Facebook Marketing: Is Social Media Really an Effective Marketing Tool?

October 11, 2012 6 Comments

Social Media Marketing is the largest growing trend in marketing today.  Essentially, it is an extension of word of

Social Media Marketing, Marketing on Facebook

Guide to Marketing on Facebook and other Social Media Marketing Principals.

mouth advertising; however, the traditional marketing rules no longer apply.  Social Media Marketing is generating 3x times the search queries from 2009 and most companies now have permanent staff just to take care of Social Media.  So where does that leave your business?

The benefits are endless for your business to get involved in Social Media Marketing.  You will generate exposure, increase traffic to your website, improve search engine rankings, generate qualified leads, improve sales, and reduce your expenses (Stelzner, 2011).  Facebook dominates the social media world, so for this post I will strictly focus on Marketing on Facebook.

Facebook Marketing is effective if presented in the right way.  Facebook users are generally interested in what companies have to say.  Facebook allows consumers to control the marketing environment.  This is creating powerful word of mouth evangelist for your business.  So how do you Market Effectively on Facebook?

Brand Engagement!!!!!!!! 

The secret to marketing on Facebook is to generate brand engagement.  Encourage your fans to participate in discussions (Hoffman & Fodor, 2010).  Allow them to communicate their opinions and concerns.  It is also an easy way to hold contest.  Think of creative, attention getting ways to allow your customers to get involved.    Avoid sales pitches at all cost.  Soon your customers will be sharing your post, content, products, and services.  Just be creative and attention getting.

A great example of effecting Facebook Marketing Is how Target created “Circle of Moms” fan page.  Here mothers could share school supply list, share promotions, and arrange carpools (Hoffman & Fodor, 2010).  The way to keep it simple is to let your customers control the Marketing on Facebook.  Think outside the box a little.  Follow the link here to create your own Facebook page for your business and begin to Market on Facebook.

If you are interested in Marketing on Facebook or any other social media Click Here.

What do you think about Social Media Marketing, Leave a reply, take the polls below.

References

Hoffman, D. L., & Fodor, M. (2010). Can You Measure the ROI of Your Social Media Marketing? MIT Sloan Management Review , 52 (1), 41-49.

Holzner, S. (2009). Facebook Marketing: Leverage Social Media to Grow Your Business. Que Publishing.

Stelzner, M. A. (2011). Social Media Marketing Industry Report.

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Customer Value Setting Pricing: Where to Begin When Pricing a New Product

May 12, 2011 2 Comments

Set a value first and the customers will tell you the price. The key to effective pricing is first determining customer value. Initially companies may want to lower prices to generate customer traffic; but often times this leads to lost profits and dangerous pricing wars. To the customer, this comes off as price is more important than their customers are. If a company spends more time on creating product value, then customers are more than happy to pay the higher prices of a premium product. It all begins with customer value and expectations.

Customers will form expectations based on the satisfaction and benefits they will receive on a product. Satisfied customers will buy again and tell other about their experience. For example, I received an Amazon Kindle as a birthday present last month. I love the little reader device. How many people have I told? I would say I told fifty people in less than a month. On the flip side, dissatisfied customers may switch to competitors and will tell other not to buy that product. A company must know their customers; easiest way to find out is to ask.

Perform a Customer Value Analysis. A customer value analysis determines the benefits for a target audience. For example, Apple listened to consumer complaints in the PC market. The benefits of owning an Apple computer are an easy to use interface, secure computing, and an aesthetically pleasing product. Apple used a three-step process in determining their value:

  1. Determine the major needs of customers (ease of use, security, ect.).
  2. Analyze company’s response toward meeting customer needs.
  3. View competitor’s response to customer needs (security threats, constant crashing).

If the company meets the customer needs, then the company can charge a higher price for the product. If a product is coming up short in meeting customer needs, then more resources should be invested into meeting those needs. Set the right level of expectations in a product. Setting expectations too high and customers will be left disappointed, too low and the company will fail to attract customers. Effective pricing is made up of everything in a floor to ceiling model were customer value, the highest amount a customer will pay, is the ceiling and the cost of producing the product is the floor. Competition, market demand, and internal/ external considerations make up the room.

Customer Perceptions of Value

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Internal and External Considerations
Marketing Strategy
Competition
Market Demand

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Product Cost

Setting the correct price for a product will closely relate to the customer value. Begin a pricing strategy from that point. It may require some research; however, research cost is minimal to the return this research will yield. If customer value is below a product cost, then careful consideration must be made in product development and manufacturing or if the product is worth putting on the market. Remember, it’s all about the customer.

References

Kotler, P., & Armstrong, G. (2008). Principles of Marketing 12th edition. Upper Saddle River: Pearson Education Group.

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Current Customers First: Where to Emphasize Marketing Efforts

May 6, 2011 1 Comment

90% of profit comes from repeat customers

Market your current customers now.  The goal for any business is to create partnerships with their clients.  A business must build long-term satisfying relationships with their customers.  These relationships are what build brand equity.  Eventually, 90% of profit will come from repeat customers (Arens, Schaefer, & Weigold, 2009).  This may seem counter-intuitive to the goals of marketing, which is generating clients; but studies show just how powerful marketing is to your current customers.  The way to market to your current customers is through relationship marketing. 

Relationship Marketing is more than just making a transaction; it is about creating and maintaining a relationship with a customer over a long time period.  It begins with a volley of neurons located in the part of the brain responsible for cognitive thought, the prefrontal cortex.   It is amazing how the different areas of the prefrontal cortex overlap each other when we humans make decisions.  This can be stressful, even though we may not perceive the environment as stressful.  Positive social interactions reduce stress hormones and release the chemical oxytocin into the brain (Cacioppo, et al., 2007).  Oxytocin is the “Whew,” relief feeling we get after responding to a stimulus.  Creating trust within the customer now is possible with the reduction of stress.

Some important facts on repeat customers are:

  1. No amount of advertising will win back a lost customer.   Poor products and services will kill a brands reputation.  Mistakes happen; but if handled correctly, the customer will not be lost.
  2. It is 5 to 8 times more expensive to gain new customers.  Utilize this direct channel of communication.  Your customers want to know what is going on in your business.  Let them be a part of decisions made in the company.
  3. 90% of pure profit comes from repeat customers.  These customers are more likely to pay premium prices for services or products, tell their friends, and continue to make purchases.

Outside advertising remains important; but factor marketing efforts to 20% outside and 80% current customers.  The results will not show up tomorrow, it takes at least a year; but this fan base will create a successful venture.

Arens, W. F., Schaefer, D. H., & Weigold, M. (2009). Essential of Contemporary Advertising. Boston: McGraw Hill.

Cacioppo, J. T., Amaral, D. G., Blanchard, J. J., Cameron, J. L., Carter, C. S., Crews, D., et al. (2007). Social Neuroscience: Progress and Implications for Mental Health. Perspectives on Pychological Science , 2(2), 99 – 114.

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E*Trade Baby, Boom or Bust? What Makes Humor in Advertising Work

May 4, 2011 2 Comments

The deepest circles of hell brought to us: The E-Trade Baby.

Humor in advertising does not work.  Well, at least in the case of E*Trade and their comical new born known to all as the E*Trade baby, it does not; however I could not help myself one night but to watch a new E*Trade Baby commercial.  My epiphany for this article came from fast forwarding through the commercials on one of my favorite TV shows I recorded on my DVR the night before.  As I am on warp speed fast forwarding through the commercials, suddenly I stopped, it was a new E*Trade baby commercial.  I was powerless to the wit of the baby and watched the ad, even though I wanted to skip the commercials.  I then asked myself the question, “I love the E*Trade commercials, but I will never use E*Trade as a portfolio builder, Why?”  Turns out, humor in advertising is more complicated than you might expect and yet humor is everywhere in advertising; but in order to be effective, the positive appeal of the ad must coincide with the products benefits.

One out of every five television ads contains some sort of humor (Eisend, 2008).  Clearly humor has its place in advertising; yet the effectiveness of the humor continues to be a mystery because humor, through several studies over the last half century, has shown to improve product attention and awareness.  The attention and awareness is what forced me to stop my fast forwarding, and my fiancée to actively search for E*Trade Baby commercials on You Tube.  This behavior stems from classical conditioning.  Humor in advertising is based on an active response.  Humor in general evokes an active response of happiness, fun, or pleasure (Eisend, 2008).  Imagine that you are now one of Pavlov’s German Shepherds, a bell goes off and food comes down a shoot into a bowl for you to taste and the tender slices of steak taste great.  Eventually the sound of the bell itself makes you salivate and you become hungry.  Because you have linked the positive experience of enjoying the food with the bell, anytime you hear a bell you begin to salivate.  Humor in advertising must work the same way, the positive experience must be linked with the benefits of owning or using the product.  Now let’s say that instead of receiving food every time a bell is rung we now receive a picture of food.  What benefits does this picture have?  Nothing, it looks great; but we cannot smell, taste, or enjoy the picture of the steak in the same way.  E*Trade has given the world a picture instead of the food.  Instead of linking the positive experience of the humor (the bell) towards E*Trades product (the steak), we are linking the humor to the E*Trade Baby (the picture).  Audiences for these commercials are distracted by the baby’s humor and in doing so, are distracted from the advertisements message.  Now, the E*Trade baby has transformed into his own, witty brand.  He is very good at making audiences laugh and creating awareness; however, he is not making consumers want to use E*Trade.  The improper use of humor in advertising can negatively impact a purchase decision as well as the perceived trust and credibility of a company (Eisend, 2008).  We only need to look at E*Trade’s performance since the Baby’s debut.

E*trade has performed awfully since the debut of the commercial.  February 4th 2008, the next day, E*Trade stock traded for around $51, today the stock price is under $15.  True, the U.S. economy went through a tremendous period of economic turmoil and prices drops; however, E*Trade’s major competitors Ameritrade and Charles Schwab stock prices remained steady.  In contrast, E*Trade sunk.  In February 2008, these three companies where pretty much equal; however, since that time E*Trade stock plummeted nearly 70% in contrast to Ameritrade and Schwab who only saw a decrease of not even 10%.  Perhaps joking around about a person’s financial future is not a joking matter.  As I stated above, humor in advertising if done incorrectly can negatively impact the company’s credibility and consumers trust in the product.  When a company is selling financial security, don’t you believe they should take it seriously?  That would be like trusting your children to be babysat by “Pogo the Clown” (who was John Wayne Gacy).  Sure he seems harmless and funny, but it is what you don’t see which raises alarm bells.  What the other companies advertised was not humorous in nature; instead Charles Schwab ran ads of a real life cartoon that resembled a Roy Lichtenstein painting.  These commercials feature confident, real life examples of how using Charles Schwab benefited them.  Schwab, Ameritrade, and Fidelity advertisements all focused on two things in their advertisements during this time, confidence and benefits.  The Consumer Confidence Index fell dramatically during 2008 ending at -49 in December (Moynihan, 2008).  Interestingly enough, E*Trade saw a drop in Retail Customer Assets of -39% (E*Trade Financial Corperation, 2009) during this same time; where, Charles Schwab lost only 12% and Ameritrade 9%.  These numbers clearly state my conclusion, in order for humor in advertising to be effective, the positive appeal from the humor must coincide with the product’s benefits.

References

E*Trade Financial Corperation. (2009). E*Trade 2009 Annual form 10-K. New York: E*Trade.

Eisend, M. (2008). A meta-analysis of humor in advertising. Journal of the Acedmey of Marketing Sciences , 191 -203.

Moynihan, P. (2008, December 30th). Confidence Closes Out 2008 With Worst 4th Quarter Ever. Retrieved 2010, from ABC News: http://abcnews.go.com/PollingUnit/story?id=6550527&page=1

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Stand Out: How Creating a Catchy Slogan Wins Customers

April 27, 2011 2 Comments

Stick in the minds of your customers.  If you are starting a new business, you may be looking at creating a catchy slogan.  A slogan, as well as a strategic business name, helps leave an impression on your potential customers.  Follow these tips to begin branding your company.

  1. Relate customer needs.
  2. Promote an action.
  3. Keep the message simple

These three ideas will create a catchy slogan.  The greatest slogan still ringing in my head is from Fred’s Towing in Davenport, Iowa. Fred’s is one of the most successful towing services in Eastern Iowa because they made a slogan that echoes among stranded motorist.  Fred’s created “Car dead?  Call Fred!  391-9666.” I have remembered this slogan for over twenty years.  Let us look closely on why I will always remember Fred’s.

A little bit of homework is required in order to relate your customer’s needs.  First, you must be able to identify these needs.  Think clearly, what value does your business provide your customers?  Fred’s provides tow services for all type of vehicles.  People rely on their vehicle for transportation; sometimes vehicles have a mind of their own.  When a motorist car does not start or is involved in a wreck, and is now “dead.”  What should I do?  “Call Fred!”

Promote action, just as this example shows.  The action one is taking is calling Fred for his tow service.  This example also has an additional element, which you may want to consider, an easy to remember phone number.  You want your customers to take action, call you, and pay for your services.  The last bit is the most important.

Keep it simple.  The simpler the message the easier it is to remember (Heath & Heath, 2008).  Small, one-syllable words are the easiest to remember (LaRocqu, 2003).  “Car Dead? Call Fred!” comprises only one-syllable words.  The slogan could have said, “If your car will not start, call Fred’s Towing.”  This example communicates the same idea; however, “Car Dead?  Call Fred!” is the simplest form of this sentence.  Alone, it may sound like caveman talk; but just give simplicity a chance.  The rewards will be endless.

Visit Fred’s Towing at http://www.fredstowing.net/

Heath, C., & Heath, D. (2008). Made to Stick. New York: Random House.

LaRocqu, P. (2003). The Book on Writing: The Ultimate Guide to Writing Well. Portland: Marion Street Press.

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