Does Natureview Have the Marketing Capabilities & Resources Required to Enter the 6-8 oz Supermarket Market?

Product Management• Ability to develop & deliver superior-quality goods and services.

Communications Management and Brand-building capability• Ability to create & manage SUPERMARKET customer perceptions leading to hi levels of brand equity,

using effective positioning, advertising, personalized communications, integrated mktg communications

Channel Management• Ability to establish and manage SUPERMARKET channels of distribution that effectively and efficiently

deliver value to end-user customers

Market Sensing & Customer Insights• Ability to learn about SUPERMARKET customers, competitors, channel members and the broader

market to develop actionable market intelligence and customer segmentation and targeting schema

Marketing Planning & Implementation• Ability to conceive and implement marketing strategies that optimize the match between the firm’s

resources (including multiple product lines/brands) & the SUPERMARKET marketplace

Proposed Marketing Budget: $3.3M

Danon & Yoplait spend >: $120M

Natureview’s Projected Share of Supermarket Market: ~ 2.9%

/57% Share $2.1M/Share Point/2.9% Share $1.1M/Share Point

Does Natureview Have the Marketing Capabilities & Resources Required to Enter the 32 oz Supermarket Market?

Product Management• Ability to develop & deliver superior-quality goods and services. Longer Shelf Life!

Communications Management and Brand-building capability• Ability to create & manage SUPERMARKET customer perceptions leading to hi levels of brand equity,

using effective positioning, advertising, personalized communications, integrated mktg communications

Channel Management• Ability to establish and manage SUPERMARKET channels of distribution that effectively and efficiently

deliver value to end-user customers

Market Sensing & Customer Insights• Ability to learn about SUPERMARKET customers, competitors, channel members and the broader

market to develop actionable market intelligence and customer segmentation and targeting schema

Marketing Planning & Implementation• Ability to conceive and implement marketing strategies that optimize the match between the firm’s

resources (including multiple product lines/brands) & the SUPERMARKET marketplace

Proposed Marketing Budget: $1.5M

Danon & Yoplait spend >: $120M

Natureview’s Projected Share of Supermarket Market: ~ .9%

/57% Share $2.1M/Share Point/.9% Share $1.7M/Share Point

Does Natureview Have the Marketing Capabilities & Resources Required to Take 68% Share of the Multipack Natural Foods Market?

Product Management• Ability to develop & deliver superior-quality goods and services.

Communications Management and Brand-building capability• Ability to create & manage customer value perceptions leading to high levels of brand equity, using

effective positioning, advertising, personalized communications, & integrated mktg communications

Channel Management• Ability to establish and manage NATURAL FOODS channels of distribution that effectively and

efficiently deliver value to end-user customers

Market Sensing & Customer Insights• Ability to learn about NATURAL FOODS customers, competitors, channel members and the broader

market to develop actionable market intelligence and customer segmentation and targeting schema

Marketing Planning & Implementation• Ability to conceive and implement marketing strategies that optimize the match between the firm’s

resources (including multiple product lines/brands) & the marketplace

Proposed Marketing Budget: $250K

Current Marketing Spend: $360K

Natureview’s Projected Share of NF Market: ~ 11%

/24% Share $15K/Share Point/11% Share $23K/Share Point

Natureview Key Takeaways• The value of identifying competitive advantage for the focal

company, key competitors, and key downstream collaborators. In other words, understanding competition at each level in the channel.

• The value of identifying stage of the life cycle for each product-market.

• The value of identifying the key capabilities required to achieve competitive advantage in each product-market.

• The value of identifying gaps between current capabilities and capabilities required to achieve success in new product-markets.

• The value of questioning the face validity of sales forecasts.

Integrated Marketing Communications

• Basic model of communication and how technology is changing that model.

• IMC Strategy – Target Audience(s) & Communication Objective(s)– Communications Mix, Message & Media– Communications Budget– Evaluation & Control

Doubt everything or believe everything: these are 2 equally convenient strategies. With either we dispense with the need for reflection.

Henri Poincare

Key Learning Points

5

Traditional Mass Marketing Communication Model

6

Mass Communication Model with Interactive Media

7

ResearchHow is competition

utilizing social media? How can

we use social media?

MineWho is talking?

ListenWhat are they

saying?

CreateDevelop social

media campaign and

generate UNIQUE content

The Social Media Process

8

If Twitter is a never-ending barrage of babble and nonsense, does it really matter?

9

Integrated Marketing Communications Strategy1. Select Target Audience(s) & Communication Objective(s)

• Flows from marketing strategy but may include noncustomer targets (e.g., influencers)

• Identify information requirements: what, where, when• Customer response, sales or profit objectives• Models are all hierarchical and have three basic stages:

cognitive, affective, and behavioral.2. Select the Communications Mix, Message & Media

• Based on product-market characteristics, communication objectives, organizational capabilities & channel considerations

• Consistent concept and message across the communications mix3. Establish & Allocate the Communications Budget

• Percentage of sales; Competitive-parity; Objective & task4. Evaluation & Control

10

K&P Purchase-Process Model

Awareness

Consideration

Preference

Purchase

Repurchase11

Flare’s Communication Strategy for SavvyHow will you accelerate the

Purchase process  

Build Awareness & Consideration

 Generate

Preference

 Generate

(Re)Purchase       

Target Audience (VALS description, demographics & current status as Flare customer)

     

       

Communications message (What will you say?)

     

       

Pull communication: Advertising Media, Direct Marketing, or Blogs you will use (Be specific)

     

       

Push communication through retail partners (will you use personal selling, point of purchase collateral material?)

     

       

Metric used to evaluate effectiveness

     

12

For example: “You are the love in Loveliest”

13

McKinsey Word-of-Mouth MarketingExperiential (50-80%); Consequential; Intentional (e.g., celebrity)

78% of consumers

trust peer recommendations

Only 14% trust advertisements

Influentials typically generate three times more word-of-mouth messages than noninfluentials do, and each message has four times more impact on a recipient’s purchasing decision. About 1 percent of these people are digital influentials—most notably, bloggers—with disproportionate power.McKinsey Word-of-Mouth Marketing

14

Introducing Socialnomics

Integrated Marketing Communications Strategy2. Select the Communications Mix, Message & Media

• Based on product-market characteristics, communication objectives, organizational capabilities & channel considerations– Advertising & social media usually line up with intermediate

(i.e., cognitive or affective) customer response objectives• Select media & vehicles that “fit” & reach target audience(s)

– Publicity & PR typically have advertising-type objectives but may quantify them as media-buy objectives (e.g., generate $xxx worth of media exposure).

– Sales promotion, direct marketing & personal selling typically have behavioral (i.e., sales and profit) objectives

• Consistent concept and message across the mix– Informational/Rational Appeals focus on functional or practical

aspects of the product & feature a unique selling proposition.– Emotional Appeals address underlying psychological aspect of

purchase decision using Humor, Fear, Guilt, Sex to enhance recall & brand liking. 15

Integrated Marketing Communications Strategy2. Select the Communications Mix, Message & Media

• Based on product-market characteristics, communication objectives, organizational capabilities & channel considerations– Advertising & social media usually line up with intermediate

customer response objectives• Select media & vehicles that reach target audience(s)

– Publicity & PR typically have advertising-type objectives but may quantify them as media-buy objectives (e.g., generate $xxx worth of media exposure).

– Sales promotion, direct marketing & personal selling typically have sales or profit objectives

• Consistent concept and message across the mix– Informational/Cognitive Appeals focus on functional or practical

aspects of the product & feature a unique selling proposition.– Emotional Appeals address underlying psychological aspect of

purchase decision using Humor, Fear, Guilt, Sex to enhance recall & brand liking. 16

Comparative ad– Brand and competitive

brand are mentioned– Usually not done by

market leaders• e.g., Coke may not

mention Pepsi, but Pepsi mentioned Coke in its “Pepsi Challenge”

Designing Cognitive Ads

17

Designing Emotional AdsHumor

Marketers tend to build campaigns around emotional positioning, yet we found that consumers actually tend to talk—and generate buzz—about functional messages.McKinsey Word-of-Mouth Marketing 18

19

• Image ads– Are more abstract; used to

convey an image– Great for positioning

Designing Emotional Ads

20

Integrated Marketing Communications Strategy3. Establish the Communications Budget

– Competitive-parity: Same $ level as key competitors– Percentage of sales: Same % as key competitors– Objective & task: How do you achieve the objectives?

• Consideration, preference, (re)purchaseAllocate to Communications Mix & Specific Media– Advertising & Social Media (usually part of a Pull Strategy)

• Cost per thousand (CPM), reach, frequency & gross rating points (GRPs), ratings, awareness, and circulation data…

– Personal Selling (usually part of a Push Strategy)• Number of customers, frequency of contact, length of call,

sales– Direct Marketing & Sales Promotion

• Response rates, purchase rates, purchase dollars… 21

Impact of Phone Contacts on Spending

22

Impact of Email Contacts on Spending

23

Impact of Mail Contacts on Spending

24

Impact of Different Combinations on Spending

25

Integrated Marketing Communications Strategy4. Evaluation & Control

– Objective Guarantees– Marketing Mix Modeling

• ST revenue elasticity wrt advertising = 22%• LT revenue elasticity wrt advertising = 41%

– LT carryover effects. – NB: elasticities wrt advertising are dropping!

– Tracking success over time• If possible, sales, inquiries, repeat purchases or other

behavioral measures• If not…

– Top-of-mind awareness (unaided recall)– Aided recall

26

Cumulative Ad Spending and Market Share

27

$0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 $16.00 $18.00$0

$10

$20

$30

$40

$50

$60

$70

$80

$90Product Revenues as a Function of Media Spend

2008 Media Spend (000,000s)

Reve

nue

(000

,000

s)

Natural '06

Loveliest ('75)

Summit ('98)

Essential ('00)

Swept Away ('03)

Awash ('96)

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What is demand (or revenue) elasticity with respect to Media Spend?

Revenue Elasticity wrt Promotion

E = % change in promotion spend% change in demand (or revenue)

EMedia$ = (1.44-.51)/.51(37.5-23.4)/23.4

= .33

Media $D from $0.51 (SweptAway)$1.44 (Essential)

EMedia$ =(50.1-37.5)/37.5(2.72-1.44)/1.44

= .38

Media $D from $1.44 (Essential) $2.72 (Summit)

ST revenue elasticity wrt advertising = 22%LT revenue elasticity wrt advertising = 41%

29See Demand Elasticity Final Exam Problem

$0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 $16.00 $18.00$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

f(x) = 14.1212471854893 ln(x) + 35.4673306581736R² = 0.987113262927147

Product Revenues as a Function of Media Spend

2008 Media Spend (000,000s)

Reve

nue

(000

,000

s)

Natural '06

Loveliest ('75)

Summit ('98)

Essential ('00)

Swept Away ('03)

Awash ('96)Why is it different for new products (Natural & Savvy?) versus established products?

30

FlareThis case requires that you analyze different growth opportunities and develop recommendations – supported by clear and compelling strategic and financial analyses – that will allow you to achieve your sales growth objective. You must consider positioning, branding strategy, channel strategy, and especially the integrated communications strategy.Summary Marketing Strategy for 3 brands

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Objective (Quantified & measurable) 

Target Customer ProfileSee VALS

 Flare’s Product-Market Strategy (see K&P Ex 1.2)

Branding Strategy (K&P 143-47)*Competitive Advantage Core capability Positioning Statement

(K&P 140)

Recommended Channel Focus

Flare’s competitive advantage is

Based on:

Review Questions

• Identify the 4 key steps in an Integrated Marketing Communications Strategy.

• Identify the three key stages (or objectives) in a hierarchical response model.

• Which communication mix elements are most effective for achieving different communication objectives?

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See you in Plano Next Week!