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is, and what they are doing in the areas of advertising and communication.
Make a list of all of the competing firms.
Collect secondary data, from statements made by competitors about themselves
in: advertisements, promotional materials, annual reports, a prospectus for a
publicly held corporation, and Web sites.
Study what other people are saying about the competition.
Analyze the competition using primary research, such as a store visit.
Opportunities
Watch carefully for new marketing opportunities by examining all of the data and
information about the market that is available.
As shown in Figure 4.1, some questions that are helpful in conducting an opportunity
analysis are:
Are there customers that the competition is ignoring or not serving?
Which markets are heavily saturated and have intense competition?
Are the benefits of our goods and services being clearly articulated to our
customers?
Are there opportunities to build relationships with customers using a slightly
different marketing approach?
Are there opportunities that are not being pursued, or is our brand positioned
with a cluster of other companies in such a manner that it cannot stand out?
Target Markets
Target markets are often carefully specified as part of the market segmentation process,
which is discussed in detail later in this chapter.
Customers
There are three types of customers that should be studied:
1. Current company customers.
2. The competitions customers.
3. Potential new customers.
Product Positioning
Positioning is the perception created in the consumers mind regarding the nature of a
company and its products relative to the competition. Positioning is created by:
The quality of products being sold
Prices being charged
Methods of distribution
Image
Communication tactics
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Types of Budgets
The various types of budgets are listed in Figure 4.7.
1. Percentage of Sales Method
a. Sales from the previous year
b. Anticipated sales for the next year
2. Meet-the-Competition Method
3. What We Can Afford Method
4. Objective and Task Method
5. Payout Planning
6. Quantitative Models
The first three are self-explanatory.
The Objective and Task method lists the costs associated with reaching a marketing
objective. It is more difficult but may be useful to more accurately allocate funding.
The Payout Planning methods establishes a ratio of advertising to sales or market share. It
indicates the often the results of advertising are cumulative over time.
Quantitative Models are simulations of relationships between advertising and sales or
profits. They may be difficult to create accurately.
Budgeting Expenditures
In terms of budget expenditures:
Media advertising normally accounts for 40% of a communications budget
Trade promotions receive about 25%
Consumer promotions are given on average about 25%
The final 3-5% goes to other expenses.
There are variances from industry to industry
Business-to-business firms have allocations, which are not the same as
consumer-oriented firms and also vary by industry
Figure 4.8 is a graphic breakdown of marketing expenditures. Figure 4.9 shows those
expenditures in other countries.
Figure 4.10 breaks down advertising expenditures by media. Figure 4.11 breaks them down by
industry.
Preparing Promotional Strategies
Strategies are sweeping guidelines concerning the essence of the companys marketing
efforts. Strategies provide the long-term direction for all marketing activities.
Matching Tactics with Strategies
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Tactics are the things companies do to support overall promotional strategies. Tactics
include promotional campaigns designed around themes, which are based on strategic
objectives. Methods used in tactical campaigns include:
Advertisements based on the major theme or a subtheme
Personal selling enticements (bonuses and prizes for sales reps)
Sales promotions (posters, point-of-purchase displays, end-of-aisle displays,
freestanding displays)
Special product packaging and labeling
Price changes
Besides the methods of communicating with consumers and sales reps that offer the
products, companies are able to add other enticements. The items that may be included in
tactical efforts include:
Coupons
Gift certificates
Purchase bonuses (a second product attached to a first)
Special containers (e.g., holiday decanters or soft-drink glasses)
Contests and prizes
Rebates
Volume discounts (larger sized packages, buy one, get one free promotions, etc.)
Market Segmentation
Market segmentation is the process of identifying purchasing groups based on their needs,
attitudes, and interests.
A market segment is a set of businesses or group of individual consumers with distinct
characteristics.
Some of the advantages of market segmentation are listed in Figure 4.12.
For a market segment to be considered a viable target for a specific marketing
communications campaign, it should meet the following tests:
The individuals or businesses within the market segment should be similar in
nature, having similar needs, attitudes, interests, and opinions. This means
persons or businesses within the segment are homogenous.
The market segment differs from the population as a whole. Segments are
distinct from other segments and the general population.
The market segment must be large enough to be financially viable to target with
a separate marketing campaign.
The market segment must be reachable through some type of media or
marketing communications method.
Market segments occur in two general areas: consumer markets and business-to-business
markets.
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REVIEW QUESTIONS
1.
3.
4.
Name and describe the types of communications budgets. Which is best? Why?
The types of communications budgets are:
Percentage of sales method, which uses a percentage of the previous years sales
and a projection of the coming years sales.
Meet the competition, which is designed to prevent a loss of market share.
What we can afford, which establishes the marketing budget after all other
budgets have been set.
Objective and task method, which allows management to set goals and ways to
achieve those goals through marketing dollars.
Payout planning, which establishes a ratio of advertising to sales or market share
based on Nielsen ratings.
Quantitative models, which uses computer simulation models to locate
relationships between advertising and promotional expenditures and sales or
profits.
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Students should probably answer that the objective and task method is the best
because it relates dollar costs to achieving specific marketing objectives.
5.
6.
7.
8.
9.
10.
11.
13.
14.
15.
16.
17.
How does the idea of a promotions opportunity analysis fit with a GIMC
program?
The promotions opportunity analysis process must be taken into consideration when
the GIMC program is being developed. Laws concerning marketing and advertising
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are different in each country. Effective marketing occurs when the companys
marketing team is aware of these differences when creating a marketing approach
tailored to markets identified in individual countries and the competitors in those
countries.
For each of the following goods or services, identify the various benefits that
consumers may derive when buying them. Does the advertisement or any other
element of the IMC use this benefit as the central part of its appeal?
a. AXA life insurance
b. Dulux paints
c. Tourism Malaysia
d. Panadol or any other brand of paracetmol
Benefits include peace of mind for AXA, intrinsic and extrinsic benefits for Dulux
e.g. personally feeling nice at home and showing off to friends, relaxation for touring
Malaysia, and getting rid of a headache and feeling better for Panadol.
2.
3.
Marketers recently have been targeting older consumers. These consumers have
more disposable income than younger consumers, and they are ready to spend
their money. In 2005, 96-year-old Irene Sinclair became the new face of
Unilevers Dove soap on billboards in London, New York, and Paris. Identify
five consumer goods or services that are segmented based on older consumers.
Discuss these products and services in terms of the benefit offered, the message
strategy, and the advertisement campaign.
One such product is Nivea Vital targeted to the 50+ woman this text comes with a
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DVD which illustrates this. It would be a good idea to show this during this session.
4.
The romantic comedy The Holiday created a boom in the online home-swap
business. Visit HomeExchange.com (www.homeexhange.com) to learn more
about this rather new and unique product. If you were the marketing manager
of a home-exchange business, what would your primary target market be? What
benefits would this target market be looking at? Do you think this form of
accommodation is likely to grow into the future?
Young and educated, long stay traveller. Benefits would be saving accommodation
money, a relaxed experience staying at home away from home and not a hotel. Very
likely do an investigation and come up with statistics.
Adage.com provides the latest ad agency news and account news. Go to the
Web site at www.adage.com. Scan through the news articles about
advertising, accounts, and ad agencies. Pick two that interest you and write a
short summary report about the contents of each article.
Student answers will vary based on the articles they select.
2.
3.
4.
following Web sites. What types of marketing messages are on each site? How
could the information on these Web sites be used to develop integrated
marketing communication plans?
a.
b.
c.
d.
Women (www.iVillage.com)
Hispanics (www.hispaniconline.com)
African Americans (www.targetmarketnews.com)
Gays and lesbians (www.planetout.com)
iVillage features sections on beauty and style, health and well-being, diet and
fitness, love and sex, pregnancy and parenting, house and home, entertainment, and
magazines.
Hispanic Online.com has sections on arts and entertainment, politics and opinion,
lifestyle, business and finance, a career center, technology, education, research and
resources, and sports.
Targetmarketnews.com has a wide list of media featuring black performers and
participants.
PlanetOut.com offers personals, shopping, entertainment, news, and other topics
including money and careers, families, health and fitness, living, pride, romance and
dating, and travel.
5.
Choose one of the following Internet companies. Examine each company's Web
site to determine what segmentation strategy the firm uses. Describe the
intended target market for the Web site. Using Figure 4.3 as a guide, what
communication objective(s) do you think the company is trying to accomplish?
a.
b.
c.
d.
Answers will vary depending what is on the Web site at the time the students access
them.
CASES
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Case 1
(1)
Burger Wars
Conduct a communication marketing analysis for one of the following:
McDonald's, Burger King, Sonic, Wendy's, or Hardees.
Student responses will vary depending on which chain is chose and which approach
they decide to take.
(2)
Besides children, identify the target markets that are best suited to each of the
following: McDonald's, Burger King, Sonic, Wendy's, or Hardees.
Some potential answers include business people for lunch, people close to the unit
(geographic), mothers with children, vacationers, and others.
(3)
(4)
Base on the information in this chapter, how would a company like Hardees or
Carl's Jr. (which owns Hardees) compete effectively against McDonalds? What
type of communication strategy and budget would work best?
Student answers will vary. The companies could focus on specific market segments,
such as older males, sports fans, or some other category. An objective and task method
could be used to reach these specific segments.
Case 2
(1)
(2)
Identify the market segments that Aheda Zanetti must maintain. What
secondary segments can she attract? (Think of some not mentioned in the case.)
Females between a certain age group that belong to the Muslim religion and other
religions and cultures that have a strict code of dress for females e.g. Orthodox Hindus
and Jews. As the case mentions burn victims, athletes, and swimmers.
(3)
Describe ways that Zanetti can reach key market segments effectively in your
country.
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Will the company be successful if it takes the business online, targeting and
marketing the product online?
Certainly since conservative and orthodox females prefer shopping for personal
products online. May be other views that for personal items such as clothes online may
not be an ideal channel.
BONUS CASE
COMMERCIAL CONSOLIDATED
John Mulvaney had been a marketing account manager for many years. He left a private
firm to take a position at a local bank, Commercial Consolidated. Bank officials
concluded that because the marketplace for financial services had become so competitive,
they needed an on-staff marketing executive to continually fine-tune the banks
advertising program. The companys headquarters were in Johns hometown, only 12
blocks from his house. John saw the opportunity to make a lifestyle move while staying
active in his chosen profession.
Once he was settled in, the first issue John pursued was a promotional analysis,
focusing on various customers. His research indicated that in most banks, 10 percent to
20 percent of the small-business accounts yielded 80 percent to 90 percent of the banks
profitability. Upon being informed of this statistic, bank officials set the goal of moving
some of the small businesses within the 80 percent that was not currently profitable to
become more like the 10 percent to 20 percent.
John told the banks leaders that he wanted to pursue a customer valuation
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segmentation approach, assigning each business a value related to the banks level of
profitability. To illustrate how this segmentation method works, John described the ways
banks could market to small businesses. He noted that the first step in customer value
segmentation is to identify the drivers that impact each business customers profitability
potential. For a bank providing financial services to small businesses, the primary value
drivers are:
Deposit balances wherein interest and other revenues exceed requirements for
servicing the account.
Sales and service delivery programs that match the banks profitability goals.
John told Commercial Consolidateds management team that not all customers have
the potential to be highly profitable accounts. He noted that by segmenting its small
customers into customer value clusters, the bank could design different marketing
programs for each segment to maximize effectiveness while minimizing marketing costs.
He suggested putting a greater marketing effort into an account with high profitability
potential than into one with low potential for profitability.
The marketing team decided to segment various small-business customers along
several dimensions. Codes placed in each customers data file allowed for easy clustering.
The team used seven characteristics to code the banks small-business customers.
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Account managers were given the following instructions for each account and its
particular characteristics:
Value segment. Code the account based on how profitable it has been over the last 12
months. Codes range from highly profitable to unprofitable.
.Long-term
value segment. Code the account based on profitability potential for the next 5
years.
Industry growth potential segment. Code the growth potential of the industry in which the
firm operates, from high-growth industry to negative anticipated growth.
Industry position segment. Relative to the industry, code the size of the firm from large to
small within the same industry.
Transaction frequency segment. Code the business customers from high to low based on
frequency of transactions with the bank over the past 6 months.
Product propensity segment. Code the business customers based on their propensity to
purchase a 401(k) plan with the bank. This code would be based on the firms size
and growth characteristics, from high potential for a 401(k) to low potential.
Creditworthiness segment. The code indicates the businesses relative credit risk.
This coding system allowed the bank greater flexibility in designing its marketing
program. The codes identified customers with the highest profit potential based on these
factors.
Commercial Consolidateds overall theme had always been focused on its
hometown bank image. Advertisements and other promotions restated the message that
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dollars invested locally were more valuable to the community than those shipped to the
home office of a competitor in another city or state.
Using this technique, a bank could assign customers to clusters based on loan usage.
Another set of clusters could be developed for investment services. A bank could develop
many different clusters with customers assigned to clusters based on their purchase
behavior of that particular type of service.
From there the bank generated an aggressive marketing program including
advertising, direct-mail pieces, and some personal visits to companies with high profit
potential. Customers with a medium level of transaction frequency could be targeted to
increase their transactions with the bank if their potential was high. The bank aimed the
direct marketing program at its top 20 customers; advertising was designed to reach the
next 100 customers (in terms of profit potential); and the remainder of the firms
advertising funds were spent on brand awareness commercials.
Next, individual consumers were segmented and targeted. The bank was most
interested in increasing use of their highly profitable consumer credit card. To do so, it
needed to understand the usage of the credit card. The banks customer cluster analysis
identified the following seven clusters:
1. The
uncommitted. The newest users of the credit card, these individuals tended to use
the card infrequently and make relatively small purchases. This cluster primarily
consisted of retired persons and individuals with low incomes.
2. Convenience
users. These customers used their cards frequently and normally paid
off their balances at the end of each monthly billing cycle. This cluster tended to have
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below average assets and slightly less than average household income.
3. Starting
out. This cluster was predominantly young adults with lower than average
incomes and low assets. They tended to have high purchases and carry moderate to
high balances on their cards.
4. Channel
income levels and were primarily females or married couples. This cluster had a low
level of delinquency, low service charges, and moderate card activity.
5. Credit
addicts. This group had the longest tenure of cardholders in the bank. They had
the highest credit limits, the greatest spending, and the highest payments due each
month. This cluster was of average age with above average income.
6. Cash
driven. As the cash-hungry cluster, these individuals tended to pay off account
balances slowly, had moderate credit limits, and used the card frequently to garner
cash advances. This cluster generally included younger males and other singles with
low assets.
7. Borderline.
The youngest of the clusters with the lowest card activity, these
made sure that the correct services were matched with customer needs. This information
was used to focus media and advertising strategies creating specific messages for specific
customers.
Within a few months, bank profits had risen significantly. John received a healthy
raise and concluded he had made a wise choice in moving to this particular organization.
(1)
(2)
(3)
Student answers will vary. Advertising messages should show how the bank could
meet the needs of various businesses.
(4)
Choose one of the credit card customer clusters listed in the case. Design a
print advertisement to reach this group. Where should the print ad be placed?
What other marketing tools could be used with the print advertisement?
Student answers will vary. They could show elderly people using the credit (debit)
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