For Sheena - Marketing Segmentation and Targeting

Learning Objectives

After studying this chapter, you should be able to:

• Describe the marketing process and how it fits into business operations.

• Summarize the reasons for conducting market research.

• Explain how campaign development is affected by the increasing ability to use customer data to trigger marketing processes.

• Recognize the tasks involved in execution of marketing campaigns.

• Discuss the reasons for measuring the results of marketing processes.

Corbis2

The Marketing Process

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CHAPTER 2Section 2.1 The Marketing Process: Crucial to Business Operations

Introduction

Today’s marketing is a humanity-centric practice that contributes to sustaining and improving the world and invites customers into collaboration to create the value they seek. What is the role of the marketing department in this new paradigm? The focus of this chapter is the marketing process—the series of logical steps based on sound business planning that is carried out by corporate marketing departments and others in an organization. Situation analysis, marketing strategy, and campaign development, followed by execution and measurement, make up that process. Later you’ll build on these fundamental process concepts to gain a deeper understanding of the marketing function.

2.1 The Marketing Process: Crucial to Business Operations

Marketing is one of many business processes that support the execution of a com-pany’s strategic plan. Strategic planning is itself a business process—the one that drives all others. In strategic planning, an organization selects an overall direction.

The strategic planning process calls for top-level executives and other stakeholders in a business (such as customers, board members, employees, creditors, and suppliers) to examine its current status to set long-term objectives, devise strategies and tactics to achieve those objectives, and summarize all those decisions in a strategic plan document. The marketing department—like all the departments in a company—takes its “marching orders” from that strategic plan.

A key tool in both strategic planning and the marketing process is the SWOT analysis. This framework for analyzing internal and external forces affecting the business either positively or negatively is depicted in Table 2.1. The acronym derives from strengths, weaknesses, opportunities, and threats.

Table 2.1: SWOT analysis

Internal External

Positive Strengths Opportunities

Negative Weaknesses Threats

Strengths and weaknesses are internal factors over which a business has some measure of control; opportunities and threats are external factors that the business cannot control.

Most large firms carry out a formalized, top-down strategic planning process on a regular cycle, usually every year. Many other companies, including those in start-up mode and businesses going through transitions such as a merger or change of leadership, also do formal strategic planning.

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CHAPTER 2Section 2.1 The Marketing Process: Crucial to Business Operations

The marketing department is in a unique position in relation to strategic planning, because it alone is equally knowledgeable about consumers’ behavior and needs and the strengths and weaknesses of the company itself. In some organizations the marketing department will have the power to set strategy for other departments. In all organizations, marketers stand at the gateway between consumer and producer, helping each to understand the others’ needs and wants. The marketing process is the means by which the marketing department drives the whole organization to encourage buying exchanges.

The Steps of the Marketing Process The marketing process involves situation analysis, selection of a marketing strategy, and development of a campaign, followed by execution and measurement. Figure 2.1 presents the marketing process as a series of steps. Factors identified in the SWOT analysis are particularly useful in the first two phases of the marketing process. It provides inputs to the situation analysis and dictates the objectives that the marketing strategy is designed to achieve.

Figure 2.1: The marketing process

• Identify opportunity to fill an unmet customer need.

• Conduct market research, leading to innovation, segmentation, targeting, and positioning.

• Make marketing mix decisions covering product development, pricing, place/distribution issues, and promotions.

• Implement campaign, monitor, and adjust if needed.

Situation analysis

Marketing strategy

Campaign development

Execution

Measurement • Use market research and sales results to measure

impact of the strategy and its execution.

The marketing process reflects the planning model by which top executives formulate a company’s strategy and communicate it throughout the organization for execution.

The marketing process helps a business select and attract a customer, make the sale, and please the customer to such an extent that he or she returns and also makes referrals. This isn’t going to happen without thoughtful planning, so that’s where the marketing process

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CHAPTER 2Section 2.2 Marketing Process Step 1: Situation Analysis

begins. To avoid confusing this planning step of the marketing process with strategic planning, remember that the strategic plan comes first. Everything marketers do through- out the marketing process responds to objectives laid out in the company’s strategic plan.

2.2 Marketing Process Step 1: Situation Analysis

In this step, marketers identify an opportunity to fill an unmet customer need or to improve on how competitors’ products fill a need. This first step has the goal of setting marketing objectives that support the strategic plan. What objective should marketing try to achieve? The situation analysis provides inputs to that decision.

Any marketing objective selec- ted in this step should first of all be achievable. The market- ing department is accountable to the organization as a whole, and it will function best when focused on goals it can reason- ably expect to accomplish.

Successful marketing processes require a competitive advantage. Every company has strengths that make some opportunities more appealing than others. A food truck entrepreneur is more likely to move on an opportu- nity to open a small restaurant than to one day open a bicycle- repair shop. But opportunities arise from customers’ unmet or

Field Trip 2.1: Marketing Process Applied to the Library System

Do libraries need marketing? With the Internet offering access to oceans of information, libraries must communicate their relevance and benefits. Follow this link to view a planning guide created by the Ohio Library Council to aid libraries in the marketing process.

http://www.olc.org/marketing/2process.htm

Questions to Consider

Imagine yourself in the position of a head librarian, whose board of directors has requested that your library take a more marketing-focused approach to operations. Describe how the marketing process fits into the operations of the library institution.

Even a micro-business like a food truck benefits from performing a situation analysis to find a good match between the company’s strengths and potential customers’ needs.

Associated Press

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CHAPTER 2Section 2.2 Marketing Process Step 1: Situation Analysis

poorly met needs, not from entrepreneurs’ ambitions. The purpose of the situation analy- sis is to find a good match between the company’s strengths and potential customers’ needs. When a company finds it is uniquely suited to deliver a product or service, or has identified a means to deliver better value than existing offerings, it has discovered a stra- tegic competitive advantage.

Finding an achievable strategy based on a meaningful competitive advantage is the key reason for undertaking a situation analysis.

Performing a situation analysis requires looking both inward and outward—spending time reflecting on what the company is oriented to do well, and on what in the environ- ment might help or hinder the company. In the language of business planning, marketers must conduct internal analysis and external analysis. Internal analysis focuses on inher- ent capacities of the organization, while external analysis focuses on contextual factors.

Table 2.2 describes a framework for situation analysis including both internal and external analysis.

Table 2.2: Framework for situation analysis

Internal Analysis External Analysis

Origins History Present state Strategic plan

Micro-environment (factors specifically affecting this company) Macro-environment (factors affecting many companies)

In a situation analysis the internal analysis focuses on inherent capacities of the organization, while the external analysis focuses on contextual factors.

Internal analysis looks at a company in terms of its story—where it began, how it reached its current state of operations, what that present state is like, and what plans for the future have been made. Internal analysis focuses on factors inherent to the organization that give it advantages or disadvantages in meeting the needs of its target customers. External analysis focuses on context, including both the micro-environment (factors specifically affecting this company) and the macro-environment (factors affecting many companies).

Each type of analysis—external and internal—will produce a list of challenges and oppor- tunities. The situation analysis helps determine strategies for minimizing the threat from challenges and maximizing the potential in the opportunities identified. The ultimate goal of a situation analysis is to match a firm’s capabilities to market opportunities. When a situation analysis reveals something customers value, that a company can do better than any competitor, marketing planners have struck gold.

The following example shows how the business known today as Patio Foods was born from a situation analysis that struck (frozen) gold in a challenging external environment in the late 1950s.

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CHAPTER 2Section 2.2 Marketing Process Step 1: Situation Analysis

Situation Analysis Example: Patio Foods When the Stumberg family in San Antonio turned to selling frozen Mexican food, it was an act of desperation.

Henry Stumberg started a frozen vegetable business in 1946 with his sons Ed and Louis in San Antonio, but prices for frozen vegetables plummeted when other companies entered the national market. Competition knocked the bottom out of the Stumberg family busi- ness, which sold to supermarkets throughout Texas. Ed Stumberg observed that the five military bases in San Antonio were creating new fans for Tex-Mex cuisine. He reasoned that they might want to continue eat- ing Tex-Mex when they returned home. The Stumbergs began shipping frozen tamales and chili across the state. In the late 1950s they formed Patio Foods and went on to distribute Tex-Mex food as TV dinners nationwide.

We can only guess what went on around the Stumberg family’s conference room or dinner table as the family business made its shift from frozen vegetables to TV dinners. It’s likely the idea emerged from a situation anal- ysis. Internal analysis would reveal a declining customer base as price competition ate into frozen vegetable sales but a positive asset in infrastructure (freezers) and distribution sys- tems. External analysis of the micro-environment would reveal enthusiasm for Tex-Mex food among military personnel on the local bases. Analysis of the macro-environment would reveal the growing popularity of the new frozen product called a TV dinner (intro- duced by C. A. Swanson & Sons in 1953).

The marketing opportunity the Stumbergs discovered in the face of competition for frozen vegetable sales carried them to financial triumph. Patio Foods was acquired by R. J. Reyn- olds Tobacco Company in 1967, and Louis Stumberg was named vice chairman of RJR Foods Inc., the tobacco company’s food and beverage subsidiary. Subsequent acquisitions took the brand to Del Monte, ConAgra Foods, and most recently J&J Snack Brands (Hendricks, 2011).

Situation analysis is where the process that leads to customer loyalty and referrals begins. But planning should never take place in a vacuum. The situation analysis will require more information before it can be considered complete. Market research will fill in the unknowns that have come to light as marketers look for opportunities to support the company’s strategic goals.

Internal analysis is usually a fairly straightforward process. Unless the company is a recent acquisition, its planners will have a strong sense of its history, current situation, and future

The Stumberg family business’s internal analysis revealed a declining customer base but an asset in its infrastructure and distribution systems. The company became a leading purveyor of Tex-Mex TV dinners.

age fotostock/SuperStock

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CHAPTER 2Section 2.3 Marketing Process Step 2: Marketing Strategy

direction. If research is needed for the internal analysis, it will be to quantify certain fac- tors like market share or to gain insights into current customers through analysis of sales records, results of past marketing campaigns, and so on.

External analysis tends to be more complex, and likely to raise more questions. Research will be needed to find out about competitors, potential target markets, industry and con- sumer trends, and more. At this point, marketing planners put the situation analysis on hold while they conduct the research needed to fill in these blanks. Chapter 8 explores external analysis in depth.

Once research has produced the needed information, marketing planners circle back to this step in the marketing process to finish their situation analysis. When complete, it is a document that summarizes opportunities to satisfy customer needs. It will also sum- marize problems that must be resolved in order to take advantage of those opportunities.

Plans are most effective when documented in writing. A company’s strategic plan will typically exist as a written document disseminated to managers throughout the organiza- tion. The marketing department will produce a marketing plan document, complete with sub-plans describing in detail what will take place and why, and how effectiveness will be measured. Chapter 9 includes a more detailed discussion of these documents used by marketing managers.

2.3 Marketing Process Step 2: Marketing Strategy

In this step, marketers conduct research to provide the specific market information necessary to target a market segment and design a marketing mix that will profitably deliver value to those customers. As stated in Chapter 1, using segmentation and tar- geting is essential to focus marketing resources on the people likely to have the most need/ desire for a product or service and likely to be the most profitable as customers. The fore- most reason to conduct market research is to gain a deep understanding of customer needs by identifying segments worthy of targeting and finding value propositions that will reso- nate with them—in other words, to support the three components of the STP approach.

Every company needs a deep understanding of its specific situation in regard to the Cus- tomer Value Equation. Without that knowledge, a company cannot fully take advantage of the opportunity presented by unmet customer needs. The outcome of this step will be a value proposition to drive the choices in the next step, campaign development.

A value proposition is a statement that targets potential customers and describes why they should buy a specific offering from a specific company. The concept of the value

Questions to Consider

Imagine yourself in a situation like the Stumbergs of Patio Foods. You’ve got freezers and a distribution system and too much competition for the frozen vegetable business you once pursued profitably. Let’s say you were located in Seattle, Washington, instead of San Antonio, Texas. Apply internal and external analysis to your current situation. Can you find a new market opportunity?

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CHAPTER 2Section 2.3 Marketing Process Step 2: Marketing Strategy

proposition is credited to Rosser Reeves, chairman of the Ted Bates & Co. advertising agency in the 1950s, who dubbed it the Unique Selling Proposition (USP) (Daye, 2010).

Reeves was one of the first to develop a technique for communicating in an overcrowded marketplace. His definition of what makes a USP or value proposition holds true today. According to Reeves, a value proposition has three component parts. First, it must make a proposition to the potential customer: “Buy this, and you will receive a specified benefit.” Second, that proposition must be something no competitor can claim or that competitors have not chosen to emphasize in their promotions. Finally, the proposition must be so compelling that it motivates individuals to act.

Consider how the Mars candy company slogan for M&M’s delivers the three required components.

“M&M’s melt in your mouth, not in your hand.”

The slogan promises a specific benefit that no competing candy claims and that will compel peo- ple wary of messy chocolate to action.

A concept closely related to the value proposition is position- ing—marketers’ practice of creating an image or identity in the minds of prospective cus- tomers that allows one offer- ing to stand out among many. The identity created through positioning reflects the reason- ing behind the value proposi- tion and the promise made by the USP. This suite of concepts is explored in more depth in Chapter 6, Promotions.

Often research is required before planners finalize the value proposition (and USP and positioning) that will define the marketing strategy and drive the rest of the marketing process. Market research is an essential task of the second step of the marketing process, because the insights gained through research improve the outcome of all subsequent steps.

Reasons for Market Research Recall from Chapter 1 that market research is defined as the collection and analysis of data to produce information for decision-making. The market research conducted in Step 2 of the marketing process produces the information needed to find a value proposition—the unique and compelling promise of customer benefits on which marketing strategy can be based. (Other kinds of market research will be conducted later in the marketing process, to refine campaigns being developed and to measure results after the marketing strategy’s execution.)

The M&M’s slogan promises a specific benefit that no competing candy claims.

Envision/Corbis

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CHAPTER 2Section 2.3 Marketing Process Step 2: Marketing Strategy

In the marketing strategy phase, marketers typically focus their research on:

• Consumer behavior, to select market segments to target. • Innovation, to discover a target market’s unmet or poorly met needs and then

find ideas for products or services to fill those needs or fill them better. • Competitors’ strategies, to find a value proposition based on a benefit that com-

petitors can’t or have not chosen to claim.

Market research may also delve deeper into trends identified in the strategic plan or coming to light in the situation analysis. The goal of this research will be to produce insights into whether innova- tive product ideas can be profitably developed.

Let’s look closer at research into consumer behav- ior, perhaps the most essential of the areas listed above, since without a target market a company will likely try to be “all things to all people” and thus fail to develop a compelling value proposition.

Research to Understand Consumer Behavior Have you ever responded to a telephone survey? Returned a questionnaire received in the mail? Been asked to take a short survey when you leave a website? If so, you’ve been on the receiving end of market research. What were marketers’ reasons for conducting the research? Most likely, they were looking to understand your behavior—not you, specifically, but the market segment of which you represent one sample individual.

Research that helps marketers understand con- sumer behavior will lead to identification of dis- tinct market segments. Among those segments, research will reveal which are likely to offer profitable customers. Thus begins the fundamental marketing task of segmentation and targeting.

Back in the Production and Sales Eras, marketers were product-centric. They made few distinctions among types of consumers. That strategy was later replaced with consumer- centric strategies in the Marketing Era, in which targeting systems emerged, primarily based on demographic, socioeconomic, and housing characteristics. As the Relationship Era brought appreciation for Customer Lifetime Value, companies sought even more infor- mation from consumers, blending in purchase history and shopping behavior. Reflecting this progression, the execution of marketing campaigns has evolved from mass-market advertising through targeted campaigns toward one-to-one messaging driven by cus- tomer data. To achieve the level of consumer insight necessary for targeting, segmentation, and one-to-one messaging, marketers need to collect data—hence the demand for market research.

The Flip Camera came and went in the market. Market research is key to understanding what the current trends are and what one’s competitors produce.

Charlie Nucci/Corbis

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CHAPTER 2Section 2.3 Marketing Process Step 2: Marketing Strategy

The methods by which market research is collected can be primary or secondary. Pri- mary research is conducted by market researchers directly. Secondary research is found in existing published sources.

The types of data collected can be quantitative or qualitative.

Quantitative research methods produce numeric data using structured questions. It is useful when there is no ambiguity about the concepts being measured. Examples of quan- titative data-gathering include:

• Surveys, • Sampling, • Questionnaires, and • Data reports.

Qualitative research methods are helpful in hazier situations, where it would be difficult to develop structured questions. Qualitative research methods bring to light perceptions and feelings and help to discover problems and opportunities. Examples of qualitative data-gathering include:

• Focus groups, • Interviews, • Mall intercepts, and • Ethnography.

Focus groups involve selecting a small number of people (typically 6 to 12) representative of the consumer segment being studied, and then guiding a discussion to discover what they think or feel about a particular subject. Interviews involve a one-to-one conservation to gather information. Mall intercepts are short interviews conducted by randomly stop- ping and asking questions of shoppers in a mall. Ethnography (also referred to as retail ethnography) is a particularly interesting type of qualitative research involving a detailed study of a group to describe its behavior, characteristics, cultural mores, etc. Follow the link in Field Trip 2.2 to learn more about it.

An increasingly useful type of quantitative research is netnography (a term derived from Internet and ethnography). Netnography is a branch of ethnography that analyses the self- directed behavior of individuals on the Internet to provide useful insights.

The examples in Table 2.3 suggest how these different types of research produce different types of information.

Field Trip 2.2: Ethnography

Envirosell is a leading retail ethnographic firm. Take a look through its website and read some of the articles to learn more about this specific form of market research.

http://www.envirosell.com/

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CHAPTER 2Section 2.3 Marketing Process Step 2: Marketing Strategy

Table 2.3: Types of market research

Research Method Data Type: Quantitative Data Type: Qualitative

Primary Example: Questionnaire Website traffic

Example: In-depth interview Customer feedback

Secondary Example: Consumer expenditure survey Industry sales data

Example: Industry case study

Different types of research produce different types of information.

Lab42, a market research survey platform provider, used primary, quantitative research to help an independent consultant answer three questions concerning consumer behavior:

1. At what age did women start using makeup, and who taught them how to wear it?

2. How did women choose their preferred brands of makeup? 3. How often did women purchase makeup?

Lab42 fielded an online survey to women aged 18–30. The firm deployed the survey across a variety of social networks, including Facebook and MySpace. It added ambigu- ous qualifying questions to the beginning of the survey to ensure it was only reaching out to women of the target age group. Lab42 was able to help the client slice the data into various market segments and understand how the data answered the three research ques- tions, thus determining the target markets for a niche makeup brand with the most profit potential.

Many firms use a secondary research approach, drawing on resources like the Consumer Expenditure Survey conducted annually by the U.S. Bureau of Labor Statistics. The Con- sumer Expenditure Survey represents research gathered by primary quantitative meth- ods. When marketers draw on data from this survey in their research, they are conduct- ing secondary quantitative research—because they did not directly collect the data they are using. Follow the link in Field Trip 2.3 to view reports from the Consumer Expendi- ture Survey.

Field Trip 2.3: Consumer Expenditure Survey

The Consumer Expenditure Survey collects information on the buying habits of U.S. consumers using two data-collection tools: the Interview Survey and the Diary Survey—each with its own sample. The surveys collect data on expenditures, income, and consumer unit characteristics.

Follow this link to view reports from the Consumer Expenditure Survey.

http://www.census.gov/compendia/statab/cats/income_expenditures_poverty_wealth/consumer_ expenditures.html

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CHAPTER 2Section 2.3 Marketing Process Step 2: Marketing Strategy

Conducting Market Research Now that we’ve explored why this second step of the marketing process requires research, and types of research that can be conducted, we turn to the question—how is market research actually conducted? There are five steps in the process:

1. Problem definition: Statement of the purpose for research, usually a question tied to one of the reasons for research identified earlier in this chapter.

2. Research design: Selection of a research method (primary or secondary) and data type (quantitative or qualitative) for the research project.

3. Data collection: Implementation of the research project as defined and designed in previous steps. This may involve fieldwork to collect primary data or gather- ing of information from secondary data sources.

4. Data analysis: Use of descriptive statistics of quantitative data and/or summaries of qualitative data, to turn information into insight.

5. Report presentation: Writing up findings to express insights or new knowledge gained, for presentation to management and other stakeholders.

Figure 2.2 summarizes these steps.

Figure 2.2: Market research process

Problem definition

Research design

Data collection

Data analysis

Report presentation

Five steps make up the market research process.

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CHAPTER 2Section 2.4 Marketing Process Step 3: Campaign Development

A complex problem may require several types of research, such as a focus group to gener- ate ideas for a value proposition, followed by a questionnaire to test the appeal of several versions of the value proposition. In that case, step 2 would describe each research initia- tive; steps 3 and 4 would include separate steps of data collection and analysis for each initiative. Step 5 would bring the results of all initiatives together in a final presentation.

To review the marketing process so far:

1. Situation analysis: Identify opportunities to fill unmet customer needs. 2. Marketing strategy: Design and conduct research; develop segmentation, target-

ing, and positioning strategies.

Once marketers have conducted research, they fold the results into their strategic plan- ning. With the first and second steps of the marketing process complete, marketers can move on to the campaign development phase.

2.4 Marketing Process Step 3: Campaign Development

In this step, marketers make decisions covering components of the marketing mix—product development, pricing, place (including both location and distribution issues), and promotions. Their goal is to develop a campaign plan in response to the oppor- tunity identified in the first step, situation analysis, that creatively communicates to the target market the value proposition identified in the second step, marketing strategy.

Campaign development demands a marketing mix based on what a company is selling to a particular target market and how the company plans to reach it. Each campaign strategy will specify a message channel and a value proposition chosen to reach a specific target market and move individuals in that niche to action.

The message channel is the medium used by marketers to deliver a message to a target audience, such as a radio station, website, or mailing list. Message channels are catego- rized by the type of audience they reach, which may be mass market, targeted, or indi- vidual (one-to-one). The choice of message channel is driven by the strategies of the mar- keting mix, most directly by strategic decisions in the Promotions quadrant.

Any discussion of campaign development today must acknowledge the tremendous increase in computing power that has made one-to-one marketing possible. The arrival of technology capable of managing vast databases has created an opportunity for marketers

Questions to Consider

Returning to the Patio Foods example discussed earlier in this chapter, consider how creators of the TV dinner might have used market research to identify a target market, discover new product ideas, find a compelling value proposition, or detect market trends. Choose one of these research purposes and describe a research project for a frozen meal business.

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CHAPTER 2Section 2.4 Marketing Process Step 3: Campaign Development

to shift from campaigns driven by use of mass-market message channels to much more effective and cost-efficient processes that reach individuals, one by one.

A compelling reason companies rely on targeted marketing strategies is to focus spend- ing on those most likely to buy. Today many companies employ one-to-one marketing—a highly sophisticated method of tailoring messages and delivering them to individuals.

The Shift From Mass-Market Toward One-to-One Campaigns Marketers must choose message channels that reach the target market they’ve selected. They must also make sure the campaign they’re developing adheres to other parameters laid out for the campaign in the marketing strategy, such as budget and time period.

Mass-market campaigns push an advertising message to an audience through mass media, using message channels such as television, radio, or newspapers. Targeted cam- paigns use tailored channels to reach specific market segments, such as people in a spe- cific geographic area (for example, readers of Chicago magazine) or those who share an interest (e.g., listeners to an all-gospel radio station). One-to-one campaigns push an advertising message to an individual using a one-to-one message channel, typically direct mail or email.

Marketers selling products and services that are needed by just about everybody have little need to move toward one-to-one campaign techniques. If the appeal of a value prop- osition is broad enough, mass media is a good choice to convey the message. Since so many people eat fast food, use skin care products, and prepare their taxes every year, you see these offerings marketed in the mass media. When politicians run for office, they want every vote, and so they use mass media.

On the other hand, market- ers know that today’s consum- ers are eager for dialogue and engagement. They prefer a per- sonal approach to a “one-size- fits-all” campaign. Marketers have learned that using tech- niques closer to the one-to-one end of the spectrum can be more effective with certain types of offerings. Ads aimed at niches can appear in online as well as in traditional broadcast or print message channels. Either can be considered fairly targeted but not yet one-to-one, because no individual has been specified to receive the message.

Marketers sell their products to customers by engaging them personally. Apple does this through its ads featuring a conversation with a loved one via the iPhone’s video talk capabilities.

Associated Press

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CHAPTER 2Section 2.4 Marketing Process Step 3: Campaign Development

Volkswagen has done a superior job of creating advertisements that match specific brands to specific target markets, even though using mass media as a message channel. A series of TV commercials (discussed in Chapter 6) shows Volkswagen’s different car models matched to different life stages, depicting typical buyers moving from their first Golf as teenagers, through a Jetta for their carefree “singleton” years, and purchasing a Passat or Touareg minivan when the babies start coming.

Catalog marketers were among the first to use customer purchase data to drive campaigns toward more tightly targeted niches. A woman who buys maternity clothes from a general J. C. Penney catalog will soon start receiving smaller catalogs from J. C. Penney displaying maternity fashions only. Before long, a baby-products catalog will follow.

Taking targeting to the one-to-one level, direct-mail food merchandiser The Wisconsin Cheeseman Company began inserting a customized order form into every holiday cata- log as soon as printing technology allowed it. The company mailed catalogs to past cus- tomers preprinted with each individual customer’s order from the prior year, making it supremely easy to order the same products again each holiday.

To deploy one-to-one campaigns, marketers must have access to a database of customer and/or product information. Have you ever received an invitation to schedule a health care screening right around your birthday? Have you received a mailer from your car dealership on the anniversary of your last purchase, suggesting you might like to trade up to a newer car? These are examples of data-driven one-to-one marketing campaigns, directed to you based on information on file about you.

Share of Market or Share of Customer? With mass-market campaigns, marketers hope to increase their share of the marketplace. In other words, if 100 people exist who might buy a thingamajig, the makers of Acme- brand thingamajigs use mass-media advertising to get as many of those 100 people as possible to make a purchase, winning market share away from competitors.

With one-to-one marketing, the focus shifts from capturing share of market to share of cus- tomer, gaining more of individuals’ purchases over their lifetimes. With this strategy, the marketers at Acme hope to get each of those 100 people in the habit of buying Acme-brand thingamajigs over and over again.

One-to-one marketing can be a company’s only campaign strategy or a supplement to mass-market campaigns. If used as a supplement—part of a strategy to drive both share of market and share of customer—the messages must be coordinated.

Table 2.4 illustrates where different types of message channels fall on the spectrum from mass-market to one-to-one campaigns. Most marketers combine techniques to increase both market share and lifetime share of the customer.

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CHAPTER 2Section 2.4 Marketing Process Step 3: Campaign Development

Table 2.4: Message channels

Mass Market Message Channels One-to-One

Examples TV Radio Newspapers Magazines

Special Interest Magazines Websites

YouTube Search Engines

Catalogs Direct Mail Email

Variable- printed direct mail Variable- content email

Characteristics Undifferentiated message, “one- size-fits-all” audience

Differentiated messages, targeted audience

Targeted messages, targeted audience

Targeted message, addressed to individuals

Individual message, addressed to individuals

Message channels occupy a place on a spectrum from mass-market to one-to-one approaches, with targeted message channels in between.

The ability to conduct one-to-one campaigns raises ethical issues. The promise of one-to- one marketing is that consumers benefit from it; more of the messages they receive are tailored more closely to their needs and interests. But consumers can perceive one-to-one marketing as intrusive, especially as concerns mount about the security of personal infor- mation. The responsibility lies with marketers to ask permission for the data they collect and not to exploit customer data beyond reasonable boundaries. We’ll return to this sub- ject in Chapter 10, Responsible Marketing.

Other elements of the campaign development step include creation of a media plan and an evaluation plan. The media plan specifies what message channels will be used, and on what schedule. Today’s media plans usually combine mass media, targeted media, and one-to-one messaging, including social media as well as traditional channels. The evalua- tion plan addresses how the effectiveness of marketing messages will be measured.

One More Round of Research for Campaign Development The campaign development stage of the marketing process is almost complete once the decisions about marketing mix, message channel strategy, media plan, and evaluation plan have been made. There’s just one more task for marketers before moving on to execu- tion—research to make sure the decisions made so far are sound.

Depending on a company’s management structure and relationships, it may need to secure final approval of a campaign before executing it. An ad agency will need to get its client company’s approval; a marketing department may need approval of the firm’s CEO or CMO. Research with the target audience that provides evidence of sound strategy is very helpful in gaining approval when presenting concepts to decision-makers inside the company or ad agency.

Consider the following example: A Wisconsin advertising agency was charged with devel- oping an anti-smoking campaign targeted at middle-school-aged (sixth- to eighth-grade) youths (Olderman, 2011). The advertising agency strategists viewed videos from national

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CHAPTER 2Section 2.4 Marketing Process Step 3: Campaign Development

anti-smoking campaigns, analyzing which appeals were used. Following this preliminary work, the agency developed three campaign concepts:

1. Smoking is bad for your health. 2. Smoking makes you less attractive. 3. Big tobacco companies are trying to manipulate you into smoking.

To which proposition would young people respond most strongly? To find out, the agency conducted focus groups around the state. The pitch highlighting health negatives did not move the youths at all. They responded more strongly to the caution about reduced attrac- tiveness, but not by much. The proposition that really got their attention was the affront to their independence and autonomy they sensed in the third concept. “Don’t let Big Tobacco manipulate you” became the theme of the ad campaign against teen smoking (Thomas T. Melvin Youth Tobacco Pre- vention and Education Pro- gram, State of Wisconsin).

This example shows how mar- ket research produced insights into which campaign message should be selected for execu- tion. We’ll return to this exam- ple in the context of the final step of the marketing process, measurement.

During the campaign develop- ment stage of the marketing pro- cess, marketers apply the four p’s of the marketing mix; they select a strategy that describes how the campaign will use mass-market, targeted, and one-to-one message channels; and finally, the marketers develop a campaign message based on an underlying value proposi- tion. After testing the message to be sure it will work, the next step is execution—rolling out the campaign. At this point, the marketing strategy can be documented in a written marketing plan, to control the actions that follow.

Questions to Consider

Let’s return to the frozen dinner business niche. Select a food item or category like “Tex-Mex” or “low- fat” for your entree. Describe your business using the four p’s of the marketing mix.

What blend of mass-market, targeted, or one-to-one message channels do you think will be most effective in reaching customers?

Market research produced insights into which smoking cessation campaign message would be most effective against teen smoking.

Associated Press

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CHAPTER 2Section 2.5 Marketing Process Step 4: Execution

2.5 Marketing Process Step 4: Execution

In this step marketers implement the campaign they’ve developed, and then monitor its execution and adjust the campaign if needed. Executing a mass-market campaign involves buying media and filling it with persuasive content, or creating a social media environment that reaches a community of interest in less traditional ways. The media plan (created during campaign development) specifies which message channels will be used, including any or all on the spectrum from mass media to one-to-one. Many media plans include social media. Media planning is a special- ized function within an ad agency or marketing department.

Once the media plan is in place, content must be created to fill it. Every piece of the plan, from the briefest radio spot to the most elaborate video production, requires creative execution.

Execution puts the “fun” in this important marketing function. While all art directors work within the framework dictated by the marketing strategy, their creativity brings the strategy to life. The people who write, produce, photograph, illustrate, create soundtracks, and otherwise fill media channels with content are artists engaged in creat- ing popular culture. Follow the link in Field Trip 2.4 to read about a significant era when advertising was “coming of age” as a profession and advertisers profoundly impacted popular culture.

Data Drives One-to-One Campaigns With the shift to one-to-one marketing, execution demands not just one advertising mes- sage, but an entire system of elements driven by fields in a database. A specialized print- ing technique called variable data printing makes it possible to print and deliver mail pieces that are customized right down to the individual recipient. Without this technique The Wisconsin Cheeseman could not have inserted a personalized order form into each customer’s catalog. Email and websites can be personalized with variable data in the same way printed pieces can.

Fields in a database drive more than just names—each element of a printed or online com- munication piece, including the images, benefit statements, and offers, can change based on data about the recipient. It’s common for marketers to use images that mirror each recipient’s age, gender, and ethnicity. The data that drives one-to-one campaigns comes from a sophisticated data warehouse containing information from sales, marketing, and

Field Trip 2.4: Advertising Campaigns and the “Creative Revolution” of the 1960s

Follow this link to read about advertising in the 1960s. During that time the Promotions component of the marketing mix drove a creative revolution in which campaigns featured candor, humor, and irony as a means to reject marketing practices that were increasingly criticized for promoting materialism and deceiving consumers.

http://adage.com/article/adage-encyclopedia/history-1960s/98702/

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CHAPTER 2Section 2.5 Marketing Process Step 4: Execution

customer service activities. Without the data warehouse there would be no data fields to drive the variable messages and nowhere for data about the outcome to accumulate.

Monitoring the Campaign Once the media planners and creative department have finished their work and the cam- paign launches, is execution complete? No; marketers must monitor all the media chan- nels used to be sure each component is executed as planned.

Radio and TV messages can be bumped by breaking news. Playback of the messages can be garbled due to technical glitches. Mail pieces can be misdelivered. Email can be trapped in spam filters. Online campaigns can go off track when servers go down, which can result when a successful promotion generates more response than expected. When Lady Gaga released her new album “Born This Way” on May 23, 2011, Amazon offered a one-day sale of the MP3 version of the album for 99 cents, $11 less than its price on iTunes. By early afternoon the company’s servers stalled (Sisario, 2011).

Marketers must make sure that make-goods are issued if another company is at fault, such as a particular television station or email distribution service. If the fault is the company’s own, execu- tion plans must be adjusted to remedy the error and get the campaign back on track.

Another form of monitoring also takes place dur- ing the execution step—monitoring the creative work on the campaign as it is developed, to be sure it stays aligned with the strategic plan. Cre- ative people tend to want to push limits. Someone on the team must counter that tendency by moni- toring that each decision regarding the four p’s of the marketing mix is reflected in the creative exe- cution. In an ad agency, this might fall to some- one with the title of traffic manager or account manager. In a corporate marketing department, the title might be marketing manager or market- ing director. If monitoring the campaign reveals problems, then adjustments must be made to get the campaign back into alignment with the stra- tegic plan.

In summary, the fourth step in the marketing pro- cess, execution, involves the tasks of specifying which message channels will be used (described in a media plan), creating content to fill the mes- sage channels, and monitoring that the messages

stay aligned with strategy and get delivered according to plan. When one-to-one messag- ing is called for, data must be available to drive it—therefore, execution also involves data management. Figure 2.3 lists the steps in the execution process.

Marketers must monitor promotions to ensure they run as planned. Amazon’s servers stalled when the company offered a discount on the MP3 version of Lady Gaga’s album “Born This Way.”

Associated Press

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CHAPTER 2Section 2.6 Marketing Process Step 5: Measurement

Figure 2.3: Marketing process step 4: Execution

Develop media plan specifying message channels, budget, timetable

Create content (print ads, TV commercials, online videos, etc.)

Use data to drive one-to-one messages

Monitor message channels

Adjust if needed

Execution involves the tasks of developing the media plan, creating content, monitoring the campaign, and adjusting if needed.

2.6 Marketing Process Step 5: Measurement

In the marketing process, there would be no sales without execution of marketing cam-paigns. And without sales, there’s no opportunity to please customers. To discover whether campaigns are effective in not just attracting customers but also making sales, there’s only one thing to do—measure them. In this step of the marketing process, market- ers use research to measure the impact of the marketing strategy that has made its way through campaign development and execution.

Questions to Consider

Careers in marketing mentioned in relation to the execution step include media planning and creating content for advertising and other marketing communications, as well as traffic and account manag- ers. Earlier steps involved the work of strategic planners and researchers—other careers in marketing. Does one or more of these career opportunities interest you? Why?

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CHAPTER 2Section 2.6 Marketing Process Step 5: Measurement

Two fundamental information needs make measurement imperative. The more obvious need is for inputs to future strategy decisions, which will allow for improvement with each campaign cycle based on what worked best in previous cycles. Less obvious but just as important is the need to demonstrate the marketing department’s contribution to the success of the organization.

But can marketing’s impact be measured? If so, with what precision?

The standard measure of organizational success used by financial managers is the calcu- lation of Return on Investment (ROI). This measure is a ratio that compares the money gained or lost on an investment relative to the amount of money invested. In the market- ing process, the goal of Step 5 is to measure the money generated in sales (or other desired gain, such as an increase in brand awareness or ability to recall a product’s benefits) rela- tive to the amount of money invested in the campaign. Marketers have begun calling this measure Return on Marketing Investment (ROMI).

Ideally, every marketing strategy is measured, with information about its outcome feed- ing each subsequent round of strategic planning. Sadly, marketing measurement is often neglected. Measurement can be expensive. Some companies simply won’t include a budget to pay for it in their marketing plans. Ad agencies tend not to emphasize measurement—it might shift budget dollars away from media buys or creative tasks, or worse, reveal that a campaign they created was not effective. And, compared to the work of developing strate- gies and creating advertising, measurement is simply not very exciting. Where measure- ment takes place in today’s business landscape, it is driven by the need to prove that what is paid for is performing up to expectations. The need to show ROMI drives measurement.

Government units will typically require measurement of the marketing processes they engage in, because they must justify their budgets to comply with rigorous fiscal man- agement and legislative oversight. The anti-smoking campaign example mentioned earlier included measures of effectiveness. Evaluation was planned into every aspect of the cam- paign’s three-year-long execution. The campaign, which encompassed advertising targeted to different populations, a teaching curriculum, and participatory youth events, was mea- sured by monitoring the change in number of new smokers among members of the target populations, based on the state’s ongoing program to measure tobacco use. Execution and measurement were coordinated by the ad agency, and paid for by the State of Wisconsin. In this case, the outcome was positive—a decrease in new smokers each year of the program (Thomas T. Melvin Youth Tobacco Prevention and Education Program, State of Wisconsin).

Plan Ahead for Measurement How a campaign is executed can build in means for measurement. One-to-one campaigns have the advantage of being highly measurable, unlike mass-market campaigns. The ease of quantifying campaign response is one reason marketers are using more one-to- one marketing. The data warehouse records the campaign information that went to the customer and captures the customer’s subsequent behavior. If a variable-data-printed birthday health-screening reminder is followed by an appointment for a health screening, marketers can justifiably claim that their campaign caused that result. Measuring targeted or mass-media campaigns is more difficult, but it can be done if marketers plan ahead, although not with the same degree of specificity as one-to-one campaigns.

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CHAPTER 2Section 2.6 Marketing Process Step 5: Measurement

Marketing measurement tracks the behavior of groups of people over time. It requires comparison of a “before” state to an “after” state. Effective measurement also requires a test group and a control group—a population that receives the campaign message and a similar population unaware of the message. These pairs can be pulled from similar geo- graphic areas or similar market segments, depending on the campaign strategy. Planning ahead for measurement should include specifications for the time frame and groups that will be measured for comparison.

What to Measure? If the overall goal of this step is to measure the impact of a marketing strategy, what data points might provide insight into that impact?

To calculate ROI or ROMI, the key data are monetary amounts generated in sales relative to the monetary amount expended to conduct the marketing campaign. When the goal is something other than sales, such as an increase in brand awareness, measuring ROI/ ROMI is much more difficult, as the monetary value of that intangible increase must be estimated.

Measuring campaign effectiveness is one means of assessing the impact of a marketing strategy. Some data directly reflect measures of campaign effectiveness; other data indi- rectly reflect campaign effectiveness by looking to operational performance for evidence.

A direct measure of campaign effectiveness is the A/B split, a technique in which elements of a message are varied and tested one by one. The elements may be as subtle as two dif- ferent headlines or as dramatic as two completely different value propositions. The mes- sage being tested can be a print ad, a Web page, an email message—the technique works regardless of the form the message takes.

The A/B split technique was used by a health care device manufacturer to test two pitches for a medical ventilator (a device to help patients breathe). One message promised a nurse’s advocate would be available around the clock to answer questions on the ventilator’s use. The other message omitted any mention of the nurse’s advocate but otherwise conveyed the same value proposition. The ad promising the nurse’s advocate pulled much better response in preliminary tests, convincing the company that the cost of adding a nurse to the staff would be recouped in sales (Olderman, 2011).

The A/B split advertising measurement method has been in use for decades and con- tinues to be a reliable method for improving campaign response. Field Trip 2.5 gives an example from Gallup and Robinson, an advertising and marketing research firm.

Field Trip 2.5: Which Ad Pulled Best?

View this link to see several “which ad pulled best” pairs on Gallup and Robinson’s website.

http://www.gallup-robinson.com/adgameindex.html

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CHAPTER 2Section 2.6 Marketing Process Step 5: Measurement

Indirect measures of campaign effectiveness rely on counting the sales generated by the campaign, using operational data. The marketing department needs reports that track:

• Sales volume, • Repeat purchases, • New customer activity, • Purchases by specific market segments, • Purchases in specific geographic areas, • Change in order sizes, and/or • Source of new sales (to measure message channel effectiveness).

When marketing campaigns include an offer that is specific to the campaign and make a unique and trackable call to action, measurement is relatively straightforward. Consider, for example, a radio commercial for Acme’s Thingamajigs that announces “20 percent off all orders received by June 1” paired with the call to action “Mention WGN Radio to receive your discount when you call.” Each caller who mentions WGN when placing an order can be counted as a campaign response.

It is more difficult to measure the effect of marketing that does not make a specific call to action, because the effects are slower to accumulate and rarely can be directly attributed to specific campaign elements. The effect of image advertising, sponsorships, and other pub- lic relations efforts are hard to track. Even so, research with a sample of members of the target population can reveal changes in their ability to recall brand attributes or specific product benefits. Presumably an increase in recall of positive attributes can be claimed as a “win” for the marketing strategy, just as tangible sales results can.

Measuring the results of marketing processes is critical for two reasons:

1. To provide feedback on marketing strategy and execution, to improve with the next cycle of the marketing process, and

2. To prove the marketing department’s contribution to the success of the organiza- tion, to ensure operational and financial support.

We’ve now discussed each of the five steps in the marketing process, from situation analy- sis through measurement.

Questions to Consider

Returning once more to the frozen dinner business niche, consider the hypothetical business you described in response to the questions at the conclusion of Section 2.4. You were asked what blend of mass-market, targeted, or one-to-one message channels would be most effective in reaching your target customers. Now consider measurement of that campaign. What measures might allow you to compare the performance of those channels against each other?

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CHAPTER 2Case Study: Not Golf!

Case Study: Not Golf!

Some golfers are turning tradition on its head, creating a new version of golf in which the rulebook gets left behind and players have more fun. The Alternative Golf Asso-ciation (AGA) launched Project Flogton (“not golf” spelled backward) in January 2011 to “legitimize a more playable game that lowers the barriers to golf, but does not lower the standards or competitive spirit,” according to the association’s website, www.flogton.com.

The AGA, founded by a group of Silicon Valley executives, tapped former chief execu- tive of Sun Microsystems Scott McNealy to serve as its inaugural commissioner. He and three Silicon Valley colleagues—co-founders Pat Gallagher, Bob Zider, and Damien East- wood—decided to create a movement for change in the golf industry (Dwyre, 2010). The founders of Flogton envision a new way for beginners to enter the sport of golf and a low- stress alternative for recreational golfers.

Flogton features an alternative rule set, intended to turn around a significant declining trend in the golf industry by enticing players uninterested in the traditional game, and creating opportunities for inventors to develop new products that would be unacceptable in play sanctioned by the United States Golf Association.

Let’s take a look at the marketing process required to leverage this opportunity into a busi- ness success—which could mean reversal of the declining trends if you’re a golf course operator, or a whole new product line if your company manufactures golf equipment and accessories.

The following marketing process description is drawn from information available on the Flogton website (www.flogton.com) in May 2011.

Situation Analysis: Imagine the discussions as the four founders of Flogton paused after a round of golf, noting the empty fairways. Where have all the golfers gone? According to an AGA press release, Zider first envisioned Flogton more than a decade ago, when a Har- vard Business Review case study convinced him that golf was a declining industry. But his plans for an alternative remained in his files, unacted on, until a string of chance encoun- ters eased the idea onto a front burner and the founding talent lineup came together. Being entrepreneurs and business leaders themselves, the founders would naturally apply tools of business strategy, such as the SWOT analysis, to the problem they observed. Before long they were using another tool—PowerPoint—to disseminate their view that “golf is the greatest game in the world, but golf has issues,” and to make their call to action: “Bring new attitude, ideas, and energy to golf.”

According to the AGA’s launch presentation, analysis provided by NGF/Pellucid (a pro- vider of research to the golf industry) revealed that most trends in golf are flat or curving downward. Course operators, equipment suppliers, golf coaches, and even the United States Golf Association itself all find common ground in the need for a new approach that will turn around the decline in traditional golf.

Statistics, including the declining numbers of golf rounds played in recent years and the declining number of beginning golfers, quantify the shrinkage of the market for traditional golf. According to the National Golf Foundation, there were approximately 24 million

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CHAPTER 2Case Study: Not Golf!

fewer golf rounds played in 2010 than in 2005. The data reveal a threat—declining interest in tra- ditional golf—but also an oppor- tunity to widen the appeal of golf by changing its traditional rules.

The insight achieved in this step of the marketing process is that other sports have encouraged variants in order to grow. Tre- mendous growth occurred in the ski business after snowboarding hit the slopes. Flogton’s sup- porters think golf could use the same kind of shaking up.

Flogton (golf with looser rules) fills an unmet customer need.

Because the four founders were investigating the launch of a new venture, only external analysis was available as a tool to understand their situation; there is no possibility of internal analysis until an organization exists.

As a result of their research, the four decided to form the Alternative Golf Association.

Marketing Strategy: In this step, the AGA needed to gather information to target a market segment and design a marketing mix that would raise awareness and adoption of Flog- ton, to do for golf what snowboarding did for the ski industry. The consumer behavior information needed to develop a strategy came from primary research by NGF/Pellucid, which revealed golf players’ attitudes. Words like “difficult,” “intimidating,” and “frus- trating” characterized their experience with traditional golf. The cost and time involved to play the traditional game were also complaints.

The AGA targeted these dissatisfied traditional golfers as the market segment for whom Flogton would fill an unmet need.

With Flogton, the AGA created a game in which more people experience the thrill of suc- cess and fewer spend time in the agony of defeat. The value proposition of Flogton could be summed up as, “Flogton makes golf a playable game for the rest of us.”

Campaign Development: According to a PowerPoint presentation produced by the AGA for the launch of Flogton (available in the News area of the website, http://www.flogton. com/releases.html), the overall strategy called for four elements:

1. Introduce new games and rules that can be played on any participating golf course; 2. Introduce innovative equipment that actually makes it easier and more fun for

people of widely varying abilities to play;

Situation analysis revealed declining interest in traditional golf, which presented an opportunity to widen the appeal of golf by changing the rules.

Design Pics/Thinkstock

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CHAPTER 2Case Study: Not Golf!

3. Introduce a new, more fun style and set of social standards; and 4. Create an online media community with social networking features.

Two marketing strategy initiatives were developed—an informative, community-oriented website and a public relations campaign. Three target audiences were identified: players, golf course operators, and equipment manufacturers.

Because paid message channels weren’t part of the plan, there was no need for a media plan describing message channels to be used, or for testing and validation of advertising concepts.

Execution: Execution put the emphasis on two of the four strategy elements: encouraging golf equipment manufacturers to develop innovative equipment and encouraging Flog- ton enthusiasts to participate in an online community.

To create an online community, the designers of the website included a forum and blog as message channels. They started a Facebook page for “Project Flogton,” which began accumulating friends. A Twitter stream for #ProjectFlogton commenced.

To encourage innovative equipment, the Project Flogton website includes an “Inventors Corner” where ideas are solicited for gear that, while not appropriate for United States Golf Association regulation play, allows Flogton players to enjoy their anything-goes sport.

The launch of Flogton demonstrates that execution doesn’t necessarily rely on a big-bud- get media campaign, or sophisticated aggregation of data to drive a one-to-one campaign. The founders of the AGA relied on the news value of their idea and the visibility of its technology-sector founders to draw interest from the traditional press and social media. The monitoring aspect of their execution consisted of tracking mentions in traditional and online media, which can be found on the Flogton website, http://www.flogton.com/ coverage.html.

Measurement: At its launch in January 2011 the AGA set a 10-year goal to double golf industry revenue by 2021. Metrics specified to measure the growth of Flogton included:

• Add 25 percent more distance to average golfer’s drive; • Reduce hooks, slices, chunks, skulls by 50 percent; • Increase wedge spins by 100 percent, allowing good shots to remain on the green; • Have special-purpose balls for distance, accuracy, spin, and putting; • Lower score by 15 strokes; and • Increase fun by 200 percent.

While not direct measures of campaign performance, these measures will allow compari- son of the “before” state (regular golfers’ performance) and an “after” state (Flogton play- ers’ performance).

Since the AGA is not executing a media campaign with a specific call to action, measure- ment of campaign effectiveness will be indirect. Measures such as the number of articles

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CHAPTER 2 Case Study: Not Golf!

written about Flogton, the count of inquiries from golf courses wanting to host Flogton play, and the number of manufacturers interested in developing equipment for the sport will be evidence of the launch’s success.

Field Trip 2.6 invites you into the world of Flogton’s online community.

Field Trip 2.6: Flogton

View the website at www.flogton.com to read coverage that resulted from the public relations cam- paign; visit Facebook (search for Project Flogton) or Twitter (#ProjectFlogton) to judge how successful the AGA has been at attracting popular interest to the new sport of Flogton.

Follow this link to read a report from the founders of Flogton from 100 days into its launch.

http://www.flogton.com/magazine/read/100-days-of-flogton_23.html

Visit YouTube and search for “Flogton” videos to see examples of the sport in action.

Challenge Question

In Chapter 1 you were asked to pick a product that interests you, or use the examples of quinoa or craft beer presented in that chapter. You described that product by analyzing the Customer Value Equation it offers in terms of the four utilities of customer value: Form, Time, Place, and Ease of Possession.

Now, consider how the marketing process might be applied to promotion of that product. What does situation analysis reveal about unmet customer needs? In terms of marketing strategy, what might your marketing mix be? What market research might be needed to help you choose a target market and develop a value proposition? How might you develop, execute, and measure a campaign promot- ing that product?

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CHAPTER 2Post-Assessment

Post-Assessment

1. In what way is the marketing department different from other business units?

a. It is knowledgeable about both the company itself and the consumers the company serves.

b. It has unique and unparalleled access to top-level executives and stakeholders. c. It only focuses on the company. d. It discourages buying exchanges.

2. What is the external analysis planning tool MOST concerned with?

a. Long-range objectives dictated by the origins and history of a firm. b. Micro-environment and macro-environment. c. Selection of segments, targets, and positioning strategy. d. Measuring impact of campaign strategy following execution.

3. Which of the following phrases is an alternate term for the “value proposition”?

a. STP (Segmenting, Targeting, and Positioning) b. SWOT (Strengths, Weaknesses, Opportunities, Threats) c. USP (Unique Selling Proposition) d. CTA (Call to Action)

4. How many steps were discussed as part of the market research process?

a. Six b. Three c. Seven d. Five

5. What does the abbreviation ROMI stand for?

a. Return on Monitoring Investment b. Return on Marketing Investment c. Return on Message Investment d. Research on Marketing Investment

Answers 1. a. It is knowledgeable about both the company itself and the consumers the company serves. The answer can

be found in Section 2.1.

2. b. Micro-environment and macro-environment. The answer can be found in Section 2.1.

3. c. USP (Unique Selling Proposition). The answer can be found in Section 2.2.

4. d. Five. The answer can be found in Section 2.2.

5. b. Return on Marketing Investment. The answer can be found in Section 2.5.

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CHAPTER 2Critical Thinking Questions

Key Ideas to Remember

• The marketing process consists of situation analysis, selection of a marketing strategy, and development of campaign strategy, followed by execution and measurement. This process fits into the larger picture of business operations by connecting consumers and producers of the business’s products and services. Marketing supports the company’s overarching objectives as defined in its strate- gic plan.

• Marketers conduct research to provide the specific information necessary to make marketing strategy decisions. Research helps marketers to discover oppor- tunities, learn about market segments, and measure the impact of campaign executions. The end result of the marketing strategy step is selection of a market segment to target and a value proposition to appeal to that segment.

• To develop campaigns, marketers apply decisions about the marketing mix, select a strategy regarding message channels, and develop creative messages to convey an underlying value proposition. The fast growth in one-to-one market- ing made possible by increasing computing power now requires planning for multiple message channels, including those driven by databases of customer and prospect information.

• Execution of a marketing campaign requires preparing a media plan specifying what message channels will be used; developing creative messages (including systems for one-to-one marketing) to fill the message channels; monitoring that the messages stay aligned with strategy and get delivered according to plan; and finally, making adjustments if needed.

• Measuring the results of marketing processes provides information to improve subsequent campaigns, plus evidence of the marketing department’s contribu- tion to the success of the organization.

Critical Thinking Questions

1. Do you think marketing strategy should drive the rest of a company’s operations or not? Support your position.

2. Describe your personal cell phone or music player in terms of the benefits it deliv- ers. Assume you are the target market for a new upgraded product from the same company. Write three survey questions that could help you test what new features should be included in the upgrade, based on the benefits you’ve identified.

3. Take the upgraded cell phone or music player product from the previous ques- tion and decide whether it is best suited to a mass-market campaign, targeted message channels, or one-to-one marketing. Give the reasons for your decision.

4. You are a marketer for a large shoe retailer. You have a database that includes information about customers’ past purchases—date of purchase, style, size, and price point, as well as email addresses and opt-in permission to receive market- ing messages. Describe the steps involved in executing a marketing campaign triggered by customer data using one-to-one messaging.

5. You’ve learned that reasons for measuring the marketing process include providing feedback on marketing strategy and execution, to improve the marketing process, and proving the marketing department’s contribution to the success of the business. Is one of the reasons for measuring results more important than the other? Why?

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CHAPTER 2Key Terms to Remember

Key Terms to Remember

A/B split A technique for testing advertis- ing effectiveness by randomly showing individuals one version of an ad message or another—(A) version or (B) version— and tracking changes in behavior based on which version they saw. A/B tests are commonly applied to ad copy or designs to determine which version drives more of the desired result.

call to action Words included in advertis- ing messages that urge the reader, listener, or viewer to take an immediate action, such as “Call Now,” or “Click Here.” Responses to messages without a call to action are difficult to measure.

campaign development In the context of the marketing process, a step in which marketers make marketing mix decisions covering product development, pricing, place/distribution issues, and promotions.

data warehouse A large-scale database designed to serve as a centralized reposi- tory of all data generated by all depart- ments and units of an organization.

ethnography A qualitative market research technique that uses a detailed study of a group to describe its behavior, characteristics, cultural mores, etc., involv- ing techniques from the social sciences.

execution In the context of the marketing process, a step in which marketers imple- ment a campaign, monitor, and adjust if needed.

external analysis A review of an orga- nization focused on factors in the micro- environment (specifically affecting this company) and the macro-environment (affecting many companies).

focus group A qualitative market research technique in which a small group is selected from a wider population and guided in discussion to discover members’ opinions about or emotional response to a particular subject.

internal analysis A review of an organiza- tion focused on internal factors that give it advantages or disadvantages in meeting the needs of its target customers.

interviews A qualitative market research technique involving a conversation for the purpose of discovering an individual’s opinions about or emotional response to a particular subject.

macro-environment In strategic plan- ning or the situation analysis step of the marketing process, factors affecting many companies.

mall intercepts A qualitative market research technique that includes a form of interview that typically takes place through stopping and asking questions of shoppers in a mall.

market share The portion of a market controlled by a particular company or product.

marketing strategy In the context of the marketing process, a step in which market- ers conduct market research, leading to innovation, segmentation, and targeting.

measurement In the context of the market- ing process, a step in which marketers use market research and sales results to measure impact of the strategy and its execution.

message channel The medium used by marketers to deliver a message to a target audience, which may be a mass market, a target market, or an individual.

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CHAPTER 2Key Terms to Remember

micro-environment In strategic planning or the situation analysis step of the mar- keting process, factors specifically affecting the company doing the planning.

netnography A term derived from Internet and ethnography; a branch of ethnography that analyses the self-directed behavior of individuals on the Internet.

one-to-one marketing A technique that uses databases to deliver messages to specific, name-identified individuals rather than group-identified target niches or undifferentiated mass markets.

primary research A method in which data are collected by market researchers themselves.

qualitative research Research that brings to light perceptions and feelings; used to identify problems and opportunities.

quantitative research These research methods produce numeric data using structured questions to test hypotheses.

Return on Investment (ROI) The ratio of money (or other desired goal) gained or lost on an investment relative to the amount of money invested in the process.

Return on Marketing Investment (ROMI) In marketing, the ratio of money (or other desired goal) gained or lost on an investment relative to the amount of money invested in the marketing process.

secondary research A method in which data are found by market researchers in existing sources.

situation analysis In the context of the marketing process, a step in which market- ers identify opportunity to fill an unmet customer need.

stakeholders Persons, groups, or organi- zations that have a direct or indirect stake in an organization because they can affect or be affected by the organization’s actions, objectives, and policies.

strategic planning A systematic process for deciding an organization’s overall direction, by examining its current sta- tus in terms of its strengths, weaknesses, opportunities, and threats (see SWOT anal- ysis), setting long-term objectives, and for- mulating short-term tactics to reach them, resulting in a strategic plan document.

SWOT analysis Stands for Strengths, Weaknesses, Opportunities, and Threats; a strategic tool applied in situation analysis in which internal strengths and weak- nesses of an organization, and external opportunities and threats faced by it, are examined.

Unique Selling Proposition (USP) An alternate term for the value proposition, a statement that targets potential custom- ers and describes why they should buy a specific product or use a service from a specific company.

value proposition A statement that targets potential customers and describes why they should buy a specific product or use a service from a specific company.

variable data printing A specialized print- ing technique for customizing marketing pieces to individual recipients.

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