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MPS all lecture notes

Marketing Planning and Strategy (University of Technology Sydney)

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MPS Exam Notes

Lec 2 – Strategic marketing planning

Marketing strategy
Decisions on:
- Compete in which markets
- Whom you target
- How to differentiate/ innovate
- Align 4 P’s

Marketing planning
- Situation analysis
- Strategy formulation
- Goals and objectives
- Implantation
- Evaluation and control

What marketing planning does

Vigilant market learning
- Sensitive to early market signals for change
Align organization to the market
- Strategy congruent with market changes and internal resources
- Assign responsivity and gauge progress towards goals

Strategic Business Unit (SBU):

Focus on finances
- Investment, debt, expenses
Financial metrics/ profitability
- ROA, ROE
Coordination across functions

Marketing function

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Focus on market segments and customers

Marketing metrics
- Revenue, market share, satisfaction, retention, NPS
Synergy and alignment across 4 P’s

Customer focused planning

Planning focus on:
- Gather and use customer data
- Understand customer loyalty
- Prevent customer attrition
- Develop long term relationships

Balanced performance scorecard – 4 pillars

What scorecard does?

- Translate strategies into daily operational terms
- Align functional units and process with strategies
- Make strategy everyone’s everyday job

Situation analysis
- In depth analysis of firms internal and external environments
Marketing plan
- Written document providing the blue print of a firms marketing activities
- Explains how the organization will achieve its goals and objectives
- Serves as a road map for implementing marketing strategies
- Informs employees about their roles and functions
- Provides specifis regarding allocation of resources and marketing activities

The strategic planning process

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Elements of mission statement

Five basic questions to be answered
- Who are we?
- Who are our customers?
- What is our operating philosophy?
- What are our core competencies or competitive advantages?
- What are our responsibilities with respect to being a good steward of our human,
financial and environmental resources?

Strategic planning process: Corporate or business unit strategy

Is a central plan to:
- Utilize and integrate organizations resources
- Carry out organizations mission
- Achieve desired goals and objectives
- Determines the nature and future direction of each business unit
- Leverages the firm’s capabilities that give it a competitive or differential advantage
- Firms should be capable of convincing customers of the superiority of their
advantages

Functional strategy
- Integrates efforts focused on achieving the areas stated objectives
Requirements:
- Fits the needs and purposes of the functional area
- Realistic with available resources and environment
- Consistent with organizations mission, goals and objectives
Should be evaluated to determine its effect on sales, costs, image and profitability

Implementation
- Involves activities that execute the functional are strategy
- All functional plans have two target markets
- External market: customers, investors, suppliers and society
- Internal market: employees, managers and executives

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- Firms must rely on their internal market for a functional strategy to be implemented
successfully

Strategic planning process: evaluation and control

- Designed to keep planned activities on target with goals and objectives
- Coordination among functional areas can be maintained with an open line of
communication
- Serve as an ending and a beginning
- Occurs after a strategy has been implemented
- Serves as the beginning point for planning in the next cycle

Structure of a marketing plan

- SWOT analysis
- Analysis of SWOT
- Developing competitive advantages
- Developing a strategic focus
- Marketing goals and objectives
- Marketing strategy
- Primary and secondary target market
- Overall branding, product and pricing strategy
- Distribution/ supply chain strategy
- Integrated marketing communication strategy
- Marketing implementation
- Structural issues
- Tactical marketing activities
- Evaluation and control
- Formal and informal controls
- Implementation schedule and timeline
- Marketing audits

Maintaining customer focus and balance in strategic planning

- Focus and content of strategic plans have changed over the last 2 decades
- Renewed emphasis on the customer
- Advent of balanced strategic planning

Customer focused planning

- Prioritizes customer needs and wants
- Focus on long term relationship

Market oriented firms:

- Generate, disseminate and respond to market information
- Focus on understanding customers in ways that enhance sustainable competitive
advantage
- Instill a corporate culture that places customers at the top of the organizational
hierarchy
- Focus on cooperative efforts that place market needs ahead of competitive interests

Balanced strategic planning

- Traditional planning approaches fail to capture value created by firms intangible
assets
Align four complementary perspectives
- Financial
- Customer
- Internal process
- Learning and growth

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Lec 3 + 4 – External and internal analysis

Macro environment – PEST
Political, economic, social and technological factors

Political and regulatory issues

Politics and policies
- Employee welfare
- Intellectual property
- Anti- trust
- Tariffs
Regulations
- Impact on costs
- Pollution control
- Red tape
Constraint on marketing activities
- Consumer privacy
- Food label, FDA

Economic factors
Most influential factors on company profits
Economic conditions
- Government spending
- Interest rate, taxes
- u/e rate
Consumer spending
- Consumer confidence
- Wage growth
- Assets appreciation
- Australian consumption driven by property boom

Sociocultural factors
Sociocultural factors are those social and cultural influences that cause changes in attitudes,
beliefs, norms, customs and lifestyles
Affect what, where, how and when consumers buy

Sociocultural trends
- Aging population
- Online shopping
- Social media addiction
- Health consciousness
- Experiential consumption

Technological factors
Examples of companies that failed to sense and respond to disruptive changes

Self-disruption
Why successful firms often fail to respond to market changes?
Successful firms continue to do what they are good at
Innovator dilemma
- New market is small
- Cannibalization
- Not align with success formula
- Technological learning is path dependent

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Porter 5 forces

Competition intensity
Intensity of competition can be driven by
- # of competitors
- Stagnated market
- Low product differentiation
- Price promotions a common tactic
- Price comparison on internet
- High fixed costs of operations

Stages of competitor analysis

Analyzing customer power

Bargaining power of customer group is driven by
- # of buyers, available
- Size of each buyer to the seller
- Level of product customization
- Buyers have low switching costs

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- Price sensitivity of buyers

Customer analysis
Current/ potential customers
- Who what where when and why
- Decode core needs your products satisfy
- Anticipate change in preference
- Uncover latent needs
Data source: surveys, focus, groups, ethnographic study, panel data…

Implications from Porter

Competitive forces squeeze profits
Adopt game-changing strategies
- Find untapped segment
- Differentiation
- Anticipate changes
- Disruptive model

SWOT and competitive advantage

Key industrial success factors
In each industry, you must identify specific assets and capabilities that enable a firm to
compete, related to…
- What customers wants
- How firms compete
Can you identify KSFs for following markets?
- FMCG
- Online retail store
- Airline

SWOT analysis
- Input for marketing planning
- Integrate external and internal analysis
- Grounded in data and evidence
- Assessments must be made from customers’ perspective
- Identify gaps in capabilities
- Caveat: prioritize strategic goals

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Implications are the key

Common issues in SWOT

Directives for a productive SWOT

- One SWOT for one product/ market
- Search extensively for competition
- Evaluate from customers’ perspective
- Assess what you can do for customers
- Diagnose root causes for weakness
- External issues dictate changes in internal issues

How to identify market opportunities

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Opportunities are real only when firms can take advantage of them
- Does your product solve a critical and urgent customer problem?
- Is the market undeserved
- Are you able to serve the market in a more efficient way?
- Is your product friction free?

Strength and weakness

Are these strengths/ competencies
- Large cash reserve
- Holding a lot of patents
- Highly skilled employees
- Own a comprehensive customer database
Strengths are skills, knowledge and capabilities that enable a company outperform rivals

Knowing the weakness isn’t enough

- No revenue growth
- Profits are shrinking
- Fail to reach marketing objectives
- Customer satisfaction score is low
- High customer defection
What are root causes of these weaknesses?

Developing competitive advantage

Competitive advantage arises from
- Firms own unique and valuable capabilities
- Operational excellence e.g. Toyota, Walmart
- Product leadership/ R&D e.g. Tesla, Apple
- Customer intimacy e.g. Starbucks, Amazon
- User network e.g. Microsoft, Facebook

Sustainable competitive advantage

Based on intangible resources
- Patent, knowledge, reputation, process
- Networks
- Non-imitable, not substitutable by other resources

From the textbook

Issues to be considered in a situation analysis

The internal environment
- Review of current objectives, strategy, and performance
- Availability of resources
- Organizational structure and culture
The customer environment
- Who are our current and potential customers
- What do customers do with our products
- When do customers select our products
- Why and how do customers select our products
- Why do potential customers not purchase our products?

The external environment

- Competition
- Economic growth and stability
- Political trends
- Legal and regulatory issues

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- Technological advancements

Data is not the same as information

Data – collection of numbers or facts that have the potential to provide information
Information – data transformed or combined with other data in a manner that makes them
useful to decision makers

Benefits of analysis must outweigh costs

- Value of analysis depends on the quality of resulting marketing plans
- Cost of acquiring data is easily determined
- Benefit of improved decision
is harder to estimate

Analyzing the internal environment

Involves a review of:
- Current marketing objectives,
strategy and performance
- Consistency of marketing
goals with corporate goals
Current and anticipated
organizational resources
- Current state of organizational
resources
- Measures required to use
resources more effectively

Basic types of competition

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Stages of competitive analysis

Collecting marketing data and information

Secondary information sources
- Internal data sources
- Government sources
- Book and periodical sources
- Commercial data sources
Primary data collection
- Direct observation, focus groups, surveys, and experiments

Problems in data collection

- Incomplete or inaccurate assessment of the situation that the data shoud address
- Severe information overload
- Time and expense of collecting environmental data
- Organizing vast amount of data and information collected during the situation
analylsis

Competitive advantage
- Can arise from many internal and external sources
- Refer to real differences between competing firms
- Can be based on perception rather than reality
- Should possess a specific benefit for customers to be a value to firms
Based on one of the following strategies:
- Operational excellence
- Product leadership
- Customer intimacy

Sources of competitive advantage

- Relational advantages
- Legal advantages
- Organizational advantages
- Human resource advantages
- Product advantages
- Pricing advantages

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- Promotion advantages
- Distribution advantages

Establishing a strategic focus

Directions for strategic efforts
- Aggressive (internal strengths/ external opportunities)
- Diversification internal strengths/ external threats
- Turnaround internal weakens/ external opportunities
- Defensive internal weakness/ external threats

The four actions framework

Marketing goals
- Statement of broad, desired accomplishments
- Expressed in general terms and do not contain specifics
- Gives direction to a firm’s growth and priorities to be used for evaluating and making
decisions
- Should be attainable, consistent, comprehensive, and intangible

Marketing objectives
- Specific, quantitative benchmarks
- Measures progress toward the achievement of marketing goals
- High degree of specificity and differentiates marketing goals from objectives
- Characteristics: attainability, continuity, time frame and assignment of responsibility

Lec 5 – Customers, segmentation and targeting

Characteristics of business markets
In comparison with consumer markets:
- Higher transaction value
- Complex buying process
- Greater inertia to switch vendors
- Mutual dependence over time

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Relationship value in B2B

Every relationship
entails investments
Relationship specific investments
Tangible
- Finance/ loan/ equity
- Customised equipment
Intangible
- HR
- Customised business process
Consumer buying process

Some strategies for marketers

- Enable customers to reach you any time any where
- Change consumer’s choice criteria to your favour

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- Minimise risk perceptions

- Friction free purchase and repurchase experience
- Reassure customers after purchase
Segmentation
Market – people or organizations have the need for a product/ product category and are
willing to pay for it
- Divide a market into a number of relatively homogenous groups based on a set of
criteria
- Based on a good understanding of customers motivation, purchase and consuming
behaviour

Criteria for successful segmentation

Effective segmentation produce segments that are:
- Identifiable
- Substantial
- Accessible
- Responsive
- Viable
Avoid ethically sensitive segments
Common segmentation variables used in consumer markets

Choose the right segment variable

Demographic based
- Easy to identify and reach out
- Loosely link to customer profitability
- Buying and consuming behaviour vary within segment
- Marketing program across 4 P’s may not align
Behaviour based
- Hard to identify targets and reach out
- Closely linked to customer profitability
- Buying and consuming behaviour more similar
- Marketing programs more effective

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2 distinct course of actions

Mass marketing
- Undifferentiated product
- Work best when entire market has similar needs
- Efiicent production and lower marketing costs
- Vulnerable to competitors targeting specific segments

Differentiated marketing
- Divide a market into segments of homogenous, well defined needs/ behvaiours
- Differentiated offers targeting multiple segments
- Higher production and marketing costs
- Hard to keep a coherent brand image

Identifying target segments

Choose target segments
- Evaluate segment size, growth, profits, level of competition, unmet needs
- Alignment between offer and needs
- Product positioning vis a vis competitors

Profiling target segment

Not enough to identify target segments using a few simple criteria
- Which media do they watch
- Where do they shop
- What other brands are they using?

Consider markets as individuals as institutions or a group of people: have similar needs that
can be met by a specific
Aim: to identify specific customer needs and design marketing programs to satisfy those
needs
Buyer behaviour in consumer markets
- Often irrational and unpredictable
- Progresses through five stages
- Issues in the buying process

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The consumer buying process: Need recognition

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Marketing activities can stimulate a desire for information

- Passive information search
- Active information search
Sources of information
- Internal sources – personal experience and memories
- External sources – advertising, websites, packaging, display and salespeople
Amount of time, effort and expense dedicated to information search depends on:
- Degree of risk involved in the purchase
- Amount of expertise with the product category
- Actual cost of the search
Evoked set:
- Narrowing down potential product choices to a few products that can meet consumer
needs
- Represents the outcome of information search

Evaluation of alternatives
Consumer evaluate products as bundles of attributes
- Each attribute has a different level of importance
- Priority of choice criteria can change during the process
Important considerations
- Products must be in the evoked set
- Consumers choice criteria must be understood

Purchase decision
Unforeseen circumstances can interfere with consumer’s decision to buy a product
Marketers overcome these factors by:
- Reducing the risk of purchase
- Making purchase easy
- Finding creative solutions to unexpected problems

Post purchase evaluation

Connection between buying process and developing long term customer relationships
Four possible outcomes
- Delight
- Satisfaction
- Dissatisfaction
- Cognitive dissonance
High likelihood of experiencing dissatisfaction or cognitive dissonance when:
- $ value of purchase increases
- Opportunity costs of rejected alternatives are high
- Purchase decision is emotionally involving

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Factors affecting the consumer buying process

Common situational influences

- Physical and spatial influences
- Social and interpersonal influences
- Temporal influences
- Purchase task or product usage influences
- Consumer dispositional influences

Buyer behaviour in business markets

Four types of business markets
- Commercial
- Reseller
- Government
- Institutional
Unique characteristics of business markets
- Buying centre
- Hard and soft costs
- Reciprocity
- Mutual dependence

The business buying process

- Problem recognition
- Develop product specifications
- Vendor identification and qualification
- Solicitation of proposals or bids
- Vendor selection
- Order processing
- Vendor performance review

Factors influencing the buying process

- Environmental conditions
- Organizational factors
- Individual factors

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Niche marketing
Efforts are focused on one small well defined market segment or niche
- Possess unique and specific set of needs
- Customers will pay high prices for products that match specialized needs
- Firms should understand and meet the needs of target customers completely in order
to earn a substantial share of the market segment

Permission marketing
Customers choose to become part of firms target market
Key advantage – customers are already interested in the product offering
Common segmentation variables used in consumer markets

Lec 6 – Programs and branding

Product and offering

Supermarkets

Point of differentiation
Augmented offer
- Attractive loyalty programs
- Gourmet items
- Coffe corners and take away
- Local farm produce
- Private labels

Expected offer
- Accurate price tags
- Long opening hours
- Multiple cashiers
- Self service kiosks
- Multiple payment methods
- Discounted items

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Core offer
- Wide scope of merchandise
- Spacious layout

Differentiation
- Create actual and perceptual difference on offerings
- Tied to tangible or intangible customer value
- At product brand, or company levels

Bases of differentiation
- Innovative product features
- Product quality
- Price
- Customer service
- Brand image

Market positioning
Create a mental representation of product/ brand in terms of differentiating attributes in the
minds of customers
- Customers perspective is critical
Relative position
- Product/ brand position vis – a –vis competition
- Discovered via two tools
- Perceptual mapping
- Strategy canvas

Product line extension

Line extensions occur when a company introduces additional items in the same product
category under the same brand name such as new flavors, forms, colors, added ingredients,
package sizes

Advantages – eco of scale, sales and distribution efficiency, ride on brand reputation, micro-
targeting
Disadvantages – irrelevant products with trivial benefits, confusion to customers, dilution of
brand image, spill over negative WOM, inefficiency in marketing

Characteristics of strong brands

- Heritage
- Awareness
- Consistency
- Emotional connection

Advantages of strong brands

- Attract first time buyers by reducing consumer perceived risk
- Differentiation
- Promotion efficiency
- Buffer against adversity

What is brand equity?

Brand equity is the value of the brand to the firm, or the marketing and financial value
associated with a brands position in the marketplace
- Driven by positive customer response

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Branding strategy
Selecting the right combination of name, symbol, term, or design that identifies a product

Parts of a brand
- Brand name
- Brand mark
Critical to product identification and the key factor in differentiating a product from its
competition
Potential brand attributes

Strategic issues in branding

Corporate branding
- Considered as important as product related branding
- Aimed at a variety of stakeholders
- Designed to build and enhance firm’s reputation
- Rebuilds firm’s reputation when unfavorable events occur

Basic branding decisions

Manufacturer vs. private label brands
- Private label brands are owned by the merchants that sell them

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Individual vs family branding

- Individual branding – when a firm gives each of its product offerings a different brand
name
- Family branding – when a firm uses the same name or part of the brand name on
every product

Lec 7 – Customer Relationship Management

Customer satisfactions
Satisfaction is customer’s subjective evaluation of consumption experience

Customer relationships
Firms need to build customer relationships in todays competitive environment due to:
- Abundant choices
- Consumers less responsive to mass media
- Consumers access to product info via WOM
- Consumer preference is individualized

Benefits of loyal customers

Loyal customers tend to:
- Buy more over time
- Less likely to defect
- Greater acceptance of new products/ brand extensions
- Spread WOM
- Reveal personal data

Customer loyalty - Customer loyalty is both an attitudinal and behavioral tendency to favor
one brand over all others, whether due to satisfaction with the product or service, its
convenience or performance, or simply familiarity and comfort with the brand.

Repeated purchase is not loyalty

A customer may repeat purchasing from the same vendor as:
- Contract locked in
- Habitual behavior
- Currently low cost provider

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Customer loyalty in B2C

Behavioral loyalty – repeated purchases

Attitudinal loyalty
- Repeated purchases
- Strong beliefs and feelings
- Emotional attachment
- Trust and commitment

Asses loyalty in B2B

- Hold ownership of supplier
- Mutual adaption and collaboration
- Pay price premium and offer referral business
- Purchase wider scope of products and resists competitors offers
- Intend to develop a long term relationship

Broad view of CRM

Involves:
- Generate and act on insights from customer data
- Manage different stages of customer relationships
- Aligns business processes with customer strategies to build customer loyalty and
increase profits over time

Key stages of tactical CRM

Identify  differentiate  interact across touchpoints  customize service and offers

Framework

Customer loyalty in digital era

Understand how each virtual and physical touch points affect stages of consumer journeys
- Transparent platform for customer sharing feedback

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- Interact with customers through multiple communication, physical and social media
platforms
- Leverage user generated content to promote brands
- Provide quick service via social media
- Cultivate brand communities and co-creation

Brand community

Customer relationship management

Business philosophy aimed at defining and increasing customer value in ways that promote
brand loyalty
- Aimed at retaining the right customers
CRM stakeholders
- Customers, employees, supply chain partners, and external stakeholders
Requires firms to shift perspective from acquiring customers to retaining clients

Developing relationships in consumer markets

Goal – move consumer through levels of increasing relationship intensity
- Customers will reach a point where they become sponsors for firms and their
products
Focus on building firms share of customer, which involves:
- Fully serving current customer needs instead of acquiring new customers
- Encouraging more business with current customers
- Realizing that not all customers have equal value to a firm

Developing relationships in business markets

Goal – move buyers through increasing levels of relationship intensity
- Provides relational capital advantage by creating win-win situations
- More engaging and complex than CRM in consumer markets
- Fewer options to choose from
- Higher financial risks

Changes in business relationships

Change in buyers and sellers roles

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- Shifts from competitive negotiation to collaboration

Increase in sole sourcing
- Create solutions at lower costs
Increase in global sourcing
- Easier to find partners that match specific needs

Quality and customer relationships

Quality – relative term referring to degree of superiority of firms g/s
Core product
- Firms justification for existence
Supplemental products
- Extra features added to enhance total product experience, but not crucial to product
function
Symbolic and experimental attributes
- Usually based on image prestige or branding

Delivering superior quality

Most firms struggle with improving quality
- Customers have very high expectations
- Most product compete in mature markets
- Keys to improving quality
- Understand customers’ expectations
- Translate expectations into quality standards
- Uphold quality standards
- Avoid promising things which cannot be fulfilled

Understanding role of value

Subjective evaluation of benefits relative to costs
- Helps determine worth of a firm’s product offering relative to other product offerings
Used to guide marketing strategy
- Balances the five types of utility
- Includes quality in a broader scope
- Accounts for every marketing program element
- Explicitly considers customer perceptions
- Means of organizing internal aspects of marketing strategies

Value formula

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Lec 8 – Supply chain partnership

A simple supply chain
A supply chain is a system of org, people, activities, information, and resources involved in
moving a product from supplier to customer

Supply chain performance

Link between SCM and Marketing

How is SCM related to marketing?
- Create differentiable products
- Comply with regulatory requirements
- Create convenience value to customers
- Bear lower operating costs

Outsourcing
Employs a partner firm to carry out an org functions
Outsourcing deicisons are driven by
- Costs savings
- Lack of knowledge and skills
- Competitiveness concerns

Outsourcing views
Non critical process/ function  Outsource
- Cost savings/ efficiency
- Supplier technological advance
- Flexibility at expanding and shrinking
- Strengthen capital flow
Critical process/ function  in house
- Tighter control
- Operational excellence/ greater customer services
- Prevent technology leak

Risks of outsourcing
- Overdependence
- Internal skills recede
- Hidden costs
- Layoff of staff/ labour union intervention
- Unforeseeable cultural management, or political conflicts for offshoring

Supplier overdependence on customer

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Supplier may also be concerned with overdependence on a single customer

Challenges in buyer supplier relationship

Agency problems
- Principal cannot assess agent’s ability prior to the contract
- Principal is unable to evaluate agents’ performance upon completion of tasks
- Agent puts less than desirable level of effort into work
Moral hazard
- Agency acts for its own interest (risky decisions, provide misleading info) that hurt the
principals interest
Implications
- Principal must design a contract (incentive mechanism) to align his and agents’
interest

Organizing interfirm partnerships

- Interfirm relationships are motivated by accessing critical resources
- Formalized interfirm relationships: joint ventures & alliances, outsourcing &
franchising

Examples of alliances/ JV
- Star alliance: airline services operation (code sharing, ground service, mileage)
- Microsoft – HP: marketing (hardware and software applications)
- Renault – Nissan: Production (shared production, joint purchasing)
- Volvo – Geely: product development
- Google – Samsung: technology co licensing

Motives for alliance

Aim to achieve strategic goals:
- Leverage partner resources and knowledge
- Risk reduction
- Set industrial standards
- Overcome Govt mandated trade barriers
- Secure sourcing from suppliers

Lec 9 – Culture and Employees

Service quality/ value
- Reliability – deliver the promise
- Assurance – convey credibility
- Tangibles – physical facilities
- Empathy – emotional connection
- Responsiveness – prompt reactions to customer requests

Critical employee skills for services

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Customer satisfaction
Customers satisfaction is customers’ subjective evaluation of their consumption experience
A function of:
- Service quality/ value
- Interactions with employees
- Pre-purchase expectations
- Comparison with what other customers receive

Customer life time value

CLV
- Net present value of profits derived form a customer’s purchase over tenue
- Components: revenue, margin and acquisition costs
Implications:
- Resource allocation for CRM efforts
- Bear in mind a customer of low CLV may be a loyal customer of your competitor
Challenges in estimation
- Past purchases dont reflect futures purchases
- Estimate serving costs
- Estimate the tenure/ defection timing
- Customers changing life events
- Customers may create indirect value

Customer equity
An aggregate of a firms individual customers CLV
Return on customer equity (ROC)
- Profits derived from the customers plus
- Increase in customer equity across time
- Similar to the concepts of dividen + increase in stock price
- Reflects impact of short term & long term marketing activites

Improve customer equity

- Acquire new customers with higher potential CLV
- Reduce serving cost per existing customer
- Sell customers more
- Increase customer referrals

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- Reduce customer attrition

Manage the mix of customers

Culture and services

What kinds of organizational practices and culture will lead to exceptional services

Customer centric practices

- Organization are structured around customer segments/ needs instead of products or
functions
- Always look out for customer feedback and improve organizational proceses based
on such feedback
- Employees performance metrics are tied to services quality, customer satisfaction
and retention
- Employees are trained and empowered to bear the requisite skills and autonomy to
serve customers
- Build a customer centric and hire employees who can fit in

Organizational culture

Drivers for internal service quality

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Lec 10 – Campaign Effectiveness

Marketing research
- Information to aid decision making
Advertising research
- A specialized form of marketing research conducted to improve the efficiency of
advertising

The research process

Step 1: Definition of the problem
Step 2: Research design formulation
Step 3: Field work or data collection
Step 4: Data preparation and analysis
Step 5: Report preparation and presentation

Industry currency
A given source is widely regarded as the most authoritative for a particular type of research.
E.g. TV usage: OZTAM Australia, Radio usage – Nielson

Measuring effectiveness
Reasons to measure effectiveness
- Avoid costly mistakes
- Evaluate alternative strategies
- Increase efficiency of advertising in general
- Determining if objectives are achieved

Reasons not to measure effectiveness

- Cost of measurement
- Problems withn research
- Disagreement about what to test
- Creative objectives
- Lack of time

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Testing factors
What to test
- Source factors
- Message variables
- Media strategies
- Budget decisions
When to test
- Pretesting
- Posttesting
Where to test
- Laboratory tests
- Field tests

Testing methods
Pretesting laboratory methods
- Consumer juries
- Portfolio tests
- Psychological measures
- Theater tests
- Rough tests
- Concept tests
- Reliability tests
Field methods
- Dummy ad vehicles
- On air tests

Posttesting
Field methods
- Recall tests
- Association measures
- Single source systems
- Inquiry tests
- Recognition tests
- Tracking studies

The major international advertising decisions

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International environment

Economic environment
- Stage of economic development
- Economic infrastructure
- Standard of living
- Per capita income
- Distribution of wealth
- Currency stability
- Exchange rate

Cultural environment
- Language
- Lifestyles
- Values
- Norms and customs
- Ethics and moral standards
- Taboos

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Demographic environment
- Size of population
- Number of households
- Household size
- Age distribution

Political/ legal environment

- Govt policies
- Laws and regulations
- Political stability
- Nationalism

Adv of global marketing

- Eco of scale in production & distribution
- Lower costs in planning, control, advertising and production
- Ability to exploit good ideas worldwide
- Ability to introduce porducts quickly, worldwide
- Consistent international brand, company identity
- Simplification of coordination and control

When is globalization appropriate

- Brands can be adopted for a visual appeal, avoiding the problems of trying to
translate words into dozens of languages
- Brands that are promoted with image campaigns that play to universal appeals such
as sex or wealth
- High tech products and new products coming to the world for the first time, not
steeped in cultural heritage of the country
- Products with a nationalistic flavor if the country has the reputation in the field
- Products that appeal to a market segment with universally similar tastes, interests,
needs, and values

International advertising
- The U.S. accounts for over half of world advertising expenditures
- Advertising expenditures outside the U.S. are growing more rapidly than inside
- Every country in the world has advertising of one form or another
- The more affluent the country, the more is spent on advertising

International ad agencies
- Many large, American general agencies operate internationally
- Foreign billings account for over a third of total billings by the top 10 American
agencies
- Large multinational companies often deal with large, international agencies
- Overseas offices are usually staffed with multilingual, multinational personnel

Foreign local agencies

- Staffed with local talent who understand local attitudes, culture, media and conditions
- Especially effective for launching consumer products in a single, new geographic
area
- Poses some problems if a product is to be launched in multiple, local, foreign
markets

Advertising ethics
Why ethical advertising?
- Not to hurt sentiments of the society
- Maintain a code of conduct

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- Avoid misrepresentation
- Adhere with social norms
- Social acceptance
- Helps in image building

Advertising
Proponents arguments
- Provides info to consumers
- Encourages higher standard of living
- Promotes competition
- Helps new firms enter a market
- Creates jobs
Critics arguments
- More propaganda than information
- Creates consumer needs and faults
- Promotes materialism, insecurity, and greed

Ethical issues
- Untruthful or deceptive
- Taste and decency
- Bait and switch
- Sexual appeals
- Advertising to children
- Sterotyping

Self regulation of advertising

Issues attracting complaint

- Portrayal of people
- Portrayal of sex/ sexuality
- Violence
- Health and safety
- Use of language
- Concern of children

Media attracting complaint

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- TV
- Print
- Outdoor
- Radio
- Cinema
- Pay TV
- Multimedia

David Ogilvy’s golden rule

Do not run ads that you wouldn’t want your mother to see

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