In a 2005 MIT study, “Zero as a Special Price: The True Value of Free Products,” the power of free was demonstrated by offering Lindt® Truffles &  Hershey’s Kisses® , first at 15 cents for the Truffle & 1 cent for the Kiss, then at 14 cents for the Truffle & the Kiss offered for free.  The participants could only choose one.

The Results:

• When the Kiss was a penny & the Truffle was 15 cents – the selections:
  The Kiss = 14%, The Truffle = 36%, None = 50%
• When the Kiss was free & the Truffle was 14 cents – the selections:
  The Kiss = 42%, The Truffle = 19%, None = 39%
• In a 3rd round, the Kiss was still free & the price of the Truffle was reduced to 10 cents – the selections:
  The Kiss = 40%, The Truffle = 12%, None = 48%

What We Learn

As marketers, there are many take-aways from this study, including:

• With regard to promotional pricing: while the actual dollars and cents may be the same, the BOGO promotion (buy one, get one free) may perform far better than 50% off.
• Free is powerful – but it still may not influence the audience if the perceived value is not there.  39% of the participants didn’t want the free Kiss.
• Price reductions may influence the cost-benefit perception with other associated products (test 3).

The Research

The study was conducted by Kristina Shampanier, Nina Mazar and Dan Ariely in 2005 and contains additional tests, examples and data that sheds light on the power of free products and their influence on purchasing decisions. I highly recommend downloading and reading it – a truly interesting read.

Additionally, Dan Ariely has recently released a book, Predictably Irrational, and should you want to further explore how the world often works according to principles of irrationality in the places where we least expect it, give it a try.

(And, keeping true to our last post, New FTC Guidelines Affect Bloggers & Social Media Marketing,  - Seven Aspens, the publisher of Dallas Marketing Services, is an authorized affiliate of Amazon, should you feel so inclined to click on the book and buy it.)

Seven Aspens is a trademark of Seven Aspens Consulting, LLC.
All other company and product names are the trademarks of their respective owners.

Under new FTC guidelines released this week, bloggers and other “word of mouth” marketers who make an endorsement must disclose if there are material connections with the seller of the product or service.   A material connection can include payments or free products received by the endorsers.

According to the Federal Trade Commission (FTC) press release (5 Oct 2009):

“The post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service. Likewise, if a company refers in an advertisement to the findings of a research organization that conducted research sponsored by the company, the advertisement must disclose the connection between the advertiser and the research organization. And a paid endorsement – like any other advertisement – is deceptive if it makes false or misleading claims.”

Given the core of social media is transparency and honest discussion, most bloggers and word of mouth marketers agree with this policy.   We have a published disclosure policy on this blog and have encouraged other bloggers and social media marketers to do the same in the past.  However, for social media marketing, the method for disclosure is not as straight forward.   We occasionally send tweets about our  (Seven Aspens’) clients and/or their products. How do you disclose in a 140 character Twitter message?

With potential hefty fines looming for violators, this is a good time to review your policies, ensure compliance and learn the best practices.  To assist in the education process, the Word of Mouth Marketers Association (WOMMA) is hosting a free webinar Thursday, October 8, to help explain what the new FTC regulations mean for marketers, advertisers and bloggers. Additionally, the Social Media Business Council provides a great Disclosure Best Practices Toolkit.

A new study shows that marketers are slowly making the transition to social media marketing with 63% stating they will increase their social media marketing spend in 2009.

clipped from www.emarketer.com

Let’s talk about budgets.
It took a while.

Even though tens of millions of users were flocking to social media sites every day, most marketers stayed away. They either didn’t understand how to join the conversations—without sounding like shills—or they were frightened away by the prospect of associating their brands with questionable content.

But things are changing.

Companies are learning how to leverage social media and tap into the rising tide of consumers participating in social network sites, blogs, wikis and Twitter.

According to the “The ROI on Social Media Marketing” report by Aberdeen Group, sponsored by Visible Technologies, marketers have developed the tools and methodologies to drive marketing ROI by listening to and learning from customers and prospects.

The money is following the methods.

Aberdeen found that 63% of the companies in their survey (defined as best-in-class) planned to increase their social media marketing budgets this year.

Are you engaging with social media brand evangelists?

“Companies use multiple approaches to identify the individuals who wield the greatest amount of influence in any given topic area and to track changes in their influence over time,” said Jeff Zabin of Aberdeen. “Best-in-class companies engage these top influencers as brand evangelists, and then track the impact of their words and actions in terms of return on marketing investment.”

eMarketer estimates that social network advertising alone will rise over 17% this year to $2.35 billion, up from $2 billion in 2008.

Even though many times there is more creativity in budgets than ads, the easiest way to get a marketer to groan is to tell them to do a marketing budget.

The Marketing Budget Process

The first step in establishing a marketing budget is to remember that marketing goals are simply a means to achieving business goals and should be viewed as such.  As with most things in life, almost anything is possible with enough time and money – it is just not a reasonable and sustainable approach.

For most companies, marketing is a method to get sales leads, so then the first question to be answered is:
What is the value of a qualified sales lead to your business?

If you already know – skip to the next paragraph.  If not, start by determining the average value of a sale, then subtract the fully-burdened (all of your expenses) cost of the sale, to get your profit per sale.   Now you know the estimated maximum to pay for a lead – you need to determine an amount less than this or you lose money.   All that said, this is a generalization – in the case of certain business conditions, like a start-up, many companies are on a (hopefully brief) the more you sell, the more you lose plan.  They just make it up in volume.

Next, determine how many leads you can reasonably handle and effectively close and your average close rate.   Now, just do the math to determine how many leads you need to fill the pipeline (if you can handle 5 sales per month and have 10% close rate, you need 50 leads per month).    Last, take the amount you have determined that is reasonable to pay per lead and multiply it by the number of leads you need to meet your sales goals.

That is your estimated optimum monthly marketing budget – if you pay more, you will be cutting into profits, if you don’t invest that amount in marketing, you will most likely be unhappy with the results.

Or  - you can do what most companies do – from the very large to the small  - and pull a number out of the air. Many times, this amount, is the amount “you can afford.”  This is reasonable – it is hard, especially in this time of restricted credit, to have money to spend that you don’t have.  However, at the same time, expectations need to be reset on the expected outcome.

Next up – putting that marketing budget to work with a tactical marketing plan.

Dallas Marketing Services is a marketing blog
published by Seven Aspens Consulting.

“Reports of my death have been highly exaggerated.”

Samuel Langhorne Clemens (Mark Twain)

We last discussed Awareness Activities, the first in the three categories of marketing opportunities.   While I have been advised by some in recent times that offline marketing and advertising is dead-finished- no more, I think there are a few gasps of breath left in the offline marketing and advertising channel.

Direct Mail Direct Response (DMDR)

According to The DMA 2003 Direct Mail Response Rate Study, the average response rate for the 1,122 industry-specific campaigns The DMA studied was 2.61 percent.

The study found the industries that utilize direct and interactive marketing to achieve above average response rates were:

• Nonprofit Fundraisers (5.35 percent)
• Retail Stores (3.36 percent)
• Establishments Rendering Services to Businesses (3.34 percent)
• Manufacturing (3.17 percent)
• Personal and Repair Services (3.07 percent)
• Travel (2.98 percent)
• Computer & Electronic Products (2.86 percent)
• Packaged Goods (2.79 percent)

So, is direct mail still a profitable marketing tool? That depends, but direct mail is one of the easier ROI calculations to estimate. Simply take the cost of the piece you will be mailing, the cost of the list and labor, if applicable, to reach a total cost.  Next, determine estimated response rate (above), the estimated conversion/close rate and the average value of the sale (profit).

For example, if you mail 1000 pieces and estimate that 2.61% will respond (the average from above) and assume 20% of those will close, then the 1000 pieces should yield about 5 sales (1000 X 2.61% = 26 responders, 26 X 20% = 5 sales).  Now, just determine if the value of the 5 sales is more or less than the total cost of the mailing.  Then, remember these are only estimates and other variables such as the quality of the piece(s) mailed, the quality of the list and the frequency you will be mailing (one time vs a series) can vastly vary the results.

Publication Advertising

Advertisements in publications, especially industry trade publications, can be a great source for building brand awareness and generating sales leads.   Subscribe to all trade publications for the markets you serve, read them, study the ads and then determine which is the best fit for your offering and your budget.   If at all possible, plan a series of ads with a theme and consistent branding to build recognition with readers.

Trade Shows and Conferences

Trade shows and conferences can be used to build awareness, generate leads, find new customers, and maintain or improve current customers’ perceptions.   Trade shows are more effective in some industries than others, so just determine if the reward (other than visiting Vegas, etc.) justifies the expense.

These events present the following promotional opportunities:

♦ Network – meet prospects within the targeted industries to help build overall awareness of your product, set up meetings with other participants, invite clients or prospective customers to visit the booth

♦ Exhibit – Secure exhibit space, logo placement and name in event guide and other promotional assets

♦ Event Sponsorships – Overall show/conference sponsor or smaller, daily event sponsorships through show/conference

♦ Off-Site Event Sponsorships – Sponsor and off-site event that is not offered through the show/conference.  Examples would include dinner at a local restaurant, cocktails at local museum or exhibit, etc.

♦ Speaker – Speak at event or in topic driven forums to share insights and build exposure with industry decision-makers.

Next up:  Part 3: Online Marketing

Dallas Marketing Services is a marketing blog
published by Seven Aspens Consulting

Next-> Opportunities: Online Marketing

Awareness

Definition: knowledge
Antonyms: ignorance, insensitivity, obliviousness, unawareness, unconsciousness
(Answers.com)

A marketing strategy is designed to outline a strategic process that allows businesses to concentrate their limited resources on the best opportunities to increase sales and achieve a sustainable competitive advantage in the marketplace. From the numerous potential opportunities that exist, a marketing plan can then be developed to provide a roadmap for the tactical initiatives that will be implemented.

At a high level, marketing opportunities can be compiled into three main categories:

• Awareness activities
• Offline marketing and advertising campaigns
• Online marketing activities

Today, we cover the first of the three:
Awareness activities

Awareness activities are just that – activities that build awareness of your product or service. They are most effective when targeted at a vertical market, an industry segment, or with advocates and influencers. The key here is exhibiting specialized or subject matter expertise within a defined area.

White papers: White papers are a powerful tool in establishing brand recognition and marketplace credibility. The most successful white papers are not sales brochures and do not mention the writer’s specific product or solution – they inform the reader of a specific trend or issue and identify potential new innovations or alternative ways to solve the problem.

Trade publications: Trade publications catering to identified verticals can be a great prospect for interviews and article submissions. This works especially well if used in conjunction with trade support – purchasing an ad for the purpose of building name awareness, while also requesting to be introduced to a writer to pitch the article idea.

Speaking engagements: Similar to trade publications, speaking engagements are a good opportunity to establish a presence within a vertical market. A call for speakers is normally listed on a conference website by the promoter about 9 months prior to the conference. Information is generally listed on desired presentation length, types of opportunities preferred, etc.

Press releases: Well-written press releases are a great marketing and search engine optimization/link building opportunity. Once the release is written, edited and ready to be published, it should be distributed to maximize awareness and create inbound links to the website, which should include social media sites like docstoc, posting to web sites, and using a PR distribution service such as PRWeb.

Advocates & influencers: As key industry contacts are established, utilization of these resources as influencers can provide one of the fastest ways to achieve recognition and credibility in the marketplace. Build a contact database , even if it is a spreadsheet, an regularly contact these important influencers.  Networking opportunities and speaking engagements at conferences and trade shows provide a great opportunity to meet and establish relationships.

Customer testimonials: Authentic customer testimonials that have specific and quantifiable information and data points can be one of the most effective marketing methods available. Don’t wait for your customers to volunteer their testimonial – most don’t. Ask them for it or, even better, write it for them and have them approve it.

Bloggers: Bloggers are industry experts (well, sometimes) with an easy method of access – their blog. Find bloggers in your industry or market, then subscribe and read the blog consistently before jumping in with comments. Once you have an idea of the types of discussions that occur, begin providing meaningful, relevant comments on posts. Be authentic and don’t add comments filled with links to your website or promoting your product.

Next-> Opportunities: Offline Marketing

Arguably the best point guard ever to play in the NBA, Magic Johnson, exemplified the qualities required of a point guard – running the offense, controlling the tempo, ensuring players are communicating and having a complete understanding of the game plan.

In a similar manner, marketing positioning is the point guard of your marketing communications. Positioning defines and controls the overall identity of your product or service and involves the art of ensuring the unique benefits of your offering are effectively communicated and matched with the prospective customer’s needs and desires.

Time and thought should be devoted to crafting an optimized marketing positioning statement.

• What position do you want to occupy in the customer’s mind?
• What are the truly unique product attributes and benefits of your offering?
• Are these benefits already considered relevant and perceived as valuable by the potential customer?
• What else is perceived by the customer as a similar, better or worse offering?
• Why?

Market Messaging

Good market messaging clearly communicates the key ideas of the positioning statement to the customer in a straightforward, consistent manner that leads them to action.  Great market messaging makes it a memorable experience.

Is Your Positioning an All Star or a Bench Sitter?

Positioning and messaging are topics that many small businesses consider too difficult to tackle and/or are simply stuff that corporate marketing teams, agencies and consultants like to discuss to make them sound important. While the latter part of the statement may be partially true, any business can and should seek to have an All Star positioning statement and marketing messaging.

Customers have a perception of your offering with or without your input. Isn’t it time to run some offense, control the message and ensure clear communication occurs at all points of customer contact?

Dallas Marketing Services is a marketing blog
published by Seven Aspens Consulting.

Please contact us with your marketing service, website design,
social media marketing, search engine optimization
and new product consulting needs.

Next-> Opportunities: Awareness Activities

]]> http://dallasmarketingservices.com/2009/02/the-marketing-point-guard-positioning-and-messaging/feed/ 0 http://dallasmarketingservices.com/2009/02/keep-your-friends-close-and-your-enemies-closer-competitors-learn-from-them/ http://dallasmarketingservices.com/2009/02/keep-your-friends-close-and-your-enemies-closer-competitors-learn-from-them/#comments Wed, 04 Feb 2009 01:45:20 +0000 admin http://dallasmarketingservices.com/?p=574

“Keep your friends close and your enemies closer.”

Sun-tzu, The Art of War, 722-481 BCE or 403-221 BCE

Anyone that has spent much time in the corporate world has heard this quote more than a few times, but in the real world of small business, can it still be applied to knowing your competition?

Absolutely. It takes time, and the ability to leave your prejudice at the door, but every business regardless of size should know and learn from their competitors by gaining an understanding of the marketplace from the eyes of the customer.

To begin, bias for one’s own product or service has to be set on the side. You must assume the role of the customer and view the offering choices as they do. See what they see. Think what they think. Question what they would doubt. Pace the buying process as they would. Fear what they would fear.

Start with the search. People looking to fulfill a need or want seek out a solution. Who and what (ads) do they find and where do they find them?

Offline marketing and advertising

• Gather all relevant information – yours and the competitors. Potential sources include: Yellow page ads, Direct mail pieces, Trade journal and industry magazine ads, Trade shows (look up the registration list online), etc.
• Track your advertising activity and the competitors’ in a spreadsheet (Ad type, placement, size, date, frequency, etc.)
• Compare your ads and their ads with a critical eye. Are you getting out- advertised? Which creative is the most effective? Take note of the headlines, the copy, the branding. Is there a call to action? Is there a consistent look, feel and messaging across delivery channels?

Online marketing and advertising

Organic or Free Search. Most product searches start with an online search, so begin there. Start with Google, but don’t forget Yahoo and MSN.

Now, what search terms do new product or service seekers use to conduct a search? The search term it is not, is your business name. Most small businesses are not known by prospects and must be found by the key words and key phrases entered into the search engine. Google has a free tool to discover/refine keywords and there are numerous others (free and not free) available.

Once you determine the key words and key phrases, work must begin to assess the SEO strengths and weaknesses of your competitors to gain a competitive advantage in search engine rankings. This process is called Search Engine Optimization, or SEO, and is an entire topic on its own. If you are unfamiliar with SEO, you need to get familiar, and quickly. Google has a beginner’s SEO guide available, check out DIY Website Success, or hire a consultant.

Paid Search or Pay Per Click (PPC). PPC ads are the paid ads that appear on the right and top of search results pages and say “Sponsored Search” above the ads. Here is a simple method to gain a quick understanding of your ads versus your competitors:

• Determine your top key words from your keywords list
• Open a Word document and create a table, 4 columns wide with 14 rows
• Label the top row of each column with a key word or phrase
• Label each row of the left column Top 1, Top 2, Top 3, Right 1, Right 2, etc.
• Now search the first phrase and cut and paste the ad results into the table, one result per cell

When you finish, you should have all the page one PPC results for your top 3 key words or phrases. Repeat for as many keywords as needed.

Google also has quite a few free tools available for AdWords advertisers. Simply create/login to your Adwords account, go to Tools and begin exploring.

Next, for the top ads (the biggest competition because customers see them first), examine their landing pages, or the place where the person is taken if that ad is selected. Does the thought path flow well or does the landing page have nothing to do with the ad? Remember, the closer the landing page is to the ad creative and messaging, the more likely the success.

Competitors’ Web Sites

If you aren’t already visiting your competitor’s web sites at least a couple of times a month, again, you need to be. Simply create a folder in your toolbar, bookmark their sites and then choose a day of the week to visit them.

Next-> Marketing Insanity

Surprisingly, many companies approach marketing with a goal to sell some stuff to somebody. Not so surprisingly, their resources are quickly spent with little or no gain.

Targeted Marketing

Target marketing is a term used to define a company’s approach towards focusing marketing and sales efforts toward specific market segments.  Examples range from broad:  business to business (B2B) or business to consumer (B2C) to very specific, such as small businesses within a 4 digit SIC in a specific geography.

The more targeted the marketing, the more likely the company can efficiently use their marketing resources. Additionally, a targeted approach provides the ability to:

♦ Demonstrate Specific Expertise.  A focused approach within a specific market allows for a depth of knowledge to be obtained that can be utilized to better communicate with prospects and customers.   Simply put, people prefer to purchase from a company familiar with their industry and needs.

♦ Emphasize Unique Benefits.  Within a specific market, unique benefits inherent in the offering can be emphasized to “customize” the offering and personalize it to the purchaser.

♦ Focus Marketing Spend.  Spend your valuable time and money marketing to the most likely market segments to purchase your product.

♦ Utilize Awareness Marketing Activities. Trade publications, speaking engagements and white papers can be highly effective tools in building brand recognition and credibility within the segment.    Influencers and advocates providing a recommendation or endorsement can help extend a program’s popularity within a specific market or industry segment.

♦ Increase Referrals.  Buyers are more likely to recommend a business when they recognize that “you know what you’re talking about.” Nothing promotes word-of-mouth faster than being an established expert in a vertical marketing field.

Finding Your Target Market(s)

As we addressed in our last post in this series, businesses should invest time in analyzing their existing customer base to uncover buyer behavior and characteristics.

Next, decide on your target market segments, such as:

Vertical markets:  Industry marketing is one of the best methods to segment your market, as it provides a tremendous opportunity to reap the rewards identified above.  Decide on the segments, identify their SIC or NAICS codes and then create an industry information repository for reference.  FURL is an excellent online tool to collect and archive information by industry.

Small and medium-sized businesses (SMBs):  Many companies spend vast resources to hook the big fish when they might have found it far more profitable and attainable to catch a lot of small to medium-sized fish.  If your product or service is a fit for the SMB market, consider customizing your offering for this large segment of the market.

Specialty market segments:  Many companies overlook potential market segments that may occur based on a special need or creative use of a product.  For example, while most flat screen TVs are purchased for people wanting to watch television, graphic designers, web designers and stock traders frequently use large, flat screens as monitors, creating a non-standard, specialty market for the product.

Market Segmentation Resources

One of the best, and free, resources to obtain market segment information is the US Census Bureau.  The Economic Census profiles American businesses every 5 years, from the national to the local level and provides a vast amount of data ranging from industry to geographic to business owner surveys.

Next-> Competitors, Learn from Them

My husband recently received an invitation from a local doctor to attend an evening that included free botox for  guests and suggested that he “bring his girlfriends and make it a girl’s night out!”

Well, I guess someone had a bit of a marketing database glitch.

Know Your Customers

Nearly every business continually tries to find more customers.   It’s the foundation of growth.    One of the best places to begin looking for more customers is your existing customer base.   Logic has it that if someone has already found your product to solve their wants or needs, then other similar customers may want your product as well.

Start By Learning Everything About Your Existing Customers

Every business, regardless of size, needs a customer database, the more detailed the better.    Information should include:

♦ Customer contact information

♦ Buying history, preferences

♦ Demographic information

♦ Psychographic information

♦ Geographic information

Enriching Your Database

Don’t have all the information on your customers?  Add it after the fact. How?   Ask them.   Survey them.  Research them.   Find out why they purchased initially and what they like best about your product or service.   Discover where they find information to make their buying decisions. Identify SIC codes from the OSHA database and NAICS codes from the NAICS Association. Find additional information on small and mid-sized businesses at Manta.

Using Your Customer Database to Find New Customers

Analyze your existing customers to determine common characteristics.   Craft your marketing message with positioning targeting the features most desired by your existing customers.  Purchase mailing lists with similar geographic, SIC codes and the correct demographic information .  Create a marketing message that addresses customers’ concerns throughout the buying process  - whether in email campaigns, advertisements, landing pages, forms or at the time of purchase – ensure well-timed content is available at each stage, based on knowledge gained from your existing customers.

Next-> Target Markets and Segmentation