Tag Archives: Greg Dean

Advertising Demystified

17 Friday Apr 2015

Posted by in Advertising, Marketing Philosophy, Marketing Strategy

≈ Leave a comment

Tags

, , , , , , , ,

Begin with the communication objective

An advertising campaign starts by identifying a communication objective. One important issue is establishing the right combination of information to properly communicate the message and satisfy the communication objective. The advertising budget should be established before the creative strategy is written.

The creative strategy is the roadmap for the campaign.

A target audience is the keystone for a creative strategy. The objectives as well as the key benefits need to be defined in the creative strategy. According to Arens, Schaefer, & Weigold (2009), the detailed creative strategy consists of the following elements:

  • The basic problem the advertising must address.
  • The objective of the advertising.
  • A definition of the target audience.
  • The key benefits to communicate.
  • Support for those benefits.
  • The brand’s personality.
  • Any special requirements.

These elements represent seven important steps for writing a creative strategy. Each step needs supporting research and business decisions distilled into a clear and concise set of instructions to guide the creative team. At a bare minimum, a creative strategy should contain an objective statement, a support statement, and a tone or brand character statement.

Choosing the correct media for an advertising campaign

Before selecting the most effective media for an advertising campaign, the media planners and buyers need to be aware of the alternatives or options available. In addition, there should be a complete understanding of how the target audience accepts, reacts, and responds to the various media.

Special consideration is given to the reach and frequency of each medium (Arens, Schaefer, & Weigold, 2009). Reach is defined as the number of unique individuals that will be exposed to the advertising using a specific medium. Frequency is defined as the number of times a single member of the target audience will be exposed to the advertisement during the lifespan of the campaign.

In many cases, a media planner leverages several communication channels simultaneously as part of an overall cross-media campaign strategy. This approach is very effective when the selected media complement one another. For example, a broadcast email campaign works very well if coupled with a campaign-specific website. The recipient is already on-line when receiving the email message, so it makes sense to make the call-to-action a simple link to the online-advertisement.

Print, radio, television and more…

Print media, as with other communication channels, has several pros and cons. One advantage that print media has over the television and radio is that it is capable of delivering more detailed information. Moreover, the target audience has the opportunity to read and re-read the advertisement as well as pass it along to others. Print media also offers very good controls over target segmentation. For example, magazine advertising offers options for delivering targeted advertising in geographic and demographic specific editions of their publication. The downside of print advertising, particularly in newspapers and magazines, is the existence of competing advertising in the same publication. Magazine advertising is expensive compared to other print media communication channels.

Television advertising is known traditionally as the medium with the longest reach. The mass coverage of television advertising is appealing to companies needing to carry consistent messages across several geographic areas. Using sight, sound, motion, and color allows advertisements to be entertaining in addition to informative. One major problem with television advertising is with ad skipping technologies. Digital video recording devices (DVRs) are a household mainstay. Consumers are recording programs and watching them at their own convenience—skipping the commercials along the way. Production costs and lead-time to produce a television advertising are a disadvantage when compared to other communication channels.

Out-of-home, direct mail and specialty advertising

Advertisers leverage various forms of out-of-home media when the need arises to expand their market coverage beyond the reach of traditional marketing channels. Depending on the specific out-of-home medium, certain factors are considered before a campaign is deployed. Outdoor advertising, which encompasses several variations of billboards and bulletins, is considered to be a low cost alternative to traditional alternative to television, radio, and newspaper advertising. Covering more than 9000 markets across America, outdoor advertising gives advertisers the ability to rapidly reach any portion of their geographic market (Arens, Schaefer, & Weigold, 2009). The anticipated return on investment (ROI) is a consideration as each medium is compared for effectiveness. Message saturation and the cost for exposure is part of the metric used in determining the viability of a particular form of advertising.

Direct mail advertising is considered to be one of the most effective communication channels. Measurable results, such as response rates, are considerably more accurate in a direct mail campaign because of the targeted method of deployment. A well-formulated direct mail campaign consists of a targeted mailing list and variable, relevant messages. Outdoor and transit advertising rely on the target audience to pass-by or be passed by a marketing message. Direct mail advertising is delivered one-to-one to the intended audience. If the advertiser needs to deploy a campaign where the message needs to be unique to each recipient, direct mail using variable data driven content is the only solution. Newspaper advertisements are not unique to each reader. Television and radio advertisements are directed to a local, regional, or national audience with a common, non-personalized message at each level.

Specialty advertising serves a purpose beyond traditional communication channels. Premiums, for example, are used to enforce the brand or continue a message from other advertising efforts. My refrigerator is covered with magnets (specialty advertising) from various local television stations, pizza delivery companies, and insurance companies. You might also find a few desk calendars from local businesses in my home office.

Planning a media advertising campaign

Media planning, if not a science, is certainly an exercise in mathematics.

While I agree that creativity is an integral part of planning an advertising campaign, decisions on the placement and timing are equally as critical. Advertising is only effective when the intended audience is exposed to the message. Not just any set of eyes and ears, but the target audience. A media planner must consider many things simultaneously while constructing a plan to deploying an advertising campaign.

 

Media planning framework ensures the media plan is aligned with the advertising and marketing plans. Media objectives are goals derived from the advertising strategy. Audience objectives and message-distribution objectives are two major components of a media objective (Arens, Schaefer, & Weigold, 2009). The audience objective is the underlying definition of the target audience the advertiser intends to reach. The definition includes the demographic, psychographic, and geographic information of the audience. For example, targeting a certain age group in a campaign is considered an audience objective.

The advertiser’s ethical responsibilities

It is the responsibility of an advertiser to do what is morally acceptable by society. It is possible, as proven by Calvin Klein and Abercrombie & Fitch, to act unethically without breaking any laws (Arens, Schaefer, & Weigold, 2009). The morals of our society has been challenged and changed many times over. We would never have seen a television commercial during an episode of Leave it to Beaver featuring a scantily clad female eating a cheeseburger while washing a car. The personal value system of our society has become more tolerant and less traditional.

The advertising industry has several mechanisms in-place to help regulate and control the content of an advertisement. There are still a few irresponsible marketers who believe that it is easier to apologize than ask permission.

The agency responsible for spawning ethically challenged advertising does not suffer nearly as bad as the company represented in the offensive advertising.

Consumer groups can impact advertising by complaining directly to the company whose products are being touted inappropriately. I like the idea of self-regulation. When advertising agencies scrutinize one another, everyone benefits.

Expect a few critics

Responsible advertisers create advertising copy best suited to attract a target audience to a specific product or service, and at the same time maintain certain sensitivity to societal issues. Advertising is a part of society. In many cases, advertising influences society. The many cultures that makeup a society dictate levels of acceptance. Some advertising copy sparks interest from certain groups within a society, and at the same time offends others. Is this irresponsible advertising? Perhaps. I believe this is more of a case where the advertiser uses a targeted message, but chooses a media vehicle that crosses into markets outside the intended target. I believe that satellite radio, simply because of the broad reach, could cross cultural boundaries.

Public service announcements are by nature intended to be in the best interest of a society. However, all other advertising runs the risk of sparking controversy. Many complaints are centered on claims of false advertising or puffery. In contrast, some consumers are convinced that purchasing products that are frequently advertised decreases the risk of dissatisfaction. The theory is that a company in the public spotlight is less likely to misrepresent their products and services (Arens, Schaefer, & Weigold, 2009). Other criticism includes the idea that advertising affects the value of products, therefore creating an economic impact to a society.

References:

Arens, W., Schaefer, D., & Weigold, M. (2009). Essentials of Contemporary Advertising. McGraw-Hill Irwin, New York.

How Advertising Content and Design Influence Buying Behavior

16 Thursday Apr 2015

Posted by in Marketing Philosophy, Marketing Psychology, Marketing Strategy

≈ Leave a comment

Tags

, , , , , , , , , , ,

Creativity in advertising sparks emotion and motivates a prospect or consumer to react. The content of an advertisement is responsible for informing, persuading, and reminding—ultimately influencing buying behavior. The design is directly responsible for attracting attention. It is important to engage the viewer and peak their interest all the while establishing credibility building desire.

Everything from images, graphics, text, and colors contribute to influencing buying behavior.

The three components of a message strategy, verbal, nonverbal, and technical, combine to describe how an idea will be communicated. In the case of the multi-media communication channels (i.e. television, internet), the verbal elements are derived from copy and converted into a script and delivered as a sound byte. When the medium is print, the verbal elements are designed to be read and understood. The nonverbal elements of a message strategy encompass visuals, such as graphics, and their usage specific to the media. A message strategy developed for radio would not include nonverbal elements. It would, however, include the technical element. Slogans, jingles, contact information, and even disclaimers are considered members of the technical element within a message strategy.

The combination of the message strategy elements are intended to engage a buyer and effect their behavior. The message strategy continues the vision identified in the creative strategy to cascade a common message across different media as part of an overall advertising strategy.

References:

Arens, W., Schaefer, D., & Weigold, M. (2009). Essentials of Contemporary Advertising. McGraw-Hill Irwin, New York.

Complex Campaigns Can Benefit From Project Management

04 Wednesday Jan 2012

Posted by in Marketing Strategy, Marketing Technologies

≈ 2 Comments

Tags

, , , , , ,

Complex cross-media marketing campaigns require a well-organized symphony of coordination and scheduling. Formal project management techniques can greatly increase the timeliness, efficiency, and profitability of a direct marketing campaign. With so many moving parts, it makes sense to leverage traditional project management techniques to command control and guarantee speed-to-market.

In nearly every aspect of our lives, we organize tasks into simple to-do lists. A typical day can be filled with chores and activities identified by an objective and a due date. A formal project—no matter how small—shares common characteristics with larger and more complex projects. In each case, the organization and structure of project management offers the framework necessary for these projects to succeed—on time and within budget. Project management can be scaled to match the scope and complexity of a project. The overall methodology and discipline, as defined in this paper, has become the main ingredients in the recipe for success.

What is Project Management?

A project can be defined as a series of interrelated tasks with a clearly identified timeline and predetermined costs. Larson & Gray (2011) describe a project as a temporary endeavor with an established objective (pg. 5). Moreover, a project has a start date and an end date, predetermined costs, and involves doing something never before realized. The predetermined timeline encompasses a project life cycle. Overseeing the project life cycle is the foundation for project management.

Project management is the coordination and day-to-day direction throughout the stages of a project life cycle. Specifically, project management is the planning, organizing, and directing of tasks and resources for a relatively short-term objective (Hanford, 2010). With an ever-changing, competitive, and fast-paced environment, it is imperative for businesses and organizations to leverage project management for effectively monitoring initiatives and ensuring success.

Speed to market is sometimes the competitive edge that a company needs to make the leap from market follower to market leader.

Project management offers an organization the ability to have higher success rates with lower uncertainty and costs associated with a project (Manu, 2007). In short, project management means an overall product life cycle can be reduced resulting a competitive advantage for an organization. Project management is an important tool for businesses to translate strategies and objectives into realities.

The Project Life Cycle

 The individual phases of a project are organized into a project life cycle. The project life cycle is comprised of several stages. The number of stages varies based on the type of project or specific industry (Larson & Gray, 2011, pg. 7). The basic project life cycle consists of four stages: defining stage, planning stage, executing stage, and closing stage.  Project life cycle management is a granular approach for controlling the logical sequence of activities as defined by a project scope.

Undefined requirements, miscommunication, and lack of sponsorship all contribute to failed projects. A structured project life cycle approach supports a clearly defined scope and objectives while offering the best chance for achieving the project goals. A large percentage of projects fail to deliver because organizations often downplay the importance of project life cycle management. Regardless of the methodology, organizing a project into stages and identifying a project plan derived from a comprehensive project life cycle guarantees success.

During the defining or planning stage, a project undergoes an initiation process. Part of the initiation process includes the challenging task of defining the overall business opportunity (Westland, 2007, pgs. 3-4). In some cases—as it relates to innovative technology-centric projects—the business opportunity can be subjective. The trailblazing Apple iPhone project in 2007 redefined the traditional project life cycle methodology to include a significant research and development initiative to help prove the business opportunity. Without the ability to draw upon previous experience, and particularly market acceptance, Apple’s definition of the business opportunity surrounding the iPhone was assumed (Müller, 2010).

An innovative product, such as the Apple iPhone, requires a unified approach to project management. One slight misstep in any of the project life cycle stages could be the difference between a history-making product launch and an overall corporate embarrassment. Regardless of the chosen methodology, every project life cycle includes a planning phase as the first stage of the project. As proven time and time again by companies such as Apple—planning, research, and critical thinking in the early stages of a project makes for a more effective execution stage. Apple’s 10-to-3-to-1 approach to product research results in a single product design from which a formal project life cycle is developed (Walters, 2008). Critical thinking and research is mandatory in the development of a project life cycle. The planning stage of a project is the foundation for all subsequent stages. Schedules, budgets, and resources are determined at this stage of the project life cycle. A miscalculated budget or misaligned resources can be fatal to a project and devastating to a company and its reputation.

Project Organization

Once designed, planned, and accepted by management, a project must be organized. Three common project management structures used to implement projects are: functional organization, dedicated project teams, and matrix structure (Larson & Gray, 2011, pg. 65). Projects do not fit within the normal framework of an organization. A project by definition has a predetermined time to live, and therefore in conflict with an organization’s day-to-day management of ongoing activities.

The structure and organization required for effective project management is alien to many traditional companies. Regardless, the organization must adopt a structure that will have the least impact on corporate culture. Integrating a project into the existing management framework of an organization provides a high level of flexibility. One notable downside to organizing projects within the functional organization is the pace at which the project moves. Projects take longer to complete when communication follows normal management channels.

In contrast, organizing projects as dedicated teams eliminates the extra layers of management and streamlines communication. The results are faster turn-around times and a unified project team. The cost of a dedicated team, however, sometimes outweighs the benefits. A matrix arrangement leverages the advantages of functional organization and dedicated teams approaches to create a hybrid structure. The three different matrix forms are: weak matrix, balanced matrix, and strong matrix (Larson & Gray, 2011, pgs. 73-74).

Organizational culture is a company’s fingerprint in the industry. Organizational culture is the defining characteristic of a company—it cascades across all projects. An organization’s culture is many times a reflection of its leaders. Leadership is crucial in an organization. A project manager is in a position of leadership. There is a distinct difference between project management and project leadership. As the leader of a project, a project manager can exercise leadership by inspiring and motivating the teams, and by understanding the bigger picture.

Sponsorship is vital in a project. A project sponsor is one of many stakeholders with an active interest in a project. The project sponsor is the liaison between the project manager and the executives. In certain cases when it becomes necessary to acquire more resources or change direction, a project sponsor would most likely be responsible for final approval. Successful projects share a common trait. They all have a strong and common bond between the project manager and project sponsor. Open communication between these two individuals is essential.

Project Team

The five-stage team development model provides the framework for project managers to build an effective team. The five stages defined by Larson & Gray (2011) include: forming, storming, norming, performing, and adjourning (pgs. 377-378). The goal of a project manager during the team-building phase of a project is to develop a cohesive group of individuals with a positive synergy. In an idea situation, a project manager would draw upon a pool of unlimited resources to choose candidates with strong compatibility and cohesion. In lieu of a perfect world, project managers yield to the effectiveness of the five-stage model to develop his or her team.

Before the project team begins the five-stage development process, a recruiting and selection process must take place. Choosing the most capable individuals for a project team ensures success (Kristoff, 2008). A project manager must understand the specific needs of the project before selecting individuals for the project team. Additionally, a project manager should consider the schedule and be sensitive to the pace at which each team member performs. Some team members, while a perfect match for a particular task, might not work comfortably at a pace required by the project timeline.

Work Packages

Objectives, deliverables, and milestones are the first three elements of a project scope. Defining the project objective is the single most important step in developing a project scope.

A well-defined project scope is used to establish a priority matrix. The priority matrix is an effective tool for establishing project priorities. Once the priorities are determined, the project manager can create a work breakdown structure (WBS). The work breakdown structure is a detailed outline of the project. Creating a hierarchical framework of the elements within a project provides a project manager the ability to manage specific costs and efforts associated with each deliverable or subdeliverable.

Project deliverables are known as work packages. Work packages are the most granular level of a work breakdown structure. The project is at the highest level, followed by the deliverables. Each deliverable can have one or more subdeliverables. The work packages of a project can be managed, tracked, and budgeted independently. This allows a project to easily be distributed across virtual teams if necessary. A project manager needs to be aware, however, of work packages that are on the project’s critical path. Any time delays or constraints to tasks on the critical path will affect the overall timeline.

Project Management Software

There are several software packages to help organize and manage projects. Microsoft Project, for example, offers all of the tools and reporting that a project manager would need to handle even the most complex projects. In situations where several projects are running concurrently as part of an overall program, a project manager can manage the project portfolio. Project management software makes if possible to create a work breakdown structure, estimate and manage schedules and costs, and monitor activities.

Managing risks is an important aspect of project management. Project management software provides mechanisms for assessing risks. Change control is often an area for exposing project scope creep. The change control management features in Microsoft Project help track changes and report the cost and time impact a change will have on the overall project. Large integrated projects will benefit from the use of project management software. The reporting capabilities alone will justify the costs.

Project management structure, methodology, and techniques can be applied to any type of project—no matter the size. Every project shares the common characteristics of a beginning and end date, defined set of deliverables, and an overall objective. Project management brings organization and framework to the project to help ensure success. While every aspect of traditional project management may not apply to all projects, the basic principles remain effective and relevant for every situation. Marketers are not exempt from the challenges of budgets, timelines, and competing priorities. Apply project management techniques to gain a competitive edge.

 

References

Hanford, M. (2010). Program management: different from project management. Retrieved March 5, 2011, from http://www.ibm.com/developerworks/rational/library/4751.html

Kristoff, S. (2008). Building a successful project team. Retrieved March 7, 2001, from http://www.suite101.com/content/building-a-successful-team-a41946

Larson, E., & Gray, C. (2011). Project management: the managerial process. New York: McGraw-Hill/Irwin

Manu, K. (2007). The importance of project management in organizations. Retrieved March 7, 2011, from http://www.articlesbase.com/leadership-articles/the-importance-of-project-management-in-organizations-246928.html

Müller, C. (2010). Apple’s approach towards innovation and creativity. Munich: GRIN Publishing GmbH

Walters, H. (2008). Apple’s design process. Retrieved March 6, 2011, from http://www.businessweek.com/the_thread/techbeat/archives/2008/03/apples_design_process.html

Westland, J. (2007). The project management life cycle. Philadelphia: Kogan Page

Economic Forces Changed the Printing Industry

21 Monday Nov 2011

Posted by in Marketing Technologies

≈ 6 Comments

Tags

, , , , , , , , , ,

The printing industry in the United States has enjoyed success in spite of many years of technology stagnation.

A recent wave of innovation has fueled changes that are beginning to affect the organizational environment. Forces specific to the general environment are causing the printing industry to be reinvented, while forces within the task environment are redefining the supply-chain. From production employees to raw material suppliers, everyone’s role, responsibility, and relationship is changing to accommodate the paradigm shift of this five-century-old industry.

Forces within the general environment are driven by the changes surrounding all three segments of the printing industry. Technological forces are the most predominate in the pre-press and press organizations. Pre-press concentrates on the preparation of materials for printing (Brown, 2009). Typesetting, for example, belongs in the pre-press segment of the printing industry. The advent of computers and desktop publishing software has redefined the role of a typesetter. Instead of manipulating the movable type invented by Gutenberg over five centuries ago, a graphic designer uses computers to set type and perform composition tasks.

The press or output segment of the printing industry is facing change due mostly to technological forces. Digital printing technologies are challenging traditional offset and web printing companies by allowing smaller companies to compete in the same market as large commercial printers. The most costly components of print production is addressed and solved with digital printing. The equipment is easier to maintain and waste is virtually eliminated.

The opportunities and threats created by technological forces are cascaded through several other general environment forces (Jones & George, 2007). For example, demographic forces are created by the need for employees with education and skills to match the new technologies. While jobs such as journeyman typesetter have become obsolete, advances in technology defined new positions. The demographic of a graphic designer is in complete contrast to a journeyman typesetter. Typesetting was a trade that could only be mastered by working as an apprentice. Today, graphic designers can learn the skills necessary for this position while attending college or a trade school.

The learning curve necessary to become a proficient digital pressman is minimal. As a result, the average age of a digital pressman is ten years younger than a journeyman offset pressman. Another ripple effect caused by a younger workforce surrounds sociocultural forces. The overall environment and culture in the workplace is changing to suit the personalities, tastes, and interests of a younger demographic.

The overhead and wages necessary to run a successful printing business today is noticeably less than in previous years. Many businesses have made financial cuts to their printing and advertising budgets. This economic force has challenged many of the well-established commercial printing companies. However, the smaller organizations are better poised to burden the financial strain.

The Economic forces resulting mostly from the demand of cost-conscience consumers have created a crowded playing field of competitors. The smaller businesses are beginning to win bids that would have never been considered in the past. Customers that would have never been able to afford traditional printing services are not only leveraging these services, but also in some cases justifying their own installation of digital printing equipment.

The low cost of digital printing has spawned a trend of in-house printing departments. Suppliers sell the raw materials to both commercial printers and in-house facilities, and therefore not affected by the loss of commercial printing to in-house manufacturing. Distributors are removed from the supply chain in an in-house printing environment. The most disconcerting change is that the customers now become competitors. The same economic forces that cause companies to become financially frugal shift direction and expose new revenue streams for in-house production facilities.

Digital printing technologies have reshaped the printing industry. An industry that once enjoyed an exclusive membership has been diluted by technology. Although technology can be interpreted as threat to the printing industry, many opportunities have emerged as a result. Moreover, opportunities for many new entrepreneurs to explore are now possible mostly due to advances in technologies in the printing industry.

The Bureau of Labor Statistics (2008) reports that 69.3% of the printing businesses in the United States employs less that ten people. General environment technological forces are responsible. Sociocultural forces endorse the changes, and demographic forces change the face of the manufacturing workforce in the printing industry—all for the better.

References

Brown, R. (2009). A Capsule History of Typesetting. Retrieved November 16, 2009, from http://www.historybuff.com/library/reftype.html

Bureau of Labor Statistics. (2008). U.S. Department of Labor, Career Guide to Industries, Retrieved November 14, 2009, from http://www.bls.gov/oco/cg/cgs050.htm

Jones, G., & George, J. (2007). Essentials of Contemporary Management. McGraw-Hill Publishing. Boston.

Public Relations: The New Marketing Ethos

04 Friday Feb 2011

Posted by in Marketing Strategy

≈ 2 Comments

Tags

, , , , , , , , , , , , , , ,

Many paradigm cases of public relations, advertising, and marketing activities exist to provide a basis for believing there are few differences between them. Advertising and public relations are individual instruments of marketing. Both have strengths and weaknesses, and each has a specific purpose. However, the gap between advertising and public relations is closing. Eventually, there will be more similarities than differences—and as a result, public relations tactics will take the place of traditional advertising methods.

Social Media is a Marketing Conduit

The popularity of social media is largely responsible for the convergence of public relations and advertising. Social media communication channels are accelerating the inevitable overlap in definition between public relations and advertising. Public relations activities are a form of marketing. Public relations communicates information about a company and its products and services—but from a neutral, broad, human-interest perspective. Whereas, advertising is more focused on a persuasive, non-personal marketing communication (Arens, et. al., 2009, p. 4). Both methods of marketing, however, require viable and effective communication channels.

Social media is quickly becoming the desired conduit for social marketing. Companies selling ideas, attitudes, and behaviors as opposed to products and services first realized social marketing in the 1970s. Social marketing and public relations are both designed to influence a target audience or general society. Social media—not available in the 1970s—has given public relations professionals a conduit to their publics. Social networking has extended the principles of marketing and redefined the marketing mix.

The four ‘P’s of marketing—product, price, place, and promotion—are joined by four additional ‘P’s. Marketing communications across social media channels require and understanding of the expanded marketing mix. The social marketing ‘P’s include publics, partnership, policy, and purse strings (Weinreich, 2010). A social marketing or public relations ‘public’ is the target market, special audience, or segment of the general public identified by an organization. Market research is often used to isolate and group individuals for the purpose of targeted marketing communications.

Social media channels, as with most Internet-based communication conduits, are easy to penetrate but difficult to control. While it is simple for public relations professionals to participate in social media activities—such as forums, blogs, and moblogs—it is impossible to control access to the content. Moreover, the Internet encourages content sharing and site linking making it difficult to know exactly who is ultimately at the receiving end of a social media communication.

Public relations strategies include providing honest, objective information to various publics through effective communication channels (Shauib, 2011). Social media has evolved from a communication channel to a marketing conduit. Press releases, one of the most effective tools for a public relations agent, provides one-way communication to a company’s publics. Social media, however, includes mechanisms that will allow the publics to communicate back to the company. Similarly, brands are using social networking to create goodwill with its consumers and prospects by encouraging an open dialog between the company and the consumer.

Social media bolsters partnerships between businesses with complementing products or services. Partnerships and strategic alliances can amplify brands, enforce messages, and influence public opinion.  Kellogg Company, for example, partnered with the National Cancer Institute to raise awareness by showing the relationship between eating habits and the likelihood of contracting cancer (Caywood, 1997, p. 439). Social media is an excellent communication channel for cause-related marketing.

Policy, one of the social media specific ‘P’s in the marketing mix, takes place when a public relations message motivates individual behavior or influences change. The use of public relations in education and Government organizations is primarily for public persuasion. A public relations professional can leverage social media channels to communicate information about the current policies of government agencies (Cameron, et. al., 2008, p. 408). If successful, promoting policies through social media communication channels will encourage support from the people.

When social media is used to raise awareness for non-profit and cause-related organizations, there is usually a strong message that pulls on the heartstrings. At the same time, a compelling call-to-action pulls on the purse strings. Social service organizations rely on public relations marketing to not only develop public awareness and recruit new members, but also raise and replenish operating funds. Fund-raising events are critical to the longevity of a non-profit organization.

Not all press releases are the same

While social media channels deliver public relations marketing messages to target audiences in real-time, the approach and composition of a message for social media is different than traditional press releases (Dubois, 2010). Public relations is quickly becoming the marketing approach of choice for businesses of all sizes. A public relations professional relies heavily on the traditional press release to compliment other public relations activities.

The use of social media to deliver press releases moves public relations ahead of traditional advertising as an effective marketing communication option. Any communication—press release or otherwise—requires a different strategy when delivered using an online method. Every online communication should be designed for two-way communication. Dean Guadagni (2009) identifies the three common non-interactive as: broadcasting, announcements, and crowdsourcing. However, crowdsourcing offers a feedback loop between consumers and businesses.

A press release or other marketing communication deployed across Internet channels should always be positioned as an interactive communication. Not only should the message engage the audience, but also all interaction should be acknowledged and an open dialog created. A company can glean information about their publics by offering surveys and polls as part of the message strategy. Additionally, feedback from the target audience presents a company with insight into the psyche of their customers. Social media—when used for marketing communication—should not be exempt from targeted communication strategies.

Target audiences, market segments, and defined publics are unique groups that can impact the company’s goals. The process of identifying a target audience for public relations and advertising is similar. A public relations professional defines his or her ‘publics’ by using traditional methods of gathering data through primary research. This approach can be expensive, but the results are specific to the business needs. In other words, primary research approaches—such as focus groups, surveys, interviews, and observation—allow companies to identify and learn more about their target market.

Secondary research is less costly and easier to obtain. The results, however, may not be as accurate as information gleaned from primary research. Secondary research is typically a great way to quickly identify a target audience. Basic demographic, psychographic, and geographic information is important for understanding the ‘anatomy’ of the members in a target audience. This information alone is enough to develop communication strategies across social media channels, but a physical address, email address, or phone number is necessary for a direct marketing communication.

Both advertising and public relations use a mass marketing or broadcast approach to deliver messages to their respective target audience. A public relations professional will cast a wider net than an advertising professional when identifying their publics. A segmented public encompasses the target audience, but also includes secondary audiences, policymakers, and gatekeepers (Weinreich, 2010). A public relations campaign is intended to create goodwill for a product, company, or cause. One common goal of both advertising and public relations is to communicate with the target audience or segmented public in a language best understood.

Advertising is Becoming Less Effective

Every successful message strategy begins with an effective use of language. Whether the marketing campaign uses advertising methods or public relations tactics, the message must be written specifically for the intended audience. The clarity and simplicity of a message has a direct impact on the success of the communication. Jargon and clichés should always be avoided. A public relations message can lose credibility if euphemisms or discriminatory language is used (Cameron, et. al., 2008, p. 150).

Advertising messages do not carry the same credibility as pubic relations messages. Consumers know that advertisements are designed to sell a product or service. Most consumers have become callused against catchy slogans and gimmicks, leaving the door wide open for public relations style communications to replace traditional advertising. The writing styles between an advertising copywriter and a public relations writer is vastly different. Advertisements typically concentrate on a single benefit of a product or service. Public relations materials are written in a journalistic style, while offering more in-depth information about a company, product, or services (Mathlesen, 2010).

While advertising continues to have its place in the marketing toolbox, public relations is proving to be a more versatile solution. Toyota Motor Corporation experienced first hand the issues surrounding the use of advertising in a situation better suited for public relations. In March 2010—in the wake of public concern over safety issues—Toyota spawned an advertising campaign designed to promote brand loyalty and build retention. The problem, however, was that Toyota failed to address specific concerns surrounding congressional inquiries and safety investigations. Moreover, Toyota did not seem humbled by the problems and made no effort to apologize to their customers (Fredrix, 2010).

Toyota’s advertising arrogance had a negative impact on their loyal following. A public relations campaign would have provided the goodwill needed at a time when the public was unsure about the company. Additionally, public relations becomes the credibility conduit between the consumer and the company. The public trusts anything written in a press release or other public relations communication. Ford Motor Company was faced with similar challenges in 2000 when many Bridgestone tire clad Ford Explorers were responsible for over 250 traffic deaths. Ford chose to reduce their advertising efforts until the public trust was regained.

The general public is skeptical of advertising. Advertising is considered self-serving and ineffective. Branding is an important part of marketing. Public relations tactics continue to be more effective than advertising for building brands. The top five brands according to The Economist magazine are Google, Apple, Coca-Cola, Starbucks, and Ikea. In contrast, the top five advertisers are, General Motors, Proctor & Gamble, Ford, PepsiCo, and Pfizer (Elliott, 2010).

Public relations offers credibility, clarity, and cost advantages over advertising. The public has weathered advertising promises for many years. No matter how cleverly disguised, an advertisement is still designed to sell. The journalistic approach of public relations messages creates a newsworthy credibility that will never exist in advertising. Claims and comparisons sometimes cloud the underlying intention of an advertisement. A public relations message is always clear, concise, and directly to the point.

One of the greatest advantages of public relations over advertising is the cost. Marketing publicity is a form of public relations that involves getting stories published about a company’s products and services. Each product inherits the credibility of the publication. Consumer Reports, for example, is known for unbiased reviews and comparisons of thousands of consumer products. Several magazines and websites specialize in restaurant and travel reviews. All of this publicity is impartial and free.

Public relations is viral. A public relations campaign can be spread across many communication channels simultaneously. Social media offers additional advantages to public relations over advertising. Word of mouth communication is commonplace on the Internet. With a single click of the mouse, a consumer can easily share information and opinion about a product or service to thousands of individuals.

For years, the words advertising and marketing were synonymous. The recent economic challenges have forced consumers to make cutbacks on products and services. Advertisers are creating more aggressive campaigns in hopes of creating a spending frenzy. In the aftermath of government bailouts and mass media coverage of mismanaged corporations, the public is desensitized to advertising. Companies need to bring themselves into the public spotlight and win the trust of their target audience. Public relations produce goodwill in the company’s various publics (Turney, 2001).

Public relations activities blaze the trail so that advertising is more effective. Moreover, advertising is more effective if following a public relations campaign. While advertising cannot perform the same function as public relations, marketing campaigns using public relations tactics can accomplish the goals of traditional advertising—increase sales and raise company or product awareness. Advertising will always be an important instrument of marketing. Public relations is proving to be a viable alternative to traditional advertising, and the lines between the two are fading. Public relations has supplanted advertising and quickly become the new marketing ethos.

References

Arens, W., Schaefer, D., & Weigold, M. (2009). Essentials of contemporary advertising. McGraw-Hill Irwin: Boston.

Cameron, G., Wilcox, D., Reber, B. & Shin J. (2008). Public relations today: Managing competition and conflict. New York: Pearson.

Caywood, C. (1997). The handbook of strategic public relations and integrated   communications. McGraw-Hill: Boston

Dubois, L. (2010). How to write a social media press release. Retrieved January 30, 2011, from http://www.inc.com/guides/2010/11/how-to-write-a-social-media-press-release.html

Elliott, J. (2010). Advertising vs. PR. Retrieved January 28, 2011, from http://www.tvaproductions.com/article/advertising-vs-pr—17.php

Fredrix, E. (2010). Toyota: No apologies for safety problems in latest ad campaign. Retrieved January 31, 2011, from http://www.huffingtonpost.com/2010/03/07/toyota-no-apologies-for-s_n_489229.html

Guadagni, D. (2009). Social media: 5 strategies for interactive communications. Retrieved January 28, 2011, from http://innerarchitect.com/2009/06/22/social-media-5-strategies-for-interactive-communications/

Mathlesen, S. (2010). Advertising vs. public relations. Retrieved January 30, 2011, from http://www.suite101.com/content/advertising-vs-public-relations-a187370

Shauib, Y. (2011). Publics and target audiences. Retrieved January 28, 2011, from http://yashuaib.tripod.com/id12.html

Turney, M. (2001). Public relations and marketing were initially distinct. Retrieved, January 25, 2011, from http://www.nku.edu/~turney/prclass/readings/mkting.html

Weinreich, N. (2011). What is social marketing? Retrieved January 28, 2011, from http://www.social-marketing.com/Whatis.html

Watch Your Language

30 Thursday Dec 2010

Posted by in Marketing Philosophy, Marketing Strategy

≈ Leave a comment

Tags

, , , , , , , , , ,

Successful marketing communication requires a strong understanding of the language of the intended audience. Never assume that a whimsical or clever catch-phrase or slogan will be understood by everyone. Language is an evolution of culture, and cultures are geographically bound. Therefore, language is a unique representation of culture in a specific time and location. Language is mostly thought of as spoken words with inflection, tone, and pronunciation linked to a country, state, or region. Variations of language within the same culture are separated by a historical timeline.  Hath, henceforth, and hither were commonplace in a Shakespearean play. These words would disrupt and confuse a conversation in a modern day culture.

From Old English through Middle English and into Modern English, sometimes referred to as the Queen’s English, cultural changes influenced language. Alterations of dialect, such as pronunciation, were a direct result of the separation of societies into culturally common groups. The wealthy were educated and pronounced every word with accuracy. The lower class societies could not afford books or to properly educate their youth. As a result, a variation of the language was evolved—influenced by culture. While the words were identical, the pronunciations were radically different. History can have an intense effect on language (Ellis-Christensen, 2009).

Over the past 1000 years, England has hosted many cultural changes with accompanying languages. The United States, a young country by comparison, has spawned many variations of its own language. Derived from the Queen’s English, American English has morphed into the many dialects we use today. We have more variations of language spread across many regions within our borders than ever before. The southern states are recognized as a culture with a slower, more deliberate, pronunciation of our modern vocabulary. Extra syllables are sometimes added as well as vowels accented to create the slow southern drawl we have come to associate with southern cultures.

The pronunciation of our American English vocabulary is bound to geographic regions in our country. There are subtle differences in speech between North Carolina, Tennessee, and Virginia. Individuals from this part of the country can identify a person from one of the other southern states. The New England states have a vernacular all its own. New York has New England and Canadian influence in the northern counties. The boroughs of New York City each enjoy a variation of the New York recognizable accent.

New York, like many other diverse densely populated regions in our country, has their own language. Once again, culture influences the evolution of these languages. A stoop is the Brooklyn word for the front stairs of a building. Dogs are attracted to and a fireman would attempt connecting a fire hose to a Johnny pump. Most of New York City uses the plural of you—yooze.

The United States has managed to incubate language more granular than that of a single culture. From cultures, through societies, and down to individual neighborhoods—language is altered and molded to be unique. Words are pronounced differently and new words are formed as a way to express independence from other cultures. Society affects language. Social boundaries are blurred as schools host multilingual classrooms (Budach & Rampton, 2008). Students from many cultural and ethnic backgrounds find common ground by developing a language unique to their social environment. A variation of language is created by the melting pot of several cultures proving once again that our cultural background forges our language.

Every country has a rich history of language and culture. As long as cultures change and societies are born, language will be as unique and versatile. While the base language for each country can be linked to a culture, societies and even neighborhoods can be responsible for the many variations of a single language. Words, expressions, and non-verbal communication are all part of the language with which we communicate. Our cultural background affects our gestures and reactions as much as our dialect and inflection. Communication is defined as, “Any process in which people share information, ideas, and feelings” (Hybels & Weaver III, 2007). Not only is language influenced by culture, but communication in general. Marketing communication should be indigenous. For your next marketing campaign–watch your language!

References

Budach, G. & Rampton, B. (2008). Language in late modernity: Interaction in an urban school. Language in Society, 37(4). p. 600. Retrieved April 4, 2009, from ProQuest Direct database.

Hybels, S. & Weaver, R. (2007).  Communicating Effectively.  Boston, MA: McGraw Hill Companies, Inc.

Leila, M. E. & Goodman, J. E. (2008). A Cultural Approach to Interpersonal Communication. Language in Society, 37(4). p. 619. Retrieved April 4, 2009, from ProQuest Direct database.

Ethical imperatives of a marketing company

03 Sunday Oct 2010

Posted by in Marketing Psychology

≈ Leave a comment

Tags

, , , , , , , , , , , , , , , , , , ,

A marketing company is faced with a plethora of moral challenges. Considering that it is the responsibility of a marketing company to provide services on behalf of other companies, it stands to reason that any unethical decision or approach reflects on the company being represented by the marketing firm. Moreover, antitrust concerns are always prevalent due to the fact that the marketing company has access to internal knowledge of many companies—some of which are competitors in the same market.

Unlike other types of businesses, a marketing company must be trusted with a client’s most valuable asset—their customer data. In many cases, customer records for several companies are comingled and hosted on a common platform. The marketing company is responsible for protecting the integrity of the information, but at the same time ensure that the proprietary information is not shared with competitors.  All the while, the marketing company is expected to create revenue-producing campaigns.

A marketing company’s success is based entirely on the performance and effectiveness of their strategies and campaigns. If a marketing company represents several clients in the same industry, there is an inescapable moral dilemma. The marketing strategy for one company could benefit from knowing the marketing strategy and corporate direction of another. The marketing industry is crowded and fierce. Pressure to retain a customer could lead to unethical decisions by campaign managers and salespersons within a marketing company.

The temptation for a salesperson to leverage information from one account for the purpose of producing revenue-generating campaigns for another is not uncommon. Pressure from upper management, coupled with personal financial responsibilities, can influence the salesperson to make immoral decisions. If caught, the individuals responsible can face serious legal problems.  Velasquez (2006) defines one of the five characteristics of moral standards as one “not established by law or legislature” (p. 9). Marketing ethics are based on—among other things—advertising truthfulness and honesty, and privacy in database marketing.

Antitrust laws were designed to allow businesses to compete fairly. Having access to a competitor’s playbook—in this case, their marketing strategy—exposes an unfair advantage. The Federal Trade Commission created the Bureau of Competition to promote competition and protect consumers (Feinstein, 2010). The Compliance Division of the Bureau of Competition would be responsible for investigating complaints and enforcing the laws. Any legislation, passed or pending, should be in the foreground of all decisions made by an agency in the marketing industry.

A proven record of capabilities and performance is imperative, but not at the risk of a bad reputation. A marketing company that cannot be trusted to represent the best interest of their client’s will not sustain business. Moreover, the same effort and expertise should be used on every marketing campaign—regardless of the client. Ethical guidelines are critical to establishing a trustworthy reputation in the marketing industry. Enforcing the guidelines is critical for maintaining the reputation and business.

Before ethical guidelines can be established, research regarding ethics in the marketing industry must be conducted. Whether the research is empirical or conceptual, the results will be enough to formulate a series of ethical guidelines for the marketing industry. Research should continue until there is enough information regarding all current ethical dilemmas in order to establish an internal corporate ethical policy. The most prevalent ethical issues facing the marketing industry are product safety and reliability, advertising truthfulness and honesty, fairness in pricing, and forthrightness in selling (Murphy, 2002).

The American Marketing Association has established a code of ethics that provides a strong framework for which an internal, company-specific, code of ethics can be developed. The company’s ethical guidelines should include details regarding product development, promotion, distribution, pricing, and market research. Each area has its own unique ethical challenges. For example, ethic issues regarding promotion would encompass false and misleading advertising. Coercion is associated with the distribution or supply-chain process. The code of ethics needs to take into consideration every aspect of the business.

Marketing research has always been under the microscope of morally sensitive consumers. No one is comfortable giving personal information to a complete stranger. A corporate policy on ethics would offer support to the researchers in the field, and help alleviate any concerns by the survey audience. A published policy on the storage, usage, and privacy of information collected in the field will put at rest any concerns by the general audience. Additionally, an acceptable usage policy could serve as an addendum to the corporate code of ethics.

Corporate ethical guidelines concerning antitrust issues are becoming more important today than ever before. While the current code of ethics developed by The American Marketing Association concentrates on issues affecting consumers, there is little written regarding antitrust or business-to-business relationships. Legislation on the subject of antitrust has been in effect for over one hundred years.  The aim of antitrust legislation is to create a level playing field for competitors (Fontenot, 2010). At the same time, however, antitrust laws and corporate adopted ethic guidelines are designed to protect the organization.

A corporate guideline of ethics needs to go beyond the issues covered by legislation. The Sherman Antitrust Act of 1890, the Clayton Act of 1914, the Robinson-Patman Act of 1936, and the Federal Trade Commission Act of 1914 together ensure inter-firm competition without interfering with the spirit and creativity of the marketing industry. Standard Oil, Alcoa, American Tobacco, IBM, and Microsoft—to name a few—have faced charges for antitrust violations. These situations may have been avoided if an internal corporate code of ethics was developed and enforced.

The company’s code of ethics should be a culmination of two moral philosophies—moral idealism and utilitarianism. The moral idealism approach assumes many expectations drawn from industry standards to establish a universal acceptance approach (Sobel, 2010). The utilitarian approach will take into consideration social costs and benefits of the policies defined in the corporate code of ethics (Velasquez, 2006, p. 60).

The company’s code of ethics will ultimately define the ethical culture of the organization.

At one time or another, every company is faced with moral challenges. The need for scruples spans every department at every level. The need for written policies regarding the company’s position on certain ethical issues is crucial. A company-wide adopted code of ethics demonstrates the company’s moral responsibility. This is not only important to the employees, but many clients and prospects insist on such a policy. It is not unreasonable for a potential client to ask for documentation concerning service levels, continuity plans, and ethical standards.

Certain types of business conducted within a marketing company are bound by pre-existing regulations. For example, if a marketing company were to produce a campaign that leveraged information—such as personal health data—the HIPA regulations would need to be followed. Similarly, under certain conditions, the Sarbanes-Oxley Act of 2002 would be enforced to ensure the proper reporting of financial information resulting from campaigns.

A formal code of ethics should include sections covering the acceptable use of the company’s inter- or intra-net. A policy explaining the proper etiquette and protocol of communicating electronically is very important. A large percent of daily communication between employees and clients happens via email. The casualness of an email message sometimes lends itself to the inadvertent mention of sensitive company or client information.

Electronic communication has become the standard. This method of communication, however, exposes several vulnerabilities and concerns. Security of everyday, casual email messages is non-existent. The corporate code of ethics should address problems related to the flippant attitude sometimes portrayed in electronic communication. Casual comments can very easily be taken out of context and leveraged against a company for proving a lack of ethical standards.

Email etiquette and voice mail policies—at the corporate level—need to be well documented, distributed, and enforced as part of a corporate code of ethics. Email messages are no longer used only to send quick messages to the next cubicle (Woloch, 1999). Important corporate communications, such as policies and contract negotiations, are distributed across email channels. The simplistic nature of email communication lends itself to vulnerabilities as it is used more often to communicate sensitive information.

One of the most important considerations for adopting a code of ethics is current technology. New technologies are realized every day. Companies are beginning to leverage technologies that did not exist a decade ago. Social networking, instant messaging, and text messaging are becoming mainstream communication tools for businesses in every industry. The code of ethics adopted by any company should include current issues that are easy to understand and enforce. The code of ethics for a marketing company will need to expand beyond the typical policies for interoffice communication. Social media has become a viable communication channel for corporate marketing and advertising.

A company code of ethics should never be a company secret, but rather the roadmap for morality.

Every employee, at every level, within the corporate structure should be trained to understand, abide by, and enforce the company’s code of ethics. The employees are the face and voice of the company. Every action is subject to scrutiny. The company will succeed by standing strong, unified, and embracing the adopted code of ethics. However, when an employee recognizes a situation that is contrary to his or her own moral virtues, there needs to be a mechanism for grievance.

The company’s code of ethics must include the procedure for reporting unethical behavior. A formal grievance procedure will encourage employees to become actively engaged in enforcing the corporate code of ethics. Moreover, the company is making a global statement regarding the widespread acceptance of the code of ethics policies. The grievance procedure will need to include sections explaining the differences, and reporting steps, between an illegal action and an unethical action. An illegal action, for example, should be reported to authorities responsible for upholding the laws.

Once adopted, the code of ethics will be circulated throughout the organization. Every employee will be required to attend training sessions that will enforce the importance of a company code of ethics on ethics while explaining the details of each internal policy. Most large organizations have an extensive human resources department. The HR department is already well versed in the methods and techniques for training employees on company policies and procedures. The challenge, of course, is managing competing schedules and the demands of clients while isolating the necessary time to train every employee.

While it is true that companies conduct ethics training to comply with legal mandates, positive fallout includes increased employee morale and retention (Tyler, 2005). With a well-defined code of ethics and a company-wide adoption of the policies, ethical issues can be addressed before they become a concern. As policies within the code of ethics change to address the company’s social costs, new training will be necessary to implement and enforce these policies. The corporate code of ethics is always evolving.

A marketing company must not only adhere to their internal policies, but also inherit the policies of their clients. Every marketing company eventually becomes an extension of other businesses. Any wrongdoing by the marketing company is reflected upon its clients. In some cases, as with Nestle in the 1960s, the burden of responsibility is entirely with the company—not the marketing firm or outside vendors. After many years of unethical behavior resulting in public boycotts, Nestle pledged to adopt the WHO/UNICEF International Code of Marketing of Breast-milk Substitutes (Sikkink, 1986). The development of a formal code of ethics by Nestle Corporation might have thwarted the unethical actions by their marketing and advertising team.

Businesses of every size leverage marketing companies for promoting their products and services. Any marketing company, bound by its own code of ethics, will accept projects that will not jeopardize their moral standards. Ethical dilemmas occur when a marketing firm is forced to choose between their moral compass and their bottom line. The policies outlined in the corporate code of ethics are only a guideline for moral standards. The decisions faced by a marketing company may not be as black and white as a code of ethics. In these situations, the company must look beyond these policies.

Companies find themselves, many times, faced with an ethical dilemma. In many cases, the problem is not internal to the company, but the result of a decision made by a client. A marketing company can be asked to develop a marketing strategy for a controversial product. There will always be a desire to be profitable, but to what end? A formal statement of ethical principles will add the necessary structure for an organization to become strong moral stewards. At the same time, a code of ethics can cause personal conflict. A marketing company armed with a code of ethics becomes the moral compass for their clients and a beacon of societal principles for the consumer.

References

Feinstein, R. (2010). Bureau of competition: 2010 user’s guide. Retrieved August 28, 2010, from http://www.ftc.gov/bc/BCUsersGuide.pdf

Fontenot, R. (2010). Antitrust issues in marketing. Retrieved August 29, 2010, from http://hercules.gcsu.edu/~rfonteno/Strategic/Anti-trust%20Issues%20in%20Marketing.pdf

Murphy, P. (2002). Marketing ethics at the millennium: Review, reflections, and recommendations. Retrieved August 28, 2010, from http://www.ethicalbusiness.nd.edu/pdf/Marketing_Ethics_Millennium.pdf

Sikkink, K. (1986). Codes of conduct for transnational corporations: The case of the WHO/UNICEF code. [Electronic version] International Organization, 40(4), 815-840. Retrieved August 27, 2010, from JSTOR: http://www.jstor.org/stable/2706830

Sobel, J. (2010). Kant’s moral idealism. [Electronic version] Philosophical Studies, 52(2), 277-287. Retrieved August 27, 2010, from http://www.springerlink.com/content/h386362587434775/fulltext.pdf

Tyler, K. (2005). Do the right thing: ethics training programs help employees deal with ethical dilemmas Retrieved August 29, 2010, from http://findarticles.com/p/articles/mi_m3495/is_2_50/ai_n11841923/

Velasquez, M. (2006). Business ethics – concepts and cases. Pearson Prentice Hall. New Jersey

Woloch, L. (1999). Email etiquette. Retrieved August 27, 2010, from http://www.theproductivitypro.com/newsletters/Number%202%20March%201999.htm

De-commoditize and Return to Profitability

20 Friday Aug 2010

Posted by in Marketing Strategy

≈ 3 Comments

Tags

, , , , , , , , ,

Your company has long been positioned as a leader in your industry.  The entrepreneurial and competitive spirit cascading through the organization inspires innovation. Without innovation, your company will find itself blending into the background with hundreds of other companies in the same market. Returning to profitability does not mean living in the past, but rather positioning for the future—without losing sight of how you got here.

From your early and humble beginnings, you realized that your products and services were becoming a ‘commodity.’ The moment when the majority of companies within a given industry can provide the same products or produce the same services—it becomes a ‘commodity.’ By leveraging existing or developing new technologies to make your products and services different from the competition, you ‘de-commoditize’ your business. In contrast, offering the services that make your company unique to other companies to add to their marketing mix ‘commoditizes’ your own services.

De-commoditization is a never-ending, full-time job. Most likely, technology has played an important role in your success. However, technology is also responsible for spring-boarding small companies onto your playing field—competing for your customers. Companies that leverage off-the-shelf solutions share the same capabilities, have identical advantages, and compete for business based entirely on price. Your company must establish a differentiator and separate from the pack to once again take the lead.

The window of opportunity for enjoying the exclusiveness of a new product or service is narrow. It is simply a matter of time before your closest competitors mirror your efforts. In many cases, your competition finds a way to offer the same services at a lower cost—making your services a ‘commodity’, and being in a better position to compete. You can combat this problem by making constant enhancements to your products and services—making it difficult for your competition to keep up.

Be aggressive and take charge of your organization. Do not become a spectator in your industry!

An Ounce of Prevention Saves a Gallon of Gasoline

13 Tuesday Jul 2010

Posted by in Marketing Strategy

≈ Leave a comment

Tags

, , , , , , , ,

Lightning does not strike twice, but thrice in the automobile industry. Over the past four decades, the automobile industry has been faced on three different occasions with consumer demand misaligned from automaker’s supply. Lessons from the first incident, in 1973, should have thwarted similar fallout from future situations. A short attention span, narrow focused direction, and greed are all responsible for the automobile industry’s inability to proactively produce automobiles that address the concerns of today’s consumer.

Making Decisions Without an Ear to the Ground

For whatever reason, the automotive industry seems to have a history of making decisions in a vacuum. The general public is sensitive to the aggressive increases in fuel prices, and yet the manufacturers produce automobiles with very low MPG ratings. The motive in the past, according to Paul MacDuffie in his 2008 Knowledge@Wharton article, was the irresistible profit margins on light trucks. Does greed continue to be the driving force behind the automobile industry’s selective hearing? One of the biggest mistakes any industry can make is to not listen to the consumer. With a deaf ear, the automobile industry repeated their mistakes again in the 1980s.

To combat the fuel shortage in the 1970s, auto manufacturers shifted to unleaded fuel, catalytic converters, and a recalculation of horsepower ratings (De Lorenzo, 2008). Of course, this did nothing for the actual rising costs of fuel. It did, however, mask certain sensitive issues such as MPG rating. As a result, consumers continued to purchase gas-guzzling automobiles. In the 1980s, automobile manufacturers perceived the fuel shortage as a temporary problem. They predicted that an aggressive drop in fuel prices would follow the shortage—and it did.

In 2005, Fox News reported that the latest fuel shortage would finally force the automobile industry to start developing fuel-efficient vehicles (2005). After surviving the affects of two previous shortages, the automobile industry felt confident that this too would pass. When the prices exceeded everyone’s predictions, analysts began to make predictions regarding the consumer’s tolerance. Automobile manufacturers were banking on the fact that Americans would probably pay nearly six dollars per gallon before giving up their sport utility vehicles. Fuel prices in Europe are nearly twice as much as in the United States.

The automakers gambled on the fact that the consumers would bounce back from the impact of high fuel costs and continue to purchase SUVs. One big mistake was to incubate the impression that the automobile industry is more interested in a profit than the economic welfare of the public. The lack of marketing research—an ear to the ground—during these times of crisis would have helped the automobile manufacturers develop products to combat the fuel shortages.

With the most recent fuel shortage, the automobile industry faced preemptive criticism. The consumers seemed to take the proactive role and demand better fuel economy. Avoiding a black eye, the automakers introduced several new hybrid and fuel cell model vehicles. The market conditions have changed. The industry is driven by the wants, needs, and concerns of the consumers as opposed to the arrogance of the industry. Pressure from several fronts has forced automakers to shift their focus.

As with any plan to change corporate direction, a formal strategy is necessary (Cateora & Graham, 2007). Automobile manufacturers can ensure success by conducting marketing research to determine the best array of products for the current consumer. Post-sales surveys are important to help fine tune the marketing mix. The most important tactic the automobile industry could add to their latest strategy is to become more sensitive to the concerns of society. Be a partner to the consumer and a friend to the environment.

The automobile is not entirely at fault. Without a demand for the gas-guzzling SUVs, automobile manufacturers would have no reason to produce them. The automobile industry could claim that they were simply satisfying the demands of the consumer, and it is the consumer that is thumbing their noses at rising fuel costs. While this may be true, it is the automobile industry that has thumbed its nose at the environment by not driving efforts and steering the public into environmentally friendly automobiles—until now.

The automobile industry is no longer behind the curve. Manufacturers are tuned into the pulse of the consumer. This is not the result of learning from their mistakes, or even proactively anticipating the financial burden of rising fuel costs. The automobile manufacturers realized that the consumers are demanding less dependency on fossil fuels. Moreover, automobile manufacturers have grown a conscience regarding the impact of internal combustion engines to our environment. And while an ounce of prevention can save a gallon of gasoline, an ounce of forward thinking can save a planet.

References

Cateora, P. & Graham, J. (2007). International marketing. New York: McGraw-Hill Irwin.

De Lorenzo, P. (2008). Rants #427 – Autoextremist ~ the bare-knuckled, unvarnished, high-octane truth. Retrieved July 12, 2010 from http://www.autoextremist.com/current/2008/1/13/rants-427.html

FoxNews.com (2005). High gas prices changing auto market. Retrieved July 12, 2010, from http://www.foxnews.com/story/0,2933,170297,00.html

Knowledge@Wharton (2008) Behind the curve: Have U.S. automakers built the wrong cars at the wrong time—again? Retrieved July 12, 2010, from http://knowledge.wharton.upenn.edu/articles.cfm?articleid=2012