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Marketing in a Digital World Professor Aric Rindfleisch

Module 2: How Digital Tools Are Changing Promotion Table of Contents Module 2: How Digital Tools Are Changing Promotion ........................................................... 1 Lesson 2-1: Basic Concept: Promotion .............................................................................................2 Promotion .............................................................................................................................................................2

Lesson 2-2: View From the Quad .....................................................................................................9 Product Reviews ...................................................................................................................................................9

Lesson 2-3: Digital Concept 1: User General Content .....................................................................12 User Generated Content .....................................................................................................................................12

Lesson 2-4: Case Study: Go Pro .....................................................................................................26 Case Study Introduction: GoPro..........................................................................................................................26

Lesson 2-5: Digital Concept 2: Doppelganger Brands...................................................................... 33 Doppleganger Brands ..........................................................................................................................................33

Lesson 2-6: Exercise: Wikipedia.org ..............................................................................................45 Exercise: Wikipedia.org .......................................................................................................................................45

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Marketing in a Digital World Professor Aric Rindfleisch

Lesson 2-1: Basic Concept: Promotion Promotion

The second of the four Ps is promotion. This aspect of the marketing mix covers the methods of communication that a marketer uses to provide information about his products. Typically we think of this information as being persuasive in nature, with the goal of getting customers to buy your product instead of its competitors.

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Marketing in a Digital World Professor Aric Rindfleisch This information can be both verbal and visual, and thus informational strategy can influence consumers by appealing to either their intellect or their emotions. For example, Coke has built an incredible degree of awareness and interest in its brand via century of effective promotional campaigns. Coke spends about $4 billion on advertising each and every year, most of this on television ads. Through 100 years of successful promotions, Coke is one of the world's most recognizable brands and the world's most popular soft drink. As indication of his promotional success, the word Coke, there it is. The second most recognized word on the planet, just after OK. Please take a look at the in-video link to get a sense of the history of Coke's advertising. If you take a close look at these ads, you'll see that Coke has historically focused more on the visual than the verbal, in its attempts to build an emotional bond with its customers. The promotion part of the marketing mix has a number of key concepts, including personal selling, sales promotion and word of mouth. In this module, we'll focus on two fundamental concepts, advertising and persuasion.

Over the past 100 years, the most popular promotional technique has been advertising, with television advertising accounting for the largest portion of most firms' promotional budgets. Today, digital advertising exceeds traditional advertising but not by much. However, television advertising is still a major element in many firms' advertising budgets.

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Marketing in a Digital World Professor Aric Rindfleisch

For example, many large firms pay over $5 million for a 30-second advertising spot during the Super Bowl. Now most advertising is targeted towards existing and potential customers. However, advertising can also be directed to a firm's distribution channel partners, such as retailers, and also to build morale among its employees. The goal of advertising is to elicit some type of response. Now, there are different types of responses that a firm may seek. For example, a new brand may focus on developing awareness, while an established brand may focus on changing perceptions. Most ads are carefully planned and developed. Usually a firm will hire a professional advertising agency to create an advertising campaign, and then will carefully pretest these ads before they're shown. Once a advertising campaign is launched, a firm will usually have a professional marketing research company track the ad to assess its effectiveness and help decide when it needs to develop a new campaign

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Marketing in a Digital World Professor Aric Rindfleisch

As noted earlier, the main goal of most promotional campaigns is to persuade customers to buy a firm's products instead of its competitors. Thus marketers often think of promotion as a form of persuasion and employ a number of persuasion tactics, such as celebrity endorsements, humor or scientific claims.

The most popular theory about how persuasion works is the elaboration likelihood model, ELM for short.

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Marketing in a Digital World Professor Aric Rindfleisch

This model suggests that there are two main routes to persuasion. First, the central route, which is more cognitive in nature, and second, the peripheral route, which is more emotional in nature.

According to this theory, the central route is effective when customers have the ability and motivation, the process a persuasion message. And persuasion will occur when they find that information to be newsworthy and believable. In contrast, the peripheral route is more effective with customers lack ability and motivation to process the message.

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Marketing in a Digital World Professor Aric Rindfleisch

And persuasion will occur when they perceive the provider of the message to be credible or attractive. These two ads are good examples of these two different persuasion routes.

Regardless of which route is employed, persuasion tactics focus strongly on trying to convince customers that a product is appealing and is based on the premise that a firm needs to find the right message or message provider

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Marketing in a Digital World Professor Aric Rindfleisch

Historically, most large firms have devoted most of the promotion budget to advertising. With a bulk of this expenditure focus on television ads developed by professional advertising agency. Although a small number of customers are typically asked to provide their opinion about these ads through techniques such as copy testing or concept testing. This process is largely top down in focus. And most ads are designed to persuade customers to buy a firm's products by first hitting attention for its brand, and then persuading them to make a purchase. This top-down approach is starting to break down due to the democratization of digital tools. For example, most large automobile companies have historically spent billions of dollars a year to advertise their products. In contrast, Tesla, which is a truly digital company, has built a successful automobile company without spending a single dollar on traditional advertising. Instead its brands via social media. For example, Tesla has over four million Twitter followers, and Elon Musk, the CEO, has nearly 30 million. In contrast, General Motors, which was once the largest company in the world, has less than 700,000 Twitter followers. In addition to making effective use of social media, the Tesla brand, as well as its products is widely promoted by thousands of fans via Twitter postings, YouTube videos and other forms of user-generated content. Thus by leveraging the power of the digital and not engaging in traditional advertising, Tesla is able to effectively tell potential customers that story without appearing like its trying to sell them something. So this new digital environment, marketing is moving from selling products to telling stories. In this module, we'll discuss how new digital tools are changing this element of the marketing mix and redefining how we think about promotion.

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Marketing in a Digital World Professor Aric Rindfleisch

Lesson 2-2: View From the Quad Product Reviews

What is user-generated content? >> I think the user generated content is something that was made by the user and they do it for their content. >> As in this like TikTok, YouTube, stuff like that.

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Marketing in a Digital World Professor Aric Rindfleisch >> So it's content generally by users. So users create content. >> All of the social videos go on user-generated content

So that we have the whole, whether they're responsible for the content which they kind of half are sometimes. >> Do you use Wikipedia? >> Yes. >> Sometimes. >> Yes.

>> Yes, we use it. [LAUGH] >> [LAUGH] >> And now, have you ever made an entry on Wikipedia? >> Never. >> No. >> No, okay. >> That would be wild. [LAUGH] >> [LAUGH] >> Wild, okay. >> No I haven't. >> Okay. >> Do you guys know what doppelganger brands are? >> No. >> Can I see the word? >> Yeah, doppelganger. >> No. >> Never heard of it? Okay, that's 10

Marketing in a Digital World Professor Aric Rindfleisch okay. >> I haven't, but I think that it means that it's the exact same thing but a generic version or something like that. >> Obviously it would be a brand that's just designed itself to be the same as another brand but cheaper or something. >> So you see the Starbucks Coffee logo right here? And then you see the doppelganger here at the bottom. And it says Big Bucks Coffee compared to Starbucks Coffee. What do you think of this doppelganger brand? >> I pretty much say they really took what Starbucks did and made it their own. They just changed Star into Big. >> I mean smart for the people who are doing it. If they can get away with it legally, why not? >> I feel like you see this a lot in other foreign countries because they don't have as much regulation. But you wouldn't really see this in the United States, unless it was found online. >> I mean, it's led to be deceiving. >> Big Bucks one to look similar to Starbucks so it can gain some reputation. >> As I said, it's basically trademark infringement, right? [LAUGH]

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Marketing in a Digital World Professor Aric Rindfleisch

Lesson 2-3: Digital Concept 1: User General Content User Generated Content

Most firms are very careful in how they manage the promotion of their products. One reason is because this activity is quite expensive. For example, in the US, a 30-second commercial on national television typically cost over $100,000 just to have a broadcast once. Since most commercials are shown more than once, this cost quickly multiplies into millions of dollars. This

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Marketing in a Digital World Professor Aric Rindfleisch doesn't even include the cost of creating the commercial. The rise of new digital tools has dramatically changed this equation. Low-cost digital video cameras, free digital editing software, and online broadcasting platforms like YouTube, Facebook and Twitter, have made the creation and dissemination of promotional messages much cheaper and easier than ever before. As a result, a growing number of firms are taking advantage of these developments to reduce their promotional cost. For example, the US beer Old Milwaukee, has dramatically reduced its promotional cost by airing their ads on YouTube instead of television. In addition to reducing the cost of promotion for firms, these tools have also enabled customers to take a more active role in developing and disseminating their own promotional material. For example, there are over 330 million Twitter accounts which produce over 500 million tweets each and every day. It's estimated that about 20 percent of these tweets are somehow related to brands and products. Thus, every day, there are about 100 million free messages on Twitter alone.

Today, just about anyone with an Internet connection, a computer, or a smartphone, and an idea and some energy can create and disseminate a promotional message for just about any product. In essence, these digital tools have democratize the promotional landscape, and this is the basic idea behind user generated content, or UGC for short. Here are a few examples of user-generated content. All of these examples are cases in which firms are encouraging UGC. However, UGC often occurs without a firm's active encouragement or even approval, such as when travelers post reviews about restaurants and hotels on websites like Travelocity.com. First, GoPro. This California company develops and sells high definition video cameras. Perhaps you own one. These cameras are compact, durable, and relatively inexpensive, and often used by extreme sports enthusiast like mountain bikers, wind surfers, and skydivers to capture their adventures. GoPro strategically uses UGC by holding contests. The ask their customers to submit photos or videos that they've taken with their cameras. The submissions provide a steady stream of content to GoPro's various social media sites, and also provides a

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Marketing in a Digital World Professor Aric Rindfleisch very persuasive form of promotion by showing potential customers the value of having a GoPro camera.

Now, we'll talk a bit more about GoPro in our case for this module. Second, Warby Parker. This is an American manufacturer and retailer of eyeglasses. They have a few physical retail locations, but they do most of their business online. This company offers a service called Home Try-On, in which they mail their customers five different pairs of glasses. They could then try them on for five days and send the ones that they don't want back to the company. Now, Warby Parker actively encourages these customers to take photos of themselves wearing these different glasses and sharing them on social media using the hashtag Warby Home Try-On.

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Marketing in a Digital World Professor Aric Rindfleisch

Now, many of their customers take ensure these photos online as a way of getting helpful feedback from others. In addition to helping their customers, these shared photos also help Warby Parker by providing them with an increased exposure and also free promotion. Third, LittleBigPlanet, perhaps you've heard of this game, is a very popular video game offered by Sony, the Japanese electronic giant. It is now in its third edition, and it has a built-in toolkit that allows players to create their own levels. Once these levels are created, their players can then share them with other customers. Currently, this game has over eight million levels, nearly all of them created by customers, not by the company.

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Marketing in a Digital World Professor Aric Rindfleisch More recently, Sony, through its subsidiary called media molecule, has recently launched a new game called dreams that takes us idea to an even higher level by using an enhanced customer toolkit. According to one report, dreams is a game about creating games. What this means is that users can create just about anything within the dreams platform, including their own art, animation, and music. In essence, they can use these digital tools within the platform to create virtually any type of game they want or can imagine, and they can share these games with others through the dreams Platform. User generated content occurs when a product's customers create and disseminate online ideas about a product or the firm that markets the product.

These ideas are often the form of text, but also come in other forms such as music, photos, or videos. UGC has three key characteristics. First, the contribution is by users of a product rather than the firm that sells the product. Second, it is creative in nature and the user adds something new, and third, it is posted online and generally accessible to others.

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Marketing in a Digital World Professor Aric Rindfleisch

Thus, an e-mail that transmits a link to a YouTube video created by somebody else is not really UGC. Now, typically, you just see is non-commercial nature and doesn't make any types of direct promotional appeals. Thus, it is very indirect, subtle, and also an authentic form of product promotion. There are lots of interesting issues about UGC. For the purpose of this discussion, I like to focus on three key issues. First, what are the different types of UGC? Although, most UGC appears on social media platforms like Facebook, Twitter, and YouTube, and also appear in other online platforms like blogs, discussion forums, or even a firm's website. So the most common types of UGC include blog postings, product reviews, and very submissions to firm based invitations like the Warby Parker, Home Try-On that we discussed earlier. Of all the different types of UGC, product reviews appear to be the most common and also has the strongest impact on customer purchasing decisions.

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Marketing in a Digital World Professor Aric Rindfleisch

Second, what motivates users to contribute? Now, the factors that motivate customers to engage in UGC are very similar to the motives that encourage them to engage in co-creation, as we discussed earlier. The biggest motive appears to be social recognition. Being an active contributor on a social media platform such as Facebook or Twitter can now provide a certain amount of fame and prestige, at least for some people. In addition, customers can also gain social recognition when firm profiles are contributions on his web page or in his advertisements. For example, the yogurt company, Chobani, has placed his customer tweets on billboard signs throughout the US. In addition to social recognition, some users are motivated by financial incentives. Typically, there are few financial rewards for most types of UGC.

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Marketing in a Digital World Professor Aric Rindfleisch

However, some firms try to encourage UGC by holding contests that provide winners with cash, gift cards, or some other type of tangible reward. For example, Dunkin' Donuts, which now is called Dunkin', I believe, encourages UGC by holding contests which customers submit photos of themselves consuming it's products, and rewarding winners with a variety of prizes such as smartphones and televisions. What are the benefits of UGC? User contributions provide firms with lots of benefits. First of all, this type of promotion is typically low cost since the content is provided by a firm's customers for free. Addition to this cost savings, UGC has also been related positively to product sales. Research suggests that most customers trust UGC more than they trust traditional promotions like paid advertising. UGC also helps make a firms need to keep it's content fresh and makes their websites much more interesting. Thus, websites that feature UGC benefit both from higher traffic as well as longer page views.

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Marketing in a Digital World Professor Aric Rindfleisch

There is a healthy and growing body of research on UGC, so there are lots of studies we could talk about. I'd like to focus on two recent and very interesting studies about this topic. This first study was published by Ni Huang and colleagues in 2019 in Management Science. The authors of this study investigate the types of feedback that motivate individuals to pro...