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Chapter Seven Marketing Services

Making Your Mark in MarCom.

Marketing Services 
Most Marketing Services relate to Marketing Communications  ³MarCom´ for short 
Umbrella term for all promotional activities other than advertising. 

As marketers grow, virtually all MarCom services are growing 
New ways to market brands, and«  New sources of career opportunities

Marketing Services 
Sales Promotion  Direct Marketing  Public Relations  Media Buying Services  Marketing Research  Event Marketing  Promotional Products

Who Performs Marketing Services? 
Client Marketing Department  Divisions of mega-agencies 
Specialized Agencies  Division within ³IMC´ agency 

Specialized Agencies or suppliers

Who Supervises Marketing Services? 
At the Marketer, many options 
Director of Marketing  Brand Management  Specialized Manager (Promotion, etc.)  MarCom Manager 

At Specialized Agencies« 
Account Managers, Account Executives  Project Managers

Sales Promotion 
How Big is the World of Sales Promotion? 
Measured Volume (Fees, etc.) over $100 Billion!  To put it in perspective« Trade Promotion 18.4%

The World of

Advertising 52.7% Consumer Promotion 23.4%

Sales Promotion 
How Big is the World of Sales Promotion? 
Measured Volume (Fees, etc.) over $100 Billion!  To put it in perspective« Other  It¶s actually larger« Trade 5.5%  The biggest categories Promotion  Trade discounts 18.4% Advertising  Consumer Savings 52.7% Consumer  «are not included! Promotion  Overall, the Volume 23.4% is HUGE!!!

The World of 

Some Top Sales Promotion Agencies 
Draft Worldwide (Interpublic) 
Burger King, Kellogg¶s

Sales Promotion 
Microsoft, Miller, Visa

The World of 

GMR Marketing (Omnicom)  Frankel (Publicis) 
Frito-Lay, McDonald¶s, Nestle 

Momentum (Interpublic) 
American Express, Anheuser-Busch, GM 

Impiric (WPP) 
AT&T, Mastercard, Mattell, Xerox

Sales Promotion 
Two Types of Sales Promotion 
³Push´ Trade Promotion  ³Pull´ Consumer Promotion

The World of 

Both emphasize Short-Term Sales  Two Types of Incentives 
Less - Savings  More - ³Added Value´ 
More Product (Bonus Pack)  A Prize (Sweepstakes)  Something else (A Premium)

Trade Promotions 
Point-of-sale

Trade Promotions 
Point-of-sale  Dealer contests  Merchandising the advertising  Deals and allowances  Co-op advertising

Consumer Promotions 
Coupons/FSIs (Free Standing Inserts)  Contests, sweepstakes & games

Consumer Promotions 
Coupons/FSIs (Free Standing Inserts)  Contests, sweepstakes & games  Cents-off promotions

Consumer Promotions 
Coupons/FSIs (Free Standing Inserts)  Contests, sweepstakes & games  Cents-off promotions  Premiums

Consumer Promotions 
Coupons/FSIs (Free Standing Inserts)  Contests, sweepstakes & games  Cents-off promotions  Premiums  Sampling

Consumer Promotions 
Coupons/FSIs (Free Standing Inserts)  Contests, sweepstakes & games  Cents-off promotions  Premiums  Sampling  Rebates

Consumer Promotions 
Coupons/FSIs (Free Standing Inserts)  Contests, sweepstakes & games  Cents-off promotions  Premiums  Sampling  Rebates  Continuity programs

Consumer Promotions 
Coupons/FSIs (Free Standing Inserts)  Contests, sweepstakes & games  Cents-off promotions  Premiums  Sampling  Rebates  Continuity programs

Direct Marketing 
Simply put, direct marketing occurs when you buy direct from a marketer 
By returning a coupon  By calling an 800#  By responding to a mail solicitation  By shopping on the Internet  By responding to a telemarketer who called you during dinner

The World of

Direct Marketing 
Sales from Direct Marketing Efforts 
From Lead Generation 
From Traffic Generation  Direct Order Sales $904 billion $212 billion $635 billion

The World of 

From Catalogs - $133 billion  From Direct Response Ads - $203 billion  From the Internet - $41 billion 

That adds up to«

$1.7 trillion!

Source: DMA Economic Impact Statement 2003

Direct Marketing 
Types of Direct Marketing Companies 
Direct Marketers 
Examples: American Express, Land¶s End

The World of 

Direct Marketing Agencies 
Example: Draft Worldwide (Interpublic) 

Support Services 
Examples: Call Centers, Catalog Printers, List Management Services, the Post Office

Direct Marketing 
CRM = Customer Relationship Marketing  LTV = Lifetime Value 
Direct Marketers work to maximize the value of the relationship with their customers, to get the most LTV (Lifetime Value)

The World of 

Doing all those things is ³CRM´  Increased valuation of current customers is a driving force in marketing today

Some Key Reasons for Direct Marketing¶s Growth 
Changing consumer lifestyles 
Shopping opportunity for ³time-poor´ consumers 

More consumer credit 
Now it¶s easy to buy from a direct marketer 

Better ³Direct Marketing technology´ 
More and better lists of potential customers  Better and less expensive technology for ³massaging the database´ 

Media fragmentation 
More cost-efficient media opportunities

Consumer Complaints About

Direct Marketing 
Here are some of the current issues:  Annoyance 
List removal option of DMA 

Privacy issues 
Who owns your information?  Data technology raises new concerns 

Unscrupulous practices 
Example: Negative option 

Major Result ± The ³Do Not Call´ List.

The Key to Success in

Direct Marketing 
List Quality  Internal lists  External lists 
Purchased from 
List brokers  List compilers

is Key 

Compiled by organization itself

Improving Performance 
Keys to improving performance are: 
Improving the list  Improving the offer/incentive  Improving the messaging 

³List Enhancement´ is key 
Adding more ³pieces´ of information about households on current list  Cleaning the list: the ³merge-purge´ function when combining different lists 

Continual testing against previous success to improve results and knowledge

Public Relations 
Marketing PR (MPR) 
Supports marketing efforts

The World of 

Corporate PR (CPR) 
Deals with broader range of issues, from investor relations to employee communications

Marketing PR: Product Publicity 
The Basics: 
The Objective - obtaining free time or space in the media that represents favorable mention

Marketing PR: Product Publicity 
The Basics: 
The Objective - obtaining free time or space in the media that represents favorable mention  The Strategy - product publicity, like all PR, must be newsworthy  The Benefit - the value of ³implied´ or ³third-party´ endorsement by the media

Product Publicity Activities 
Press Releases (immediate news)  Technical and Case History stories  Feature stories  Press Tours 
Press to Company  Company to Press

Corporate PR Activities (Non-Marketing Related PR) 
Investor Relations  Employee Communications  Government Relations (lobbying)  Crisis Management (oil spills, etc.)  Community Relations  Advocacy Advertising (corporate point of view on public issues)

Ownership 
PR Agencies now part of mega-agency groups

PR Agency 

Top Ten PR Agencies (and ownership) 
         Burson-Marstellar (Y&R/WPP) Fleishman-Hillard (Omnicom) Hill & Knowlton (WPP) Edelman Public Relations Worldwide (Independent) Ketchum (Omnicom) Porter Novelli International (Omnicom) Shandwick (Interpublic) BSMG Worldwide (True North/Interpublic) Weber PR Worldwide (Interpublic) Ogilvy Public Relations Worldwide (WPP)

Ownership 
PR Agencies now part of mega-agency groups

PR Agency 

Ad Organizations by PR Fees 
Omnicom $490.1 million  Interpublic $316.5 million  WPP Group $230.4 million  Y&R Inc. $196.4 million  True North $120.3 million 

Mergers Continue 
Y&R will be added to WPP totals  True North will be added to Omnicom totals.

Media Buying Services 
Independent companies that buy media time and space for advertisers  Originally, an alternative to the media department of a full-service ad agency  Evolved as media choices proliferated and media buying became more complicated  Now mega-agencies have ³unbundled´ their media departments to create competing media buying services

The World of

Media Agencies Media Buying Services 
The Pioneer: Dennis Holt builds Western into #1 
Bought by Interpublic  Merged with Initiative  Becomes model for all agencies

The World of 

WPP combines Ogilvy and JWT Media Departments to form MindShare  Leo Burnett turns their Media Department into StarCom  Unbundling continues«

Marketing Research 
The Business of Evaluation 
FEEDBACK is critical nourishment for marketers

The World of 

The Product is FACT, not opinion 
Accurate information gathering is also critical.  Research reputations depend on the dependability of their data

Marketing Research 
Two types of entities provide this critical marketing information: 
Internal Marketing Research Departments  At the marketer  At a full-service agency  Outside Marketing Research Firms

The World of

Role of Internal Marketing Research Department 
Analyze company sales data  Provide short-term and long-term sales and industry projections  Determine what primary research studies need to be carried out  Select and hire outside research firms to conduct surveys and provide other information

Types of Outside Marketing Research Firms 
Limited-service Research Suppliers 
These supply a specific type of data, often to all major marketers.  Syndicated Research (Nielsen TV ratings)  Standardized Research (Gallup & Robinson ad recall pre-testing studies) 

Full-service Research Suppliers 
Focus Groups and Surveys  ³Starting from scratch´ research projects

Event Marketing 
How big is the World of Event Marketing? 
Sports sponsorship $5.92 billion

The World of

Event Marketing 
How big is the World of Event Marketing? 
Sports sponsorship $5.92 billion  Entertainment, tours, attractions $817 million

The World of

Event Marketing 
How big is the World of Event Marketing? 
Sports sponsorship $5.92 billion  Entertainment, tours, attractions $817 million  Festivals, fairs, annual events $740 million  Causes $700 million

The World of

Event Marketing 
How big is the World of Event Marketing? 
Sports sponsorship $5.92 billion  Entertainment, tours, attractions $817 million  Festivals, fairs, annual events $740 million  Causes $700 million  The Arts $548 million

The World of 

That all adds up to...

$8.7 billion!

Event Marketing 
Provides opportunities for: 
Sampling of product  Widespread publicity in media  Unique connection w. target market

The World of 

Cause marketing: 
A special type of event marketing  Example: Children¶s Miracle Network

Promotional Products 
A $16 billion business  Items with company brand or logo on it (pens, hats, key rings)  Higher priced items called ³business gifts´  Many uses: 
Sales lead generation, trade shows, awareness building, employee morale, etc.

The World of

Who is The Person Who Helps Pull All of This Together?

The MarCom Manager 
Relatively new position - result of ³IMC.´ 
Title/function more common on West Coast  Evolving as marketers¶ needs evolve 

Requires ³jack-of-all-trades´ promotional skills and understanding of all forms of ³IMC´  Emphasis will vary by industry 
High-tech - PR emphasis  Packaged goods - sales promotion emphasis  Beverages - event and sports marketing emphasis

Marketing Services 
With increased pressure for short-term revenue, the need will keep growing  There will be dynamic growth in most areas 
Sales Promotion - up 20%  Direct Marketing - up 15%

The Future of 

Increased focus on existing customer ³LTV´ 
More loyalty programs  More targeted programs  More Customer Relationship Management

Marketing Services 
New Technologies 
Interactive and Information Technology  The Internet will affect everybody!  Virtually everyone will practice some form of direct or highly targeted marketing

The Future of 

New Companies 
Start-ups - need IMC from ground up  Start-ups will be internal as well as external 
Example: Nike buys Converse and suddenly Will Smith is wearing them in ³iRobot´

Marketing Services 
Economics of Scale 
Large Mega-agencies will have more resources  Large marketers will want more programs

The Future of 

Competition 
All marketing services activity will increase  Competition between services will also increase 

More Diversity 
Not just in population, but marketing approach  Managing all of this will be a huge challenge!

In Conclusion«

You Can Make Your Mark in MarCom.

Questions & Discussion 
Sales Promotion  Direct Marketing  Public Relations  Media Buying Services  Marketing Research  Event Marketing  Promotional Products