(making the most out of your viral marketing)

By JUSTINE P. CASTELLON

When a trusted friend, officemate, relative, or acquaintance recommends a product or service to us, we normally won’t hesitate to try that product or service at the first opportunity. And when someone has had a very good experience with your product or service, he or she would most likely turn around and tell as many as 10 people about that good experience. Conversely, however, they would likely tell as many people if their experience with your product or service had been bad or negative.

The phenomenon involved in situations like these is called word-of-mouth (WOM) or viral marketing, which has been described as a promotional method “of customers, by customers, and for customers.” When it brings positive results, such as when your loyal and satisfied customers actually brag about how good your business is, viral marketing is the ultimate dream of every entrepreneur.

THE VIRAL SPOTS

There are several ways of doing viral marketing, with each variation operating for different reasons by using different methods to bring in different outcomes. Whatever the variation, however, they largely have the same mechanism at their core—a means for providing customers with quality experiences and for encouraging people to pass the message along.

The entrepreneur can consider using any of the five most common types of viral marketing, namely pass-along, buzz marketing, incentive viral, undercover marketing, and a user-managed database.

Pass-along. This is the type often used by users who do their business on the Internet. It consists of a short note that’s automatically attached to the footer of every electronic message when it is sent out to its recipient. A good example of this pass-along viral spot is the one being used by Hotmail.com. It comes in the form of a tag line at the bottom of every outgoing email that reads “Get your free, private email at www.hotmail.com…” The promotion operates on autopilot, with the message automatically spread out by all Hotmail.com users when they use the mail server to send their mail. Through this simple expedient, Hotmail.com was able to rapidly grow a huge subscriber base.

Buzz marketing. This viral type involves getting mass media celebrities to discuss their experience with your product or service, preferably on a provocative but always positive note. The idea is to deliberately create noise and buzz about the product or service among the readers, viewers, or listeners. For instance, Oprah and her choice of Wacoal created buzz on how to alter a woman’s figure minus the expensive surgery.

Incentive viral. This scheme gives people an incentive to pass a viral message or viral object along. To get the reward, the passer of the message must get the user to take the desired action. This type of viral marketing is the primary tool of multi-level marketing companies, some of which have grown from nothing to multibillion-dollar businesses because of some astute use of an incentive viral. Incentivizing viral messages latches onto a force that’s even more effective than broadcast television, yet one that’s far less expensive.

Undercover marketing. This is the most interesting type of viral marketing. It occurs when people don’t know they are being marketed to. Such a campaign needs to be camouflaged as a piece of news, without obvious incitements to link or pass along. 

undercover marketing is perhaps the most difficult type of viral spot. It has to be made to appear simply trendy or curious, it should not seem to be asking an individual to forward them, and it should create the impression that nothing in particular is being promoted. This, for instance, is exactly what Canon Inc. did when it sent out couples to the field to pretend to be Japanese tourists politely requesting passersby to take their photos. They would hand a target passerby the newest Canon camera, and this target passerby in the process would subconsciously learn how easy, smart, and fun it is to use the camera.

User-managed database. This refers to a database of prospects that a user generates with the help of online service providers. By inviting other people to join and participate in the user’s group, the user creates a viral, self-propagating chain of contacts that grows naturally, thus encouraging others to sign up as well. Two good examples of this self-propagating type of viral chain are online dating services and the highly popular site Friendster.com.

THE VACCINES FOR VIRAL MARKETING’S DOWNSIDE

Viral marketing should be useful particularly to start-up entrepreneurs because of its ability to obtain a large number of interested people at low cost and because of its extensive reach, high credibility, and high efficiency.  However, vital marketing has several downsides: the difficulty in measuring the reach of failed campaigns, the lack of control, the risk that the viral message might be perceived as spam, and the limited possibility for segmentation. Since viral marketing depends on people not too familiar with your branding strategies, it is very important to carefully develop a message that’s strong enough to prevent misinterpretations of your brand.

Particularly on the Internet, you should avoid using purely money as an incentive for your viral marketing. This is to avoid the likelihood that your message would be spammed across the web. When you offer money as incentive, most of the time your message would be perceived as ‘too-good-to-be-true’, and you wouldn’t get good results that way. So if you wish to offer incentives to prospective participants to get immediate results, use incentives like discounts or gifts for message recipients instead, or perhaps rewards for those who make referrals.

That way, you preserve the credibility of your message, for the best viral campaigns work on the principle of value, not greed. And since the strength of viral marketing is its credibility, you must avoid being perceived as a spammer, and you must make an effort as well to find appropriate triggers to ensure that customers will function as advocates for the brand, rather than as spammers themselves.

The vital in viral marketing

While it has come under strong criticism from consumers and privacy advocates because of their concern over unsolicited messages, viral marketing remains a good alternative to expensive traditional marketing. Should you decide to use it, you can avoid negative reactions by making sure of using the principles of viral marketing very tactfully. This is because viral marketing is not only about getting someone to interact with a message; it also needs to be really viral—meaning that it needs to have a pass-along effect. 

One good example of viral marketing is Sun Cellular’s 24/7 promotion, which offers unlimited calls and SMS within the network for a flat monthly or weekly rate. It takes advantage of a natural human motivation, using its own subscribers to create the buzz and recruit new customers. For their own benefit, the subscribers work autopilot to convince friends, relatives, and family members to subscribe to the same mobile phone service. By encouraging others to do so, they can fully maximize the potential of experiencing longer—if not unlimited—call time for themselves.

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How to build a successful WOM Campaign

·         Create the Buzz. Create value-driven news using your best customers. Involve them in the process of making and delivering your products or services. This way, it creates positive feelings that lead them to talk about your business.

·         Incentivize. WOM is very much about the “WIIFM” principle: “What’s in it for me.” Offer an incentive to someone to tell others about you.

·         Personalize. Response rates increase dramatically when users can see that a message is coming from a friend, and it brings instant credibility to your message. If you’re using e-mail as courier of your message, insert the sender’s name in the subject line, like “Juan de la Cruz thinks you will like to avail the exclusive membership fee…”

·         Get ready for the takeoff. If your viral campaign shoots up towards success, your systems have to be ready to handle the traffic and transactions.

·         Measure. If you want to be able to measure the effectiveness of your viral marketing campaign, you may want to dissect what transpired that led to the success of your respondents.

Sources:

• The Secrets of Word-of-Mouth: How to Trigger Exponential Sales Through Runaway Word of Mouth by George Silverman
• Marketing Management (International Edition) by Philip Kotler
• The Six Simple Principles of Viral Marketing by Dr. Ralph F. Wilson

The Guerrilla Entrepreneur’s philosophy of frugality and thrift.

By: Justine P. Castellon

One of the most important decisions that an entrepreneur has to make is how much money to spend on a marketing and operational budget. Though the answer varies by business and industry size, the most important thing to consider is how much you want to grow and how fast in terms of profitability and not sales revenues alone. Most entrepreneurs under-spend their budget thinking this will give them savings. You’re wrong – your business have to spend money to make money. The trick however is to spend your money wisely on a tailored marketing plan aimed at fulfilling your business goals.

Jay Conrad Levinson, the father of Guerrilla Marketing talks about the principles of guerrilla entrepreneur attacks in his recent visit in Manila. Levinson says, “when you don’t have a lot of money to spend on your marketing, invest your time, energy, knowledge and imagination to the business.”

Here’s the solutions on how you can economize the guerrilla way.

Show that you care for your customers.

Recognize that your customers have needs and expectations. You’ve got to meet those needs and exceed those expectations, always.  According to Levinson, it’s very easy to care about your customers, “but unless you take steps to show them that you care, they might be wooed away by a competitor. Your marketing can say all the right words and tell customers how important they are to you. But you’ve got to prove your dedication to customers — and prospects — by taking concrete steps beyond mere words”

For some marketers, delighting your customers is the first act in winning trust.  Focus on customer experience and interaction to fast-track market penetration — your customers value attention, reliability, promptness and competence. In earning their loyalty, customers rate their quality of interactions as equally important to the quality of your products. Similar to Levinson’s, highlight on the process on how you deliver excellent customer experience.  Well-trained and customer-centric employees are the top attribute of companies that provide consistently excellent experiences. Continuously improve the quality of your service.  Use feedback forms and encourage customers to share their views on how you conduct their relationship-building and fix the trouble areas revealed.

Market your marketing.

You’re not really promoting unless you’re cross-promoting. “Your trade show booth will be far more valuable to you if you promote it in trade magazines and with fliers put under the doors of hotels near the trade show,” shares Levinson.

The changing nature of markets, particularly the increase in competition and development of both local and availability of global brands make us more dependent on several media to motivate a purchase. It is no longer enough to design an attractive promotion. Marketing your promotion becomes a necessity. Make a big-bang announcement when you present value offers, sampling or even freebies.

It doesn’t mean that you will allot additional budget on promotional announcements. Maximize your existing communication vehicles.  When you develop a brochures or flyers, make sure to include your hotline number and website address to access on more clarified information. Use your business card as marketing tools or promotional bulletin board by posting your services or promotions at the back of your card. Never forget your exit strategy.  Bounce-Back coupons are excellent way to engage customer to come back on limited period time by offering certain discounts on the next purchase. This way, you’re motivating them to return using the same promotional materials. 

Explore fusion marketing.

“The guerrilla entrepreneur is dependent upon many people. He knows that the age of the lone wolf entrepreneur, independent and proud of it, has passed — he is very dependent upon his fusion business partners,” says Levinson.  Identify potential partners for fusion marketing (also called co-marketing promotions). Fusion marketing takes your brand to a new audience by associating with other brand. It will strengthen preference or purchase intention.

Because of too many choices and similar offerings, you have to spend extra for differentiating your brand. With this, several businesses share the same customers and by combining their efforts into one synergistic move are more economical and bring better results. Combine your marketing efforts, concept and production skills, customer information and anything else to increase your marketing reach while reducing the cost. Take Pizza Hut and Pepsi for instance, or Krispy Kreme and Hersheys.  These companies merge their forces to create a single campaign targeting one segmented audience carrying both their brands.

Collaboration happens not only with similar branding activities but partnership and alignment with your suppliers and employees as well. Building your brand is similar to building a cathedral or making a movie, it takes hundreds of collaborators. Always remember, when you join fusion marketing, you have to be ready to collaborate with your partners. “You’ll scratch my back and I will scratch yours”, says Levinson.

Nurture the ones you already have.

The most common method of economizing is also one of the most overlooked — marketing to existing customers. Customer acquisition will cost you six times more that customer retention. Levinson points out that the price of discovering and convincing likely customers is astronomical when compared with the price of doing the same with current customers. Most entrepreneurs believe that customer relationship management is expensive.  This is a common misconception; you can simply develop database marketing. Update and maintain your list of customers’ information accurately.  This information is handy for prospecting purposes, customer segmentation, forecasting sales or determines who your real customers are and their buying habits.  That way, you can communicate with them frequently, more effectively.

Customer-nurturing programs cannot be measured on how your membership cards look or the rewards that you give. It is by how well you know them on a personal basis. Always remember their names (and important dates such as birthdays and anniversaries).  Surprise them, by giving small token on unexpected dates. Finding cost-effective and fast communication vehicles will also strengthen the relationship-building process with your customers. Use email and SMS message blasts.  Develop a simple HTML catalogue-type email (avoid using attachments), and send them to all customers who uses internet.  Also, get advantage of the Telco’s offers of unlimited text to broadcast your new products and services.

Understand conversion rates of prospects to leads, to qualified opportunities, and to winning the customer loyalty.  Create pipelines that fill target accounts, nurtures, appointment and sales. Understand what works, what doesn’t, continuously improve the streamline processes, and prepare to pilot another tailor-fit program.

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A common problem for all businesses today is not only about not having enough money to work on all the possible marketing ideas, but putting the right plan. Squeezing the maximum results from your marketing activities is the best way to economize.  A one-time radio ad, or a 7-seconder TV commercial will not necessarily translate to increased sales.  Your target customers need to hear your marketing messages at least 7 times to influence a buying decision.   Use low-budget marketing to get your message out to your customers on a regular basis.

The philosophy of frugality and thrift is not about cutting and limiting your marketing expenditures. It is the concept of “stretching your marketing budget” to reach your target market in multiple channels, thus, bringing higher impact to your marketing message. And for Levinson, guerrilla entrepreneur’s attacks do not suffer from lack of resources, “but instead prosper because lack of capital makes them more willing to try new and innovative ideas.”

[NOTE:  From the actual one-on-one interview with Jay COnrad Levinson in Manila]

A good visual presentation will draw in the customer with a shopping mood into your store.

By Justine P. Castellon

Visual Merchandising (VM) is everything the customer sees from the way you products are arranged inside your store outlet and how your visual collaterals are positioned from your window displays down to the counters where your customer pays for the merchandise. VM creates an image you desired for your business that results to bringing attention, interest, desire and action to buy on the part of your customer.  VM dictates the overall atmosphere of your business –  the way you communicate your brand message, and the manner on how you will sell your product.

How your store visually aligned to what you are selling depends on whether or not your customer enters your store. While advertising, prices and promotions are important, VM gives the final push whether he buys or not.  The appearance of your store announces what can be expected inside. An excellent visual merchandising attracts attention, creates interest and invites customers into the business.

When planning for the best visual merchandising, consider the following hotspots. Remember the three major goals of your store: motivate the customer to spend money, projects the image of your business, and keep your expenses to a minimum.

Visual merchandising includes window displays, signs, interior displays, and any other special sales promotions taking place.

WINDOW DISPLAYS

Customer will require split second to capture their attention.  It is necessary to have strong stopping-power visual to tell what your business is selling.  In less than 10 seconds, your window poster and merchandising will effectively communicate your message that will create interest and invite customers into your store to purchase the goods.

Retail outlets like The Body Shop and Bench master the art of putting the best front in the window displays. The Body Shop for instance carried a theme throughout the display.  Every seasonal promotion such as the Valentine’s Day, the poster conveys a message of what are the best products for that specific occasion. The window table at the bottom of the poster carries the products with A6 cards announcing discounts and bundle promos. Bench on the other hand creates awareness of happenings in fashion world and up-to-date with the dynamics of the market constantly by highlighting the clothing merchandise displayed with the most up-to-date celebrity endorsers.

There are certain things which you need to take care while proceeding with the process of displaying your products. These components when combined together in a proper ratio will make a successful outcome:

• A window poster announcing the current promotion is mandatory.  The poster is the first thing the customer sees when deciding if they want to enter the store. It reflects the store’s showcase the newest products that it offers. It is necessary that your window poster contains a message strong enough to catch attention. Then all the interior displays and in-store merchandising come next to appeal to the customer.
• For non-clothing products, a window bed or promo table supports the message from your poster. Mannequins are still the best tool for merchandising clothing products.  Put product highlights on the window bed with supporting display cards or tags.  Be careful not to crowd too much merchandise as customer might find it difficult to determine the message and what products are being promoted. 
• Miniature spotlights to accent price cards and specific focused items.  A compact footlights will help relieve shadows at the bottom of vertical displays

VM is essential to have themes for all retail display, “ to capture peoples imaginations.” A good theme display makes a visual presentation come together, and will draw in the customer with a shopping mood into your store.

TRAFFIC GENERATOR ANNOUNCEMENTS & SIGNAGES

First time customers tend to remember your store’s entrance which provides the first and last view of your store’s interior.  A properly designed traffic generator like banners or easel standee will bring additional mileage to other products which you might want to push, or simply an additional support to window message.

Signage in the gondolas and rack fixtures is a critical part of your point-of-purchase promotion. A promo strip card or A6 card are excellent addition when you arrange your products.  It communicates a sales message to the customer can make up for lack of sales personnel.

Consistency plays an important role to maintain the image and identification.  The design concept to be used in your banner, easel standee, and promotional cards will be more effective if an attempt is to carry the colors and graphics throughout the store, and all promotional collaterals including advertising materials.

WINDOW BAYS/GONDOLAS

Visual merchandising actually centers how your products should appear in the display area.  Your products can be effectively displays on variety of fixtures available such as gondolas, tables, cubes, mannequins’ racks, display cases and other manufactured point-of-purchase displays. These fixtures should present your products to the customers and act as your silent salesperson.

The pre-requisites of arranging the merchandise in different categories: Generally, customers look to the center of racks/gondolas first, then right, and finally left. Focus products are best displayed at the eye level shelves. If products are arranged in one table, hero product should be highlighted by elevating it using an acrylic rise or should be located on the center or starting from the left area. If possible, allocate a sample product from the range and allow customer to test and feel the item.

Packaging should be balance on display, and allow enough space for product to breathe. Organize the product according to use, never mix other category or different items on that particular arrangement.  Other method of acceptable merchandise arrangement is by color.  People think of colors in a rainbow pattern and they are very comfortable in that kind of presentation.

Promotional product should be located at the area with the highest customer traffic. Consider presenting the promos on entrance area or areas where you can attract the biggest attention.

Higher priced items require fewer fixtures because there is less stocks.  Use T-stands to create an illusion of space. Use a starter gap in which an item is missing, so the customer will not feel like they are messing up a neat display.  When your items begin to show broken sizes or assortments, these remaining items should be moved to the bottom shelves of the gondola.

Small and low-priced products should be arranged in an acrylic bowl or line up in a small rack near the counter to allow impulse buy or last-minute additional purchase.

Your visual merchandising approach should complement your other strategies. The content of the display should complement the in store environment and other marketing strategies. If you have a specific logo, the colors of the display can reflect the same color of the logo. For example, in all  McDonalds outlets,  The Ronald McDonald statue is of the same color, red and yellow as in their logo.

Your store cleanliness is the foundation of an inviting a successful visual merchandising. A beautiful display can be ruined by a cracked sign holder or an unclean racks or shelves. Constant and regular cleaning schedule of fixtures and products is required.

The success of your business requires a distinct and consistent image that should be created in the mind of the customers that will infuse your product offerings.  Visual merchandising can help create that image that will lead to successful sales.  It does not only communicate the store image, but also reinforces your business advertising efforts and encourages impulse buying by the customer. 

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THE PRINCIPLES OF DESIGN USED IN VISUAL MERCHANDISING

1. Balance – involves the equilibrium and weight of elements between two sides of display. Example, when planning a VM, if several small objects are more exciting than the large object, they will overpower the large item or a large expanse of empty  space will call attention to a single object placed within
2. Proportion – is the ratio of parts to the whole display.  It is a comparative relationship of distance, sizes, amounts, or parts.  Each item may look normal when isolated, but if it is inconsistent in area of dimension with neighboring items, it seems out of proportion.  Each peace of merchandise must be considered in relationship to all the other merchandise.
3. Rhythm – or flow involves measurement of organized movement; a self contained movement from object to object, background to foreground, or side to side.  The rhythm in display should lead the viewers eye from the dominant object to the arrangement of accessories.
4. Emphasis- it is the point of initial eye contact.  It is the formulation of focal point, with all else in the display subordinate.  There should be emphasis in all displays.  This can be by virtue of the focsl point’s size, color or position.
5. Color – contributes significantly to people’s impression of a display, as well as store’s overall appearance. It catches the eye and make people pause and look.
6. Lighting – is essential in calling attention to merchandise in a display. A shopper’s eye is drawn automatically to the brigtest item or area.
7. Harmony- a coordinating umbrella principle that can cover and incorporate every other principle.  It is agreement in feeling and consistency in mood – without harmony, the observer is uncomfortable and will not be enticed to purchase the merchandise

NOTE:  This article was published in the Masigasig Magazine (April 2008)

By Justine P. Castellon

(http://labornotes.org)

The excellent performance of the country’s travel and tourism industry has not only brought

In Metropolitan Manila alone, smaller independent hotels are competing with the daily task of selling rooms along-side franchised brands such as Mandarin, Shangri-La and Holiday Inn. The average room occupancy rate growth has reached 2.9%, according to the January-June 2007 Regional Hotel Occupancy Report, which was recently published by Department of Tourism.

This increase in the number of visitors has brought with it rising expectations from travelers, fueled by massive tourism promotions and aggressive competition among hotels.  Consolidated marketing and the synergy of chain branding are also threatening the existence of many independent hotels; these independent hotels have to contend with their relative obscurity in the marketplace.  And because their marketing funds are limited, they need to rely on overflow from their larger franchised neighbors.  But, what happens when there is no overflow?  Even the franchised hotels with their structured marketing programs and funding have to deal with the problem of low occupancy rate during lean seasons.

Since this downside is inevitable, hotels (both franchise and independent) are giving their best shot by employing these techniques from the hotel management playbook.

Develop reservation alliances

While this has been the stronghold of large hotel franchises for many years, the sheer nature of the Internet and the popularity of online third party aggregators are changing the playing field itself. Traditional advertising was diluted by the entry of central reservations offices like Philippine Hotel Reservations Service (PHRS) which help guests pick and choose hotels in destinations of their choice based on price, quality and service offerings. With a listing of more than 400 hotels and resorts all over the Philippines, travelers have wider choices of the best hotels by just clicking their computers.

Central reservation offices work similar to travel booking agencies.  The hotels are listed based on the central office website’s search engine which allows traveler to choose by locations, budget and hotel category.  There is also provision for prime spot in the website where they showcase the best hotel deals.  PHRS main online booking page (http://www.philippinehotelreservations.com) consists of hotel search engine, Philippine vacation and travel packages with discount madness and special packages, most requested hotels and the reservation helpline.  Once a traveler click on a certain hotel of choice, a separate window pops up which displays the hotel’s description, room rate, amenities, photos, location and hotel policy.  The traveler may then make reservations by filling up an inquiry form. The PHRS travel consultants will get right back to them within 24 hours to advice about the details of booking. After confirming the reservation, the travel consultant will advise about the payment details of booking. Once the payment has been received, PHRS will send a travel voucher, either by email or fax. In case of last minute bookings, PHRS will send the travel voucher directly to the hotel front desk for pick-up.

Since these central reservation offices ensure that guests get the best possible rates offered, independent hotels can now level the playing field versus the franchise-chains by offering a price advantage.  This price war is evident during the lean season to ensure steady growth of room bookings.  The franchises’ self-imposed war against independent hotels was caused, at least in part, by their fear that the much lower room rates of these independent hotels could threaten their reservations base and their very way of life by also eroding brand loyalty.

To minimize the impact of a price war, franchise-chains should find the best marketing propositions. One of the newest hotels in the country, Crowne Plaza in Ortigas Center, put more weight on the “essentials of time in doing business” in their marketing communication.  Crown Plaza claims that their hotel is designed to be a perfect working base with upscale amenities, comprehensive business support and top-notch meetings expertise to take care of details – all under one roof.  That way, when business travelers check on with central reservation offices with arrays of choices, they can study offerings based on rates, amenities or comfort.

This is similar to the independent hotels – if they can not offer excellent room amenities, they can always emphasize affordable rates as their value propositions.

Create Electronic Booking

It would appear that many leisure and business travelers have discovered that some of the best hotel room deals are to be found not through a travel agent or through calling a hotel directly, but on the web.  The Internet is still the most effective and value-packed sales tool ever devised.  Although in using online hotel consolidators to sell hotel reservation like the central reservation offices, Internet users would always find discounted rates and nothing else.

As far as the Internet consumer is concerned, these discounted rates are, in effect, the published hotel rates.  The resulting price dilution can seriously affect the contribution margin.  To address this concern, create your own direct hotel online booking.

When a traveler is searching for accommodations, he should be able to find hotel website directly through the search engines (Yahoo or Google, etc) and destination portals (www.yourhotel.com).  This is a direct hotel online booking, a hotel website with a 24 hour by 7 day sales force, complete with booking engine, website optimization, website functionality, customer e-mail capture and a strong customer service component.   The website is not just an online brochure.  While it is essential to keep it simple, nice, informative, useful and efficient, this should contain a real-time booking engine. The booking engine should be prominently displayed on the Home Page and become the centerpiece of your hotel website.  All pages within the website should prominently feature the “Online Reservations” or a “Book Now” buttons.

Richmonde Hotel  in Ortigas Avenue employed a secure system in its online booking under “Reserve Now” tab. A reservation system displays availability and rates for any two-week period beginning on check-in date. A customer select preferred room type and can even view 2 weeks-worth of availability and rates. He/she can enter the numbers of room per night starting with check-in date. The guest can have an option to review reservation details, before providing his/her credit card information.  Once everything is done, the guest can click on CONFIRM MY RESERVATION at the bottom of the page.

Offer free goods to improve value proposition

These incentives, entice more travelers in booking at preferred hotels because of tempting offers in the form of discounts, bundles, free samples, and coupons. These can be offered when travelers book a certain numbers of days.  Some marketers introduce this approach as hyperdifferentiation, This can be described as “the art of reducing the importance of price as the principal determinant of customers’ selection among alternative goods and services.” That is, hyperdifferentiation seeks to encourage customers to select goods and services based on deep delight, delight that provides value sufficient to distinguish one offering from all of its competitors, so that the purchaser is less concerned with price differences between the selected product and the available alternatives.

Holiday Inn is famous for its free-on-five promo. For travelers who stay longer than the usual booking gets treat of free 1 day stay or a room upgrade.  Medium size hotel, Eurotel in Sampaguita Theater building, in Cubao is offering free half friend chicken for traveler who check in for 10 hours onwards. Customer delight is not new to Hotel Sogo in Cariedo, Manila, for 12 hours stay, the customer will have a free breakfast for two.  But this is applicable for check in between 4pm-2am Monday to Thursday, the low customer traffic dates.

This technique delights the traveler and bases his choices not on price.  Remember, customers based their purchase on trust.  And trust is equal to reliability and delight.

Offer loyalty program

As a result of increasing number of hotels focusing on offering the EST (best, cheapest, newest, etc), one should look into the improvement of customer experience in a manner that will increase customer retention (and revenue).  A good hotelier doesn’t stop at having excellent room service and affordable rates to attract customers.  Keeping customers for future bookings will them peace of mind during lean seasons.  Too many hotels suffer from high customer churn – they gain new customers, only to lose them later.  After luring them by lowering room rates and offering freebies, hotels neglect their exit strategy by not giving their guests a reason to come back.  Think of filling a leaking pot with water.   Marketers have already learned that it’s ten times more expensive to attract a new customer than to keep existing customers loyal.

Loyalty programs come in different forms.  A bounce-back coupon offering a certain discount when customers book again within a specified period of time, can help ensure that the hotel will be top-of-mind when it comes to choosing accommodations.   A reward card can also be used to track frequency of visits. Since a traveler is aiming for certain rewards due to frequent visits, brand switch can be avoided.

PHRS for instance, not just handles reservations for any hotels but conducts overall promotions as well.  The new program for all their loyal customers, “Customer Referral Program” which was launched last December, encourages frequent online visitors to refer clients to book travel and hotel accommodations using PHRS. For every person referred to PHRS can earn points that may be use as a discount on your succeeding bookings at any of 400 + hotels nationwide.

A good example of hotel reward loyalty program is the The Richmonde Club 1 Plus, an exclusive bookers’ program entitles customers to a host of exciting rewards and privileges each time they reserve a room or book a banquet event. This promotions is eligible to all corporate clients of The Richmonde Hotel’s Room Sales and Banquet Sales who book within the promo period and accumulate a total revenue of at least PhP10,000 will automatically qualify for the Club 1 Plus program and will be given an application form.  Upon approval of the application, he/she will receive a confirmation letter bearing his/her name, company and Club 1 Plus Membership Number. This membership number should always be given when making reservations at any of the Club 1 Plus Revenue Centers.  The rewards range depending on the accumulated revenue credit, Richmonde Gift Certificates worth PhP800 or Sodexho Pass worth PhP500 for PhP50,000 revenue credits. The bigger the accumulated revenue credits, the more exciting rewards await the members.

These techniques from the playbook of hotel management can buy a little time in acquiring the customers during lean season. But hoteliers should never forget that nothing can replace excellent service . . . and it is the most important. Why does a customer need a loyalty program or a great discount on room rates if he is happy with the treatment and service?

Whether a customer is satisfied after checking-in depends on the hotel’s performance in relation to the customer’s expectations in terms of room service.  Many companies aim for high satisfaction because customers who are satisfied are much less likely to switch.  High satisfaction creates an emotional bond with your brand, not just a rational preference.

Winning and keeping customers happy and satisfied are essential to hotel business. When they seek to understand their people, and customer service representatives understand their role, they will keep customers coming back again and again regardless if it is a lean season or not.

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SIDE BAR:

Resource Books for Hotel Management

• Check-In Check-Out : Managing Hotel Operations
  (This book has been a mainstay text for hotel educators, and a reference source for industry professionals, for over 30 years. Frequent revisions by the authors “a father-and-son team” have kept the book current and complete. Both bring a depth of professional and educational experiences to the seventh edition.
  by Gary K. Vallen (Author), Jerome J. Vallen (Author) 

• Hotel And Lodging Management : An Introduction
  (Prepares you to succeed as managers in the hotel and lodging industry, while developing a solid foundation for a long and successful career. This comprehensive resource combines detailed presentations of each department in a hotel or lodging establishment along with a close examination of organizational structure and the interdependent relationship among departments)
  by Alan T. Stutts (Author), James F. Wortman (Author)

NOTE:  This article was published in the Masigasig Magazine (March 2008)

One of the most difficult tasks a marketer has to do is rescuing the Rescue Plan. As a strategist, my role is to come up with series of plans to achieve the goals of my clients (which includes working as a full-time consultant on-site). Thanks to Ries & Trout’s Bottom-Up Marketing, which says let everybody get involved particularly the sales force. Well, consultants are not always welcome in any organization but you can’t blame those guys because you remind them that they haven’t done their jobs well. So, the main key is collaboration. Get them involved.

When I reviewed the rescue plans of some managers, I can honestly say, there’s nothing wrong with them. It’s just a matter of rescuing the rescue plan. Sounds easy-peesy, huh?! Rescuing involves the right execution down to the last details. Make sure that everyone’s tasks are aligned with their daily assignments and schedules. Ooppps, don’t forget to motivate them along the way. Monitor, monitor, and monitor. This is the hardest part . . . monitor, calculate and measure the progress.

Always remember that EXECUTION, not strategy is where the rubber meets the road.

Please check out my new page (FREE STUFF). It contains my previous strategies and presentations. I will do my best to compile all the previous so I can include them here. Feel free to download and use them accordingly but please give credit to the author J

[For the first I let you read topic from other author and this one came from bonus article with permission from Jay Levinson. ]

THE GUERRILLA’S THREE TARGETS

by Jay Conrad Levinson

You’re a guerrilla. So your marketing plan probably identifies your target audience. As a business owner or marketing honcho, you probably have doneyour homework to learn at whom your marketing should be directed. You have probably put into writing your exact target prospects. Now, I invite you to aim at larger target as well as to more targets.

Realize as all guerrillas do, that you don’t have merely one, but three target markets at all times.

Your first target market, and this is the largest of all three markets, but will generate the least profits for your company, is absolutely everybody in your geographic area, giving no thought to how well they fit your customer profile. The name of this target market is the universe, and if you are thinking sanely, you are investing 10% of your marketing budget talking to these people.

They are too important to overlook, regardless of what’s happening right now. Things and people change. Marketing messages grow stronger when nourished by time.

Your second target market, and it will generate substantial, but not gold-medal profits, is your prospects, those members of the universe who do fit your customer profile. They have the right demographics, psychographics, income, proclivity to buy, and they have the kind of problems you can solve — or the kind of goals you can help them achieve. Thinking clearly, you should be investing, 30% of your marketing budget talking to these people – these potential customers, poised on the threshhold of purchasing, needing you to nudge them a little — maybe even a lot.

Your third target market, and this is the teeny-tiniest of your markets, but can and should generate, by far, the highest profits for your company, is your customers, Guerrillas happily invest 60% of their marketing budget talking to these wonderful, special, tasteful, discriminating people.

When you are in the guerrilla mode of investing marketing funds directed to all three target markets — and use the percentages only as a rule of thumb – you will realize that marketing isn’t an event as much as it is a process.

It’s the process of moving members of the universe onto your prospect list, then motivating these prospects to buy so that they can get onto your customer list. When that happens, you will see why guerrilla marketers continue to be guerrillas. Your profits will rise as your marketing investment diminishes.

Because it now costs you six times as much to sell something to a new customer as it does to an existing customer, your marketing costs will go down because it costs you relatively so little to market to current customers. After all, 60% of your budget goes to them and you already know who they are, what they like, what they need, and how much they’ll spend. But customers move, they die, and they get wooed away by competitors, so you must always add new people to your customer list, and they will come in a steady flow if you consistently market to prospects. Think in terms of them being a solid long term investment for you. Realize that members of the universe have ways of becoming prospects, and it’s a lot easier to sell to a prospect who has heard of you than one who hasn’t.

Most likely, you are aiming almost 100% of your marketing budget at prospects. Does that mean you are wasting 70% of it? I hate to tell you this in public, but it does. The rule of thumb says 30% goes to prospects, 10% goes to the universe, and 60% goes to customers. Marketing works well that way. Ask any guerrilla.

Jay Conrad Levinson is the author of the best-selling marketing series in history, “Guerrilla Marketing,” plus 30 other books which have sold 14 million copies worldwide in 41 languages. Levinson taught guerrilla marketing for ten years at the University of California in Berkeley and practiced it in the United States — as Senior Vice-President at J. Walter Thompson, and in Europe, as Creative Director and Board Member at Leo Burnett Advertising.

July was my luckiest month. I’ve met the guy I never expected to see face to face . . . even in my dreams! It was too late for me when I saw the billboard of Jay Levinson Live in Manila along Edsa Guadalupe. Tickets are sold out for SME forum in Greenbelt. I tried pulling strings from fellow marketers to get me a ticket from Salt & Light Ventures, but even the genie can’t perform miracle this time.

My fairy godmother Millet (Managing Editor of Entrepreneur Magazine) texted me in the nick of time asking if I’m available to cover the event for Jay Levinson in Greenbelt! What?! You mean a free ticket in front row?! You’re right, i still preserve my sanity and accepted Millet’s offer calmly. Like a true fairy godmother from Cinderella, Millet arranged for everything including a one-on-one exclusive interview with Jay during book signing at the Powerbooks , and an exclusive dinner with him with the rest of Entrepreneur and Salt and Light Venture’s bosses.

Why meeting Jay Levinson is so important to me? I’m an advocate of Guerrilla Marketing even from the beginning. I am very fortunate that my previous trainings and experiences as marketers came from the “not so rich” companies. I was trained to combat the Goliaths out there using the limited resources and maximizing the ones I have. Like what Levinson said guerrilla marketers’ attacks do not suffer from lack of resources, but instead prosper because lack of capital makes them more willing to try new and innovative ideas.

Most of the topics discussed during the forum were never new to me but seeing Levinson deliver it live is something else. Yes, I’ve got a warm hugs and kisses from him after the dinner. And I can honestly tell you, the experience was worthwhile =)

Watch out for my series of articles regarding Guerrilla Marketing by Jay Levinson in the Entrepreneur Magazine. Grab a copy every month! The guerrilla marketing conference is produced and organized by Salt & Light Ventures, Inc. for the benefit of Salt & Light TPLR Foundation Inc. Co-presented with Entrepreneur Magazine, Business Mirror and Philippine Daily Inquirer. The conference is also made possible with the help of Philippine Marketing Association, Powerbooks, Fitness First, Rabbit Advertising, Faber Castell, Spring Global Mail, Digital Fox, Binalot and Figarro Coffee Company.

By: JUSTINE P. CASTELLON / Consumer Strategist

“it costs five times as much money to find a new customer than it does to get a current customer to come back and buy from you.”

Over the years, a variety of marketing approaches have been used to extract and evaluate customer information in an effort to understand and replicate what keeps customers happy and loyal. So businesses have adopted the tactics of recognition and reward to identify, maintain and increase the yield from their best customers . . . loyalty program. And it is designed to increase the lifetime value of current customers through a long-term interactive relationship. Why do businesses do this? Because when you’re in a commodity trade, you need to offer customers a reason to choose you and stick with your product or service. They need something that helps to break the tie in their head. Choosing between two or more nearly indistinguishable products or services is always hard. It’s like finding a needle in haystack, unless yours is the golden needle that shines amidst the bunch of hays. By running loyalty programs that not only increase overall usage but also offer elements of exclusivity and personalization, you reinforce market behaviors, buying patterns and relationships. While this valued in the marketing arsenal, start-up companies or smaller business are either frightened or their eyes glaze over the idea of customer loyalty program because they think it’s either too expensive or too complicated to implement. And many still find it difficult to set up a strategy that will make life easier for them and better for their customers. But always bear in mind that it is cheaper to retain old customers than acquire new ones, because it costs five times as much money to find a new customer than it does to get a current customer to come back and do business with you. Create a simple yet effective loyalty program. It doesn’t have to be complex. A simple, graded points system is all it takes. Check National Bookstore’s Laking National or Mercury Drugstore’s Suki Card. One of their key tenets are the management and the contact points. Any small business wishing to start a customer loyalty initiative needs first to identify important customer. Use whatever tools, and data-mining techniques to locate your repeat, regular customers. Equally vital is to know your profit margins. Don’t offer discounts until you know the impact on your bottom line. Then follow the key features that provide the framework and the kick-start to those who wanted to create a process that is both positive and profitable.

1. Analyze and capture customer information. Identify customer types and purchases accordingly. Start to what the marketplace is telling you – what your loyal customer wants, how they buy and what motivates them. This data will help you in designing the ideal loyalty program that meets your objectives, targets , and delivers a return on investment.
2. Track customer behavior. By grouping customer’s types you will be able to know where your business comes from and sell to them more effectively. This will also allow you to react and respond differently and with intention to each group.
3. Develop a customer contact plan. Creating such plan provides you with a broader view and allows you to see where your activity time is being spent. Identify areas of commonality and where leverage can be gained.
4. Raise customer expectations. The best programs build excitement by letting customers know exactly what rewards they can expect and how to earn them.
5. Manage points and redemption. Invest in technology to automate customer purchases and rewards. These will allow you to easily monitor what keeps them (customer) coming back to you. No retention solution would be complete without continuous and insightful monitoring and tracking of your most valued customers’ usage patterns, purchasing behaviors and redemption rates.
6. Communicate. Launch your loyalty program and communicate its value to your target customers. This includes developing and distributing introductory kits, membership cards online and offline registration, sign-up events direct marketing, and internal staff training.
7. Evaluate. Does program bring in more foot traffic to your store or inquiries on your services? Is the conversion rate higher? Do you still have the same customer despite the heavy competition? Is the profit margin exhibit better performance? If yes, then your program is successfully managed and implemented.

And here’s the best part of your loyalty program: the data you collect can also help you improve your customer acquisition results. Just take what you learn about your best customers and tailor your marketing approach to address prospects with similar characteristics. A loyalty program which is properly designed, promoted and personalized – is a powerful and cost-effective way to complete the sales cycle, retain profitable customers and accelerate your market share. But as efforts are steered toward retention rather than acquisition, particular attention is being paid to cultivating high-value customers. But never forget the balance of customer management by putting similar effort in the acquisition of new customers. TYPES OF LOYALTY PROGRAM
While there is no “all-in one” type of program in loyalty marketing. There are four basic types of loyalty programs to choose from.

1. Rewards program – Rewarding loyal customers with awards unrelated to your product/service.
2. Appreciation program - Rewarding loyal customers with more of your own product/service.
3. Rebate program - Rewarding loyal customers incrementally according to their purchase activity.
4. Affinity program – Building a lifetime value relationship with a customer based on mutual interests and not on the use of rewards.

PREREQUISITES OF LOYALTY PROGRAM
Creating a program is a great idea but there are things to think about before you decide to build one. For starters, it requires the following three items:

1. Members - you must have a targeted, well-defined group of members who have similar values and interests.
2. Loyalty Currency – the rewards points that members earn over time. Extending this currency beyond the boundaries for which it was initially intended increases the relevance of the program to its members, enhancing members’ opportunity to earn points through more locations.
3. Marketing - you need a vehicle to communicate your program enhancements to members. Using a combination of advertising, direct mail and online channels to reach existing and prospective members is not free, so be prepared to make that necessary investment.

Congratulations! You’ve managed to grow your business and it has gotten to a point where you need to tell more potential customers that you exist. You need to tell others about what you can do for them. You need increased reach and capabilities.  The work has now gone from planning and research, to actually reaching out to your selected customer target groups.  One of the most effective tools at your disposal is the media campaign. The media is the bridge, which serves as the channel of communications carrying your message to the audience.    

ADVERTISING IS NOT WHAT IT USED TO BE

Advertising agencies started out with no designated functions.  In the beginning, there were no copywriters, no account managers, no creative directors, and no media planners.  To be advertising man then meant that you were simply a broker of ad space.  Over the years advertising became increasingly complex, eventually including media planning and buying among its functions.  From traditional mass media vehicles (such as print, radio and TV), marketers now have a variety of new media options available.  Marketers have to target their advertising budget carefully to reach the right audience at the right time.  A well-conceived media strategy is the key.  What is the right media mix?  What specific media offer access to the target market? When should advertisements air, and how often? Marketers should keep these key questions in mind to ensure that the advertisement reaches the right audience at the right time. In trying to come up with the answers to those three questions, what follows are the balancing acts to make the most effective use of the marketing budget. 

THE AUDIENCE
Media strategy explains the “how” of a media campaign. But before you begin, it is important to know the receiver of your campaign. All strategy starts with the audience . . . your customer. The person who purchases the products has direct bearing on overall advertising strategy.  The cost of delivering an advertising message is cost constraint, so it is important that you should avoid creating media strategy that has the possibility of speaking to no one or reaching no one.   Audience measurement is an important because it enables advertisers and media executives to estimate how many people are viewing or listening to their programs or commercials. This measurement provides estimates of audience size, composition, and media cost. Audience size has several possible measures:

•  Circulation: The number of physical units carrying the advertising
•  Audience:  The number of people exposed on the media vehicle (if the vehicle has pass on readership, then the audience is larger than the circulation)
•  Effective audience:  the number of people with target audience characteristics exposed to vehicle.
•  Effective ad-exposed audience: The number of people with target audience characteristics whoa actually saw the ad. There are different audience measurement companies such as Nielsen, which publish numerous reports, such as overnights and sweeps for advertisers, networks, and stations. Numerous other rating companies exist, some of which specialize in particular audiences or particular forms of programming. Some measures opinions about people and programs. 

THE MEASUREMENT
Given cost constraints, media planners try to select the media that will expose the largest target audience for the lowest possible cost.  The key notion here is the target audience. The process of measuring the target audience size against the cost of that audience is called CPM and CPR CPM, short for Cost Per Thousand, is ad impressions, an industry standard for measuring and selling ads. The ‘M’ is taken from the Roman numeral for “thousand.”  To calculate the CPM you need only two figures: cost of the message unit (page or 30 seconds) and the estimated target audience.  You divide the target audience’s gross impressions into the cost of the unit to determine the advertising budget needed to expose 1,000 members of the target. 

                               Cost of message unit  
            CPM    =  ——————————-   x 1,000
                                 Gross Impressions

 This allows a media planner to compare media based on two variables: audience and cost. CPM is used as a comparative device. The lowest cost per thousand medium is the most efficient, all other variables being equal. Oftentimes the media with the lowest cost per thousand are selected, but not always. CPM may be computed for a printed page or broadcast time.  How to Calculate CPM
Magazine: for an issue of a fashion magazine has 600,000 readers who could be considered a target audience.  The advertising unit is a full-color page and its rate is PhP 75,000.  The CPM is: 

                               Cost of page x 1000
            CPM    =  ——————————-
                            Target audience readers                               

                            75,000  x 1000
                    =  ———————-  =  PhP125
                             600,0000 

Television: a noon-time variety show has 1,000,000 target viewers.  The cost of 30-second announcement during the show is PhP 35,000.                           

                         35,000  x 1000
         CPM   =  ———————-  =  PhP 35
                           1,000,0000  Some planners prefer to compare media on the basis of rating points (CPR or Cost per Rating)  instead of impressions.  The calculations is parallel to CPM with one exception: the denominator is the rating percentage  rather than the total impressions.                            

                             Cost of message unit  
            CPR    =  ——————————-  
                             Program or issue rating 

The figures the companies collect can be calculated in many ways: ratings,  Shares, PUTs, HUTs, PURs. Rating is the audience of a particular program or station at a specific period of time expressed as a percent of the audience population. The rating may represent household viewing or a specific demographic audience segment’s listening or viewing.  

Share is the audience of a particular television program or time period expressed as a percent of the population viewing TV at that particular time. Share, then, is a percent allocation of the viewing audience and differs from the rating which is a percent of the potential audience. Share is usually reported on a household basis.  

HUT (homes using television) at a particular time, is expressed as a percent of all TV homes. HUT differs from rating because it combines all viewing, rather than identifying specific program viewing.  

PUT (persons using television) at a particular time, is expressed as a percent of all persons in TV homes. PUT combines all persons viewing, rather than reporting specific program viewing. Note that PUT and PVT (persons viewing television) are interchangeable terms in common usage.   Ignoring variances caused by rating service reporting standards and multi-set viewing, the following mathematical relationships apply after first converting rating, share, and HUT to decimals.  

• HUT x Share = Rating (HH)
• Rating (HH) / HUT = Share
• Rating (HH) / Share = HUT 

GRPs, TRPs, Reach and Frequency
The aggregate total (the sum) of the ratings is called Gross Rating Points or GRPs. The sum of the ratings of a specific demographic segment may be called Target Audience GRPs or more simply TRPs. The term GRPs is generic and may refer to household GRPs or to specific target segment GRPs.  

Reach is the number or percent of different homes or persons exposed at least once to an advertising schedule over a specific period of time. Reach, then, excludes duplication.  Frequency is the number of times that the average household or person is exposed to the schedule among those persons reached in the specific period of time. Because it is an average frequency, dispersion of frequency of exposure will differ between specific schedules and daypart mixes.  GRPs, reach, and frequency are mathematically related in the following ways:

• GRPs = Reach X Frequency
• Reach = GRPs / Frequency
• Frequency = GRPs / Reach 

There is no such thing as a perfect media plan. It is an organic creation specifically targeted to the product or service, the marketing objectives and the marketing budget.  One of the most potent tools to reach consumers is a media advertising campaign. When well conceived, a media campaign enables marketers to reach thousands of consumers simultaneously with a uniform, focused message. Bear in mind that media advertising is typically only one part of a company’s marketing mix. In the most effective marketing campaigns, the media advertising campaign works in synergy with other marketing initiatives such as sales, distribution channel strategy and customer service.  It is important for the marketing mix  to deliver a unified, focused message to the consumer. 

[published in ADEDGE Magazine by Carlos C. Castellon ]  Source: Media Math, NTC Publishing;  The McGraw-Hill Companies. Philip Kotler (Marketing Management); Wells, Burnet, Moriarty (Advertising Principle and Practice)

By: JUSTINE P. CASTELLON / Consumer Strategist

While it is an excellent methodology for many kinds of consumer research, there are times to use it and times not to.

In spite of the rapid growth of good marketing practices, some companies are still building their marketing plan based on ‘myth’ which lead them on the wrong path. And often times, they tend cut corners by eliminating a couple of steps to study their prospects. They believe marketing research consumes their time and budget. But how can you effectively and confidently sell your product? Marketing research helps evaluate your prospects, and eventually deal with them more effectively. It is a systematic collection, analysis and reporting data and findings relevant to your specific situation facing your product. You can actually obtain marketing research in a number of ways. One of the techniques that are becoming popular is the focus group discussion or the FGD. According to Kreuger (1), FGD is “carefully planned discussion designed to obtain perceptions in a defined area of interest in a permissive, non-threatening environment.” Bear in mind, focus group is not solely a marketing research but a portion of your research approaches. FGD composes a gathering of six to twelve individuals who are invited to spend a few hours with a skilled moderator to discuss a product, service, organization, or other marketing entity. The session consist of an average of one to 1.5 hours (so you can ask at most five or six questions). The meeting is typically held in a pleasant surroundings (refreshments are also served). Normally, participants are paid in a small amount for attending (gift certificate or gift packs of your product and a going-away amount of P1000). The key to the discussion is the moderator, who needs to be objective, knowledgeable on the issue, and skilled in group dynamic. He might start with a broad questions, such as “How do you feel about your current facial care product?” Questions then move to how they regard the different brands available, and their view on trying a new brand. The moderator encourages free and easy discussions, hoping that the group will reveal deep feelings and thought while at the same time, he “focuses” the discussion. It is also critical that all members participate as much as possible, yet the session move along while generating useful information. The entire discussions are recorded through note taking, audiotape, or videotape. Then, it is subsequently studied to understand consumer beliefs, attitudes, and behavior. Focus group discussion is a useful exploratory step, but it is sometimes “a misused research tools in the business” writes Jack Trout (2) in his book The New Positioning. The process can be distorted (can you imagine turning bystanders into marketing experts?) You can never get around to the quantitative data which based on a true sample of target audience. And you act on the opinions blurted out by those small groups of people. While it is an excellent methodology for many kinds of consumer research, there are times to use it and times not to.

Focus groups can be used at any point in a research program. Stewart and Shamdasani (3) have summarized the more common uses of focus groups to include: obtaining general background information about a topic of interest; generating research hypotheses that can be submitted to further research and testing using more quantitative approaches; stimulating new ideas and creative concepts; diagnosing the potential for problems with a new program, service or product; generating impressions of products, programs, services, institutions, or other objects of interest; learning how respondents talk about the phenomenon of interest which may facilitate quantitative research tools; interpreting previously obtained qualitative results.

However, do not depend solely on FGD for major marketing and budget decision. It is true that focus groups can provide a wealth of consumer ideas, tendencies, and perceptions, but qualitative data lacks statistical precision. Also, you must avoid generalizing the reported feelings of the focus group participants to the whole market, because the sample size too small. Though FGD has some shortcomings, many companies particularly in consumer goods have been using this for years, and an increasing number pharmaceuticals, publications and service organizations are discovering the value of it. It may seem abstract, complicated, and tentative, yet, focus group are being included as extension members of product management team, and their influence in the marketing strategy is growing. This methodology, when use in proper venue of your marketing planning it actually yields positive results . . . and it helps marketers to rethink their basic assumption.

REFERENCE

1 Kreuger, R.A. (1988). Focus groups: A practical guide for applied research
2 Trout, Jack, & Steve Rivkin (1995). The New Positioning: The Latest on the World’s #1 Business Strategy
3 Stewart, D.W., & Shamdasani, P.N. (1990). Focus groups: Theory and practice.

(EDITOR’S NOTE: Thanks to Carlo Aquino for the Lego presentation of FGD)

HOW TO CONDUCT AN EFFECTIVE FGD

Identify the major objective of the meeting.

• Collection of useful information for your product
• Data that can be used to set priorities, as input for your marketing plan
• Carefully develop questions

1. Ask questions generally but follow up with add-on questions if the participants appears to have more to say.

2. Get feedback on each question from at least half the group.

3. For some of the questions it is a good idea to have them raise their hands to answer yes or no. You should count the responses.

4. Also feel free to change the order of the questions if that makes more sense for your audience.

• Plan to provide the final results to participants.

Plan your session

• Scheduling : over lunch seems to be a very good .
• Setting and Refreshments: conference room is very ideal to conduct the session. Configure chairs (circle setup) so that all members can see each other. Provide name tags for members, refreshments, and box lunches if the session is held over lunch
• Ground Rules: a) keep focused, b) maintain momentum and c) get closure on questions.
• Agenda: a) welcome, b) review of agenda, c) review of goal of the meeting, d) review of ground rules, e) introductions, f) questions and answers, g) wrap up.
• Membership: select members who don’t know each other and who are likely to be participative and reflective.
• Recording: prepare either an audio or audio-video recorder.

Invite potential members

• Send them an invitation with a proposed agenda, session time and list of questions the group will discuss.
• Follow-up Calls- three days before the session, call each member to remind them to attend.
• Facilitating the Session
• Introduce yourself and the co-facilitator (if you have one)
• Explain the means to record the session.

Carry out the agenda

• Carefully word each question before that question is addressed by the group. Allow the group a few minutes for each member to carefully record their answers. Then, facilitate discussion around the answers to each question, one at a time.
• After each question is answered, carefully reflect back a summary of what you heard (the note taker may do this).
• Ensure even participation. If one or two people are dominating the meeting, then call on others. Consider using a round- table approach, including going in one direction around the table, giving each person a minute to answer the question. If the domination persists, note it to the group and ask for ideas about how the participation can be increased.
• Closing the session – Tell members that they will receive a copy of the report generated from their answers, thank them for coming, and adjourn the meeting.

Review outcomes after the session

• Immediately verify if the recorder worked throughout the session.
• Gather the notes taken and do not summarize or transcribe them.
• Review the moderator’s feedback on the focus group
• Write down any observations made during the session.
• Finalize the analysis based on your major goals or objectives of the meeting and present it to the stakeholders.

By: JUSTINE P. CASTELLON /Consumer Strategist

Customer Relations Management will help you build your business by teaching you ways to keep your loyal customers and attract new ones.

 Customer Relations Management, or CRM, is considered the foundation of any customer-focused retail strategy because it involves the management of the business’s relationships with the end users. Jos Ortega, chairman and chief executive officer of Brandlab, a management and marketing consultancy firm, says CRM encompasses the people, processes, and technology associated with successful marketing, sales, and customer service solutions. “The customer is at the heart of the whole discipline. The challenge is how to identify the customer’s needs and issues; then address them through media-neutral communication channels within their natural sphere of experiences,” says Ortega. CRM works on a simple and straightforward principle: Figure out who your best customers are and their characteristics, get customers like your best customers, and then understand the value drivers that make your best customers better. Understanding this principle will lead you to discover that customers should be treated differently depending on their value. Ortega says the key is to identify the behaviors of your current and prospective customers. “Then map out specific strategies on which behaviors you want to reinforce and which ones you want to influence another way.”

[EDITOR’S NOTE: Read the complete article at ENTREPRENEUR MAGAZINE (Philippine Edition October 2006 issue ]

CLICK TO VIEW ARTICLE

Social responsibility should be inherent in a company’s objective strategy, however, without bottom line concerns, social responsibility cannot be implemented.

The market has become oversaturated with the flood of company messages touting the hottest, the best, the newest, or even the cheapest. This has lessened the effectiveness of traditional marketing efforts and worn-out the audiences they are aimed at. Today, it isn’t enough just to send a press release to get your organization noticed. With the competition for share of voice so great, it’s crucial that you set yourself apart. Thus, customers preferences and behaviors have evolved. Generally, they wanted to align themselves with companies they admired and respected. They preferred a better relationship with the brand and what it stood for. So, marketers need to develop a clear, concise vision that is not solely for corporate agenda, but on a wider scope. The promising industry known as corporate social responsibility – or CSR … is now seen as a vital tool in promoting and improving the public image of some of the world’s largest companies and corporations.

THE ROLE OF SOCIAL RESPONSIBILITY
Corporate social responsibility, also referred to as corporate stewardship or corporate citizenship, has become increasingly important to companies competing in today’s business climate. CSR is becoming a best bet alternative to stand out from the pack and forms an instant relationship with customers. It is an avenue in which companies can realize the value of their brands, build good will, and establish lasting impressions with their customers. Brands like The Body Shop have made social commitments a fundamental component of their corporate mission, personality, organizational identity, and reputation. This mind-set is reflected in their marketing efforts and has resulted in a stronger brand reputation, a universal sense of corporate good will, and increased revenues. Anita Roddick, the founder of The Body Shop took the cosmetics industry by storm and forged a popular icon of socially responsible business . This company becomes the case studies of relationship between the brand and its role in the society. It enjoys being the front liner in the debate on social marketing around the globe. What makes this brand the icon of social marketing?

THE REAL VALUE
The weight of public relations is tremendous. When a company performs philanthropy, people are impressed and it contributes to the overall image. Thus, sales of products and/or services can only increase as expected. When The Body Shop decided to use simple, natural ingredients harvested without harm to the environment, and for the benefit of indigenous people, business escalated. Despite the absence of advertising exposures, the image of third world sensibility proved advantageous. In contrast to other personal care products, The Body Shop has the least advertising exposures for the simple reason the founder believe that products become more expensive due to its packaging and marketing promotions (thus, limiting availability to consumers who want to experience it). What more important to this company are the quality of the products, availability, and everybody can experience the pleasure of wellbeing. The bottles (which is considered as one of the main attractions) are too modest for cosmetics, and to top it all it introduced the notion of recycling. “The frugality that my mother exercised during the war years made me question retail conventions. Why waste a container when you can refill it? And why buy more of something than you can use? We behaved as she did in the Second World War, we reused everything, we refilled everything and we recycled all we could,” shares Roddick in her website (www.anitaroddick.com) about her and The Body Shop. Thus, foundation of the business environmental activism was born out of ideas like these. The Body introduced the 3R (Reuse, Refill, Recycle) campaign in all stores. What makes this brand stand out is the campaign for women in general, loving your body as the way it is . . . unlike the increasing views of women who are too focused on seeing beauty as anorexic figure, rather than self-esteem and self- confidence. In short, the brand helps promote the beauty in different angle. And that is embracing pleasure of caring for your bodies regardless of who you are, and what you are.

THE CORE PRINCIPLES
The Body Shop embraces not just social values concerning its main target audience – women – it embraces social concerns as a whole. The company is an extension of Roddick’s passionate concern not just for women, but for the world, environment, for her employees, and for the communities within which The Body Shop is located. In return, that passion evokes passionate support from customers. “Businesses have the power to do good. That’s why The Body Shop’s Mission Statement opens with the overriding commitment, ‘To dedicate our business to the pursuit of social and environmental change.’ We use our stores and our products to help communicate human rights and environmental issues,” quoted Roddick. The Body Shop exhibits a great force for positive social and environmental change through its lobbying and campaigning programs around its five core principles: Protect Our Planet, Defend Human Rights, Support Community Trade, Activate Self-Esteem, and Against Animal Testing. These principles form the basis of campaigns and community programs, as well as the ethical policies and guidelines of the company.·

· Protect our Planet
In 2002, The Body Shop ran a global campaign with Greenpeace International ‘Choose Positive Energy.’ The campaign tackled the issue of global warming and the pressing need for world leaders to promote and invest in the use of renewable energy. The campaign petition of 1.6 million signatures was presented at the World Summit for Sustainable Development in Johannesburg. It furthered the commitment to environmental sustainability through investment in renewable energy, funding of energy efficiency projects in the developing world, and incorporating a proportion of recycled plastic (post consumer recyclate) into all packaging

· Defend Human Rights
Among the founding companies of the Business Leaders Initiative on Human Rights (BLIHR). This initiative was founded in 2003 to help lead and develop practical company responses to the human rights issues facing international business.

· Support Community Trade
The community trade program is based on fair trade principles. Its objective is to make a positive economic and social difference within individual communities, in return for natural ingredients and handcrafted accessories. The program works with 36 community based suppliers of raw ingredients and accessories in 23 countries.

· Activate Self Esteem
Working with leading organizations in the provision of support and services, the company have joined their effort to ‘Stop Violence in the Home’. The Body Shop has already established a strong reputation on the domestic violence issue through campaigns in Canada, the USA, the UK, West Malaysia and the Philippines.

· Against Animal Testing
The Body Shop was the first company to be certified against the Humane Cosmetics Standard, which attests to the effectiveness of our Against Animal Testing Policy and the monitoring processes that underpin this.

WALKING THE TALK
It is true that putting a caring face first, companies are discovering the commercial benefits of being seen as socially responsible, but their activities must be in tune with their brands, otherwise, consumers are not convinced. Remember, the customers support you because of your common goals, and whatever your choice (being environmental-friendly, or humanitarian advocacy), you have to play it by heart. Social responsibility should start from the inside of the company’s activities. Just like The Body Shop, it starts from belief in the company’s core values. It pervades the organization until eventually, it profoundly influences the corporate culture. You can’t be a wife-beater if you’re a The Body Shop employee (a company, which supports human rights), and you’re also expected to attend tree-planting sessions every year (they’re also an environment-friendly organization). And these are all hidden from the media. No tarpaulins or any non-biodegradables in all merchandising displays, despite the high cost of biodegrable materials. And you can see the result . . . The Body Shop is synonymous to social marketing. The Body Shop is social marketing.

BALANCING BOTTOM LINE CONCERNS
No wonder, with the success of The Body Shop in this category, companies are beginning to explore this area of marketing. But other regard this as an accessory to its marketing communications. CSR should not be an optional ‘add-on’ to business core activities —but about the way in which businesses are managed. Social responsibility should be inherent in a company’s objective strategy, and to aid the well being of society. However, without bottom line concerns, social responsibility cannot be implemented. Make a profit first before you can contribute to a society in dyer need. Hence, when the business entity is profiting, social integrity can be regarded as preeminent concern. The Body Shop core values inform the way that they do business. They are entirely consistent with strong and sustained financial performance, and that profits and principles must be achieved in order to sustain the long-term future of the company.

[published in AD EDGE, May 2006]

By: JUSTINE P. CASTELLON /Consumer Strategist

Social marketing is being practiced lately to differentiate brands, and hopefully shorten the road to brand equity. However, the common pitfall of some marketers is the way they treat ’social marketing’. . . just like any marketing strategy.

What’s the goal of a social and ethical marketing?
Social marketing helps you build brand advocacy. This is the stage where you have already built your relationship with your customer. Your loyal customer buys beyond the product or service. They support you because of your common social goals . . . for example . . . being an environmental-friendly company or the supporter of humanity or any other forms of socially-responsive campaigns. Whatever your choices, you have to play it by heart.

I noticed some new companies who practiced this kind of marketing, but they forgot the first rule . . . walking the talk. One company that supposedly claims being an environmental supporter in all its campaigns and promos, uses tarpaulin materials. Tarpaulin is a non-biodegradable material which hurts mother earth. Some companies are proud to support human dignity, yet, they have a series of labor cases filed against them. Others donate cash to support socially-responsible agencies, and shamelessly broadcast it in front of its target audience.

One of the most successful social marketers is The Body Shop. The four core values are well-communicated to its target audience. And all campaigns are well-planned all through out. I was lucky to be one of the marketers of The Body Shop. As a common marketer during my first week in my job, I included PR and media blitz in one of my values campaigns. My bosses (both from regional and local) pointed out that when you do social projects, it has to be done discreetly. Social marketing is done from the inside. Social marketing starts from belief in the company’s core values. It pervades the organization until eventually, it profoundly influences the corporate culture. You can’t be a wife-beater if you’re a The Body Shop employee (a company, which supports human rights), and you’re also expected to attend tree-planting sessions every year (they’re also an environment-friendly organization). And these are all hidden from the media. No tarpaulins or any non-biodegradables in all merchandising displays, despite the high cost of biodegrable materials. And you can see the result . . . The Body Shop is synonymous to social marketing. The Body Shop is social marketing.

By: JUSTINE P. CASTELLON / Consumer Strategist

Shock advertising or “shockvertising” is the use of fightening, offensive, taboo, and emotion-provoking words, images or concepts to sell a product or an idea. They are meant to nail the consumers’ scanning mode and wandering attention— the initial shock invariably burns the accompanying brand name into the viewer’s memory. If not done properly though, objectionable ads may elicit such negative emotions (i.e. fear, anger or disgust) that the buyer ends up avoiding the product or the company entirely.

Clothing giant Benetton is an example of a company that has used shockvertising to its fullest. It uses institutions that advertisers normally stay away from—churches (a priest and a nun kissing), sex (a black stallion mounting a white mare), and even prisons (their “We, On Death Row” ads include interviews about the inmate’s thoughts and dreams as they face death.) While the campaign may have reaped public criticism along the way, it made their products more popular and generated enough curiosity and interest, which later translated to sales.

But are Pinoy consumers (who are generally more conservative than their Western counterparts) ready for shockvertising?

“Yes they are,” says Jos Ortega, Chairman and CEO of BrandLab Inc., a branding strategy company. “On the contrary, it is us campaign developers and the approving parties (advertisers) who are not ready yet.”

The key is mixing shock with humor “to get away with it.” For example, Baygon’s “Mating” ad created by BBDO Guererro Ortega showed two cockroaches having sex with the suggestive song “Afternoon Delight” playing in the background. Towards the end of the ad, the message was “Time for Some Birth Control” appeared on the screen. So although the ad focused on insects’ sexual activities, the humorous message at the end overturned the initial shock; plus, it went back to the product’s core message—killing the entire population of cockroaches, including the next generation of cockroach eggs—so the audience immediately got it.

Putting values into your shock ads also help. One example is The Body Shop’s “Ruby” poster ad, which showed a nude doll with bulging proportions. Launched in 1998, this ad was even banned after one mall patron in the US said his daughter had been traumatized by seeing it. Overall, however, the ad generate positive feedback because it aimed to boost women’s self-esteem. “The shock was meant to magnify the increasing views of women who are too focused on seeing beauty as anorexic figure, which should not be the case,” says Emmanuel del Rosario, CEO of The Body Shop in the Philippines. The ad celebrated the meaning of true beauty. It appealed to the customers’ emotions, thus created the the concept of emotional branding. It attracted not just through the functional aspects of products, but through the emotional aspects, which is what branding is all about.

So, when planning to use shockvertising, map out your strategic plan carefully:

Establish your objective of using it—to grab the consumers’ attention, not turn them off completely. Then present one central proposition. In the case of “Ruby” ad, women’s self esteem was the focus of the material. The message was the main selling point, and the disproportioned doll image became secondary.

Finally, support the central proposition with your brand story in the succeeding ad campaign. To make the campaign more credible, The Body Shop never uses celebrities and models in their next materials. They used real people, ordinary citizen like their store staff as models.

Remember that there is a fine line between being tasteful and unnecessarily using shocking images and copies. Tasteful shock advertising will successfully make its point, and there is a clear reason for the use of whatever was shocking.

Of course, those who subscribe to the mantra “There is no such thing as bad publicity” will always say that shock advertising (no matter how offensive) is the only way to get the message across. “But never forget that shock works only for brands that link back to the brand values; otherwise you’ll end up just shocking the viewers.” ended Ortega.

ABOUT THE AUTHOR:
Justine Castellon, a writer and consumer strategist for her own firm Market Place 2.1 specializing in marketing strategies. You may email her at marketplace21@yahoo.com

[published in ENTREPRENEUR MAGAZINE: April 2006]

By: JUSTINE P. CASTELLON /Consumer Strategist

There’s uncertainty in the air. The Philippine economy is wobbly, businesses are compelled to tighten belts and customer loyalty is slipping away. On top of that, the value of the peso has plummeted and consumers aren’t able to purchase as much with that peso as they could have last month or last year. For businesses and consumers, weathering the daily grind would have to involve more than rolling with the punches.

Most businesses are planning superfluous efforts to ride out the tough times. Some are cutting back on marketing expenses and waiting until the economy improves, while some are crafting more creative and aggressive strategies. We see proliferation of products and services complicate consumers’ buying behaviors even more. The made-in-China 168 stores in Divisoria corners the market of toys and gifts and other household items for the budget-conscious. Then there are the export-over-runs in tiangges, and the Salvation Army’s clothes in the ubiquitous Ukay Ukay stall. Original products from
Japan in All 88 stores in malls offer competitively lower prices in household items. There are too many choices for consumers out there, and companies left and right are scratching their heads, formulating the best marketing tactics to get hold of what little resources consumers are willing to spend. This is the race to the bottom.

When dealing with the consumers’ ”downgraded” budget and, at the same time, addressing their demands on better deals, the instinctive response for many marketers is to cut prices. This silences customer complaints, helps cover fixed costs, and buys time until the economy rebounds. Some businesses enter the battle of price wars believing that once the dust has settled, prices can rise again.

Josiah Go, Chairman and Chief Marketing Strategist of Mansmith and Fielders, Inc., and author of several bestselling marketing books, says price wars happen “when competition in an industry lowers prices of goods, companies hoping to attain competitive advantage.” It is when a retailer under-prices the competition, which can create a cycle of two or more retailers lowering prices in turn to undercut the other.

It’s necessary to understand why a price war is occurring—or why it may occur. According to Go, price wars occur when there is an identical way of doing business (like I.T. retail shops clustered inside malls); when a company enjoys lower cost or have other profit sources (like SM charges product highlight fees which smaller stores are not capable of imposing); when a market challenger wants to gain new customers and critical mass fast (like Sun Cellular’s unlimited usage); when a firm’s business model is in the repeat business (like HP selling the printers at lower prices to gain an upper hand in the more profitable ink cartridges business); or when a company wants to weaken the core profit area of a competitor. “And it happens when a competitor is unaware of other options available to them or when they have no other choice, which is almost rare,” he adds. Whatever the reasons, the bottom line of price war is winning the trophy – consumers.

The race is on. And it’s win or lose.

There are price merchants that will market almost anything for close to cost or below to try and gain market share. Sun Cellular of Digitel Mobile Philippines Inc. intensified the price war among mobile phone operators with its 24/7 unlimited call and text service. This aggressive marketing strategy has helped the newcomer grow its subscriber base tremendously prior to the launch of the campaign. The “price-cutting momentum” drives other competitors to follow the initial move. Globe Telecom Inc. and Smart Communications, Inc. followed suit with a similar scheme, their unlimited text and call promos.

A price war is not simply a matter of responding to a competitor’s aggressive price move. It drives other products and services to work more on their value side. It polarizes the customers to either the price side or the value side, and leaves most of them confused when they are trying to make buying decisions. Today the market is split between those who buy for low price and those who buy for value. Relatively few customers stand in the middle and step in both directions.

“Competitors in an industry are actually changing the consumer attitudes permanently with their strategies,” says Go. The consequence of shaping consumer perceptions and consumer behavior is that “consumers are swayed into not to buying a product or service when the price is higher.“ Price war affects the major components of retailer performance: store incidence and basket size (spending per shopper). Moreover, a price war makes consumers more responsive to prices.

Go stresses that the idea of lowering prices is to recover profit from volume. “However, we can see rampant violations because many companies are selling goods at such a low price not as volume discount but as tingi. Wouldn’t it be better to have reasonable prices and high volume at the same time?”

Race Over?

Understand who’s in command to win the race. A price war brings an advantage to businesses trying to gain access to market share, although this is not always applicable to all businesses. Price reduction should not be viewed as a Band-Aid solution. Rather, it has to be aligned with your long-term solutions. Company factors such as cost structures, capabilities, and strategic positioning should also be examined carefully. Cost structures may be affected by changes in technology or business practices, which in turn may tempt a company to cut prices in a manner that will trigger a price war.

Some businesses believe that they will be driven out of business if they do not compete with the price cuts. What’s more dangerous though, is that they can run themselves out of business by competing on their ‘competitors’ terms: low prices! The easiest way to compete with a price merchant is NOT to compete on price. “Do not defend price. Stress value when customers ask price,” writes Thomas J. Winninger in his book Price Wars (How to Win The
Battle for Your Customer). “Consumers judge value by what they get in return for their money.”

Take the super brands’ approach in price war. Instead of a price reduction, they develop creative and long-term strategies. Unilever builds strong a strategic alliance consisting of its brands (bundling and co-branding promotions). Sara Lee restructures the organization to become consumer-driven instead of product-driven (stronger relationships with its customer base). And Nestle goes beyond the norms of P.O.P (Point of Purchase), it aligns the overall strategies to become consumer-centric. Their common denominator is customer value. And value is subjective . . . this component is the golden key to success in the battle of price war.

So when your customer tells you that your prices are somewhat higher as compared to other brands, they are not saying that they’re not going buy. They’re giving you the chance to explain “value”.

TheAlternative Route to Winning the Race

Sure, rock-bottom pricing can draw customers into your store, but what happens after that? According to Winninger, the business-consumer relationship doesn’t end with a purchase. It begins with a purchase. The purchase of an item should be the threshold to a long-term relationship that is fortified by verification of the quality of your business’ service and delivery. Crafting the right marketing strategies and reinforcing sales while avoiding price cut will not only strengthen your business now, it will also prime it for growth later. So, before you race to the bottom, and engage in price combat, find an alternative route first. Josiah Go shares the Mansmith and Fielders’ 12 Options to Price Wars:

1. Find a value segment that is not price sensitive.
Waters Bio Mineral Pot is the leader in the premium segment of water purifiers in the
Philippines. At the time of price wars among water refill stations and purifiers, it did not resort to cutting prices because it has established itself in the value segment early. Waters Philippines (www.waters.com.ph) continues to grow in the last few years, including doubling of its sales volume in the first quarter of 2006.

2. Redesign the product.

Hortaleza
Beauty
Center decided to launch their own multi-brand private labels instead of selling the same items as any other personal care stores. This strategic move paid off as the sales of their own higher margin labels is now over 70% of total sales versus a measly 3% three years ago.

3. Introduce flanker brands.

When Beer na Beer attacked San Miguel Beer with lower prices in 1988, San Miguel wisely pushed their lower priced Gold Eagle brand and shielded themselves from possible revenue and profit decline.

4. Be the first mover geographically.
The first Waltermart store was in busy E. Rodriquez Avenue in
Quezon City in 1993. Not contented with price wars from neighboring stores, Waltermart decided to open 10 stores in the Laguna-Cavite area ahead of the big supermarkets, giving them a head start advantage without resorting to price wars to gain and maintain customers.

5. Offer free goods to improve value proposition.

When Ph Care attacked Lactacyd with a much lower priced product in August 2002, the latter did not adjust their pricing strategy. Research told the Lactacyd marketers that they enjoy a high loyalty level, thus, Lactacyd simply offered more products for the same price or free gift items for every purchase. Today, the market for intimate wash has expanded to more than double the market size 3 years ago and Lactacyd continues to grow in volume while enjoying decent profitability from a well-calculated “no price war” decision.

6. Bundle different products together.

Buffet lunch and dinner are examples of bundled products. Buying a product individually will cost a company more but buying it as a whole without any price breakdown for individual components makes it hard for clients to guess the price of each individual product. PLDT resorts to this strategy with some clients.

7. Establish alliance with another companies.
Marketing alliance means that a co-marketed product becomes more valuable than taken separately. For instance, Compaq laptops had alliance program with Kodak digital cameras in the past, offering better value for money when bought together.

8. Offer loyalty programs.
Appliance manufacturers offer dealer incentives like cars and trips and these dealers have commitments to the manufacturers, thereby shutting out their competitors offering lower prices. Colgate also offers incentives for supermarkets granting them bigger shelf space, thus, avoiding the probability of a clash with lower price competition without access to shelf space.

9. Communicate superiority.

Verbatim tries to be associated with dependability thereby implying that buying a generic or lower cost diskette means the risk of not getting the data when needed.

10. Offer a better image.

Rustans Department Store is differentiated in that its gift-wrapping paper offers the prestige association enabling any gift recipient to feel more important than getting a gift from just any other corner stores.

11. Reengineer to gain lower cost.
In a price war, a company with lower costs will usually still end up being more profitable than competition. Thus, if Philippine Airlines will launch a price attack versus Cebu Pacific Air, the latter more efficient “passengers per employee”, among other cost-efficient measures will push them to a better financial position.

12. Agree with competition to compete based on other variables like service (if local laws would allow).

When all else will not work, consider a friendly dinner with competition to stop the price war and rechannel competitive energies to other areas like service, value-added and the likes.

Certainly, these tactics change from business to business and from product to product. Price is only one thing in the list of value items. Price wars are a fact of life—whether we’re talking about the fast-moving goods in the supermarket counters, the telecommunications’ products and services, or the advertising spaces in glossy magazines. If you’re not in this race yet, you probably will be soon.

EDITOR’S NOTE: read the complete cover story of Ad Edge May 2006

By: JUSTINE P. CASTELLON /Consumer Strategist

Red tags that scream, “On sale,” “50% off,” “Buy One, Take One,” and “Free” have a hypnotic effect on shoppers. They cause many unplanned purchases, which never fail to make many retailers happy, particularly in these trying times. For the entrepreneur, these tactics tend to build a base among patrons and eat into the competition’s market.

These incentives, collectively known as promotions, entice customers to buy more, buy now, or buy more now, offering in exchange various temptations that may come in the form of discounts, bundles, free samples, and coupons. They are offered either after you buy, before you buy, or during the sale. Some promos may require simple acts like entering the store, others a complex set of acts such as performing increasingly difficult tasks at various stages of the sale.

But retailers want exceptional or ‘wow’ promotions that can cause the customer to rush to the counter, buy the product, and avail of the promo with little or no regard for the item. You may develop and implement one using any or a combination of these methods:

• Freebies. Customers love to receive free items and services. The Body Shop is famous for its free makeover to customers who try out their products on promo. The additional benefits: This is an exceptional way to do product sampling, and the best way to demonstrate how to use the product.
• Instant contests. Raffles and similar gimmicks attract new customers and help you build a mailing list, which may be used in future offers and promotions. Customers prefer winning on the spot from having to wait for a raffle in the future. Many groceries offer small prizes for certain purchases.
• Charity works. Touch the customers’ heartstrings and you create an emotional bond with them. For instance, give a portion of your sales to favorite charitable institutions.
• Community involvement. Community service, especially in your own area of business, is a quick way to get positive publicity. Be a good neighbor to your community. Encourage recycling your product’s packaging or wrapping material.
• Celebrations. Join Mother’s Day, Independence Day, Earth Day, and other occasions. Give regular patrons personalized greeting cards and other celebration offerings. This personal touch fosters loyalty and helps important customers remember your name.

BRAND MANAGEMENT
Promotions are short-term and temporary, while building brand awareness is a long-term process. Here are some tips on how to make a sales promotion an effective brand-building tool:

1. Make sure that the promotion is justified. A new product and a company anniversary make perfect occasions to run a promotion with your brand name front and center. Thematic ones like Back-to-School or Christmas are not enough – they are too generic, and sales normally pick up during these seasons.

2. Tie the promotion to brand image. Great examples are the San Miguel Beer’s Oktoberfest or Red Horse’s Musiklaban. An outstanding promotion kills two birds with one stone: raise sales and build brand awareness.

3. Aim it toward a specific, measurable result. Know the desired result and understand the product’s or service’s overall marketing context.

4. Evaluate promotions vis-à-vis the before, during, and after sales. If sales continue to go up after the promotion, then some customer gain has been achieved. Your promotions work best when your competitor’s customers try your product, find it to be the better choice, and buy it.

5. Find out if it was a “profitable” promotion. It is if it exceeds the profits that would have been made without the promotional offer.

[This article was published in Entrepreneur Magazine ]

Justine P. Castellon is a consumer strategist for her own firm Market Place 2.1. She has published articles on branding, advertising, lead management, and customer relationship management. She may be reached at marketplace21@yahoo.com.

By: JUSTINE P. CASTELLON /Consumer Strategist

Marketing must be run like a manufacturing plant with accurate schedules, high quality production and results measured in revenue.

Are you having trouble justifying your marketing plans and budgets to the CEO? Are they bugging you with accountability issues and results? These questions are often scribbled in your expensive worn-out leather planner. As you work your way in increasing your value to the company and hopefully increase your pay and bonus, you can’t avoid dealing with the most important factor in the financial realm of every organization . . . scoring in the return on marketing investment. Since marketing is already the single largest expense for most companies, it becomes the center of attention in the financial division. Return on marketing investment or simply ROMI is one thing your CEO wanted to discuss with you when you present your marketing plan. While marketing campaign is important piece of your plan, many companies demand to know more about the expected and realized return of investment. It always ends with “what’s the return?”

While marketing expenditures require a clear and concise justification, still some marketers proceed without a clear goal in mind. They continue spending without the ability to measure the definite success. “They are made with no clear connection between them and the goal of generating more sales. They are simply made with the hope that more sales will come in the future. Often they are made because the marketing people want an ad that makes them look good. They want a product slick that simply shows off their design and creative talents,” excerpts from Guy R. Powell in his book ‘Return on the Marketing Investment’. Powell defines ROMI as “the revenue (or margin) generated by a marketing program divided by the cost of that program at a given risk level.”

The Elements Of ROMI In any investment decisions, marketing expenditures must consider four basic elements: · Expenditure or investment · Returns · Risks· Hurdle rates The projected results (returns minus costs) must exceed a certain investment hurdle rate for a given level of risk. The difficulty of comparing investments in marketing with other more operational investments is that marketing investments lead to more sales. Compared with other investments that generate exactly the same profits, investments that generate higher revenue are more highly valued than those generating the same level of profit through reduced costs. Remember, marketing budget is not a given. You must look after marketing as a sound business investment. The company ask you to defend the marketing budget and bottom-line terms, and marketing spending is considered a budget column not to be taken for granted, nor should it be! Marketing is an investment but unless you can effectively communicate the bottom-line of your marketing spending, you face losing your budget and the confidence of your management.

Marketing budget must be made with a clear goal in mind, supports the financial goals of the company. It generates brand recognition, that will later drive more revenue. Marketing budgets are investments that will lead to future sales.

THE ROMI CALCULATOR
NUMBER OF IMPRESSIONS x EXPECTED RESPONSE RATE = LEADS GENERATED PER YEAR x LEAD-TO-PROPOSAL % = NUMBER OF PROPOSALS x CLOSE RATE = NUMBER OF CUSTOMERS x ANNUAL CUSTOMER VALUE = REVENUE – TOTAL MARKETING EXPENSE = ROI.

Compute how many leads your program should generate how many customers you should convert, and therefore your return on investment. To calculate your marketing plan’s expected ROI, you need to compile the following information in your ROI calculator:

Marketing Vehicle Used. Include all marketing expenses. Take every marketing vehicle such as labor (both in-house and out-source staffing), brand awareness activities (public relations, advertising, product presentations, event marketing), marketing communications (broadcast, print, radio and web), CRM and direct marketing activities (direct mail and email), and promotions (loyalty programs, in-store promotions, rewards and incentives.)

Number of Impressions Made. Enter the number of impressions for each marketing vehicle each month. Impressions are the measure of the size of the audience for every vehicle used in certain time. How many readers will read your ad or press release published in each publication? How many attendees and participated in your event marketing? How many loyal customers involved in your rewards or incentive programs? How many flyers or brochures distributed? These are the things you need include in the expected impressions for a vehicle. If you can’t quantify it, use “0″ as the number impressions and include its cost in your equation.

Expected Response Rate. Response rate refers to the ratio of number of audience who answered/participated in your marketing vehicle divided by the number of targeted audience. It is usually expressed in the form of a percentage. Some marketers used their existing metrics. If you do not have a benchmark, you will need to make a conservative estimate based on your best guess or better yet hire a consultant to guide you.

Annual Cost. Calculate the annual cost for each implemented vehicle.

Average Lead to Proposal Ratio and Average Close Rate. This is the percentage of leads that become proposals on average. You will also need to know your company’s average close rate (the average percentage of proposals, bids, or cost estimates that you win.)

Average Annual Customer Value or Sales. Calculate (or at least get the estimate) the average annual customer value in terms of the average sales per customer per year.

THE BALANCE SCOREBOARD.
With the stir to financial accountability in marketing operations, it’s now more important than ever to measure the investment and returns in your brand over time. Learn to confidently optimize your marketing plan by balancing marketing science with art, experience and intuition—with measurable results! Translate marketing efforts and activities into financial opportunity on-demand and on an on-going basis. Identify and quantify the business value of every marketing effort, constantly adjust and optimize marketing spend, while at the same time justify and secure marketing budgets. Just like in any investments, it is essential to understand and plan where the financial return from increased sales is expected for each investment.

Understanding and using ROMI is the key to implementing more effective marketing campaigns that positively affect the bottom-line. It is a means for confirming your marketing intuition and presenting your ideas in finance terms. It is no longer pretty graphics and big ad budgets. Marketing must be run like a manufacturing plant with accurate schedules, high quality production and results measured in revenue. Your marketing plan must show its’ accountability and ability to measure the definite success. [published in AD EDGE May 2006]

By: JUSTINE P. CASTELLON /Consumer Strategist

There was a time when direct mail was considered the poor stepchild of more sophisticated forms of advertising, and upscale businesses did not regard it as a viable, elegant solution to their marketing problems. Direct mail ranges from the catalog that arrives along with your letters and the advertisement inside your billing statement to the flyer slipped under your windshield and even to the salesman knocking at your door.

Savvy marketers soon realized, however, that mass direct mail could provide immediate sales results, create a personal connection with customers, is more cost effective than billboard or display advertising when the object is to get immediate results, not just to create awareness. Perhaps most importantly, direct mail lends itself to greater measurability and to testing variations in form and content to determine the best approach. Today it is universally regarded as one of the most effective forms of advertising especially with its latest approach in the new economy . . .

THE FIRST LEAD GENERATION MEDIA
Catalogue Marketing Catalogue marketing is the most common and the first in-line for direct mail. Catalogue marketing occurs when companies mail one or more product catalogues to selected addresses. They may send full-line merchandise catalogues, specialty catalogues or business catalogues, usually in print form. Catalogue marketing is the popular medium because it permits target market selectivity, can be personalized, is flexible, and allows early testing and response measurement. In most cases, this means moving that customer from the education and consideration stage to the purchase stage. The distinguishing characteristic, of course, is the call to action. Usually this call takes the form of a telephone number, Web site address or mailing address – often a combination of the three.

The most common catalogue marketers are Avon, who regularly mails consumers the latest in its product line including the best-value offers. Gerber, on the other hand educates its target audience by way of sending “The How to Feed Me Handbook”. And of course, Del Monte Kitchenomics’ best recipes. Some companies distinguish their catalogs by adding literary or information features, sending swatches of materials, operating and special hot line, and answer questions, ending gifts to their best customers and donating a percentage of profits to good causes. The editorial contents surely set apart your catalog from your competitor. Catalogue marketing aim to receive an order from the prospects.

VIRTUAL CALL CENTER TECHNOLOGY
Telemarketing
Telemarketing describes the use of telephone operators to attract new customers, to contact existing customers to ascertain satisfaction levels , or take orders. In the case of routinely taking orders, it is called telesales. Most telemarketing systems are fully automated. Automatic –dialing and recorded-message player (ADRMPs) can dial numbers, place a voice activated advertising message, and take orders from interested customers on an answering machine device or by forwarding the call on the operator. Telemarketing is increasingly used in business as well as consumer marketing. Companies like Globe, Smart, PLDT and Bayantel use telemarketing to reduce the amount of personal selling needed for contacting its dealers. Telemarketing, as it improves with the use of videophones (in some more advanced countries) will increasingly replace, though never eliminate, more expensive field sales calls. Today, a remote agent and telecommuting workforce is made possible and more reliable because of the growth contact centers as well as for call centers of the future (virtual call centers).

FLEXIBLE, INNOVATIVE OPTIONS
Kiosk Marketing
Some companies have designed “customer-order-placing machines” called kiosks (in contrast to vending machines, which dispense actual products) and placed them in stores, airports, and other locations. Although it is not yet fully implemented in the Philippines but some are already enjoying the real time transactions to their customers . Globe Autoload Advantage is an exciting member-get-member program for both Globe Handyphone Prepaid and Touch Mobile subscribers. It is a convenient over-the-air reloading of subscriber through authorized retail outlets or kiosk. Autoloading works just like it sounds: no dialing, no scratching of call cards, no keying in of PINS. It’s hassle-free reloading for your prepaid account anytime, anywhere.

VIRTUAL TV
At-Home Shopping Channels
Some television channels are dedicated to selling goods and services. Mostly, these home-shopping channels, which broadcasts 24-hours a day, consists of program hosts offering bargain prices on such products as, collectible dolls, jewelry, cosmetics, and power tools. Viewers call in their orders on a toll-free number and receive delivery within 48-hours.

ADVENT OF E- MARKETING SERVICES
Email and Internet Advertising
The rise of the Internet produced a gold rush not only in commerce, but in new expectations for online marketing. Many of those expectations were inflated: not all Internet marketing has proven to be created equal. Although successful while still a novelty, Internet marketing response rates are quickly eroding. Users are inundated with banner ads everywhere they go on the Internet.
While it is true that advertising on vertically targeted portals can produce better than average click-through rates, banner ads can be a difficult medium to achieve marketing goals. Marketers looking for an effective way to reach customers online are turning to e-mail. E-mail has quickly become a communication standard and the Internet’s most popular application. Both the number of e-mail users and the usage rates are continuing to grow exponentially.

FAST TIMES ON THE MINUTE EXCHANGE
SMS Advertising in Mobile Marketing
Recently, the focus seems to be on mobile marketing services in the Philippine marketplace. Realizing the significance of this mode of marketing, marketers are increasingly opting for mobile marketing techniques to connect with their target audience—directly. And with around more than 20 million subscribers in the country, the concept of mobile marketing services is rapidly gaining momentum,
The rise of the text messaging in the Philippines produced a gold rush not only in commerce, but in new expectations for mobile marketing. The Philippines could be the world’s text messaging capital, with reportedly 50 million text messages sent out every day. Even the crippled economy got a boost from text messaging.

When you hear your mobile phone beep these days, it’s more likely to be a mobile marketing service. It could be new movies, concerts, freebies, you name it! The phenomenon of mobile marketing is, of course, the age-old practice of direct mail remade in modern dress. Mobile Marketing is one of those things that’s easy to do in response advertising— but hard to do well. When it is done right, though, mobile marketing is one of the most effective marketing tools available to businesses, regardless of the industry.

RESPONSE OBJECTIVES
Digital delivery might be rewriting business rules and redefining direct marketing. And the advent of electronic forms of communication such as e-mail, the Internet, and the SMS (short message service) have given marketers new and even more cost effective ways to become more focused and granular in their marketing efforts. But still, creating and managing a direct response advertising campaign whether it is from the traditional direct mail or the technologically-driven mobile marketing services, is about three quarters science and one quarter art. That’s what makes it so much fun.
The key measure of any direct response campaign is the term “effective”. To be effective, a direct response campaign must have a clearly defined core objective – and that objective must be set before doing any creative or media planning work. Direct mail campaigns have four possible objectives:

• Generating Qualified Responses Potential customers either call into a toll-free number or register at a Web site. When people call in, operators can collect contact information and get more data about that person’s particular needs. This information can either be used to mail an information packet, or salespeople can follow-up directly.
• Converting Prospects Through this objective, companies can convert prospects into customers directly. Rather than just collecting data for follow-up, operators can take orders. Generally, this objective works better for more intuitive products and services. Anything requiring extensive customization, such as the installation of a complex piece of software, would probably be better handled through a follow-up call by a salesperson.
• Building Customer Relationships Direct response campaigns can be used for existing customers as well. For example, if a company were was set to launch an upgraded version of its software package, a direct response mailing to current customers would help generate upgrade sales. Or, the customers could call in to learn how to use a new feature in the existing software.
• Developing a Customer Database This is closely related to the first objective, but focused on current customers rather than prospects. Often, as companies grow they start using more sophisticated database software to manage customer accounts. When transferring data from an old system to the new one, there may be gaps in the data about certain customers such as a lack of e-mail addresses. The direct response campaign would encourage those customers to call in and update their account information, perhaps in exchange for a premium.

Direct Mail offers several advantages over a more traditional advertising strategy. The most obvious, of course, is that it encourages customers and potential customers to pick up the phone and call. As a result, the return on investment is more tangible, and more immediate. When managed properly, a direct response campaign can effectively generate leads and sales while at the same time enabling marketers to get the most from their marketing spending.

(published January 2005 Ad Edge Magazine)

By: JUSTINE P. CASTELLON /Consumer Strategist

If you are starting a new business or launching a new product line, how do you go about acquiring new customers? Once you have a core base of good customers, how do you go about finding more customers like the good customers you have? How do you strengthen the relationship with your good customers, build their loyalty and make them heavier buyers from you? How do you prevent your good customers from leaving you for your competitors?These are the key questions driving new strategy orientation in many forward-thinking firms today.
There are many terms being used to describe this new strategy orientation, but perhaps the two most common terms are “Customer Relationship Management” (CRM) and “Direct Marketing.” CRM and Direct Marketing are rapidly moving into the core of consumer and business-to-business marketing practices, simply because they represent the single most compelling growth strategy in today’s highly competitive landscape.CUSTOMER PROFILING
Strategies in the New Customer-Centric Economy
As we enter the 21st century, the new economy is becoming increasingly customer-centric. Building long-term, loyal relationships with customers is the key to profitability. Thus, when Averell Gaspar, Operations Manager of Lilly Philippines (makers of the bestselling anti-depressant, Prozac) refers to the new economy as a “relationship revolution,” he is describing the impact of technological and economic change on business relationships.“For me, CRM plays a big role. Any company which can maximize its potential will win in the marketplace.” Gaspar explains that there are three areas where CRM can impact the business: customer service, market research and business processes. CRM can revolutionize sales force effectiveness and processes that can lead to higher productivity.
The concept of CRM is based on the simple activities of (a) figuring out who your best customers are, (b) using transaction data analysis to determine the characteristics of your best customers, (c) getting more customers like your best customers, and (d) understanding the value drivers that make your best customers better. These activities are then put together to implement a strategy where different customers are treated differently depending on their potential value.If there is a way a CRM can consolidate information gathered through various market research activities, sales and even sales representatives’ inputs, and make them accessible to the decision-makers fast, then the organization can react quickly and exploit opportunities as they occur. “A lot of companies are now using PDA-phones mostly for sales-call reporting purposes but I can see that in the future, these gadgets will be equipped with customer-information and even interactive systems that link them directly with customers’ need for info, products and service”, added Gaspar. This new technology tool allows for a more dynamic profiling of opinion leaders (top customers), thus one can address customers’ needs and wants more seamlessly. “Speed and the ability to target specific markets to customize strategy will lead to higher productivity and better ROI.”TAILOR-FIT STRATEGY
The primary CRM focus areas support the requirements of the customer-facing processes of a business: By using CRM, marketers can also access the necessary business intelligence to better understand which campaigns are working and which customers to target with a specific offer. This type of information reduces wasted time and money on sending out the wrong promotion to the wrong customer. With the right profiling of customers, it is to better understand which campaigns are working and which customers to target with a specific offer. One of the best tailor-fit strategies is Avon.

Avon is a global manufacturer and marketer of beauty and related products. Avon’s business is primarily comprised of one industry segment, direct selling, which is conducted worldwide. Sales are made to the ultimate consumer principally by independent Avon Representatives. Avon understands the importance of financial independence and self-fulfillment of women globally. They focus their strategies by dedicating their entire supports to women – not only in beauty – but health, fitness, self-empowerment and financial independence. Avon knows who their primary target audience is, and understand the psyche of this market perfectly. The company capitalized on this segment and built a strong sales and marketing strategy . . . and that’s going direct. Avon Representatives describe as self-empowered women, a group you want to be associated with. They attract, retain and develop loyal customers, heighten marketing, sales and service efficiencies, cut costs and boost profitability.
Today, Avon is in the list of Fortune’s “Most Admired Companies”, featured in Business Week as one of the “100 Most valuable Brands”, with more than 4 million sales representatives in 100 countries. With the success of Avon, many marketers see direct marketing as playing a broader role, that of building a long-term relationship with the customer. Direct marketing can help virtually every type and size of business today. But making it work is becoming more difficult as an increasing number of businesses embrace it. How can you succeed in using direct marketing to help your business?

MARKETING INTELLIGENCE
An integrated CRM strategy gives the marketer access to intelligent information on customer profiles as well as campaign metrics and analytics. Marketing intelligence on campaign metrics can help the marketer understand which channels are most effective, which campaigns are generating the most leads, and which lists resulted in better response rates. This enables marketers to measure campaign effectiveness and allocate resources to the most successful tactics.
For example, when you decide to go direct to the consumer based on the results on customer profiling, you must implement basics and essentials that are necessary in any direct marketing endeavor.

• GET THE RIGHT PRODUCT OR SERVICE
  A terrific product or service is absolutely essential. Otherwise, people won’t return to buy from you again. An important direct marketing concept: the back end is more important than the front end. In other words, getting your customers to buy from you again is most important and you won’t get them back unless you have a terrific product or service. If your product or service can stand on its own without a lot of hype, you will get repeat customers.
• CREATE A MEDIA CAMPAIGN THAT GETS RESPONSE AND BUILDS A RELATIONSHIP.
  In creative work, copywriting skills are vital. Art attracts but COPY SELLS. You need to break through all the communications clutter in the marketplace. Good design should lead the eye. It should not dominate the display. The design does not sell — even if you’re selling Caribbean vacations. Art attracts, explains and enhances, and good art will let the copy make the sale.
• DEVELOP and LEVERAGE A CUSTOMER DATABASE
  The lists you choose can make or break your mailing. Your most valuable marketing resource is the database containing the names of your current and previous customers who have defined their interests in terms of the products and services they have purchased. These are the people that can be depended upon to make any promotion profitable.
• MAKE THE RIGHT OFFER.
  The right price, terms, guarantees and extras
  An offer simply means what you’re willing to give and what you want in exchange for a particular response from prospects or customers.
  - Proper timing is essential.
  - Segmented marketing can achieve very high responses for you.
  - Tailor your mail to an individual prospect.
  - Options put your prospects in a power position.
  - Urgency lifts your total response.
  - Risk relievers, such as guarantees or warranties, build confidence.
  - Use reinforcers, such as testimonials and case histories, which state your product or service
  is really the best. If someone else says you’re great, that’s better than you saying you’re
  great
• BUILD ADVOCATES The transformation of loyal customer to aggressive sales force Advocates are your very best customers. They not only buy from you very heavily, but sell for you by touting your product or service to business colleagues, friends and neighbors.
  The objective of any direct marketing effort is not just to get a response or make a sale. It is to build customers. Direct marketing can be used at any stage – separating suspects from prospects, moving prospects to trial, converting one time buyers to multiple buyers, and getting multi-buyers to become advocates.
  Not everyone will become an advocate. Direct marketing helps you leverage the 80-20 rule (80% of your business will come from 20% of your customers). It allows you to identify the 20%, reward them to retain them, and then clone them.

MEASURING RESULTS
Being able to measure means being able to improve
This means income generated per money spent on marketing. Do not be fooled by an expensive promotion with a high response rate compared to a less expensive promotion that may have a lower response rate overall but a higher rate of responses per dollar. Also, any evaluation of your marketing effort must include an assessment of the lifetime value of an average customer. This information allows specific promotions to be evaluated both in terms of the cost of acquiring a new customer and in terms of the customer’s contribution to short and long term profits compared to the average. There are a number of ways to improve lifetime value (other than lowering product/service costs): lowering customer acquisition costs, increasing frequency or duration of purchase, and increasing size of purchase.Customer Relationship Management has become the bridge by which vendors get, keep, and grow customers, whether you decided to engage in ethical marketing or direct marketing. It is the means by which companies are meeting the needs of customers who now expect high levels of personalization and care at every touchpoint. While providing superior customer relationship management across your organization may seem overwhelming at times, it is a mandatory competency. “When used strategically, it has potential to improve business profitability. The key is to use it where it brings incremental benefits not because it is “nice to have”. Gaspar ended.

[published January 2005/ Ad Edge Magazine]

In spite of the fundamental flaws, some marketers are racing to take advantage of its potential 

The E-mail has created a brand-building environment for marketers.  It brings profound changes on how they interact with customers faster and more frequent than the traditional direct mail. For some marketers, E-mail based marketing is one of the only media where you can see immediate results.  Marketers can send out customer newsletters, special product or promotion, reminders of service requirements or warranty renewals, or announcements of special events. Some even encourage prospects and customers to send questions and suggestions.  This way, real interaction with customers begins.  

However in using E-mail as marketing vehicle, companies must be extra careful not to develop a reputation as a “spammer” . . . the unsolicited E-mail.  Consumers accustomed to receiving junk mail in their real mailboxes are often enraged to find unsolicited marketing pitches in their email boxes. And it has gotten a bad reputation over the past few years because of these “spammers”.  The used-to-be amazing tool has gotten itself in untangling the mess produced by its fine advancement.  It’s just like introducing a new good product.  Yet for some reason, somebody sold a bad batch of goods early on. 

In spite of its fundamental flaws, some marketers are racing to take advantage of its potential.  They still believe that E-mail helps injects more equity into their brands. It works faster and it’s more cost-effective:  it’s like you’re running a marathon and someone gave you a ride for the first half of the race. “It shortens the time to market, does not require a lot of resources, and interested customers can respond immediately as well,” says Rey Sulit, Marketing and Business Development Manager of Infocom Technologies, Inc.  

NEW TOOLS FOR NEW RULES

The Internet may seem sort of helter-skelter, but it works fast in targeting the right audience. Take a look on how fast online-placement agencies overtook its competitions in terms of recruitment and job placements.  JobsDB, an interactive recruitment agency sends job openings via E-mail to its subscribers.  Recruitment and selection are faster as interested applicants send their resumes and career portfolio with a just mouse click away.    

No doubt Fuji Xerox realized its cost-effectiveness when they started posting event/seminars via E-mail instead of sending invitations via snail mail (think of the costs of printed invitations and post stamps).  What makes it more effective is that it gives a better room for product/event description as spaces are not that limited compared to the printed materials.  It is easier to get responses from the prospects.  “ I don’t need to find a telephone to call them or send back my confirmation slip.  It just a matter of clicking the confirmation tab and send it back again through email” says Carlos Castellon of Johnson & Johnson who often receives conference/service invitations via email.   

Though E-mail based marketing isn’t widely practiced here yet, some begin to explore the potential.  Infocom believes that Filipinos are becoming more tech-savvy.  Establishments such as coffee shops, restaurant and even fitness centers are equipped with Wi-Fi technology as a value added service to its customers.  This shows that there’s a wide market for Filipino customers who are comfortable in dealing and transacting over the internet . . .  and marketers are beginning to see that.   

EMAIL MARKETING HINTS & TIPSSo how do you map out a sharp marketing strategy using the email for luring customers?   Remember, you’re not going after the Internet customer; you are recruiting a multichannel customer.  So it is best that you lay the groundwork by differentiating yours as a legitimate strategy. The ultimate and the only irrefutable judge is the recipient. If the recipient thinks your E-mail is spam, it’s spam. Or it may as well be because the reaction and the negative impact on your reputation is the same. 

·          CUSTOMER PROFILING
“First, get the profile of the people you are sending the to, instead of randomly send Emails,” advices Delia Ruth Del Rosario, brand manager for Mentos.  She added that if E-mails are sent without profiling the recipients first, chances are you get back junk information or no information at all.  “For impulse products, the base or profile may be wider, but for other lines of business that need more consumer involvement, profiling is a number one requirement to make sure those questionnaires or promos reach the people who need information.” 

·          SECURE PERMISSION FROM THE PROSPECT
One company that has been successful in using this campaigns is Iomega Corporation by using permission-based marketing. Iomega ran several E-mail campaigns in the past years and always started with its registered-customer-installed base.  From this select list, it mails only to those who have given them permission to send E-mail.  Just like Iomega, JobsDB also makes sure to include the unsubscribe option: “If you wish to cease receiving our Job Alert, please click here to cancel your subscription.”  

By targeting customers who actively agreed to receive or reject E-mail, you can avoid being blackballed on the Internet and increase your chances of getting positive responses or sales.  

·          GIVE THE CUSTOMER A REASON TO RESPOND
Have a clear cut idea of your special offering. Do this if you have something of value to offer (whether it’s a discount on popular products, items targeted to special interest, or a new product that certain customers might like).  Use it to broadcast the news and make it clear that these offers are valid for certain duration. Others also offer powerful incentives for reading E-mail pitches such as trivia games, scavenger hunts and instant-win sweepstakes to lure customers. 

·          PERSONALIZE THE CONTENT
Customers are more receptive to personalized pitches.  Marketers should personalize the communication in the subject line why the consumer is being contacted, in JobsDB for instance, “Dear Juan dela Cruz, your career profile matches that of a marketing management position that we are looking for.”   This sends your prospects the message that you took the time to know them first before contacting them. 

·          OFFER SOMETHING THE CUSTOMER COULDN’T GET VIA DIRECT MAIL
Direct mail campaigns take a lot of time to plan and carry out. Because E-mail campaigns can be carried out more quickly, they can offer time sensitive information. Offer specials such as, “FREE delivery if you order online.”  Remember you’re in the business of changing customers’ behavior.  The Internet is a great way to move excess inventory and to test-market new style and product.   

·          EASY-TO-VIEW and EASY-TO-UNDERSTAND MATERIALS
The most important principle of anything you do online is that it’s fast and easy.  That means, not too much graphics, and you’re not using Java or Shockwave. You should do things that are text-oriented . . .  and avoid attachments.  If this can’t be avoided, always give your customers the alternative choice in your selection.  For example: “If this HTML message is jumbled, please login to your MyJobsDB account at the following address to set your future Job Alert message in Text Mode.” 

Bear in mind that customers need to be fed with what your product or service is all about before they will decide if it is okay to go for it.  “And we try not to make the e-mail be a hard sell tool for us.  We just make sure it sparks interest so it doesn’t get deleted ‘immediately’,” offers Sulit. 

·          MEASURE THE RESULT
Whatever media mix you choose, don’t forget to measure everything.  You need to know each customer’s background, their needs and wants, and count every purchase, both online and offline.  If you can’t correlate customers’ cross-channel buying behaviors, you’ll never know what impact you’re having. 

According to Sulit now that there are a lot of “big guns” targeting online retail marketing, innovative and informative marketing promotions is becoming the key to stand out.  “We usually just think of something new to send our clients.  The internet industry is pretty dynamic and provides a lot of technically good products and ideas most of the time.”   

And marketers need to make decisions based on what is relevant to customers.  You need to ask, ‘Who are my best customers?’ ‘Who are my worse customers?’ ‘When are they buying?’ ‘What messages will I send, and what format is the most appealing way to do that?’    When you do this, and when your customers receive 100 E-mails, yours is the one that they read.  Yours is the one they respond to.  Because every time they do, they think that the content of the message is timely and anticipates their needs. 

If the marketer plays by all these rules, they stand to turn E-mail into one of the hottest new marketing media.  But always keep in mind that your E-mail strategy is just one of the components of your branding strategies.  The Internet is not a substitute for good fundamental marketing practices.  Fifteen to twenty years from now, there is going to be another piece of a puzzle, another hot, new medium that is going to come along. 

[published in AD EDGE MAGAZINE : November 2005]