Marketing of High-Technology Products and Innovations Chapter 10: Advertising and Promotion in High-Tech Markets: Tools to Build and Maintain Customer

Marketing of High-Technology Products and

Innovations

Chapter 10: Advertising and Promotion in

High-Tech Markets: Tools to Build and Maintain

Customer Relationships

© Mohr, Sengupta, Slater 2005

Chapter Overview

Advertising and Promotion Mix: An Overview

The Importance of Branding in High-Tech Markets

New Product PreAnnouncements The Role of Marketing

Communications in Customer Relationships


Advertising and Promotion Pyramid

Coverage of Target Audience (Reach)

Salesperson

Telemarketing

Catalog Literature

and Manuals

Trade Show Seminars, Training

Direct Mail

Public Relations Publicity

Media Advertising

Narrow Broad

Coverage of Target Audience (Reach)

Co

st p

er C

on

tact

HIGH

LOW


Integrated Marketing Communications

The use of different promotional tools such as advertising, public relations, events, and the Internet in a planned, coordinated campaign to deliver a clear and consistent message to a target audience.


Media Advertising Select media vehicle

Mass media or trade journals Audience overlap with firm’s target market Cost efficiency (CPM) “Fit” of editorial climate with brand message Size/Frequency of ads Ad agency or not? SRDS, CMP Media, media kits

Select message strategy Break through clutter/gain attention Reinforce brand message


Public Relations Event sponsorship Charitable events/cause marketing Corporate advertising Publicity Press conferences, press releases

Positive image, good media relations are vital


Direct Mail Effectiveness is a function of

List quality Appropriate mailing

volume/frequency Message


Trade Shows To launch new products, reach sales

prospects, compare competitors’ products

Investment versus return Attract traffic to booth Follow-up on leads


Catalogs, Literature, Brochures Build on earlier communications Showcase key benefits in terms of

Relative advantage Compatibility Scalability Service/warranty Total cost of ownership


Telemarketing Outbound Inbound

Assign people to specific customer accounts

Do Not Call list


Personal Selling Effectiveness of this most

expensive tool is a function of the foundation established by lower-level tools in the pyramid.


Internet Advertising Can be used in a complementary

fashion at all levels of the pyramid Banner ads

Live banners Interstitial ads

Search engine Optimization (SEO) Paid search Contextual ads


Internet Promotional Tools Affiliates Viral marketing Permission marketing (email,

newsletters) versus spam Mobile advertising


Branding in High-Tech Markets Short product life cycle and

customer fear, uncertainty, and doubt put a premium on having brand equity


Brand Equity

Power of a brand to positively affect consumer response to marketing


Advantages of Strong Brands

Advantages of strong brands to firms Command premium prices Financial performance and stock valuation Credibility in new markets Reduce risks in new product introductions

Advantages of strong brands to customers Safe choice Simplify decision-making


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 stimulate word-of-mouth


Strategies to Develop Strong Brands (Continued)

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 (co-branding, ingredient branding)

Use the Internet effectively


The Internet as a Branding Tool

Use when Internet is part of the company’s value proposition

Coordinate online and offline campaigns

Take advantage of the “viewer’s” active role

Focus on the customer experience at the Web site


Ingredient Branding

Supplier OEM/Manufacturer Retailer Customers

-raw materials-components-production equipment-services

-personal consumption

-business use


Ingredient Branding Stimulates derived demand for

ingredient Relies on cooperative advertising


Pros/Cons of Ingredient Branding

Pros Cons

Supplier Creates competitive advantage Costly

Possible risk if OEM has product problem

Conflict with large OEMs

Large OEM Erodes ability to differentiate

Risky if supplier's product has

performance problems

If it doesn't cobrand, consumers might

question product quality

Small OEM Lends credibility to its product Risky if supplier's product has

Gets advertising support performance problems


Branding for Small Business Resource constraints May enter market with no brand Develop relationships with one or

two large customers Improve quality, customer

experience Creativity can compensate for low

budget


Pros/Cons of New Product Preannouncements

Pros Cons

Pioneering advantage: Preempt competitors Cue competitors

Stimulate demand Product delays damage reputation

or jeopardize firm survival

Encourage customers to delay purchase Cannibalize current products

Help customers plan Confuse customers

Gain customer feedback Create internal conflict

Stimulate development of complementary products Generate antitrust concerns

Provide access to distribution

Pursue a leadership position


Tactical Considerations in Preannouncements

Timing is a function of New product innovativeness, complexity Customer buying considerations Timing of product design decisions


Timing of Preannouncements

Use EARLIER preannouncements when Product complements are needed from

third parties 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 secret

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

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

Customers Competitors Distributors Partners Shareholders Employees Industry Experts Media


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

Decide on level of marketing effort and expenditure for each category

Tailor marketing communications appropriately


Categories of Customers Low share of purchases/Low

consumption in category Absent compelling reason, avoid the

customers 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! Maintain loyalty; don’t be complacent


Other Strategies for CRM Capture the customer Event oriented prospecting Extended organization Manage by wire Mass customization Yield management


CRM Software

Automate the sales force Track accounts and prospects

Automate call centers 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 shopping activity

Documents

Marketing of High-Technology Products and Innovations Chapter 10: Advertising and Promotion in High-Tech Markets: Tools to Build and Maintain Customer