- Posted by: Paul Christ
We have talked many times about companies facing big problems when a product category reaches the Maturity stage of the Product Life Cycle (PLC). For instance, in 2014 we looked at how changes in the beer industry had dragged several older beer brands into the Maturity stage. Also in 2014, we saw how slow sales in the golf industry were likely a signal it was entering the Maturity stage. And back in 2010, we discussed how Apple's introduction of the iPad was driving several competitive products to the Maturity stage.
As we note in our Planning With the Product Life Cycle tutorial, while reaching the Maturity stage may seem like a bad thing, it also should be a signal to marketers that changes are needed. Such changes come in many forms including: adding different features to a product in hopes of renewing customer interest; keeping the product mostly the same but targeting new markets; or accepting that things are changing and different products are now needed. The key to all of these options often comes down to timing. Marketers, who are ahead of their competitors in recognizing a leveling market and make the needed changes, often end up in a much better position than their rivals. Of course, if it turns out the market is only temporarily leveling off, such as what may occur during a recession, then making big changes may prove costly if the market recovers. But if a company has made the right decisions and the market is leveling off then their changes may pay off in a big way.
We can see an example of company winning by making changes ahead of a flattening market in this Fortune story. It provides insight on the strategic changes beverage company Dr. Pepper Snapple has instituted in the soft drink market, where carbonated beverage sales have declined for ten straight years. While other companies, including industry giants Pepsi and Coca-Cola, have seen their sales decline, Dr. Pepper Snapple sales have increased.
To keep ahead, Dr. Pepper Snapple has made a number of marketing adjustments including adding new non-carbonated products, addressing demands of growing markets, such as the Hispanic market, and engaging in product distribution deals with rivals Pepsi and Coca-Cola.
- Posted by: Paul Christ
Looking back on the many posts we have made over the years, one market to which we have not directed enough attention is the online content market. By online content we are referring to websites providing information to a specific audience including sites offering text-based information (e.g., blog postings, news and how-to articles), discussion forums, and multimedia sites (e.g., video and audio content). For example, our site, KnowThis.com, is a good example of a content site targeted to those interested in marketing issues.
To maintain a business targeting specific issues, most websites need to generate revenue to help fund their operations. They primarily do this in two ways: 1) charge a subscription fee, or 2) display advertisements. As most of us know, most content websites choose the latter. While some websites will handle their own ad management, including finding advertisers and collecting the advertising fee, the large majority of online content websites rely on ad-serving companies to present ads and to collect payment from advertisers.
The most important ad-serving service is run by Google. Its AdSense product is used by tens of thousands of websites. We at KnowThis.com have used this for many years and have always found this product's performance, including their backend analytics, to be outstanding. While online content websites looking to generate revenue have many ad-serving choices to choose from, Google is often at the top of the list.
Once a company or individuals operating a content website has decided to display advertisements; ad revenue numbers are something they watch closely. For most sites, the amount of traffic on the site is a pretty good indication of revenue. That is, the more traffic, the higher the revenue. However, that is not always the case, as it may depend on how much an advertiser is willing to spend for their ad to be delivered on certain websites. But even this can be tricky, especially if there are visitors to a website who are intentionally looking to raise an advertisers' costs.
A good example of this has just happened to KnowThis.com and many other sites on the Internet. Someone, somewhere in the world set up a system in which ads on sites were automatically clicked on April 19 and 20. The impact of this was startling. For instance, the images below show, that while KnowThis.com web traffic was fairly consistent, our AdSense ad revenue showed a dramatic increase for these two days.
While Google has now addressed this issue, it is important for anyone running a website generating revenue from advertisements to understand they should not get euphoric when they see a nice gain in ad revenue. But even more important, organizations advertising online need to pay close attention to their ad delivery. Certainly Google will evaluate this situation and make amends, but less reliable ad-serving services may not possess the skill to handle this type of malicious attack.
In any event, if a marketer is going to spend money advertising on the Internet, it is a good idea to be well schooled in the good and the bad of this promotional method.
- Posted by: Paul Christ
As we note in our tutorials dealing with pricing decisions, for many organizations, and especially those selling tangible products, setting price is often fairly straightforward exercise. You figure out what it costs to produce your product and then set the list price by determining what the markup will be. Of course, there are adjustments that can take place to the list price, such as offering discounts to encourage purchasing. But for many marketers determining price is a rather mechanical exercise and not the most exciting part of their job.
While such a rote method of pricing is common for product marketers, services marketers often take a much different approach. They view the demand for their product as being quite variable and look to adjust their price accordingly. For instance, during some periods demand is very strong in which case they can get away charging a higher price compared to times when demand slacks off and a lower price makes more sense. This approach to pricing, called dynamic pricing, is common with transportation services, such as airline fares, and hospitality services, such as hotel room pricing.
A key reason dynamic pricing has become an accepted practice in these industries is because of the evolution of e-commerce technology. Because of the Internet and mobile technology, these industries derive an extremely larger percentage of customers without directly communicating with them. While this may seem to be a bad thing, consider that what these industries do obtain is information captured when customers use these technologies. This information enables marketers to see what is or is not in demand at any point in time. Knowing this can then signal what the right price should be.
A great example of how a service company uses customer information to set price can be seen in this Washington Post story. It explains the dynamic pricing methods used by taxi service Uber. Their so-called "surge pricing" approach is powered by sophisticated computer programming that then determines what price to charge its customers. While the angle of the story is a college professor's assessment of how Uber drivers are affected by surge pricing, there are additional details presented explaining how this dynamic pricing method works.
- Posted by: Paul Christ
Marketers love data in whatever way they can collect it. Whether it is data from customers' website visits or information recorded on a fitness watch or GPS data obtained with the help of customers' smartphones, marketers will certainly try to capture it. The amount of data collection taking place is massive and, as we discussed in March, is leading to a rapidly growing demand for people skilled in managing data analytics.
While marketing organizations love big data, customers, on the other hand, are often not so keen on what they believe is being collected about them. Their chief concerns almost always revolve around privacy issues. However, while customers may not like how and what is being collected about them, a marketer should not assume consumers are totally opposed to data collection.
For instance, as discussed in this Harvard Business Review story, companies may find their customers are much more accepting of the data that is being collected if the marketer is open about their collection activity, especially for data customers feel is the most value to them. The story suggests the value-of-data question is cultural and may depend on the country in which customers reside. This means the openness marketers share about their data collection methods will depend on the type of information customers find most valuable, which may vary by country.
In addition to offering marketers suggestions for when they should focus on improving the openness of data, the story also provides several good research statistics including how customers view the trustworthiness of different industries when it comes to their personal data. It also presents information on how few customers really understand the ways data is being collected about them.
- Posted by: Paul Christ
One of the great temptations for marketers is getting caught up in what attracts the attention of the news media. For the news media, when it comes to marketing, a good story is likely one dealing with advertising and product design, and not one dealing with other important marketing decisions such as shipping, warehousing and even product labeling. Yet, these less "glamorous" areas of marketing are still extremely important in building a successful marketing business.
Another area that can be added to this list of less-than-glamorous marketing functions is customer service. Many marketers despise getting involved in customer service as they view this as less of a service and more of dealing with whining customers. Of course, companies do face whining and, in some cases, arrogant customers, though to dismiss or give short shrift to a function that offers direct contact with those who support the business can be a big mistake.
However, recognizing the need for good customer service also means that companies must spend on technology. In today's instant-contact-is-expected age, marketers cannot afford to let customers be limited to obtaining help from a few phone lines or through email. Companies must expand to offering near instant communication with its customer service department. This means providing such options as online chat and, as described in this story from CRM Magazine, the use of text messaging.
Adding a text messaging option would seem to be easy. Just have a few smartphones manned by customer service folks, and you are good to go. However, as discussed in the story, that is not the way this works, as more technology is needed for text messaging to be a useful customer service option.
Yet, offering a customer service texting option creates a dilemma. While responding to customer issues by text may offer convenience for the customer, on the company end they may be losing out on opportunities to develop stronger relationships with their customers due to the impersonal nature of texting. Unlike a person-to-person phone call, it is much more difficult to engage the customer in communication that could possibly lead them to purchase other products. On the other hand, companies not offering this option could be perceived as not being very advanced or not caring about their customers.
The story offers a good background for why texting is quickly becoming many customers' preferred channel for reaching a company's customer service department and also suggests how companies can turn this customer service channel into a sales channel.