17. Choosing Your Advertising Media

     By now you’ve learned that there are many different ways to get your advertising messages across. But how can you get the most for your advertising dollar? There are advantages and disadvantages to each medium.

Here are the main media for advertising:

1.    Newspapers

2.    Magazines

3.    Television

4.    Radio

5.    Direct Mail

6.    Telemarketing

7.    Brochures and Flyers

8.    Free Samples

9.    Internet

10. Cause/Brand Marketing

11. Product Placement Ads

12. Network Marketing

13. Consumer Surveys

14. Publicity Stunts

15. Outdoor Advertising

     When considering which advertising medium (or media) to use to promote your product or service, you must consider four things:

1. Whether the target consumer uses this medium

2. Overall cost of advertisement

3. Average cost per target consumer

4. Whether this medium is a good fit for my product or service.

5. Whether another medium or combination of media will give my product more exposure per advertising dollar.

Newspapers

     When considering newspapers as a means of advertising, there are six things to consider:

1. Circulation (How many people read it?)

2. Does the image or reputation of the newspaper fit my product or service’s image or reputation?

3. Area of Circulation (Where is it published?)

4. Readership (How many people read it?)

5. Target readership (How many of the people who read it are my target consumers?)

6. How much will the advertisement cost per target consumer?

Magazines

     Basically, you ask the same question as you would for newspapers. Newspapers tend to be for general readers. Magazines are often a better choice because magazines tend to target specific readerships.

     For example, Vogue magazine targets women who are interested in fashions and have the money to pay for them. Car and Driver targets teenagers who are interested in cars as a form of recreation.

     Some magazines are published only in very small geographical areas. Some are published worldwide. You should place your advertisement in a magazine published in an area that fits your marketing area and targets your target consumer.

Television

     Television advertisements, of course, cost more than ads for newspapers that cover the same geographical areas. There are, however, three major advantages to advertising on television:

1. You can select time slots when your target consumers are most likely to be watching television.

2. You can have your ad placed along with a show your target consumers are likely to be watching. when your target consumers are watching TV.

3. Television is an active, visual medium. This may fit advertising needs for your product or service.

Radio

     There are several advantages to advertising on radio:

1. Radio usually broadcasts over the same places as television, but it’s cheaper.

2. Radio broadcasts to a captive audience, such as drivers during rush hour. Listeners don’t leave during a commercial.

3. Since radio doesn’t command complete attention the way television does, the listener is in a less critical frame of mind. Thus, he’s more open to advertising suggestions.

4. Radio broadcasts stimulate imaginations; TV broadcasts take the place of imaginations. Thus, you can create “scenes” on radio that would be impossible for television.

Direct Mail

     Direct mail is possible only if you have a mailing list (email or snail mail) of your target consumers. The advantage of direct mail is that everyone who sees your ad will be a target customer.

     You can either buy a mailing list or create your own list by doing a survey in your target area.

A disadvantage to direct mail by snail mail is the cost. You have to create the printed material, hire someone to address envelopes and stuff them, apply for a bulk mailing permit, and pay for postage. Still, it’s one of the cheapest forms of advertising per target consumer.

Telemarketing

     Telemarketing involves calling people at their homes, usually between 6:00 PM and 9:30—the time when they’re most likely to be home. It’s also the time when they would least want to be bothered. Telemarketers use mailing lists targeting specific groups of people.

There are two advantages to telemarketing:

1. Everyone contacted is believed to be a target consumer.

2. This form of advertising costs less per target consumer than almost any other form of advertising.

     A major disadvantage is that most people hate telemarketers almost as much as they hate pedophiles. That’s why most companies don’t use this form of advertising.

Brochures and flyers

     A flyer is a single sheet of paper bearing an announcement or advertisement. A brochure us usually one sheet, but it’s folded and is usually of heavier stock paper.

     Flyers and brochures are used for small geographical areas because the target consumers are all found in that small area. Several times a week, you’ll find a flyer or brochure in your mailbox, advertising something local, such as a new apartment. In these cases, very few of the people getting the flyers or brochures will be interested, but this means is the most cost-effective means of reaching people in a small area.

     For this reason, brochures or flyers may also be placed in specific places, such as restaurants or tourist areas. Other small items, such as sports schedules or packs of tissue may also be used for this purpose.

Free Samples

     This is one of the most expensive forms of advertisements. It not only involves giving away the product for free, but it also involves paying for the means of delivering the free samples to target consumers.

     Although it’s costly, it’s often the preferred means of promoting a new product or promoting a product in a new market.

     One advantage is, it’s a cost-effective means of reaching target consumers in a small target area. Everyone who accepts a sample will be a target consumer.

Consumer Surveys

     Typically, businesses conduct consumer surveys to measure consumer tastes, likes, and dislikes prior to developing a product.

     Sometimes, surveys are taken for the purpose of identifying potential customers and making a sale to them. Either the sale is made on the spot, or the consumer’s contact information is recorded for a later sales pitch.

Other Forms of Advertising

     We’re grouping several other forms together, either because they’re self explanatory or we’ve set aside sufficient space for them in other lessons. They include the following:

1. Internet marketing

2. Cause/brand marketing

3. Product placement ads

4. Network marketing

5. Outdoor advertising (such as billboards)

6. Publicity stunts.

From where does your target consumer get his information?

Television? Which types of programs? What times of day?

Radio? Which types of programs? What times of day?

Movies? What genre of movies?

Internet? Which web sites does he visit?

Outdoor advertising? Where would he see them?

Magazines? Which magazines does he read?

That’s where you should direct your advertising.

Now it’s your turn!

How will you and your team advertise your product or service?

16. Remembering Your Target Consumer

     Do you remember the lesson in which we mentioned a guy who likes to fish? All of his equipment and fishing strategy were designed to fit the kind of fish he wanted to catch. You probably remember that you designed your product and your marketing campaign to fit your target consumer. Well, that’s also true with your advertisements—only more so. You design your product, your marketing campaign, and your advertising campaign—everything—around your target consumer.

Identifying your target consumers

     First, let’s do a quick review of how you fit your marketing campaign to your target consumers.

Suppose you wanted a small child to take vitamins. Suppose you wanted an elderly person to take vitamins. Would you talk to both of them in the same way? Of course you wouldn’t. Would you give both of them the same reasons for taking their vitamins? You probably wouldn’t. Neither do advertisers.

Take food supplements, for example.

     To the small child, you may say, “It tastes good. It’ll make you strong and healthy. You’ll get this nice toy car to play with. Your favorite cartoon character likes it and wants you to take it.”

     To the elderly person, you may say, “It’s help you to have more energy. You won’t get sick as often. You want to be spry enough to go hiking, don’t you? I do want you to live longer.

   
     For that matter, suppose there were four little boys the same age. Supposed one liked baseball, one liked computers, one liked music, and the other was a temperamental sort who didn’t seem to like anything. You wouldn’t talk to these four little boys in exactly the same way, would you? Of course you wouldn’t!

     Let’s look at two examples of nature-based medicines and the target consumers for each of them.

1. Nature-based medicine for women with urinary cramps

2. Nature-based medicine for middle-aged and elderly people with joint problems

     Look at the image below. You will see the same high-mountain oolong tea in both packages. One costs NT$129; the other costs NT$888. That’s because one is packaged the same as most other teas. The other is packaged as if it were a thoughtful and expensive gift for a friend.

     Now look at the bottles of vinegar below. You will see basically the same thing in differently designed bottles at different prices. That’s mainly because the marketer is targeting different groups of consumers.

     You’ll see the same phenomenon for every product you see in the stores. Here are a few others we’ve observed.

1. Fabric softener—same company, same product, but two different colors: blue for little boys and pink for little girls.

2. Other fabric softeners—same product, different companies, different target consumers: a lavender-scented fabric softener in a lavender-colored bottle just for women (with a picture of a woman on it); a mauve-colored one for women with children (with a picture of a woman and a little girl on it); and a plain white bottle for low-budget consumers.

3. Toothbrushes: One brand is smaller than the other, and it displays images of cartoon characters. The other is larger, designed to fit the fingers of an adult’s hand, and it displays images of smiling, white teeth. It’s not hard to tell which targets small children and which targets adults.

     As you can see, both of these cereals are targeted toward health-minded consumers. The one on the left, however, more specifically targets health-minded women who want to lose weight.

     Even the colors you choose for your product or package should fit everything else in your marketing and advertising strategy. For example, most soft drinks are clear, but soft drink manufacturers add coloring to them. Root beer is colored a natural-looking brown. Lime soft drinks are colored a soft green, to remind target consumers of lime. We mentioned earlier that the lavender-scented fabric softener came in a bottle that was tinted a lavender color.

     You can see now that you don’t just make a product, advertise it, and hope that somebody buys it. You decide exactly which type of consumer you want to buy your product, build everything—from product creation to design to advertising to marketing—to please that one type of person.

Now it’s your turn!

     How will you and your team package your product or service”

15. Creating Your Website

     Due to the ever-changing nature of the Internet, it’s hard to give specific advice on how to use the Internet in your marketing campaign. No doubt you already realize that your business website is not just another form of advertising.

     The Internet has become a marketing tool in its own right. But how do you take your website from desktop to cyberspace and from cyberspace to the bank?

Here’s a smart start:

1. Hire a professional to build your website,

2. Have him make your website user friendly,

3. Maintain the website and regularly update it.

     At this point, you may be thinking, Hmm, I didn’t have to come to class to learn that one. That’s something everybody already knows. I’ll just skip this lesson.

     You see, nothing is more deceptive than an obvious fact. What’s more, people overlook obvious facts more quickly than any other information. That’s why we have to begin by emphasizing what you thought you already knew.

     The basic principles of marketing haven’t changed in thousands of years. That’s because basic human nature hasn’t changed in thousands of years.

     The only real changes have been in the tools we use for marketing.

  When your grandparents were teenagers and the first shopping malls opened, your grandparents were practicing the basic principles of Internet shopping. Actually, the basic principles of Internet shopping go back thousands of years. But let’s start with something more familiar to you.

     Why did your grandparents go to shopping malls? They went for the same reasons you do: because they enjoyed going. Why did they stay longer in a mall than they would have stayed in a mom and pop store? Again, they stayed longer because they enjoyed it more. And, because they stayed longer, they were more likely to buy something.

     From looking at our mall shopping habits, here are some of the lessons we learn about Internet shopping:

1. Potential customers have to know about the site before they can go there.

2. They have to go there before they can buy something.

3. The site must be easy to access and easy to navigate.

4. Potential customers must enjoy the site enough to want to stay awhile and to return. The longer they stay, the more likely they are to buy something. The more often they return, the more likely they are to buy something.

5. They will enjoy the site more if it’s kept interesting and if they don’t have to use much thought in navigating the site.

6. If they’re interested, relaxed, and not thinking very critically, they can be more easily nudged toward making a purchase.

     Let’s take another look at the list you saw earlier:
1. Hire a professional to build your website,

2. Have him make your website user friendly,

3. Maintain the website and regularly update it.

     Most people who want to create a website are focused on the website’s content (1.) When they think of maintaining it and regularly updating it (3.), they’re still thinking of content. What about the customer (2.) and the real purpose of the website: making sales?

     You don’t need a professional to provide content for you. For that reason, many businesses building a website try to get by cheaply and use the nearest computer nerd they can find.

     But content is just advertising—actually, it’s not even that much. Wouldn’t you want to hire a professional advertising agency to design your ads for you? Then you should have your website designed as professionally as possible.

    Almost everyone agrees that professionals should be hired to build business websites, but—astonishingly—many businesses use in-house amateurs anyway. Don’t overlook the obvious!

Another word on making your website user friendly:

     A typical visitor to your website should scarcely be aware that he’s visiting a website. He should not be expected to adjust his thought processes to fit the needs of the website. Navigation tools should be designed to fit his thought processes.

     For an example of this principle, look at the cursor on your computer screen. For many years, people had to move the cursor by clicking arrows up, down, or to the side. That’s not the way people think. Then someone invented the computer mouse. This more closely fits what people are more accustomed to doing: simply moving an object from here to there. More recent technology involves pointing or giving voice commands. People are becoming less and less aware that they’re using computer programs, because the programs are behaving more in line with the way real people think.

     Notice how familiar symbols are incorporated into websites. 

     The more familiar your communication seems to the visitors to your site, the more relaxed he’ll be. The more he feels that he’s navigating a website, the less relaxed he’ll be. The symbols you use, however, shouldn’t be distracting.

     Remember that your website is a shopping area. The longer customers linger in a shopping area, the more likely they are to make a purchase.

     How do you “nudge” them towards making a purchase? You do it the same way your favorite novelist nudges you to keep reading his novel until you reach the final page.

     You do it the same way a belly dancer keeps people watch her dance—even though she’s as modestly dressed as many of the young women you see on the street during the summer.

Here’s the step-by-step method:

1. First, you get their attention. They must understand that it won’t cost them anything to look.

2. You reward their interest by feeding them something interesting. At the same time, give them a hint of more to come. That will hold their interest.

3. Get them involved by having them do something that doesn’t involve cost or effort on their part. It must be something they think is interesting and relevant to them.

4. The more you’re able to repeat steps 2. and 3., the closer to a sale you can move the customer.

Shopping Cart: Making the sale

     One of the most brilliant marketing devices on the Internet is called the shopping cart. It’s easy to place an order in the shopping cart, and it’s just as easy to remove an item from the shopping cart.

     The customer knows that it costs him nothing to place an item in the shopping cart. It does, however, cost him if the item is still in the shopping cart when he leaves the website.

     That’s the brilliance of it. Call it a high-tech version of Newton’s Law of Inertia. If the item is not already in the cart, the customer probably won’t put it there. Once it’s in the cart, there’s a good chance that the customer will complete the purchase.

     There’s also the chance that the customer will get distracted and forget that it’s there. It’s still a sale.

Workflow: Completing the sale

     There’s much more to making an Internet purchase than just pressing the “send” button. Pressing the “send” button , however, is all that most customers actually do. All the other stuff is done automatically, to save the customer steps, time, and trouble; and that’s the way it should be.

     That’s where the concept of workflow comes in. Workflow is the set of chores that no one likes to do, but someone has to do it. As it was in the fairy tale “The Elves and the Shoemaker,” we have computer programs to do it for us.

     If the customer is buying a car from, for example, the Ford Motor Company, this is how the workflow may someday take place:

1. The customer fills out a form and places an order for a Ford Taurus.

2. The customer’s credit is verified by GE Capital.

3. The customer’s insurance is provided by Samsung.

4. The customer’s car is registered at the state department of motor vehicles.

5. The customer is informed of when and where his new car will be delivered.

     A single click of the mouse sets the entire process in motion. Unless there’s a hitch, such as a bad credit rating, the customer has to do nothing more; and the dealer has to do little else.

What if you’re not interested in e-marketing?

     Even if you’re not planning to make sales over the Internet, you’re still in the business of e-marketing. The only difference is, your shop or store, rather than the Internet, is the customer’s point of purchase. You still have to get him interested enough to come to your place of business.

You still have to do an effective selling job if he’s going to be interested in finding your place of business. You still have to make it as simple as possible for him to find your place of business.

You’ll also want your customer to be satisfied with service after the sale. He’ll be more satisfied if he doesn’t have to leave his home to get the service he needs.

14. Managing Outside Pressure

     In Lesson 13, we covered supply chain management, and you saw how one bad link in the chain can harm a company’s reputation. Reputation management, though, involves more than things that can go wrong in your supply chain. It also involves decisions you should make in managing your business’s reputation.

     You’ve probably heard the old saying, “The road to hell is paved with good intentions.” By the same token, just thinking of yourself as a good person doesn’t mean that you can’t get a bad reputation.

Case Study #1: Royal Dutch Shell

     Some years ago, the oil company Royal Dutch Shell had to dismantle an aging oil platform in the North Sea. After years of study, they concluded that the most reasonable way to dispose of it was to blow it up and sink it. Their scientists told them that the ruins of the platform would become a habitat for fish and other sea life.

     Some oil would leak into the sea, but it would be far less than the sea naturally experiences without human causes. Besides, the oil would soon biodegrade.

 

     Then, in the dead of night, a radical environmentalist group called Greenpeace seized control of the oil platform. This captured the world’s attention.

     Greenpeace argued that, if this platform were sunk, other aging platforms would also be sunk. This, they said, would create a pollution hazard. Royal Dutch Shell further harmed their own reputation by using water cannons to try to dislodge Greenpeace activists from the platform.

     Amid public disapproval, Royal Dutch Shell’s profits fell. In the end, they agreed to dismantle the oil platform and recycle it on land.

Case Study #2: Star-Kist

     Star-Kist is the world’s top processor of canned tuna.

     Tuna fishermen use nets to catch them, but they sometimes accidentally catch dolphins. Since dolphins are mammals and not fish, they can drown if they become entangled in nets.

     At the time, dolphins were regarded as plentiful all over the world. On the other hand, tuna populations—especially blue fin tuna—have been depleting since 1886, and several species of tuna are approaching the risk of becoming endangered species.  

     Scientifically, there’s every reason to be concerned about tuna populations but no reason to be concerned about dolphin populations. At least that’s what Star-Kist’s scientific advisers told them.

    During the mid-1980’s, a popular television program premiered: Flipper. The “star” of the show was a lovable dolphin named Flipper, who was also very smart and often saved people’s lives.

     Viewers of the TV series Flipper could be excused for wondering why anyone needed life guards or a Coast Guard when they had Flipper to solve all their seagoing problems for them.

     Overnight, the public began to see Star-Kist as low-life scum who were murdering Flipper’s friends. Star-Kist sales dropped faster than a brick. Never mind that Star-Kist’s competitors were doing the same thing. Activists targeted Star-Kist, and Star-Kist suffered.

     Star-Kist began using “dolphin-free” nets and noted this fact in their advertisements.  As a result, they eventually regained their market share.

Case Study #3: Nike

     Nike, with its image-driven marketing campaign, was enjoying double-digit increases in sales figures each year from the beginning of the 1980’s until near the end of the 1990’s. In just one year—1996—Nike’s sales figures jumped by a whopping 36% over the previous year. The figures for 1997 were even more impressive: 42%. Nike was on a roll, and it appeared that nothing could stop it.

     All during the 1990’s labor rights groups tried to publicize the labor abuses of Nike’s source plants in Asia, particularly Indonesia. Nike CEO Phil Knight dismissed these concerns, saying that he “didn’t have to know” about labor conditions in his source plants. If anyone had a problem with the way Nike’s source plants treated their workers, they could take it up with the source plants—not with Nike. “We don’t make shoes,” Knight flatly stated.

     Then the Nike labor scandal hit the mainstream. For more than a week, the popular comic strip Doonesbury emphasized issues of safety, health, child labor, and physical abuse at Nike source plants in Vietnam. Tonight Show comedian Jay Leno panned Nike on his television program.

     Hollywood muckraker Michael Moore made a movie in which he interviewed Nike CEO Phil Knight. On camera, Knight said that he wasn’t bothered by the thought of 14 year-old Nike laborers, because, in Southeast Asia, that was the legal age for dropping out of school and going to work in a factory.

     Nike’s sales figures still climbed but at a much lower rate: 14%, as opposed to 42% the year before. Nike had to reorganize just to make a profit. The following year, Nike posted its first loss in two decades.

   
      Since 1999, Nike has worked with chosen activist groups to improve its image. Nike source plants are no longer accused of child labor, physical abuse, labor contract violations, or violations of safety and health.

     Nike does, however, remain on watchdog watch lists for alleged union-busting tactics. For example, in Latin America, a source plant was allowed to unionize. After it was unionized, Nike then cited quality control problems at the plant as a reason for ending his contract with the plant. Public pressure forced Nike to back down and rehire the workers.

     As dismal as Nike’s labor record is, labor activist groups generally consider Nike “one of the better performers” on labor rights.

     In the decade since the labor abuse scandals of the late 1990’s, Nike has never regained its market share.

Royal Dutch Shell, Star-Kist, Nike:

What did these three scandals have in common?

1. All of these companies were obeying the law as the laws existed at the time.

2. Standard business practices of the time were still in a state of flux, and it was not yet firmly established that what the companies were doing was wrong. (About the same time, Adidas and Levi Strauss took quicker and more responsible approaches than Nike and their sales didn’t suffer, except as a direct result of the Asian Currency Crisis of 1997-98.)

3. All three companies were able to offer compelling reasons for their actions.

4. All of these companies failed to consider the emotional side of the issues. Seeing only facts and statistics, they were blindsided by public outrage.

What can your company do to manage outside pressure?

     Most protests will never harm your company’s reputation or sales. Still, it is important to be able to recognize which issues should be taken seriously.

Ask yourself a few questions about the issue:

1. Does the issue have the power to raise emotions?

2. Is the issue media friendly (current, visually striking, easy to understand)?

3. Can your opponents make a reasonable-sounding case for their views (even if you disagree with their views)?

4. How far has the issue progressed? (By the time the issue has hit the comic strips, talk shows, and evening news, you may have waited too long to act.)

5. How difficult is it to find a solution? The easier it is to find a solution, the more important compromise becomes.

6. How much potential does this issue have to harm my company’s reputation or sales?

7. How “isolated” is my company? That is, is there any reason to believe that other companies may help in my defense—or will they find that it makes better business sense to leave my company to its opponents?

8. Can anyone make a connection between this issue and some other highly emotional issue? For example, the Royal Dutch Shell protests went beyond North Sea oil platforms; people associated it with the general principle that the earth’s environment should be protected.

Now it’s your turn!

     Get together with your team and decide what kind of CSR issues can be used against your business or its marketing strategy.

     Remember that CSR issues don’t have to be of world-class importance. For example, what if your company sponsored a Little League Baseball team? That sounds like good PR and good CSR, but what can go wrong? For one, Little League Baseball teams are for boys. Opponents could ask, “Why are you discriminating against girls?” This could cause you to lose half of your customers—the female half.

     On your final exam, include a discussion of CSR issues and outside pressure that your business may face and how you would manage it.

13. Supply Chain Management

     Every business has a supply chain, and some supply chains are longer than others. Even if you have a shop or kitchen in which you make everything from scratch, you still have to get your supplies from somewhere.

     We tend to think of a supply chain as something resembling a chain—like this:

     The customer, by the way, isn’t considered part of the supply chain because he doesn’t supply anything.

     The supply chain is also called the value chain because each person at each link of the chain adds value to the product.

     Actually, your value chain is far more complex than the illustration you see here. If supply chain management (SCM) were as simple as this illustration seems to show, SCM would be a very simple matter; and this lesson would not be necessary.

     To take only one example, let’s look at the wheat farmer. He’s not at the beginning of the value chain; he’s actually somewhere near the middle. What’s more, you can now see that it’s not a simple chain; it’s more like a network. Each of the other links in your value chain is just as complex as this one—often more so.

     What kind of problems could result in just this part of your value chain? Let’s look at a few examples:

1. Grain merchant: Over 80% of all grain is a genetically modified organism (GMO), or at least partly so. How can you be sure that your bread is non-GMO?

2. Pesticide manufacturer: Types of pesticides range from natural to fairly safe to hazardous. What about the pesticides used on the wheat in your bread?

3. Fertilizer distributor: How can you be sure that the fertilizer used to grow the wheat in your bread meets with soil and water regulations or your customers’ idea of what kind of fertilizer is acceptable (for example, natural)?

4. Farm laborers: Are the farm laborers treated according to fair labor standards?

     If even one thing in your value chain goes wrong, it can hurt your reputation and your business. So, you see, SRM isn’t just a matter of watching your back or looking over your shoulder. You have to know what’s happening everywhere in the value chain.

     Okay, so maybe you’re thinking, “Oh, it’ll be rough at first, locating only sources I can trust. After that—well, how complicated can it be? It can be very complicated. Like it or not, the world is now a global village and you’re faced with world-class competition. Some of your sources are likely to change from one month to the next.

Look at it this way:

     Suppose you made and marketed a food item that had 20 ingredients. You buy each ingredient with three things in mind: cost, trust, and reward. For now, let’s focus on one: cost. After careful bargaining with your suppliers, you may find yourself buying from 20 different suppliers.

     Your agreement with some may be for a few months; with others, it may be for only a month. The batch you make this month, then, would not be identical to the one you make next month, because you won’t have the same 20 sources next month. If only one source is different, the next batch will be slightly different.

     With proper quality control, however, no one should be able to tell one batch from the next. They should all be of the same high quality.

     Now consider that each of your sources has his sources. That further complicates things, doesn’t it?

     Think of what happened to the American toy marketer Hasbro in 2008. In the United States, it was illegal to use lead paint for household purposes; and it was illegal to import household purpose items (including toys) containing lead. At the same time, lead paint was legal for most uses in China.

     Hasbro sourced a Chinese company to do the finishing touches on some of their most popular toys. The Chinese company agreed to Hasbro’s demands that only a certain kind of paint would be used. This company subcontracted the paint job to another Chinese company under the agreement that the latter company would use only the paint provided by Hasbro’s source company.

     This other company then used cheaper paint—which contained lead. In August 2008, hundreds of thousands of Hasbro toys were recalled, Hasbro lost millions of dollars in profits, and the CEO of the Chinese source company committed suicide. Under Chinese law, the dishonest company CEO had done nothing worse than violate a contract.

     In September 2008, China banned the export of lead-contaminated products.

     Among all of your sources and their sources, how can you be sure that not even one of them will accidentally or dishonestly do something wrong?

     If one of your sources does something that can harm your company’s reputation or business, it probably is the result of one problem in one batch, caused by one source. Maybe the offending source was your source for only one batch: say, the one your company produced for October of this year. Did you, by chance, use that same source company for January or some other month? You don’t remember? Of course, you don’t!

     How do you keep track of it all? Using pen, paper, and a pocket calculator, you can’t. Modern businesses have to rely on watchdog groups, government agencies, and information technology (IT).

Watchdog groups:

     Watchdog groups are usually non-governmental organizations (NGOs) that watch the behavior of businesses to make sure they do what the group thinks that the businesses ought to do.

     To give a few examples, environmental groups monitor businesses for environmental responsibility; labor groups monitor businesses for their treatment of workers; consumer watchdog groups monitor businesses for the safety and health of their products.

     When an NGO sees something wrong in a company’s supply chain, they usually protest directly to the company. The company often appreciates the NGO bringing the problem to their attention. For that reason, many companies and NGOs work together on a problem instead of opposing one another.

     In an earlier lesson, you learned that Starbucks works with rainforest preservation groups, labor groups, native rights organizations, and other NGOs to make sure that their company has a reputation for corporate social responsibility (CSR).

     If NGOs are not satisfied with the company’s response, they may protest in public and ask people not to buy that company’s product. Then the company will have a CSR problem and can lose customers.

Government regulatory agencies

     Governmental regulatory agencies also serve as watchdog groups, but they have the power of government behind them. They can use force, arrest businessmen, fine them, or, in some cases, entirely shut down the businesses.

Information Technology (IT)

     In today’s business conditions, companies have found that they need to use information technology to keep track of their rapidly shifting supply chains. Large businesses often use radio frequency identification (RFID) for supply chain management (SCM). RFID, however, is too expensive for most companies and can be used only under limited conditions.

     The Japanese have invented a more user-friendly system called quick response codes (QR Codes). 

     That strange-looking square didn’t come from a low-budget science fiction movie. It’s a means of storing information about a company’s product. It’s capable of linking to far more information than a bar code could possibly hope to achieve.

     The Japanese invented QR Codes to keep track of items in their supply chains. Each batch of each product is assigned a different QR Code.

     Someone with a cell phone camera can photograph a QR Code from almost any angle, even if part of the image is damaged, and gain information about the product or that particular batch.

Store shoppers or anyone anywhere along the value chain at any time can photograph the QR Code and download it to his computer. The image is then sent to a special website. All accessible information related to that particular batch of that particular product instantly becomes available to anyone anywhere along the value chain.

     QR Codes aren’t just a monitoring tool. Some Japanese companies are using QR Codes as a subtle advertising tool. For example, you may want your customers to know more about the health benefits of your product than you can write on the package. QR Codes make an excellent link to further information.

A Final Word on Supply Chain Management (SCM)

     We’ve spent most of this lesson discussing how supply chain management is necessary ensure quality control and to avoid CSR disasters. A word on supply chain negotiations is in order.

     You succeed in business by giving your customers a product or service he demands at a price he’s willing to pay and of such quality and reliability as he expects (cost, trust, reward). That’s the basis of your negotiations with your suppliers.

     You negotiate quality, quantity, cost, just-in-time delivery, service, and everything else that may give your business a competitive advantage. This is not a course on how to negotiate. It’s just a reminder that you mustn’t overlook anything in negotiations. If you overlook even one important point, your competitors may not.

Now it’s your turn!

     Tell how you would monitor your supply chain. This should be included in your group’s final exam presentation.

12. Product Placement and Celebrity Endorsement

     Product placement is the art of placing your product or service where people are most likely to see it (or hear it mentioned) in a favorable way. It’s not the same as an advertisement, but it has the same effect. In this lesson, we’ll talk about two forms of product placement. One is the way it’s presented or placed at the point of purchase. The other is known as a product placement ad—although, as I just said, it isn’t really an advertisement. A product placement ad is sometimes called a “hidden advertisement.”

     We’ve all seen these hidden advertisements whether we realize it or not. In fact, these ads are effective simply because we don’t recognize them as ads.

First, let’s discuss something we’ve all noticed: packaging.

     Have you ever noticed that small products, such as a bottle of eye drops, or USB’s (memory sticks), are packaged on cards? The cards are several times as large as the product. It would cost the company much less if the package were no larger than the product.


Question: Why do they do this?

Suggested answers:

1. So they’ll have a place to put the instructions? (Hmm, do you really need instructions on using a memory stick?)

2. To reduce the chances of shoplifting? (They have security tags for high-risk items.)

3. To have a place to put the hole so that they can hang it on a peg in the store? (Wrong again. I’m sure you’ve seen lots of things hanging on pegs without being attached to cards.

Correct answer: So that people are more likely to notice it. People don’t buy products unless they notice them.

Colors:

     We’ve discussed colors in another lesson. In this lesson, we’ll go a little deeper.

     The colors used in product packaging have a bearing on whether the customer will buy the product, but so do colors and lighting in the store. The makers of a product should pay attention to the appearance of the store because that’s usually the point at which the customer decides to buy or not to buy.

     If you were marketing meat or fish products, you wouldn’t want the walls or containers to be green. When meat and the color green are seen together, people unconsciously connect the two and think the meat looks spoiled. Light blue is better for fish, and orange is better for meat.

     Likewise, the color scheme (the way the different colors work together) of the packages should attract attention, but it should be favorable attention. Yellow is the most attention-getting color in the spectrum, but what if everyone used yellow? Your product would be harder to notice. Red is considered the most exciting color in the spectrum, but, if everyone used red in their color schemes, it would lose excitement.

     Your best bet for favorable attention would be a unique combination of colors and patterns (like the Nike swoosh or the Coca Cola red-and-white pattern). You should also be aware of the psychological impact of the colors you use so that your color scheme will fit both your product and your customers.

     In different cultures, colors suggest different things. Not only that, but different colors associated with different products suggest different things. For those reasons, I won’t tell you that certain colors always suggest the same things.

     Green, as I said, it lousy for fish. Certain shades of green, however, are excellent for vegetable products. In this one course, it isn’t possible to cover all the bases. If you want to know more, you’ll have to research it on your own.

End Caps and Free-standing Displays

     When a product is displayed in stores, there are six places it may be displayed:

1. On shelves

2. In display cases

3. Behind counters

4. At end caps

5. At free-standing displays

6. Point-of-purchase displays.

      An end cap is that section at the end of the shelves. End cap displays are noticed more than any other kind of display.    In the photo to the right, you see a woman standing at an end-cap display.

     Actually, the display you see here is both a free-standing display and an end-cap display. A true end-cap display would be on shelves at the end of a row of shelves. Since the end-cap shelves are covered by the display in this picture, we can also call this display an end-cap display.

Below are two types of free-standing displays:

     A manned free-standing display (left) and an unmanned free-standing display (right.)

     You’ve probably noticed something that the manned free-standing display has in common with the manned end-cap display. They’re both manned by attractive young women. In the field of advertising, attractive young women are called a “primary advertising symbol.” (No offense is intended here.) Let’s face it: Both men and women would rather look at attractive young women than any other demographic group of people. But don’t overdo it; it can lose you customers.

Point-of-purchase Displays:

     Point-of-purchase displays are displays at the checkout counter. The purpose of these displays is to encourage impulse buying. While you were making out your shopping list, you probably didn’t write down that you needed the most recent copy of Next magazine, a soft drink, or a candy bar, did you?

     If your product is small, inexpensive, subject to impulse buying, and completely unnecessary, that’s the place for the supermarket to display it. The woman in this picture may be tempted to put a candy bar on the checkout counter without even realizing it. The other woman may be reading a copy of Next.

Hidden Advertisements:

     Let's suppose you’re watching a car chase in an action movie. The hero of the movie is driving an exciting car, while the bad guys are driving cars manufactured by other car makers. The hero’s car handles so beautifully that it doesn’t crash even once. The bad guys’ cars—the ones made by other automakers—are crashing all over the place. Even if you’re dirt poor or don’t have a driver’s license, you’re thinking, I’d like to have a car like that.

     That’s what you’re supposed to be thinking because the scene you were just watching was sponsored by an automaker. It takes money to make a movie or television series, right? Now you know where the producer of the movie got the money to make that scene.

     How many times have you seen a movie or television series—such as JAG—in which a fleet of navy ships are doing things that make a career in the U.S. Navy sound glamorous? I hope you don’t think that Hollywood has that kind of money to throw around, especially for an empty-headed television series that was never all that popular anyway.

     That’s Americans' tax dollars at work. An all-volunteer military depends on capable people wanting to join. Hollywood and the military-industrial complex have been in cahoots at least as early as World War II.

     When people watch an obvious advertisement, their defensive filters are up. If they think it’s just a show, they’re more likely to buy the product—in this case, they’re more likely to enlist. That’s why the JAG TV series never showed anyone sweating it out in a ship’s boiler room or dying of a Gulf War illness.  Television shows about life in the military are always more glamorous than the truth.

A few other product placement ads:

1. In the 1980’s Spielberg movie E T, a little boy used a candy called Reese’s Pieces to lure a space alien into his closet. In two scenes, the front of the package was clearly shown. This was enough to tremendously boost sales of Reese’s Pieces.

2. In a 1990’s movie, the main character (Tom Hanks) went a little overboard in praising the Starbucks “experience.” That was too obvious.

3. In a more recent police show, some policemen tease a cop about drinking a domestic beer—clearly shown to be Budweiser—instead of a fancy European beer. When the cop is shown to be more intelligent than the other cops, they also order “what he’s having” (meaning Budweiser.)

4. At major events such as the Academy Awards and presidential inaugurations, fashion designers usually provide the gowns that famous women wear.

     Note: Product placement ads don’t have to be as expensive as the ones mentioned in this lesson. For example, many fashion ideas have been tried out by hiring ordinary people to wear them in natural settings.

     Remember, also, that there must be a fit between the “ordinary” person who is wearing the clothing and the “ordinary” people who are your target consumers. You wouldn’t want to hire someone your teacher’s age to be seen wearing something that you hope to market to college students.

Celebrity endorsements

There’s little to be said about celebrity endorsements that you don’t already know. There are three ways to go about it:

1. Pay the celebrity to say good things about your product in an advertisement, or to appear in an advertisement for your product.

2. Pay the celebrity to use your product in public.

3. Both.

     This works if everything fits. A famous baseball player can be a celebrity endorser (or celebrity spokesman) for athletic equipment, but it would be a poor fit for him to endorse Burger King. It also helps if the celebrity actually likes the product.

Warning! Warning! Warning!

     An alliance between a brand and a celebrity is always a risk for both. Either the brand or the celebrity may be caught in a scandal that destroys the fit between them. Here are two memorable examples:

1. In 1955, James Dean was the idol of teenagers all over America. He was hired to do public service announcements urging teenagers to drive safely. In September 1955, he was killed while driving recklessly on a mountain road.

2. During the 1990’s, actor Stacy Keach was hired to make public service announcements against smoking. This ad campaign abruptly ended when he was arrested for possession of marijuana.

3. For many years, a famous golfer named Tiger Woods was celebrity spokesman for a slew of products.  It was more than just his golfing skills that made him attractive as a celebrity spokesmen.  It was his wholesome, clean image.  When his wholesome, clean image went down the tubes, so did his contract with several companies. 

Now it’s your turn!

     You and your team will design a product placement campaign for your product or service.