Chapter 11

Campaign Management
 Topics Discussed

• Campaign Management Process

• Campaign Planning and Development

• Campaign Execution

• Analysis & Control

• Campaign Feedback
 Campaign

• A series of interconnected promotional efforts designed to achieve

precise marketing goals

• Composed of one or more promotions, each of which is an initiative

or a device designed to attract the customers’ interest

• Aimed at prospects or existing customers

• Usually undertaken within a defined timeframe

 Campaign Management Stages
• Planning:

– Strategic process by which decisions are taken

– Definition of the purposes and objectives of the campaign

• Development:

– Tactical process that takes care of creating the offer, choosing the
creating support and design, choosing the media and selecting the
customer names

• Execution:

– Operational process of running the campaign in the media chosen and

controlling all related aspects

• Analysis:
 Campaign Management Process
Campaign Management

Campaign Planning Campaign Analysis

& Development Execution & Control

Setting objectives & Implementation & Measuring

Strategies Coordination campaign results

Identifying customer Monitoring Response

segments & fine-tuning Analysis

Developing commu- Profile

nication strategy Analysis

Developing the offer

Campaign Budget

Testing
 Campaign Planning and Development
• Setting objectives and strategies

– ( Who do you want to target )

– Categories:

• Market penetration (increase usage or market share)

• Market extension (find new user groups or enter new segments)
• Product development (new products or services)
• Diversification (find new markets and products, discover new strategies)

– Examination of different marketing strategies in place:

• Product strategy
• Pricing strategy
• Distribution strategy
• Promotion strategy
 Defining the Campaign Strategy

• Who to target?

– Retention strategy: focusing on existing customers

– Acquisition strategy: concentrating on getting new customers

– Mixed strategy between retention-acquisition: targeting existing and

new customers at the same time

– Ideally the company should target its most profitable customers (often
done through LTV and/or RFM analysis)
 Retention Strategy
• Develop loyalty from the existing customers, via a
strong relationship or via superior quality or service

• Develop tailor made products for the needs of existing customer

profiles

• Sell additional products to existing customers (cross-selling)

• Sell a superior product (with more features or additional services) to

customers who already use similar products (up-selling)

• Merchandise different brands from different categories to the same

customer (cross-merchandising)
 Customer Acquisition Strategy

• If company wants to sell the same product to new customers: target

“prospects” based on the profile and behavior model of existing
customers

• If company wants to offer different products to new customers:

develop new markets
Customer Retention and Acquisition Strategies

Allocate resources between existing and new customers

Retention Strategy: Acquisition Strategy:

Keep existing customers Attract new customers
Market decisions:
Market decisions:
-Segment your customers by -Target the customers based on
lifetime value
the model of existing customers
-Retain your best customers
-Develop new markets
-Develop one-to-one marketing
Product decisions:
Product/Service decisions: -Highlight your price/ product offer
-Develop relationship marketing -Have a clear positioning on the
-Retain your clients with superior market
quality service -Develop attractive branding
-Develop tailor-made products -Give incentives to add initial
-Cross-sell and up-sell value to the new customer
-Cross-merchandise
 Developing the Communication Strategy

• Marketing communications (marcom): Targeted interactions between

company and its customers and prospects, using one or more media

• Can use a single approach (e.g. a direct mail) or combine several

approaches (e.g. direct mail with advertising in television, radio and
newspapers)

• Integrated marketing communications (IMC): management and

organization of all marketing communication tools (media, messages,
promotions and channels)

• CRM database system: stores information about customer and

prospect preferences, allows firm to focus marketing activities toward
specific targets - effective use of IMC
 Retention and Acquisition Media
Retention Media Acquisition Media
Direct Mail: TV: - Direct response TV (DRTV)
Mailings: - TV spots
- Single-product - Home shopping channels
- Multi-product - Digital TV
- Miscellaneous Radio: - Direct response radio (DRR)
- - Birthday cards - Radio spots
- Thank-you notes
Telemarketing:
- Invitations
- Outbound
Enclosures:
- Inbound
- Statements
Print Media :
- Parcels
- Press / newspapers
- Magazines
Telemarketing:
- Insert
- Outbound
Direct mail :
- Inbound
- Mailings
Catalogues
- Inserts
Internet
Newspapers / bulletins
Exhibitions / field marketing
Minicase: Pro-Mark- Example of Media-mix for an
Acquisition and Retention Strategy
• $10-million drumstick maker in Houston; developed database with info. on
end-users by pursuing print media strategy in different specialized magazines

• Advertising/marketing campaign strategies:

– Recruiting test-marketers:
• Ad offering free product samples in return for customer feedback
• Respondents' names entered into a database, each received a catalog with
sample
• Achieved 100% response rate
– Profiling end users
• Ran a simple black-and-white ad asking readers to nominate them to be selected
as the "Not Yet Famous Drummer”
• Contest doubled Pro-Mark's database of names .
– Promoting new products
• To promote new autographed drumsticks, coupon allowing readers to buy them
for $5 and enter a contest to win a chance to meet Abbruzzese in person
 Developing the Offer

• Offering the customer some kind of incentive that will induce him/her to buy
or to ask the company for more information

• Ranges from a free product sample to price-related incentives or an item

providing information on the firm

• Objectives should be to attract new customers or members, obtain repeated

business from existing customers, reactivate lapsed customers, produce
sales leads or acquire new customers

• Record estimate of campaign costs and profitability in the CRM system -

used as a “model” to fine-tune the campaign results
 Offer Options

Price incentives
Payment options
“You have been specially chosen”
Premiums
Samples
Free trial
Automatic shipment
“Member gets member” Early bird offer
Contests and sweepstakes
Multiple discount offers
Multiple product offer
Deluxe edition
Bounce-back
Money back guarantee
 Campaign Budget Calculation: Methods
Pre-set Budgeting

• Determine a given year’s marketing expenditure on the basis of what

they spent the year before

Advantages:
– Follow a more or less steady expenditure flow

Disadvantages:

– Last year’s sales not considered, marketing considered as an expense rather than
an investment to boost sales
 Budget Calculation
Budgeting for an allowable marketing cost (AMC)

• Determine the amount that can be spent on campaign marketing activities,

while preserving the required profit margin

• Potential expenditure is given priority according to its forecast for return on

investment

• Obtained by subtracting the costs (cost of goods + distribution costs) and

the required profit margin from the total sales value

Advantages:
– No pre-set limit to the campaign budget unless a constraint of cash-flow is
imposed, the company can controls costs

Disadvantages:
– Many activities are hard to accurately forecast and some activities may not
 Budget Calculation
Budgeting with the competitive parity method

• Equating budget allocation with those of competitors

Advantages:
– Emphasis is on competitor intelligence

Disadvantages:
– Very difficult to be precise as to who the competitors are and what are
their relative sizes

– Different marketing communication strategies for market leaders and for

market followers and budgeting based on parity may not work
 Budget Calculation
Budgeting with the objective and task method

• Determining marketing objectives and the marketing communications tasks

needed to achieve them

• Budget set by calculating costs of the communication tasks

Advantages:
– Resources expended are limited to the objectives

Disadvantages:

– Implementation difficult because it is not always easy to define the objectives and
to quantify their implementation costs

– Assumes that the relationship between objectives and tasks is

well known and understood
 Budget Calculation
Percentage of sales method

• Fixed percentage of turnover allocated to marketing communications

• Marketing communication expenditure directly linked to sales level

• To determine the exact percentage that should be allocated, the company

looks at competitor allocations and industry averages

• To define the turnover the company can look at historic sales

Advantages:

– Incorporates a series of alternatives and allocates costs to the objectives

Disadvantages
– Difficult to determine the percentage of sales that must be allocated
 Budgeting with Key Performance Indicators
Performance
Formula Definition
Measure
Cost per thousand CPM = (Total promotion expense / Total
(CPM) quantity) x 1’000 Relates total cost of promotion
with quantity produced.

Cost per response CPR = (Total promotion expense / number

(CPR) of responses) Ratio of total campaign costs to
number of responses obtained

Cost per enquiry CPE = (Total promotion expense / total Ratio of total campaign costs
(CPE) orders) to total enquiries

Cost per sale CPS = [Total promotion expense / (total Ratio of total costs to enquiries
(CPS) orders- Returns and bad debts)] that were converted into sales,
net of returns and bad debts

Calculated by comparing the

Conversion rate CR (%) = (number of buyers / number of
number of buyers with number
(CR) responders) x 100
of responders to the campaign

Return on Investment ROI = Sales Revenue / Total promotion Ratio of sales revenue to the
(ROI) expense campaign cost
 Budget Calculation
Lifetime Value
• Allows the company to compare returns on alternative marketing expenditures
• Allows comparison of return on expenditure from obtaining business from
existing customers or from new ones

Advantages
– Using CRM database information allows the company to predict cost of the campaign
more accurately

– Allocates resources between strategies because it allows comparison between the

returns of alternative marketing campaigns

Disadvantages
– Difficult to keep track of customer values because most companies lack transactional
data from its customers
 Testing
• Conducting a comparison between different ways of proceeding with a
campaign

• Test individual campaign elements, other elements remaining constant, and

measure the resultant change in the performance of the campaign

• Benefits of testing

– Shows real behavior, as it provides a (close to) real environment in which behavior
is validated

– Protects the company’s greatest asset (the customers): by using only small
samples with each test can give customers the “proven offer”

– Minimizes financial risk and avoids costly errors

 Variables for Testing

• Key variable: the target audience - in the form of a list of targeted

customers and prospects

• Offer variables - prices, incentives

• The format - physical shape, the “feel”, and the size

• The creative element - the appeal, the tone, and the message

• The media and/or the timing

 Performance Measures Tested to Predict
Campaign Results
• Response to the campaign, in percentage

– The number of responses obtained divided by the total number of customers

selected will give the response rate, in percentage

– Response rate serves as an indicator of the success that the particular campaign
being tested can achieve

• Campaign profitability

– Performance results allows an estimate for the revenues of the real campaign

– Total campaign costs (expenses of preparing the campaign, testing costs plus
cost of running the campaign) deducted from the revenues, gives a prediction for
the profitability of the campaign
 Testing in Different Media
• Direct Mail

– Direct marketer controls every aspect of the campaign, including the

timing and the budget
– Testing of all elements possible

• Telemarketing

– In one call session, promotion of a particular product or service,

testing a different script or promotion, etc possible

• Press and Inserts: not as easy and inexpensive as others

– Split-run testing (different insert format in different magazines)

– A/B splits (creative or colour change in alternative copies of same
publications)
– Cross-over test (different elements changed in different messages and
 Potential Problems in Testing

• Performing several tests with the same set of customers

• Limited time validity: since customer preferences change over time,

conclusions drawn from tests often short-lived

• Testing the same things all over again

 Campaign Execution
• Operational process by which a campaign is implemented

• Implementation and coordination

– The campaign program

– The campaign schedule

• Monitoring and fine-tuning

– Revision of planning based on enquiry or orders performance alone.

– Adjustment of the media selection
– Undertaking corrective action if the campaign included a first sequence
of creative and offer testing
 Causes of Campaign Failures

• When marketing planning is undertaken at a functional level and does not

integrate with other functional areas of the company

• Top management not taking an active role in marketing planning

 Analysis and Control

• Evaluates campaign results in light of original objectives and determines

campaign level of success or failure
• Measuring campaign results

– Comparing the CPM, CPS, ROI, and the CR with the budgeted KIP

– Back-end performance analysis

• Direct mailing: statement of profit or loss for the campaign promotion

• For a loyalty program: allowable marketing cost and break-even

• Contribution: Campaign costs deducted from the gross margin and resulting
value divided by the number of new customers

• New customer lifetime value and attrition rate

 Analysis and Control (contd.)
• Response analysis

– Calculates the campaign results up-to-date, projects its final results, as

responses, inquiries and leads, and analyzes these results

– Can be performed with customer and market segments, product lines,

campaigns, offers and promotions, media or advertising agencies

– Responses recorded in CRM database should be summarized by time,

i.e., by arrival date

– Results can be analyzed as soon as the first campaign responses are

known and eventually can correct the campaign progression
 Campaign Feedback

• Record all relevant data about campaign planning, implementation

and results

• Model relationships between data gathered, the controllable

variables and campaign results

• Apply this knowledge to future campaigns