Friday, January 4, 2008

Marketing, Advertising, Public Relations. What's the difference Part II

This is the second of a three part series. The previous post dealt with Public Relations. The next will deal with Marketing.

As competition increases, the focus on marketing also increases. When I started working in marketing in the Caribbean 20 years ago, very few companies had marketing staff. Today, that's the exception rather than the rule. Unfortunately though, it is not always clear to non-marketers and some marketers alike what the function encompasses. Terms such as public relations, advertising and marketing are sometimes used interchangeably. When we do so, we omit to consider all the tools available to attract good customers.

This is an effort to provide some clarification.


When competition increased, companies started to try to explicitly convince buyers to buy their product. Up to quite recently accountants and lawyers in Curacao did not do so. Now they have started putting up advertising, telling us what they are good at. Soap manufacturers went down this path many decades ago. Banks started some 20 years ago and now are at it in full force.

Advertising is "any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor" (Armstrong, Kotler). It involves designing advertisements and campaigns and placing these on radio, TV, billboard, Internet, in the paper or magazines, etc. Some companies, "advertising agencies", are able to do everything following a well-thought out strategy. Others do part of the process. Graphic designers in principle just design an advertisement following the specific instruction of the advertiser/client. Copywriters just write a text following instructions of others. Independent photographers, video producers, etc. in principle also follow instructions of others. Their creative juices should be flowing within boundaries set by the client or determined by a strategy.

Marketing communication
Advertising and public relations are now often referred to as marketing communication.

(Sales) Promotion
The term "promotion" may cause confusion. It is conveniently used in the four marketing P's to denote everything that has to do with communicating with the client: advertising, public relations, direct marketing, sales, customer service, and sales promotion.

However, if you want to use the terms correctly then (Sales) Promotion is "short-term incentives to encourage the purchase or the sale of a product or service" (Armstrong, Kotler). Think of sweepstakes, raffles, buy-one-get-one-free, give-aways, coupons, programs in which you save and get something later, etc. In Curacao we often call them "kampana" or "speshal".
Why are they used? Everybody already has a toothpaste. If you are introducing a new toothpaste you must convince the customer to leave his old toothpaste and buy yours. An incentive in the form of a gift, lower price, a free trial, etc. may do so. A good sales promotion always induces the customer to "ACT NOW" or its gone.

Read about Marketing in the next post.

Thursday, January 3, 2008

The marketing of green: 5 ways to be part of the trend

Green has taken center stage, not just because of global warming, but also because of the price of oil. Finally going green also makes good business sense immediately (the way business people, unfortunately, like it).

Here are five tips to ride the trend. Remember though, you can ride the trend, but you must be sincere. Otherwise it will hurt your brand.

  1. Use green to add value for your customer. I always thought a restaurant with its own vegetable, flower or herb garden is a neat idea. Now, it reduces transportation costs... and there is really nothing to beat freshly picked vegetables on the plate and flowers on the table.
  2. Use green to attract customer segments with a special affinity for the environment. You can imagine that if you are the only company in your category known to reduce, reuse or recycle water, energy, bags, etc., you may appeal to certain segments. This strategy works best for companies that are seen to provide a near-commodity, such as banks, insurers, and airlines. There are not so many other tangible sources of differentiation.
  3. Develop new uses for your products using green. Curacao cantaloupe is an additional way to use Curacao liqueur.
  4. Support efforts that reuse the waste that your company produces. In Jakarta, my friend Roy and his team make the coolest laptop bags from empty tubes of toothpaste found on the streets.
  5. Use green to distinguish your brand or company from others for a short moment. At MarkStra, our corporate gift this year was a reusable crate for shopping and a list of tips. Let me say that I consciously try to reduce our footprint through composting, planting trees, and several other efforts. But, I admit... the empty reusable crate over the holidays was to distinguish us from the habitual well-wrapped baskets well-filled with goodies.

Three strategic models to bring objectivity to marketing plans

I would not be surprised if in Curacao "strategy" will continue to be the marketing buzzword of 2008. Good for me, that was my specialization in business school.

A strategy determines how a company is going to compete. Some strategic models also provide objective tools to evaluate the quality of marketing plans. In other words, whether the right mix of resources is dedicated to each element in the marketing mix: line extensions (new products), advertising, pricing, service, direct sales, or consumer and trade promotions (campaigns). This for each product in your portfolio.

Last year I had the pleasure of applying some models which I had long "forgotten" to a client's portfolio.
  1. Product Life Cycle. Uses the life cycle stage each product is in (development, introduction, growth, maturity or decline) to help you determine for each product in your portfolio the right mix of resources and the level of profitability you should aspire to achieve. The PLC model has been around long and is quite readily applicable.
  2. Boston Consulting Group Matrix. Uses your market share and overall market potential to determine marketing objectives and resources to dedicate to each element of the marketing mix.
  3. Trout's Strategic Square. Uses your market share relative to that of competitors to determine marketing objectives: defend market share, attack the market leader, avoid the him or be a guerrilla.

For all some data, market intelligence and forecasting ability is needed. How to get the data?

Porter's Competitive Strategy. Uses SWOT analyses of yourself and your competitors to determine how to compete. It's a great model, which I studied at length when in school and which continues to be used extensively today. Unfortunately, there are few objective measures to determine your or your competitors' strengths or weaknesses, or which of these are relevant. Even the opportunities and threats facing the organization are not obvious. Hence, SWOT analyses often turn out to be an exercise in bias and subjectivity. A consultant should be able to be more objective. But, the first time I did so honestly (in 1995), I was fired on the spot.

Six tips to decrease marketing waste and increase your ROI.

With oil at 100 dollars a barrel, we can barely afford to produce waste, including marketing waste. What can you do?

  1. Find out who your true target customer is, so you can focus on her in all your marketing efforts. Be detailed, specific. Try to describe her in terms of demographics, lifestyle, friends, family. Then think of someone that you know who fits that description and finish the picture.
  2. Think of what will really help her and how much she can or is willing to pay for that benefit. Again, be specific. Everyone has insurance. How does your insurance product help her better than the commodity insurance product?
  3. Think of how you might influence that person best. Best bet: ask her what she really reads and watches and who or what she really listens to. Read, watch and listen. Not just skim, see or hear.
  4. Find out how many people there are in that target segment. Then you know, for instance, if it's worth your while to place an advertisement in the national newspaper or to approach her via her club or gym. The latter is produces less waste and gives your more opportunity to interact with and influence her directly. It is more effective. It may even be less expensive and more fun.
  5. Find out and decide if, realistically, you can grow your brand and how. If you have a very large market share it may not be easy. But, if you find alternative uses for your product, that can produce growth. If you can't, focus on another product.
  6. Then calculate, calculate, calculate. Calculate your target sales and the resulting ROI. Is your planned effort worth it? Or is to bound to be just "marketing waste"?

The greening of marketing: the 60-30-10 rule

When I started MarkStra in 1995, the Guerrilla Marketing Handbook by Jay Levinson and Seth Godin provided ingenious, effective, practical and low-cost marketing thoughts and tips for my own company and our clients. Here is one:

"When planning a direct mail campaign, remember to follow the commonly known 60-30-10 rule.

  • Sixty percent direct mail success lies in using the right mailing list;

  • Thirty percent depends on your making the right offer (that is, an offer that satisfies the customer's needs better than the competitor and provides value to him or her);

  • Ten percent depends upon your creative package"
Between 1995 and 2007, the price of oil (and consequently also of our marketing material) has risen from just over US$20 per barrel to US$100 and the environment is under pressure.

Have you stopped to evaluate if its worth it, both for your bottom line and for the environment, to produce some of the super-creative marketing material we marketeers strive for? Especially when you know that super-creative material is not exceedingly effective in attracting customers?