Association for Light and Life

Archive for the ‘Marketing’ Category

Most of today’s discussion of interactive marketing centers on the Internet. The Internet is an all-purpose global network composed of some 50,000 different networks around the globe that, within limits, lets anyone with access to a personal computer send and receive images and text anywhere.
The Internet provides an efficient way to find and share information, but until recently, most people outside universities and government agencies found it difficult to use and learn. This changed in 1993 with the advent of browser technology that provides point-and-click access to the World Wide Web (WWW or Web). The Web is actually an interlinked collection of graph- ically rich information sources within the larger Internet. Web sites provide byper’media resources, a system allowing storage of and access to text, graphics, audio, and video in so-called pages linked to each other in a way that integrates these different media elements. When a user clicks on a highlighted word or picture (icon), the browser converts the click to computer commands and brings the requested new information—text, photograph, chart, song, or movie clip—to the user’s computer.

Compared to traditional media, the hypermedia resources of the Web offer a number of advantages. Data moves in seconds, without the user noticing that several computers in different locations combine to fulfill a request. Interactive control allows users to quickly access other information resources through related pages, either at the same or other sites, and easily navigate through documents. Because it is dynamic, Web site sponsors can easily keep information current. Finally, multimedia capacities increase the attractiveness of these documents.

Interactive media technologies combine computers and telecommunications resources to create software that users can direct themselves. They allow people to digitalize reports and drawings and transmit them, quickly and inexpensively, over phone lines, coaxial cables, or fiber optic cables. People can subscribe to personalized news services that deliver article summaries on specified topics directly to their fax machines or computers. They can telecommunicate via e-mail, voice mail, fax, video conferencing, and computer networks; pay bills using online banking services; and use online resources to get information about everything from investments to a local retailer’s special sale, day-care facilities, and local entertainment activities for the upcoming weekend.
Companies are now using interactivity in their marketing programs, as well. Interactive marketing refers to buyer-seller communications in which the customer controls the amount and type of information received from a marketer. This technique provides immediate access to key product information when the consumer wants it. Interactive techniques have been used for more than a decade; point-of-sale brochures and coupon dispensers are a simple form of interactive advertising. Today, however, the term also includes two-way electronic communication using a variety of media such as the Internet, CD-ROMs, and virtual reality kiosks.
Interactive marketing frees communications between marketers and their customers from the limits of the traditional, linear, one-way messages to passive audiences using broadcast or print ads. Now customers come to companies for information, creating opportunities for one-to-one marketing. For example, each customer who visits a XVeb site has a different experience, based on the pathway of links he or she chooses to follow. Interactive marketing can also allow many- to-many exchanges, where consumers can communicate with one another using e-mail or electronic bulletin boards.
Interactivity involves more than just moving from one section of a CD-ROM or Web page to another. These electronic conversations establish innovative relationships between users and the technology, providing customized information based on users’ interests and levels of understanding. Interactive technologies support almost limidess exchanges of information. People gain access to chosen programs and services via their personal computers and telephones, and they can purchase products not only from stores but also via television or the Internet. For example, the Weather Channel offers extra information on local forecasts and the Tonight Show provides details aboutjay Leno’s guests on its interactive TV programs.

One of the busiest areas of interactive marketing is online auctions and name-your-oi-price vendors. This sector, which is expected to draw well over 6 million buyers by 2002, includes airline tickets, hotel rooms, cruises, and rental cars. Although Budget, Avis, and Hertz all have Web reservation sites, Budget was the first to establish an interactive price bidding feature, the Bid- Budget program. Online bidders simply fill out a form indicating the desired dates and airport pickup location, preferred car type, contact information, a major credit-card number, and the price they are willing to pay. Budget notifies the bidder within 24 hours whether a bid is accepted and offers a money-back guarantee up to 48 hours before the pick up time.
Interactive marketing can transform and enhance customer relationships. Interactive promotions put the customer in control. They can easily get tips on product usage and answers to customer service questions, they can also tell the company what they like or dislike about a product, and they can just as easily click the exit button and move on to another area. The challenge is attracting and holding consumer attention. Marketers must devise new strategies based on interactive marketing techniques to build lasting customer relationships. Subsequent chapters will show how companies are successfully using interactive techniques in their marketing campaigns.

As we enter the new century, we also enter into a new era in communication, considered by some as unique as the fifteenth-century invention of the printing press or the first radio and television broadcasts early in the twentieth century. Technology is the business application of knowledge based on scientific discoveries, inventions, and innovations. Interactive multimedia technologies such as computer networks, video conferencing, online services and the Internet, interactive kiosks, CD-ROM catalogs, and personal digital assistants have revolutionized the way people store, distribute, retrieve, and present information. Computer networks and other telecommunications technologies link employees, suppliers, and customers in different locations through the Internet or in-house Intranets.
These technological advances are revolutionizing marketing. Companies can reach specific groups of customers in a variety of ways: from hotels’ in-house television channels targeting guests to toll-free telephone numbers and in-store videos with point-of-purchase product demonstrations. Now that nearly half of all U.S. households have personal computers, online services and the Internet offer a new medium over which companies can market products and offer customer service. Marketing and sales departments can quickly access vast databases with information about customers and their buying patterns. They can develop targeted marketing campaigns and zoned advertising programs for consumers located within a certain distance from a store and even within specific city blocks.
Shoppers can visit kiosks in shopping malls that feature video displays, discount coupons, and product information for a variety of merchants. They can browse through a CD-ROM product catalog on their computers or conduct specific searches to quickly find desired items. Surfing the Web or online services is another way to get product information and order merchandise from catalogs. Firms can quickly update this information at minimal costs. Online retail spending in the United States is growing at an alarming rate—from $7.8 billion in 1998 to an expected $100 billion by 2003. Consumers’ willingness to spend online is growing as is the amount they spend on each visit.

Technological developments play an important role in every phase of marketing, as you will see throughout the text. Each chapter begins with an example of a company that uses technology to develop more effective marketing strategies. We also include many examples of the impact of technology on marketing. Every chapter ends with a number of ‘net Work assignments that let you explore the Internet and take advantage of its capabilities in solving marketing problems. The text has been expanded through the creation of the Boone & Kurtz Home Page, which contains additional case materials, up-to-date reports of recent marketing developments, and updates on people and organizations featured in the text. As an example of the effect of the technological revolution on marketing, consider two key developments: interactive marketing and the Internet.

The challenges presented by today’s complex and technologically sophisticated marketing environment require critical-thinking skills and creativity from marketing professionals. Critical thinking refers to the process of determining the authenticity; accuracy, and worth of informadon, knowledge, claims, and arguments. Critical thinkers react skeptically to what they hear or see. They do not take information at face value and simply assume that it is accurate; they analyze the data themselves and develop their own opinions and conclusions.
Creative government bureaucracy might sound like an oxymoron, but it is an accurate description of the U.S. Mint since Philip N. Diehl became director. After years of fighting entrenched political resistance, Diehl was able to transform this $1 billion government agency into a close approximation of a private sector, profit-seeking business. The organization than was reorganized, jobs were redesigned and positions added, state-of-the-an computerized information systems were installed, bureaucratic workers were trained to become customer-responsive employees, and new products were introduced. Tn 1998, the 50-state quarter program was launched. The Mint will release five quarters a year, each featuring a different state. It also designed the new dollar coin, first minted in January 2000, featuring the likeness of the Native American Sacajawea. The result of all these creative changes is a government agency that shines, as they say, like a brand-new penny.15
Creativity is an extremely valuable skill for marketers. It helps them to develop novel solutions to perceived marketing problems. Leonardo da Vinci conceived his idea for a helicopter after watching leaves twirl in the wind. Swiss engineer George de Mestral noticing that burrs stuck to his wool socks because of their tiny hooks, invented Velcro.
Creativity is particularly important in the creation of promotional messages.

Marketers do not make decisions about target markets and marketing mix variables in a vacuum. They must take into account the dynamic nature of the five dimensions of the marketing environment: competitive, political-legal, economic, technological, and social- cultural factors. Environmental concerns have led to new regulations on air and water pollution. Automobile engineers, for instance, have turned public concerns and legal issues into opportunities by developing hybrid cars for the new century. These new models are fueled by dual energy: a gasoline engine and an electric motor. Toyota was the first to enter the market with its Prius, which depends primarily on the electric motor, but includes a backup gasoline engine. The Prius currently sells in Japan for about $19,000. Changes in the legal environment regarding automobile emissions alerted automobile designers to make these changes. By accommodating future needs of consumers and meeting the more stringent legal requirements, they created a new market segment. It did not take long for competitors to follow Toyota’s lead. Honda’s new VV model runs primarily on its gasoline engine with the electric motor as its secondary energy source. Honda plans to hit the showrooms with a vehicle that offers a lower price and better gas mileage. Nissan and Fuji Heavy Industries also have models on the drawing boards for launches scheduled within the next two years. European and U.S. automakers, however, have not jumped at the chance to enter the race with their version of a hybrid car. General Motors might have a so-called green car ready in 2001; Ford and DaimlerChrysler say they may be ready by 2005.
Corporate giants are increasingly looking to foreign shores for new growth markets. Wal-Mart has been the star child of American business for years, although a mounting number of competitors has begun to chip away its market. When the going got tough, Wal-Mart got going—to other countries, that is. Within two years, it doubled its foreign sales to $7.5 billion. Currently only 6 percent of Wal-Mart’s sales are from outside the United States, but this huge potential market is a major current focus.24
Two more important characteristics in the contemporary marketing environment include cultural diversity and ethical concerns. Every chapter in this book contains detailed examples that explore the impact of these factors.

One of the most difficult areas of marketing decision making, pricing strategy, deals with the methods of setting profitable and justifiable prices. It is closely regulated and subject to considerable public scrutiny.
One of the many factors that influence a marketer’s pricing strategy is competition. The computer industry has become all too familiar with price cuts by both current competitors and new market entrants. After years of steady growth, the market has become saturated with low-cost computers, driving down profit margins even farther. Big PC makers such as Dell, Compaq, and IBM are trying to compensate by focusing more on business customers. Meanwhile, start-ups like eMachines and Microworkz are the fastest growing segment of the retail computer market with a 20 percent share. In 1998, just 2 percent of computers could be bought for less than $600; today, well over 20 percent are sold at below that price.

Promotion is the communication link between sellers and buyers. Organizations use many different means of sending messages about their goods, services, and ideas. They may communicate messages directly through salespeople or indirectly through advertisements and sales promotions. Highly creative advertisements like the one in Figure 1.6 can even provide a form of demonstration. Kraft marketers advertise their three varieties of ranch dressing by creating a replica of the American flag from a combination of ready-to-dip items, including cauliflower, cherry tomatoes, blueberries, and star fruit. They offer a humorous set of preparation instrucdons that ends with “Solute and serve.”
In developing a promotional strategy marketers blend together the various elements of promotion to communicate most effectively with their target market. Many companies use an approach called integrated marketing communications (IMC) to coordinate all promotional activities so that the consumer receives a unified and consistent message. Sony PlayStation Underground, for example, has built the brand and its customer base through the use of IMC programs. The subscription-driven club for video garners who use PlayStation hardware targets consumers with a mix of direct mail, catalogs, a Web site, a computer disk magazine, television spots, package inserts, space ads, and even billboards. In just one year, PlayStation Underground members received some 47 mailings from Sony; software developers received nine; and PlayStation distributors got five mailings. Future plans include creating greater synergy between TV spots, print ads, and other marketing efforts. Sony’s database has grown from 100,000 to 1.5 million names, all of whom will receive Sony’s new catalog of branded merchandise. Says Peter Dille, Sony’s director for product marketing, “Anything that makes the PlayStation customer relationship stronger will sell more product.”

Marketers develop distribution strategies to ensure that consumers find their products in the proper quantities at the right times and places.
Distribution decisions involve modes of transportation, warehousing, inventory control, order processing, and selection of marketing channels. Marketing channels are made up of institutions such as retailers and wholesalers—all those involved in a product’s movement from producer to final consumer.
Technology is opening new channels of distribution in many industries. For example, software, a product made of digital data files, is ideally suited to electronic distribution. Major players like Netscape, Sun Microsystems, and Microsoft Corp. already distribute their programs and upgrades directly over the Internet. Electronic commerce holds great promise for providing quick response to purchasers while markedly reducing prices by slashing packaging and shipping costs, cutting out many intermediaries, and allowing online shoppers to look for the best prices from both domestic and international suppliers.
Distribution strategy is covered in more detail in Pan 6. Topics include marketing channels and logistics management (Chapter 13) and retailing, direct marketing, and wholesaling.