Week 2: IMC, Branding, Positioning and Consumer Engagement

Week 2 places advertising and promotion within the wider marketing strategy. It opens with the Samsung repositioning case, then presents the marketing and promotions process model, the SOSTAC planning framework, value propositions (with Starbucks as the example), and the full target marketing process: opportunity analysis, competitive analysis, segmentation, target market selection and positioning.

Opening case: Samsung's upward repositioning

Samsung produces laptops, mobile phones and flat-screen TVs, and at the time of the case ranked 5th in the world in patents (behind companies such as IBM, Canon and Micron Technology).

Strategy: reposition the brand upward.

• Historically the company was associated with copycat products: cheaper versions of Sony or Mitsubishi products.
• Since 1997 it has changed its image by producing more upscale, top-of-the-line offerings.
• It pulled out of big discount chains such as Kmart and Wal-Mart, which focus on price over quality, and moved to specialty stores such as Best Buy and Circuit City (distribution supports positioning).
• Its brands are slightly lower priced than the very top names, but in quality the Samsung label is right there with them.

Supporting IMC:

• The campaign "DigitalAll: Everyone's Invited" positions the products as exciting, cutting edge and reasonably priced.
• Samsung consolidated its 55 different advertising agencies into one, a typical IMC step to ensure one consistent message.
• It spent $900 million on global IMC campaigns in 2002, $70 million of it in the US (including a billboard in New York's Times Square and a high-profile presence at the Salt Lake City Olympic Games).
• Campaign objectives: raise awareness and enhance brand image. The ads are surreal, many featuring the "snow woman", a beautiful woman who gives an expensive, classy feeling to the viewer and, hopefully, to the brand. They appear on TV, in print, in retail and on outdoor billboards.
• Internet is a major part of the program: sponsorships on 50 major websites such as Fortune.com, Forbes.com, BusinessWeek.com and CNN.com. Samsung hopes to associate its brand with other well-known, well-respected brands.

Result: Samsung became the second most recognizable consumer electronics brand in the world, a strong player in China, Russia and Korea, and a truly global brand. The case shows how product, distribution, price and promotion were all changed together to support one new position.

The marketing and promotions process model (Belch and Belch)

This model shows where promotion fits in the marketing process. It runs from left to right:

1. Marketing strategy and analysis: opportunity analysis, competitive analysis, target marketing.
2. Target marketing process: identifying markets, market segmentation, selecting a target market, positioning through marketing strategies.
3. Marketing planning program development: product decisions, pricing decisions, channel-of-distribution decisions and promotional decisions (advertising, direct marketing, interactive/internet marketing, sales promotion, publicity/PR, personal selling).
4. Promotion is directed either to the final buyer or to the trade (resellers, who then sell to the final buyer).
5. Target market: ultimate consumers (consumers and businesses), leading to purchase.

The strategic marketing plan

The strategic marketing plan:

• guides the allocation of the organization's resources;
• evolves from the organization's overall corporate strategy;
• serves as a guide for specific marketing programs and policies.

A strategy process model is a framework for approaching strategy development. The lecture uses SOSTAC as a generic strategic approach.

The SOSTAC (e-)marketing plan

SOSTAC (developed by PR Smith) is a generic framework for (e-)marketing planning. The letters stand for Situation analysis, Objectives, Strategy, Tactics, Action and Control. The stages form a cycle: control feeds back into a new situation analysis.

Strategy within SOSTAC: STP

• Segmentation means dividing the whole customer base into different subgroups based on similar characteristics (for example demographics or behaviour).
• Targeting means deciding which subgroup(s) the company should target with its products and services, focusing on specific segments for efficient resource allocation.
• Positioning means placing a good, unique image of the product in the minds of customers so that it stands out in the market.

Value proposition and online value proposition

Strategic approach in advertising and IMC

Two views on how strategy is formed:

• Prescriptive (planned) strategy: strategic analysis, strategic development and strategy implementation are linked together sequentially: first analysis, then development, then implementation.
• Emergent strategy: analysis, development and implementation are interrelated and developed together.

Strategic windows. An emergent strategy approach is essential in a highly dynamic technology environment, because it lets organizations respond to sudden environmental changes that open strategic windows (opportunities that are open only for a limited time). Strategic windows may occur, for example, through the introduction of new technology such as AI. Advertisers should, however, consider the danger of responding too quickly: when evaluating new approaches they must weigh issues such as privacy, which may degrade the overall customer experience.

Example: Starbucks value proposition versus online value proposition

Value proposition. Starbucks offers more than coffee: a premium coffee experience, personal connection and a comfortable atmosphere that makes customers feel valued. Its mission statement is: "To inspire and nurture the human spirit, one person, one cup, and one neighborhood at a time." Key elements:

• High-quality coffee and beverages made from ethically sourced ingredients.
• Personalized customer experience (customized drinks, barista interaction).
• Comfortable, community-focused spaces: the "third place" between home and work.
• Strong brand identity associated with sophistication, relaxation and social connection.

When a customer walks into Starbucks, they are not just buying a latte; they are buying a moment of comfort, a sense of belonging and a consistent global experience.

Online value proposition. Starbucks' OVP highlights digital convenience, personalization and rewards through its online and mobile platforms: "Order and pay ahead, earn rewards, and enjoy a personalized coffee experience anytime, anywhere." Elements:

• Starbucks Rewards app: earn points ("Stars"), free drinks and exclusive offers.
• Mobile ordering and payment: skip the line and pick up the order conveniently.
• Personalized recommendations: tailored offers based on purchase history; the app recalls your favourite order and suggests food pairings and pick-up locations.
• Digital engagement: interactive promotions, seasonal campaigns and social media storytelling.

IMC features of the app: user-friendly design; an engaging loyalty program; mobile pay and ordering; integration with other platforms and services; instant location awareness (the location-enabled app improves speed and accuracy of drive-thru pick-up, which reduces balking, people not ordering because of long waits, and so increases transactions); UX design engineering for drive-through and in-store ordering; and customer insights via AI (loyalty data plus machine learning create automated personalized incentives, push new products and influence habits).

The mobile ordering system acts as a digital marketing tool: combined with app notifications and email, Starbucks creates interest in new menu items before the customer arrives. Orders are also possible via Amazon Alexa and in Ford vehicles, via the "My Starbucks Barista" voice/messaging feature, and payment via Apple Pay and Google Pay and the Apple Watch. The app gives the user an experience similar to visiting the store.

Example: a customer orders a favourite drink in the app, pays digitally and earns rewards, while being notified of a new pumpkin spice offer. This creates digital convenience plus loyalty reinforcement.

Marketing strategy and analysis: the structure

The rest of the lecture follows this structure:

• Strategic marketing plan
• Opportunity analysis
• Competitive analysis
• Target market selection: identifying markets, market segmentation, selecting a target market
• Market positioning

Opportunity analysis

A careful analysis of the marketplace should lead to alternative market opportunities for:

• existing product lines in current markets;
• new products for current markets; or
• new products for new markets.

Example: athletic footwear. As more people exercise, the athletic footwear market grew to over $13.5 billion. Companies such as Nike and Reebok see this as an opportunity to broaden their customer base domestically and internationally, and spend heavily on advertising: in 2001 New Balance spent "only" $13 million, Reebok $49 million and Nike over $155 million. Lifestyle changes also shifted demand among trail, running, basketball and "lifestyle" shoes such as slip-ons.

Market identification. A company identifies opportunities by examining the marketplace and noting demand trends and competition in various segments. A market is rarely one large homogeneous group; it consists of many heterogeneous groups, or segments. Example: the PC industry has home, education, science and business segments, which can be divided further (small companies versus large corporations; elementary schools versus universities). A company in the auto industry must decide in which segment(s) it wants to compete, which depends on the amount and nature of competition the brand will face there.

Competitive analysis

In developing its marketing strategies, the manager must carefully analyze the competition to be faced. This ranges from direct brand competition (which can include the firm's own brands) to indirect competition, such as product substitutes.

Ways to achieve a competitive advantage:

• quality products that command a premium price;
• superior customer service;
• the lowest production costs and lower prices;
• dominating channels of distribution;
• advertising that creates and maintains product differentiation and brand equity. Example: the long-running Michelin tyre campaign stressing security as well as performance. The strong brand images of Colgate, Campbell's, Nike, Kodak and McDonald's give them a competitive advantage in their markets.

Target market selection and identifying markets

After evaluating the opportunities presented by the various segments, including a detailed competitive analysis, the company may select one or more segments as a target market. In a target marketing strategy the marketer identifies the specific needs of groups of people (segments), selects one or more as a target, and develops marketing programs directed to each.

Target market identification isolates consumers with similar lifestyles and needs and increases knowledge of their specific requirements. The more common ground marketers establish with consumers, the more effective their communications will be in informing and persuading them that the offering meets their needs.

Market segmentation

The segmentation process involves five steps:

1. Finding ways to group consumers according to their needs.
2. Finding ways to group the marketing actions (usually the products offered) available to the organization.
3. Developing a market-product grid to relate the market segments to the firm's products or actions.
4. Selecting the target segments toward which the firm directs its marketing actions.
5. Taking marketing actions to reach the target segments.

Bases for segmentation

Psychographic segmentation. There is some disagreement about whether personality is a useful basis, but lifestyle factors have been used effectively, and many consider lifestyle the most effective criterion. Psychographic segmentation gained acceptance with the VALS (Values and Lifestyles) program developed by the Stanford Research Institute (SRI). VALS 2 divides Americans into eight lifestyle segments with distinctive attitudes, behaviours and decision-making patterns. Segments are placed on two dimensions: primary motivation (ideals, achievement, self-expression) and resources (education, income, health, energy level, self-confidence and degree of consumerism).

Behavioristic segmentation. A profile (demographic or psychographic) of the user is developed, which serves as the basis for promotional strategies designed to attract new users.

Benefit segmentation. Consumers buy products to satisfy specific needs and look for products that provide specific benefits. In toothpaste, some want fluoride (Crest, Colgate), others fresh breath (Close-Up, Aqua-Fresh), tartar control (Crest) or plaque reduction (Viadent). Den-Mat introduced Rembrandt whitening toothpaste for consumers wanting whiter teeth, and other brands followed.

Selecting a target market

Selecting a target market involves two decisions: (1) how many segments to enter and (2) which segments offer the most potential.

(1) How many segments to enter:

These run from targeting broadly (mass) to targeting narrowly (individual).

(2) Which segments offer the most potential: the firm must examine the sales potential of the segment, the opportunities for growth, the competition and its own ability to compete, and then decide whether it can market to this group. Example: Royal Crown (RC) Cola was first to market with diet colas and caffeine-free colas, but because of limited resources it could not capitalize on them as Coke and Pepsi did and never became market leader.

Market positioning

• The position of a product, service or store is the image that comes to mind and the attributes consumers perceive as related to it.
• The position is communicated through the message (which explains the benefits) and the media strategy used to reach the target group.
• Positioning is the most important factor in establishing a brand. It concerns the image of the brand relative to competing brands and is the key factor in communicating benefits and differentiating from competition.
• Reflection exercise from the lecture: what comes to mind for Nike, Adidas, McDonald's, BMW and Apple? How do their stores, websites and ads differ from competitors, and when and where are the ads shown?

Developing a positioning strategy: six questions

1. What position, if any, do we already have in the prospect's mind? (This must come from the marketplace, not from managers' perceptions.)
2. What position do we want to own?
3. What companies must be outgunned if we are to establish that position?
4. Do we have enough marketing money to occupy and hold the position?
5. Do we have the guts to stick with one consistent positioning strategy?
6. Does our creative approach match our positioning strategy?

Positioning strategies

Aaker and Shansby discuss six positioning strategies; Aaker and Myers add a seventh (cultural symbols).

The role of advertising and promotion

Promotional tools (advertising, sales promotion, direct marketing, publicity/PR and personal selling) are used to inform consumers about products, prices and where products are available. All promotional-mix variables must work together to achieve an integrated program. The development and implementation of an IMC program is based on a strong foundation that includes market analysis, target marketing and positioning, and coordination of the marketing-mix elements.

Main sources: Belch and Belch, Advertising and Promotion: An IMC Perspective; Laudon and Traver, E-Commerce 2021-2022.