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					Marketing Channel Management

             Product                 Price
                           Target
                             &
                          Position
                  Place          Promo


Distribution                            Media
 Channels                              Channels
        thru                                  thru
      SMC                                    IMC
Supply Chain Management                 Integrated Marketing
                                           Communication
The Changing Worlds of
 Distribution & Promotion
Channel Integration
 Supply Chain Mgt-       Shared
   Info replaces inventory
 Integrated Marketing
  Communication
   Developing Creative &
    Media Strategy
 The “New” Media &
  Advertising-Promotional
  techniques…
Changing World of Distribution
Old World

    Marketer’s distribution
     decisions not extend
    much beyond level of
           intensity-
   (Convenience, Selective
        or Exclusive)
  Levels of       Mfgr. Channel Strategy
distribution
 intensity       Exclusive Distribution
When mfgr. restricts
 distribution to single/ select
 few retailer(s)
Specialty Products
   Expensive
   Infrequently purchased
   Sought after by consumers
   Require considerable after-
    sale servicing
  Levels of
distribution
                  Mfgr. Channel Strategy
 intensity
                     Selective Distribution
Product available in
  multiple retail outlets
Shopping goods
 Buy less frequently
 High-Mod. price
 Comparison shop
   i.e Clothing, appliances
  Levels of                Mfgr. Channel Strategy
distribution
 intensity              Intensive Distribution

Convenience products
- sold thru virtually every available
   retail outlet in a particular market
 Buy frequently, immediately
 Low priced
 Mass advertising
 i.e Candy, soda, newspapers- anything in a
    convenience store
   Changing World of Distribution
      Old World            New World
Independent Middlemen   Supply Chain Team


 Separate functions      Integrate all members
handled by separate        of SC thru shared
    businesses                info- system


                          Coordinate supply-
Focus only on your        production-
 link in the chain        transportation &
                          Distribution
    Changing World of Promotion
      Old World              New World
      Mass Media &         Integrated Marketing
     Mass Middlemen           Communication


     Communication
    Separate functions     Integrate all channels of
Dominated by Advertising
 handled by “experts” in    promotional mix under
     & Ad departments
  separateAgencies          one strategic umbrella



                           Mass media advertising
                           serves supportive role in
Focus on mass media
Focus on mass media           overall Marketing
                            Communications effort
            SCM & IMC
Getting   the Right    Getting the Right
Things                   Messages
to the Right Places    to the Right people
at the Right Times     at the Right Times
w/ Minimum cost &      w/ Minimum waste
Maximum levels of        & Maximum effect
Customer service
        Product & Message
    Distribution Commonalities
To get Product out:
   Effective Communication w/
    distributors
   Effective Distribution Channel
    strategy & mgt.
To get the Message out:
   Effective Communication w/
    consumers
   Effective Media Channel strategy
    & mgt.
                         Direct
          Advertising
                        Marketing



                                  Public
                    In
Webvertising
                                 Relations

                   Sync
  Events &                             Sales
Sponsorships                         Promotion


                          Personal
           Packaging
                           Selling
        Manufacturers           Shippers




Transporters
                  In                Warehouses

                 Sync
Distributors                          Suppliers




                    Retailers
Free & Immediate movement of Information
         up & down supply chain

                                             Sourcing & procurement




           Logistics information system
                                              Production scheduling


                                                 Order processing
Supply
 chain
 team                                           Inventory control


                                          Warehouse & materials handling


                                                  Transportation
      Information Distortions and
          the “Bullwhip Effect




Sales rate volatility   Production rate volatility
          The “Bullwhip Effect”
                    1200

    Customer        900

    Demand
                    600

                    300
                           0   4   8   12   16   20   24   Mo.
                    1200

  Retailer Orders   900

  To Distributor    600

                    300
Inventory is insurance against supply chain uncertainties
                     0    4    8   12   16   20  24    Mo.
                    1200

    Distributor     900

      Orders
 To Manufacturer    600

                    300
                           0   4   8   12   16   20   24   Mo.
  Supply chain management substitutes
        information for inventory



Standard Deviation, 10-yr Moving Average
20%
                             Production Growth Volatility
18%

16%

14%

12%

10%
                            Sales Growth Volatility
8%

6%
      '68 '70 '72 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04
Logistics Costs Continue to Fall
Costs as a percent of GDP
16

14
                       Total Logistics Costs
12

10

 8
                       Transportation Costs
 6

 4
                       Inventory Carrying Costs
 2
     '81   '83   '85   '87   '89   '91   '93   '95   '97   '99   '01   '03
 Wireless/Mobile IMS
Key Point: Distribution              Increased productivity
  functions can be
  improved w/ INFO-                  Increased accuracy
  integration (“compunication”,      Increased space
Scanning & RFID technologies)         efficiencies –
 Receiving
   Product storage/                 Better customer
    “putaways”                        service=satisfaction–
                                      order processing time
   Order Fulfillment/ “Picks”        & effort;
   Inventory
   Shipping                         Better (fresher)
                                      product shipped; Less
                                      damage
    Integrated Marketing
      Communications

  Wherein a
  Company
 Integrates &
Coordinates all
      its
Communications
Co-ordinate, Synthesize, Orchestrate all
     Marketing Communications…


                                   Mass
                                   Media


  campaign strategy
                       Creative     PR
                       Concept

                                   Cust.
                                  Service




 Execution of single strategy     In-store

    & concept across all
   communication channels          New
                                   Media
   Broader Perspective of
        Promotion

Conceptualize
IMC in terms of
   “All
 Contacts”
  between
 customer &
   brand
    Integrated Marketing
       Communication
                     More
  More             Consistent
Continuous


      Maximum
       Impact!
More Impact
IMC helps Cut Thru Message Clutter




   IMC
 Strategy
 More Continuity & Impact
Integrate Comm. Across Time & Channels
     High
                        Personal selling


Importance                Sales promotion




                          Advertising
     Low
       Pre-purchase         Purchase        Post-purchase
            Stage of consumer’s purchase decision
   “IMC
 Simple in
 Concept
Need only
1. Have something
   interesting &
   compelling to say
2. Have an effective
   means of reaching
   logical prospects
Developing IMC Campaigns

Need only              Creative Strategy
1. Have something         Campaign
   interesting &           Concept- “the
   compelling to say
                           big idea”
2. Have an effective      Message
   means of reaching       Execution-
   logical prospects       style & format
  (Media Strategy)
Can’t be pulled out of a hat …
              …nor from of a book
 The Creative Work-plan


The Situation
The Target
The Product
The Message
    Developing the Communication
         Campaign Concept

    Suits--
“Its not creative         Director of Marketing
 unless it sells”

                Brand Manager                   Ad Agency AE



                             Creative Director



                    Copy Chief                  Art Director


                                 Poets–
       Copywriter             Artistic; value                  Artist
                             entertainment &
                                originality
  The Situation
 Key  fact- major problem /
 opportunity to emerge from
 sit. analysis
 MarketingGoals- sales,
 votes, memberships…
           Goals-
 Advertising
 communication based
    The Target

   Prospect Definition-
    all relevant descriptors
   Key Dimensions-
    most relevant
    descriptors
     The Product
   Benefits & Attributes-       -
    real, imagined, in-
    use,result-use, social,
    psycho…
                                 -
   Competition— what/how
    are they selling             -
   Position- in consumer’s
    evoked set
    The Message
   Concept- “The Big Idea”
   Promise / USP — what
    “really” offering
   Support- words, facts,
    reasons, images backing-
    up promise
   Slogo- visual/verbal ID
We’re ready to go when you are…

                      That’s why
                      We’re #1 in
                       the #2
                       Business




                      Johnny-on the Spot
   Having developed WHAT your going to
   say– next decide HOW to say it
                            Unique Character, Image,
                                    Celebrity represents
                              Persona—thatEndorsement
        User-Testimonial      the Brand—
                            (Leo Burnett School:
                                                 Slice of Life
Scientific/Technical         Tony the Tiger
      Expert                 The Keebler
                           FORMATS Elf
                             Jolly Green Giant
                                                    Fantasy

 Animated-Personality        Charlie the Tuna
                             Morris the CatDemonstration


                           Music Video
 Creative Brief
 Del Monte
• The Objective – Increase
  awareness of the smaller-size
  cans with pull-top lid.
• Target Audience – senior
  citizens, especially those that
  live alone and suffer from
  arthritis.
• Message Theme – The new
  cans not only contain a smaller
  portion but are easier to open.
• Support – 30 cent introductory
  coupon to encourage usage.
• Constraints – copyright logo,
  toll free number, website
  address, legal requirements of a
The message theme of
this milk advertisement
was that milk will provide
calcium. The calcium will
provide the customer
with benefit of strong
bones.
Humor
Humor
Evaluating Campaign

          Two Measures of Success
                 Demonstrates process
                  of Communication
                  Testing

Communication Effects      Sales Effects
What makes message
Effective
Tell A Story
The Ultimate Evaluative Criteria:

   You Know you have
    succeeded when:
 You get people to buy
  things they don’t need…
 With money they don’t
  have…
 Toimpress people they
 don’t like!
Developing Marketing
Communication Campaigns

             Creative strategy
              – Campaign Concept
                & Execution

             Media Channel
              strategy
              – Media Planning
Basic Media Decisions
        1. Deciding on
           Message Weight:
           Reach, Frequency,
           Continuity & Budget
           & Message Weight-
           GRP’s & CPM
        2. Choosing Media
           Channels &
           Vehicles
 Media-Plan Metrics

Reach
             What % of
Frequency
               market –
Continuity   target sees
  Cost          -reads,
  GRP
                hears-
              Message
  CPM
  Media-Plan Metrics

   Reach      How often
Frequency       target
 Continuity    audience
   Cost        exposed
   GRP            to
   CPM         message
  Media-Plan Metrics

  Reach
             When are
 Frequency    the best
Continuity    times to
   Cost      reach the
   GRP         target
   CPM
             audience?
Media-Plan Metrics
             -Spend
 Reach
             1.What can afford
Frequency
             2.% of sales
Continuity
             3.What need to
 Cost          spend to achieve
  GRP
               certain level R&F
             4.What
  CPM          competitors
               spending
Media-Plan Metrics

 Reach
             (Message Weight)
Frequency
Continuity   Gross Rating
  Cost
              Points=
 GRP         Reach x
  CPM         Frequency
 Media-Plan Metrics

 Reach         Cost- Per -
                Thousand
Frequency
              Cost * (x1000)
Continuity    (Audience size)
  Cost       Statistic allows
  GRP          comparison of
             cost efficiency of
 CPM          different media
                  vehicles
Basic Media Decisions

      1. Deciding on Message
         Weight: Reach, Frequency,
         Continuity & Budget &
         Message Weight- GRP’s &
         CPM
      2. Choosing Media Channels
         & Vehicles
Established Channels & Methods
There’s an old adage …
“Half of my $ spent on
 advertising is wasted-
 The only question is
 what half?”
   w/ U.S. advertisers spending $200+
    billion each year & Worldwide
    spending exceeding $400+
    billion…that’s a lot a $$$$$
And it could be getting
a whole lot worse…




The “old & established” methods
  of promotion ain’t what they
  used to be….
“Mass reach” is
giving way to a
world of niches…




• Everybody has multi comm devices
  & consume what they want - when
  they want - where they want
     Agents of Change are Everywhere:

   DVRs , PDA’s & Smart- phones
   Wireless hot spots
   “Branded entertainment”
   Word-of-mouth, viral marketing
   Podcasts, online video
   Pervasive usage of GPS
    assisted content delivery
   Rapid deployment of
    addressable advertising
    technology
    The media universe has
    shattered
mfgrs. are losing their
simple connection to
the consumer...
   In 1995 it took 3 TV
    commercials to reach 80% of
    18- to 49-year-old women.
   Today- takes > 10 times #
    Ads to reach the same group.
Even if could reach w/ 1 ad….
      …effectiveness is
         questionable
 Given increased consumer
     resistance to and
 skepticism of advertising
    no longer secure customer attention
AdsAdult evening TV viewers able to name, without
 prompting, a brand or product advertised in show just
                         seen




  Source: Newspaper Association of America, Cabletelevision Advertising Bureau, and Nielsen Media Research
           eroding believe that
 Beware of 76% don’tTRUST!
              companies tell the
              truth in
              advertisements
                    --Yankelovich, 2005
Consumer trust in advertising has
plunged 41% over the past three
years
Only 10% of consumers say they
“trust” ads today
       20th Cent. Media Business
        Model on Its Last Legs!

“Emerging digital technologies are
  wresting power from the hands
     of the content provider and
    placing it with the consumer,
  forever changing the traditional
   paid-media advertising model”
_____________
  “Madison Ave. melds pitches and content,”
  Advertising Age ; Chicago; Oct 7, 2002; Hank Kim
The DVR: consumers control
programming, content & time
               • From 2000 –
                 to date—

               The % of
                HH’s w/
                DVR’s
                gone from
                0% to 40%
                 (projected -2008)
   Marketing Professionals Vary in Awareness

                                  23%          The Rush to Second Life              77%
                            39%             The Rise of YouTube               61%
                     49%          Popularization of “Mash-ups”          51%

“SAW IT
                     50%     Newspapers Moving to Tabloid Format        50%
                  52% Issue-Specific Print Audience Measures 48%              “TOOK ME
COMING”           53%          TV Commercial Rating System            47%        BY
                 54%         Growth of Free Daily Newspapers          46%     SURPRISE”
               58%         Restructuring of Traditional Media     42%
         65%         Explosion of Consumer Content              35%
        75%            Emergence of Podcasting              25%
    77%        Social Media in Communication Plans         23%
   80%          Mass Adoption of Text Messaging          20%
  86%           TV Programs on the Internet           14%


              Media Investment Survey 2007
 New Communication technology
     has & continues to alter
     Consumer preferences &
  patterns of media consumption
And as a consequence- has & will
           continue to
render long established business
   methods & models obsolete!
 Mass Media Out - Mass Channel In

It's the Mass Channel…Not the
   Mass Media that is attracting bulk of
  marketing dollars
 10 biggest Mega-Retailers: account for
  ~ 80% of mfgrs biz vs. ~ 30% decade ago
 ~ 60% of mfgrs' marketing $$ go to
  retailers compared with 36% two
  decades ago
               PUSH STRATEGY
Manufacturer     Wholesaler              Retailer           Consumer
promotes to      promotes to           promotes to          buys from
 wholesaler         retailer            consumer             retailer


   Orders to manufacturer



               PULL STRATEGY
Manufacturer
                 Consumer               Retailer          Wholesaler
                   demands             demands              demands
promotes to
                    product             product           product from
 consumer
                 from retailer      from wholesaler       manufacturer



                                 Orders to manufacturer
Thus Increased importance of Packaging
 Protection
Containment, storage,
  recycling
   Information
Ingredients, UPC,
   Instructions,
   Promotion
Readily noticed &
   recognized (Brand ID)
Facilitate, use &
   convenience
 Changing World of Marketing Communication
      Old World                 New World

                            Two-way Dialogue W/
                            Two-way Dialogue With
“Talking At” Consumers           Consumers
                                Consumers

                           Focus - Building Long
                           Focus on Building Long
Focus on Winning New
                           Term Relationships W/
                           Term Relationships With
     Customers                  Consumers
                                Consumers


   Marketers Relied           Marketers Use &
                             Coordinate Many
Primarily on Advertising     Different Forms of
    and Promotions            Communication
                      Many-to-Many
Mass Marketing   Social Network Marketing
 One-to-Many
                                Your network of
                                friends/associates




   One-to-One
  W3 Marketing




                           Their network of
                           friends/associates
IMC- Integrating the Buzz w/ other Marketing Comm. Vehicles
The New (and not so new) WOM
Marketing Techniques
• Buzz Marketing
• Brand Blogging
• CGM- Consumer Generated Media
• Product Placement
• Viral Marketing
• Stealth Marketing
• Guerilla Marketing
• Conversation Marketing
• Grassroots Marketing
• Evangelist Marketing
• Referral Marketing
• Influencer Marketing
• 2Step Flow Marketing
• Many-to Many
  Viral Marketing
 Creating
 entertaining / info-
 taining messages
 designed to be
 passed along …

Example:
   Go Elf Yourself- Stats
Radian6
http://www.tremor.com/
•250,000+ teen Connectors
screened & opted in




                            http://www.bzzagent.com/
                                      80,000 members
                                Cost: 1,000 agents -12
                                        weeks ~$100K
    BUZZ
  Marketing:
 Using high
    Profile
entertainment
or news to get
people talking
 about your
   product
      Halo : WOM Campaign
Buzz Generator= On-line- Community
    interactive-immersive mystery story that
    allowed advance play of Halo2
   600,000 full-time players
   2.3 million participants
   1million+ blog posts
   Media coverage w/ CNN, USA Today,
    NYT, etc.
= $125 million opening day sales-
   biggest opening day revenue in
   entertainment history
   Halo3=$170M vs. &151M
    Spiderman
              Evangelist
              Marketing


Cultivating advocates
  volunteers who will
take a leadership role
 in actively spreading
 the good word about
your product/service
            Video - ClipList

   V-8 Communication Test

   Top Ten Super Bowl Ads 2009 –
   Best SB ad all time- Herding cats

				
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