complex (engender buyer uncertainty) Long buying process High buyer switching costs © 2000 Jakki Mohr

Timing of PreAnnouncements Use LATER preannouncements when: Need to keep development information 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 © 2000 Jakki Mohr

Tactical Considerations in PreAnnouncements Nature and Amount of Information Reveal product attributes? Reveal how product works? Reveal how it compares to existing products? Reveal pricing/delivery? © 2000 Jakki Mohr

Tactical Considerations in PreAnnouncements Communication Vehicles Trade shows Advertisements Press releases/press conferences © 2000 Jakki Mohr

Tactical Considerations in PreAnnouncements Target audiences Customers Competitors Distributors Partners Shareholders Employees Industry Experts © 2000 Jakki Mohr

PreAnnouncements Useful When: Firm has low market dominance Faces lower cannibalization risks Faces fewer antitrust concerns Firm believes competitors not likely to respond Ex: specialized technology/patent protection To advance the customer decision process Product requires customer learning or customers face switching costs © 2000 Jakki Mohr

Avoid PreAnnouncements When Cannibalization might be high Firm has strong portfolio of products Customers would postpone current purchases Firm is large and might be accused of predatory intent © 2000 Jakki Mohr

Customer Relationship Marketing Use database marketing to categorize customers on volume and profitability and/or on share of customer purchases and consumption level Rely on customer relationship management software Tailor marketing communications appropriately © 2000 Jakki Mohr

Categories of Customers Low share of purchases/Low consumption in category Absent compelling reason, avoid the customers “The Strategic Power of Saying No” Risk of alienating wrong customers © 2000 Jakki Mohr

Categories of Customers (Cont.) High share of purchases/Low consumption in category Reasonably profitable, but not compelling Sustain with occasional offers Low share of purchases/High consumption in category Major opportunity Grow firm’s share of business Aggressive marketing © 2000 Jakki Mohr

Categories of Customers (Cont.) High share of purchases/High consumption in category Bread and butter customers Attractive to competitors! Don’t be complacent © 2000 Jakki Mohr

Other Strategies for CRM Capture the customer Event oriented prospecting Extended organization Manage by wire Mass customization Yield management © 2000 Jakki Mohr

CRM Software Front office software to: Automate the sales force Track accounts and prospects Automate call centers Create customer profiles Provide scripts Cross-sell Coordinate communication © 2000 Jakki Mohr

CRM Software (Cont.) Analyze customer purchase history Design targeted campaigns Measure results Develop Web interface Product catalog, shopping cart, credit-card purchases Web configurator, for custom products Web analysis of cookies © 2000 Jakki Mohr