viral marketing

Definition

 

Marketing phenomenon that facilitates and encourages people to pass along a marketing message.

The buzzwords viral marketing and viral advertising refer to marketing techniques that use pre-existing social networks to produce increases in brand awareness or to achieve other marketing objectives (such as product sales) through self-replicating viral processes, analogous to the spread of pathological and computer viruses. 

It can be word-of-mouth delivered or enhanced by the network effects of the Internet, Viral promotions may take the form of video clips, interactive Flash games, advergames, ebooks, brandable software, images, or even text messages. The basic form of viral marketing is not infinitely sustainable.

Information

 

 Viral marketing depends on a high pass-along rate from person to person. If a large percentage of recipients forward something to a large number of friends, the overall growth snowballs very quickly. If the pass-along numbers get too low, the overall growth quickly fizzles.

At the height of B2C it seemed as if every startup had a viral component to its strategy, or at least claimed to have one. However, relatively few marketing viruses achieve success on a scale similar to Hotmail, widely cited as the first example of viral marketing.

Example:

1. Today many companies are using a way of sms to deliver viral massage, people pass on message that you will earn free balance, talk time etc and continue go to pass the message..

2. The Movie 2012 also used viral marketing for the promotion of the movie, that was already information was prevailing the market about the end of the world in 2012.

Advertising vs. Public Relation : by Philip Kotler

The following article deals with the relative merits of advertising and public relationsin the marketing mix—with some conclusions that are sure to rattle your cage. Philip Kotler is Distinguished Professor of International Marketing at the Kellogg School of Management. He is the author of Marketing Management, one of the most widely used marketing books in graduate business schools worldwide, and numerous other books and articles. Kotler is renowned for pioneering "social marketing," campaigns for nonprofits or causes as "an alternative to coercion or legal action in solving social problems."

His new book, According to Kotler (AMACOM), is a summary of the key principles of marketing and how they relate to current events such as corporate accounting scandals, outsourcing, globalization, warehouse shopping and online marketing. It includes controversial new topics such as "demarketing," "reverse marketing," "body advertising," and other tactics. What follows is an excerpt of the book, based on the thousands of questions Kotler has been asked over the years by clients, students, business audiences, and journalists.

Question: Can you please say something regarding "the need for a new marketing

mix"?

Kotler: The original marketing mix was not 4Ps but about 14. Neil Borden many years ago used a large list of marketing tools. We can always add to the list. So the question isn't "what tools constitute the marketing  ix" but, rather, "what tools are becoming more important in the marketing mix." For example, I feel that advertising is overdone and public relations is underdone. This is seconded in Al Ries's book, The Fall of Advertising and the Rise of PR. And direct-marketing tools are also rising in importance in the marketing mix.

Question: TV advertising seems to be losing its effectiveness. What are alternative

ways to get attention?

Kotler: The average American is exposed to several hundred ad messages a day and is trying to tune out. TV advertising is losing its effectiveness because of growing advertising clutter, the increasing number of channels, the availability of zapping mechanisms, and reduced watching of television by certain groups. The result is that marketers must consider other methods of getting consumer attentions. Here are a number of possibilities:

• Sponsorships. Companies have put their names on stadiums, on whole teams

and on individual athletes in order to gain exposure.

• Mentions on talk shows. During his evening show, David Letterman sent a

camera crew out to buy Snickers candy bars and ended up talking about it on

three subsequent shows, including when Mars sent a whole van of Snickers to

feed the audience.

• Product placement. In the movie Die Another Day, James Bond drove an Aston Martin, used a Sony cell phone and prominently featured an Omega wristwatch. Products are also mentioned in novels—in fact, Bulgari commissioned a whole mystery novel to be written called The Bulgari Connection.

• Street-level promotions. Companies have hired actors and actresses to walk in busy areas and ask passersby to take a snapshot of them using their new camera phone. Hopefully the picture takers are impressed and tell others about the new camera phone.

• Celebrity endorsements. Michael Jordon's endorsements gave a boost to Nike shows, McDonald's, Hanes underwear, and Rayovac batteries. Ex-Senator Bob Dole's surprising endorsement of Viagra put Viagra on the nation's mind. • Body advertising. College kids agreed to paste Dunkin' Donuts logos on their foreheads during an NCAA basketball tournament.

Question: What is the main communication challenge?

Kotler: The major challenge today is getting people's attention. Consumers are pressed for time, and many work hard to avoid advertising messages. The main challenge is to find new ways to capture attention and position a brand in the consumer's mind. Public relations and word-of-mouth marketing are playing a growing role within the marketing mix to build and maintain brands. 

Question: There is a great deal of hype about integrated marketing communications. What is the status of this subject today?

Kotler: In the past, we taught separate courses on advertising, sales promotion, public relations and other communication tools. Each student became a specialist in one of these areas, remaining ignorant of the other tools and having a tendency to defend the primacy of her tool. Within companies, the advertising person always received the biggest budget for marketing communication (leaving out the sales force), and the others would fight for the crumbs. Clearly, this is not a good situation, especially considering that the effectiveness of

different communication tools changes over time. The decision on how much to allocate to the different promotional tools cannot be left to turf battles. Someone must be put in charge. Let's call that person the chief communication office (CCO). That person should be responsible for everything that communicates anything about the company—not only the standard communication tools but also corporate dress, office decor and even the look of the company's trucks. Today, an increasing number of business schools are teaching marketing communications using an IMC-oriented textbook. First, this prepares the student to understand the role of different communication vehicles. Second, it makes the point that the company's brand and customer message must be communicated consistently through all media. Thus, if a company wants to be known for its high quality, it has to produce high quality and communicate high quality in all of its messages.

Question: Do you see companies as setting their communication budgets optimally?

Kotler: Marketers develop a certain mindset concerning the most effective communication mix. They will continue the same mix even when evidence shows diminishing effectiveness. Allocations become frozen, and the chief marketing officer is loath to change the allocation. This would change the power positions of different communication managers in the organization. Also, it will be done at some risk.

Question: Companies continue to spend more money on TV advertising, even as channels proliferate and more channel-switching takes place. Aren't companies being slow to realize TV advertising effectiveness has fallen?

Kotler: Companies are still fairly blind to the cataclysmic changes in the communication marketplace. The days of mass advertising, with its waste and intrusiveness, are passing quickly. I have advised clients to reduce their TV advertising budgets, especially mass advertising. Fewer people are watching TV, many are zapping commercials, and most commercials are too brief to be effective. If a country had only a few TV stations, radio stations, and newspapers, mass marketing would be effective. When a country, such as the United States, has thousands of TV stations and radio stations, reaching a mass audience is very expensive. Among the few mass audience vehicles are the Super Bowl and the Olympics. The growing fragmentation of media audiences requires marketers to shift to target marketing and even one-to-one marketing. The good news is that this will reduce wasted media exposures. What good is it to advertise cat food on national television if only 25% of families own a cat?

Question: What should advertising agencies do in response to the declining effectiveness of mass advertising? Kotler: Advertising agencies can no longer prosper just by creating ads and choosing media. There are so many new ways to communicate today. Smart ad agencies will transform themselves into full-service communication agencies. They will work with their clients to choose the best messages and media vehicles, whether these are in the form of ads, press releases, events, sales promotions, sponsorships, direct mail, email or telesales. Some advertising agencies have added these communication capabilities—they have created them or networked with public relations firms, sales promotion firms and direct-marketing firms in a move to becoming total communications firms. Ogilvy called its system "Ogilvy Orchestration" and promised to deliver integrated marketing communications. In practice, however, the dominant voice in this comprehensive agency is still that of the agency's advertising group. These agencies still make most of their money from their advertising billings. So how can they be fully objective when advising on the best mix of communication tools? Yet advertisers are demanding more communication effectiveness. They want to shift more of their promotion dollars into direct marketing, public relations, and newer promotion tools. Advertising agencies would be wise to transform themselves from being narrowly defined advertising agencies into broad communication agencies.

Question: What is advertising's main limitation?

Kotler: Traditional advertising works primarily as a monologue. Today's companies would gain considerably by setting up systems that would enable dialogue to take place between the company and its customers and prospects.

Question: Will the Internet become an effective advertising medium?

Kotler: A few years ago, the CEO of Procter & Gamble said that he would happily switch a large portion of P&G's huge advertising budget to the Internet if he could find effective ways to do Internet advertising. So far, the Internet has not become a full-blown advertising medium like television, radio, newspapers, or magazines. It is true that the Internet carries banner ads, but they are being opened less than 1% of the time. Advertisers are pressuring popular Web sites to carry skyscraper or pop-up ads, but the Web sites see this as risky. Also, consumers can choose to block pop-up ads. Google has developed a system to align paid-for ads next to topics being searched by consumers. For example, if I type "BMW" on Google, the right side of Google's page will show a BMW ad. BMW will quickly learn whether its ad is leading to sales. All said, it is too early to tell how widespread or effective Internet advertising will become.

Question: How can companies effectively reach mass audiences?

Kotler: Advertisers won't see again the glorious days when they could reach millions of people in the evening with the same TV show or mass magazine. There are three options today: One is to advertise on a number of media channels in the same time slot. Another is to advertise on Super Bowls, the Olympics, and other major worldwide events that attract large audiences. A third is to build a giant database containing the names of people who have the greatest interest in the company's offerings.

Question: Some media analysts call for more spending on public relations. Do you agree?

Kotler: I agree. Advertising has been overdone in the past, especially mass advertising with its "hit or miss" quality. PR has been underdone. PR consists of many tools, which I call the PENCILS of PR: publications, events, news, community involvement, identity tools, lobbying, and social investments. When a customer sees an ad, she knows it is an ad, and an increasing number of customers are tuning ads out. PR has a better chance of getting a message through. Furthermore the message can be fresher and more believable. PR is better equipped to create "buzz" about a new product or service. Interest in PR is increasing—witness the title of the recent book by Al and Laura Ries, The Fall of Advertising and the Rise of PR.

Philip Kotler is the S.C. Johnson & Son Distinguished Professor of International
Marketing at the Kellogg School of Management, Northwestern University, Evanston,
Illinois.
Copyright © 2000-2006 MarketingProfs.com

The Scope of Marketing

Marketing people are involved in marketing 10 types of entities: goods, services, experiences, events, persons, places, properties, organizations, information, and ideas.

Goods. Physical goods constitute the bulk of most countries’ production and marketing effort. The United States produces and markets billions of physical goods, from eggs to steel to hair dryers. In developing nations, goods— particularly food, commodities, clothing, and housing—are the mainstay of the economy.

Services. As economies advance, a growing proportion of their activities are focused on the production of services. The U.S. economy today consists of a 70–30 services-to-goods mix. Services include airlines, hotels, and maintenance and repair people, as well as professionals such as accountants, lawyers, engineers, and doctors. Many market offerings consist of a variable mix of goods and services.

Experiences. By orchestrating several services and goods, one can create, stage, and market experiences. Walt Disney World’s Magic Kingdom is an experience; so is the Hard Rock Cafe. Events. Marketers promote time-based events, such as the Olympics, trade shows, sports events, and artistic performances.

Persons. Celebrity marketing has become a major business. Artists, musicians, CEOs, physicians, high-profile lawyers and financiers, and other professionals draw help from celebrity marketers.

Places. Cities, states, regions, and nations compete to attract tourists, factories, company headquarters, and new residents.5 Place marketers include economic development specialists, real estate agents, commercial banks, local business associations, and advertising and public relations agencies.
Properties. Properties are intangible rights of ownership of either real property (real estate) or financial property (stocks and bonds). Properties are bought and sold, and this occasions a marketing effort by real estate agents (for real estate) and investment companies and banks (for securities).

Organizations. Organizations actively work to build a strong, favorable image in the mind of their publics. Philips, the Dutch electronics company, advertises with the tag line, “Let’s Make Things Better.” The Body Shop and Ben & Jerry’s also gain attention by promoting social causes. Universities, museums, and performing arts organizations boost their public images to compete more successfully for audiences and funds.

Information. The production, packaging, and distribution of information is one of society’s major industries.6 Among the marketers of information are schools and universities; publishers of encyclopedias, nonfiction books, and specialized magazines; makers of CDs; and Internet Web sites. Ideas. Every market offering has a basic idea at its core. In essence, products and services are platforms for delivering some idea or benefit to satisfy a core need.

WHAT IS AFFILIATE MARKETING

WHAT IS AFFILIATE MARKETING?

It is an application of crowd sourcing. Examples include rewards sites, where users are rewarded with cash or gifts, for the completion of an offer, and the referral of others to the site. The industry has four core players: the merchant (also known as 'retailer' or 'brand'), the network, the publisher (also known as 'the affiliate') and the customer. The market has grown in complexity to warrant a secondary tier of players, including affiliate management agencies, super-affiliates and specialized third parties vendors.
Definition
Revenue sharing between online advertisers/merchants and online publishers/salespeople, whereby compensation is based on performance measures, typically in the form of sales, clicks, registrations, or a hybrid model.
Information
The advertisers/merchants are typically referred to as affiliate merchants and the publishers/salespeople are referred to as affiliates.

It is a promotion method that can be used to reward partner companies for introducing new clients. It can be seen as a digital form of franchising or as an electronic joint venture. The Merchant normally delivers advertising banners and web links to their affiliates. Also the Merchant grants a commission. Normally in return for a click-through to their website, subscription to their service, or purchase of their products which is generated via these links. Affiliates place a tracking code for these ads into their web pages. Each time a visitor on the affiliate's website clicks towards the website of the Merchant, that transaction is registered online. Compensation for the Affiliate may be made based on:
• Pay per click. A certain value for each visit.
• Pay per lead. A certain value for each registration or for each qualified registration.
• Pay per sale. A certain value for each customer or sale.
ORIGIN OF AFFILIATE MARKETING. HISTORY
Affiliate Marketing can be seen as the modern variant of paying finder's fees to individuals or organizations who introduce new prospects or clients to a business. In July 1996, Amazon.com launched an associates program that became a huge success.

USAGE OF AFFILIATE MARKETING. APPLICATIONS
• Online advertising.
• The approach is most effective when placed in context with quality content.
• Some third parties such as LinkShare, Commission Junction and also Google offer affiliate networks and provide services such as tracking, reporting, affiliate recruiting, payments, sending out end-of-year tax forms, and responses to webmaster queries.
STRENGTHS OF AFFILIATE MARKETING. BENEFITS
For the Affiliate:
• Offer additional products or services to their visitors.
• The opportunity to earn money from their niche audience by up selling or cross selling. Without the need to invest in logistics, financial fulfillment, or back office administration.
For the Merchant:
• No payment is due to an Affiliate until certain results are achieved.
• Typically low-cost and cost-effective.
• Targeted advertising into appropriate niches.
• To get a measurable means of advertising their products or services.
• Extend reach of brand.
LIMITATIONS OF AFFILIATE MARKETING. DISADVANTAGES
• Some affiliate marketers have been accused of spamming to promote their programs. Either in the form of email spamming or by creating multiple websites with the purpose of generating artificial traffic from search engines (spamdexing).
• Websites made up purely or predominantly of Affiliate links are usually regarded negatively as they do not offer any quality content.
• Note that most people don't purchase during their first visit to a website. A cookie can ensure that a referral is registered. If the referred person makes a purchase on a future visit, the original referrer will still be credited for the sale.
TYPES OF AFFILIATE WEBSITES

Affiliate websites are often categorized by merchants (i.e., advertisers) and affiliate networks. There are currently no industry-wide accepted standards for the categorization. The following types of websites are generic, yet are commonly understood and used by affiliate marketers.
• Search affiliates that utilize pay per click search engines to promote the advertisers' offers (i.e., search arbitrage)
• Comparison shopping websites and directories
• Loyalty websites, typically characterized by providing a reward system for purchases via points back, cash back
• CRM sites that offer charitable donations
• Coupon and rebate websites that focus on sales promotions
• Content and niche market websites, including product review sites
• Personal websites (This type of website was the reason for the birth of affiliate marketing; however, such websites are almost reduced to complete irrelevance compared to the other types of affiliate websites.)[citation needed]
• Weblogs and website syndication feeds
• E-mail list affiliates (i.e., owners of large opt-in -mail lists that typically employ e-mail drip marketing) and newsletter list affiliates, which are typically more content-heavy
• Registration path or co-registration affiliates who include offers from other merchants during the registration process on their own website
• Shopping directories that list merchants by categories without providing coupons, price comparisons, or other features based on information that changes frequently, thus requiring continual updates
• Cost per action networks (i.e., top-tier affiliates) that expose offers from the advertiser with which they are affiliated to their own network of affiliates
• Websites using adbars (e.g. Adsense) to display context-sensitive, highly-relevant ads for products on the site.
• Final Remark
• At the top and bottom of this page, you can see a remarkable example. You can find some well-known Affiliate Marketing companies which advertise here themselves via this method.

PRODUCT LIFE CYCLE: CONCEPT AND SIGNIFICANCE

Every product passes through four stages in its life namely, introduction, growth, maturity and decline. The concept of Product Life Cycle (PLC) highlights that sooner or later all products die and that if an entrepreneur wishes to sustain its revenues, he must replace the declining products with the new ones.

Every firm makes sales forecasts during introduction, growth, and maturity stages of the PLC. To achieve the sales target, it formulates promotional, pricing and distribution policies. Thus the concept of PLC facilitates integrated marketing policies relating to product, price, promotion and distribution

The advantages of forecasting the life cycle of a product to a firm are as follows:

1. When the PLC is predictable, the entrepreneur must be cautious in taking advance steps before the decline stage, by adopting product modification, pricing strategies, distinctive style, quality change, etc.
2. The firm can prepare an effective product plan by knowing the PLC of a product.
3. The entrepreneur can find new uses of the product for the expansion of market during growth stage and for extending the maturity stage.
4. The entrepreneur can adopt latest technological changes to improve the product quality, features and design.

STAGES IN PRODUCT LIFE CYCLE
The product moves through the four stages namely, introduction, growth, maturity and decline. As the product moves through different stages of its life cycle, sales volume and profitability change from stage to stage as shown in the figure below. The entrepreneur’s emphasis on the marketing mix elements also undergoes substantial changes from stage to stage. A brief discussion of the marketing strategies in different stages of the PLC is given below:



Introduction: The first stage of a product life cycle is the introduction or pioneering stage. Under this state the fixed costs of marketing and production will be high, competition is almost non-existent, markets are limited and the product is not known much. Prices are relatively high because of small scale of production, technological problems and heavy promotional expenditure. Profits are usually non-existent as heavy expenses are incurred for introducing the product in the market.

To introduce the product successfully, the following strategies may be adopted:
a. Advertisement and publicity of the product. ‘Money back’ guarantee may be given to stimulate the people try the product.
b. Attractive gift to customers as an ‘introductory offer’.
c. Attractive discount to dealers.
d. Higher price of product to earn more profit during the initial stages.

Growth: The sales as well as the profits increase rapidly as the product is accepted in the market. The promotional expenses remain high although they tend to fall as a ratio to sales volume. Quite often, smaller firms move into the market during the growth phase. With their flexibility they can move very quickly and capture a valuable part of the market without the huge investment risks of the development phase. In this stage, the competition increases and distribution is greatly widened. The marketing management focuses its attention on improving the market share by deeper penetration into the existing markets and entry into new markets. Sometimes major improvements also take place in the product during this stage.




The following strategies are followed during the growth stage:
a. The product is advertised heavily to stimulate sale.
b. New versions of the product are introduced to cater to the requirements of different types of customers.
c. The channels of distribution are strengthened so that the product is easily available wherever required.
d. Brand image of the product is created through promotional activities.
e. Price of the product is competitive.
f. There is greater emphasis on customer service.

Maturity: The product enters into maturity stage as competition intensifies further and market gets stabilized. There is saturation in the market as there is no possibility of sales growth. The product has been accepted by most of the potential buyers. Profits come down because of stiff competition and marketing expenditures rise. The prices are decreased because of competition and innovations in technology. This stage may last for a longer period as in the case of many products with long-run demand characteristics. But sooner or later, demand of the product starts declining as new products are introduced in the market. Product differentiation, identification of new segments and product improvement are emphasized during this stage. In order to lengthen the period of maturity stage, the following strategies may be adopted:
a. Product may be differentiated from the competitive products and brand image may be emphasized more.
b. The warranty period may be extended.
c. Reusable packaging may be introduced.
d. New markets may be developed.
e. New uses of the product may be developed.

Decline: This stage is characterized by either the product’s gradual displacement by some new products or change in consumer buying behaviour. The sales fall down sharply and the expenditure on promotion has to be cut down drastically. The decline may be rapid with the product soon passing out of market or slow if new uses of the

product are found. Profits are much smaller and companies need to assess their investment policies, looking towards investing in newer and more profitable product lines. As far as possible, attempts should be made to avoid the decline stage. But if it has started, the following strategies may be useful:
a. The promotion of the product should be selective. Wasteful advertising should be avoided.
b. The product model may be abandoned and all the good features may be retained in the new model of the product.
c. Economical packaging should be introduced to revive the product.
d. The manufacturer may seek merger with a strong firm.

Sources Of Marketing research

Marketing research is the means by which the information necessary to run a business is obtained.

It is the gathering, recording, and analysis of all facts about problems relating to the transfer and sale of goods and services from producer to consumer.

Marketing information can be collected from the following sources:

Primary Sources
1. Customers: Consumers being the final users of products or services can be an invaluable source of primary data. A representative sample of consumers may be selected and information obtained from them regarding the quality, design, package, price, etc. of the firm’s products.
2. Dealers: The dealers can provide information about the marketing policies of the competitors.
3. Salesman: Salesmen remain in personal contact with the customers. They can, therefore, supply data to the marketing manager relating to the buying habits and preferences of customers.

Secondary Sources
1. Press: Newspapers like the Economic Times and Magazines like Business Today and trade directories regularly publish data about various industries.
2. Government Publications: Bulletins, periodicals, journals and magazines of different ministries and departments of the Central and State Government.
3. Publications of financial institutions: Publications of Reserve Bank of India, public financial institutions and commercial banks.
4. Foreign governments and international agencies: Publications of agencies like the United Nations, the World Bank, the ILO, UNCTAD and the IMF.
5. Publications of trade associations: Trade associations and Chambers of Commerce collect and publish useful data for the benefit of their members.
6. Private concerns and research institutions: Business data published by research institutes like National Council of Applied Economic Research, Indian Institute of Foreign Trade, etc.

Marketing myopia

Short sighted and inward looking approach to marketing that focuses on the needs of the firm instead of defining the firm and its products in terms of the customers' needs and wants. Such self-centered firms fail to see and adjust to the rapid changes in their markets and, despite their previous eminence, falter, fall, and disappear. This concept was discussed in an article (titled 'Marketing Myopia,' in July-August 1960 issue of Harvard Business Review) by Harvard Business School emeritus professor of marketing, Theodore C. Levitt (1925-), who suggests that firms get trapped in this bind because they omit to ask the vital question, "What business are we in?"
Featured Tip

In 1960, a professor at the Harvard Business School named Ted Levitt published an article in the Harvard Business Review entitled "Marketing Myopia." In the article, Levitt suggested that the most important question for any marketer is, "What business are you really in?" Levitt had examined a long list of successful, profitable sectors, such as the railroad industry in the early 1900s and the motion picture industry in the late 1940s, that had been blindsided by new competitors and run into severe financial problems as a result. His conclusion: Many of these industries simply misdefined the business they were in. The railroads thought of themselves as being in the railroad industry instead of transportation, and motion picture studios saw themselves in the movie business instead of entertainment.