Marketing Plan

9 Managing the Marketing Effort Businesspeople in a meeting. FlamingoImages/iStock/Getty Images Plus Learning Outcomes After reading this chapter, you should be able to Summarize three reasons integrated marketing communication has become imperative. Describe two uses of analysis in marketing strategy formulation. Summarize the decision factors in media planning. Describe the use of marketing dashboards for control in marketing management. Summarize the relationships among analysis, analytics, and Big Data. Describe the implications of Big Data for control through metrics. Introduction Managing the marketing process is central to the operation of any business in any industry sector. Chapter 2 covered the “what” of that process—the steps that take place in a specific order to carry out the marketing function for a business. This chapter takes a different approach to the same subject, tying together many themes from previous chapters. At this point in your study of the basic principles of marketing, you know a great deal more about the marketing mix, customer markets, competitors, and environmental influences than when you began. You are ready to deepen your understanding of the concerns of marketing management—the “who,” the “how,” and the “why” behind the marketing process. Managing the marketing effort requires four functions: analysis planning implementation control In this chapter, we will consider each in turn—but first, let’s confirm that they are taking place within the frame of integrated marketing communications (IMC)—the management approach required to achieve coordination across those four functions in today’s multichannel message environment, online and offline. IMC demands that organizations link all management initiatives related to brand communications so that receivers encounter a consistent message across all channels. The increasing complexity of marketing communications across paid, owned, earned, and shared (POES) message channels (discussed in Chapter 6) gives urgency to the adoption of the IMC approach, in order to manage the marketing effort more effectively. 9.1 Integrated Marketing Communications Successful use of the IMC approach requires teamwork across every business function touched by sales, marketing, and corporate communications. In-house resources must work seamlessly with outside partners, like traditional advertising agencies, digital marketing firms, media buyers, and more. But achieving a meaningful level of coordination among internal units, service providers, channel partners, and customers is not easy. The fundamental concern of IMC is integration. What does it take to ensure that audiences encounter a consistent and effective message across all channels? That consistency is what turns disparate messages into positive associations linked to a brand in the minds and memories of the target audience. Thus, the goal of IMC must be to make certain that all of a brand’s communications work together to support each other and provide a unified message to the target audience (Hatheway, 2013). As digital platforms have proliferated, so have the number of ways in which a brand can communicate with its target market—and more to the point, the number of ways in which a consumer can assemble an impression of the brand. A Quick History of IMC The first definition of IMC appeared in 1989, written by a task force of the American Association of Advertising Agencies attempting to make coordinated marketing the domain of the advertising agency (as opposed to the client firm). This was during the marketing era discussed in Chapter 1, in which increasing professional specialization in the marketing discipline was making coordination more difficult to achieve. As the marketing era gave way to the relationship era in the 1990s and the marketer’s objective became developing long-term relationships with customers, IMC gained credibility. Academics and practitioners alike were drawn to IMC for its promise of sustainable competitive advantage that the marketing department could control (Mūnoz-Leiva, Porcu, & del Barrio-García, 2014). Its principles were codified and taught by Professor Don Schultz at the Northwestern University Medill School of Journalism. Long considered the “father of IMC,” Schultz is the author of over a dozen books on the subject and is still active in promoting the IMC approach (Northwestern University, 2016). Over the decades, the question of where responsibility for controlling IMC should rest remained in flux. The advertising industry went through significant changes in the 1980s and 1990s, when large firms bought up smaller specialist shops, in part to create capability to handle the increasing proliferation of promotional channels. Consolidation allowed agencies to achieve integrated strategy and execution across those channels by keeping control under one roof. But clients weren’t necessarily eager to be bound so tightly to one agency. As the 1990s gave way to the 2000s, client organizations began to move the brand management role in-house, taking control of IMC (J. Karrh, personal communication, January 14, 2016). More recently, as the humanity-centric Marketing 3.0 era has begun to drive marketing thought and practice with its view of customers as collaborative partners, acceptance of the importance of IMC has been increasing because IMC is inherently customer-centric (London School of Marketing, 2015). The current definition of IMC from the Journal of Integrated Marketing Communications (2017) provides the foundation for understanding how IMC is currently practiced: Integrated marketing communications (IMC) is a strategic approach through which organizations drive performance by engaging, serving and communicating with consumers and other stakeholders. IMC combines qualitative understanding of consumers with large-scale analytics to develop communications and content that build and maintain strong brands. Grounded in advertising, IMC has emerged as the premier way for organizations to manage customer experiences in the digital age. (p. 4) Adopting the IMC approach means committing to grounding all components of marketing communications in research and coordinating efforts so the target audience receives a single consistent message. How companies approach IMC has changed over the decades, but one reality has become clear: The need for strategic coordination of marketing efforts to deliver consistent customer experiences is here to stay. The IMC Imperative The media landscape is constantly expanding, with new digital media channels being introduced and new uses for traditional media being discovered every day. IMC has become an imperative, for three reasons: As audiences have become more fragmented, the audience reached by any single media channel gets smaller and smaller. Advertisers must use multiple channels to reach everyone in a target market. Consumers integrate the message themselves. The brand narrative they perceive emerges from the sum of all points of contact that the consumer has with the company. Encountering the same message via every channel from television to social media to in-person experiences increases the integrity and consistency of that perception. For cost efficiency, companies must coordinate their efforts across multiple departments and platforms. By reducing duplication of effort and increasing the efficiency and effectiveness of marketing communications, IMC maximizes return on a company’s investment in marketing. The strategic management implied by IMC will remain necessary, if challenging, even as the options for delivering the message proliferate and change (Percy, 2008). The Push-and-Pull Communication Model The second point above names a fundamental insight of IMC: the integration referred to occurs as much at the external receivers’ end as it does among the various internal departments and external suppliers charged with integrating their contributions to the organization’s marketing communications. Schultz has presented widely on what he has termed the push-and-pull communication model in today’s marketplace. In his view, brand communications have traditionally been based on outbound, marketer-controlled systems. Consumers now function in a media environment in which they can block marketers’ push messages and assemble their own information network, pulling toward themselves whatever they deem relevant and trustworthy. They draw from social media as well as traditional message channels. For this reason, marketers must do everything they can to ensure the consistency of messages across all channels, so that the message consumers pull together for themselves is consistent with the message that the marketers have pushed. In this new paradigm, consumers are as important as marketers in the communication process. IMC should be recognized as a means of holistically managing the consumer experience so that the sum of receivers’ participation with brand communications (whether pulled or pushed) is greater than its parts—and consistent across all channels and experiences. Field Trip 9.1: Don Schulz on IMC If you’d like to hear more from Don Schultz, follow this link to a short video in which he discusses his 2016 research paper, “The Future of Advertising (or Whatever We’re Going to Call It),” published in the Journal of Advertising. https://www.youtube.com/watch?v=vG4OxPf6hXw 9.2 Marketing Management and the IMC Approach Schultz expressed concern that marketing practitioners are more likely to have been trained in push techniques, rendering them ill equipped to serve consumers who are pulling instead of accepting what is pushed at them. Marketers who understand today’s pull paradigm must bring their less-forward-thinking peers along, even if that means new hires “teaching old dogs new tricks.” Of course, not every marketing department in every company has the influence to shift senior leaders toward adoption of IMC. The power of the marketing department varies from industry to industry and company to company. While results may vary depending on the marketing department’s ability to lead implementation of IMC, certain best practice rules have emerged. Get senior management support for the initiative by emphasizing benefits, such as cost-effectiveness and shortened sales cycles. Pursue integration both horizontally (across departments) and vertically (among channel partners). Create and monitor visual design standards for the use of brand identity elements such as logos and typefaces. Develop a robust CRM system to house and share vital information. Articulate a clear marketing communications strategy, from the value proposition on through each element of segmentation, targeting, and positioning. The firms that adopt IMC will find an additional point of advantage over their late-adopting competitors. Field Trip 9.2: An Education in IMC Follow these links to view current university programs in IMC. Form your own opinion of the suitability of educational curricula to the challenge of the push-and-pull communication model. http://www.medill.northwestern.edu/imc http://www.ithaca.edu/rhp/depts/stratcomm/programs/imc Concerns Regarding IMC In a 2015 interview in Forbes, Schultz shared his views on “what’s wrong with marketing today.” He took issue with marketers’ focus on “snapshots”—what happened last month or last quarter. He recommended looking at longitudinal data collected over 6 to 10 years to reveal meaningful patterns. He also voiced concerns regarding organizations’ lack of follow-through in using the data they collect, especially B2B organizations. It is not surprising that as the father of IMC, Schultz is concerned that even decades after the introduction of the IMC approach, marketing practitioners are unprepared for the sophisticated demands of today’s marketing management. He finds that the biggest challenge facing organizations today is the need to retrain managers (Ellett, 2015). Most marketers accept that IMC is strategically important and believe that it should be practiced. However, the departments responsible for different channels may not work as collaboratively as IMC demands. Adoption of IMC requires considerable restructuring by organizations, ad agencies, and others, but leaders too often lack the vision or will to support it directly. Professionals from specialist areas and disciplines have to give up their traditional autonomy, budgets, and work processes. A fairly steep learning curve and effort are required, for which there may be little motivation (Mishra & Muralie, 2010). Corporate culture and organizational structure must adapt to a more collaborative style of work. The problem of accurate measurement dogs practitioners of IMC. One reason for the rapid adoption of digital advertising is the ability to measure its performance and thus optimize return on investment. Click-through rates and cookies, for example, yield precise data about consumer behavior. Traditional advertising has not progressed much beyond the estimates of audience size produced by research firms like Nielsen and Arbitron. Thus, IMC creates a mixed bag in which some channels produce quantifiable evidence of cause and effect but others do not (J. Karrh, personal communication, January 14, 2016). No means have surfaced to comprehensively and accurately measure IMC’s effectiveness. This makes it hard to apportion budgets for the different campaign elements—some investments will always be a “surer bet” than others. Even though IMC is essential to reach a fragmented audience of potential buyers, achieve consistency with consumers who pull messages from different channels at different times, and make marketing spending more efficient, it remains difficult to achieve. In conclusion, the fundamental mission of IMC is to effectively manage consumers’ self-constructed impressions of brands (pulled) as well as their encounters with marketers’ pushed communications. IMC creates synergy among all the interrelated elements of the marketing plan. Organizations that build on a market orientation adopt IMC to deliver a more holistic consumer experience and thus gain an important competitive advantage. But until practitioners accept the challenge of staying current in the field as measurement techniques become more sophisticated and demand for multichannel accountability increases, there is cause for concern. IMC Success in Action Have you been on the receiving end of an IMC campaign? The answer is surely yes, because everyone today is exposed to so much marketing. Have you ever noticed advertising or branded content from Coca-Cola? The company has been a pioneer in IMC. With a core value proposition around a lifestyle of fun and happiness, Coca-Cola has adapted its strategy to reach diverse target audiences around the globe. In the early 2000s, using the theme Open Happiness, Coca-Cola integrated marketing messages across advertising, direct marketing, sales promotions with channel partners, digital marketing, and social media. No matter whether you were in a theater watching a movie, ordering in a restaurant, watching television, or surfing the web, anywhere in the world, you were likely to encounter consistent Coca-Cola messaging (Coca-Cola, 2011). As social media gained favor with young people, Coke strategists determined that the brand should build a viral digital marketing campaign around happiness to reach these young consumers. To generate buzz, Coca-Cola used experiential marketing that created online engagement as well as real-world excitement. In one of several initiatives designed to garner shares in social media, the company installed so-called Happiness Machines (or in some countries, Happiness Trucks) that dispensed product in quantity so that a person purchasing one Coke suddenly was able to hand out free drinks to everyone around. Hidden cameras were installed to capture videos of the Happiness Machines in action, which Coca-Cola subsequently released in social media channels. Almost immediately, the videos achieved Coke’s goal of going global. Coke released one single video of a Happiness Machine installed in a cafeteria at a university in New York to YouTube in January 2010 and announced it with a single Facebook status update. Approximately 10 days later, the video had been seen a million times. Within 2 months, the video had been viewed over 2 million times (Misra, 2015). In 2017 the Coca-Cola-owned brand Fanta earned recognition in Australia for its IMC campaign to relaunch the fruit-flavored sparkling beverage, winning a gold medal in the Media Federation of Australia’s annual award category Best Integrated Campaign. Star of the campaign was a Jelly Fizz flavor variant that took on a unique thick consistency after the can was shaken. With a goal of expansion beyond its core tween market, the Fanta Relaunch campaign invited teenagers into cocreation at the website Fanta.au. Site visitors over age 13 could design their own billboard, customize product flavors, create a Snapchat lens, and upload a soundmix. The 12-week campaign drew almost 300,000 teen visits to the website—making it the most visited in Coca-Cola’s history. Teens made 11,841 creations on the site, with 75 selected to receive skateboards, yoga mats, and surfboards they had designed—turning them into brand ambassadors as they shared their Fanta cocreation stories on their social channels. The Snapchat lens reached 65% of Australian users. The Jelly Fizz beverage sold at 4 times the rate of regular Fanta Orange, the best sales in 3 years. Teen consumption of Fanta overall rose 4 points, reversing a declining growth rate. The Media Federation of Australia (2017) contest judges awarded the Fanta Relaunch campaign its gold prize for the campaign’s strategy of authenticity, creativity, audience engagement, and evidence of success in the marketplace. While Coca-Cola’s Happiness Machines show an example of a far-reaching, global IMC campaign that played out over several years, Fanta Relaunch is an example of a smaller, country- and niche-specific campaign that still required the IMC approach to succeed. Field Trip 9.3: Nike She Runs, Winner of 2012 MFA IMC Award The Media Federation of Australia gives out annual industry awards that include a category for IMC. Follow this link to view a brief case study presentation about the 2012 winner, She Runs for Nike. The campaign not only integrated various marketing channels effectively, it addressed a social issue. Nike She Runs Case Study—MFA Awards 2012 (Best Integrated Media Campaign) https://www.youtube.com/watch?v=RqGIemVf4cY Questions to Consider Will the IMC approach affect creativity? If yes, will the effect be positive or negative? Why? Do you think ultimate authority and responsibility for IMC should rest with the company or the advertising agency? Explain the pros and cons of each. 9.3 Four Functions of Marketing Management: Analysis It should now be clear that managing the marketing effort takes place within a context of IMC. It’s time for a closer look at the four functions that comprise marketing management—analysis, planning, implementation, and control—introduced at the start of this chapter. You should already be aware of the analysis function, based on the discussion in Chapter 2 of analysis as the first of the steps in the marketing process. Analysis is also where marketing management begins, because analysis grounds planning in the realities of what is going on in the macro environment, the industry, the company, and most importantly, the lives of customers. Analytic techniques for selecting a strategy were introduced in Chapter 2, including the BCG Matrix, Ansoff’s Matrix, and SWOT analysis. Now let’s dive deeper into the input required for analysis: data! Sound, reliable, complete data! Data Fuels Analysis Analyzing Consumer Behaviors Communication technology allows marketers to perform predictive analytics. Do you think that you personally will benefit from the kind of data mining described in this video? What are the two chief problems the "data hunter" in this video needs to solve to make predictive analytics useful to marketers? With exponential growth in computing power and increasing access to sophisticated data-mining techniques, marketers now have more information available than in the past. Plus, visualization of data has made that information easier for nontechnical people to comprehend. Marketing management has benefited from these advances. Let’s start with vocabulary: How do analysis and analytics differ? Analysis is the examination of data to uncover and understand cause–effect relationships as a basis for decision making (“Analysis,” 2018). Analytics, on the other hand, goes deeper. Analytics describes statistical and mathematical data analysis that examines trends, effects of decisions, and quality of tools used to make decisions (“Analytics,” 2018). Thus, analytics provides the inputs to analysis that can guide decisions about strategy. Without data, there could be no analytics; thus, a place to collect the data is required. Multiple databases (CRM, website clickstreams, sales transactions, etc.) are usually brought together in a company’s data mart (another term for data warehouse). Big Data and Innovation Companies are folding analytics back into the customer experience and core value proposition of their products. For example, the Nike+ personal fitness products incorporate sensor technologies embedded in running shoes and wearable devices that connect via the Internet with mobile apps and social networks. Users can track their individual performance—and they can link their data to that generated by communities of friends and even their coaches (de Swaan Arons, Van den Driest, & Weed, 2014). Since its launch in 2006, the Nike+ product suite has acquired a user base of 7 million runners. Just as important as the customer experience, which transforms running from a solo experience to a data-driven social sport, is the benefit for Nike. The company aggregates the millions of data points reported from its customers’ devices, in real time—data that is generating insights for future product innovation (Van Rijmenam, 2013). Nike factory storefront. memoriesarecaptured/iStock Editorial/Getty Images Plus Nike uses Big Data when undertaking its marketing. The Nike+ platform exemplifies the use of Big Data—a phrase that has proliferated as rapidly as the computing power that enables it. Big Data has become one of the most-talked-about trends, as if it were an imperative for every organization that wants to achieve or maintain a competitive advantage. In fact, Big Data is only relevant in situations in which companies must deal with rapid proliferation of data, a need to exploit data in real time, new data types (such as sensor data), and/or complex data types (such as video) that are not easily indexed by traditional “small data” approaches (Sowmyanarayanan, 2015). That being said, some of the more exciting examples of using analytics for product innovation are driven by the availability of Big Data. Follow the link in Field Trip 9.4 to learn more. As has been shown, analytics can be deployed to aid strategy formulation or innovation. Product innovation is especially well served by a Big Data analytics approach. Gather as much as possible of the best data available, slice and dice it using sophisticated analytics and visualization software to deeply understand what the data is saying, then form hypotheses about possible courses of action. That is the analysis function of marketing management. Field Trip 9.4: Big Data and Innovation Follow this link to read about companies innovating new value using Big Data. The World’s Top 10 Most Innovative Companies of 2015 in Big Data https://www.fastcompany.com/3041638/the-worlds-top-10-most-innovative-companies-in-big-data Choosing a Course of Action Fundamentally, the function of analysis is to identify potential strategies that can create competitive advantage by enhancing the customer experience. Some companies choose a strategy of deepening customer engagement, for example, by leveraging customer data to personalize marketing of the offering itself. Others choose a strategy of broadening engagement by adding touchpoints, each of which becomes an opportunity to collect more data (de Swaan Arons et al., 2014). Analysis is a process of matching internal strengths to market opportunities. For example, using a SWOT analysis can bring to light a company’s greatest opportunities while increasing its understanding of the firm’s core competencies. The point of analysis is to uncover significant factors affecting a business’s likelihood of achieving profitable, sustainable growth. Analysis brings about a kind of “matchmaking” between a company’s core competencies and the areas where the potential to capitalize on opportunities is greatest. Sometimes analysis will result in a clear sense of direction, and choosing a course of action can immediately follow. If not, marketing managers may want to dive deeper into their data, looking for insights to guide strategy formulation or even innovation that changes the value proposition of their products and services. Marketing managers narrow down possible courses of action to decide on specific strategies. Understanding customers is one of the chief applications of analytics, which can lead to choosing a course of action. In Chapter 7 the case study on RC Willey showed how analytics were applied to develop a highly targeted trigger marketing program based on 7 years of point-of-sale data. This is an example of data-driven strategy formulation, with identifying and sending messages to specific customer segments as its objective. It is also an example of predictive analytics, because it takes advantage of current and historical data to make predictions about future events (consumer purchases). Another example of using analytics to choose a specific course of action comes from DSK Solutions, a business analytics consulting practice serving the association and nonprofit industry. An association client wanted to better predict expected attendance at its annual conference in order to estimate registration costs, venue requirements, and on-site staffing needs. DSK Solutions’ first task in this engagement was to create a data mart from the association’s disparate sources containing customer information, past event attendance, and membership history, as well as demographics and engagement factors. The consulting firm used visualization tools that allowed its client to “see” its membership’s behavior. The analysis showed that travel distances of over 500 miles presented a barrier for 85% of potential attendees. Based on that insight, the association decided to experiment with holding two annual conferences each year, to minimize members’ travel expense by allowing them to choose the closer location. Not only was the original research objective achieved, but the association now has a data mart and visualization tool, as well as a staff trained to use it to address further strategic decisions (King, 2015). As these examples show, analysis can aid decision making about marketing programs and product/service offerings. Organizations may employ teams of analysts simply to support this function of marketing management, or they may contract with outside firms to support their data analytics needs. Questions to Consider Aptitude for analytical thinking is becoming a necessity for employment in marketing management. Could reliance on data take the creativity out of choosing a course of action? Explain your thinking. 9.4 Functions of Marketing Management: Planning The second of the four functions required for managing the marketing effort is planning. The inputs to this function flow from the organization’s analysis of its current situation. As the marketing planning function takes place, profitability goals are translated into marketing objectives and ideas for marketing actions. The outcome of the planning function is usually a written marketing plan on which implementation and control can be based. Even without a written plan, the fundamental reason for planning is to guide specific, purposeful action. Flash mob of people dressed in beach attire holding beach balls in front of a Chicago building. Associated Press Flash mobs—like this one that was featured in a McDonald’s commercial—are an example of less traditional marketing techniques. Can you think of any other examples? All organizations require a well-defined scope to contain their actions. Each company’s core vision, mission, and values provide the boundaries within which it will operate and suggest the direction in which it will grow. With scope defined, planners must formulate how the company will proceed by setting objectives, broken into smaller goals supported by tactical action plans. Planners must also define how resources such as time, money, and human talent will be allocated. The strategic plan will include sections outlining each department’s actions and resource allocations, including the marketing department. The marketing component of the strategic plan describes every action planned in every message channel, from traditional advertising to a flash mob “happening” at an airport staged to impress customers arriving for a trade show. The strategic marketing plan specifies what will take place and all associated costs. In short, planning in the context of marketing is all about specifying who will do what, by when, monitored and controlled by what measures, backed up by a sound rationale (the “why” behind all that activity). The term strategic planning is often misunderstood and misused. No specific definition is widely agreed on. However, most marketing practitioners do agree that to be worthwhile, strategic planning in the context of marketing must involve deciding how an organization will deliver customer value, earn profits, and secure competitive advantage. Developing the Media Plan One significant subset of the planning function is the media plan, which fills in the details of all communication tactics called for by the promotions component of the marketing mix. The media plan addresses the schedule on which each message will be deployed, in what channel, and at what cost. Refer to Chapter 2 for a discussion of message channels, shown in Table 2.5. Media planning is a specialized function within a company’s ad agency or marketing department. Media planners determine how to reach the right audience at the right time with the right message, working within a specific budget. This entails finding the right media channels to use—and in what proportion. It can be a challenging role, involving expertise in multiple areas—the math skills to analyze cost and audience numbers, the people skills to negotiating prices, and the good judgment to ascertain which channel will serve best for a campaign’s creative concept. Advertising agencies have been biased in the past toward basing the media plan on mass market advertising, in part because agencies were compensated on a commission system based on the dollar volume of mass market billings. Today more agencies are replacing the commission system with a fee-based arrangement with clients. The result? More objective evaluation of all media channels and scheduling based on effectiveness of specific channels for specific communication objectives (Hackley, 2010). A media plan begins with a goal statement that explains the desired communication outcome. A media goal should be stated in precise, measurable terms, such as: Advertising in video game magazines will create a 20% increase in awareness of Rude Energy Drink in young men ages 18–25, who will retain the impression that Rude is a delicious way to enhance energy and focus. A goal statement aids media planners in decision making and facilitates measuring the return on advertising investment after the plan is executed. Decision factors in media planning include the following: determination of reach, frequency, and impact goals choice of message channel selection of specific media vehicles decision regarding timing Media planners balance the need for reach, frequency, and impact to achieve the desired communication result within the budget available. Reach estimates how many different people will see or hear a message; reach is expressed as a percentage of total people in the target market. Frequency estimates how many times each one of those reached will see or hear the message; frequency is expressed numerically. Impact assesses the message’s ability to influence those it reaches; impact is qualitative and cannot be expressed in mathematical terms. Reach, frequency, and impact come at a cost. The more of each an advertiser hopes to achieve, the higher the media spending required. Media planners look for channels that reach the target consumer efficiently (without wasted spending) and effectively (in ways that demonstrate the value proposition). A media plan can only achieve its goals if it results in effective communication, meaning there is a match between the message and the message channel chosen to deliver it. Communication can take place through rich or lean mediums. The richest form is face-to-face communication, because it allows interpretation of vocal tones, facial expressions, and other verbal and nonverbal cues. At the lean end of the continuum are e-mails and text messages, which convey very little context. Consider a high-end fashion brand: A pop-up fashion show could deliver the richest experience. A YouTube video could approximate the excitement of the runway event and demonstrate the garments’ style in action but with less richness. A color magazine ad would be leaner communication but still more effective than a black-and-white newspaper ad. A text message would be the least effective way to promote high-end fashion, but it could be effectively used for customer communications after a relationship had been established. (“Hi Joan, the Fendi bag you ordered is in, please stop by to pick it up.”) Table 9.1 summarizes the advantages and disadvantages of some of the major message channels. All the online advertising media (websites, ads placed on other websites, search advertising, social media, and mobile) share certain advantages: Response can be monitored in real time, and changing online advertising messages is much easier than altering messages in traditional media. Overall, online advertising is generally less expensive than traditional advertising. Table 9.1: Message channels: Advantages and disadvantages Traditional advertising message channels Medium Advantages Disadvantages Newspapers Short lead time required, low cost, somewhat targeted, timely, local, credible Short life, poor image reproduction, competition from other advertisers, low control over placement Television Local, combines visual and audio appeal, low cost per exposure High production cost, fleeting, high absolute costs, untargeted Direct mail Targeted, flexible, no competition, can contain complex messages, high-quality image reproduction, can be personalized for one-to-one messaging Relatively high cost per exposure, can be considered junk mail Radio Local, low cost, can use humor and sound effects creatively, short lead time Fleeting, low attention, fragmented audience Magazines Targeted, credible, long life, good pass-through readership Long lead time required, high cost, competition from other advertisers, low control over placement Outdoor Flexible, high repeat exposure, low cost, low competition Untargeted, message must be short/simple, can be considered a traffic hazard Online advertising message channels Medium Advantages Disadvantages E-mail Targeted, flexible, can contain complex messages, high-quality image reproduction, can be personalized for one-to-one messaging Can be considered spam Websites Can contain complex messages, high-quality image reproduction, can include animation or video, can be personalized for one-to-one messaging Relatively high production costs, ineffective without other advertising to drive traffic, requires search engine optimization Advertising on other websites Targeted, low cost, interactive, can include 10–15 seconds of animation or video, short lead time required Relatively low impact, competition from other advertisers, can be intrusive Search advertising Targeted, cost can be controlled Choosing the right keywords can be complicated, bidding for popular terms can become expensive Social media (Facebook, YouTube, Twitter, etc.) Targeted, can include animation or video, reaches Marketing 3.0 consumers Demographically skewed audience, time commitment required to engage in conversation Mobile Convenient, targeted, reaches Marketing 3.0 consumer Demographically skewed audience, small message size Note. Each message channel has its pros and cons. Source: Adapted from Kotler & Armstrong, 2006, p. 464, Table 15.2; Kerin et al., 2009, p. 367, Figure 16-2. Advertisers must reevaluate message channel decisions frequently because audience habits and the types of message channels available to advertisers change rapidly. The shift toward target marketing and micromarketing strategies, as well as the rapid growth of online advertising channels, is changing the nature of many organizations’ media plans. Field Trip 9.5: Pros and Cons of Online Advertising In 2017 global spending on online advertising reached $209 billion, surpassing television (Kafka & Molla, 2017). As this spending increases, it becomes more important for marketers to understand the pros and cons of different forms of online advertising. Follow this link to read an article on the pros and cons of online advertising. Display Ads, Search Ads, and Social Media Ads: Pros and Cons http://blog.hootsuite.com/display-ads-search-ads-and-social-media-ads Once a general decision has been made about reach, frequency, impact, and the types of message channels to use, specific media vehicles (specific publications or platforms, such as Sports Illustrated or ESPN, as opposed to categories like magazines or TV channels) must be chosen. Media planners evaluate vehicles based on cost per thousand (CPM) people reached, and qualitative evaluation of the degree of attention paid by the audience reached. Comparing CPM calculations for similar blocks of advertising yields a quantitative comparison between specific media vehicles, but comparing qualitative aspects such as production value and attention quality can be just as important to the decision process. Finally, media planners must decide on timing of their advertising, finding the right balance among reach, frequency, and impact. Timing will depend on the goal of the advertising—is a new product being introduced? Do sales follow a predictable pattern or seasonality? Each situation suggests an appropriate timing strategy. Advertising fills message channels in flights over given time periods. How the flights are arranged can extend an advertising budget. Some scheduling options include the following: Continuous: A regular pattern over a given period. Seasonal: A push during natural peaks in demand, or a push during valleys to raise sales during lean periods. Pulse: An on-again, off-again sequence during a given period. Front loaded: Starting with a push that tapers to a continuous or pulse pattern. Evaluating media options will always be somewhat like comparing apples and oranges, because each message challenge has its own strengths and weaknesses, and each specific vehicle within a media category has its own characteristics, from the vocal style of a radio station’s announcers to the ratio of ads to content on an online platform. Media planners begin with quantitative ranking, using data like CPM for publications, traffic counts for billboards, cost per piece for direct mail, and so on to compare options within a media category. Then the options that rise to the top through quantitative ranking will be considered from a qualitative perspective—does a particular media vehicle have characteristics that enhance its advertisers’ messages? Are competitors advertising in this channel? Does the medium support the creative direction of the campaign? From these two exercises comes a short list of viable options. Then the decision comes down to balancing reach, frequency, and timing against the budget. To arrive at a media budget, planners deduct a portion to cover production costs appropriate to each message channel, such as TV commercials, radio, and mobile. Then they decide how to divide the remaining budget to purchase airtime or space in each channel, calculating reach, frequency, and timing to arrive at costs (Paulson, 2011). Media planning decisions command high budgets, with little room for error. A media plan must be developed in sufficient detail to estimate costs. Decision factors in media planning include goals for reach, frequency, and impact, plus specifics of message channel usage, media vehicle selection, and timing. To make these decisions, planners consider the target consumer, how the offering’s value proposition might be pitched, and which media vehicles are most likely to reach the target consumer efficiently and effectively. The media plan will specify how many ads will run over a given time period. All these factors affect the cost of the media plan, which must be calculated before planners can tell whether it fits within the overall promotional budget. Setting the Marketing Budget Once a media plan has been developed, costs can be estimated for the components of that program. Those costs must fit into the larger structure of the company’s promotional mix, as described in Chapter 6. Planners choose a budget allocation method from several available methodologies, including the following: Percentage of sales: Allocating a fixed percentage (of past or anticipated sales revenue) to advertising. Task objective: Basing the budget on results to be achieved, tactics required to achieve those results, and costs associated with those tactics. Competitive parity: Estimating and matching competitors’ spending, which assumes other firms have similar marketing objectives and expertise. Market share: Similar to competitive parity, basing estimated spending on external market trends. Adaptive control: Employing market research to estimate sales volume and profitability levels and adjusting the budget accordingly. All available funds: Allocating all available profits to marketing; risky and aggressive, but useful in certain situations, such as with a start-up business. Affordability: Basing the budget on what senior leaders believe the firm can afford to spend on marketing. These methods can be combined to create a more customized approach. Each has its advantages and disadvantages. The task-objective approach is generally considered to be the strongest from a strategic point of view, since it forces planners to specify assumptions about each tactic and anticipated result, against which performance can be measured. However, it is also the most difficult approach to implement. For a closer look at these budgeting methods, follow the link in Field Trip 9.6. Field Trip 9.6: Budgeting for Marketing Programs For a deeper look at methods for setting the marketing budget, read this article from Inc.com, which describes other methods in addition to the task-objective approach. http://www.inc.com/encyclopedia/advertising-budget.html Regardless of the method of budgeting chosen, planners must decide how to allocate their budget dollars across the various communication tactics called for by their marketing strategies (such as “advertise in Sports Illustrated” or “deploy brand ambassadors at public events”). Besides mass-media advertising, the plan might require use of any of the paid or owned message channels described in Chapter 6 and listed in Table 6.2. Writing the Marketing Plan The marketing plan describes actions designed to accomplish the objectives from the company’s strategic plan. In well-managed firms, the marketing department produces a written marketing plan that describes a chosen marketing strategy and how it will be carried out. In less orderly environments, the plan may never be set down on paper. Whether a marketing plan follows a formal structure and takes the form of a written document or not, it generally exists and governs the activities and priorities of marketers. A marketing plan helps marketers stay on track. With a written plan, it’s easier to be proactive rather than reactive and to improve with each repetition of the cycle of campaign development and execution. The specific format of the plan, and what is included, depends on the nature of the organization, its target audience, and its purpose. If the marketing plan is for a small company and/or an internal audience, it may be quite informal. If it is intended for an external audience, such as bankers or potential investors, it must function as a persuasive tool. More attention will be given to sections that build confidence in the planners’ ability to carry it out, such as financial information, market research, and biographies of key personnel. Figure 9.1 summarizes the outline of a thorough marketing plan. An example of a marketing plan is included in the case study later in this chapter. Figure 9.1: Components of IMC A written marketing plan helps marketers stay on track. A complete marketing plan might include all the sections listed. Figure of factors that can be in a marketing plan. To summarize the planning aspect of marketing management: This function requires the inputs of the analysis function in order to produce the marketing plan that guides the implementation and control functions. The marketing department’s plans fit within the scope and strategies selected at the highest organizational level. Every marketing action must be described in detail, stating measurable goals and media plans, including estimated costs for each action. While several budgeting methods were described, the task-objective approach is recommended for its emphasis on specifying not just tactics but also anticipated results. This method facilitates evaluation later. Objectives, strategies, implementation plans, and budgets come together to form the marketing plan, often in the form of a written document, that governs marketers’ activities and priorities. Questions to Consider In Chapter 6 you learned about brand-controlled message channels (paid or owned) and stakeholder-controlled channels (earned or shared). Planners can only address what they can control; thus, this discussion did not touch on stakeholder-controlled channels. How might planners respond to scenarios in which stakeholder-controlled channels become increasingly dominant? Marketing planning is becoming exponentially more complex as new message channels appear and consumers take more control of the discussion of companies and brands. Where is all this headed? Will it reach a point that advertising is simply not effective at reaching and persuading consumers? Will advertising as we know it disappear? 9.5 Functions of Marketing Management: Implementation and Control In the analysis and planning functions, managers focus on finding effective strategies. As their attention turns to the functions of implementation and control, their focus shifts to carrying out the strategies they’ve selected. Plenty of companies excel in strategy formulation but falter when it comes to implementation. Organizations that do both well can gain a significant competitive advantage. Success factors in implementation and control stem from the who, how, and why of those functions, including the following: who exerts the effort required, including individuals throughout the value chain, both inside and outside the company how the company organizes its functional structure, its decision systems, and its compensation programs to create a motivated and market-oriented organizational culture why some tactics succeed and others fail, as judged by performance evaluation that leads to corrective action Applying the framework of the four functions of marketing management to the marketing process outlined in Chapter 2, three steps are involved in implementation and control: campaign development, execution, and measurement. Implementation alone could be the subject of an extended course of study. Aspects of marketing implementation come into play in the execution of strategies in each area of the marketing mix. That makes understanding control through metrics relevant to every student of marketing. Control Through Metrics Fundamentally, marketing control consists of measuring and evaluating the results of marketing strategies and taking any needed corrective action to keep implementation on track. Marketers must measure campaign performance in the marketplace; evaluate the cause of any variance between expected and actual performance; and take action to correct missteps, which may require changing tactics. To measure performance while campaigns play out in the marketplace, marketers must decide what they will monitor. Measuring communications effect requires looking for outcomes that can be quantified, such as measuring advertising recall (how much of the message content its receivers remember) or measuring how many receivers subsequently completed an action like clicking on an ad link or calling a toll-free number. The problem with this approach is that it is difficult to relate these measures to sales. Measuring sales effect attempts to match the dollars spent on a campaign with its specific impact on sales revenues. This avoids the weakness of measuring communications effect but is still problematic, because marketers cannot control for other variables affecting outcomes. For an exaggerated example, consider a hardware store advertising gas-powered electrical generators in Topeka, Kansas. The day after a crippling tornado, sales of generators go through the roof—but can the promotional campaign be credited with that sales spurt? No. But marketing practice has leaped forward from these fundamentals since the advent of online message channels and Big Data. With these advances, an entire marketing analytics industry has emerged and continues to grow. In many ways it is reshaping advertisers’ expectations and marketers’ practices. Marc de Swaan Arons, Frank van den Driest, and Keith Weed (2014) wrote in the July/August 2014 issue of Harvard Business Review: In the past decade, what marketers do to engage customers has changed almost beyond recognition. With the possible exception of information technology, we can’t think of another discipline that has evolved so quickly. Tools and strategies that were cutting-edge just a few years ago are fast becoming obsolete, and new approaches are appearing every day. (para. 1) One change in marketing practice is the increasing attention paid to consumer behavior. Knowledge of what an individual consumer is doing where and when is no longer enough: High-performing companies “integrate data on what consumers are doing with knowledge of why they’re doing it, which yields new insights into consumers’ needs and how best to meet them” (de Swaan Arons et al., 2014). Another change in control of marketing programs through metrics is the demand by corporations that their advertising agencies hold themselves accountable for measuring the impact of their advertising campaigns, regardless of the blend of media channels used. Thus large, medium, and even smaller advertising firms are adopting more sophisticated quantitative analysis techniques. A new ecosystem of service firms is emerging to serve this demand for accountability by providing information processing services (Jobs, Aukers, & Gilfoil, 2015). Are marketers ready for the challenge Big Data presents to measurement of marketing campaigns? As online message channels have become a crucial part of message strategy, integrated performance measurement naturally becomes more important. The pressure for greater accountability goes hand in hand with the need for IMC. With the advent of Big Data, we are even able to measure how one media channel lifts the performance of another (e.g., TV advertising bolstering social media effectiveness) to some extent (Nichols, 2013). Evaluating marketing strategy performance now requires an unprecedented level of sophistication and coordination among internal and external marketing roles. The marketing function has come a very long way from the “creative revolution” of the 1960s celebrated in the popular TV series Mad Men. Figure 9.2 represents the interlocking nature of the many metrics that play a role in managing the marketing effort. Explaining each of these metrics is beyond the scope of this course, but study of the many ways marketing activity can be monitored and thus controlled would be time well spent—a grasp of metrics contributes to career success in the marketing field. Aspects of marketing metrics come into play in every area of the enterprise—far beyond marketing, as Figure 9.2 shows. Figure 9.2: Marketing metrics: Customers are at the core Marketing metrics interlock, as do marketing programs in the IMC approach, aligned around the central role of the customer. Diagram demonstrating marketing metrics. Farris, P. Bendle, N.T., Pfeifer, P.E., Reibstein, D.J. (2010) Marketing Metrics: the Definitive Guide to Measuring Marketing Performance, 2nd Edition, 2nd Ed., ©2010. Reprinted by permission of Pearson Education, Inc., New York, New York. Marketing Dashboards A marketing dashboard takes its metaphor from a car’s instrument panel, appropriately enough, since there are many metrics that could provide information about a car’s operation, but the dashboard is designed to show just those few that are crucial to safety and performance. A marketing dashboard, like a car’s instrument panel, is designed to display essential information visually, so it can be understood at a glance. The dashboard makes it easy to know whether corrective action is needed. The “gauges” display values and trends tied to quantitative measures for evaluation designated by the marketing plan. Car instrument panel. Rtdesignstudio/iStock/Getty Images Plus A marketing dashboard displays essential information visually (like a car’s instrument panel), making it easy to know whether the marketing function is operating properly. Marketing dashboards have two purposes: (a) to make the fire hose of data from marketing metrics less overwhelming to individuals and (b) to provide a means to see essential data as close to real time as possible. To achieve the first purpose, dashboards must be tailored to different roles. A social media manager needs to monitor different values and trends than the leader of the sales force or the senior manager making strategic business unit and product portfolio decisions. For a marketing department focused primarily on direct mail strategies, a dashboard’s gauges might show marketing campaign results including response rate, total sales, and average order value. For a marketing department using online promotions, the display might show the message open rate, unsubscribe rate, and conversion (response rate). For social media analytics, the display might include search terms, top social platforms and keywords, and referrers. What decisions are individuals responsible for, and thus, what data or trend insights might be helpful to them? Key performance indicators (KPIs)—statistics such as number of new orders or unique website visitors, for example—are used to measure a firm’s performance in specific critical areas. KPIs earn their “key” designation because the actions they measure, if not properly performed, would lead to strategic weakness. The design of a marketing dashboard takes into account which KPIs would be most useful in monitoring marketing performance based on specific roles. All key business stakeholders should have access to a marketing dashboard tailored to their role. To achieve the second purpose, dashboards should focus on leading indicators, as discussed in Chapter 8. The speedometer on your car’s dashboard would be of no use to you if it only showed what speed the vehicle was going yesterday. Unfortunately, too many of today’s dashboards draw their numbers from accounting mechanisms, which produce information that is already historical. Data displayed on a dashboard should be as current as possible. A weekly update is better than monthly; daily is better than weekly; hourly is better still. Advances in communication technology are making near-real-time marketing data available from point-of-sale transactions, Internet activity, and more. This is increasing the value of marketing dashboards for control in marketing management. This interactive diagram shows one possible marketing dashboard, developed for a major retailer. As data-driven marketing has grown, so has the ability to measure performance, increasing the significance of marketing metrics that quantify trends, dynamics, and characteristics of market performance. Metrics make it possible to compare observations across sectors and time periods. “If you can’t measure it, you can’t manage it,” goes the quote attributed to various management experts (Farris, Bendle, Pfeifer, & Reibstein, 2010). A few of the metrics that business managers use to monitor performance are customer perceptions, market share, revenues, profitability, sales force performance, price sensitivity, advertising effectiveness, and lifetime customer value. Marketers are increasingly turning to customer-centered metrics like customer acquisition, retention, and lifetime value to overcome the weaknesses of measuring communications effect and sales effect (Kotler & Armstrong, 2006). The most commonly used metric of organizational success is return on investment, introduced in Chapter 2. To calculate ROI, marketers must quantify the gain (return) on a specific activity and the investment in that activity. One common expression of the ROI formula is: Return on Investment = (Gain from Investment – Cost of Investment)/Cost of Investment When managers attempt to break out investments in marketing and attribute sales effect to them, the metric is referred to as return on marketing investment (ROMI), also introduced in Chapter 2. Its components are identified in Figure 9.3. Figure 9.3: Return on marketing investment Return on marketing investment focuses on customer-centered metrics such as customer attraction, retention, and lifetime value. Diagram of ROMI, or return on marketing investment. Kotler, P., & Armstrong, G. (2006). Principles of Marketing , 11th Ed., ©2006. Reprinted by permission of Pearson Education, Inc., New York, New York. As marketers come under more pressure to “show ROI” on their activities, we will need to improve on the ROMI metric. Both the ROI and ROMI calculations depend on what is included in gains and costs. For example, one marketer might compare two products by dividing gross profits from each by the marketing expenses of each, including every component in the media plan. Another marketer might compare the same two products by dividing the net profits from the two products by the total value of all resources required to make as well as market each. Marketers need to assign dollar values to intangibles, such as improved customer satisfaction, to quantify ROMI. There is no one right method, and this flexibility has a downside: ROI and ROMI calculations can be easily manipulated to suit different purposes. When using these metrics, marketers must make sure the inputs used are clearly stated. Measuring ROMI is important, but it is destined to be inexact because the goal of marketing communications is rarely to directly affect sales—expressed as “return” in this formula. Rather, marketing activity is intended to initiate a series of responses that build over time to an eventual effect on sales (Taylor, 2010). And as IMC becomes “business as usual,” estimating ROMI becomes more inexact, because of the complex and subtle interactions between different marketing programs and campaigns. The gain from investment might show up in any number of ways following a marketing thrust. If brand ambassadors are working the crowd at a rock concert offering free shots of an energy drink, while at the same time text messages offering purchase discounts go to the brand’s customers who have opted in to receive messages and whose mobile devices are near the concert arena, which strategy gets credit for any sales lift generated—the brand ambassador program or the text message campaign? Bottom line—marketers must use ROMI responsibly. Allocating budgets based on comparing positive scores on ROMI would be a questionable practice, but eliminating campaigns and programs that have earned a negative ROMI would very likely make sense (Farris et al., 2010). Using the right marketing metrics significantly adds to the precision of measuring campaign performance, the first step in marketing control. A marketing dashboard makes it easier to spot variance from expected performance sooner. This facilitates the second step in marketing control: evaluating the cause of variations. Based on the outcome of that step, marketing managers decide whether to take corrective action while the campaign is still under way or merely apply insights from that experience to the next iteration of strategic planning. To conclude, implementation covers the many tasks related to executing marketing mix strategies regarding product, place, price, and promotion. Control of all that activity is facilitated by marketing dashboards that allow managers to monitor performance using specific KPIs in as close to real time as possible. Questions to Consider Few small businesses have access to the budget or technology required to make full use of marketing dashboards. If a company lacks the resources to use dashboards in its approach to marketing management, what alternatives might it turn to for performance evaluation? Review Section 2.6, “Marketing Process Step 5: Measurement,” in Chapter 2 before you formulate your answer. Case Study: Sample Marketing Plan for Cats & Cameos The following marketing plan is based on a real situation. Details have been changed to protect proprietary information. The founder has identified a product that leverages several social trends, including an increase in pet ownership and strong sales in luxury good categories despite slow recovery from the economic recession. The business idea takes advantage of Marketing 3.0 consumers’ desire to partner with companies in cocreation of value. The plan was written to address an audience of potential investors. Executive Summary Cats & Cameos is a start-up company based in suburban Chicago. The founder is a semiretired owner of a boutique graphic design studio and avid pet lover interested in developing a new business. This plan describes Year One of the launch of Cats & Cameos. Current Situation Cats & Cameos is a start-up company that proposes to design, manufacture, and sell paired designer accessories for cats and their owners. Cats & Cameos will be involved in three distinct activities: Designing cameo brooches in pairs consisting of stylish ID tags for cats with a portrait of their owners, and cameo brooches for owners with an image of their cat’s breed or a custom portrait of their cat. The products create an aesthetic and emotional bond between pet and owner. Producing the accessories, using third-party manufacturers. Marketing and selling the accessory pair as a gift item. The set will initially be sold directly to the public online only and may be sold later through pet boutiques and gift stores. Market Pet products are a $40-billion-plus-a-year industry. More than one third of American households include one or more cats. Gift giving to pets and their owners continues to rise—with 8 out of 10 cat owners buying cats gifts for birthdays. Cats & Cameos targets a high-income niche: Households with incomes of $100,000 or more represent more than one third of pet product customers, and these households spend double the annual average on pet products and services, according to consumer surveys. The prime target is a woman in her 40s with a household income of more than $100,000, living in or near a large city. These households spend more than $800 a year—more than twice the average—on pet products, according to the Consumer Expenditure Survey of the Bureau of Labor Statistics (2018). A secondary target consists of non-pet owners who will see the product as an ideal gift item for the primary target. Product The products are tastefully designed. The products are so unique that they give cats and their owners the opportunity to enjoy being the center of attention. The base product pair, the Cameo Set, includes a cat ID tag that resembles a high-quality cameo but is manufactured from durable plastic resin to withstand wear and tear. The low-relief sculptural portrait of the owner is created from a photo provided by the owner, altered in Photoshop, and manufactured to create a three-dimensional cameo. The cat ID tag is paired with a matching high-quality cameo brooch for the owner, also made of resin, with a three-dimensional image of the cat breed selected from a catalog of over 300 popular breeds. The Cameo Set is manufactured in Cordoba, Argentina. The added-value product pair is the Heritage Deluxe Cameo Set, in which the owner’s pin is a true customized cameo with an image of the owner’s special pet, carved from carnelian shell by artisans in Torre del Greco, Italy, and destined to become a family heirloom. An option with either of the product pairs is the MyFinder RFID tag. An RFID chip can be embedded in the cat’s cameo tag to provide location data to the owner if the pet and owner become separated. The integral battery in the optional tag provides 3 to 5 years of continuous use. The product line is designed to appeal to the urban, fashion-conscious cat owner. The following table summarizes Cats & Cameos’ three products. Cats & Cameos’ product line Product Cat’s ID tag Owner’s cameo brooch Cameo Set Cameo-like low-relief sculpted portrait of owner based on a photo Durable plastic resin Low-relief sculpted cameo of cat breed Choose from catalog of over 300 breed images Durable plastic resin Accompanied by certificate of authenticity Heritage Deluxe Cameo Set Same as above Customized cameo with low-relief sculpted portrait of cat based on a photo Carved from carnelian shell in Torre del Greco, Italy Heirloom quality Accompanied by certificate of authenticity Optional MyFinder tag RFID tag, battery powered Competitors Competitors offer customized ID tags, including some with color photos, and competitors offer designer accessories for cats and their owners, but none have exploited the opportunity to use paired images to celebrate the bond between cats and their owners. Cats & Cameos expects a little direct competition. However, the potential for substitute offerings to compete with this product line is undeniable. Manufacturers of upscale cat accessories include The Sophisticated Cat, Cody’s Creations, ABC Cat Craft, Cats Rule, Imperial Cat, and Precious Cat, Inc. SWOT Analysis SWOT analysis for Cats & Cameos Internal External Strengths Weaknesses Opportunities Threats Owner is experienced marketer with past ad agency employment experience. Owner lacks direct experience in retail. Spending on luxury goods showed recovery by the summer of 2011 from recent economic downturn. If recessionary economy deepens, it will limit discretionary spending. Owner is graphic designer with good sense of the target market’s tastes. Business model relies on globally dispersed manufacturers; communication may be an issue. Product line can expand at the higher-price bracket through customized options. Other high-end products appealing to the same target consumer are widely available. Business requires little capital for start-up inventory due to customized nature of the product line. Business model offers little “clout” with supply chain due to small order sizes. Market trends indicate increased spending on high-end pet couture and accessories. Owner is familiar with social media and ready to engage in building the customer conversation through social media message channels. Research points to growth in cat ownership. Product line dovetails with Marketing 3.0 trends of consumer collaboration in product design. Objectives and Issues First-Year Objectives Capture 1% of the estimated population of 44.8 million households with cats via direct sales online. Build social media followers to 1,000 plus. Second-Year Objectives Capture an additional 1% of those 44.8 million households via direct sales online. Expand sales to retailers. Build social media followers to 4,000 plus. Issues The founder has identified three main concerns: The sluggish economy may hinder sales. The product/price strategy leaves a gap between the low-end and high-end offerings. Capturing the attention of consumers in the target market and cat-fashion-world media will require significant investment of marketing effort. Marketing Strategies Positioning The value proposition for Cats & Cameos answers the question “Which reason to buy our offering matters most to our target customers?” with the promise of an attention-getting article of couture for both pet and owner so distinctive that others will be jealous. The additional advantage of the RFID location function creates a promise of security—with style. Product Strategy The core product is a pair of couture cameos for owner and cat to wear. Each is styled to resemble traditional cameo pins. The pet’s cameo is a durable plastic resin ID tag with a custom image of the owner. An RFID tag is available as an add-on option. The owner’s cameo pin is either a generic image of the cat’s breed in plastic resin or a portrait of the specific pet, carved in heirloom-quality carnelian shell. The benefit delivered by these accessories is celebration of the pet–owner relationship with a luxury aesthetic. The expanded product is about possession of a well-crafted “little luxury” in which the purchaser has played a part in the design, through customization of the image of pet and owner. All Cats & Cameos products come with a warranty of durability and a certificate of authenticity. The product concept is a perspective that the bond between pets and owners is emotionally similar to that between family members and deserves celebration. This product helps connect owners and their pets in an appealing way, while making a stylish statement. Cats & Cameos takes a socially responsible approach to sourcing product manufacturing, working with artisans around the globe to improve their economic stability while providing high-quality craft items to buyers. The founder will create an excellent shopping experience for customers by engaging in conversations with shoppers whenever possible, even via live chat with website visitors. Tucked into each purchase shipped will be a handwritten thank-you note. Pricing Strategy Cats & Cameos’ philosophy is to use price to communicate a high-end, quality product; the price point will be at the higher end when compared with similar gift items. The owner will monitor the industry to remain competitive but is confident that the product, because of the concept, will generate interest among those who can afford luxuries big and small. The Cameo Set is value priced, while the Heritage Deluxe Cameo Set’s price reflects its heirloom quality and customization; this is a truly one-of-a-kind piece of jewelry. While production costs will dictate the final price points, the owner anticipates the Cameo Set will sell for about $60, the Heritage Deluxe Cameo Set will sell for about $800, and the RFID option can be added to either product for about $50. Distribution Strategy Cats & Cameos will be based in the owner’s home office in the suburban Chicago area. Later, as the business grows, rental space/storage may be necessary to house inventory and accommodate additional employees. During the initial stage of the business, the products will be available to customers exclusively online via a website. At a future phase of the business, the owner will explore distributing products through retail outlets. Channel partners at the launch of Cats & Cameos include a manufacturer in Cordoba, Argentina, for the plastic resin products and artisans in Torre del Greco, Italy, for the heirloom-quality cameos. In the future, retailers and distributors may join the distribution channel. Marketing Communications Strategy The promotional components for Cats & Cameos will include a website plus advertising in Cat Fancy, Cats USA, Natural Cat, Pet Style News, Pet Fashion Showcase, and local area gift guides. The owner will conduct public relations outreach to pet-niche magazines. The owner will create and actively participate in social media communities on Facebook, Twitter, Pinterest, and Tribe. While the company is organized as an online retailer, the owner intends to create relationships with local retailers to interact with consumers and learn more about their perceptions of the products’ value and benefits. The owner will attend pet product and retail gift trade shows to create buzz and interest for Cats & Cameos’ product, and to explore sales to retailers. Marketing Research The owner will monitor website usage to gain insights into which pages/products hold visitors’ attention; an online exit survey will add to understanding of consumers and the Cats & Cameos value proposition. The owner will conduct focus groups with cat owners in the target market demographic before placing an initial order for demonstration products. The owner plans to test-market the product line by taking demonstration products to local and regional stores. Marketing Organization The start-up company will be operated by the owner without employees. As growth warrants, employees will be added to fulfill functions of finance and operations; the owner will remain the lead marketer. The company will focus on B2C selling online but will also develop a B2B model selling to local retailers. Implementation Plans The founder’s focus for the launch year will be on raising awareness of, and interest in, Cats & Cameos. First Quarter Launch website. Launch social media. Second Quarter Advertise in Cat Fancy, Cats USA, and Natural Cat. Continue public relations activity. Continue social media activity. Third Quarter Advertising expands to Pet Style News, Pet Fashion Showcase, and local area gift guides. Social media activity continues. Fourth Quarter Public relations activity continues with message focused on “most unusual holiday gift idea.” Social media activity continues. Budgets Cats & Cameos’ budgets Promotional component Estimated cost Website including e-commerce module $15,000–$20,000 Advertising $325,500 Social media 0 (Founder will invest time) Public relations 0 (Founder will invest time) Controls/Measures of Effectiveness Communications effect: referring sites website traffic page views last page viewed before exit conversion Sales effect: advertising response rate total sales average order value In conclusion, Cats & Cameos is ready to proceed with implementation of the product launch upon completion of the search for investor-partners. A full business plan is available upon signing of nondisclosure agreements by interested parties. Challenge Question Even as a small start-up business, in today’s marketing environment Cats & Cameos must meet the challenge of using an IMC approach. Put yourself in the position of a marketing consultant asked to advise Cats & Cameos’ founder. How would you suggest she address this challenge—for example, should she emphasize a push communication model, pull, or both? How does IMC impact her execution of the four functions of marketing management—analysis, planning, implementation, and control? Key Ideas to Remember The IMC approach requires integration across every business function and resource involved in sales, marketing, and/or corporate communications. Seamless teamwork is essential. Managing the marketing function in this era of IMC means coordinating efforts so the target audience receives a single consistent message. Analysis provides a basis for selecting strategies to execute by grounding planning in the realities of the business environment, the industry, the company, and customers. Big Data becomes relevant to strategy when companies must deal with rapid proliferation of data, need to exploit data in real time, or use data types that are not easy to automatically index, like video. Planning guides purposeful action by defining scope, objectives, goals, and action plans. Part of a strategic plan is a marketing section describing all actions planned or underway. Media planners must specify reach, frequency, and impact goals; message channel usage; media vehicle selection; and timing, considering the target consumer, value proposition, and specific media vehicles to be used, down to the details of how many ads run, and in what pattern, over a given time. A new ecosystem of service firms is emerging to serve the demand by corporations that their advertising agencies hold themselves accountable for measuring the impact of their advertising campaigns, regardless of the blend of media channels used. Implementation of marketing plans leads to actions that carry out marketing mix strategies. Marketing dashboards that allow managers to monitor performance are helpful in monitoring and evaluating performance of all that marketing action. Critical-Thinking Questions Pick one of the three reasons IMC has become imperative and describe its potential implications for Cats & Cameos. Describe the four functions of management. In your answer, identify how a marketing manager might realize when it is time to focus on one function or another. Imagine you are consulting with a manager of a business that sells cleaning supplies to nursing homes. Your client wants to develop a marketing plan but has a small budget for marketing his business. How would you show your client the benefits of a marketing plan? What aspects of a marketing plan could be scaled back or eliminated for this client’s situation? Customer perceptions, market share, revenues, profitability, sales force performance, price sensitivity, advertising effectiveness, and lifetime customer value were listed as KPIs of marketing performance. Identify which are measures of communications effect and which are measures of sales effect. Many people have an idea for a new product or service that arose from frustration with an existing offering. Do you? Try performing a SWOT analysis on your product or service idea. Key Terms to Remember Click on each key term to see the definition. analysis  The examination of data to uncover and understand cause–effect relationships as a basis for decision making. analytics  Statistical and mathematical data analysis that clusters, segments, scores, and predicts what scenarios are most likely to happen. Big Data  Extremely large data sets that may be analyzed computationally to reveal patterns, trends, and associations, especially relating to human behavior and interactions. communications effect  Performance measure of marketing campaigns based on outcomes such as advertising recall or actions taken after exposure to the campaign. cost per thousand (CPM)  In print and broadcast advertising, the cost of reaching 1,000 people or households of a targeted demographic segment or geographical area. data mart  (or data warehouse) Repository for all data generated by all departments and units of an organization, plus purchased data sets such as consumer profiles and credit scores. flights  Timing tactics for advertising campaigns running for a fixed period, such as continuous, seasonal, pulse, or front loaded. frequency  In media planning, the calculation of how often each person reached will be exposed to an advertising message during a campaign. impact  In media planning, a qualitative assessment of a message’s ability to influence those it reaches. key performance indicators (KPIs)  Statistics used to measure a firm’s performance in critical areas that, if not properly performed, would lead to strategic weakness. marketing dashboard  A software interface that presents the most critical diagnostic and predictive metrics, organized for a specific role and presented graphically in a way that facilitates recognition of significant patterns, like a car’s instrument panel. marketing metrics  Performance measures that quantify trends, dynamics, and characteristics of market performance. media plan  A programmatic description of strategic use of advertising media vehicles designed to reach a targeted audience; includes a schedule and budget. media vehicles  Specific print or electronic media employed in an advertising campaign (as opposed to media types, which are categories in which media vehicles can be classified). objectives  Ends that can reasonably be achieved within an expected time frame with available resources. Similar to goals, but usually broader in scope. organizational culture  Values and behaviors that contribute to the unique social environment of an organization. Based on shared attitudes, beliefs, and customs, apparent in the ways an organization conducts its business and treats its stakeholders. planning  A fundamental management function that results in identified goals, accompanied by strategies to achieve them. push-and-pull communication model  A brand communications model in which the consumption of marketing messages is more critical than their means of distribution. In this model, individuals retrieve (pull) whatever messages they deem relevant and trustworthy from the stream of outbound marketer-controlled messages (push). reach  In media planning, the calculation of how many different people will be exposed to an advertising message during a campaign. sales effect  A performance measure of marketing campaigns based on matching the dollars spent on a campaign with its specific impact on sales revenues. scope  The extent or range of actions under consideration; the boundaries within which an organization constrains its actions as a result of its core vision, mission, and values.