advtg mktgmanage-lecture2

8/7/2019 Advtg mktgmanage-lecture2

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Advertising ManagementAdvertising ManagementAdvertising ManagementAdvertising Management

Objectives setting:

Communication Sales

Budget Decisions:

Affordable approach % of sales Competitive parity Objectives & tasks

Message Decision:

Generation Evaluation &

Selection Execution

Media Decision:

Reach, frequencyimpact

Major media types Specific media

vehicles Media timing

Advertising

Evaluation:

Communicationimpact

Sales impact


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AdvertisingAdvertisingAdvertisingAdvertising

ObjectivesObjectivesConsumer awareness - thinking vs. feelingConsumer awareness - thinking vs. feeling

products and central vs. peripheral routes toproducts and central vs. peripheral routes tomemory; awareness needed for high involvement;memory; awareness needed for high involvement;attitude needed for low involvementattitude needed for low involvement

Positive reinforcement after purchasePositive reinforcement after purchase

Exposure oriented objectives - reach andExposure oriented objectives - reach andfrequencyfrequency


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The Purpose of AdvertisingThe Purpose of AdvertisingThe Purpose of AdvertisingThe Purpose of Advertising

To informTo inform

To persuadeTo persuade

To remindTo remind


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To InformTo InformTo InformTo Inform

Tell the market about a new productTell the market about a new product

Suggest new uses for a productSuggest new uses for a product

Inform the market of a price changeInform the market of a price changeExplain how the product worksExplain how the product works

Describe available servicesDescribe available services

Correct false impressionsCorrect false impressionsReduce buyers fearsReduce buyers fears

Build company imageBuild company image


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To PersuadeTo PersuadeTo PersuadeTo Persuade

Build brand preferenceBuild brand preference

Encourage switching to your brandEncourage switching to your brand

Change buyers perception of productChange buyers perception of productattributesattributes

Persuade buyers to purchase nowPersuade buyers to purchase now

Persuade buyers to receive a sales callPersuade buyers to receive a sales call


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To RemindTo RemindTo RemindTo Remind

Remind buyers that the product may beRemind buyers that the product may be

needed in the near futureneeded in the near future

Remind buyers where to buy itRemind buyers where to buy itKeep it in the buyers mind during offKeep it in the buyers mind during off

seasonsseasons

Maintain its top-of-mind awarenessMaintain its top-of-mind awareness


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Purpose:Purpose: To reach a highly targeted group within a specificTo reach a highly targeted group within a specificgeography as cost-efficiently as possible.geography as cost-efficiently as possible.

Strengths:Strengths:TargetabilityTargetability: Specific groups by location, product usage, interests: Specific groups by location, product usage, interests

CostCost: Controlling costs; generally very low: Controlling costs; generally very low

TimingTiming: No outside media deadlines: No outside media deadlines

VersatilityVersatility: Personalized; conveyed detailed message: Personalized; conveyed detailed message

ReachReach: All households: All households

MeasurementMeasurement: Response rate is easily measured: Response rate is easily measured

EnvironmentEnvironment: Tangible; saves consumer time: Tangible; saves consumer time

Media Options - Direct MarketingMedia Options - Direct Marketing


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Media DefinitionsMedia DefinitionsMedia DefinitionsMedia DefinitionsReachReach: the number of different persons or: the number of different persons or

households exposed to a particular mediahouseholds exposed to a particular mediaschedule at least once during a specifiedschedule at least once during a specifiedtime period.time period.

FrequencyFrequency

: the number of times within the: the number of times within the

specified time period that an average personspecified time period that an average person

or household is exposed to the message.or household is exposed to the message.


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Gross Rating Points (GRP)Gross Rating Points (GRP): the reach: the reachmultiplied by the average frequency.multiplied by the average frequency.

Cost Per ThousandCost Per Thousand: the calculated cost: the calculated costit takes to reach one thousand people init takes to reach one thousand people inthe target audience from that mediathe target audience from that media

vehicle.vehicle.

Media DefinitionsMedia Definitions


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Media DefinitionsMedia DefinitionsMedia DefinitionsMedia Definitions

FlightingFlighting: calls for advertising for some period,: calls for advertising for some period,

followed by a hiatus with no advertising, and thenfollowed by a hiatus with no advertising, and then

followed by a second flight.followed by a second flight.

PulsingPulsing: a continuos advertising at low weight: a continuos advertising at low weightlevels reinforced periodically by waves of heavierlevels reinforced periodically by waves of heavier

activity. Pulsing draws upon the strength ofactivity. Pulsing draws upon the strength of

continuous advertising and flights to create acontinuous advertising and flights to create a

compromise scheduling strategy.compromise scheduling strategy.


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Advertising TestsAdvertising TestsAdvertising TestsAdvertising Tests

An advertising testing program may includeAn advertising testing program may includetests to assess:tests to assess:

copycopymedia placementmedia placement

budgetingbudgeting

At the pre-introductory product testing stage,At the pre-introductory product testing stage,advertising testing will focus on copy tests.advertising testing will focus on copy tests.


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Copy Tests: ObjectivesCopy Tests: ObjectivesCopy Tests: ObjectivesCopy Tests: Objectives

Does the copy achieve the objectives setDoes the copy achieve the objectives set

out in the copy strategy?out in the copy strategy?

Assess recall of ad(s)Assess recall of ad(s) Assess communicationAssess communication

Assess effect of ad(s) on attitudes towardAssess effect of ad(s) on attitudes toward

thethe brandbrand and theand the advertisementadvertisement.. Assess impact on purchase intention.Assess impact on purchase intention.


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Purpose:Purpose: To reach a highly targeted group within a specificTo reach a highly targeted group within a specificgeography as cost-efficiently as possible.geography as cost-efficiently as possible.

Strengths:Strengths:TargetabilityTargetability: Specific groups by location, product usage, interests: Specific groups by location, product usage, interests

CostCost: Controlling costs; generally very low: Controlling costs; generally very low

TimingTiming

: No outside media deadlines: No outside media deadlines

VersatilityVersatility: Personalized; conveyed detailed message: Personalized; conveyed detailed message

ReachReach: All households: All households

MeasurementMeasurement: Response rate is easily measured: Response rate is easily measured

EnvironmentEnvironment: Tangible; saves consumer time: Tangible; saves consumer time

Media Options - Direct MarketingMedia Options - Direct Marketing


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Direct Marketing (contd.)Direct Marketing (contd.)Direct Marketing (contd.)Direct Marketing (contd.)

Weaknesses:Weaknesses:

Consumer Avoidance: Almost half of all mail gets thrown awayConsumer Avoidance: Almost half of all mail gets thrown away

unopenedunopened

Image: Referred to as junk mailImage: Referred to as junk mail

Timing: Bulk mail takes 3-10 days to be deliveredTiming: Bulk mail takes 3-10 days to be delivered

Cost: Mailing costs continue to riseCost: Mailing costs continue to rise

Reach: Difficult to get new customers.Reach: Difficult to get new customers.


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Purpose:Purpose: A mass media used to reachA mass media used to reachadults 35+ with a complex, detailedadults 35+ with a complex, detailedmessage or to advertise product.message or to advertise product.

Strengths:Strengths: Reach: Large mass audienceReach: Large mass audience

Delivery Form: TangibleDelivery Form: Tangible

Prestige: Traditional medium with wide acceptance;Prestige: Traditional medium with wide acceptance;somewhat targetable; credible; readers tend tosomewhat targetable; credible; readers tend to

have higher income & education levelshave higher income & education levels

Versatility: Ad size and timingVersatility: Ad size and timing

Message: Illustrations; detailed messageMessage: Illustrations; detailed message Tar etabilit : Sections; zone editionsTargetability: Sections; zone editions

Media Options - NEWSPAPERMedia Options - NEWSPAPER


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Purpose: To reach a narrow target withPurpose: To reach a narrow target withfrequency to build awareness.frequency to build awareness.

Strengths:Strengths:

Frequency: Top of the mind awareness; low unit cost

Demographically Selective: Combine age/sex and

listening preferences to better target Emotional: One on one relationship

Timing: Flexible message; 24-hour air time

Cost: Negotiable; efficient; low cost

Media Options - RADIOMedia Options - RADIO


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RADIO (Contd..)RADIO (Contd..)RADIO (Contd..)RADIO (Contd..)


Reach:Reach: Cannot reach broad demographicsCannot reach broad demographics

Clutter:Clutter: Mat be too many advertisersMat be too many advertisers

Senses:Senses: No visualNo visual


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Purpose:Purpose: Reach narrow target groups with singleReach narrow target groups with singleexposure in chosen geography. Able to buildexposure in chosen geography. Able to buildfrequency.frequency.

Strengths:Strengths: Growing Medium:Growing Medium: Increased subscribersIncreased subscribers

Frequency:Frequency: Top-of-the-mind awarenessTop-of-the-mind awareness

Senses:Senses: Includes both visual and audioIncludes both visual and audio

Cost:Cost: Low; local mediumLow; local medium

Versatility:Versatility: Tie-in opportunitiesTie-in opportunities

Geographically Selective:Geographically Selective: Customized to market areaCustomized to market area

Demographically Selective:Demographically Selective: Target specific consumerTarget specific consumer

groupsgroups

Media Options - CABLEMedia Options - CABLE


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CABLE (Contd.)CABLE (Contd.)CABLE (Contd.)CABLE (Contd.)


ReachReach: Fragmented; rural; areas not: Fragmented; rural; areas notwiredwired

ClutterClutter: More commercial air time: More commercial air time

MeasurementMeasurement: Limited research: Limited research


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Purpose:Purpose: A mass reach medium designed to reach AdultsA mass reach medium designed to reach Adults18+ with a reminder or directional message.18+ with a reminder or directional message.

Strengths:Strengths:

Cost: LowCost: Low Reach: Large mass audiencesReach: Large mass audiences

Environment: Size demands attention; 24-hours,Environment: Size demands attention; 24-hours,7 days a week7 days a week

Frequency: Highly visibleFrequency: Highly visible

Versatility: Target specific geography;Versatility: Target specific geography;

variety of messagesvariety of messages

Mass Media - Outdoor BillboardMass Media - Outdoor Billboard


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Billboards (Contd.)Billboards (Contd.)Billboards (Contd.)Billboards (Contd.)Weaknesses:Weaknesses:

Environment: Negative image; no message detailEnvironment: Negative image; no message detail

Availability: LimitedAvailability: Limited

Impact: Minimal viewing; low recallImpact: Minimal viewing; low recall

Targetability: Not efficient for small, narrow target audiencesTargetability: Not efficient for small, narrow target audiences


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Other Media ConsiderationsOther Media ConsiderationsOther Media ConsiderationsOther Media ConsiderationsYellow PagesYellow Pages

Evidence people look hereEvidence people look here

Costs for display ads may be quiteCosts for display ads may be quite

highhigh

Reduced reliance due to otherReduced reliance due to other

information search tools (e.g.,information search tools (e.g.,Internet)Internet)


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TelemarketingTelemarketing

Set outbound call objectives ahead of timeSet outbound call objectives ahead of time

Motivate staff through direct incentivesMotivate staff through direct incentivesConsider training staff on handling rejectionsConsider training staff on handling rejections

Other Media ConsiderationsOther Media ConsiderationsOther Media ConsiderationsOther Media Considerations


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Event MarketingEvent Marketing

Helps build relationshipsHelps build relationships

Examples:Examples:Sponsoring local sports teamsSponsoring local sports teams

Running seminars on financial planningRunning seminars on financial planning

No sales at time of event leads only.No sales at time of event leads only.

Other Media ConsiderationsOther Media ConsiderationsOther Media ConsiderationsOther Media Considerations

C tC t


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CostsCostsTelevisionTelevision

Late News Spot(30 second spot)

Large market $2,000 $3,500

Medium market $600 $1,000

Small market $200 $400


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RadioRadio

Morning drive time (30 second spot)

Large market $1,000 $2,000

Medium market $400 $800

Small market $50 $200


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Out-of-Home/BillboardsOut-of-Home/Billboards

14 x 48 painted bulletin

Large market $8,000 $12,000 per month

Medium market $1,500 $3,000 per month

Small market $800 $1,500 per month


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NewspaperNewspaper

Space is reserved on a

column inch basisLarge market $300 $700

Medium market $60 $90Small market $10 $50


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Yellow PagesYellow Pages

Quarter page display with color

Bold LineCost of Ad Listing

arge market $546/Mo

$14.60/Mo

Medium market $532/Mo$17.40/Mo

mall market $425/Mo


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PromotionPromotionPromotionPromotion

Designed to achieve an active response over a short period ofDesigned to achieve an active response over a short period oftime.time.

Has been increasing relative to advertising 57% in 1981 in 1994Has been increasing relative to advertising 57% in 1981 in 1994

72% of A/P.72% of A/P. Trade and consumer promotion target different players.Trade and consumer promotion target different players.

Promotions can be offensive (trial) or defensive (Stove Top).Promotions can be offensive (trial) or defensive (Stove Top).

Promotion used to bridge trial gap.Promotion used to bridge trial gap.

Objectives: Buy more, buy now, loyality, capture switchers, getObjectives: Buy more, buy now, loyality, capture switchers, get

nonuser trial, awareness and build image.nonuser trial, awareness and build image.


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PromotionPromotionPromotionPromotion Tracking - Pre-post anlysis withTracking - Pre-post anlysis with

controlcontrol

Trend analysisTrend analysis

Redemption ratesRedemption rates

Payback analysisPayback analysis

Modeling - PROMOTER BaslineModeling - PROMOTER Baslinevolume vs. actual sales on promotionvolume vs. actual sales on promotion


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When do brands spend a lot.When do brands spend a lot.Standard productStandard product

Many end usersMany end users

Purchase amount is smallPurchase amount is small sales made through channelssales made through channels

Premium pricePremium price

High contribution marginHigh contribution marginSmall market shareSmall market share


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Types of PromotionsTypes of PromotionsProduct based - bonus pack,Product based - bonus pack,

sampling, onpack, inpacksampling, onpack, inpack

Price based - sale, coupons,Price based - sale, coupons,refunds, rebates, frquency, termsrefunds, rebates, frquency, terms

PremiumsPremiums

DisplaysDisplays

GamesGames


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Global MarketingGlobal MarketingGlobal MarketingGlobal Marketing

Moving from single country to dual country to regional to globalMoving from single country to dual country to regional to globalincreases complexityincreases complexity

Lots of opportunites to do dumb things:Lots of opportunites to do dumb things:

Clairol mMist Stick meant Manure Stick in GermanyClairol mMist Stick meant Manure Stick in Germany

Pepsis Come alive with the Pepsi generation was translatdPepsis Come alive with the Pepsi generation was translatd

into Pepsi brings your ancestors back from the grave ininto Pepsi brings your ancestors back from the grave inChinaChina

The Coca-Cola name in China was read as Ke-kou-ke-laThe Coca-Cola name in China was read as Ke-kou-ke-lameaning Bite the was tadpole later changed to Ko-kou-ko-meaning Bite the was tadpole later changed to Ko-kou-ko-le meaning happiness in the mouth.le meaning happiness in the mouth.

In Italy Schweppes Tonic water was translated intoIn Italy Schweppes Tonic water was translated intoSchweppes Toilet waterSchweppes Toilet water


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Phases of Global MarketingPhases of Global MarketingPhases of Global MarketingPhases of Global MarketingMarket extension (Intl is secondary)Market extension (Intl is secondary)

P&G, Poloroid, WhirlpoolP&G, Poloroid, WhirlpoolMulti-domestic (Intl equal domestic)Multi-domestic (Intl equal domestic)

Ford prior to 1996Ford prior to 1996

Global (no difference Intl and domestic)Global (no difference Intl and domestic)

IBM, Coke, McDonaldsIBM, Coke, McDonalds

Global marketing forces companies to communicate and think globally.Global marketing forces companies to communicate and think globally.

Knowledge is centralized to some degree.Knowledge is centralized to some degree.

Less local autonomyLess local autonomy

Global product teamsGlobal product teams

Global ad agencyGlobal ad agency

High coordination across marektsHigh coordination across marekts

Systematically developing intermarket segmentsSystematically developing intermarket segments

Global cadre of managers; cultural relativityGlobal cadre of managers; cultural relativity


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Global SegmentationGlobal SegmentationGlobal SegmentationGlobal SegmentationSES FORMATION

(CLUSTERING OF FACTOR SCORES)

High

Sweetness

Low

Sweetness

Low

Information

Search

High

Information

Search

C1

3

E2

H3

A3

C1Segment 5

C2

C3

7

9

5

2

4

8

F1A3

A3

A3A3

F2

6

1B3

D1

H1

D2

D3

B1

A2

E1Segment 2

Segment 4

F2

G2

G1

Segment 1

A1

Segment 3


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Major Decisions inMajor Decisions in

International MarketingInternational MarketingMajor Decisions inMajor Decisions in

International MarketingInternational MarketingDeciding whether

to go abroad

Deciding which

markets to enter

Deciding how toenter the market

Deciding on themarketing program

Deciding on the

marketing organization


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Internationalization ProcessInternationalization ProcessInternationalization ProcessInternationalization Process

No Export

Export via Agents

Sales Subsidiaries

Production Abroad


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Challenges in Going GlobalChallenges in Going GlobalChallenges in Going GlobalChallenges in Going Global

Shifting bordersShifting borders

Unstable governmentsUnstable governments

Foreign-exchangeForeign-exchange

CorruptionCorruption

Technological piratingTechnological pirating

Cultural differencesCultural differences


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Five International ProductFive International Product

and Promotion Strategiesand Promotion StrategiesFive International ProductFive International Product

and Promotion Strategiesand Promotion Strategies

Dualadaptation

PromotionPromotion

ProductProduct

Productadaptation

AdaptAdapt

productproduct

Straightextension

Do not changeDo not change

productproduct

Do not changeDo not changepromotionpromotion

Communi-cation

adaptation

AdaptAdaptpromotionpromotion

Develop newDevelop new

productproduct

Productinvention


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Directinvest-ment

JointventuresLicensing

Five Models of EntryFive Models of Entry

Into Foreign MarketsInto Foreign MarketsFive Models of EntryFive Models of Entry

Into Foreign MarketsInto Foreign Markets

Directexporting

IndirectExporting

Amount of commitment, risk, control, and profit potential


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Marketing OrganizationMarketing OrganizationMarketing OrganizationMarketing Organization

Export Department

International Division

Global Organization

RUS S IA

AS IA

EURO PE

M I D D LE EAST

AF RICA

USA

SO UTH

AM ERI CA

AUSTRALI A

CAN AD A

ANTARCTICA

G REEN LAN D


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Five Product LevelsFive Product LevelsFive Product LevelsFive Product Levels

Potential product

Augmented product

Expected productBasic product

Core benefit


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Product MixProduct MixProduct MixProduct Mix

WidthWidth - number ofdifferent product

lines

WidthWidth - number ofdifferent product

lines

LengthLength - totalnumber of itemswithin the lines

LengthLength - totalnumber of itemswithin the lines

DepthDepth - number ofversions of each

product

DepthDepth - number ofversions of each

product

Product Mix -Product Mix -all the product

lines offered

Product Mix -Product Mix -all the product

lines offered

Co

nsistency


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Product-Line LengthProduct-Line LengthProduct-Line LengthProduct-Line Length

Line StretchingLine Stretching

DownmarketDownmarket

UpmarketUpmarket

Two-wayTwo-way

Line FillingLine Filling

Line ModernizationLine Modernization

Line PruningLine Pruning


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Two-Way Product-LineTwo-Way Product-Line

Stretch: Marriott HotelsStretch: Marriott HotelsTwo-Way Product-LineTwo-Way Product-Line

Stretch: Marriott HotelsStretch: Marriott Hotels

QualityEconomy SuperiorStandard Good

Price

Price

High

Aboveaverage

Average

Low Fairfield Inn(Vacationers)

Courtyard(Salespeople)

Marriott(Middle

managers)

MarriottMarquis

(Topexecutives)

O fA O i f


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An Overview ofAn Overview of

Branding DecisionsBranding DecisionsAn Overview ofAn Overview of

Branding DecisionsBranding Decisions

BrandingDecision

Brand

No brand

Brand-SponsorDecision

Manu-facturerbrand

Distribu-tor

(private)brand

Licensedbrand

Brand-Name

Decision

IndividualbrandnamesBlanketfamilynameSeparatefamilynamesCompany-individualnames

Brand-Repositioning

Decision

Reposi-tioning

Noreposi-tioning

Brand-StrategyDecision

Lineextension

Brandextension

Multi-

brandsNewbrands

Cobrands


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Brand StrategiesBrand StrategiesBrand StrategiesBrand Strategies

BrandExtension

New

BrandName

Product Category

LineExtension

Existing

Existing

MultibrandsNew NewBrands


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Good Brand Names:Good Brand Names:Good Brand Names:Good Brand Names:

SuggestProductBenefits

Distinctive

Lack PoorForeign

LanguageMeanings

SuggestProductQualities

Easy to:

PronounceRecognizeRemember

CWh P k C i lWh P k C i lWh P k C i l


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Why Package Crucial as aWhy Package Crucial as a

Marketing ToolMarketing ToolWhy Package Crucial as aWhy Package Crucial as a

Marketing ToolMarketing Tool

Self-service - usage eg. boil in bagSelf-service - usage eg. boil in bag

Company & brand image - LeggsCompany & brand image - Leggs

Opportunity for innovation - ColgateOpportunity for innovation - Colgatepumppump

Point of sale impact - reaches the rightPoint of sale impact - reaches the right

people at the right time - Wine bottlepeople at the right time - Wine bottle


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LabelsLabelsLabelsLabels

IdentifyIdentifyIdentifyIdentify

DescribeDescribeDescribeDescribe

PromotePromotePromotePromote


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PurePure

ServiceService

Categories of Service MixCategories of Service MixCategories of Service MixCategories of Service Mix

TangibleTangible

GoodGood

w/w/

ServicesServices

MajorMajor

ServiceService

w/ Goodsw/ GoodsHybridHybrid

PurePure

TangibleTangible

GoodGood


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ServicesServices

Inseparability

Services cannotbe separated

from theirproviders

InseparabilityServices cannot

be separatedfrom theirproviders

Perishability

Services cannotbe stored for

later sale or use

Perishability

Services cannotbe stored for

later sale or use

Intangibility

Services cannotbe seen, tasted,

felt, heard, orsmelled before

purchase

Intangibility

Services cannotbe seen, tasted,

felt, heard, orsmelled before

purchase

Variability

Quality ofservices dependson who providesthem and when,where, and how

Variability

Quality ofservices dependson who providesthem and when,where, and how


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ServicesServices

InseparabilityIncrease

productivity ofproviders

InseparabilityIncrease

productivity ofproviders

PerishabilityMatch supplyand demand

PerishabilityMatch supplyand demand

IntangibilityUse cues to

make it tangible

Intangibility

Use cues tomake it tangible

Variability

Standardizeservice

production& delivery

VariabilityStandardizeservice

production& delivery

Th T f M k tiTh T f M k tiTh T f M k tiTh T f M k ti


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Three Types of MarketingThree Types of Marketing

in Service Industriesin Service IndustriesThree Types of MarketingThree Types of Marketing

in Service Industriesin Service Industries

Internalmarketing

CompanyCompany

CustomersCustomers

Externalmarketing

EmployeesEmployees Interactive

marketing

Cleaning/maintenance

services

Financial/bankingservices

Restaurantindustry


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Service-Quality ModelService-Quality ModelService-Quality ModelService-Quality Model

Expected service

Management perceptions

of consumer expectations

Markete

r

Markete

r

Co

nsumer

Co

nsumer

Gap 1Service delivery (including

pre- and post-contacts)

Gap 3Translation of perceptions

to service-quality specifications

Gap 2

Gap 5 Perceived service

Externalcommuni-cations to

consumers

Gap 4

Personal needs Past experienceWord-of-mouthcommunications

D t i t f S iD t i t f S iD t i t f S iD t i t f S i


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Determinants of ServiceDeterminants of Service

QualityQualityDeterminants of ServiceDeterminants of Service

QualityQuality

ReliabilityReliability

AssuranceAssurance

TangiblesTangiblesEmpathyEmpathy

ResponsivenessResponsiveness

I t P fI t P fI t P fI t P f


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A. Concentrate here B. Keep up the good work

D. Possible overkillC. Low priority

Importance-PerformanceImportance-Performance

AnalysisAnalysisImportance-PerformanceImportance-Performance

AnalysisAnalysisExtremely important

Slightly important

Excell

entperform

ance

Fairperformance

1 2

9

11

13 12 14

34

5 678

10

# = Attributes

S iS iS iSer ice


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ServiceService

ExcellenceExcellenceServiceService

ExcellenceExcellence

Strategic ConceptStrategic Concept Top-Management CommitmentTop-Management Commitment

High StandardsHigh StandardsMonitoring SystemsMonitoring SystemsSatisfying Customer ComplaintsSatisfying Customer Complaints

Satisfying Both Employees & CustomersSatisfying Both Employees & CustomersManaging ProductivityManaging Productivity


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Complaint ResolutionComplaint ResolutionComplaint ResolutionComplaint Resolution

Excellent service recovery can increaseExcellent service recovery can increaseloyalty (perfection not expected)loyalty (perfection not expected)

Hiring Criteria & Training for EmployeesHiring Criteria & Training for EmployeesDevelop Guidelines for FairnessDevelop Guidelines for Fairness

Remove Complaint BarriersRemove Complaint Barriers

Analyze Types & Sources ofAnalyze Types & Sources of

ComplaintsComplaints

PLANNING, CREATING, AND DELIVERING SERVICESPLANNING, CREATING, AND DELIVERING SERVICESPLANNING, CREATING, AND DELIVERING SERVICESPLANNING, CREATING, AND DELIVERING SERVICES

Figure 1


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CORPORATE OBJECIVES AND RESOURCES

MARKET OPPORUNITYANALYSIS

RESOURCE ALLOCATIONANALYSIS

MARKET POSITIONING STATEMENT

What product(s)

With what distinguishing characteristics

To what target market segments

SERVICE MARKETING CONCEPT

What customer benefits

-Core product

-Supplementary services

-Service reliability levels

-Accessibility (where and when)

At what cost-Money

-Time

-Mental effort

-Physical effort

OPERATING ASSETS STATEMENT

What physical facilities

What equipment

What information and communicationstechnology

What human resources (numbers andskills)

SERVICE OPERATIONS CONCEPTGeographic Scope of Operation

-Area(s) served

-Single site versus multi-site

-Facilities location-Telecommunications linkages

Scheduling-Hours/days/seasons of service-Continuous versus intermittent

-If intermittent, what frequency

Facilities design and layout

Operating assets deployment

-What task, Where, When

Leverage through intermediaries operating assets

Leverage through customers assets (partnerships and self-service)

Specific tasks assigned to front stage and backstageoperations

SERVICE DELIVERY PROCESS(See Figure 2)

SERVICE DELIVERY AND EVALUATIONSERVICE DELIVERY AND EVALUATIONSERVICE DELIVERY AND EVALUATIONSERVICE DELIVERY AND EVALUATION

Figure 2


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SERVICE MARKETING CONCEPT SERVICE OPERATIONS CONCEPT

SEVICE DELIVERY PROCESS

Sequencing of service delivery steps

what steps, in what order, where, when, and how quickly?

Extent of delegation

Should the firm take responsibility for all steps or delegate some to intermediaries?

Nature of contact between customers and provider

-Customer comes to provider

-Provider comes to customer

-Arms length transactions

Nature of process

-Customers served in batches

-Customers served individually

-Customers serve themselves (self-service)

Protocol for allocating limited capacity

-reservations procedures

-Queuing procedures

Imagery and atmosphere

-Employee scripts and protocols

-Variations in dcor, lighting, and music

Performance Evaluation-By customers

-By managers-By employees


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Key Concepts in Services PositioningKey Concepts in Services PositioningKey Concepts in Services PositioningKey Concepts in Services Positioning Internal Company AnalysisInternal Company Analysis

Involvement of Functional Areas Especially OperationsInvolvement of Functional Areas Especially Operations

Training in the Service ConceptTraining in the Service Concept

More Segmentation PossibleMore Segmentation Possible

Ex AmexEx Amex

Temporal Separation and Physical SeparationTemporal Separation and Physical Separation

AttributesAttributes

Experience QualitiesExperience Qualities

Credence Qualities FaithCredence Qualities Faith

Positioning, Choice Criteria and PreferencePositioning, Choice Criteria and Preference

Communicating the Concept SymbolsCommunicating the Concept Symbols

Merrill LynchMerrill Lynch Bullish Bullish

AllstateAllstate Good hands people Good hands people

State FarmState Farm Like a good neighbor Like a good neighbor

NationwideNationwide Is on your side Is on your side

PrudentialPrudential The rock The rock

Fuzzy Positioning in Services Anti-MarketingFuzzy Positioning in Services Anti-Marketing


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Asset Utilization and YieldAsset Utilization and Yield

ManagementManagementAsset Utilization and YieldAsset Utilization and Yield

ManagementManagement Service capacity is a function of resourceService capacity is a function of resource

HumanHuman

PhysicalPhysical

FinancialFinancial

Most services build a service delivery system with an inherent constraintsMost services build a service delivery system with an inherent constraints

on capacityon capacity DisneyDisney - Wait times- Wait times

HotelHotel - Number of rooms- Number of rooms

Trains and airlines - Seats, schedules, vehicles, parts inventory, etcTrains and airlines - Seats, schedules, vehicles, parts inventory, etc

FedExFedEx - Planes, route drivers, etc- Planes, route drivers, etc

Service firms try to maximize Asset Revenue Generating EfficiencyService firms try to maximize Asset Revenue Generating Efficiency

(ARGE)(ARGE)ARGE = % Capacity UtilizationARGE = % Capacity Utilization XX Actual Price/ Maximum PriceActual Price/ Maximum Price

OrOrTotal Revenue/ Maximum RevenueTotal Revenue/ Maximum Revenue


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Portfolio of CustomersPortfolio of CustomersPortfolio of CustomersPortfolio of Customers

Customers are not necessarily equally loyal, profitable or ofCustomers are not necessarily equally loyal, profitable or ofequal statusequal status

Pacesetters, bread and butter, busyworkPacesetters, bread and butter, busywork Understand price sensitivity and cost drivers (ABC)Understand price sensitivity and cost drivers (ABC)


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Maximizing ARGEMaximizing ARGEMaximizing ARGEMaximizing ARGE

Advance sales decisionsAdvance sales decisions Divide capacity ahead of time and set targetsDivide capacity ahead of time and set targets

Groups and conventionsGroups and conventions

Allocate capacity over time by segmentAllocate capacity over time by segment Set ideal mix at different times of yearSet ideal mix at different times of year

Set pricing guidelines and matrixSet pricing guidelines and matrix

Rewarding the most valuable customersRewarding the most valuable customers Profit per customer changes over time ( increase purchases,Profit per customer changes over time ( increase purchases,

reduce cost, referral, premium pricing)reduce cost, referral, premium pricing) Frequent usersFrequent users

Track usageTrack usage

Be careful of perceptions of short-term advantage and ill-willBe careful of perceptions of short-term advantage and ill-will

R l ti hi M k tiRelationship MarketingR l ti hi M k tiRelationship Marketing


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Relationship MarketingRelationship MarketingRelationship MarketingRelationship Marketing


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IdentifyIdentify

CustomersCustomers

IdentifyIdentify

CustomersCustomersProvide an incentive to customers to identifyProvide an incentive to customers to identifythemselves and provide informationthemselves and provide information

Define how you will use the information beforeDefine how you will use the information beforelaunching the programlaunching the program

Train your contact people - make it easy to do andTrain your contact people - make it easy to do and

hard not to dohard not to do

Collect information each timeCollect information each time

Use information strategically to increase quality ofUse information strategically to increase quality of

the relationship (more loyalty, sales, referrals)the relationship (more loyalty, sales, referrals)

Diff iDiff ti tDiff ti tDiff ti t


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DifferentiateDifferentiate

CustomersCustomers

DifferentiateDifferentiate

CustomersCustomers

Differentiate valueDifferentiate value

Most profitable customers (highest Lifetime value)Most profitable customers (highest Lifetime value)

Best growth opportunity (most unrealized futureBest growth opportunity (most unrealized future

value)value)

UnprofitableUnprofitable

DifferentiateDifferentiate by needsby needs

Desired service level - define valueDesired service level - define value

Preferred contact methodPreferred contact method

GGGG


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GrouGrou

pp

GrouGrou

pp

Define buckets of similar customers to make tailoringDefine buckets of similar customers to make tailoringactionableactionable

Blue collar locals with kidsBlue collar locals with kids

Auto only singlesAuto only singles

Profile each segment and define key elements toProfile each segment and define key elements to

enhancing the relationship: more loyal, more share ofenhancing the relationship: more loyal, more share of

wallet, more referrals, more positive word of mouthwallet, more referrals, more positive word of mouth

R l tR l tR l tR l t


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RelatRelat

ee

RelatRelat

ee

Organize to cater to individual needsOrganize to cater to individual needs

Use your knowledge of the customer to alter theUse your knowledge of the customer to alter the

way you treat the customerway you treat the customer

Improve convenienceImprove convenience

Provide a benefitProvide a benefit

Increase confidence and assuranceIncrease confidence and assurance


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Relate toRelate to

LoyalizeLoyalize

Relate toRelate to

LoyalizeLoyalize Implementation of Frequency MarketingImplementation of Frequency MarketingPromote the program with all customersPromote the program with all customers

Define how you will use the information beforeDefine how you will use the information before

launching the programlaunching the program

Train the people in your office you are at keyTrain the people in your office you are at key

contact points - make it easy to do and hard notcontact points - make it easy to do and hard notto doto do

RelatRelatRelatRelat


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RelatRelat

eeRelatRelat

ee

How to RelateHow to Relate

Have an objectiveHave an objective

Only ask onceOnly ask once

Use the customers mode of interactionUse the customers mode of interaction

Lead with the customer not a saleLead with the customer not a sale

Positive reinforcement of desired behaviors -Positive reinforcement of desired behaviors -referralsreferrals

Make sure the customer gets perceived valueMake sure the customer gets perceived value

C t Lif ti V lCustomer Lifetime ValueC t Lif ti V lCustomer Lifetime Value


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Customer Lifetime ValueCustomer Lifetime ValueCustomer Lifetime ValueCustomer Lifetime ValueBasic Nice Relationshi

MarketingAnnualPremium

$1,000 $1,000 $1,000

First Year

Commisions

$600 $600 $600

SubsequentYear Commisons

$100 $100 $125

Years with

Company3 5 7

TotalCommisions

$800 $1000 $1,300

% Gain vs. Basic N/A 25% 90%

PR TOOLSPR TOOLS


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PR TOOLSPR TOOLSPR TOOLSPR TOOLS

Written materials ( brochures, newsletters,Written materials ( brochures, newsletters,pamphlets, research reports, magazines)pamphlets, research reports, magazines) Tangiblize (Brochure)Tangiblize (Brochure)

Need internal communicationNeed internal communication

Quality imagemakes a statementQuality imagemakes a statement

Doesnt work as stand alone tactic; should have a roleDoesnt work as stand alone tactic; should have a role

in overall marketing programin overall marketing program

Consistent with positioningConsistent with positioning

Copy test before useCopy test before use

Customer oriented, not firm orientedCustomer oriented, not firm oriented ExamplesExamples

State farm outlookState farm outlook


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Public RelationsPublic Relations

Evaluating publics and executing programsEvaluating publics and executing programs

to influence themto influence them Communications ToolCommunications Tool

Influence attitudes, behavior changeInfluence attitudes, behavior change

secondarysecondary ProcessProcess

Identify relevant publicsIdentify relevant publics

measure image and attitudesmeasure image and attitudes

establish goalsestablish goals

develop tacticsdevelop tactics

evaluate resultsevaluate results


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PR Tools (Continued)PR Tools (Continued)PR Tools (Continued)PR Tools (Continued)


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PR Tools (Continued)PR Tools (Continued)PR Tools (Continued)PR Tools (Continued)

SpeechesSpeeches

Influence/Impress large potential customerInfluence/Impress large potential customer News releasesNews releases

EventsEvents

Sponsorship (ex Conf. Board)Sponsorship (ex Conf. Board)

Convert into PR New releasesConvert into PR New releases

NewsNews

Press ReleasesPress Releases

Hire publicist contactsHire publicist contacts

News worthinessNews worthiness

AtmosphericsAtmospherics Buildings, Equipment, etc. (FedEx, Time AOLBuildings, Equipment, etc. (FedEx, Time AOL

Opportunity to establish image and brand recognitionOpportunity to establish image and brand recognition

Price - Quality StrategiesPrice - Quality StrategiesPrice - Quality StrategiesPrice - Quality Strategies


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PriceHigh Medium Low

High

LowProd

uctQuality

Med

PremiumValue

PremiumValue

MediumValue

Economy

Overcharging

Rip-OffFalse

Economy

HighValue

SuperValue

Good-Value

Price Quality StrategiesPrice Quality StrategiesPrice Quality StrategiesPrice Quality Strategies

Setting Pricing PolicySetting Pricing Policy


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Setting Pricing PolicySetting Pricing Policy

1. Selecting the pricingobjective

2. Determining demand

3. Estimating costs

4. Analyzing competitorscosts, prices, and offers

5. Selecting a pricingmethod

6. Selecting final price

Types of CostsTypes of Costs


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Types of CostsTypes of Costs

Total CostsSum of the Fixed and Variable Costs for a Given

Level of Production

Total CostsSum of the Fixed and Variable Costs for a Given

Level of Production

Fixed Costs(Overhead)

Costs that dontvary with sales orproduction levels.

Executive SalariesRent

Fixed Costs(Overhead)

Costs that dontvary with sales orproduction levels.

Executive SalariesRent

Variable Costs

Costs that do varydirectly with the

level of production.

Raw materials

Variable Costs

Costs that do varydirectly with the

level of production.

Raw materials

The Three Cs ModelThe Three Cs Model


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for Price Settingfor Price Setting

Costs Competitorsprices andprices ofsubstitutes

Customersassessmentof uniqueproductfeatures

Low PriceNo possible

profit atthis price

High PriceNo possibledemand atthis price


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Some important pricing definitionsSome important pricing definitionsSome important pricing definitionsSome important pricing definitions

Utility: The attributeUtility: The attribute

that makes it capablethat makes it capableof want satisfactionof want satisfaction

Value: The worth inValue: The worth interms of other productsterms of other products

Price: The monetaryPrice: The monetary

medium of exchange.medium of exchange.

Value ExampleValue Example:: CaterpillarCaterpillarTractor isTractor is $100,000$100,000 vs.vs.

MarketMarket $90,000$90,000

$90,000 if equal$90,000 if equal7,000 extra durable7,000 extra durable6,000 reliability6,000 reliability5,000 service5,000 service

2,0002,000 warrantywarranty$110,000 in benefits -$110,000 in benefits -

$10,000 discount!$10,000 discount!

P ti l P i i


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Promotional PricingPromotional PricingPromotional PricingPromotional Pricing

Loss-leader pricingLoss-leader pricing

Special-event pricingSpecial-event pricing

Cash rebatesCash rebates Low-interest financingLow-interest financing

Longer payment termsLonger payment terms

Warranties & service contractsWarranties & service contracts

Psychological discountingPsychological discounting

P h l i l P i iP h l i l P i i


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Psychological PricingPsychological Pricing

Most Attractive?Most Attractive?

Better Value?Better Value?

PsychologicalPsychologicalreason to price thisreason to price this

way?way?

A

32 oz.

$2.19

B26 oz.

$1.99

Assume Equal Quality

Discriminatory PricingDiscriminatory PricingDiscriminatory PricingDiscriminatory Pricing


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VariablesVariablesVariablesVariables

Time

Product-form

CustomerSegment

Location

Price-Reaction Program forPrice-Reaction Program for


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Meeting a Competitors Price CutMeeting a Competitors Price Cut

Has competitorcut his price?

NoNoHold our priceat present level;

continue to watchcompetitors

price

Is the pricelikely to

significantlyhurt our sales?

YesYes

Is it likely to bea permanent

price cut?YesYes

By more than 4%Drop price tocompetitors

By 2-4%Drop price by

half of the

How much hashis price been

cut?YesYes

NoNo NoNo

By less than 2%Include a

cents-off coupon

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