Short answer

When designing marketing campaigns for FMCG, integrate seeding programs to complement sales promotions, but be mindful of potential negative interactions with advertising, possibly by adjusting advertising schedules or intensity.

Field: Innovation & Markets
Source: Journal of Marketing (2018)
Method: Empirical analysis using a rich dataset combining sales, advertising, promotion, and word-of-mouth data.
Evidence: Strong effect

Word-of-mouth marketing through seeding programs in fast-moving consumer goods (FMCG) amplifies the impact of sales promotions while diminishing the effectiveness of traditional advertising. This innovation & markets research insight is drawn from a 2018 study published in Journal of Marketing. Using Empirical analysis using a rich dataset combining sales, advertising, promotion, and word-of-mouth data., researchers explored how this design variable affects real-world outcomes. The key design takeaway: When designing marketing campaigns for FMCG, integrate seeding programs to complement sales promotions, but be mindful of potential negative interactions with advertising, possibly by adjusting advertising schedules or intensity.

Study

Innovation & MarketsHigh ImpactStrong effect

Seeding Programs Enhance Promotions, But Conflict with Advertising in FMCG

Word-of-mouth marketing through seeding programs in fast-moving consumer goods (FMCG) amplifies the impact of sales promotions while diminishing the effectiveness of traditional advertising.

Journal of Marketing · 2018

Key Findings

01Firm-created word-of-mouth through seeding programs interacts negatively with all tested forms of advertising.
02Firm-created word-of-mouth through seeding programs interacts positively with promotional activities.
03Seeding programs may increase total sales by approximately 3%–18% during campaigns.

Application

Design takeaway

How to apply

Before launching a seeding campaign, analyze historical data to understand how it has interacted with past advertising and promotion efforts. Consider running A/B tests with different combinations of seeding, advertising, and promotions.

Project actions

01When researching marketing strategies, consider how different tactics influence each other.
02Investigate the potential for synergy or conflict between various promotional tools.

Method & Evidence

AimHow do firm-created word-of-mouth seeding programs interact with traditional marketing tools like advertising and sales promotions within the FMCG sector?

MethodEmpirical analysis using a rich dataset combining sales, advertising, promotion, and word-of-mouth data.

ProcedureCollected data on four FMCG brands across European markets, integrating information from brand managers, market research companies, and seeding program agencies. Analyzed the data using statistical methods to address endogeneity and multicollinearity.

ContextFast-moving consumer goods (FMCG) markets in Europe.

Variables

IV["Seeding program activity (firm-created word-of-mouth)","Advertising spend/activity","Sales promotion activity"]

DV["Sales volume/revenue","Brand awareness (implied)"]

CV["Brand","Market (European FMCG)","Time period"]

Strengths & Limitations

Strengths

+Empirical analysis using a rich, multi-source dataset.
+Addresses complex statistical challenges like endogeneity and multicollinearity.

Limitations

The study's findings might be specific to the FMCG sector and may not apply directly to luxury goods or services. The data collection period might not capture long-term effects.

Reliability & validity

The use of multiple data sources and advanced statistical techniques likely enhances the reliability and validity of the findings, though potential biases in self-reported data or market research data should be considered.

Think critically

If seeding negatively impacts advertising, does this imply that companies should shift budgets entirely away from advertising towards seeding and promotions, or is there an optimal balance to be struck?

Design Principles

"Marketing mix elements are not always additive; their interactions must be understood and managed for optimal campaign effectiveness."

This insight is crucial for FMCG companies to optimize their marketing mix. It suggests a strategic reallocation of resources, emphasizing the synergy between seeding and promotions, and potentially reducing reliance on advertising when seeding is active.

What This Means for Your Design

Using people to talk about your product (seeding) helps sales when you also offer discounts (promotions), but it makes your TV ads less effective.

How to use in your project

1.This research can inform the justification for choosing specific marketing strategies or the design of a promotional campaign within a design project.

Add to My Project

Quick Cite

Paragraph starter

Research indicates that firm-created word-of-mouth through seeding programs in the FMCG sector exhibits a negative interaction with advertising but a positive interaction with sales promotions, potentially increasing overall sales by 3-18%. This suggests that when designing marketing strategies, the interplay between seeding, promotions, and advertising must be carefully considered to maximize impact and avoid diminishing returns.

Source

Journal of Marketing

Seeding as Part of the Marketing Mix: Word-of-Mouth Program Interactions for Fast-Moving Consumer Goods

journal · 2018

View source

Questions About This Research

What does the research say about seeding programs enhance promotions, but conflict with advertising in fmcg?: When designing marketing campaigns for FMCG, integrate seeding programs to complement sales promotions, but be mindful of potential negative interactions with advertising, possibly by adjusting advertising schedules or intensity. Evidence: Journal of Marketing (2018).
Why does "Seeding Programs Enhance Promotions, But Conflict with Advertising in FMCG" matter for design?: This insight is crucial for FMCG companies to optimize their marketing mix. It suggests a strategic reallocation of resources, emphasizing the synergy between seeding and promotions, and potentially reducing reliance on advertising when seeding is active.
How can designers apply this research?: When designing marketing campaigns for FMCG, integrate seeding programs to complement sales promotions, but be mindful of potential negative interactions with advertising, possibly by adjusting advertising schedules or intensity.
What were the main findings?: Firm-created word-of-mouth through seeding programs interacts negatively with all tested forms of advertising.. Firm-created word-of-mouth through seeding programs interacts positively with promotional activities.. Seeding programs may increase total sales by approximately 3%–18% during campaigns.
What research method was used?: Empirical analysis using a rich dataset combining sales, advertising, promotion, and word-of-mouth data..
How strong is the evidence?: Evidence strength is rated Strong effect, based on a 2018 journal from Journal of Marketing.
What should I do differently in my next project?: Before launching a seeding campaign, analyze historical data to understand how it has interacted with past advertising and promotion efforts. Consider running A/B tests with different combinations of seeding, advertising, and promotions.
What are the limitations?: The study focused on specific European FMCG markets and may not be generalizable to all product categories or geographical regions. The precise mechanisms of interaction were not fully detailed.