Rajagopal. Marketing Dynamics: Theory and Practice

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Marketing Dynamics: Theory and Practice

• Product line brand positioning

• Performance oriented brand positioning

• End-use based brand positioning

• Technology based brand positioning

• Research based brand positioning

Brands of merchandise can also be positioned in the competitive market considering the various

aspects of market segmentation. Of these the more prominent indicators are:

• Demographic factors comprising age, income, sex, occupation, education, location variables

and the like

• Behavioral factors with reference to the variable of consumer satisfaction, taste, touch,

appearance, etc., related to the product

• Additional benefits in terms of multiple usage, health improvement, energy and the like

• Psychographic factors determining personality, social status and life style

Brand positioning can also be determined taking into consideration the unique features of the

merchandise. Packaging may be one of the attributes e.g. Brooke Bond’s ‘ stand pack ‘ of green

label coffee has a distinctive packaging among other existing brands in the market. Another approach

of brand positioning is selling a challenge for the close competitor linking marketing strategy to

warfare. Such an approach is called as brand positioning by the competitor.

CONCEPT OF PROMOTION MIX

Personal selling consists of verbal communication between a salesperson or selling team and one

or more prospective purchasers with the objective of making or influencing a sale. Many companies

feel that the personal selling is better strategy to manage the interface of buyer and seller and

therefore annual expenditures on personal selling are larger than advertising. However, advertising

and personal selling strategies share some common features, including creating awareness of the

product, transmitting information, and persuading people to buy. The personal selling is an expensive

way of persuading the buyers as compared to various ways of advertising. Salespeople can interact

with buyers to answer questions and overcome objections, they can target buyers, and they have the

capacity to accumulate market knowledge and provide feedback. Sales promotion consists of various

promotional activities, including trade shows, contests, samples, point-of-purchase displays, trade

incentives, and coupons. Sales promotion expenditures are substantially greater than the amount

spent on advertising. Direct marketing includes the various communication channels that enable

companies to make direct contact with individual buyers. The common direct marketing techniques

are catalogues, direct mail, telemarketing, television commercials, radio, magazine, newspaper,

electronic shopping and kiosk shopping etc. The distinguishing feature of direct marketing is the

opportunity for the marketer to gain direct access to the buyer. Direct marketing expenditures account

for a large portion of promotion expenditures. Electronic shopping is one of the newer forms of direct

marketing. Publicity or public relations for a company’s product, service, or idea involves

communications placed commercially in the media. The objective of public relations is to encourage

the media to include company-released information in media communication.

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Table 6.3 Criteria for Determining Promotion Mix

Marketing mix

Product factors Market factors Customer factors Budget Factors factors

• Nature of • Position in its • Household • Financial • Relative

product life cycle versus resources of price/relative

• Perceived risk • Market share business the quality

• Durable versus • Industry customers organization • Distribution

non-durable concentration • Number of • Traditional strategy

• Typical • Intensity customers promotional • Brand life

purchase of competition • Concentration perspectives cycle

amount • Demand of customers • Geographic

perspectives scope of the

market

A variety of factors should be considered to determine the correct promotion mix in a particular

product/market situation. These factors may be classified as product factors, market factors, customer

factors, budget factors, marketing mix factors etc. as outlined in the Table 6.3. Development of an

optimum promotion mix is by no means easy. Many companies often undermine the roles of advertising,

personal selling, and sales promotion in a given product or market situation. Decisions about the

promotional mix are often diffused among the decision makers, impeding the formation of a unified

promotion strategy.

Recent research conducted by the Strategic Planning Institute for Cahners Publishing Co. identified

the following decision rules that can be used in formulating ad budgets. These rules may be helpful in

finalizing promotion mix decisions.

• Market share - A company that has a higher market share must generally spend more

on advertising to maintain its share.

• Sales from new products-If a company has a high percentage of its sales resulting from

new products, it must spend more on advertising compared to companies that have well-

established products.

• Market growth-Companies competing in fast-growing markets should spend comparatively

more on advertising.

• Plant capacity-If a company has a lot of unused plant capacity, it should spend more on

advertising to stimulate sales and production.

• Unit price (per sales transaction)-The lower the unit price of a company’s products, the

more it should spend on advertising because of the greater likelihood of brand switching.

• Importance of product to customers (in relation to their total purchases)- Products that

constitute a lower proportion of customers’ purchases generally require higher advertising

expenditures.

4 Refer Workbook for Estimating your Advertising Budget : Cahners Publishing Co., Boston, 1984

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Marketing Dynamics: Theory and Practice

• Product price-Both very high-priced (or premium) products and very low priced (or

discount) products require higher ad expenditures because in both the cases, price is an

important factor in the buying decision and the buyer must be convinced (through advertising)

that the product is a good value.

• Product quality- Higher-quality products require a greater advertising effort because of

the need to convince the consumer that the product is unique.

• Breadth of product line-Companies with a broad line of products must spend more on

advertising compared to companies with specialized product lines.

• Degree of standardization-Standardized products produced in large quantities should be

backed by higher advertising outlays because they are likely to have more competition

in the market.

Expansion of product market largely depends on the way the product sales are organized. There

are many techniques adopted in organizing effective sales. They are- departmental stores, supermarkets,

mobile sale units, emporia, exhibitions and fun sales. Among these systems, the departmental stores

and supermarkets have received considerable attention in towns, urban and semi-urban areas, while

the mobile shops and fun sales have induced the buyers in the rural areas. The fun sales are organized

in less developed areas through the entertainment program. Such a system is being observed in

different Asian countries. In future more flexible methods of sales may appear to cover a larger

consumer segments under product market.

ADVERTISING OBJECTIVES

It is necessary to pinpoint the objectives to build a good advertising program of the ad campaign. It

would be wrong to assume that all advertising leads directly to sales. Sales is a multiphase phenomenon,

and advertising can be used to transfer the customer from one phase to the next: from unawareness

of a product or service, to awareness, to comprehension, to conviction, to action. The objectives of

advertising may be defined by any one of the following approaches: inventory approach, hierarchy

approach, or attitudinal approach.

A number of scholars have articulated functions performed by advertising. The objectives of an

ad campaign may be defined from an inventory based on a firm’s overall marketing perspective. The

inventory approach to set-up objectives of the advertising may be set considering many aspects as

presented in Table 6.4.

Inventory approach is helpful in emphasizing different objectives in advertising. These advertising

objectives may be selected with reference to the overall marketing plan. This approach helps the

advertiser choose a better functional platform for projecting the advertisement.

In hierarchy approach, the objectives of advertising should be stated in an action oriented

psychological form. Accordingly, the objectives of advertising may be defined as (i) gaining custom-

ers’ initial attention, perception, continued favorable attention, and interest; or (ii) affecting custom-

ers’ comprehension, feeling, emotion, motivation, belief, intentions, decision, imagery, association,

recall, and recognition. The concept of this approach is that customers move from one psychological

state to another before actually buying a product. The purpose of advertising should be to change the

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customers from the state of indifference or negative to the positive approach and ultimately towards

purchasing the product. The attitudinal approach of advertising is instrumental in producing chang-

es in attitudes; therefore, advertising goals should be defined to influence attitudinal structures. This

strategy is helpful in developing a positive consumer attitude towards the company, brand, product

class and attributes, competitive advantages and post sales services. The attitudinal approach is an

improvement over the hierarchical approach because it attempts to relate advertising objectives to

product/market objectives.

A person completely familiar with all product/market perspectives should define advertising

objectives. A good definition of objectives aids in the writing of appropriate ad copy and in selecting

the right media. It should be recognized that different ad campaigns for the same product can have

varied objectives.

ADVERTISING STYLES

It is an art and can not be limited to the theoretical boundaries. The advertising manager always

stays at liberty to design the message in the most appropriate manner to insert in a popular media for

achieving best results. However, some common techniques are observed in the product advertising.

They are:

• Comprehensive advertisement

• Positive advertisement

• Negative advertisement

• Social theme based techniques

• Future project base techniques

• Entertaining and family oriented

Table 6.4: Setting Advertising Objectives – Inventory Approach

Areas of Influence Attributes

Increase sales • Encouraging potential purchasers to visit the company or its dealers

• Obtaining leads

• Inducing professional people (e.g., doctors, architects) to recommend

the product

• Securing new distributors

• Prompting immediate purchases through announcements of special

sales and contests

Creating awareness • Informing potential customers about product features

• Announcing new models

• Highlighting the unique features of the product

• Informing customers about product availability

• Announcing price changes

• Demonstrating the product in use

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Marketing Dynamics: Theory and Practice

• Gender sensitive

• Product-customer age cohesive

• High frequency insertion - Drive

• Average frequency insertion- Cue

• Reorienting Consumers- Flanker

• Scientific message

• Abstract message

• Indicative and symbolic for segment customers

• Influence leader oriented

• Comparative product profit oriented

These techniques change according to the behavioural changes in the customers towards the

products. All techniques may not be appealing but are equally expensive. Hence, an advertising

manager should be very selective in adopting an appropriate technique, as the advertisement/

communication expenditure also reflects in total cost of the product and also affects the pricing

structure.

MESSAGE STRATEGY

Development of message strategy is linked to an advertiser and media factor. It depends on what an

advertiser needs and how the message for advertising can be carried on the media effectively. A

compromise to these factors would help in developing the most effective message idea, as a

result of facts judged about products, markets consumers and competitors. In this process the

strength of background information is the foundation of building message ideas. The copy writers,

artists and creative advertising personnel of advertising agency should know the pulse of generating

effective message ideas. There are two basic sources of idea stimuli - (i) intuition drawn on the basis

of acquaintance with the product or service and (ii) scientifically collected data on the product and its

marketing plans. The data can be collected in two ways as stated below:

• By administering primary investigation tools

• By obtaining secondary information supplied by authentic sources.

Message strategy should match with any of the four advertising objectives comprising

psychological pull, action, marketing and institution oriented. The application of any of these

objectives would help in generation of message ideas. However, it needs to be tested on different

components of ‘creative-mix’. This mix consists of verbal and non-verbal elements.

They say love never grows stale. At least Oswal Woollen Mills believes it is true. The 60-seconds

advertisement for its Monte Carlo brand of winter wear, featuring Lisa Ray and Dino Morea

(models of India), aims to add a fresh, contemporary dimension to this core value. The film opens

in a western-style departmental store all decked up for Christmas. As Ray’s character travels up

the escalator, Morea’s travels down, and of course they don’t notice each other. Finally, both girl

and boy land up at the same store, leaving identical Monte Carlo bags at the entrance.

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Girl has a tiff on the cell

phone with someone

and stomps off in high

dudgeon... with the

wrong bag. Boy is left

with his mouth

hanging open, having

failed to stop her. Back

home, girl excitedly

pulls a red pullover out

of the bag and slips

into it. Only to

discover it’s about five

sizes too big.

Bemused at first, she

figures out the mix-up and starts fooling around, enjoying the sensation of being lost in the

enveloping warmth. The doorbell interrupts her fun. The girl answers door to discover the

boy outside, holding up her bag. A little talk and the glimmerings of a romance before he

departs, leaving the pullover with her along with the memory of ‘the way you make me feel’.

This Television campaign has significant non-verbal signals that convey the product and

consumer relationship. The rich red wool, sparkling eyes and flickering firelight create an

island of warmth and human bonding in the midst of a frosty winter.

Company is trying to achieve and maintain its leadership position by giving the brand a chic edge

in the face of a plethora of competing brands. The predictable success is anything to go by, the

storyline should appeal to the young Indian.

CREATIVE-MIX

Decision making in creative-mix is to be based on the advertising objective and audience. In

developing an advertisement, thinking and feeling sets high importance among other behavioral

variables. An advertising objective for its long lasting effectiveness should possess the following

characteristics as exhibited in the Table 6.5.

Table 6.5 Creative-mix in Advertising

Verbal elements Non-verbal elements

• Copywriting Illustrations • Visuals

• Headlines • Layout

• Slogans • Typography

• Brand names • Trade mark

• Performance statements combination • Color and Special Effects

• Institution reports • Dynamics

• Music

Box 6.1: Monte Carlo—advertising concept and strategy

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Marketing Dynamics: Theory and Practice

STRATEGIES TO DEVELOP WORD-OF-MOUTH ADVERTISING

Word-of-mouth advertising has been called the world’s best kept marketing secret. No matter how

much money the movie industry spends on advertising, we still consult our friends about which

movies to see. And our friends and relatives are the number one source of information about places

to visit. Some categories are more dependent than others on word-of-mouth referrals. Topping the

list, for example, are decisions about choosing a doctor, a mechanic or lawyer. The companies and

advertising agencies believe that consumers tend to rely less on word-of-mouth, however, in choosing

where to buy a car, obtain a personal loan or get a haircut. Word-of-mouth exists because it is

impossible for consumers to know everything about everything. When a product is complex and

difficult to evaluate and when there is risk involved in the decision - as is the case with the purchase

of many services - consumers often look to others for advice.

Consumers look at the people they know, or those with whom they have strong ties. And if their

advice is good, they regard these people as expert sources in the future. Word-of-mouth has many

benefits for companies. Leads attracted to the business via word-of-mouth cost less and such sales

are easier to close. As well, referrals tend to generate better quality customers in terms of profitability

and loyalty compared with those attracted via price promotions in advertising campaigns. Marketing

consultants Mercier Gray found that 60 percent of consumers purchased products solely through

personal recommendation and that only 29 percent had ever bought a product as a result of seeing it

in a TV advertisement. Although word-of-mouth is an extremely effective tool, few people know

how to develop it. The best word-of-mouth advertising programs happen by design, not by chance.

Word-of-mouth can be managed. Here are some tips to help the managers do just this.

1. Memorable service

Word-of-mouth does not happen overnight. It ultimately depends on the quality of your

customer service. This is rarely based on one thing you do. Rather it is the result of

hundreds of little things you consistently do a little bit better than your competitor. Things

like exceeding customer expectations and delivering on your promises. People often

remember your customer service more distinctly than your product, so focus on making

the experience memorable. Absolutely nothing will help you to generate referred business,

if your company cannot deliver a superior experience.

2. Be positive

Train your employees never to say anything negative about your company to customers

or to friends. Reward those who speak positively. It is also good policy not to badmouth

the competition. If your organization uses volunteers, ensure they also understand their

roles as ambassadors. Train them the same way you would train the employees.

3. Talk to customers

Ensure your customers know how important referrals are to your business and let them

know how much you appreciate them. It is necessary to plant word-of-mouth seeds. When

5 The Record, February 21, 2001

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clients express their satisfaction with your goods and services, acknowledge their kind

words with a sincere thank you. Then, take it a step further and let them know how much

of your business is as a result of referrals from satisfied customers like them.

4. Incentive programs

Some organizations use incentive programs to generate referrals. Tactics such as paying

cash for referrals may work. However, too often they smack of a bribe in exchange for

a list of names of your friends. Instead, offer free samples that let you introduce clients

to products or services they might not have otherwise tried. You could also give discounts

against future purchases, memberships or other gifts.

5. Maintain a presence

One of the best things you can do is to simply stay top of mind with your customers. Ensure

your company maintains a presence by sending a quarterly newsletter, or by inviting them

to special events, if appropriate.

6. Network

Another key to building a word-of-mouth referrals is networking. The only people who

are going to give referrals to you consistently are people who know and trust you. You

need to spend time with the right people in structured professional environments, building

friendships and lasting professional relationships.

7. Help others

Referrals are like boomerangs. What goes around comes around. So be sure to remember

those who have sent you referrals when you are asked for the name of someone who

can help.

Advertising objectives should serve three key determinants of product. They are -dissemination

of message; decision making and evaluation of the advertisement or advertising strategy. The Table

6.6 exhibits the attributed that are required for developing the good advertising.

Table 6.6: Attributes of Good Advertising

Attributes Reason

Continuity For hierarchical order of advertising

Precise To educate the consumer in short span

Measurable Enabling to perform monitoring exercise and feed back analysis effectively.

Realistic Presenting the facts and market experience of the product or institution

Flexible Convenient for all ethnic groups, age, class and literate groups to understand and

retrieve.

Impressionistic Should possess long term symbiosis of product and company with consumers

COPYWRITING

Copy refers to the content of an advertisement. In the advertising industry, the term is sometimes

used in a broad sense to include the words, pictures, symbols colors, layout, and other ingredients of

an ad. Copywriting is a creative job, and its quality depends to a large extent on the creative ability of

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Marketing Dynamics: Theory and Practice

writers in the advertising agency or in the

company. However, creativity alone may not

produce good advertising copy. A marketing

strategist needs to have his or her own

perspectives incorporated in the copy such as

the following basic parameters what to say,

how to say it, and to whom to say it. The copy

of an advertisement should address information

on advertising objectives, product, target

customers, competitive activity and ethical and

legal considerations. Although copywriting may

be the outcome of a flash of inspiration on the

part of an advertising genius, it must rest on a

systematic, logical, step-by -step presentation

of ideas.

Copy of the commercial of Hong Kong

and Shanghai Banking Corporation (HSBC)

shows how financial institutions invariably

appeal to the consumer’s emotions through

their advertising when money matters are

supposed to strictly involve head-over-heart

decisions. The television commercial film,

conceptualized by Lowe Lintas, HSBC

Group’s global creative agency is part of an

international series being run in the print and

electronic media, based on the same tagline.

The film is a part of HSBC’s ongoing image

campaign which seeks to drive home the brand

attributes of trust, integrity, reliability and

excellent customer service. What we are

trying to show is that every HSBC employee

is willing to go that extra mile for the customer,

beyond the call of duty.

In advertising terminology copywriting

refers to “studying of text” or ”body of the

text” to be put in an advertisement and devising

its “Headline” or caption. In broad sense ‘copy’

refers to writing of a message of an

advertisement, including the headline and text.

It is believed that an advertisement is complete

Is it like kissing a girl ?

Strategy Focus 6.2:

Delivering the Product Objectives: The

Coca-Cola Way

The Atlanta-based soft drink giant Coca-Cola has

always emphasized a strong role for advertising to sell

its soft drinks. In its various advertising campaigns in

recent years, Coca-Cola utilized such major themes as

‘things go better with Coke’, ‘Coke is it’, ‘Always

Coca-Cola’, and others to sell its products. A brand

can be a badge, an emblem, a global symbol that can

bestow credibility, and attract instant attention in a

new country, a new category, a new industry. The

Atlanta-based soft drink giant, one of the world’s

biggest advertisers, relies heavily on sports-related

advertising to boost worldwide sales, particularly for

Coke Classic (during its sponsorship of the 1994 soccer

World Cup, Coca-Cola saw double-digit sales increases

in Mexico and Argentina). The Olympics represent

Coca-Cola’s biggest 1996 marketing thrust. In the

summer of 1996, the company spent more than US

$200 million in Games-related marketing, including

the Olympic city park and approximately 70

billboards lining the streets of metro Atlanta. It’s

Atlanta, Coke’s hometown, and it was the 100

anniversary of the Olympics. The Olympic Games

contributed to increased brand awareness because every

visitor was exposed to the advertising of the Coca-

Cola company. In addition the advertising campaign

had been seen in many different countries.

Source : Adapted from various sources, The Business

Week, The Euro Monitor, 2003, 2004

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when visuals are supported by words i.e. copy, though visual advertising makes an in-depth impact,

the value of text can not be ignored. An exclusive non-verbal creative-mix cannot convey the message

in isolation. Hence the importance of copy writing is invariably considered by advertising agencies.

However, contrary to this notion, some advertising agencies feel that the consumers make

buying decisions from the visual illustrations and price line information because of the impact of

“copy”. Yet, in the field of advertising both believes are honored and integrated for effective

response. Copywriting in advertising depends on the four conditions. They are: desired response

for copy writing, inducement offered for advertisement and an approach for copy writing adopted

by the advertising agency. These conditions are inter-related. An institutional copy and a

promotional copy of the advertisement may be categorised on the basis of desired response. A

set of inspirations which endeavors to have an institution ‘copy’ lies in (i) selling the idea (ii)

acquainting consumers with products and (iii) attracting long range patronage for the product

from consumers. A “Service copy” is required for product canvassing in retail stores while a

“prestige copy” is taken to build reputation of the product advertised and its company. Unlike

‘service copy’, the ‘prestige copy’ offers the merchandise to build its image and utility. A

‘promotional copy’ is used for generating instant sales in the retail stores. The details of the

product in fashion and its stand in the market are provided to the consumer for reference in the

‘fashion copy’. It presents and interprets facts graphically with glamorous visuals and the exposure

styles which are commonly accepted by the consumers. The advertising of household application

products or direct utility merchandise is dealt in ‘Utility Copy’ to educate the consumers of

usage of such products.

DEVELOPING MEDIA PLAN

Media planning is an essential exercise to be performed in advertising management. In developing

a media plan, five basic dimensions need to be assessed. They are (i) media objectives (ii) target

market (ii) media types (iv) media vehicle and (v) media scheduling. Besides these factors, continuity

is also an important indicators which relates to time scheduling of messages on media. At the

introductory stage it is required to allocate advertising budget for higher media time that can be

gradually reduced as the stand of merchandise in the market advances. However, the life cycle of

the merchandise also needs to be considered while setting the objectives.

Setting Target Markets

It is required to take the help of media specialist in identifying target markets for the

merchandise to be identified and the type of advertisement required thereof. The market

segmentation principles have to be considered for setting target market for physical distribution of

merchandise and media has to be selected accordingly.

Media Selection and Budgeting

Data on effective media responses has to be analyzed for selection of the particular media.

The cost of advertising on media on the basis of the frequency and continuity needs to be set for