Marketing Outside the Box

Table of contents

Table of contents

List of figures

List of abbreviations

1. Introduction
1.1. Problem formulation
1.2. Purpose and methodology

2. The basics of marketing
2.1. The scope of marketing
2.2. The target marketing process
2.3. What is marketed?

3. The marketing mix
3.1. Product planning
3.2. Price planning
3.3. Distribution planning
3.4. Promotion planning

4. Traditional advertising media
4.1. Television advertising
4.2. Radio advertising
4.3. Press advertising
4.4. Out-of-home advertising
4.5. Online advertising
4.6. Product placement

5. Development of the guerrilla marketing concept
5.1. Origin and definition of the term guerrilla
5.2. Objectives and effects of the guerrilla approach
5.3. Risks and threads of the guerrilla approach
5.4. Measurement of costs and results
5.5. Guerrilla marketing in the marketing mix

6. Guerrilla advertising tools
6.1. Low-budget marketing
6.2. Offline guerrilla marketing tools
6.2.1. Ambush marketing
6.2.2. Ambient marketing
6.2.3. Sensation marketing
6.3. Online guerrilla marketing tools
6.3.1. Viral marketing
6.3.2. Mobile marketing
6.4. Strategic guerrilla marketing tools
6.4.1. Pricing
6.4.2. Producing
6.4.3. Distributing

7. Traditional advertising versus guerrilla marketing approach

8. Conclusion

References

Appendix

List of figures

Figure 1: Five product levels

Figure 2: Product mix pricing strategies

Figure 3: Customer marketing channels

Figure 4: The basic guerrilla effect

Figure 5: Guerrilla marketing in the marketing mix

Figure 6: Guerrilla advertising instruments

Figure 7: Differences between traditional marketing and guerrilla marketing

Figure 8: Mr. Proper ambient marketing campaign

Figure 9: Benetton advertising campaign

Figure 10: M&M’s ambient advertising at the cinema

Figure 11: Ikea ambient media marketing campaign at a metro station in Paris

Figure 12: Mini during a basketball game in the USA

Figure 13: Mini wrapped as suitcase at the airport

Figure 14: 3D street art in London

Figure 15: Spreewaldhof gherkins to-go

List of abbreviations

illustration not visible in this excerpt

1. Introduction

1.1.Problem formulation

Have you ever asked yourself how often you happen to zap through the TV channels during a commercial break trying to escape the information flood with only one thought in mind: “Help, commercials!”? As Ty Montague ^[1] claims, “advertising is the business of interrupting what people are interested in with a commercial message about something they are not interested in.” ^[2] And this is true – today’s consumer is bored to death by all the conventional publicity messages he is exposed to in his everyday life. What is more, advertising nowadays is increasingly perceived as a burden ^[3] which forces consumers to try to avoid it as much as possible. ^[4] Because individuals are continually faced with the well-known marketing tools, their activating and persuasive impacts start to decrease and lead to wear-out effects. ^[5] This trend presents marketers with an uneasy challenge - they have to fight with their competitors and win the consumer’s attention without being intrusive. This, however, might turn out to be a difficult task because it involves a high advertising budget. ^[6]

The marketing expert Jay Conrad Levinson notes to that: “if you had all the money that was wasted in marketing each year, you’d be richer than Bill Gates and Warren Buffet combined […] And your earnings would increase each year because more money is wasted than invested in marketing each year.” ^[7]

The “war for eyeballs” ^[8] has been started and the marketers’ mission is now more than clear: they have to develop alternative methods for differentiation and raising awareness in a creative manner and without wasting money for expensive advertising campaigns (see Hutter and Hoffmann, p. 40). Guerrilla marketing is exactly what they need because it includes instruments which guarantee the generation of a big profit with small expenses. ^[9] Its tactics represent an alternative to the traditional marketing communications methods, as well as to the product, price and distribution activities.

1.2.Purpose and methodology

Within the framework of this thesis, guerrilla tools are compared to the conventional advertising instruments. For this purpose, the basics of marketing are firstly examined. Chapter 2 considers the evolution of the marketing concept and its definition. Moreover, the market segmentation process is investigated. The next section is organized around the four P’s in the marketing mix – from product development, through pricing objectives and distribution channels, to promotion planning decisions – the whole marketing concept is being analyzed. Afterwards, chapter 4 looks closely at the main traditional advertising methods applied by marketers. The following two sections focus on the guerrilla marketing approach. Chapter 5 lays out its origin, definition and main objectives, as well as the risks and threats which guerrilla marketing may bring. Its role within the marketing mix is outlined, too. Part 6 highlights all kinds of methods which are subsumed under the umbrella of the guerrilla approach – low-budget, offline, online, as well as strategic guerrilla marketing tools are explained on the basis of examples. Finally, chapter 7 shows to what extent traditional advertising methods differentiate from guerrilla tools and after that a conclusion brings the thesis to an end.

2. The basics of marketing

Before exploring the guerrilla marketing approach in detail, it is worth emphasizing, that guerrilla marketing does not aim at replacing the traditional marketing. Its purpose is rather to expand the marketing instruments and to complement the marketing mix in a more up-to-date manner (see Patalas, p. 15). In order to understand how exactly this happens, this thesis begins with a review of the essential characteristics of marketing.

2.1.The scope of marketing

Today marketing is more important and prevalent than ever before. Regardless of the size of an organization – from large multinationals to small entrepreneurial companies and local businesses – its role in the competitive marketplace is crucial. ^[10] However, marketing has not always been seen as such a significant business function.

Evolution of the marketing concept

In the early 1900s, as the market was product-oriented, businesses were more focused on producing products efficiently and commercially and less interested in producing products that would meet customers’ needs. Later on, during the second half of the 20 ^th century, marketing started to gain in importance. Why? Because consumers’ living standard and income increased, and so did their demand for new and more qualitative products. The production processes also improved and there was a wider choice of goods for consumers. Thus, industries had to struggle for their customers. A market with a competition-oriented structure was created, which made businesses to realize that having a good product would not be enough for a success. Instead, their focus was shifted to the delivery of products and services that create value for customers. Therefore, more emphasis was placed on marketing activities. ^[11]

Nowadays, this emphasis is even stronger. The first decade of 21 ^st century put companies’ financial prosperity into question. The economic recession of 2008 caused budget cuts and extreme pressure from companies’ senior management to make each euro spent on marketing count. Marketing had to react quickly and effectively, adapting to the changing marketplace conditions. Marketers had to manage to reorient their attempts to meet customer satisfaction and to create valuable products within these markets. Many global players, such as Nokia, understood that they cannot afford to relax their marketing tactics because their authority was challenged by fast-growing competitors like Samsung and by the changing consumer tastes. That is why, the knowledge of the changing conditions and business trends, as well as the ability to react to them are key requirement. ^[12]

Marketing defined

Knowing about the importance of marketing and its development in the past, one should not forget to define it. However, this is not that simple, because marketing has a different meaning to different people. Many think of advertising when hearing the term marketing. Others associate it with the selling process (see Kaser, p. 62). In fact, advertising and selling are only the “tip of the marketing iceberg” ^[13]. Theodor Levitt of Harvard Business School analyzed the difference between selling and marketing, claiming that:

Selling focuses on the needs of the seller, marketing on the needs of the buyer. Selling is preoccupied with the seller’s need to convert the product into cash, marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering, and, finally, consuming it. ^[14]

Today, marketing should be viewed not in the old perception of making a sell, but in the new one of satisfying customer needs. If the marketer gets to know consumer needs; develops valuable products; prices, distributes and promotes them effectively, they will be easily sold. According to the management guru Peter Drucker, “the aim of marketing is to make selling unnecessary” ^[15]. Of course, the importance of the sales function should not be underestimated, but an unplanned (from a marketing perspective) product or service will always face difficulties on the market (see Kotler et al., 2011, p. 5). In other words, marketing means managing profitable customer relationships. Moreover, the marketing concept assumes that the key to achieving this goal is to be more effective than competitors in understanding the consumers’ needs and in creating, managing and communicating value to the targeted consumers (ibid.).

Customer value and satisfaction

As already mentioned, customer value and customer satisfaction are key factors in expanding relationships with consumers. But what exactly is meant by creating customer value ? It can be easily understood from the following example.

When buying a Toyota Prius hybrid automobile, customers gain certain benefits. The most evident benefit is fuel efficiency. However, by acquiring a Prius, the owners may receive additional advantages, such as status and image values. When they begin to drive their Prius, others will consider them as environmentally responsible, which will make them feel noticeable. Before purchasing the car, consumers will compare these and other benefits of owning the Prius with the money and other physic costs they would spent for it. In addition, they would weigh the value of having a Toyota Prius against that of another hybrid car brand. At the end, they will choose the brand which is giving them the greater value. If they decide to buy the Prius hybrid, then Toyota’s marketers have managed to offer the highest consumer perceived value - the customer’s evaluation of the difference between all the benefits and all the costs of a product relative to a competing one. ^[16]

In this context, customer satisfaction relates to the interdependence of a product’s perceived performance and the consumer’s expectations. If performance meets or exceeds expectations, the buyer is satisfied. But why does marketing aim at keeping their customers satisfied? As many studies show, a higher customer satisfaction leads to greater customer loyalty, which reflects companies’ overall performance, making it better. Despite the fact that marketing’s main purpose consists of increasing customer value and satisfaction, it is crucial to mention, that it should not maximize them. In order to increase customers’ value, sometimes companies lower their prices and expand their services. However, this may result in decreasing profits. Therefore, one should additionally claim that the task of marketing is to generate customer value profitably for both sides: for consumers and for the company (ibid.).

2.2.The target marketing process

After investigating the marketing purpose, the following part focus on the market planning, which involves identifying the target markets (the consumers or businesses that a company wants to work for) and the effective marketing mix (see Kaser, p. 66).

The market includes the actual and potential buyers of a certain product or service. They share the same need or desire that can be satisfied as relationships are exchanged (see Kotler et al., 2011, p. 8). However, it is not easy to create those relationships with potential customers without the understanding of who is likely to be attracted by the offered products. In order to build a customer base, the basic characteristics of a target market need to be defined first.

The task of analyzing the target market is a continuous process for each company, regardless of its size. Clearly, businesses invest a lot of time and money in market research. Based on it, they can improve their products before offering them in the marketplace. Moreover, a new product line can be included in the company’s portfolio in order to increase the customer base. For instance, a sports company that produces sporting equipment may launch a line for energy snacks for athletes. Thus, consumers that are already satisfied with the sporting equipment and buy it, may also show interest in purchasing the energy snacks from the same manufacturer (see Kaser, p. 70).

To define a target market more precisely, market segmentation is required. Segmenting the market, businesses separate big heterogeneous markets into smaller segments that can be reached more efficiently with products, appropriate enough for their needs. However, there is no single way to segment a market. Below the main variables, used in segmenting consumer markets, are briefly defined below:

- Geographic segmentation divides a market into different geographical measures, such as nations, regions, countries, cities or neighborhoods. A business may function in one or several geographical areas, or in all of them, but paying attention to local differences in needs and wants. For example, Procter & Gamble has introduced its Pringles chips with a curry flavor in England and with a “funky soy sauce” taste in Asia. ^[17]
- Demographic segmentation is a process of dividing the market based on differences in age, gender, nationality, religion, race, income. These are the most common bases for customer segmentation. Why? Because demographic variables are easier to measure, compared to the other types. For instance, many cosmetic giants, such as L’Oreal, offer skin care products for men – L’Oreal Men’s Expert is a typical example for gender segmentation (see Kotler and Armstrong, p. 187).
- Psychographic segmentation splits the market into different groups, based on social classes, interests, opinions and lifestyles. Product brand and performance are of high importance regarding psychographic segmentation. Starbucks, for example, is a highly recognized brand, related to a certain lifestyle. People go there not only to drink coffee, but to relax, work and socialize with others (see Kaser, p. 79).
- Behavioral segmentation is a technique that separates individuals into groups according to their knowledge, attitude or response to a particular product. People tend to connect a certain product with a specific occasion, e.g. many marketers have special offers and ads for Mother’s Day or Halloween (see Kotler and Armstrong, pp. 185ff).

2.3.What is marketed?

So, before going into more depth in understanding the marketing mix, it is crucial to mention what actually is being marketed. One may consider products as the only thing being exchanged. However, according to Kotler et. al. (2012), marketers are delivering value to seven entities:

Services

Defined as usage of knowledge and skills to create a benefit for the other party ^[18], services take a leading part in the global marketing stage (see Kotler et. al., 2012, p. 10). They include airlines, hotels, restaurants, hairdressers, but also professionals working for companies, such as accountants and programmers. ^[19] According to the World Trade Organization, the services sector amounts to €1 trillion of world trade and over two-thirds of the European labour force are employed in it (ibid.).

Goods

From fresh food to various machines and cars, products are tangible items and are often used to establish solutions that marketers provide to their target markets (ibid.).

Events

Event marketing is gaining increasing importance, proven by the “wars” between countries to host such big events as the Olympic Games and the World Cup in football. Other examples include the Frankfurt book fair, the German Hurricane music festival or concerts of famous groups, such as U2 (ibid.).

Experiences

Companies offering products and services can market special experiences linked with them: Disneyland in Paris or Legoland in Germany (ibid.).

Persons

Used mostly in advertising, celebrity marketing is a huge business. Moreover, some people have marketed themselves and become global celebrities – examples include David Beckham (for Adidas), Bono (for Louis Vuitton) or Carla Bruni (for Bulgari) (ibid.).

Places

Cities, regions and even nations are continuously struggling to attract more and more tourists, factories and company headquarters. Place marketing includes a full marketing plan to pull tourism and incoming economic investments, often called Foreign Direct Investment (FDI). For example, a survey shows that Europe is the most visited region in the world for holiday-makers and Paris is at the top of most visited cities. ^[20]

Ideas

Behind every marketing offer there is a core idea. According to Kotler et.al. (2012), the term social marketing describes how marketing can promote positive social behavior. The examples are numerous: social problems such as obesity, drink-driving, recycling or stop smoking campaigns encourage people to live healthy and have an environmentally friendly lifestyle.

3. The marketing mix

After investigating the core marketing functions, the different types of market segmentation and what actually is being marketed, the following chapter focuses on the marketing mix, which includes the key tools, used by organizations to create a desired response among a predefined group of consumers. These strategic tools consist of the product itself, its price, the promotional activities that communicate it to customers and the locations where it is accessible. These elements are often referred to as the Four Ps: product, price, place and promotion. Besides the fact that they are examined separately, in reality, all four decisions are completely interdependent. Every single one of them is affected by and affects the other decisions. ^[21] Although the main emphasis of this thesis is put on one of the four elements - the promotion, the other three are also going to be examined in the next pages.

3.1.Product planning

Product development and product life cycle

Creating the marketing mix, businesses usually start with the product – everything that a customer receives in an exchange (see Solomon et. al., p. 243). The company brings value upon products and builds profitable customer relationships. Moreover, successful products are a result of careful market research and study of target markets. The product development process always starts with a new product (see Kaser, p. 92). By new products it is meant that original products, product improvements, product modifications and new brands are developed thanks to the firm’s research and development efforts. As a key source of growth, new products bring variety and solve different problems for both customers and firms. The product development process includes eight major steps: idea generation, idea screening, concept development and testing, marketing strategy development, business analysis, product development, test marketing and commercialization. Within the first five steps, the product concept exists only as a word description or as an idea. Moving into the product development itself, research and development specialists and engineers turn the basic idea into a physical product (see Kotler and Armstrong, pp. 253-267).

After launching a new product, the goal of the management is for it to have a “long and happy life”. It is not expected to sell it forever, but the company wants to earn a profit at least equal to the amount invested into launching the product or service. Although its exact shape and length is different, each product life cycle (PLC) has four stages (ibid.).

The first one, the introduction stage, starts with the launch of the product. Compared to the other stages, at this stage sales growth is slow and profits are negative due to the high distribution and promotion costs. If the product is good enough and satisfies the market, it enters the growth stage (ibid.). This phase is characterized by a quick sales increase. Besides, prices stay the same or even fall slightly, depending on the demand behavior. Promotional costs are still kept high, but spread over a larger volume and costs per unit decrease because of the producer learning effect (see Kotler and Keller, p. 193). Spending a lot in product improvement, promotion and distribution, the company has a dominant position on the market. However, at one point the continuous growth will slow down and the product will enter the maturity stage. This is the longest product stage and most products on the market are mature products. During this period of high sales levels there are many products and many producers on the marketplace. This overcapacity leads to greater competition and the weakest competitors drop out of the market. Those who remain there, have to take one of these three strategies – they should modify the market, the product or the marketing mix. Considering modifying the market, the company tries either to raise the consumption of its product by looking for new customers and new market segments, or to boost usage among existing purchasers. The company can also try to modify the product – improving or changing product’s features to tempt new users and increase sales. By trying to modify the marketing mix, for example raising sales using a better advertising campaign, companies can also meet the changing consumer needs. Finally, sales of most products eventually go down. This decrease might be slow or fast – this is the decline stage. The reasons for that include technological progress, changing consumer tastes or rapid growing competition. In this phase profits and sales are decreasing and companies need to decide whether to keep or drop their products (Kotler and Armstrong, pp. 270-272).

Product levels

Most businesses, however, are selling more than one type of product. The product mix includes all different products sold by the company (see Kaser, p. 95). Moreover, marketers are planning their market offerings at five levels, as shown in Figure 1.

Figure 1: Five product levels

illustration not visible in this excerpt

Source: Own representation based on Koter and Keller, p. 179.

According to Kotler and Keller, each of the levels adds more customer value, and all five levels form a customer value hierarchy. The most essential level is the core benefit: the product or service that the consumer is actually buying. Hotel guests, for example, are buying “rest and sleep”. At the second position, the marketer transforms the core benefit into a basic product. At this level, the hotel room has a bed and a bathroom. Moving to the third level, an expected product is prepared by the marketer: a bunch of features and conditions expected by the purchaser. Hotel guests expect a clean and tidy room, as well as new towels every day. At the fourth level, the marketer plans an augmented product that goes beyond customer expectations. At this level, brand positioning and competition take place. Nevertheless, product augmentation is cost intensive, so the marketer must consider whether customers will be willing to pay enough to cover the extra cost (of high-speed internet in a hotel room, for instance). At the last fifth level stands the potential product, including all possible changes and magnifications the product might go through in the future. At this point, a company is looking for completely new ways to satisfy its customers and differentiate its product (see Kotler and Keller, pp. 178-179).

Product mix components

Examining the product mix, one should not forget to mention the three most important things when developing a product – the product line, package and label, and brand (see Kaser, p. 96).

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^[1] Ty Montague is a co-president and chief creative officer at JWT New York, a speaker and guest lecturer at many leading business schools and author of the book “True Story: How to Combine Story and Action to Transform Your Business” (Source: http://www.fastcompany.com/user/ty-montague, accessed November 13, 2013).

^[2] Gavin Lucas, Guerrilla advertising 2: more unconventional brand communication [London: Laurence King Publishing, 2011], p. 8.

^[3] Konrad Zerr, Guerilla-Marketing in der Kommunikation – Kennzeichen, Mechanismen und Gefahren [Berlin: Springer Verlag, 2005], p. 584.

^[4] Thomas Patalas, Guerilla Marketing – Ideen schlagen Budget [Berlin: Cornelsen Verlag, 2006], p. 43.

^[5] Katharina Hutter and Stefan Hoffmann, Guerilla Marketing – eine nüchterne Betrachtung einer viel diskutierten Werbeform [Der Markt, Vol. 50, 2011], p. 122.

^[6] Katharina Hutter and Stefan Hoffmann, Guerrilla marketing: the nature of the concept and propositions for further research [Asian Journal of marketing, Vol. 5, 2011], p. 40

^[7] Jay C. Levinson, Mastering guerrilla marketing: 100 profit-producing insights you can take to the bank [New York: Houghton Mifflin Company, 1999], p. 3.

^[8] Jörg Tropp, Markenmanagement: der Brand-Management-Navigator - Markenführung im Kommunikationszeitalter [Wiesbaden: VS Verlag für Sozialwissenschaften, 2004], p. 236.

^[9] Jay C. Levinson, Guerrilla Marketing: Secrets for making big profits from your small business [Boston: Houghton Mifflin Company, 1984], p. 2.

^[10] George E. Belch and Michael A. Belch, Advertising and promotion: an integrated marketing communications perspective [New York: The McGraw-Hill Companies, 2012], pp. 6f.

^[11] Ken Kaser, Advertising and sales promotion [Mason: Cengage Learning, 2013], p. 63.

^[12] Philip Kotler, Kevin Lane Keller, Mairead Brady, Malcolm Goodman and Torben Hansen, Marketing management [Harlow: Pearson Prentice Hall, 2012], p. 5.

^[13] Philip Kotler, Gary Armstrong, Ahmed Tolba , Anwar Habib, Principles of marketing [Harlow: Pearson Education Limited, 2011], p.5.

^[14] Theodore Levitt, Marketing myopia [Harvard business review, 2004], available at http://hbr.org/2004/07/marketing-myopia/, accessed October 20, 2013.

^[15] As quoted in Carolyn P. Neal, From the editor [Marketing Management, January-February 2006], p. 3.

^[16] Philip Kotler and Gary Armstrong, Principles of marketing [New Jersey: Pearson Prentice Hall, 2008], p. 13.

^[17] Darrel K. Rigby and Vijay Vishwanath , Localization: The revolution in consumer markets [Harvard business review, April 2006], p. 83.

^[18] Stephen Vargo, On marketing theory and service-dominant logic: Connecting some dots [Marketing Theory, 2011], p. 4.

^[19] Philip Kotler and Kevin Lane Keller, A framework for marketing management [New Jersey: Pearson Prentice Hall, 2007], p. 4.

^[20] See http://ec.europa.eu/enterprise/sectors/tourism/index_en.htm, accessed October 22, 2013.

^[21] Michael Solomon, Greg Marshall, Elhora Stuart, Marketing: Real people, real choices [New Jersey: Pearson Education, Inc., 2012], p. 92.