Power of Digital MarketingEvery day it seems marketers are being confronted with more evidence signaling a change is underway in how promotion should be done, especially for consumer products. And at the heart of this change, we are seeing traditional methods of promotion, such a television and radio advertisements, newspaper coupons, product demonstrations and many others, are being displaced in favor of new digital promotions, such as social media, online advertising and mobile technologies. While traditional promotions still represent the bulk of spending on consumer product promotions, many companies now understand that what they originally thought about digital must be reevaluated.

For instance, when social media was first used by marketers, it was primarily intended to be a one-way communication tool, such as using Twitter to let followers know about a new television advertisement that they could watch on YouTube. However, as social media has evolved, marketers have learned that it can be used to stimulate conversation and, thus, become a two-way interactive form of promotion. This makes social media more like personal selling than advertising. But that is not all, marketers are now finding that actively monitoring social media can be used as a way to signal when other types of digital promotions should occur. This has led to an explosion in so-called responsive or real-time marketing, where companies look to program their promotions based on something that is happening right now, such as one of the company's product receiving heavy social media coverage. With responsive marketing marketers may be able quickly to adjust other promotions, such as online and electronic billboard ads, to take advantage of what is being discussed in social media.

In the mobile technology arena, companies are obtaining promotional value by creating product-oriented apps downloaded by loyal customers. The apps not only serve as useful freebies for valued customers (e.g., games), they also become promotional outlets as companies target ads and special sales promotions on these apps.

A very nice example of a company that has jumped into digital marketing with both feet is found in this story from Fast Company that looks at cookie giant Oreo. Oreo's parent company, Mondelez International, is planning to spend 50% of it U.S. advertising budget on digital promotion. The story traces the path Oreo has taken that has led to digital promotions becoming so important. The story also notes how the digital marketing area continues to evolve and how new options may be coming, suggesting marketers must not only understand what is currently available but also be ready to adjust when new options emerge.

Adjusting Marketing Strategy at TargetStudents in college-level marketing courses are often exposed to case studies that provide insight into important marketing lessons. One lesson that comes out of many cases students read is that marketers must be willing to change. The change may be in how they deal with customers or how they deal with suppliers or how they deal with the media, or thousands of other issues.

While understanding something needs to change is one thing, the decision to make the needed change is a much more difficult pill for many marketers to swallow. Why? Because making the adjustment often means moving away from something that was working and the company was comfortable doing. Moreover, the ultimate result of the adjustment may be hard to predict, especially if the change it is not easy for customers, suppliers or the company.

However, companies that run into roadblocks and are reluctant to change are not long for their industry. Eventually, things will catch up to them. For examples, look at Radio Shack, Blackberry, Kodak and many other companies who once dominated their market and now face tough times. These firms are struggling because they would not accept or did not recognize the changes their market demanded.

Yet, for the companies that do adjust, there can be a significant payoff – staying a relevant brand. For example, in this story from Advertising Age, the CMO of leading retailer, Target, discusses a number of adjustments the retailer as made due to a major credit card breach in 2013. Among the changes is acknowledging their target market is shifting from the suburban middle-class mom, who drives their minivan to the store each week, to customers who shop by mobile device. These changes signaled to Target the need to focus more effort on mobile and online shoppers.  This has resulted not only in stronger security measures but also in a more aggressive online marketing effort.

Understandably these changes have not come easy, but Target's CMO seems to present a good case that Target is doing the right thing.

Status and Target MarketsMany believe the holy grail of marketing is trying to figure out what the key factors are that affect customers' purchase decisions. The general idea is that, with this knowledge, marketers can directly target these factors with their marketing efforts. However, as we note in our Consumer Buying Behavior tutorial, it is practically impossible to isolate one factor as the primary reason someone makes a buying decision. Sure price is often a major influencer, but few people are making a buying decisions strictly on price or on any other marketing factor, as many other issues can impact what is purchased. For example, certain cultural and group characteristics that are ingrained in the consumer can affect what they buy. These characteristics, which are often considered outside of the control of purchasers, can weigh heavily on what is bought. Other external factors include the purchase situation and the economic conditions facing the buyer.

While marketing and external factors heavily affect customer purchasing, marketers almost always find that the most difficult factors influencing consumer behavior are those that exist inside a buyer's head. These internal factors include such things as how much knowledge a customer has about a purchase; the circumstances motivating a customer to make a purchase; how a customer views their self; and many more.

A good example of how internal factors can influence consumer behavior is found in this story from Knowledge@Wharton. The story discusses research that examined how perception of status affects the purchase of new products. While the subjects in this research are business buyers rather than consumers, the results are likely to apply to the consumer market. Essentially, the research shows that those who view their status within a group as being in the middle of the status scale are more likely to adopt new products with the hope the product will improve their status. Those at the top or bottom of the status scale are less likely to buy, primarily because those at the top feel they do not need to increase their status while those at the bottom feel they are so low that the purchase will not help them.

The research method used to gather this information is quite interesting as it involved over 6,000 scientists from around the world. The research also confirms how external "opinion leaders" (well-regarded external people or groups) can influence customers' decisions.

Pricing at Comedy ClubsFor many marketing organizations, determining price is the most challenging of all marketing decisions. The reasons are many, but often it comes down to the difficulty marketers experience in trying to determine what people are willing to pay for the value they derive from consuming a product. While the struggle with price vs. value is at the top of the list when marketers try to figure out what to charge, it is not the only issue they face. Another is whether to design a pricing strategy that is far different than what is customary in the industry and, if they do, how will it be accepted.

For example, for over 50 years, with the exception of music released as a single, most music was sold on an album pricing model rather than an individual song model. That is, if fans wanted an artist's music that was not a single, they had to purchase the full album whether or not they liked the other songs they were receiving. This model began to change when music publishers found Internet sites, such as Napster, uploading songs without publishers' permission. Once publishers researched customers' download preferences, they switched to a customer-friendly pricing model that allows for the purchase of individual songs.

While market forces drove the change in music pricing, other examples show that companies within an industry are the key drivers in changing how pricing is done. For example, airlines have figured out that all seats in a plane are not equal and they now charge more for seats that are located more forward or have slightly more leg room, such as seats in exit rows. While this model is used by nearly all airlines, customers are much less receptive to this pricing compared to music pricing.

Most changes in an industry pricing model, whether customers like or dislike the model, starts with one company trying something new and if successful others will adopt. What may be an example of a new pricing model, that if successful could be adopted by others in the industry, is discussed in this story from Time about an experiment at a comedy club in Spain. Nearly every comedy club in the world charges customers a single price to attend a show, though some may adjust this somewhat based on seat location. However, this club is experimenting with a method where they will charge based on how much a customer laughs. The number of laughs is calculated with facial recognition technology tracking customers' reactions. Thankfully, for customers who experience an excellent comic, there is a cap on what can be charged.  But for the poor comics, who struggle to please an audience, this could be a big problem, especially if their pay is tied to the number of laughs they produce.

Creativity is the hallmark of great video advertising with the best ads often becoming the gold standard by which future ads will be judged. Yet, the creative aspects of leading advertisements also tend to become heavily adopted or downright copied by others. For instance, television advertisers often produce copycat ads where the ad layout and execution are clearly influenced from ads presented by another company. Alternatively, these contain certain effects, such as music, which are included in other ads. (For other examples see this 2007 New York Times story.)

While in many business situations imitation is the sincerest form of flattery (e.g., designing a sales force training program that uses the same key elements used by a leading firm), in reality, once a creative video advertising approach is copied by others it is only a matter of time before targeted customers become bored with it.

One creativity advertising approach that may be on the way to achieving highly-imitated status is the "What was that I heard?" advertisement. The idea with this ad is to create a message that motivates targeted customers to experience the ad again just to make sure they understand what they heard. A good example are ads where the phrasing of words makes it sound like it may be something else. Probably one of the best recent examples is the Kmart "ship-my-pants" ad from 2013.

Now, as described in this Adweek story, there is another example, this time from Verizon, where the words "half fast" are uttered in a way that likely will cause viewers to pay attention. If Verizon finds success with this, then more advertisers will be inclined to give this advertising approach a try as there are certainly an unlimited number of word combinations and phrasings that can give the same effect (the story even suggests one!). Yet, despite the effectiveness of this creative form, it can be argued we are reaching the half-life of the type of advertising.