Talking about marketing channels

The days, if they ever existed at all, when prospective buyers were supposed to beat a path to the factory door are long gone. 

Today, businesses, are participating in a global market that exerts a direct influence, even on companies only operating in their home market. Conversely the opportunity to sell products and services to a wider market place has never been better. Moving product from the point of manufacture to the ultimate end user may involve a lengthy chain of participants, or be delivered direct.  With the advent of the Internet and e-commerce continuing to exert changes on the markets addressed and channels to serve them, new business models have emerged. Sales teams are much slimmer than before, product volumes often higher and market channels, distribution and delivery changing to the new paradigm.

Traditionally serving a large customer base, has been through an intermediary – wholesaler, stockist, distributor, dealer or agent. The manufacturer is relieved both of shipping to multiple end customers and the cost, and risk, of carrying perhaps thousands of small accounts, in return for a discount against the published selling price plus marketing and training support. Working through intermediaries can present a number of marketing challenges, in terms of pricing, profitability and keeping in touch with the end user. A term that has been introduced in the last few years is disintermediation – the process of bypassing distribution and going straight to the end customer. Direct selling demands a high level of product quality associated with a ‘plug and play’ out of the box simplicity, to avoid high levels of ‘expensive to deal with’, returns. The use of call centres and the Internet linked with global carrier services and credit payment methods have now given the manufacturer the mechanisms to bypass traditional channels by appealing directly to the end user, but the investment in promotional costs with this model is high.

Finally it is important to remember the roles of specifiers and influencers, although not part of the supply chain, may still wield the real specifying influence. The end customer is often not just buying your product, but a complete working system where a system integrator or consultant may be a key player in bringing together a range of products to carry out the tasks needed by the end user.

PLASA London - images of new docklands venue

After many years at Earls Court, the PLASA Show has moved to Docklands. Here are some images from the area and show floor.

 Trams, cranes, refurbished buildings and modern structures

DLR arrives at Custom House

Cranes 

New life breathed into old buildings

ExCel - entrance to the show

 



Lights, camels and cars!

 

Take to the dance floor with Harlequin

Switched on and connected with ELC's ethernet systems

Market drivers change as markets mature

Like the product life cycle, complete markets or market sectors can also progress through different stages over time. At each stage there are different market drivers, so it is important to understand how these market drivers work. 

During the introductory phase the target audience is small and characterised by innovators and early adopters. Application of new technologies can often be the driver for new markets. There are plenty of examples of markets served by products that previously did not exist – mobile telephony, the Internet, the whole Apple portfolio – where early adopters drive the market forward. In growth markets, the drivers are a constant flow of new users accepting and using the product, as well as an increase in usage rate amongst existing users. 

The next wave of customers, influenced by the early adopters, join the market and in doing so increase the current target audience as well. But while the Internet is still growing the market for mobile telephony has passed the initial growth phase as handset saturation is approached. Mature markets develop when there is no increase in the total population of users and existing users cannot readily use or consume more of the product. More manufacturers will also have entered the market. In mature markets there will typically be many suppliers, little real product differentiation and pressures on price due to high supply and no growth. 

Many industrial markets  are arguably in this state most of the time, leading to excessive discounting to move the product and with suppliers experiencing falling margins. Declining markets are usually characterised by a shrinking total population and sometimes a decline in usage as well. This may be caused by a shift to use different solutions or simply the reason for the product need is no longer valid. 

At each stage of the market cycle – introduction, growth, maturity and decline – the marketing approach will need to address the target audiences which themselves will change and not be a constant. The proposition to early adopters and opinion formers in helping grow a new market will be quite different to marketing to an audience well familiar with the market, comfortable with the same again, resistant to change but not yet ready to move their allegiance to a new and evolving sector.

Talking about product life cycles

Products sales can be demonstrated to evolve through various stages during the life of the product. By plotting a chart with respect to time, sales exhibit a typically slow start, then a period of rapid growth, before slowing, peaking, and declining again. 

The practical problems however in plotting the future of any new product may be far more difficult to achieve than the theory might suggest. For some the timeline may extend over years, for others it may be a matter of months. By the time you have collated sufficient data to detect the onset of maturity, it may already be too late to decide what to do next. There are some household brands that have been around in basically the same form for a century, while a more fashion related product, may be obsolete in weeks. The life cycle curve is generally seen as exhibiting four phases - introductory, growth, maturity and decline. But with so many other factors affecting sales it is often difficult to state with any real certainty when growth changes to maturity and when is the right time to delete the product completely. This produces forecasting challenges throughout all phases. 

Many products have failed due to poor availability at the onset of the growth phase and allowed better-prepared competitors to take up the demand. But over estimating the growth can equally put a lot of stock on the shelves that cannot be moved without radical action such as deep price cuts. Various manufacturing and logistics techniques aim to match product availability to demand, but for a longer lead-time supply routes - if the goods are shipped by the container load from China for example - then commitment to stock may need to be taken well in advance. Marketing actions can help of course make some impact on the product life cycle curve. Product updates and enhancements may give the product a new lease of life, but generally they only delay the onset of maturity – they don’t prevent it. There is a need to start planning the successor product while sales are still buoyant. 

At the peak of a product’s success it is easy to assume that success will be projected forward indefinitely, then find that a competitive move or new technology are set to change the market situation. 

Are marketing campaigns based on research?

It makes sense not to commit investment to new development or promotion without first understanding the market, what benefits the users are seeking and response to different brands. But few companies actually do this. Some assume they know all about their market. Others may think market research is too expensive, so don’t bother. But to conduct a basic awareness and perceptions study need not be prohibitive and can save expensive misplaced investments in producing an ‘off track’ product, or communicating the wrong message. First define your target market. Where is your product being sold? Then define who will buy, or influence that sale. Produce a list of your target audience and take a random selection to ask for their views. Ask what names ‘come to mind’ unprompted, if your brand is not mentioned then prompt with other brand names to see if they have any recall at all. Further questions can establish perceptions they hold of different manufacturers, issues relating to the type of products currently available and key specification criteria that lead to a purchase decision and the most trusted sources of product information. It is surprising how often a simple telephone survey can produce results that show the awareness and perceptions held about a brand are ‘at odds’ with the company held assumptions . 

Keep the interview short, get straight to the point and also record the anecdotal comments – these are often just as informative. A survey may bring up some really fundamental issues. One example found in testing the market’s response to a new product was that nobody would order it because they had massive delivery problems so the market didn’t trust them. Another company that perceived their image as traditional and were looking to launch a campaign to promote a new style, discovered their long absence in communication with customers had led many to think they had gone out of business. But more typically surveys do confirm much of the company’s own views and can help fine tune the campaign, so marketing spend can be committed selectively where it will realize the greatest benefit. 

A quick recap on PR

Press & Public Relations activities, or PR for short, can play a key role in developing and enhancing the reputation of a business. 

Almost every enterprise that markets products and services to other businesses and end users can reach potential decision makers and influencers through the press, journals and web sites.  Carefully placed editorial material complements other marketing activities by providing a variety of positive stories and statements about the business, in a way that has the authority of apparently independent editorial comment.  In the long term, regular editorial will help raise awareness of the business, create a positive attitude towards the company and its products and generate enquiries. 

Advertising reaches a mass audience effectively, but works best when conveying a simple proposition designed to gain attention quickly and with maximum impact. PR can expand this message by use of news items, third party endorsement, or by longer articles that reinforce the message through explanation and applications of products and services. News can embrace product launches, important contract wins, personnel appointments, new technology developments, events and company results. Unlike a short-term advertising campaign, PR offers a long-term marketing tool that is the deliberate, planned and sustained effort to establish and maintain mutual understanding between an organisation and its public. 

When things go wrong, as they sometimes do, the public will be more tolerant of a 'well thought of’ business that communicates with them and is seen to put the problem right. The PR plan can seek to follow a theme that builds a particular view of the business, but is also flexible to react to tactical developments or unexpected events which can be handled quickly and positively at any time, and far more effectively and rapidly than with other promotional activities. 

In today’s quick consumption, time poor working environment, industry and company web sites and social media offer an alternative news delivery channel to traditional print. News headlines can be e-mailed to interested readers offering the opportunity to click a link to read more of stories that attract their attention or just tweeted. 

News is also one of the main reasons for return visits to a web site and a news publishing and archive system such as Technical Marketing Ltd’s Virtual News Office™ can be integrated with the web site. 

Advertising - what is it all about?

Aerial advertising

The term advertising is often confused with the whole marketing process itself. 

Our use of the word is confined to ‘paid for’ media space. In business-to-business communication this is mainly the trade press and portal web sites, but advertising media also embraces radio, cinema, television, bus sides and bill boards. 

Advertising has been described as the persuasive force that utilises mass communications to make changes in customer attitudes, behaviour and actions towards products and services in a direction favourable to the advertiser. 

Advertising is cost effective in reaching large groups of customers and potential customers with a shared defined profile, hence the proliferation of special interest and industry specific magazines that can deliver an audience relevant to the needs of the advertiser. Media selection must therefore seek to match your target audience and readership profiles. 

Advertising’s key aims are to progress the target audience through a series of stages by first turning possible unawareness of the product, into awareness, a comprehension of the proposition, a conviction that the product is both relevant and of benefit and finally a ‘call to action’ to convert the prospect into a potential customer. 

As individuals we are subjected to hundreds of advertising messages each day, so to arrest attention the advertisement has to stand out from the others. This may be by use of compelling images, headlines or a combination of both, that stops the browser just long enough to take in the proposition. The fly fishing analogy has been used to explain the process of first being seen and attracting attention, then swiftly driving the point home. Once ‘hooked’ a few telling words must explain the benefits of the proposition succinctly, then offer a ‘call to action’ where the prospect can find more detail. Today typically a web site, but the ‘call to action’ could be incentivised by the promise of a useful or attractive offer to enhance response rates. 

Advertising is a key marketing tool, to raise awareness, build brand recognition and communicate a simple or top-level message, but needs repetition to ensure that message is seen and acted upon. Other communication means such as PR and direct marketing will be called into play for a fully integrated campaign.