Post #9: How to Communicate as a Marketer

As a marketer, you probably chose this path because you thought it would provide you with an outlet for your creativity; perhaps you find yourself more of an introvert, and you would rather avoid socialization and work in an office, in front of a computer, designing digital ads and television commercials. Now, if your hopes revolved around the idea that you would have to communicate minimally with other people, you were sadly mistaken. Communication plays a significant role in marketing. However, this form of communication is different from the literal definition. In Marketing, communication is the process of conveying a message to others and it requires six elements: a SOURCE, a MESSAGE, a CHANNEL OF COMMUNICATION, a RECEIVER, and the processes of ENCODING and DECODING.

The Six Elements of Communication:

1.       Source: a company/person who has info to convey.

2.       Message: information sent by a source forms a message.

3.       Channel of communication: the means that the message is conveyed by (salesperson, advertising media, public relations tool, etc.)

4.       Receiver: consumers who read/hear/see the message.

5.       Encoding: having the sender transform an idea into a set of symbols.

6.       Decoding: process of having the receiver take a set of symbols, the message, and transform the symbols back to an idea.

From my own personal experience, I will illustrate the “Six Elements of Communication” via Coca-Cola. Obviously, the source is Coca-Cola, the international soft drink giant. The company’s message has changed over the years, but it has consistently been associated with words and phrases like: ‘Fun’, ‘Good Times’, ‘Refreshing and Delicious’, ‘Enjoy Life’, and most recently, ‘Happiness’ and ‘Share a Coke’. Take a look at a few of the marketing techniques utilized by Coca-Cola during their ‘Open Happiness’ marketing campaign below:

Above we have three examples of channels of communication via advertisements that can be publicized through magazines or social media, and public relations stunts, such as these two innovative vending machine ideas. Since its beginning, Coca-Cola has remained infamous for its ingenious marketing strategies. Sales promotions, short term inducement of value offered to arouse interest in buying a product/service, are a channel of communication as well. Coke uses discount coupons (seen below) that its vendors place on the products on the shelves during the restocking process. They also promote their products with contests, such as the recent NCAA College Football Sweepstakes that offered the consumer the possibility of winning four tickets to an NCAA playoffs game by simply entering a code underneath the cap online.

 

The receivers are obviously customers who buy Coke products. In terms of encoding, Coca-Cola has transformed the idea of ‘happiness’ into the very symbol of its brand. With its unique shape, the Coke bottle symbolizes the aforementioned ideas of ‘happiness’, ‘fun’, and ‘refreshing’. By using innovative advertisements and other marketing stunts, the company has subliminally impacted consumers to associate these keywords with their brand. Hence the reason many people find themselves thirsty for ‘an ice cold Coke’ on hot a summer day, or salivating at the thought of a Coke with a burger and fries.

As for decoding, the same is true. The symbols that Coca-Cola projects (its Coke bottle, its logo, its slogans, and advertisements presenting 'Coke messages') influence the consumer, allowing them to transform these messages and symbols with ideas related to the product.

It is important to remember the significance of communication when marketing a product. Innovative marketing techniques and strategies can rapidly enhance a company’s brand reputation and the position of a product in the consumers mind. Ineffective communication will not lead to the success of a company as it will not further the company’s brand. Utilize these six communication elements so as to bring sure success to your company!

Until next time!

-Adam

Post #8: Supply Chains and Marketing Channels

Have you ever purchased a product, started using it, and suddenly began philosophizing about where it came from? How was it made? Who, or what, helped manufacture it? The answer to these questions lies in what marketers call the supply chain, the various firms involved in performing the activities required to create and deliver a product or service to consumers or industrial users. The various firms that aid in the production process include suppliers and producers. The suppliers provide raw material inputs to the producers who manufacture the goods using these resources, selling the products to intermediaries (wholesalers, retailers, dealers, etc.) who then deliver the finished products to consumers. Essentially, the supply chain is one big series of linked suppliers and customers purchasing from each other until a finished product reaches the ultimate consumer.

Supply chain management is the integration and organization of information and logistics activities across firms in a supply chain for the purpose of creating and delivering products and services that provide value to consumers. Companies use sophisticated information technology to share and operate systems for ORDER PROCESSING, TRANSPORTATION SCHEDULING, and INVENTORY and FACILITY MANAGEMENT.

The following diagram exemplifies the supply chain of the global enterprise SolarWorld Private Limited (AG), one of the world’s leading solar power system corporations.

  

SolarWorld employs 2600 people at 11 branches in 8 countries on 4 different continents of the world with distribution facilities in every key market in the world. As displayed in the above diagram, the company itself, in addition to a joint venture facility in Qatar, harvest the raw materials (silicon) from three locations: two in Germany and one in Qatar. The company sends raw materials to two manufacturing hubs (Hillsboro, Oregon, U.S.A. and Freiberg, Germany) to convert the SILICON into SOLAR WAFERS to then form SOLAR CELLS which make up SOLAR MODULES. Next, an inspection procedure occurs before the shipping process. Finally, the Hillsboro plant delivers the finished solar panels to distribution facilities throughout North, Central, and South America, while the Freiberg plant distributes them to such facilities in Europe, Africa, Asia, and Australia. These distribution facilities are also known as marketing channels (of distribution), which consist of individuals and firms involved in the process of making a products or services available for use or consumption by consumers or industrial users. These individuals or firms, known as intermediaries, make possible the flow of the finished products to the consumer. Watch this video about the manufacturing portion of SolarWorld to get a better idea of the production process:

Coca-Cola uses intermediaries associated with the company known as distributors. These are branches of the company with warehouses where their products are stored. The distributors are also wholesalers who maintain inventories and sell to retailers, like supermarkets and grocery stores (known as “Off-Trade Channels”). These stores prove the final stage of the supply chain as they provide the consumer with the finished good. Check out this beautiful looking aisle at THIS grocery store! Do you see the fancy display method of 2 Liter Bottles of Coca-Cola?

The final term to discuss this post is the idea of logistics, the activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost. Companies strive for the high performance of these activities, known as logistics management, the practice of organizing the cost-effective flow of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption to satisfy customer requirements.

Three elements can be used to summarize this definition:

1.       Flow: of the product; from raw material to consumption.

2.       Cost-effective:  relating to the above decisions.

3.       Customer service: satisfying customer requirements.

Logistics and Logistics Management are nicely represented in the concept of supply chain and supply chain management in that companies often recognize the need for smooth running logistics, thus collaborating, coordinating, and sharing information among manufacturers, suppliers, and distributors to create a seamless flow of products and services to the consumer. UPS stands strongly by this idea, and heavily advertised this part of their mission for their customers via ads like these:

Hopefully, after this introduction to the Supply Chain and Marketing Channels, you now realize the significance of these two in the business world. Logistics, a related category to these two concepts, assists companies in operating effectively and efficiently and proves a crucial aspect of any marketing strategy. Remember, the supply chain is essentially the framework of any business. Without it, companies would literally not exist. The more organized and well-managed, the more efficient and successful a business will operate, resulting in increased sales and brand reputation. Remember this in your professional career. Please enjoy this SNL UPS parody to conclude.

                                     https://screen.yahoo.com/ups-1-000000789.html 

See you soon!

Adam

Post #7: The Price Is Right

In the early stages of building a business, one of the most crucial and controllable factors of the marketing mix is price, the money or other considerations (including other products and services) exchanged for the ownership or use of a product or service. The “right” price means that customers are willing to pay it. It determines all other business decisions, and thus must be set prior to deciding on further actions. The “right” price should generate enough sales dollars to maintain an efficient business operation (e.g. development, production, and marketing of the product), not to mention, earn a profit for the company. Depending on the firm’s pricing objectives—specifying the role of price in an organization’s marketing and strategic plans—they may hope to penetrate the market rapidly or slowly. Once established in the market, a company may decide to raise the price of their product if they have effectively created a demand for it. Kerin, Hartley, and Rudelius claim on page 318 of their textbook, Marketing, that “Research on 1,000 large U.S. companies show that a 1 percent price increase translates to a 12 percent increase in profitability, other factors remaining the same”. Again, a price increase must occur after a brand has successfully defined itself in the market.

Proper utilization of the Global Marketplace can reduce the production costs of a firm. Firstly, once a business has grown to the extent that it feels it can expand outside of its home of origin, it may hope to become a multinational corporation (MNC) and engage in international trade. In doing this, often times a company cannot afford to simply ship their product from the country of origin to new markets in other countries. Instead, they tend to have to set up new production facilities in these new markets so as to expedite the distribution process in terms of time, in addition to dramatically cutting costs. Selecting a new country to market towards often involves searching for suppliers whose efficiencies and lower hourly wages can reduce the costs of production. With a lower production cost, a company can maintain or raise their prices and make an even greater profit. With several growing economies eager to expand their job markets MNCs have lush opportunities to invest in cheaper labor via mass production facilities.



The world’s leading technology companies—including big names such as Apple, Microsoft, Samsung, and Intel—have taken advantage of these cheap labor markets in order to increase sales revenue and decrease production costs, resulting in vast amounts of profit. However, a company should not be too ambitious when setting a price, especially if they have lowered their production costs, as too high an increase of unit price outside the customer’s price range can deter them from purchasing the product. This segues us nicely into our next topic which revolves around the concept of value and the way in which it correlates with price.

Value is the ratio of perceived benefits to price, exemplified through the following equation:

For the consumer, price indicates the value of a product. This equation is one method in which the consumer can quantify the value of a product through a simple ratio of “perceived benefits” over “price”. As perceived benefits increase, value increases as well. Hence, the success of “BUY 1, GET 1 FREE” sales. Jos. A Bank is an example of a company that often advertises such sales, such as “BUY 1 SUIT, GET 3 FREE”, which incentivizes the purchase of a suit so as to obtain further suits. The sale attracts buyers as they see it as more valuable. Rather than spend $500 on one suit alone at a competitor like Men’s Wearhouse (which actually recently acquired Jos. A Bank in the summer of 2014), why not pay the same amount for multiple substitute products? Any customer would jump on a deal like that, and so, many companies promote their products through such value-adding sales.

Demand factors, the factors that determine consumers’ willingness and ability to pay for products and services, include three key causes: (1) Consumer tastes; (2) Price and availability of similar products; and (3) Consumer income. These three aspects influence the consumers want to buy, and their ability to buy. Vitamin Water is a current example of an everyday product in the global marketplace which has suffered in popularity in recent years. As a fad product, it is very much in the ‘decline stage’ of the product life cycle with shrinking consumer interest and loyalty to the energy drink. The consumer has not become unable to pay for the product, but due to changing consumer tastes and the availability of similar drinks, the number of brand loyal Vitamin Water customers has dwindled. The consumer has become less willing to purchase the product when many other competitors exist in the sports drink market.

Price is a highly important aspect of marketing product. The right price can either set your business up for success, or for failure. Too high, and your product will never effectively penetrate the market and establish your brand. Too low, and you may never turn a sustainable profit. Understanding the importance of value and recognizing, from the consumer’s perspective, how valuable your product is, will help you and your business effectively create and market your product. In addition, demand factors aid in establishing the consumer’s willingness and ability to buy a product. After reading this blog, I hope you feel confident and comfortable enough go out into the real world and apply these teaching to your life and professional career!

Until next time,

Adam

Post #6: Raisin(g) Bran(ds)

Brands define businesses. Branding is a marketing decision in which an organization uses a name, phrase, design, symbols, or combination of these used to distinguish a seller’s goods or services. The concept “brand/branding” has many characteristics that will be covered in today’s blog.

Kellogg’s is a classic and world-renowned example of a company which has strengthened the brand of their product, Raisin Bran, through effective product development. This results in what is known as brand equity, the added value a brand name gives to a product beyond the functional benefits provided. The common misconception is that Kellogg’s Raisin Bran is a trademarked brand. However, according to a 1944 case by the District Court of Nebraska, “A name which is merely descriptive of the ingredients, qualities or characteristics of an article of trade cannot be appropriated as a trademark” (Skinner v. Kellogg). Hence the use of the name “Raisin Bran” by other cereal companies.

Thus, the fact that Kellogg’s has so successfully marketed this cereal to occupy itself in the consumer’s mind as “the” Raisin Bran proves the effectiveness of Kellogg’s early marketing strategy. The four steps used by marketers to achieve such brand equity included the following:

    1. Developing positive brand awareness in the consumer’s mind.
    2. Establishing the brand’s meaning in the minds of the consumers, both functional and abstract dimensions.
    3. Elicit the proper consumer responses to a brand’s identity and meaning (to think and feel
       positively about the brand).

    4. Create a consumer-brand connection evident in an intense active loyalty brand relationship.

One company’s brand equity can lead to lucrative brand licensing opportunities for other companies. Brand licensing is a contractual agreement whereby one company (licensor) allows its brand name(s) or trademark(s) to be used with products or services offered by another company (licensee) for a royalty or fee. A well-known example exists in the way that many packaged foods, like cereals and Kraft™ Mac N’ Cheese, sometimes feature popular television characters to promote the sales of their product. Brand names are any word, device (design, sound, shape, or color) or combination of these used to distinguish a seller’s goods/services. They represent a company’s mission statement, helping the consumer identify with the company and its message.

Some companies will follow a marketing tactic known as multiproduct branding, which is when a company uses one name for all its products in a product class. This tactic gives the company an edge when marketing their product as consumers that have had positive experiences with the product in the past will feel the same when considering the company’s other products. Thus, product line extensions—using a current brand name to enter a new market segment in its product class—become possible for companies such as Campbell’s Soup Company. Campbell’s has expanded their target market through the extension of their soup varieties, including Campbell’s Condensed, Select Harvest, and Chunky soups, with over 100 soups flavors. In this way, multiproduct branding also proves valuable for a company as it reduces advertising costs and raises awareness levels while remaining highly effective. However, product line extension can harm a company if it begins cannibalizing the company’s products, and does not take sales away from competing companies.

Another method of avoiding cannibalization is through multibranding, a branding strategy that involves giving each product a distinct name when each brand is intended for a different market segment. Frito-Lay created Santitas, what is known in the business world as a fighting brand, which confronts competitor brands, to contend head-to-head against regional tortilla chip brands that were taking away from Frito-Lays brands Doritos and Tostitos. Many consumers do not realize that Santitas are a branch brand under Frito-Lay, instead assuming that Santitas is an independent company. This works out to Frito-Lay’s advantage as brand loyalty (to Frito-Lay or their competitors) does not influence the consumer’s decision to buy the product. Part of Santitas success—aside from being a superior substitute good due to their delicious quality—revolves around their packaging, seen below, which looks like the labelling of an independent foreign tortilla chip company. Labels are an integral part of the package that typically identifies the product or brand, who made it, where and when it was made, how it is to be used, and package contents and ingredients. Santitas’ label not only characterizes a classic Central American theme, but it’s simple yet attractive design with a bright “$2 Only” selling point effectively captures consumers’ attention, in addition to immensely undercutting popular brands like Tostitos.

Packaging—a component of a product that refers to any container in which it is offered for sale and on which label information is conveyed—proves highly important in influencing the consumer to purchase a company’s product. Many companies, in their early years, invest a great deal of time and money in package and product development. Coca-Cola experimented with bottle design early on, hoping to create a package which would prove both voluminous and distinguishable. Early prototypes achieved these goals, but sadly, proved problematic in that they were unstable on conveyer belts. By shrinking the diameter, but keeping the contour shape of the bottle, Coca-Cola achieved a stable bottle that remained recognizable to the consumer, so much so that today it is one of the most identifiable packages worldwide. This highly effective form of packaging has greatly impacted the success of Coca-Cola and their brand equity.

Brands prove a highly important concept in the business world. They represent a company’s mission statement, their success, ways in which one company can implement another company’s brand for increased market standing, a means of cutting marketing costs while expanding their product line, and methods of increasing sales through ‘stealthy fighting brands’. With this new-found understanding of this important aspect of marketing, one should be able to apply it to both their life and professional career.

Works Cited:

Skinner MFG. Co. v. Kellogg Sales Co. Same v. General Foods Sales Co., Inc. 143 F. 2d 895. U.S. (1944).