Transcript PPT

Marketing of High-Technology
Products and Innovations
Advertising and Promotion in
High-Tech Marketing:
Tools to Build and Maintain
Customer Relationships
Chapter Agenda
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The Advertising and Promotion Pyramid
Branding Concerns in High-Tech Markets
New Product PreAnnouncements
Using Marketing Communications to Manage
Customer Relationships
Main Concepts
• Brand awareness/Brand equity (will be explained
in class)
• Advertising and promotion pyramid
• CPM
• Public Relation
• Publicity
• Strategies for Branding in High-Tech
Environment
• Rational Branding
Main Concepts
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Ingredient Branding (Cobranding)
Derived Demand
Preannouncement
Vaporware
Database Marketing/One-to-one Marketing
Categories of Customers
Strategies for Customer Relationship
Management
• CRM
Advertising and Promotion Pyramid
HIGH
Salesperson
Cost per Contact
Telemarketing
Catalog Literature
and Manuals
Trade Shows, Seminars,
Training
Direct Mail
Public Relations /Publicity
Media Advertising
LOW
Narrow
Broad
Coverage of Target Audience (Reach)
Media Advertising
• Select media vehicle
– Audience overlaps with firm’s target market
– Cost efficiency (CPM)
– “Fit” of editorial climate with brand message
– Size/Frequency of ads
– SRDS, CMP Media, media kits
• Select message strategy
– Break through clutter/gain attention
– Reinforce brand message
Public Relations/Publicity
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Event sponsorship
Charitable events/cause marketing
Corporate advertising
Press conferences, press releases
Product announcements
Positive image is vital, yet hard to quantify
Direct Mail
• Effectiveness a function of:
– List quality
– Appropriate mailing size/frequency
– Message strategy
Trade Shows
• To launch new products, reach sales prospects,
compare competitor’s products
• Expense vs. return
• Attract traffic to booth
• Follow-up on leads
Catalogs, Literature, Brochures
• Build on earlier communications
• Showcase key benefits in terms of
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Relative advantage
Compatibility
Scalability
Service/warranty
Total cost of ownership
Telemarketing
• Outbound
• Inbound
– Way to manage customer relationships
efficiently
Personal Selling
• Effectiveness of this most expensive tool a
function of foundation established by lowerlevel tools in the pyramid.
Premise of the pyramid: Use the more costefficient/wider-reach tools at the base of the
pyramid to establish foundation with prospects and
to more effectively leverage more
expensive/narrower reach tools.
Internet
• Can be used at all levels of the pyramid
• Focused attention in Chapter 11
Branding in High-Tech Markets
• Advantages of strong brands to firms:
– Command premium prices
– Have credibility which can be leveraged in new
markets
• Can lower customer acquisition costs
– Reduces risks with new product introductions
• Advantages of strong brands to customers:
– Signal of a safe choice: trustworthy and long-lived
– Decision-making heuristic
Branding in High-Tech Markets
• Short product life cycle and customer fear,
uncertainty, and doubt put a premium on
having strong brand names.
Strategies to Develop Strong Brands
• Supply steady stream of innovations that
deliver value
• Emphasize traditional media advertising
and PR tools rather than sales promotion
• “Influence the influencers” to credibly
stimulate word-of-mouth via opinion
leaders
Strategies to Develop Strong Brands
(Cont.)
• Brand the company, platform, or idea (rather
than the individual product)
• Rely on symbols and imagery to create brand
personality
• Effectively manage all points of customer
contact
• Work with partners in co-branding
• Effectively use the Internet
The Internet as a Branding Tool
• Use when Internet is part-and-parcel of the
company’s value proposition
• Accounts for the “viewer’s” active role (vs.
passive viewing)
• Focuses on the customer experience at the
Web site
– “Rational branding:” emotion + meaningful
experience
Branding Strategies
for On-Line Companies
• Brands very important where switching is easy.
• Make customer experience meaningful
• Understand importance of speed and response
time
• Deliver on their promise
Ingredient Branding
Suppliers
OEM/Manufacturers
-raw materials
-components
-production equipment
-services
Dealers
Customers
personal
consumption
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-business use
Ingredient Branding
• Stimulates “derived demand”
• Rely on cooperative advertising
Pros/Cons of Ingredient Branding
PROS
Supplier
Create competitive advantage
Costly
Possible risk if OEM has product problem
Conflict with large OEMs
Erodes ability to differentiate
Risk if supplier’s product has performance
problems
If doesn’t co-brand, consumers might
question product
Worry about supplier forward integrating
Large OEM
Small OEM
CONS
Lends credibility to its product
Gets advertising support
Pros/Cons of New Product
Preannouncements
PROS
CONS
Pioneering advantage: pre-empt competitors
Cue competitors
Stimulate demand
Cannibalize current products
Encourage customers to delay purchase
Delays damage reputation or survival of firm
Help customers plan
Confuse customers
Gain customer feedback
Create internal conflict
Stimulate development of complementary
products
Generate antitrust concerns
Provide access to distribution
Pursuit of leadership position
Tactical Considerations in
PreAnnouncements
• Timing:
– Function of the innovativeness, complexity,
customer buying considerations, timing of product
design decisions
Timing of PreAnnouncements
• Use EARLIER preannouncements when:
– Product complements are needed
– Products are novel or complex (engender buyer
uncertainty)
– Long buying process
– High buyer switching costs
Timing of PreAnnouncements
• Use LATER preannouncements when:
– Need to keep development information from
competitors
– Product features not known till late in the product
development process
– Want to minimize risks of cannibalization
• Time preannouncements to coincide with
purchase cycle of customers
Tactical Considerations in
PreAnnouncements
• Nature and Amount of Information
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Reveal product attributes?
Reveal how product works?
Reveal how it compares to existing products?
Reveal pricing/delivery?
Tactical Considerations in
PreAnnouncements
• Communication Vehicles
– Trade shows
– Advertisements
– Press releases/press conferences
Tactical Considerations in
PreAnnouncements
• Target audiences
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Customers
Competitors
Distributors
Partners
Shareholders
Employees
Industry Experts
PreAnnouncements Useful When:
• Firm has low market dominance
– Faces lower cannibalization risks
– Faces fewer antitrust concerns
• Firm believes competitors not likely to respond
– Ex: specialized technology/patent protection
• To advance the customer decision process
– Product requires customer learning or customers
face switching costs
Avoid PreAnnouncements When
• Cannibalization might be high
– Firm has strong portfolio of products
– Customers would postpone current purchases
• Firm is large and might be accused of
predatory intent
Customer Relationship Marketing
• Use database marketing to categorize
customers on volume and profitability
and/or on share of customer purchases and
consumption level
– Rely on customer relationship management
software
• Tailor marketing communications
appropriately
Categories of Customers
• Low share of purchases/Low consumption in
category
– Absent compelling reason, avoid the customers
– “The Strategic Power of Saying No”
– Risk of alienating wrong customers
Categories of Customers (Cont.)
• High share of purchases/Low consumption in
category
– Reasonably profitable, but not compelling
– Sustain with occasional offers
• Low share of purchases/High consumption in
category
– Major opportunity
– Grow firm’s share of business
– Aggressive marketing
Categories of Customers (Cont.)
• High share of purchases/High consumption
in category
– Bread and butter customers
– Attractive to competitors!
– Don’t be complacent
Other Strategies for CRM
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Capture the customer
Event oriented prospecting
Extended organization
Manage by wire
Mass customization
Yield management
CRM Software
• Front office software to:
– Automate the sales force
• Track accounts and prospects
– Automate call centers
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Create customer profiles
Provide scripts
Cross-sell
Coordinate communication
CRM Software (Cont.)
• Analyze customer purchase history
– Design targeted campaigns
– Measure results
• Develop Web interface
– Product catalog, shopping cart, credit-card
purchases
– Web configurator, for custom products
– Web analysis of cookies