Recommending a new blog

My friend and professional in the area of Digital Marketing has launched his new blog: www.josecomerma.com It is one of those places I recommend you to visit (yes, I know it is in Spanish but use Chrome translator and your problem is solved). It will be interesting tho see the development of this blog as it talks about areas related to Digital Marketing: a continuously developing area with new techniques but based on the Marketing basics.

Jose starts to talk about applications and how to create loyal customers with help of apps to trigger impulsive shopping behavior.

 

Digital Marketing

Before internet, it was enough with “something to say” and “the right moment” through the “optimal channel” and people would listen and react. Now it is about the customer forming part of the creation of your message or campaign or product and therefore it has been more importance than ever to listen and interact with your audience.

This post is about marketing, Digital Marketing and reflexions on how to work with content. If you want to follow a person that knows a lot about this, don’t miss @pineti .

First some basics on publicity good to have in the back when talking about digital marketing

ALL PUBLICITY IS BASED ON

  1. support (the technology)
  2. format (in what way you communicate)
  3. the audience (for whom we do it)
  4. measurement (report)

What has changed from the 20th century and the 21st century?

  1. we went from running a monologue to “everybody talks”
  2. we went  from working with temporal campaigns to “the consumer decides”
  3. we went from territorial thinking to universal focus
  4. we went from restricted communication (we decided) to accessible (by everybody)
  5. we went from static to viral
  6. we went from we control to we don`t control
  7. we went from a need to a “will” (the need is not forced, it generates the will to do something)

All this requires that we change our ways of working with marketing, online and offline. The line in-between these two becomes more and more blurred. The brands have to “propose” their offering and messages and the consumer “has the decision”, the “will” to buy in to the messages. The proposal is done via content (e.g.Coca-Cola giving happiness in physical places in such way that it viralizes). If the audience start to “like” what they see they will be the ones to “move” the brand.

When working with digital marketing (online marketing), it is more important than ever to build up an attribute record around your brand. There are different ways of doing this but it is clearly the experience around your brand that will make it visible, that will make it viralize, that will make the buyers to “buy in to” your brand values and offering.

The buyer, the audience is changing behavior. Recent research talk about 66% consulting internet before making a purchase. Why do people watch a spot to its full length on internet but not on tv? Because they decide when to see it and it comes as recommended (by somebody you know). The decision is no longer the brands, they can just “propose”, it is the consumer that decides when and what. Rubius is an example. People decide what they want to interact with. You must therefore understand what the persons want, before you create the content. It is about enriching the experience

Steps to take when working with digital marketing

  1. You need to change your process – you need to make all the players (agency, production etc) to work towards the need of the customer 
  2. You have to risk to re-create and innovate and it can go wrong
  3. You have to visualize special if you work with targets that are ” attitude focused”. The target has changed it is not demographic anymore is based on attitude
  4. Captive impact (you “see something but you don´t observe it). Today, you work with multiple devices. Before you only worked with one or few). Now you work 24h with captive impacts
  5. Unite to simplify – you must gather in order to simplify (example google search box)
  6. Be able to import and export info
  7. Change in scale. You must be able to adapt your content, your product to a small audience, to a big audience
  8. The content does not pass around the product. The product pass through the environment/the attribute around the product.
  9. Connect networks. You need to identify them but then you need to connect them.
  10. Search for the “strange thing”
  11. Go against the flow. You will get something if you go against the flow. Something different.
  12. Work with opposite sides. You need to find the balance.
  13. Add yourself to the future – you don’t have to be first but you must touch the future (mobile etc)
  14. Recycle
  15. Be persistent
  16. Imagine the digital world. There is always something in the future – but you must imagine it
  17. Re-invent yourself
  18. Search for the coherent of your brand (intelligent marketing, the stupid marketing, the evil marketing…) dear to search for other areas not always the intelligent marketing

A FEW OTHER IMPORTANT THINGS TO REMEMBER ABOUT DIGITAL MARKETING

  1. The qualitative flow (you give what you say, not replicate the offline world online, you need qualitative content, a memorable experience and if it is information only what is of utility!
  2. Functionality (short, concise and important for the user. Don`t overdoing it)
  3. Usability
  4. Persuability (AIDA – attention, interest, desire, action is the standard direct marketing matrix but now we talk about AAIADA – attention / action, interest/action, decision/action)
  5. Feedback (search the dialog). There are many ways of doing this.
  6. Loyal customers (the persons want to have variation. Changes, news) but if there is a routine that works, you can’t break it.

the fatal errors

  1. Technology is now a commodity – don`t think it is an easy thing
  2. Be careful with the environment – search for the sensorial part, the emotions not always the rational
  3. Not everybody will understand you – you must believe in what you do but not everybody will

if you are into displays how TO WORK WITH DISPLAY (BANNERS)

There are tools that identify how much you invest in internet display  to see how much the investment is in a country. One example is www.iabspain.net

It is important to engage. Let the visitor engage with your content but basing it on the fact that “if he wants”. That what he does impacts on his experience. (a banner that is interactive based on what you do with it).

Internet helps you segment your audience – they come to you based on the content you make (compared with television for example). Before the audience was not fragmented. Now it is. Which is good because you reach your audience with better quality. But branded content becomes more and more important.

When you work with brand on internet or TV, you need to think of what content adds value for the user. Example http://www.revivalproject.es (artist creates arts and refers to a webpage where you find more related content. The brand is not visible until the visitors really wants). Work more as a “facilitator” without being a brand, or being so obvious.

This forces that your strategies “pivot” with your consumer in mind and not the other way around. That you know your audience.

We are able to decide on the perceptions. So let’s do it, but let’s do it right!

Marketing Experiential

Marketing is to create value. Based on this we will try to create an experience. We want to create “emotions”. A brand can only create values
a) functional
b) emotional
c) auto-expresion of personality

Experiential marketing is to offer an experience. Previously, the focus was on characteristics of the product and benefits of the product and now we move towards the experience of the product. To work with the process of creating value of the brand. The brand is not only a characteristic it becomes also the “how” you experience this brand.

Experience marketing is not for all the brands but there are certain that have worked this very well and where it makes sense: Coca-Cola, Apple, IKEA.

When you work with positioning and you use product characteristics you can end up in problems with “why” people buy. Do people buy Volvo for the security? today we take for granted that all cares are secure. So what is the experience?

The customer is not passive anymore with the brand. They are active. It is important to understand that there must be a stimuli. They are individual, they are memorable, you have to plan them, design them, program them and deliver them.

You have to create a good feeling!

When you create experiences you need to focus on:

  1. Strategic Experiential Modules (SEM)
    a) sense
    b) feel
    c) think
    d) act
    e) relate

To work with senses

  1. Once done you need to use tools to generate that experience

TO WORK WITH thinking

Example is Apple and Audi. To make people think is also an experience. Intelligent communication.

TO WORK WITH acting

Cross sourcing. Platform where people create their own coffee, computer etc. Example is Starbucks. People add their ideas and others vote. Personalization of a product is creating an experience.

TO WORK WITH relate

When you relate to a brand. “Niconistas”, Harley Davidson.

MOTS and Touchpoints

Authentic brands don’t emerge from marketing cubicles or advertising agencies. They emerge from everything the company does. If this is the case, you need to work with the touch points of your brand. The core is to identify these touchpoints and work with experiences in these areas.

The MOTS are those points that you need to focus on, the places you can change to create a better experience.

It is said that only 1 out of 10 extremely satisfied verbalize their experiences and 8 of 10 extremely unsatisfied verbalize. Therefore, the positive experience is therefore of great importance. It is said that if you can generate positive prescription (recomendation) that will generate sales.

There are two things to have in mind when you work with a product.

1) to what extent is my product critical for the client in his life
2) differentiation (because if it is different it is hard for the customer to compare with others)

the steps to set up the marketing Experiential

1) set up the plan – visualize all touch points
2) chose a experiential platform
3) identify when you can do an experience (for each touchpoint)

When you work with product development you need to think how to introduce the experience into the product. Example “Old el Paso” – it is an experience

When you work with experiential marketing you need to balance what is our executive and what is our experience. You must know “are they really satisfied”?

First you must manage the offering based on the client, never from the inside (without insight). You must study the

Value (tangible benefits (performance) + intangible benefits (feeling)) / effort (price + inconvenience + uncertainties)

Relationship Marketing

What is Relationship Marketing

Relationship marketing is a strategy with the objective to foster customer loyalty and long-term engagement via the interaction. Other terms related are direct marketing, one2one, interactive marketing and CRM. There is difference in-between these terms but they all search for the interaction with the customer. One contact, one personalization, one interaction required. That is what we want to achieve with a relationship marketing approach. Relationship Marketing is focusing more on “how you do it” than through what channel.  It must have an idea o “wanting” to create a relationship. It’s the “will” behind the action that defines if its relationship marketing.

It is about going from mass marketing, to segment marketing to the one2one marketing.

Relationship marketing is a “philosophy” that needs to be the base o a company. If the idea is not part of the company philosophy, you only turn your activities into direct marketing pure. Its a way to “search for your identification”.

The process

  1. identify customer
  2. capture
  3. create loyalty
  4. Store the info in a database to extract KPIs with the purpose to create a relation and negotiate

IDENTITY THE CUSTOMER

How do you identify the customer? Press, magazine, calling, internet

HOW DO YOU CAPTURE

how do you capture the customer? Press, media, promotion, lead generation. The key here is to identify the driver of your business. A driver that is related to your product or service (giving away items is not a driver, is a short term activity).

The important thing is to focus on what purpose you have with your communication.

The first thing to do is to define who you want to capture. Once you have the profile you plan how to approach, you se what to say and finally surprise.

If you don’t have a database, you need to create it (MGM = member get member)

HOW TO CREATE LOYALTY

There are many ways to create the relationship, but the most important thing is to make sure it meets the demands of the customers. You can give away products, provide promotions, highlight the person, introduce the customers in the development of the products. There are tools that can be used to understand how people relate to situations, offerings etc One example is http://thedma.org/.

To create loyalty you need to offer something that is irresistable.

how to build a relationship

This is done via “the tangible” product and “the soft part”. The most important thing is that every relationship action must be measurable and generate profit.

 

Leadership

There is always a “happening” that via the “senses” is “captured” and based on the “bag”  you have you interpret. The interpretation leads to an “attitude” with based on the “perception” which eventually generates the “behavior“.

In leadership there are two things to have in mind: letting something be said in public and creating doubts. Once you let this happening every argument that something is said that argument would just go against you. The only way to get out from this situation is to notice that the only way out is to stop the “its you or its me” game and give up the fighting. The way to accept the situation is to state that  you know what happened but if the person wants to keep the approach it is up to him.

In the “bag” we have many things:

  • selective perception
  • projection
  • empathy
  • stereotype

If you are in front of a problem you, as the one receiving the complains from the customers

  • the customer is the once that accuses
  • the problem is the one that is accused
  • you are the “advocate” that should defend the problem

Everybody has:

  • a public part (things that I know and others know are typical for me)
  • an intimate part (things that I know about myself but others don’t know)
  • a blind part (things that I don’t see and others see)

The most “important” part to think about and work with would be the intimate part as those are often the reason for why confusion/misunderstanding happens. If we would express this area (I don’t like when…) the communication would flow better.

When you state something you need to think of “how” you say things. You need to avoid the following aspect.

  • generalize
  • judge
  • attribute

Therefore when you give feedback you need to describe behavior not attack a personal attribute (you are…is an attack on the personality, but right now you acted like…it is related to the behavior).

There are different types of personalities:

  • Q4 I want / I know: empowered (you should “let him be”, you don`t need to motivate him or try to convince him, you just need to trust him)
  • Q1 I want / I don`t know: principate (very motivated but doesn´t know you need to teach them but you don´t need to motivate them)
  • Q2 I don’t want / I don`t know: conformist (you need to mark the path, be on top of him)
  • Q3 I don’t want / I know: unmotivated (you need to motivate)

You need to treat the people differently based on how they are as persons. Even in public. There is no reason for why not

The people “are not” they “behave in a certain way in a certain situation”. With that we mean that people are not a state (motivated, conformist etc) they behave in a certain way in a certain situation. It is important to understand the different because as a leader you need to lead “situational”. Lead in that situation.

Therefore, it is important that your as leader know the life of your team.

Trade and retail marketing

History of trade marketing

When talking about the retail marketing, it is important to have in mind the complexity of the relationship distributor and producer (of products). Historically, there was a dependency in-between channels and distributors (producers) where the strongest/biggest had the most power to decide what to buy or what to sell. Today, the relationship is totally different where the relationships have switched.

The complexity of the channel mix for the retail market resides in that their have their own channels that they need to keep profitable. Therefore, there are products that they can not sell to their channels due to the impact on the high profitable channels.

In any case the relationship between distributors and producers is of great difference.

Historically (in the 60s) you could easily sell what you produced just by putting promotion in the Television. Buying spots you generated distribution, if the distribution worked you sold more products, selling more products leads to generate more business and that to invest in promotion in TV etc…

But this has changed. What has happened are several trends:

  • Saturation of information (promotion). Spain is the 4th country that use TV for promotion
  • Concentration of the distribution (all markets tends to this but in consumption it has taken off)
  • The brand of the distribution is more important than ever. This alters the relationship of the power
  • The supermarkets and hypermarket have empowered their own brand to the extend that it is now affecting profitability (as they compete with their own brand along with the brands they include in their space)
  • Innovation is harder and harder due to the copy-replication of the products
  • The globalization has impacted the retail market due to the new emergent markets and the transfer of the technology. Globalization has led to hypersegmentation of the offering which has affected the life cycle of the products
  • Changes in consumer behavior: from mass market to individualism and ending up in multi-individuals (grouping them based on their common behaviors)

The way to calculate sales in retails is: price *how many units * frequency * penetration (people that have bought my product more than once). It is hard to affect penetration unless you have an innovative product. I.e. it is hard for an existing product to increase penetration, i.e. to make the homes buy more of a product.

An interesting aspect is the 2X1 habit in the retail market. It is not done to “get rid of stock”, it is done to increase the frequency of buying behavior (have the hypermarket consumer return more than the 11 times a year as usual). A way to increase frequency is AXE campaign (“spray more like in the spot” with the result that you use more and need to buy more).

the channels

The channels producer, distributor and consumer are today interfacing with each other. There is a relationship in-between consumer and distributor and between relationship in-between the product and the distributor.

Trade marketing is about “identify and satisfy the needs of the channel (distributor) adding value, profitability and dependency”, but the trade marketing is also working on identifying and satisfying the needs of the consumer. The marketing mix in retail mix is called:

  • offering
  • promotional activities
  • price (towards consumer)
  • space

Challenges fo the trade and retail marketing

For the producer: The challenge is to be “visible” with your product. It takes 5 seconds for a consumer to choose a product. For a supermarket with 11 000 products and 1h of medium time it means that only 6% of the products are selected. 94% are “missed”. Therefore, the objective of the retail marketing is that the consumer choose your product. Branding, promotions become your most useful tool.

For de distributer: The challenge for the distributor is the great amount of categories they have to work with. This cause an issue as they find it hard to differentiate. This will cause a trend towards socio-demographic segmentation. They work with

  • providing all the different needs of a consumer and/or
  • a set of many brands that answers the same need

What trade marketing can do generate more successful business

Spain by facts

  • invest less in marketing/communication in new products (innovation)
  • the spanish population is less prone to change
  • products in the spanish market take longer time to reach the shop

There are 5 types of product launches. It is important to focus your effort based on the type of culture you are talking to.

  1. great boost (typical English approach) 
  2. retarded effect
  3. collapse
  4. plain
  5. continue increase (typical Spanish approach)

Working with different markets and channels. From most margin to less margin depending on what type of distribution you use. E.g. the retailer is buying the product to a higher price than the supermarket. The margin is important but the focus is on “how much does our customers get their return” in order to understand where the week points are for that business. The reason for why it is important to understand the business of the client (distributor), is to know how much the producer profit from the product in each channel and how much the client (distributor) earns in terms of margin. Information useful in the negotiation and decision of how much and where to place the product.

The challenge for the producer is to adapt to the segmentation of the distributor. If the focus is single homes, your product has to adapt to those segments as well as support the needs of other distributors. This could be handled by creating different formats of the same products.

co-marketing

In order to provide a better product and service to the consumer, the producer and the distributor try to cooperate. The main aim is to make the product category to grow (instead of chasing the market share). When you work to increase a category you must be aware of that you also help the competitor to increase. E.g. if you make the category perfumes to increase you also “help” the competition to increase their sales.

The reason why the distributor and the producer co-operates in increasing a product category is to gain benefits from both angels: know-how of the consumer (the producer) and know-how of the consumer behavior (the distributor). There are many elements that are important in the buying behavior but that may be (very often) different from the elements important for the consumer. Normally we focus on the consumer but not so much on the shopping behavior. Very often we segment based on parameters that may not be relevant for the shopper (the user that does the shopping). E.g. wine. Segmented by “color” and then by “origin” but what about “when it is used”? Example, a segment of wine called “to give away”.

All buying activity is about offering more solutions for less effort. Therefore you need to work with minimizing the effort and or increasing the solutions for that effort required. The less effort you ask the consumer to make the easier you make purchase (less time, simplify, same product developed to meet several demands).

The focus has to be in the needs of the consumer/shopper independent if we are distributor or producer. The focus has to be on solutions, experiences in the buying process. Create experiences by simulating how the dress fits, how the furniture fits into your home, cosmetic simulations without having to try on the cloths.

Distribution – supply chain strategies

Peter Drucker (1998) talks about the supply chains as a differentiator, competition advantage due to the well coordination between provider (Tier1, Tier2 etc), company and customer. We are moving towards a competition between chains instead of company-competitors.

The supply chain is an important factor in the operation of the product or services. The planning of the full supply chain has to be aligned with the marketing plan and the financial plan. A badly organized supply chain can impact on the total experience of the product of services. Example, McDonalds works only with local providers, has a process on how long you wait for a hamburger etc. The supply chain is based on the what the product is expected to do. Ferrari works with quality, exclusivity.

If you work with a product that is low-cost, your supply chain has to work with those parameters (e.g. IKEA, their products are innovated taking into consideration the space they take in the packages for transportation – weight and volume).

You must find a balance between cost and service level. You need to measure this in order to know if you have lived up to what you promised.

Characteristics of Supply Chain Management

  1. production (what, how, when produce)
  2. Stock (how much)
  3. Transport (how to do it. Depending on what you are looking for, you need to identify what transportation you need)
  4. Location (where will you locate yourself)
  5. System (that handle the management of the supply chain)

The buying department is very important in the decision-making of the development of a product and cost of transportation. Therefore, the relationship with providers is very important. It is a mirror of your relationship with your customers.

  • Combat-relationship (fight for price)
  • Cooperative-relationship (looks for good cooperation)
  • Associated relationship (partnership. A win-win situation where you go as a block towards the market)

For a successful operations (supply chain management) the most important factor is to work in a team.

bullwhip effect

A “small” demand has the impact of generating a psychological expectation that results in stock”back in the chain”, based on estimation of the supply chain of how much the actual sales is. If you inform about the “real” demand and sales in order to reduce the speculation and generate supply back in the chain a correct production, reducing stock of products. WallMart discovered this effect and worked on generating the correct information about the demand in order to reduce unnecessary stock.

 

Distribution strategies

Distribution is a set of “things” you have to do and operation you have to make in order to make sure that your product or services arrives to the place or consumer that will consume.

The distribution channel is the “road” through which products and services circulate from its creation in the origin to the arrival of the consumer.

There are different commercial structures that have different characteristics. Depending on what your product is and what your strategy is you would need to choose the correct distribution. Depending on your positioning, its attributes, the needs your product satisfy.

Different types of distribution channels

  1. Mega-supermarket
  2. Supermarket
  3. Branded shop
  4. Local shop
  5. Home delivery

Different types of characteristics

  1. Capacity to Customer Care
  2. Logistic costs
  3. Consumer effort
  4. Customer time

Depending on what product/service you sell you will have to find the optimal distribution channel. But it depends on what characteristics you are covering. Example high-value products don’t have to worry about low-cost logistic because you have margin to work with the delivery, but if you have a low-cost product you need to focus on finding delivery that matches your product.

The product can therefore be sold through:

  • direct selling (channel)
  • retailer – consumer
  • wholesaler – retailer – audience
  • franchising

Different types of integration

  • horizontal integration
  • vertical integration (cooperatives, banks in order to control quality and price) are normally contractual

setting up a distribution channel

Depending how “complex” your product is (does it need to be explained?) and how targeted your audience is (if you know exactly who your target is you don´t need long channel chains but if it`s mass market you need to be everywhere and then you need long indirect channel chains)

  1. Taking decisions about the “length” needed of the channels
    a) direct channels (Dell)
    b) short indirect channels (a car)
    c) long indirect channels (Coke-Cole)
  2. Decisions about the coverage of the channels
    a) intensive distribution (e.g. a medical brand)
    b) selective distribution (e.g. scisors)
    c) exclusive distribution (e.g. Mango)
  3. Review:
    a) the companies objectives
    b) the marketing objectives
    d) distribution objectives
    e) analyse characteristics of the product
    f) identify possible channels
    g) value your distribution channel

 

Working with strategies

Once you have done the Internal analysis and the external analysis that led to identifying th SWOT, you are prepared to define strategies.

There are different strategies to define. Here are some:

segmentation

(to be completed soon)

Product

There are different strategies to define. Here are some:

distribution

(to be completed soon)

 

How to work with perceived value versus price

There are different ways to work with branding, positioning and visualization of your product. The important part here is to make sure you strategically work with this product in such way, that you “associate” your brand with values you want your product to be associated with. By associating your products with other products (related life style) and have other persons that represent your product you indirectly give a message stating what type of product yours is.

There are different ways to work with these

To work with positioning is to work with what your “brand stands for”. You must associate you with activities that represent what your brand stands for. You must make sure that people interact with your brand and get the experience you want them to associate with.

HOW TO WORK WITH ambassadors and influencers

It is important to associate your product/service with influencers, advocates that “brand” your product without you have to “pay” for it. You give the product, if they like it the will use it, show it in an environment where it is visible.

How to work with Co-Branding

The co-branding strategy has to be based on the win-win situation and the added value for all the brands included. You must find out what it is your “strength” that you can offer which would add value to the other brands.

To work with “Limited edition” is a good way to add value to a Co-branding brand.

The first step is to identify brands that “have the same position as you, on another market and that does not compete with you”. Finding the ideal positioning.

Once you find the correct partner for the cobranding you must work with how to position that brand within your activity (our your activity within their brand). This generates that you do something different, that you get press/blogs where your audience is, to come just because the “limited edition” “co-branding” is there present of the world they are interested in. Therefore, it is important to make sure that the brands are associated.

You must study what values the activity you associate with has.

thinks to keep in mind when you work with prices

  • Make sure you state how many there are in stock if you offer a product for free related to a product
  • Number 5 and 9 are easier number to relate to “good price”. So prices that end in these number tends to be more attractive

UPPSELLING

  • The quality has to be higher
  • The order in which the offer comes
  • When in time it happens

cross selling

  • Offer other related products

how to calculate a price

  • You must take into consideration the minimum margin you have
  • You must take into consideration the competitors prices for the similar product
  • You must take into consideration the perceived value (the items bought individually)

And based on this, you set your price (that is lower than the perceived value)

What is the “gray market”

A parallel market. You sell your product to “traders” that buy and sell (they play with smaller margins). The problem is that you sell the same product but to different prices. You compete with your own brand (because you sell the same product to different prices).

Drawback: you lose control of the brand, of the image, control of the price
Benefits: you sell a great amount