Advertising & Consumer Behavior, Lecture VI by Pekka Mattila

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Advertising & Consumer Behavior, Lecture VI by Pekka Mattila

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Advertising & Consumer Behavior, Lecture VI by Pekka Mattila

  1. 1. Advertising &Consumer BehaviorLecture VI 7.12.2010Adjunct Professor of PracticePekka Mattila, D.Soc.Sc. 6.12.2010
  2. 2. To begin with apologies• The promised individual feedback is still in process• Grading has taken place (reaction papers + assignments)• Promise to deliver on Wed! Pekka Mattila 6.12.2010 2
  3. 3. Curriculum• http://www.youtube.com/watch?v=suRDUFpsHusa) Tricks of the tradeb) Final exam Pekka Mattila 6.12.2010 3
  4. 4. Processing the message1. Attention2. Learning3. Acceptance4. Emotion• Attention and learning necessary to all messages• Acceptance needed for high-involvement brand attitude strategies• Emotion facilitates and fosters all message processing Pekka Mattila 6.12.2010 4
  5. 5. Processing the message• Attention may be conscious or unconscious: reflexive vs. selective attention• Ideas of learning: • At the conscious level declarative or explicit memory • At the unconscious level: implicit memory• Ideas of processing: • Top-Down (conscious) • Bottom-Up (unconscious) Pekka Mattila 6.12.2010 5
  6. 6. Creative tactics• Awareness: recognition or recall objectives• Attitude: • Informational: presenting the benefit claim support • Transformational: emotional portrayal Pekka Mattila 6.12.2010 6
  7. 7. Creative execution• Consistency in look and feel• Over time: association with the very brand > brand awareness and brand benefit• Roles of media and marketing communication agencies • Upheaval in 2000’s • Higher priority for media agencies • Joint planning and presentation • Holistic marketing agencies? • Roles to last? Pekka Mattila 6.12.2010 7
  8. 8. Creative execution• Need for transparency and facilitation• Groupthink• Immense lack of high quality briefing• Pre-testing • Avoiding focus groups Pekka Mattila 6.12.2010 8
  9. 9. Advertising and promotion• Sales promotion: stimulus for purchase & communications of brand benefits• Trade promotion: focus on the distribution channel’s presence, promotion, price and employee motivation• Consumer do not distinguish between brand and trade promotions• Overt focus on promotion very harmful Pekka Mattila 6.12.2010 9
  10. 10. Advertising and promotion• PR• Product placement• The power of packaging Pekka Mattila 6.12.2010 10
  11. 11. Valuing referrals (Kumar & Petersen & Leone 2007)• Often, it turns out that the customers who buy the most or are most loyal are not the best marketers• High CLV is not a good predictor of CRV and so is a very questionable proxy for a customer’s total value• Nearest that most firms get to estimating the value of a customer’s referral power is some gauge of the individual’s willingness to make referrals • It is positively correlated with the company’s profit growth (Reichheld 2003) Pekka Mattila 6.12.2010 11
  12. 12. Value of WOM (Kumar & Petersen & Leone 2007) CRV High Low High Affluents ChampionsCLV Low Misers Advocates Pekka Mattila 6.12.2010 12
  13. 13. Valuing referrals (Kumar & Petersen & Leone 2007)• Huge gap: intention vs. action• Huge inefficiency: action vs. conversion• Understanding how much value a customer brings in from purchases and how much from referrals can help companies target their marketing campaigns appropriately• CRV is not relevant in all situations (B2B) Pekka Mattila 6.12.2010 13
  14. 14. Advertising experiments (Eastlack & Rao 1989)• Findings • Contra-seasonal advertising generated significant sales gains • 25% of dollars to outdoor generated significant sales gains • Targeting kids generated significant sales gains Pekka Mattila 6.12.2010 14
  15. 15. Advertising experiments (Eastlack & Rao 1989)• Lack of early success is an accurate predictor of the lack of eventual success.• Budget levels may have little or no impact on the sales of these well established brands• Changes in copy strategy, media selection, media mix and targeting may produce a substantial payout Pekka Mattila 6.12.2010 15
  16. 16. Trade promotions (Kasulis & Morgan & Griffith & Kenderdine 1999)• Trade promotions are non-routine marketing inducements designed to influence channel partner behavior (Blattberg and Neslin 1990)• Trade promotions have had little impact on a company’s underlying baseline sales volume• Their long-term implications are likely to be negative• In practice, only 35 to 49 percent of manufacturer off- invoice promotion dollars are passed along to consumers by retailers Pekka Mattila 6.12.2010 16
  17. 17. Trade promotions (Kasulis & Morgan & Griffith & Kenderdine 1999)• Excessive buying of deal merchandise for sale in non- deal periods (forward buying) and for sale in nondeal territories (diversion)• If a supplier is caught in a regular cycle of repetitive trade promotion incentives, retailers become conditioned to expect these inducements• Market power is the strength of a supplier relative to competing suppliers and a retailer relative to competing retailers Pekka Mattila 6.12.2010 17
  18. 18. Trade promotions (Kasulis & Morgan & Griffith & Kenderdine 1999)• Proposition 1: A supplier in a dominant position should minimize trade promotion activity • EDLP Every Day Low Purchase Price• Proposition 2: A retailer in a dominant position should favor supplier trade promotions that shift channel profit from the supplier to the retailer Pekka Mattila 6.12.2010 18
  19. 19. Trade promotions (Kasulis & Morgan & Griffith & Kenderdine 1999)• Proposition 3: Channel partners in strong symmetric relationships should favor trade promotions that strengthen channel relationships by promoting cooperation in mutually beneficial activities• Proposition 4: Channel partners in weak symmetric relationships should favor price-oriented trade promotions in an attempt to gain or hold market share Pekka Mattila 6.12.2010 19
  20. 20. Other required and recommended readings• Evaluating work of advertising suppliers (Morrison & Haley 2003)• Influence of spokesperson (un)trustworthiness (Priester & Petty 2003)• Effects of humorous advertising executions on brand memory (Krishnan & Chakravarti 2003) Pekka Mattila 6.12.2010 20
  21. 21. Final exam = Final report• Open books & In-class• Format • 2 Synthesizing essays - 8 points each: altogether 16 points (theoretical insights by Pekka & Sammy) • 1 Application of a research/analysis/interpretation framework -12 points (by Sammy) • 1 Personal reflection and analysis of the Valio assignments -12 points (by Pekka)• Total 40 points = 40% of the course grade Pekka Mattila 6.12.2010 21
  22. 22. • http://www.youtube.com/w atch?v=Pzl86IjTpHIPekka Mattila6.12.201022
  23. 23. Thank you –Take it further at ourFacebook groupLecture VI 7.12.2010Adjunct Professor of PracticePekka Mattila, D.Soc.Sc. 6.12.2010

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