Transcript: Brand Equity Gives a Firm Market Power

Transcription

1 LSM524 Transcripts Transcript: Course Introduction Welcome to the course on creating and communicating the value of your brand. Perhaps no activity really adds value to many companies than building a strong brand in a consumer's mind. We'll talk both about how this provides value to the company but also how it provides value to the consumer. And why we have to think about that in building brands. When you think about brands, so if you think about Apple computers and other products, Coca-Cola soda. The value that consumers place on those brand names over and above the quality of the product, it's a very important part, of why they buy that product and the price that they're willing to pay so therefore the profitability of the company. So, in this course, we're going to be talking about the value of brands to the company, and the value of brands to consumers. And by understanding those values in a particular consumer value of brands and the consumer aspects of brand knowledge, how we as marketers can go about systematically building brands that will provide value back to our companies. In particular, we'll play a focus on marketing communications. And how communications with consumers can be used to build brands and build what's called brand equity, the value of brands for the company. And what different kinds of communications that we use at different stages in the brand building process, in the consumer knowledge process, in the buying process. Can be effective in helping us move forward in building our brands. So, this course is really about the value of brands and understanding that at a specific level not a general level, so that you can build your brand in a more effective way in the marketplace, and understand the tools you have in your toolkit to help you do that. Transcript: Brand Equity Gives a Firm Market Power Welcome to the course. In this course we re going to talk about brand equity. What it is, why it s important, and different ways we can communicate that to consumers to build value for our organization. So let me start out by what it is, and I ll use Kevin Keller s 1

2 framework, which is not the only framework, but one that I think is very powerful, and very useful and it s quite often used in marketing. And his framework beings with what do brands mean to consumers? Brands are not something that we have in our organization. Brands are something that live in the minds of consumers. What do they know about our product, what do they think about our product, what associations do they have in their minds about our product, and about our product in a relative sense to other products that are out there in the marketplace? So what meaning do they attach to our brand? And that s something that consumers have in their mind. We do things to affect that, as we ll talk more throughout the course. But it s not something we have. It s something we d like to build, but it s something consumers own, and that s very important. And, why is that valuable to us? Well, in Keller s framework, that s very valuable to us because it affects how consumers respond to our marketing efforts. It affects how they respond to our price. If we raise our price, will consumers go along and keep buying our product? Or will they stop buying our product? If our competitors lower their price, will our consumers switch to their product, or continue to be loyal to our product? Our advertising. Do consumers pay attention when our advertising come on? Do they respond favorably to that advertising? All of these things are affected by brand equity, by the image, the associations that consumers have to our brand. And they can be very valuable to us. If we think about the top brand value, and there s different ways to calculate value, but this slide shows one particular way to calculate the value of a brand as part of the market capitalization of a company. And usually the number one brand on these lists as it is here is Coca Cola. And here we have about $70 billion of value in the market capitalization of the Coca Cola company that s in their brand. It s in the name Coca Cola, in the red and white colors that are associated with that brand, in the script, the particular font that s used for Coca Cola, the shape of the bottle. All those kinds of things make up the brand in consumers minds. A tremendous amount of value of Coca Cola is in that brand. Well where does that value come from? It comes from, as Keller says, how they respond to our marketing. What price will they pay? If that very same cola was in a bottle that didn t have the Coca Cola name, didn t have the same shape, didn t have the colors, we wouldn t pay as much for that product. So we re able to charge a higher price. That s one way we get value from brands. Secondly, how much do we sell? They re much more likely to buy it if it s Coca Cola than if it s another brand. So the quantity we sell is higher if we have a strong brand. And lastly, one that a lot of people don t think about, our costs can quite often be lower if we have a strong brand. If people respond favorably to our advertising we don t have to do as much advertising if we have a strong brand. We can do less advertising and still reinforce that brand. We might have to do less promotions, less coupons, less discounts if we have a strong brand. So our costs might be lower. So for all of those reasons the price we can charge, the margin we can get, the amount of sales that we get, the total market share, as well as the cost 2

3 it takes us to get those sales can all lead to tremendous amount of financial value for the company. So throughout this course we re going to be talking about brands, and how do we build brands to provide this value to our organization. Transcript: Why Consumers Want Brands I introduce brands by talking about the value of brands to our organization. And of course, that's where the concept of brand equity comes from and where we start from. But what's missing from that and what I think many marketers fail to fully appreciate, is just how much consumers, and our customers, value the brand. Branding is not something we do to customers, branding is really something we do for customers. People want brands. Brands give them value, and that's something that we provide to them. And I think that's an important concept in building brands, to really understand where the value comes from, from the consumer point of view. So, let me go through three aspects of where consumers get value from brands. First, consumers get value from the image, so there's two, really two dimension of that. So, think about Apple. Apple's extremely popular products and extremely powerful brand that consumers really get value from. First would be self-image. So we might buy a product because we think we're that kind of person. And that's very true. If you ask many Apple consumers, they'll say, well I buy Apple products because that's the kind of person I am. The other products might be for other kinds of people, but I'm a creative person or I'm an intuitive person, or other kinds of things that are quite often associated with the Apple brand. A second people, a second kind of value that consumers get from brand image is more external image. Quite often, when people buy a car, or people buy clothes or other kinds of things, they're not only buying them because they think they're consistent with their image internally. But also they're trying to project something to other people. They're trying to project the kind of person they are. Or prestige or other kinds of things they get from the external image of the brand. And these are very important aspects for some consumers, for some kinds of products and services. Not for every consumer and not for every product. But for many brands the internal consumer self-image as well as external image can be very important. A second kind of value that brands gives to consumers is risk. Consumers are quite often more worried about downside risk of certain purchases than they are of opportunity. Lots of psychological research suggest that human beings are more prone to think about risk in a value way. And first think about risk then they are to think about opportunities and gains. And in a way, we're more risk-averse than we are gain seeking. Well, to that extent, when people are in the market place and buying goods or services, they're risk-averse. They're worried about what's the risk, what if this product doesn't work, what if this service doesn't deliver the value that I'm expecting. And one of the things brands do through trust is lower than risk. If we trust a brand, if we trust Coca- Cola to deliver a consistent product, it gives us a certain taste and a certain experience, 3

4 then we know there's not that much risk. If we go into a store and there's a brand that we don't know about there's a risk associated with that. So, brands lower risk, and therefore help consumers avoid something. That something that's very important to them. The third aspects of brands that are really important to consumers is it makes decisions easier. Consumers in general want to buy things, but don't necessarily want to spend a tremendous amount of time. I think the supermarket is a good example of that. The majority of consumers, if you ask them what their goal is in the supermarket, will say, to get out of the supermarket relatively quickly. They want to buy food, they want to buy the things that they need for their house and their family. But they don't want to spend too much time doing it. It's not, for many people, an inherently pleasant task. So making decisions easily is very important, yet you want to make the right decision. And what do brands do? They provide a short hand for consumers to make a decision and know about something when they don't have to get into all the facts. So, for example, imagine going to a supermarket and there were no brands. That there was strawberry jam a, strawberry jam b, and strawberry jam c. And you had to look at the jar and read the label and really think about what the differences between them are before you bought something. That would take time, would not be pleasant, and would be a difficult task. But if you have brands, where you know the brands, you know different brands, you have history with them, and they have images, so you have associations. They tell you what kind of product is this going to be. Is this going to be a higher quality product or a more value product? Is it going to be something that has more of an imported taste? Or more of a domestic taste? Or other kinds of things that you associate with that brand. It makes a decision easier, and that's very valuable to consumers. So at the end, I'd just like to say, the point is not each one of these things, but the important point of understanding that consumers want brands. And understanding why they want brands helps, helps us decide how to build the brand and how to get value from the brand. Transcript: Customer Loyalty and Brand Equity In this section I'd like to talk about brand equity and the term, customer loyalty. And those are very related. That if we have true brand equity, if we have a strong brand in the consumer's mind, customers will tend to be loyal. But sometimes, we see customers who buy our product over and over again. Or use our service over and over again, and we think we have loyalty, so we think we have brand equity. But that's not always true. For example, customers might be buying our product out of habit. They go to the supermarket every week and buy our product every week. Well, it's not because they're really loyal. It's not because we have super-strong brand equity. It might be, but it might be because they're just haven't put the time and effort into thinking about other things that are going on. So if you take that frame, one of the ways I think of thinking about 4

5 brand equity is, if we have real brand equity, it protects us from market changes. Then we really know we have brand equity. So, for example, our competitor introduces a new product or does a big advertising campaign. Do our customers stay with us, or do they change? If we have to raise our price because costs have gone up or some other reason. The customer stay with us, or not stay with us. I think that's a very good measure of true loyalty and true equity, not just to keep people keep buying from us. And if you think about that kind of framework, I'd like to emphasize one last point that I think is a very important one in terms of long-term marketing thinking, versus short-term sales thinking. Quite often, we do things that might boost sales. But we've learned a lot, might impact brand equity and therefore hurt us in the long term. And promotions, I think are just an excellent example of that. If we look at what happens when we do a promotion, we'll have a baseline level of sales. Then we do a promotion. And almost all the time, if we do a price promotion or some other kind of promotion, we'll get an increase in sales. And in the short term, that increase in sales is likely to be profitable. The amount of increase in sales is likely to be more than the loss we get from the lower price, or whatever other costs of doing that promotion. So promotions are quite often things that we really look to in marketing to really give us a boost. But what happens after a promotion? Well, two things happen after a promotion. First, there might be a short term dip in sales. For example we cut the price so people buy now rather than buy later. So we lose those later sales. But even with their short term impact, promotions are still quite often very profitable, because the boost in short term sales might more than offset, the loss of those later sales from what's called time shifting. People buying earlier, rather than waiting to buy, later. And that doesn't really affect brand equity. What I'd like to talk about is more the long-term effect of promotions. The effect on that baseline. What happens when we do a promotion? Quite often what we're telling people is, buy the product now. Buy it based on price or buy it based on quantity, or buy it based on some other factor. And that factor is not, buy it based on its brand equity. So we're changing people's consideration of the reason to buy our product. And quite often, history has shown, that affects the baseline. So it's not just a short term bumping up sales we get. And not just that afterwards short term dip. We have to think about what the promotion does to the baseline. And if we're telling people, buy us because we're inexpensive now, maybe they start thinking we're inexpensive. And we start losing brand equity. So thinking about loyalty and thinking about equity and thinking for the long term is very important when we think about marketing actions. 5

6 Transcript: Ask the Expert: Clarence Lee on Social Media and Customer Voice What is the impact of social media on the voice of the customer? So social media gives voice to the little people. And specifically people at the extremes. If you think about all your customers and put them on a line, on one end are customers that are very, very happy about your product and your brand, and on the other end are customers that are not happy about your brand at all. Social media gives these people a megaphone. They can either make your brand or they can break your brand. One example I'm thinking about is United Airlines. And there's one incident where United, they managed to, they had broken this very expensive guitar of this folk musician, Dave Carroll. And long story short, Dave Carroll tried to ask for compensations and repair but he was given the run around by the United baggage claims process. And so Dave, as you can imagine, is not very happy about that and what he did was he made a song. He made a song about how United broke his guitar and that was posted on YouTube and many social media outlets, and that became viral and this is a poster child example of how social media gives the little guy a megaphone to speak out and to get attention from the large companies. Now what does that mean for the companies? You as a firm want to understand on that line of customers, where do most of your customers lie? Are they on the happy end? Are they on the unhappy end? Because if most of your customers are on the unhappy end specifically, and that's inconsistent with your brand positioning, then even little instances on social media can easily trigger what I call say a branding forest fire, in this case where a lot of people are really incited by one or two social media instance as in the case of United Breaks Guitar. Transcript: Defining Brand Equity The last explicit brand equity topic I'd like to talk about before we get into how do we communicate is defining brand equity more specifically, because our communications and the way we talk about our brands have to attack different aspects of brand equity. And there's really two aspects of brand equity. The first is awareness. Are people aware of our brand? What we call in psychology 'salience.' How aware are they? And it's not just generally aware, it's the level of awareness that we really have to think about. And I'll talk about two different levels of awareness, recall and recognition. Which make a big difference when it comes to things like marketing communications. Are we going after recall? Are we going after, can people remember our brand, are they well-enough associated with the product category to when we say just the product category, people will recall our brand? So when I say 'tires' what brands come to mind? That would be 6

7 brand recall. You might have said Goodyear. You might have said Firestone. You might have said some other brand, Michelin or lots of other brands that might have come to your mind. But that's what we would call a brand that you recall just based on the category association. A different level of awareness is recognition. If I say Michelin do you recognize that as a tire brand? And you might recognize it or not recognize it. But obviously it's much easier to get recognition than it is to get recall. You can probably recognize many more brands of tires than you would recall if I just said, name tire brands that you recall from memory spontaneously. So, when we think about building brand equity, we have to think about what level of awareness, what level of salience, do we want to have for our brand. And recall is much more expensive and more difficult to build than recognition. The second aspect of brand equity that I'll be talking about is image, associations. And that's what most people think about when they think about branding, of course it's very important. Three dimensions that we'll talk about for brand associations. First, they have to be positive. And we have to understand that brands live in consumers' mind. And consumers will have both positive and negative associations with any brand. So it's very important that we try to make sure that we're building as positive associations as we can. Secondly, that they're strong. Consumers will have associations with a brands that are strong, the ones that comes to mind most readily, and associations that are weaker that don't influence the overall brand equity as much. So one of our goals is to build the positive associations to be stronger, so that those are the ones that come to mind, and those are the ones that affect the brand equity the most. And third, we want them to be unique. And this can quite often be difficult. So for many brands, the associations that consumers have are associations that they have for other brands. So if we go back to tires, Michelin and Goodyear. If I say tires that are of good quality, tires that are well known, tires that have lots of different kinds available, or lots of different retailers. Consumers might have those associations for both Goodyear and Michelin. So can we build associations that are unique to our brand, that are strong and are positive? So not only do we have a brand that's positive in consumers' minds, but brands that have unique equity characteristics, unique selling propositions that are strong in consumers' minds that we can leverage to build sales for our product. So again, just to recap, brand equity, very important to us as organizations because we get a lot of value from it. But also very important to consumers, because consumers get a lot of value. It's something that's built in consumers' minds. It's built through awareness, and it's built through associations. And in the next sessions, we will be talking about how do we go about building that awareness and those associations. Transcript: Objectives of Marketing Communication 7

8 I'd like to switch a little bit now and talk specifically about marketing communications. And there's really two main objectives to communications. First, we've been talking about brands, that brands are built on awareness and image. And one objective of market communications is a longer-term brand building objective. Our relative objective is much more short-term and sales-directed in terms of moving customers through what we call the purchase funnel. From awareness, interest, evaluation, trial, adoption. Sales, for example, in the purchase funnel that you see on the slide, In terms of moving customers through the stages they need to, to get to where they buy our product, use our product, and ultimately hope for most products, become loyal. And that's a combination of building a strong brand but also getting them through specific stages that they need to buy the brand. One of the reasons to go through this purchase funnel and talk to you about it is that we have to think about the different kinds of communications we have, and specifically what we're trying to accomplish with different kinds of customers to think about what the right communication is to use. For example, for either brand building or in a purchase funnel, the first stage is awareness. Awareness is a very general kind of objective, not a very information-rich objective. So we tend to use things like broad-based advertising to try to accomplish general awareness objectives. But as we move through the funnel or we get to more deep brand related things such as really trying to get recall or trying to get specific image related things in consumer's minds, we now get to interest and evaluation and we use other tools. For example, the web is a very information rich environment where we can often get people to come to a website and give them specific information tailored to what their specific interests are. And as we move further down, down to trial, to get to people to actually try their product and see the benefits that might not be clear from just reading about them. We do free trials and in-store activities and other kinds of things to get people to see those kinds of benefits. And finally, we want adoption, we have to do sales. Whether that's a specific promotion to get people to buy it at a particular time through a discount. Or personal sales, or other kinds of activities to try to close the sale. So I'd like you to think about long term branding objectives in this part of the course in terms of communication. Just to accomplish that, but also more specific sales related objectives and communications. So as we go through different tools, and different kinds of communications we'll be talking about these different marketing objectives for each. 8

9 Transcript: Four Communication Tools So let's talk now about the different kinds of communication tools we have available to us as marketers, and when we might use each, and what are some of the advantages and disadvantages are of each. First, advertising. Advertising is a tool where we pay for the space in the media. Be it space on a website, for a search, on a television show, in a magazine, or whatever place. There're certain amounts of space and time where a viewer is looking at something, and we pay to put what we want to have in that space. That has some advantages. We get control. We get to decide what kind of search we want to pay for. What television show we want to put our advertisement in. Where in a newspaper we want to put the advertisement. Two, we have control over what we use in that space. We get to design the advertising. We get to say what we want to say in that advertising. So advertising has some very strong advantages in terms of our control. But it has some real disadvantages. First of all, the consumer may not pay attention. We're buying the space, but that doesn't mean the consumer is necessarily going to look at it. Second, a very important part of advertising is consumers know that advertising is paid for, that it's controlled by the marketer. So consumers look at advertising in a somewhat more skeptical frame of mind, than they would some other kinds of communications we're going to talk about. So advertising, a very powerful, very common tool. Used in many different ways. In particular for awareness kinds of objectives and getting consumers into our funnel. And starting them down through the funnel in terms of some of the image kinds of objectives. But a tool that can't do everything for us and has some real limitations. The second tool on the chart is personal selling. More specific attempts to talk directly one to one with consumers. Extremely powerful. It can be interactive, we can have a sales person either visit customer, or talked to a customer in a store. Or other kinds of specific one-to-one communications. Those can be extremely powerful. We can tailor the communications specifically to that consumer. We can listen to what they're saying, and adjust to what they're saying, in terms of responding to their specific needs, and how they're reacting to what we're saying. If they're skeptical what we're say, we can ask them why. Explore what they're skeptical about, and attempt to overcome it. So personal selling, extremely powerful, but of course in general, very expensive, to be able to have those kind of one on one conversations. In b and b marketing, usually very much worth it. In b to c marketing, might not be worth that expense. So personal selling, very effective. Particularly as we get farther down the funnel and want to close the sale. It could potentially be worth it because there's high potential of that customer buying from us. But we have to be very careful about the cost. 9

10 Third, it's the opposite. Public relations where compared to personal selling, not as high cost because we're not paying for the media unlike advertising. But very general, we've lost control. So in advertising, we paid for the space, and we get control over that space. Public relations, we don't pay for this space, we try to put out information to the media, to other kinds of organizations that consumers look at. And we try to get them interested enough in our information that they'll write about it. And they'll talk about it in ways that are favorable to us. Very powerful, because here that other media outlet is getting the consumer's interest, getting the consumer's eyeballs so to speak. So we'll get much more attention paid to our information than we might in a more obvious advertisement. And secondly, credibility. If a media outlet is writing about us, it's now not us saying we're great, it's somebody else saying we're great. Which obviously has more credibility in terms of the consumer, as long as they feel that the outlet is credible. And generally that'll be true because they won't go to a specific outlet unless they think it's credible. But we lose control. We don't know that they'll say favorable things. We don't know that they'll say the things we want them to say about our brand. So, in terms of building our brand and building a specific image, public relations is only good to the extent that we can induce people to write about it or talk about our brand in ways that are important to us. So another tool in our tool kit like others has advantages and disadvantages, depending on what the situation is. Do we have really new information, that's interesting information, that's positive information that we think people will talk about? And public relations becomes very effective. And lastly promotions. By promotions, here I mean short term inducements to buy. Usually used right at the very end of the funnel, whereas advertising is more at the beginning of the funnel, promotions are more at the end of the funnel. We have people aware of our products or service. People are interested in our product or service. But we have things we want to overcome that last step to purchase. And that's usually where promotions come in. Price promotions, other kinds of short term inducements where we say if you buy now, there's something special that we'll give you to do that. To induce people to overcome that hurdle and make that purchase. That could be more b to b where we give volume discounts, or it could be more b to c, where we give coupons and other kinds of inducements. But sales promotions can be very powerful short term inducements to get a sale, at the end of the funnel. The one caution on sales promotions is usually we're telling people to buy our product because of that special inducement, not because of the strong brand and strong benefits that they're getting from buying our product. We're trying to incorporate that in, but the promotion is emphasizing that short term inducement as the reason to buy at that specific time. That could be powerful to get the sale, but it might have a negative impact on the longer term brand, in terms of saying, it's at a low price, or you can get a volume discount or whatever it might be. Which might take away from, buy us because we're valuable. So again, like each of the other tools, promotions can be very powerful, but also have some negatives that we have to balance in terms of what's the right promotion, what's the right tool for the right objective. 10

11 So again, when we do marketing communications, we have to think about the objective. Think about what we're accomplishing, and use the right tool for the right objective. Transcript: Traditional Media Compared with New Media If we think about marketing communications, one of the biggest thing that's happening of course is the development of new media, social marketing and other kinds of uses of technology. And this has really changed the way we've had to think of marketing and communications. In traditional media, in general, we have more control over what's going on. Somebody's reading a newspaper. Somebody's watching television. Somebody's listening to the radio. In those kinds of things, the context in which they're going about, interacting with that media is pretty much set by the media. You watch a television show from the beginning to the end in general. But what happens with technology? Now that we have mobile devices on which we watch media. Now that we have down streaming of media as opposed to traditional broadcast media. Control is moving much more over to the consumer. This consumer gets to decide what parts of different things they're looking at, they want to see. If they're watching a television show they can decide. Do I want to watch the advertising or not watch the advertising? So all of the sudden we get new terms such as Zipping and Zapping. Zipping would be, I zip through the commercials, I can fast forward. Or zapping can be, I skip the commercials altogether. I just zap them because I have control over my media experience. And the chart you see now shows some zapping data, which shows in many product categories a large percentage of consumers will actually not watch the advertising. Now of course what's most important to us as marketers is who's watching our advertising? And this kind of data overplays the negativity of zapping. Because quite often those people were most likely to want to watch our advertising. Those people were specifically targeting are less likely to zap because they're going to be more interested in what we have to say. Because, of course, we're developing the communications for them and what their needs are, as opposed to people who are not in our target market, for whom the advertising is not directed. And they're more likely to zip or zap because they're less interested in what it has to say. But still there's overall activity in terms of consumers being more in control of their media experience. And therefore, as marketers, we have to take advantage of where consumers are and what we can do, and be mindful of what we can't do in a new kind of environment. So, just for example, we have to think about where media should be shown, and where do we have control over a customer's experience. And in the late 2009, 2010 data, I just pick one example that people might not think about. What's the fifth largest television network in the United States? And people might not think about. It's actually Walmart Television, in terms of the number of people viewing a network in store, in Walmarts. And so many people shop at Walmart so often, more people see Walmart television 11

12 than all but four of the traditional television networks you might think about. That's because we have control over that. They're in the Walmart store, for other reasons, for shopping and things like that. But for example, at checkout, people are waiting in line, and they'll watch the TV screens, and that's something where we can get our message out. So, it's thinking about what's going on in the environment. Where do you have control, where do you not have control, and where can you get people to see the communications in ways that you want to see them? That being said, new media has some very big advantages that I want to talk about and think about how you take advantage of them. And, the most important of those is targeting. That through media, media is so disperse, the web is so specific. People go to websites that are specific to what their interests are. And we have data from people, for example, Google, or Facebook, and other kinds of social media, have tremendous data about their users and can link that to each user's visit to their web sites. We can target very well. We can choose specific kinds of people who we want to show our communications to. Very powerful part of new media. Secondly, the context. It's not just who we're showing, but when we're showing. We want to show our communications. For example, if we are food marketers, we might want to show our communications when people are looking at cooking information and thinking about food, not when they are looking at health information. Then we might want to show them information about healthy options or other kinds of things. So very powerful part of new technology. Marketing is the ability to target not only who the people are, but in what context they're looking at information. And in what context they're going to see our information. So they can be thinking about the kinds of things, the kinds of needs that are relevant to what we're trying to sell them. So very powerful part of social media marketing where even though the consumer's in control of their media experience, we can use technology to deliver messages at the right point of time to the right person. The next big advantage, of course, is low variable cost. That the cost to send somebody an is extremely low. It becomes close to zero after you've set up the system to do it. Whereas things like direct mail or other kinds of ways to send messages to consumers have much higher variable cost. So in terms of media and in terms of thinking about traditional media versus new media, we have to think about consumer control, we have to think about context, we have to think about what the advantages are. But also what the disadvantages are in terms of what's the best communication medium to use. Also in new media, we have to think about some other disadvantages, things like privacy and potential reaction to our use of specific consumer information. Things like measuring new media. For example, a movement as in new media is to measure and pay for communications by how many people click on an ad. Or go through to our website from an ad. But that leads to things like click fraud where somebody might 12

13 artificially create clicks, to be able to get paid much more if they're getting paid by the click. So tracking some of those things can be difficult. So understanding what the model is, how we're paying for the communications, how the consumer's seeing the communications, and what the real value is can be tricky and new and different. And therefore we have to think about not the only advantages and disadvantages of new media, but also some of the problems that are being caused and how we're dealing with those problems. Transcript: Compare Push Media to Pull Media I'd like to talk to a specific aspect of new media marketing. What I'll call push versus pull. Because I think it has a lot to say about how we have to think about how we're communicating with consumers and what they want from us, and need from us. By push I mean, us going and taking what we have and pushing it out to consumers, and trying to get consumers to pay attention. So traditional advertising is very much a push media, where we're paying a media outlet, be it at a television station, a magazine, a newspaper, or a billboard company, whatever it might be. We're paying them to put our communication in the space where a consumer will be. We're trying to push it out to the consumer. But think about most new media. It's very much pull, where consumers are saying I'm going out and looking for information. I want information about health, or I want information about travel, or I want information about electronics, or whatever it might be. They're out in the media looking for information, talking to other people and doing different kinds of things, so a very pull kind of environment. In a push environment, for example, traditional advertising, a consumer isn't that involved in our communication. Because they're reading a magazine, for whatever reason, they're reading the magazine. They see the ads, but that's not really what they're about. That's not really what they're there for, so they're not as involved in that information. Secondly, they tend to be more passive, for example, listening to the radio or watching television. You're sitting back and the media is sort of coming to you. You're sitting back and you're relaxed, and you're letting that information come to you. You're not as actively involved as compared to mobile or going to a website or being part of social media where you're actively involved and trying to interact with that information. A much more involving situation. But, so in general, that's kind of nice, because consumers are pulling that information to them and they're more involved. The problem for us as marketers is we lose control. And that come to a real decision. We get into a pull information where consumers are involved. And consumers are engaged in the information. And that's fantastic. But what do we do about control? And there's sort of two theories out there that are very relevant for marketers to think about, in terms of 13

14 how to react to that. One, try to take control. Try to go about influencing those media outlets and trying to put relevant information about your product or service where that consumer will be. And try to get back some control. That can be effective for certain marketers, but many people would say that for most marketers, that'll be ineffective. In a social media situation, marketers really trying to gain control. It's too much backlash. It is ineffective to get control. It can be difficult to be effective in that situation. So the prescription is to sit there and back off. Very difficult for marketers to say, let consumers have the conversations that they want to have. Let us perhaps try to engage in the conversation by getting advocates to go and blog, or get involved in online conversations about whatever it is that's relevant to our product or service. But mostly back off and allow conversations to happen where all we are is in the background trying to influence the conversation in subtle ways that are relevant to our consumers. The very much one of the marketer losing control, allowing consumers to have control. But the benefit we get is that they're engaged, they're involved. If there is relevant information, it'll really have an influence on them. So it has some advantages, and some of it is just the reality of that's where consumers are. So that's what we have to be about and we have to think about what's going on in that space, and what we can or can't do in that space. Finally, the last thing I'd like to talk about in terms of new media is what's called reach versus richness. And really trying to use technology to get the reach of getting to lots and lots of consumers. But also the richness of a very engaging, involving, deep communication that'll convince them a lot about our brand, about the product or service we have, to convince them to buy. Traditionally, there's been a trade-off of reach and richness. For example, we could do broad media advertising. Well, lots of reach gets to lots of people, but not very rich because we only have one page in a magazine or 30 seconds on television, or something like that. So we get a lot of reach but we don't a lot of richness. On the flip side, we can do things like personal selling, where we get tremendously rich interaction but we can't reach very many people. It's very expensive to get to each person. So, the promise of technology, if we can use social media correctly, if we can use websites correctly, if we can use links to our information correctly. We'd be able to get reach, get to lots of people, because the variable cost of getting to different people is low with technology. But use interactive technology, use conversations that are out there in social media, to get an information-rich message out about our product or service. To break down the trade-off of reach and richness, to get reach through the cost of technology. But get richness through the interactive nature of online technology. The very best marketers, some of the best social media out there usage, really gets people involved, gets people talking, gets that happening. That sort of rich communication about our product or service out there in the environment. But does it in a way that enough people come into that, we're reaching enough consumers to make that effective, to really build substantial sales for our organization. 14

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