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Paradigm Shift of Marketing WOM Marketing WOMlabo Credentialwww.womlabo.com June 2010

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What highly influences a purchase decision is WOM suggestions from other loyal customers. At WOM labo, we call this loyal customer Brand Ambassador (BA). By making WOM by BAs accessible to potential targets through the WEB, it enables to speed-up a purchasing decision.

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Paradigm Shift of MarketingWOM Marketing

-WOMlabo Credential-

www.womlabo.com

June 2010

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About WOM labo project

1

What we do -WOMlabo-

1. Develop a WOM promotion platform

2. Structuralize a communication plan with WOM platform

3. Analyze WOM insights

4. Trainings, seminars, and introductory sessions

5. Whitepapers about WOM

6. Effectiveness measurement on WOM

http://www.womlabo.com

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2

Introduction to our WOM Marketing Activity

Publication in Japan

Publication in China

Publication in Korea

日本 (JAPAN)

中国 (CHINA)

韓国 (KOREA)

Our WOM marketing program is introduced in 3 countries in Asia.

2003

2006

2004

2007

”図解でわかるくちコミマーケティング”(Graphic explanation of word-of-mouth marketing)

“『くちコミニスト』を活用せよ!”(Strategic Use of word-of-mouth with KUCHI-COMINISTs)

“口碑营销/市场营销新概念系列”(Word-of-mouth marketing)

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3

ビジネスリスクマネージメント 2007年11月

サンケイリビング別冊 クチコミックス 2006年6月

YOMIURI ADリポート 2005年4月

Nikkei Marketing-Watcher 2010年6月

Introduction to our WOM Marketing Activity -Article-

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メディア接触時間

フリーペーパを見る1.3%

折込チラシを見る4.5%

インターネットでコミュニティ(ブログ/SNS/掲示

板等)を見る8.5%

雑誌を見る2.7%

ラジオを聴く(室内)3.5%

BS/CS等の有料チャンネルを見る

2.6%

ラジオを聴く(車内)2.1%

新聞を見る6.6%

録画したテレビ番組を見る6.3%

テレビでDVDを観る1.7%

NintendoDS、PSP、携帯ゲームを利用する

1.5%

PS、Wii等でゲームをする1.1%

携帯電話でモバイルサイトを見る

2.9%

インターネットを使う(その他)22.4%

インターネットで動画を見る3.0%

地上波のテレビをライブで見る(録画ではない)

29.3%

Change in customer's media spending time

Source: Brand Ambassador

Research by Kokokusha,

January, ‟09

N = nationwide 1,698

Contact frequency in 1 week

The Internet

33.9%

Breakdown of the time spent on media in one week

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5

Media Environment that surrounds consumers

Today, it‟s B2C2C = the Era of Multilateral Communication

Brand Ambassador(BA) =

Advocates who are high in brand

loyalty among customers

general

consumers

SNSgeneral

consumers

general

consumers

Potential customers

Potential customers

Potential customers

Information

from an entity

Today, in addition to information transmitted through mass media, “live information”

transmitted by consumers, called CGM, have effects on one‟s purchase activities.

magazine

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『Leverage the WOM of loyal customers in marketing』

What highly influences a purchase decision is WOM suggestions from other

loyal customers. At WOM labo, we call this loyal customer Brand Ambassador

(BA). By making WOM by BAs accessible to potential targets through the WEB,

it enables to speed-up a purchasing decision.

The Concept of our WOM marketing

Potential customers

Loyal customer =

Brand Ambassador (BA)

Potential customers Potential customers

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Functions of WOM Platform

Loyal customer =

Brand Ambassador (BA)

1: Gather BAs

2: Analyze WOM by BAs

3: Spread WOM by BAs

Potential customers

Potential customers Potential customers

1. Gather BAs’ WOM of high loyal customers from among existing

brand users.

2. Analyze the cause for BAs to suggest by WOM and leverage them in marketing.

3. Spread by making BAs’ WOM accessible to potential consumers.

Functions of our WOM Platform

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Functions of WOM Platform

BA (Brand Ambassador)

Y axis

X axis② loyalty/intention to use a brand

Z axis yesNo

① degree of influence

toward others

③ degree of suggestive-ness about a brand

Brand Ambassador: DefinitionAt WOMlabo, Brand Ambassadors are existing customers of a brand who are highly loyal to the

product/service, and who are also influencers to people they know. (In case of a new product, people

who are interested to the brand and have high interest in making a purchase.) Not only BAs have

communicative powers, but they also have experiences in using the brand, and are high in loyalty

toward. BAs aresegmented by utilizing a program such as below.

■Characteristics Brand Ambassadors are:

① Highly influential.

② Highly loyal. (In case of a new product, have high interests in making a purchase.)

③ Highly suggestive (WOM-advocative) about the brand.

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X axis: Usage Intention+U&AQ: HP Purchase Frequency: 1+ times / week, etc.

Brand Loyalty + Intention Barometer

Y axis: Influencer BarometerQ: More likely to tell others of useful knowledge/info.

Q: More likely to be asked for an advice

Q: Active in seeking information etc.

Z axis :

Suggestive-ness Barometer

Q: Account with mixi/twitter/facebookupdate frequency, # of my mixi/follower/RT/friends

Q: Blogs – write/comment/viewupdate + contact, frequency/PV

Q: iPhone ownership / since whenfrequency + applications

Proof for Degree of Influence to Others

Brand Ambassador

Functions of WOM Platform

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WOM research

Down load here

http://www.womlabo.com/case02.html

Wom research 2003

Wom research 2004

Wom research 2006

Wom research 2007 + Wom Research2007 English Version

Wom research 2010

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BRAND AWARENESS-Media by which customer knew brand that you bought-

Kuchikomi research 2010 Limited User

wom

wom

wom

wom

BRAND AWARENESS

Date executed: February, 2010

Research subject: 865 males/females over age 20

Research region: all Japan

1 .See in the shop 23.6%

2.Television 17.7%

3. Net search (Yahoo, Google, etc) 16.8%

4. Netcomuunity 16.3%

WOMlabo researched the effect of wom

New research report the following site

http://www.kokokusha.co.jp/service/kuchikomi.html

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PURCHASING

wom

wom

wom

wom

purchasing decisions

Limited User

1. Shop 23.7%

2. Internet (communities/blogs) 20.2%

3. TV 19.1%

4. Retail outlet promotions: 17.0%

Kuchikomi research 2010

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womwom

1. Face-to-Face 59%

2. Net community 51.8%

3. sns(kakaku.com/@cosme) 25.4%

Kuchikomi research 2010

Which was the most Influenced

WOM,when you decided the brand?

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Tuszumi Model TSUZUMI Model is a graphic explanation of ‘word of mouth'

Potential customer

customer

Target Customer

Kuchi-Cominists

●Experience of recommending commodities to

someone by WOM 45.7%

WOM had influence

on a purchase decision

YES 64%

BRAND AWARENESS①Shop 23.6%

②TVCM 127.7%③SNS/Blog 16.3%

PURCHASING

①Shop 23.7%

②SNS/blog 20.2%

①TV 19.1%

wom

wom

wom

wom

B to C

C to C

Kuchikomi research 2010

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About Loyalty Program

Potential

customerPotential

customer

Potential

customer

Consumers Consumers

customer

Brand Ambassador

(BA)

Target

Events

ATL

BTL

Feel affinity, transmit WOM

Corporate WEB, campaign WEB,

OOH

Branding,

Media planning

WOMWOM

BRAND

AWARENESS

interesting

purchase

Layalty

wom

comparing

WOM

extract

BRANB AMBASSADOR

Develop

Talk-able programs

Extract Brand Ambassadors, and offer a platform to spread WOM.ブランドアンバサダーを選出し、ブランドアンバサダーからくちコミが広がるプラットホームを提供します。

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2. Type of WOM

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1. バズマーケティング (Buzz Marketing)

2. バイラルマーケティング (Viral Marketing)

3. コミュニティマーケティング (Community Marketing)

4. 草の根マーケティング (Grassroots Marketing)

5. エバンジェリストマーケティング (Evangelist Marketing)

6. プロダクトシーディング (Product Seeding)

7. インフルエンサーマーケティング (Influencer Marketing)

8. コーズマーケティング (Cause Marketing)

9. カンバセーションクリエイション (Conversation Creation)

10. ブランドブログ (Brand Blogging)

WOM Marketing methods defined by WOMMA(USA)

Source: Types of Word of Mouth Marketing (WOMMA)

Type of WOM by WOMMA

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2.Viral Marketing leverage viral contentsDefinition: To leverage public entertainments and news for sparking a conversation.

Advantage: Heightens marketing impact by effectively mixing with other media.

Disadvantage: Cases with less transmission than expected, depending on the content /

scheme.

1.Evangelist Marketing leverage Kuchi-Cominists

Definition: To nurture evangelists and supporters (advocates) who will take action

towards leadership.

Advantage: Firmly facilitates positive transmission by provoking WOM in a natural way.

Disadvantage: Can take longer process to nurture consumers.

Organic WOM type

Amplified WOM type

Two important WOM techniques

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Reach (#

of p

eople

engaged)

TIME elapse

2.Amplified WOM typeWOM by sparking a conversation

1.Organic WOM typeNaturally triggering WOM

*Leverage Kuchi-Cominists

*Be tactful depending on the product

1.Organic WOM type Evangelist MarketingThoroughly nurture fans in triggering WOM

2.Amplified WOM type Viral MarketingEvoke a topic for a domino effect for WOM to spread

*KEPCO Happy-e supporters

*TEPCO Switch! Supporters

*Hurley Davidson (HOG)

Two important WOM techniques

1. Organic WOM type example

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Offline

Online

Organic

WOM type

Offline

Organic

KEPCO

Happy-e-

Supporter

Online

Organic

Offline

Amplified

Online

Amplified

Viral

marketing

Reve21

AmplifiedWOM type

Mapping the WOM Landscape

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Ⅰ WOM marketing CASE

STUDY of ALL-DENKA

Organic WOM typeEvangelist Marketing example

Kepco

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Happy-e-Supporter

WOM Marketing Objective

1. Facilitate a deeper comprehension about All-Denka to existing customers in

developing a platform for them to recommend to potential customers.Those with higher loyalty have more chances to actively recommend to others

2. Extract dissatisfactions and questions about All-Denka from existing

customers and deliver correct information to them.

3. Develop a channel where KEPCO and local consumers can directly

communicate by having a conversation.Today, power companies have less chances of directly facing consumers.

All-Denka especially requires such an opportunity to extract voices from local consumers, and

leveraging those into marketing.

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Test research

All-Denka is highly visible 98%

2 objectives;

1. Consumers don’t recognize the degree of

inconvenience in the current situation.

2. Consumers don’t understand how a life

can change with All-Denka.

KUCHIKOMI

POSSIBILITY WITH KUCHIKOMI MARKETING

wom

wom

wom

wom

Potential

customers

Prospects

Customers KUCHIKOMI

NISUT

98% AWARENESS

94%SATISFACTION

Degree of satisfaction with All-

Denka customers is very high

94%

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y

xLOYALTY BEHAVIOUR

zREFERRAL RATE

EMOTIONAL

LOYALTY

Yet-to-have

Loyalty

Pretended

Loyalty

Emotional

Loyalty

Favorable

Loyalty

Loyalty Analysis program

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LOYALTY ACTION

EMOTIONAL

LOYALTY

-1

0

1

2

3

4

5

6

7

8

9

10

11

-1 0 1 2 3 4 5 6 7 8 9 10 11

未ロイヤル層

偽ロイヤル層

Emotional

Loyalty

Favorable

Loyalty

SELECTING

BRAND AMBASSADOR

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2002 200 ppl.

2006 503 ppl.

2009 700 ppl.

WAKAYAMA-Prefecture (KEN)

= Happy-e-Supporter

Expand the number of happy-e-Supporters

SELECTING Brand AMBASSADOR

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1 ALL-DENKA (TOTAL ELECTRICITY)

INFORMATION SEMINAR

2 INFORMATION EXCHANGE

3 INFORMERCIAL

4 MATSUSHITA FACTORY VISIT

5 IH COOKING SCHOOL

6 The Salon

kuchikomi STATISTICS

Happy-e-SUPPORTER

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1.NETWORKING EVENTS

BA seminar

BA party

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2. Infomercial

TV WAKAYAMA

TOTAL ELECTRICITY SERIES

BRAND Ambassador appears in TV program

TV Wakayama

5-minute “All-Denka Home Visitation”

1 show / week X 10 times series

(120 seconds/show)

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3.IH COOKING SCHOOL

4.MATSUSHITA

FACTORY VISIT

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5. The Salon - See, Touch and Try for Brand AMBASSADOR

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Happy-e-Supporter: Transition in Loyalty

-2

0

2

4

6

8

10

12

-2 0 2 4 6 8 10 12

-1

0

1

2

3

4

5

6

7

8

9

10

11

-1 0 1 2 3 4 5 6 7 8 9 10 11

Start: December, „03

Start: December, ‟03

# of supporters: 203

ROI analysis: March, ‟05

# of supporters: 466

-1

0

1

2

3

4

5

6

7

8

9

10

11

-1 0 1 2 3 4 5 6 7 8 9 10 11

Y a

xis

: Em

otio

nal L

oyalty

X axis: Loyalty Action

Applicants in July, ‟07Additional 87 people

323 people in Wakayama Pref.

Favorable

Loyalty

14.7%(93)

Pretended

Loyalty

0.5%(3)

Emotional Fans

76.5%(484

Yet-to-have

Loyalty

8.4%(53)

●Average

Emotional 8.21pt

Behavioral 2.45pt

Loyalty disposition of All-Denka

customers as of Aug., „09

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Effects of WOM Activities: Number of Information Offers

134

274

356324

387

3773 74 74 96 107

509437

252

469 477

575 568

0

100

200

300

400

500

600

700

H15 H16 H17 H18 H19 H20

情報件数 成約件数 サポーター数

# of information # of contract # of supporters

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Effects of WOM Activities: Number of Information Offers

Conversion Rate for All-Denka

2004(H16) 27.6%

2005(H17) 26.6%

2006(H18) 21.1%

2008(H20) 21.0%

2009 (H21) 21.0%

*KPI (Key Performance Indicator)

Key barometer for business management

20% Conversion Rate

Number of our customers whom we got

Number of supporter information cards=

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Ⅱ.Amplified WOM CASE

Structure to evoke WOM and to spread

WOM mainly on the WEB

Viral Marketing

Amplified WOM typeViral Marketing example

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Consolidated

Campaign

Planning

[Trick for viral effects: Story

development](creative strategy)

Campaign site

Viral movie, etc.

Blog parts, gadgets, etc.

[Trick for viral effects: “Telling”

architecture](media & seeding strategy)

Optimization on movie-sharing site

Blogger seeding

Inserts on other CGM media

X

Step3: Seeding & SpreadingExecution and spread WOM

Step2: StoryTellingExpression X channel strategy

Step1: PlanningCampaign planning

Amplified WOM Campaign Planning

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Reve21 Challenge for hair

growth!

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Message to the target

-Reve21 challenges to reveal the truth of hair growth-

We Can Change Your Hair Life!あなたの髪の運命は、変えられる。

Reve21 now challenges the reality!

http:www.365real.jp

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Promotion site TOP

Reve21 official site TOP

link

lead

Primary Target

クチコミ発生

クチコミ発生

クチコミ発生

クチコミ発生

クチコミ発生

クチコミ発生

サイトへの接触 Secondary Target

&

Potential customers

Males 20s-40s

Implement contents which

focuses on the point target

users want to know the most.

(ie. Whether or not it really

works for one‟s hair growth.)

Display ads

Listing

Friends, people they know

Seeding strategy on bloggers

Movie ads

lead

lead

lead

Aim for a spread on CGM by creating movies for blogs and external distribution.

*Documentary-like

TOP page design

for the look & feel of

reality.

Exterior

contents

Leads to a trial

Kuchi-Coma

Promotion: Overall Picture

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Promotion: Movie on Hair Growth Progress

1-year blogs on the progress of hair growth

Movies on hair grown

progress

Transition by 365-day

documentary movie

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[Movie Viewership]Goal Result Performance Rate

693,600 times 1,110,900 times 160%

[Site Leads]Goal Result Performance Rate

12,440 clicks 102,130 clicks 821%

[Conversion]

5 times more than average advertising on the WEB

Accomplishments

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Kokokusha Co., Ltd.

President: Hitoshi Yuzawa (Representative Director)

Registered Address: 1-2-14 Yuraku-cho, Chiyoda-ku Tokyo

Founded: May 1, 1888

Incorporated: August 29, 1947

Employees: 253

Capital: ¥ 84 million

Banks: Mizuho Bank, Sumitomo Mitsui Banking Corporation,Bank of Tokyo-Mitsubishi UFJ

Business Outline :

Advertising for newspapers, magazines, TV, radio, the Internet, transportations and the outdoors;

sales promotion; PR; events; research; planning; production; and all other marketing services

Company Addresses

●Tokyo Headquarters: 6-8-7 Ginza, Chuo-ku, Tokyo 104-8111 +81-333750090

●Nagoya Branch: 3-1-1 Sakae, Naka-ku, Nagoya, Aichi 460-0008 +81-522611051

●Osaka Branch: 1-5-17 Dojima, Kita-ku, Osaka 530-0003 +81-663445371

●Sapporo Branch: 6-2 Kitagojo-Nishi, Chuo-ku, Sapporo, Hokkaido 060-0005 +81-112714571

●Hiroshima Branch: 3-2-31 Ote-machi, Naka-ku, Hiroshima 730-0051 +81-822440755

●Fukuoka Branch: 1-6-8 Tenjin, Chuo-ku, Fukuoka 810-0001 +81-927311511

●West Tokyo Sales Center: 2-15-12 Sakai, Musashino, Tokyo 180-0022 +81-422500565

●Sendai Office: 1-3-9 Hon-machi, Aoba-ku, Sendai, Miyagi 980-0017 +81-222256851

●Education Solution Center: 6-8-7 Ginza, Chuo-ku, Tokyo 104-8111 +81-335750087

KOKOKUSHA Corporate Profile

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http://www.womlabo.com

Thank you

WOMlabo

Representative

Masayuki Nakajima(中島正之)

+81-(0)3-3575-0062

[email protected]