“Deep Marketing” Engages Customers
October 10, 2007
By Denis Pombriant, Beagle Research Group, LLC
Customer centricity, the voice of the customer and the customer experience are all ideas swirling around CRM today, and they have in common a need to find ways to more actively incorporate the customer into many customer-facing business processes. Social networking—or techniques associated with it, at least—has often been suggested as a means of achieving the goal of greater customer involvement. Several challenges arise whenever this topic comes up, though.
One of the most obvious questions on many lips is why? After all, if you ask 50 people the same question about a company and its products you are likely to get 50 different answers. Then what? Also, social networking, rightly or wrongly, has been tagged as a less than serious technology in some circles because its uses span everything from dating clubs to simple networks of business contacts. In other words, social networking is largely used to contact almost total strangers by people who want something.
Nevertheless, our research shows that a variant of social networking can be used effectively in business to help drive innovation, and we have suggested that, if used properly, it can represent an additional business process to add to the marketing arsenal. The social networking technique I refer to is simply called a “community” or a “community of interest,” and I have called the business process “Deep Marketing” to distinguish it from the everyday “Short Marketing” cycle that we have grown accustomed to for lead generation and sales.
‘I have seen an active community of men, 18 to 24 years old (a hard demographic to capture), who volunteer a great deal of information to the consumer products company, Unilever.’
Deep marketing has its intellectual roots in the books of several business gurus such as Glen Urban, author of Don’t Just Relate—Advocate (Wharton School Publishing May 2005); Eric von Hippel, in Democratizing Information (The MIT Press, April 2005); and Fred Reichheld, in The Ultimate Question (Harvard Business School Press, March 2006). These and other authors have, in one way or another, shown that customers want to volunteer ideas to their vendors to help drive better products and services: what some have called cocreation of value.
Simply put, Deep Marketing engages with customers to gather their insights and opinions, which, in turn, drive actionable knowledge. Because it operates online, Deep Marketing can be pursued much more rapidly and at significantly lower costs than traditional surveys and focus groups.
Figure 1 outlines the basic Deep Marketing process and shows its relation to traditional sales and marketing. Note how the information output of Deep Marketing influences both product development and marketing with the data that customers freely divulge.
If you think about it, customers have a vested interest in seeing their vendors succeed, and smart vendors are beginning to leverage this reality to guide innovation not only for products and services but also for marketing messages.
The best example I have seen of how Deep Marketing works is in the customer community of interest. Companies hand-select the community members from invited individuals who represent desirable demographics that companies want to target. Members agree to visit a web site for a specified amount of time each week to interact with other members and to answer questionnaires or render opinions about relevant topics.
For example, consumer products companies might ask life-style questions along with questions about products. The same might be true of a financial services company; though, as you might expect, the questions would be tailored to the circumstances.
Figure 1. The Deep Marketing Cycle in context (Source: Beagle Research Group, LLC)
I have seen an active community of men, 18 to 24 years old (a hard demographic to capture), who volunteer a great deal of information to the consumer products company, Unilever. This community provided insights into what the well-groomed young man thinks and does in his social life, insights that Unilever used to fine-tune its product—Axe Body Spray—and its marketing messages. Unilever credits its community’s input for helping to propel Axe to leadership status in its market, and the company won a 2005 Explor award from the American Marketing Association for its innovative use of technology.
Other industries
Communities, and Deep Marketing, are not simply for CPG companies, either. Charles Schwab, the financial services colossus based in San Francisco, also relies on customer communities and deep marketing to capture customer insights. Recent Schwab communities have included a group of customers who are active stock traders with a minimum amount of cash invested and another group composed of high-net-worth individuals with a threshold amount invested with Schwab.
Schwab customer community participation is quite good—a finding that might surprise conventional marketers, given the relative inaccessibility of these groups to traditional marketing approaches. But because Schwab appears to these customers to be actively listening to their input, and then tangibly making use of it, these people make the effort to contribute.
Not long ago, Charles Schwab, himself, wanted up-to-date information about his clients’ investing strategies and views of the market in preparation for a press tour. Schwab worked with the community administrators to craft a questionnaire, and, according to Schwab Vice President Jonathan Craig, “clients were literally writing essays to him about what they liked and what needed improvement.”
You might expect that kind of response for the boss, but it demonstrates the power of the community and the kind of response community hosts have come to expect when dealing in this realm.
Other companies as diverse as General Motors and Nabisco have used customer communities with similar results. These companies have demonstrated that deep marketing can generate high and enthusiastic customer participation and a wealth of information that drives product and service innovation as well as helping to fine-tune marketing messages. Deep Marketing is not a panacea, and it will not cure all marketing ills, but it is an important addition to the marketing quiver at a time when many of marketing’s arrows have gone dull.
Denis Pombriant is a well-known thought leader in CRM and the founder and managing principal of the Beagle Research Group, LLC, a CRM market research firm and consultancy.
Setting and Negotiating Prices and Fees
October 10, 2007
Setting and negotiating prices and fees is an integral part of authentic promotion. This is true in part because of the stewardship relationship you have with your business. In addition, naming your price with confidence is part and parcel of embodying your offer.
Doing the right work for the right client at the right price requires a bit of homework. Let’s start with setting fees and prices. (Artists: this section is tailored to the needs of consulting and service professionals. While the principles pertain to you, the nuts and bolts of pricing creative work are not covered in detail. For an excellent discussion of pricing artwork, see Caroll Michels’ book How to survive and prosper as an artist.)
Setting prices and fees is a function of several variables:
- Your desired income and the costs of earning it
- The amount of time available for you to earn that income
- The value (perceived and actual) that a client places on your services
- What the market will bear
- What your competition charges
Setting Prices / Fees and Hidden Costs of Stewardship
Calculating fees based on what you want to earn and what it costs you to earn it is relatively simple. However, if you are accustomed to earning a paycheck, there are some refinements to this simple notion that may have escaped your notice.
Many businesses are vulnerable to changes in the marketplace. Depending on your profession, it is wise to plan for times when work is scarce. By building reserves for these times, you can use them not only to support yourself when work is scarce, but also to enjoy a long-desired vacation or to take advanced training. If you are in a vulnerable industry, you will need to earn enough to eventually save one to two years’ living expenses.
This lesson was vividly demonstrated to thousands of dot-commers during the recent boom and bust. Contractors (and employees) earned unprecedented incomes and quickly evolved spending habits to match. When the bust came, many were caught in a double bind: loss of income on one hand and high living expenses on the other.
If you are just starting out, make a plan to save part of your income until you have built up this cushion. Be open to supplementing your income from other sources until your business can support you and allow you to save at least 10% of your income. Don’t let the thrill of collecting a high hourly billing rate seduce you into living an expensive lifestyle that prevents you from building reserves.
Promotion- push and pull strategies
October 7, 2007
“Push or Pull”?
Marketing theory distinguishes between two main kinds of promotional strategy – “push” and “pull”.
Push
A “push” promotional strategy makes use of a company’s sales force and trade promotion activities to create consumer demand for a product.
The producer promotes the product to wholesalers, the wholesalers promote it to retailers, and the retailers promote it to consumers.
A good example of “push” selling is mobile phones, where the major handset manufacturers such as Nokia promote their products via retailers such as Carphone Warehouse. Personal selling and trade promotions are often the most effective promotional tools for companies such as Nokia – for example offering subsidies on the handsets to encourage retailers to sell higher volumes.
A “push” strategy tries to sell directly to the consumer, bypassing other distribution channels (e.g. selling insurance or holidays directly). With this type of strategy, consumer promotions and advertising are the most likely promotional tools.
Pull
A “pull” selling strategy is one that requires high spending on advertising and consumer promotion to build up consumer demand for a product.
If the strategy is successful, consumers will ask their retailers for the product, the retailers will ask the wholesalers, and the wholesalers will ask the producers.
A good example of a pull is the heavy advertising and promotion of children’s’ toys – mainly on television. Consider the recent BBC promotional campaign for its new pre-school programme – the Fimbles. Aimed at two to four-year-olds, 130 episodes of Fimbles have been made and are featured everyday on digital children’s channel CBeebies and BBC2.
As part of the promotional campaign, the BBC has agreed a deal with toy maker Fisher-Price to market products based on the show, which it hopes will emulate the popularity of the Tweenies. Under the terms of the deal, Fisher-Price will develop, manufacture and distribute a range of Fimbles products including soft, plastic and electronic learning toys for the UK and Ireland.
In 2001, BBC Worldwide (the commercial division of the BBC) achieved sales of £90m from its children’s brands and properties last year. The demand created from broadcasting of the Fimbles and a major advertising campaign is likely to “pull” demand from children and encourage retailers to stock Fimbles toys in the stores for Christmas 2002.
New Product Marketing: Need Help In Marketing A New Product? Publicity Can Be A Profitable New Product Marketing Strategy
October 7, 2007
Publicity is the most cost effective way to launch your company’s latest new product regardless of whether you plan to market your new product on a local, national or international scale.
With publicity, you can introduce a new product to thousands, even millions of people literally overnight and gain valuable new product marketing research in the process.
IMA defines publicity as mass communication with potential customers through the media. Publicity is the process by which your company’s new product marketing “sales pitch” is transformed into an editorial format or news.
Editorial coverage of new product marketing launches can take many forms, but the most profitable type usually occurs in print media such as newspapers and magazines.
Print publicity has a “shelf life,” – the printed word can reach and convert readers into buyers for weeks, months, and even years after publication. Conversely, two minutes of radio or television editorial coverage – once it has aired – disappears forever with its power to reach and convert the listening or viewing audience into buyers.
Print media can also be targeted to “vertical markets” or homogeneous audiences, which is a requisite for a new product marketing campaign to produce profitable results. Radio and television traditionally reach a “horizontal” consumer audience with broad unrelated interests which decreases the strength of your message and its probability for success.
Publicity and advertising are often confused with each other. You have to pay hefty prices for advertising space; whereas, the space publicity appears in is free. Publicity is perceived more favorably than advertising because the availability of advertising space is virtually unlimited and thus worth less – anybody can buy an ad and market their new product.
Publicity, on the other hand, always occupies an independent third party’s – the media – limited space for newsworthy topics. The catch? Getting publicity requires knowing how to convince the press your new product marketing launch is actually newsworthy.
Although publicity is free, there are much less quantities of it available. Publicity’s scarcity makes it considerably more valuable than advertising.
The result? An inch of publicity is worth a foot of paid advertising.
In advanced cases, publicity can be used to win public opinion and major economic victory for your company. At a minimum it can generate new interest in your company and sales of your new product.
IMA has generated over one thousand local, national and international placements -news stories – for our clients new product marketing campaigns over the last decade – reaching tens of millions of people and producing millions of dollars in sales.
Make publicity an integral part of your new product marketing processes and you too can generate buyers for your new product overnight.
Pricing Strategies for Small Business
October 7, 2007
The pricing strategy of your small business can ultimately determine your fate. Small business owners can ensure profitability and longevity by paying close attention to their pricing strategy.
Commonly, in business plans I’ve reviewed, the pricing strategy has been to be the lowest price provider in the market. This approach comes from taking a quick view of competitors and assuming you can win business by having the lowest price.
Lowest Pricing Does Not Win
Having the lowest price is not a strong position for small business. Larger competitors with deep pockets and the ability to have lower operating costs will destroy any small business trying to compete on price alone. Avoiding the low price strategy starts with looking at the demand in the market by examining three factors:
1. Competitive Analysis: Don’t just look at your competitor’s pricing. Look at the whole package they offer. Are they serving price-conscious consumers or the affluent group? What are the value-added services if any?
2. Ceiling Price: The ceiling price is the highest price the market will bear. Survey experts and customers to determine pricing limits. The highest price in the market may not be the ceiling price.
3. Price Elasticity: If the demand for your product or service is less elastic, you can then have a higher ceiling on prices. Low elastic demand depends on limited competitors, buyer’s perception of quality, and consumers not habituated to looking for the lowest price in your industry.
Once you understand the demand structure in your industry, review your costs and profit goals as set in your business plan or financials. The low price strategy is best avoided by small business but there are conditions such as a price war that can drag a company into the lowest price battle.
Avoiding a Price War
A price war can wreck havoc in any industry and leave many businesses, out of business. In the early 90’s, I observed the competitive exercise equipment market enter a price war in a large city market. Profits were plentiful but a price war took the gross margins from 42% to 12%. In less than 18 months, over 60% of the retailers were out of business while my division went national. Take these tips to evade a deadly price war:
Marketing strategy
October 7, 2007
A marketing strategy is a process that can allow an organization to concentrate its (always limited) resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage.
Types of strategies
Every marketing strategy is unique, but if we abstract from the individualizing details, each can be reduced into a generic marketing strategy. There are a number of ways of categorizing these generic strategies. A brief description of the most common categorizing schemes is presented below:
- Strategies based on market dominance – In this scheme, firms are classified based on their market share or dominance of an industry. Typically there are three types of market dominance strategies:
- Leader
- Challenger
- Follower
psycological
- Porter generic strategies strategy on the dimensions of strategic scope and strategic strength. Strategic scope refers to the market penetration while strategic strength refers to the firm’s sustainable competitive advantage.
- Cost leadership
- Product differentiation
- Market segmentation
- Innovation strategies – This deals with the firm’s rate of the new product development and business model innovation. It asks whether the company is on the cutting edge of technology and business innovation. There are three types:
- Pioneers
- Close followers
- Late followers
- Growth strategies – In this scheme we ask the question, “How should the firm grow?”. There are a number of different ways of answering that question, but the most common gives four answers:
- Horizontal integration
- Vertical integration
- Diversification
- Intensification
- A more detailed schemes uses the categories:
- Prospector
- Analyzer
- Defender
- Reactor
- Marketing warfare strategies|Warfare based strategies- This scheme draws parallels between marketing strategies and military strategies.
