Video Lecture: Generating Engagement and Demand

• [00:00:23] Value Proposed vs Value Perceived
• [00:01:17] Two Broad Missions: “use our information to decide” or “try us yourself”
• [00:05:04] Funnel Models for Promotional Campaign Planning
• [00:09:23] Attribution Modeling
• [00:13:13] “Push vs Pull” Promotions

Transcript-Generating Engagement & Demand

If we’ve done our job of building great benefits, reducing transactions costs, capturing a fair share for ourselves, what’s left is the customer value that we’re creating. And that’s where our promotion strategy is focused. We’re going to develop integrated campaigns to reach and engage with our customers to convince them this value that we propose is there– after all, this is a value proposition– is actually there.

[00:00:23] Value Proposed vs Value Perceived

Because here’s the challenge. The value we propose: the value that when we sat down and thought about what our product was going to be and the benefits we wanted to offer, price, we’re going to charge… that’s all from our perspective.

The value perceived is quite different.

Our customers don’t know the brand benefits, the experential benefits until they experience them. So they don’t have a lot of value for them initially.

They see the price very clearly. They see transactions costs as more costly than we do for a lot of different psychological reasons and also because we have thought about how to reduce those transactions costs in ways that they haven’t really thought about yet.

We haven’t told them about all the functional benefits yet. And they haven’t experienced the social benefits yet. So there’s a lot of reasons why customers may not see the same value early on that we do.

[00:01:17] Two Broad Missions: “use our information to decide” or “try us yourself”

And so we have two ways that we can try to make the value that the customer perceives be closer to the value that we are proposing. That’s what our promotional strategies focused on.

The first are information based promotions like advertising campaigns and deploying out salespeople to interact with customers and demonstrate that value and communicate that value.

This is designed to show customers that the functional, social, and experiential benefits that we propose are actually true. And they’re also there to reduce transactions costs. Our salespeople are interacting with customers, figuring out what information would be helpful for them to progress through their decisions, providing service and support for them that reduce transactions costs, directly.

Then the second way that we can try to increase perceived customer value is just to reduce. These are a broad class of promotions, incentive-based promotions, which we are using in the simulation as rebates. But we have lots of different types of incentive-based promotions that companies use, including sales, trial periods, coupons.

All of these promotional tools temporarily reduce the price– and when you temporarily reduce the price, you automatically increase the customer value– in order to convince customers to try it. And prove to themselves all of these experiential components, particularly the transactions costs and the social and brand value,, convince themselves that the value is what we say it’s going to be.

Customers believe themselves more than anybody else. They believe their friends next. They believe word of mouth, they’re friends and people that they know, they believe the internet at large and then finally low down on the bottom, they believe us. So one of the reasons that we think about the promotional space in terms of these two buckets is because these incentive-based promotions have such an impact on inducing customer trial and customer word of mouth.

One of the downsides, the more that you use incentive-based promotions, the more that customers discount the inherent value of your brand. In other words, incentive-based promotions actually have a negative impact on brand value, on experiential value. People assume that if you can be always discounting, that your product isn’t as premium as other products that don’t discount might be. And so you see discounting strategy wrapped up heavily in brand strategy and it does have a long-term impact on that.

There is a range of tools. I’m not gonna spend a lot of time here because you’re living this in this, in the simulation and also the reading that you had did a pretty good job of talking about it.

You can think about how all these promotions line up in terms of these two different broad categories of promotional strategy. So some of them are better at providing information that help aid that decision to buy. I’m going to make a more informed decision because I have more information at my disposal.

Others are better at providing incentives to try things personally, even if you don’t have a lot of information in order to get the information from the trial itself. There’s a bunch of them that are kind of in between, and every promotional strategy is going to have a mix of things across these two.

The 6M is the most useful model for marketing communications. It is the most useful for information based promotions. The price based promotions, there is a smaller literature on that. There’s no broad models to focus on it other than this fairly robust finding that the more that you use incentive promotions the more that it has a negative effect on your overall brand equity.

[00:05:04] Funnel Models for Promotional Campaign Planning

The mission of your promotion campaigns is to align your promotional campaigns with advancing the buying process.

Thinking of promotional campaigns in terms of funnel is useful. Thinking about your overall marketing strategy in terms of influencing funnel, not so useful. When you’re thinking about really understanding customer needs, you do want to think about the entire experience. We can map the different phases in the funnel into this customer experience.

But for planning and measuring, how we might influence different aspects of this funnel. What is the purpose of any particular piece of our promotional campaign? Is it meant to engage people at the top of the funnel or the bottom of the funnel. Attracting people to come to our stores, come to our website, come to our properties, or is it meant to engage people while they’re there?

So you are having to make investments on opening new stores versus hiring more salespeople and service people in the stores. Opening new stores is an attraction strategy to get more people there. Hiring and training people in the stores is an engagement strategy. Once people are in the store, what can we do to move them down the funnel, move them through their own buying process and through our demand funnel to get them to be a customer. To attract, engage, convert and then delight them so they come around again and talk to other people.

You saw this funnel in the micro simulations that you have. You’ll see funnels used all the time. I use funnels every day in my tactical go to market planning.

What is the key goal of any component that you’re doing and then where do you expect it to have an effect? And then you can figure out how to measure that appropriately.

That moves this right to measure. Here are some of the effects that we think about. We might have a campaign that has ad and organic search focused on attracting. And then we have website content and a video channel that’s really focused on keeping people engaged.

We know that they’re attracted because we have impressions and click-throughs, you learned all about those in your micro SIM. Then we have engagement measures: we have views, length of time on site is a really common digital one, number of pages viewed. How long people watched a video is one that gets used for video content. Actually it’s the one that we use to charge.

So reach measures and we also have impact measures like: did they actually sign up for our email list? Did they allow us permission to track and interact with them.

This is where privacy concerns come in. It’s a good sign that we have engaged with a customer if a customer is willing to share information with us. Measuring what kinds of information customers are willing to share is a way of measuring the relative engagement that we have.

ATTB stands for “attitude towards the brand”. It is one of the primary measures that we use broadly, across all advertising and promotional media. It’s usually a survey based measure. We might ask people when we think about this category of product, what brands come to mind– that’s unaided recall.

And then we might ask them have you heard of this brand– aided recall. Do you remember seeing these brands? What is your impression of this brand? Those questions about impression towards the brand, salience of the brand in their lifestyle, and general affect towards the brand, feelings towards the brand positively or negatively, those are all attitude towards the brand measures. And so that’s often a primary tracking measure.

And then we have convert. If we get people’s emails, we might then start sending them emails. If people come to our website, we might use ad tech to retarget them with ads related to things that they were looking at on our website. And we then are back to impressions and click throughs for convert.

The things in green here are the results. We get dollars because we pulled people through the funnel. If we do a good job of delighting them as well through that process and through the use of our value proposition, we get satisfied customers which generate positive effects in terms of brand value, which has an impact on our ability to attract organically.

You’re seeing this happen with the organic search aspect of your simulation. Word of mouth is all driven by this phenomenon, that people who are happy tell other people. Lots of ways to measure that that are beyond the scope of this course. But we will do a small introduction to how we translate our activities into metrics for our final module.

[00:09:23] Attribution Modeling

Trying to think about what is the effect of each of the campaigns on dollars. What is the return on investment that we’re looking at here?

And one of the challenges that we have with that is that we can be pretty good at measuring the effect of one particular campaign element, but we’re less good at thinking about how they all fit together. It really is the integration of all the components that matter.

For example, those retargeting ads , those ones that follow you around the internet? Really high return on investment. Why are they really high return on investment? Because they’re engaging people way down in the sales funnel. So it’s really close to the process of converging to dollars. So if our measure is the effect of the campaign on dollars, retargeting ads they have a little bit of a headstart. Because in order for you to qualify for a retargeting ad, you already had to come to the website, spend some time there so we can figure out what it is that you were interested in, put it in your shopping cart so we can retarget you, and then follow you around. You’re pretty far down your decision making process.

It’s not surprising that a campaign that targets people lower in the funnel has a better overall click through rate. If you’re using click-through rates to measure sales, to correlate those directly, you’re going to show a bigger effect on sales.

What this chart shows is that things like social media, and display ads, and email have a disproportionately underrepresented effect on the overall sales process when you put all the pieces together. The bars in orange are the measures based on just that media and the bars in blue are the measures based on an entire integrated campaign. This is a ginormous area for market analytics, with lots of AI looking at this. And it requires a lot of data to figure out. So it has a lot of privacy implications. How can we track people across different media?

Building any sort of analytics model you’re going to have to do three things. You’re gonna have to figure out how to appropriately, attribute the effect of any particular factor to the outcome. Then once you have that attribution correct, then you think about optimizing. Then once we have a fully optimized model, then we think about allocating the money that we have to that optimized model.

So this general task of modeling the attribution of individual marketing activities in an integrated manner, is a rich and and robust area of marketing. The best way to do it is to build tests with control groups. There’s so much noise in these models that the general trend has been to move towards lots of experimentation. We do AB tests, we provide basically the same experience with one or two small changes. So that we can isolate the effect . So for example, if we were trying to do an experiment on the effect of social media in our overall campaign mix, we might send out, two plans. One plan gets the social media plan and the other group doesn’t get the social media plan. If someone comes to our website, we’ll show the first person that shows up one version. Second person shows up slightly tweaked version and we’ll use the aggregate effects of those experiments to isolate these individual effects.

Lots of other classes that can help build that. But that general principle that we have to figure out the appropriate attribution for each of the elements is a key theme that I hope you take away from this class. We have to do things in an integrated manner. And when we do things in an integrated manner, we also have to then have methods to isolate the individual effects. And experiments tend to be the best class of research approaches to do that.

[00:13:13] “Push vs Pull” Promotions

I’m going to leave this on push versus pull. We’re going to market, usually through complementors: retailers, some other channel partner, going through Amazon, whatever it is. We’re going to split our marketing budget between investments to push our products to our complementors, to the retailers and promotions targeted at consumers to pull that demand through the retail channel and back. Different industries have different ratios that they spend on that. Just a big highlight. Your sales force is a big promotional tool for push promotions. when you’re thinking about your sales force investments for the simulation, you can think of that as part of your promotional toolkit, as well as your place and infrastructure toolkit. They are promotional tools, but they are also complementors. We have to create value for them, as well.