73 Marketing Questions&Answers For Pulp Paper and Cardboard Industry

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As a seasoned marketing professional and a member of pulp, paper and cardboard community, I know how hard you work every day to serve customers in your market with exceptional products in the form of fine printing paper, coated paper, newspaper, office paper, packaging paper, cardboards, corrugated paper, stationary paper, special paper, pulp and so on. Paper is an important part of everyday life and so is marketing for our industry. Peter Drucker is a father of marketing other than being the father of management. Peter F. Drucker once said “The two functions that counts in a business are marketing and innovation. All the other functions are costs” and he also said “the purpose of a company is to create a customer not a product”. According to Drucker, the aim of marketing is making selling unnecessary.

In this perspective, my goal for this writing is to help you gain more practical marketing knowledge you need in the increasingly competitive marketplace. I designed this in question and answer style since I have been receiving so many marketing related questions over the years from different parts of the world. I kept my answers simple.

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73 Marketing Questions&Answers For Pulp Paper and Cardboard Industry

  1. 1. H. Kursad Devecioglu,M.Sc. http://tr.linkedin.com/in/kursadd Version 1.0
  2. 2.  Success is not final, failure is not fatal: it is the courage to continue that counts. -Winston Churchill
  3. 3.  An American educated marketing professional with published marketing and direct marketing books. A public speaker and presenter in the field of marketing as well. * You may watch his presentations on Youtube Channel; http://www.youtube.com/user/hasankursad Linkedin : http://tr.linkedin.com/in/kursadd/ Website : www.hasankursad.com Slide Share : http://www.slideshare.net/HASANKURSADDMSc Facebook : www.facebook.com/hdevecioglu Skype : kursad.devecioglu Email : kursadd@yahoo.com
  4. 4.  As a seasoned marketing professional and a member of pulp, paper and cardboard community, I know how hard you work every day to serve customers in your market with exceptional products in the form of fine printing paper, coated paper, newspaper, office paper, packaging paper, cardboards, corrugated paper, stationary paper, special paper, pulp and so on. Paper is an important part of everyday life and so is marketing for our industry. Peter Drucker is a father of marketing other than being the father of management. Peter F. Drucker once said “The two functions that counts in a business are marketing and innovation. All the other functions are costs” and he also said “the purpose of a company is to create a customer not a product”. According to Drucker, the aim of marketing is making selling unnecessary.  In this perspective, my goal for this writing is to help you gain more practical marketing knowledge you need in the increasingly competitive marketplace. I designed this in question and answer style since I have been receiving so many marketing related questions over the years from different parts of the world. I kept my answers simple.  I hope you enjoy reading this as I enjoyed writing it. If you have any questions, please feel free to contact me directly. H.Kursad Devecioglu, M.Sc. – April 2014 kursadd@yahoo.com
  5. 5. I. Marketing Management II. Marketing Planning & Strategy III. Direct Marketing Management IV. Brand Management
  6. 6. MARKETING MANAGEMENT
  7. 7.  American Marketing Association offers the following formal definition: “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. ”  Marketing is a war of ideas, not products. The more focused your marketing approach, the greater your chance to dominate in the marketplace. There are many definitions of marketing. Basically, marketing can be described as “finding out what your target customer wants/needs and just give it to them.”  For the Pulp, Paper and Cardboard Industry (PPCI), I would like to share my favorite definition as the one from Prof. Philip Kotler; “Marketing is creating, communicating and delivering value to target market at a profit.” From this definition, marketing clearly involves product management, brand management and customer management.
  8. 8. This concept of giving versions to marketing is an idea of father of modern marketing Philip Kotler and here it is the definition:  Marketing 1.0 is appealing to the customers‘ mind wherever customers are,  Marketing 2.0 is appealing to the customers‘ heart by knowing a lot about customers and trying to get close to serve to the customers,  Marketing 3.0 is knowing that customers have other concerns and Company says "we care too to make a better world". it is about caring about the earth. After reading the definition, take a moment to think about your company and see in what version you are operating with.
  9. 9. Marketing is a part of our lives for sure. Here is a list of some marketing types:  Commercial Marketing,  Place Marketing,  Person Marketing,  Political Marketing,  Social Marketing,  Fundraising.
  10. 10.  The marketing mix consists of product, price, place and promotion.  Product is the pulp we deliver to paper mills for paper production or office paper we produce for people to communicate or environmentally friendly cardboards we use for packaging. Although we do supply tangible products in PPCI, the service always comes with the product.  Price is an important element of the marketing mix. A pricing policy needs to be based on the current situation in the marketplace. If you are offering a type of special paper, and you have little or no competition for that product, you might have the luxury to set a high price. If you are selling a common product such as office paper, you might need to keep an eye on your competitors and price your product close to the going rate for those products.  Place stands for your distribution channel. The typical distribution channel for a manufacturer is Wholesaler > Retailer > Consumer. The distribution channel includes all parties who facilitate the flow of goods and services from producers to final consumers. Other channel partners could include distributors, agents and brokers.  Promotion is communication between your company and your customers. Promotion includes personal selling (face-to-face selling), direct marketing (direct mail, e-mail, catalogs, etc.), general advertising (radio, TV, newspaper, etc.), social media marketing and sales promotions (free shipping for a certain amount ordered, free samples, etc.) The primary objectives of promotion are informing, persuading and reminding. Informing is necessary for potential customers to become aware of your products. Persuading is used to create or reinforce a positive set of attributes associated with the brand and to stimulate interest in and to try the product. Reminding includes communicating with customers to create and/or sustain brand loyalty by reinforcing positive brand association.
  11. 11.  Within the marketing mix (product, price, place and promotion) only price brings revenue to company. Being the only element within the marketing mix to bring revenue, price is the most important element to focus on. That is true that we as business professionals do not want to reach target customer with price alone so it is marketer’s job to work on other marketing activities such as market research, word-of-mouth-marketing, branding and advertising in order to support the price position.
  12. 12.  The price ceiling is the highest price that a consumer is willing to pay for your product.
  13. 13.  The price floor is the lowest price at which you can sell your product without losing money.
  14. 14.  It is the first price you establish in order to introduce a new product into the market. Customers take this price as a mental reference.
  15. 15.  Pricing a product based on a previously released similar product.
  16. 16.  If you do not set the price high enough for the company’s profitability for the long term, it is difficult to sell the product later at its true (higher) price because the customer will still be thinking of the low “reference price.” it is important to start with a fair market price so that you make a profit and your customer can still buy from you. You can test your pricing tactics in designated pilot areas before applying in entire marketplace
  17. 17.  Price skimming: Setting the price high initially, then lowering it.  Penetration Pricing: Offering the product with a low price to capture market share.
  18. 18.  The actual product: Physical product, design, features, quality, brand and packaging.  Augmented product: Extra features and benefits that improve the actual product. For instance, selling 80 gram/m2 offset printing paper to a printing house with a satisfaction guarantee.  Core benefit: This stands for what you are really selling, for example when you receive corrugated paper with high stiffness from your supplier for box making, your boxes will have high stiffness as well.
  19. 19.  Just like everything else in the world, each product has a life cycle defined by the following stages: market introduction, market growth, market maturity, market decline and market decline. Do you have any paper products in your product line that used to sell well but is now selling slowly due to low demand? Think about this as product life cycle.
  20. 20.  Marketing process starts with market research. In any market you are entering whether local or International, you need to make sure that you have Enough, meaning market knowledge for Segmentation, targeting and positioning purposes.
  21. 21.  There are two types of market research available for PPCI professionals:  Primary Research  Secondary Research  Primary research is research that you conduct such as: surveys, questionnaires, and focus groups. You gather the information, sort it and analyze it yourself. You do not use any other source to get information.  Secondary research is using research information that was gathered and analyzed by other researchers. In this case you are using someone else’s research results for your company.  If you talk to your customers to get feedback regarding your A4 office paper product then sort and analyze their comments, that is an example of primary research.  Primary research can give you more in-depth information about the marketplace, but you should be careful when you are implementing it in terms of quantity and quality of the research details. On the other hand, secondary research can help you save time while you are using previously made research information but you need to understand the conditions of that research before using it.
  22. 22. Segmentation is dividing the market into groups based on similar needs relevant to your product. The primary objective of segmentation is to identify unique sub-Markets of customers with like attributes, and to find segments that are attractive from a profit perspective. You can segment your market based on your criteria.
  23. 23. Targeting means identifying attractive market segments and tailoring the marketing mix to match the needs of target customers. In this sense, segmenting your market helps natural stone companies identify their target markets.
  24. 24.  You need market research results (primary or secondary market research results )first to analyze the market situation. While analyzing, you need to be as realistic as possible. There are some tools to use such as SWOT analysis, and Porter’s 5 Forces. While doing a SWOT analysis, you need to asses your company’s strength and weaknesses. Also opportunities and threats in the marketplace. Strength and weakness part is usually the most difficult part as it is about the company itself and this requires an utmost objectivity.
  25. 25.  Micro environment and macro environment.  Micro environment consists of company, suppliers, competitors, publics, marketing intermediaries.  Macro environment consists of demographic forces, economic forces, natural forces, technological forces, political forces, and cultural forces.  As a member of pulp, paper and cardboard industry, you can affect microenvironment. You can affect macro environment but you can be proactive.
  26. 26.  Competition brings higher quality products, lower price products and innovation to marketplace.
  27. 27.  Millions of people are moving. It is important to know where they are moving in order to modify marketing plans based on changing geographic and demographic conditions. It is also especially important for paper industry to follow trends in terms of industrial parks and industrializing regions. The rule of thumb is wherever there is production, there is a need for paper and cardboard.
  28. 28.  Demographics are the population or consumer statistics regarding socioeconomic factors such as age, gender, income, occupation, education, family size and so on. Demographics are important to use as a basis for creating target markets (market segmentation). It also helps natural stone companies match advertising media with target market groups
  29. 29.  Buying power and spending habits. It is essential to know about the buying power of customers in your target market. Based on their buying power, you can modify your offers.  Spending habits show us how your customers spend their income.
  30. 30.  Recognize the need  Research information  Evaluate  Purchase  Post purchase
  31. 31.  Problem recognition  Produce specification  Supplier search  Proposals (RFQ, RFP)  Select supplier  Specify order routine  Review
  32. 32.  1- Monetary Risk,  2- Functional Risk,  3- Physical Risk,  4- Social Risk,  5- Psychological Risk
  33. 33.  Price  Quality  Delivery  Support  Financing  Quality of suppliers
  34. 34.  There are fewer business buyers than consumers  Business buyers are often concentrated in certain geographic areas  Business buyers make larger purchases in volume  Business buyers buy what they need not what they want  Business buyers buy exactly what they need  Business buying decisions are group decisions
  35. 35.  Quality  Features  Style and design  Branding  Packaging  Support services
  36. 36.  They are both important, however, focusing on the benefits is usually more helpful for any paper company to close the sale.  For instance, an A4 office paper might have high bulk. This is a feature. If high bulks lowers the risk of paper jam then paper user can save on time. Saving time is a benefit.
  37. 37. All marketing strategy is built on STP – Segmentation, Targeting and Positioning. Kotler defines Positioning as “the act of designing the company’s offering and image to occupy a distinctive place in mind of the target market. Let’s say you work for a paper distribution company and due to market conditions, you may position yourself as cut to size cardboard distributor so that you can cater your target market’s needs in a specialized manner, which is a service. Another example for corrugated paper manufacturers. Let’s say you position your company to provide the highest quality low gram-high density corrugated paper with highest know-how possible. In this sense, you provide the product and educate box makers to have the highest productivity while working on the paper you provided, which is providing a service along with the product of yours. The idea is to be as different as possible from competition. Leadership, heritage, market specialty, production process, being the best in a category or the latest in a category can be great differentiation ideas.
  38. 38.  The answer is “ it depends”. It depends on what kind of paper product we are talking about. Let’s divide paper products into two groups as cultural paper products (A4, offset printing paper, design paper and so on) and industrial paper products (packaging paper, cardboard and so on).  In general wants are more profitable than needs.
  39. 39. Marketing myopia is being short-sighted in the Marketplace. While operating, you do not pay attention to changing environment, you can not keep up with changing customer preferences and fierce competition. Marketing myopia causes Company to fall behind in dynamic environment. For Instance; Kodak fell behind in digital camera market place while it was dominant in regular film camera Industry. Marketing myopia is not being able to see further ahead and no adapting to change.
  40. 40. Customer lifetime value is how much a customer worth over the years doing business with our Company. While some products can be purchased again and again by customers, some products can be purchased for certain number of years. The idea is to acquire customers and retain them as long as possible to have more revenues from them and increase their lifetime value. A customer’s life time value can be high for A4 office paper product since A4 office paper consumption is continuous.
  41. 41.  Buying habits and purchasing behavior
  42. 42.  As saying goes, you can not manage what you can not measure.  First and foremost, each marketing activity has to have a goal such as generating leads, creating awareness, increasing market share and so on. After testing and making sure, the marketing activity is ready to launch, marketing metrics needs to be shaped as well to monitor and control the developments.  Marketing metrics are supposed to find out how much of the goal has been reached or exceeded. The most popular metric is return on marketing investment (ROMI).  Let’s say a cardboard company launches a marketing campaign towards cardboard packaging companies and goal is to generate leads for sales team to finalize the order. In this case marketing department needs to measure how many leads they generate, and then how many of them ended up with orders.
  43. 43.  A product line is group of products that are connected to the same brand.
  44. 44.  Cannibalization is a negative consequence resulting from the line extension of a product. The potential negative impacts of line extension are as follows:  If the line extension does not fit with the current branding (image, function, appeal to target market, etc.) a mental disconnect can occur for the customers,  Customers might be confused about product and the brand.
  45. 45.  When a company offers another variety or version of a product, which is already part of an established brand line of products. For example, adding a diet or sugar free version of a line of soda products.
  46. 46. MARKETING PLANNING & STRATEGY
  47. 47.  As long as it takes
  48. 48.  Intensive Growth ( Market Penetration, Market Development, Alternative Channel Development, Product development, New product for new customers),  Integrative strategies(Forward, Backward, Horizontal Growth),  Diversification
  49. 49.  Marketing is about differentiation. If you do not have any differentiation point, you better have a better price,  Quality, Creativity, Price and customer orientation are rarely differentiation ideas. Being first, leadership, heritage, market specialty, preference, being the latest, hotness can be differentiation ideas.
  50. 50.  Competition (know your competitor. stay away from competitors' strength and exploit the weakness), differentiation idea, credentials to support the point of difference, communicate the difference  Every aspect of your communication should reflect your difference.  Advertising can dramatize the difference. you do need the drama to present differentiation
  51. 51.  In general 10 % is recommended.
  52. 52.  Customers  Brands  Distributors  Patents  People
  53. 53.  According to strategy guru Michael Porter, there are two ways for a company to have competitive advantage:  Cost leadership,  Differentiation.  If you have cardboard products, that are different from the competition, that is a competitive advantage. If you have no differentiation point, you better have low cost. In some paper and cardboard markets, we have seen companies that are creating differentiated service instead of product itself such as custom order service, fast delivery, free delivery, customer satisfaction guarantee and so on.
  54. 54.  Products lacks a meaningful value proposition,  Price is too high  Market did not understand the product
  55. 55.  Represent the voice of the customer,  Monitor the evolving business landscape and gather customer insights,  Be the steward of the corporate brand,  Upgrade marketing technology and skills in the company,  Bring insight into the corporate strategies,  Measure and account for marketing financial performance.
  56. 56. DIRECT MARKETING MANAGEMENT
  57. 57.  Direct marketing is the interactive use of advertising media, to stimulate an immediate behavior modification in such a way that this behavior can be tracked, recorded, analyzed, and stored on a database for future retrieval and use.*  * Bob Stone, Ron Jacobs, “Successful Direct Marketing Methods”, 7th edition, McGraw-Hill 2001, Page:5
  58. 58.  Direct marketing can help pulp, paper and cardboard companies get new customers and retain current customers.
  59. 59. Elements of Direct Marketing Media and customer list Offer Copy Graphic
  60. 60.  A direct marketing campaign has the following elements:  Media and customer list – 40%  Offer – 30%  Copy – 15%  Graphic – 15%  * Bob Stone, Ron Jacobs, “Successful Direct Marketing Methods”, 7th edition, McGraw-Hill 2001, Page: 8  Based on these percentages, we can say that when organizing your direct marketing campaign, the most important element to consider is your customer list and your media. You need to identify your customers and choose ideal media channels (internet, newspaper, industrial magazine, catalog, etc.) to reach them.  The next element is what you will offer to your customers to respond to your direct marketing campaign. You need to give them a reason to respond. That reason might be discount, premium, free-shipping and so on.  Copy is the text of your direct marketing piece. It stands for the language and tone that you will use in your campaign.  The last element is the visual part of your campaign. It stand for the pictures, graphic and photos you will use in your campaign.
  61. 61.  Direct marketing’s starting point is the customer  The chosen media must have a consistent message  Since direct marketing operations are on- going, communications must be well-planned  Listen to your sales team in order to improve your direct marketing efforts
  62. 62.  Customer retention is less costly than customer acquisition,
  63. 63.  The offer (proposition) is the terms under which a specific product, service, or brand is promoted. It includes a mix of factors that motivate individuals within the target group to respond.  * Bob Stone, Ron Jacobs, “Successful Direct Marketing Methods”, 7th edition, McGraw-Hill 2001, Page:9 
  64. 64.  Hard offer: Asking for the payment up front when the customer places the order  Soft offer: Asking for the payment after the order is delivered  Negative offer: Keep sending the products until customer asks you to stop shipping.
  65. 65.  It is essential to give customers reasons to call you. It might be a discount, free gift, introductory price or free shipping to move the customer to take action and accept the offer.
  66. 66.  Direct email, direct mail, telephone, catalog, radio, TV, newspapers, magazine, social media and alternative media.
  67. 67.  RFM stands for: Recency (the last time the customer made a purchase from your company), Frequency (how often the customer buys from your company) and Monetary (the customer’s average dollar amount spent per purchase). Based on this information, each customer’s activities with your company can be analyzed.
  68. 68.  Before launching the full scale direct marketing campaign, the marketing materials should be tested on a small portion of your customers in order to understand how effective your campaign will be. Based on the test results, the campaign materials or approach can be modified and tested again or, if successful, the campaign can be launched after the test.
  69. 69. BRAND MANAGEMENT
  70. 70.  Brand is an identifying mark, symbol, word or combination of the same that separates one company’s product or services from another firm’s. Brand is a powerful asset to your paper company. Brand creates a connection with your customers.  Brand is what you are all about. It is a character that needs to be built.
  71. 71.  Branding is how a product is identified via name, logo, symbol, tagline, etc. The goals of branding are: to help differentiate your product among competing products and to help people remember your product when they consider their choices. Some brands go beyond loyalty and become icons like Harvey Davidson, Disney, Nike, etc.
  72. 72.  Gets customer preference,  Gets customer loyalty,  Provides Leverage,  Provides Awareness.
  73. 73. The brand should:  Suggest a benefit or quality of the product  Be easy to pronounce and remember  Be distinctive, especially among competing brands  Be easy to translate into other languages and cultures
  74. 74.  Manufacturer brands,  Private label brands. Usually retailers create their own private labels.
  75. 75.  Brand loyalty is the degree to which a consumer repeatedly purchases a brand. There are many factors that influence brand loyalty such as: consumer attitudes, family pressure and friendship with the sales person.
  76. 76.  Brand Pyramid is the foundation to establish a brand with a discipline. In each part of the pyramid, you can define what the product is all about, especially in an emotional point of view. Brands make an emotional connection with the customer and it is essential to pinpoint those emotions. From bottom to top; brand pyramid consists of product/service features, functional benefits, emotional rewards, user values and brand personality. After viewing the example for brand pyramid on next page, try to build your pyramid for your paper/cardboard or pulp brands.
  77. 77.  References  Previous works  Ideas for the business
  78. 78.  CRM stands for customer relationship management. Its main objective is to establish a long-term, reliable relationship with customers. That is an important point for paper companies. A customer centric approach can help you organize your operations where your customer and your company can win at the same time.

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