- Published: March 18, 2014
For years, television executives have eagerly awaited the day when technology will enable them to fulfill their plans for using product placement advertising as a significant revenue generator. The technology they have been waiting for is the one that enables viewers to instantly make purchases of products as they see these appear on their favorite television shows. The executives see tremendous opportunity to expand the common practice of product placement advertising, where companies pay to have their products appear on shows, into product placement-and-purchase, where what viewers see can also be directly purchased.
Sure buying what customers see on television has been around a long time, and shopping networks HSN and QVS have been offering this for years. But inserting a purchase option within network programming, such as sitcoms and dramas, may send this to a much higher level.
From a consumer behavior perspective, marketers salivate at the potential for customers to make a quick purchase decision. For the marketer, they see customers making buying decisions when they have recognized the need and the buyers' thought patterns have moved quickly to acquiring the product (i.e., "My favorite shows has the product and so should I"). In many ways, this is aimed squarely at impulse buyers, who spend virtually no time searching for options. This, of course, is not necessarily the best thing for customers, who may have different thoughts about buying if more time was needed to make a purchase, but marketers have rarely worried about that.
An example of one attempt at product placement-and-purchase is presented in this New York Times story. It discusses how Target is teaming with the TBS television network to test purchasing of 25 products appearing on the network's Cougar Town show. To make a purchase, a viewer will need to be watching their television and also be connected to the Internet through another device, such as a tablet or computer, that is streaming a special version of the show. The online version will indicate which products can be purchased, which customers can do with a click.
The need for separate devices is certainly something that will not be needed as this product placement-and-purchase moves forward. Instead, as television becomes more like computers, it is easy to see the day when a viewer simply points their remote at their television and makes the purchase.
- Published: March 14, 2014
There is little doubt the least glamorous and most underappreciated roles in marketing are the ones undertaken by those responsible for product distribution. While transportation decisions are likely not something that first comes to mind when someone thinks about marketing, these are, nonetheless, extremely crucial for two key reasons. First, transportation decisions affect when customers can obtain products. Any delay in delivery could frustrate customers leading them to cancel orders and instead purchase from competitors. Second, costs associated with product delivery are almost always passed on to the final customer. Thus, poorly selected delivery methods can lead to higher prices resulting in a less competitive product offering.
As we note in our Managing Product Movement tutorial, there are several modes for transporting products including truck, air, railroad and water. Of these main modes, water often offers marketers the lowest cost for transporting product. Of course, there is a tradeoff here – using a ship to transport product means slower delivery compared to other modes. This tradeoff between cost and speed may seem like a hard decision and for some companies it is. However, when it comes to transporting products from overseas, especially bulky products, water is the only real option.
This leads us to this story from National Public Radio. The story discusses a new cargo ship that is remarkable in its size. Among the ship's impressive specs are these: it is 240 feet tall (20 stories), 1,300 feet long (over 4 football fields) and 200 feet wide. But the most mind-boggling statistics is that is can carry over 18,000 shipping containers that, if laid end to end, would stretch nearly 70 miles!
With this type of capacity, the per-unit cost of shipping products must be markedly lower than using ships with less capacity. Of course, with a ship of this size there are other issues including available docking space in the world's ports. Yet, as the story discusses, it is expected that ports around the world will expand in order to accommodate ships of this size.
- Published: March 11, 2014
The ability to identify and, more importantly, understand customers is arguably the most fundamental characteristic of successful marketers. In fact, our Definition of Marketing places the need to understand customers right at the center of what marketer must do. Marketers that have a firm grasp on knowing their customers find it is an ongoing exercise and one that is not always easy. It often requires spending considerable time and money researching their target market with the goal of gaining deep customer insight. From this knowledge, all other decisions flow such as what products to offer, how to reach the target market with the right promotion, what is the optimal price to charge, and many more.
But what happens when the research shows the main customer, who has been the focus of so much attention, is changing? For instance, when a target market begins to age This may be an issue that could soon face warehouse retailer Costco. As discussed in this story from Time, Costco’s customer base is typically an older, suburban residing group. They want the savings offered by bulk purchasing but also have the space in their homes to store extra items. And, of course, they have cars, SUV’s and mini-Vans to haul their purchases.
But as Costco’s customer get older, younger groups, including the so-called millennial generation (i.e., young adults), are not shaping up to fit Costco’s traditional target market. Younger groups are more interested in city living and getting around by walking, taking a taxi or public transportation, rather than by automobile. They also do not have the need or household space for purchasing large quantities of a single product.
Of course, Costco research shows this is happening and, as the story points out, they are making some effort to reach this group. However, it is unclear how strong an effort they are putting forth and whether they really view this as an issue worthy of a signficant strategy change.
- Published: March 7, 2014
When marketers talk about tracking customer activity it almost always is discussed within the context of an Internet marketing environment. For instance, tracking how a customer arrived at a website (e.g., via a search engine), what pages were viewed on a website, or even what other websites a customer viewed prior to arriving at another website. But tracking is not limited to activities taking place online; it also happens offline. For instance, retail stores track customers by matching purchases to the use of loyalty and membership cards; cable television networks track customers' viewing habits through set top boxes; and package delivery companies track product movement using scan codes and follow their vehicles using GPS.
While these offline examples are interesting, Disney's new MyMagic+ technology, now being tested in its theme parks, seems to raise offline tracking to a higher level. According to this Businessweek story, Disney has invested $1 billion for technology that tracks customer activity. The key component for capturing data is wearable wrist bands, branded as MagicBands, that customers flash when entering the park, making purchases and even opening their hotel room door.
In addition to collecting data on when customers arrive, what part of the park they visit and how long they stay, Disney's tracking technology is also used to improve customer service. For instance, the story explains how a food server can locate a customer and deliver their food even though the customer ordered a meal from a kiosk and found their own table. It also explains how this technology can be used for other purposes, such as adjusting staffing depending on the anticipated crowd at an attraction.
While all this is very intriguing, it is important to note the story also raises potential ethical issues. For some, the constant tracking, particularly if a GPS element is used, reeks of Big Brother control. This has led to backlash, including some people taking Disney to task on discussion forums and social media.
- Published: March 5, 2014
Today we posted a story from Forbes discussing the results of a study that looked at budgeting issues within leading marketing organizations. While the Forbes story is insightful, it is more interesting to look at the source behind the data reported in this story. The research results come from CMO Survey, which is a collaboration between three major organizations: industry group The American Marketing Association, consulting firm McKinsey & Company, and the business school at Duke University. As stated in their mission, the CMO Survey intends to “to collect and disseminate the opinions of top marketers in order to predict the future of markets, track marketing excellence, and improve the value of marketing in firms and society.”
Since its founding in 2008, the CMO Survey has provided excellent information with the best being its twice yearly survey of marketing professionals. The most recent report, which was released in February, goes well beyond the information discussed in the Forbes story. Based on results obtained from over 400 respondents, this report looks at several other issues including: what top marketing executives think about the economy; the type of marketing strategies they are pursuing; spending on social media; marketing’s role in their organization; the use of marketing analytics; and much more.
This is terrific research, and whether you are a business professional, student, marketing instructor, or just someone that is intrigued by the field, this research is worth a look.