Question

Topic: Strategy

Comm Differentiation For Similar Segments

Posted by Anonymous on 7/28/2009 at 5:01 AM ET 500 Points
hello,

working in telecommunication business and we offer 2 different promotions ( lets say offer no1 & offer no 2) to quite the same target - young, educated, male & female, maximum 33yo.

you get offer no2, which is a better one, if you join a programme and you have no more than 24y.o. If you dont join the programme you have offer no1. The ROI comes from offer 1 but offer 2, with the associated programme, is a nice to have in the portofolio and also to match the competition. till now, major communication budget was invested in offer 1 but now we also have to focus on offer 2. In communcation execution, we used same characters for both offers... this was due to timing issues... cant change the past

the question I have now is how you consider the communication should be differentiated between the two segments in order not to canibalize them. should it be differentiated through media channels? if so, how? only media channels? any unconventional ideas are welcome.
thank you
kk
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RESPONSES

  • Posted by mgoodman on 7/28/2009 at 7:03 AM Accepted
    I'm not sure I understand all of this. It's not crystal clear.

    First, WHY do you have to focus on offer 2? Can't you continue to promote offer 1 and just save details of offer 2 for those who participate in the programme? Or are you trying to increase participation in the programme? If the profit is lower in offer 2, why not increase the price of offer 2 (or of the programme) so that you are indifferent between them?

    I'm pretty sure I don't have the full picture. Maybe you can explain in greater detail.

    P.S. Can you change that character for offer 2 now?
  • Posted on 7/28/2009 at 8:04 AM Author
    @mgoodman - the focus is on offer 1 as it is the most profitable one for co. on the other hand, offer 2 with the programme associated must be communicated since it is our answer to what competition is doing. the objective is to increase participation in the programme but cant change the pricing because it wouldnt be competitive anymore.
  • Posted by wnelson on 7/28/2009 at 3:48 PM Accepted
    Kristian,

    Too late! You HAVE cannibalized offer 1. Whenever you offer a substitute to the same segment, consumers will leave one for the other. However, as you say, you are offering it to combat the competitor's offering.

    Now, the true test of its worth is this: Compute the total profit you gain from offer 2. Subtract the total profit lost from the cannibalizing. Subtract from it the cost of marketing for offer 2 and any other "support costs" you incurred by offering offer 2. If this resulting number is positive, You were successful. If it is negative, you just lost the company money and no reaction to your competitor's offering would have been better.

    I hope this helps.

    Wayde
  • Posted on 7/28/2009 at 4:33 PM Accepted
    Kristian,

    Could you consider Offer 2 to be an upsell of Offer 1? Since the cost to the customer is the same, I would continue to rely on your core offering (which is also most profitable) as the featured product you promote. There's no sense in promoting both, which would lead to confusion and, likely, a "grass is greener on the other side" mindset that could cause buyer's remorse.

    Make the program an optional upsell, so that your customers understand the primary offering they are buying (which, if it's true, you could tout as being better than the competitors'), and make the program an option for them to add as a supplement. This way, you can focus your marketing on one primary offering, but for the sake of keeping up with competition, your customers have the option to get the same thing your competitors are offering. Basically, you'll be able to say "we do X better than anyone else AND we offer the same kind of program if you want it."

    Hope that helps!

    Nate Custard
  • Posted on 7/28/2009 at 5:07 PM Author
    @ncustard

    This is something I should consider, yes. Im thinking now how and if i can convince target to pay the upsell. the fact is that offer 2 costs less than offer 1 AND you get more value, especially because people up to 24y.o. are less likely to pay more. building an upsell from offer 1 is less probable to be attractive for target and we might lose the segment for good.
    at this point, we are more interested in increasing the base, rather than having a profit from <24y.o. segment.

    what do you think?

    thank you,
    kk
  • Posted by cookmarketing@gmail. on 7/28/2009 at 9:52 PM Accepted
    In the long run, if you follow your competition; you lose.

    Agree with the earlier comment on self cannibalization, you've started boiling that pot already...don't be the lobster.

    Ncustard has very valid input. As you react to your competitions offer...tie into the fact you are wanting to increase your base and your 24 y.o. is price conscious...stay with us a year and we'll coupon/rebate you x amount...then push the now deducted rebate dollar...exampled...Competition at $29.99 you push $24.99 after year end rebate (of course, only a small percentage rebate anyway)
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