Authors: Kaikati, Andrew M. (andrew.m.kaikati@accenture.com), Kaikati, Jack G. (jkaikat@siue.edu)
Subject: Marketing & CRM
Publish: 2004
Status: full text
Source: California Management Review; Summer2004, Vol. 46 Issue 4, p6-22
Preparation: Scientific Database Management Journal Articles www.SYSTEM.parsiblog.com
Abstract: The article discusses stealth marketing methods used by companies to reach consumers without their motives being obvious. It is noted that word of mouth and peer group recommendation are the most effective promotional and marketing tools. The ive of creating "buzz" for a new product or service is to perpetuate an environment where consumers carry the message along to others. Stealth marketing techniques are being driven by a growing criticism of the advertising industry. Guerrilla marketing techniques include viral marketing, brand pushers, celebrity marketing, bait-and-tease marketing, and marketing in popular music. The author feels that brand managers need to consider the strengths and weaknesses of stealth marketing and traditional marketing before they decide on either.  --Download Article

Introduction: Stealth marketing is anchored on the premise that word of mouth remains the most effective form of promotion and that peer group recommendation is the ultimate marketing weapon. Stealth marketing campaigns help marketers to cut through the clutter of traditional advertising. Since wary and cynical viewers are bombarded with an ever-increasing number of advertising messages, they immediately tend to put up their defenses as they detect they are being sold something. Marketers must therefore rely on more subtle methods of communicating a message to their consumers. Stealth marketing attempts to catch people at their most vulnerable by identifying the weak spot in their defensive shields. Stealth marketing represents the latest in a long line of marketers" attempts to get their brands noticed in a crowded marketplace by flying below the consumers" radar. It is considered to be a viable alternative to conventional advertising because it is perceived as softer and more personal than traditional advertising.
Basically, stealth marketing attempts to present a new product or service by cleverly creating and spreading "buzz" in an obtuse or surreptitious manner.[ 1] Instead of aggressively shouting to everybody at the same time, stealth marketing tends to whisper occasionally to a few individuals. It loads a product or service with attractive features that make it "cool" or "in" and relies heavily on the power of word of mouth to encourage customers to feel they just "stumbled" upon the product or service themselves.
The main ive is to get the right people talking about the product or service without it appearing to be company-sponsored. Essentially, it creates a positive word-of-mouth environment whereby selected consumers become spontaneous carriers of the message. Eventually, the message is diffused in concentric circles, from the trendsetters to mainstream consumers. The initial message can be conveyed in a variety of ways: physically (celebrities or trendsetters may be seen with the brand); verbally (people sneak the brand name in on-air or off-air conversations); virtually or virally (message is transmitted via internet chartrooms, newsgroups, or weblogs); or in any combination thereof. If consumers like the new product or service, they will be delighted to mention it to their friends and colleagues who probably know people just like themselves. By attempting to incorporate the product in the target audience"s lifestyle, stealth marketing tends to present products and services by the softest sell of all.
Brand managers looking to move beyond the traditional reliance on 30- second TV commercials should explore the feasibility of using stealth marketing techniques. While stealth marketing is an emerging phenomenon, it will become more popular as marketers find it harder and harder to reach their target market.

The Growing Popularity of Stealth Marketing
The growing popularity of stealth marketing derives from three factors that contributed to the diminishing effectiveness of television advertising and other traditional techniques. The first factor is the growing criticism of the advertising industry in general. For example, the hierarchy-of-effects model, the most sacred cow in the advertising business for more than 100 years, has been openly challenged. According to this theory, consumers tend to move through some type of measurable mental process on the way to purchasing a product or service. Weilbacher argued that the hierarchy-of-effects models are flawed. He presented four main reasons why these models have not and cannot be validated. He concluded, "These models have never been explicitly validated --hierarchy models are little more than rationally and intuitively sensible."[ 2] Wielbacher"s article was so controversial that a rebuttal[ 3] and counter rebuttal[ 4] ensued.
Additionally, at least two books critical of the advertising industry were published in 2002. Sergio Zyman argued that 30-second television commercials are not sufficient to build awareness, and that the advertising industry must rethink its model.[ 5] Likewise, Al and Laura Ries argued that PR should lead any new product introduction to be followed by advertising.[ 6] The cost effectiveness of stealth campaigns is implicit in those authors" recommendations to embrace non-traditional techniques. In a presentation in Chicago, Al Ries attributed the successful introduction of Botox to skillful use of PR. He argued that Botox has become a $300 million brand with absolutely no advertising whatsoever. Krispy Kreme also became a cult favorite in the U.S, with very little traditional advertising.[ 7] The doom and gloom warnings expressed in these publications are not ignored by other marketers.
The second factor contributing to the diminishing effectiveness of advertising is that marketers are finding it more difficult to track down potential customers because audiences are more and more fragmented. As the number of television channels, radio stations, and consumer publications proliferate, audiences are fragmented into smaller groups thereby making it more difficult and expensive to reach an audience of a given size. For example, in the 200-channel TV universe, individual programs are drawing considerably fewer viewers than in the past. More alarming is the fact that recent research reveals that a growing number of young males are watching less television and playing more videogames. A 2003 Nielson study concluded that young men between 18 and 34 years were watching 7.7% less prime-time TV than a year ago.[ 8] With commercial clutter mounting and media audiences fragmenting, serious cracks are appearing in marketers" devotion to a medium operating in a world of diminishing returns whereby they are being charged ever-escalating prices despite everdeclining viewership/readership.
Other technological threats to traditional TV advertising are also contributing to the popularity of stealth marketing. Even when marketers succeed in tracking down their prospects, they tend to confront a bigger challenge. They are finding that it is more difficult to convince their potential customers to sit through the TV commercials. Thus, the third factor contributing to the growing popularity of stealth marketing is the advent of personal television recorders (PVRs) or digital video recorders (DVRs). TiVo and Replay TV are the leading brands of PVRs. To marketers and advertisers, the most disturbing feature of this device is its ad-skipping ability, allowing users to skip or eliminate commercials with a click or two of the remote control. Some TV executives perceive the adskipping feature as a greater threat to the television industry than Napster was to the music industry. While FCC Chairman Michael Powell called TiVo "God"s machine," it is considered a four-letter word on Madison Avenue and has been aptly dubbed "the commercial killer."
Some surveys revealed disturbing findings for the TV advertising industry. A study revealed that the number of TV commercials needed to reach 80% of 18- to 49-year-old women increased from three ads in 1995 to 97 ads in 2000.[ 9] Another survey aptly titled "Will Ad-Skipping Kill Television?" polled 112 marketing executives from the Association of National Advertisers.[ 10] Seventy-six percent of the respondents indicated that they would reduce advertising expenditures when PVRs reach 30 million homes. Additionally, the survey revealed that nearly half indicated they would increase spending on program sponsorships and product placement deals, which are not so easily bypassed. More alarming, the survey found that 68 percent of the marketers believe that their respective ad agency is not equipped to assist with the ad-zapping predicament. Additionally, Forrester Research predicts that PVRs will be in 30 million homes before 2007 as satellite and cable operators incorporate the technology into their set-up boxes.[ 11]
Frustrated with limitations of the traditional 30-second commercial, and fearful of gadgets that empower viewers to skip ads altogether, marketers need to explore new ways of driving their message home. More specifically, they should attempt to create "zap-proof" formulas by relying on more subtle messages that are harder to avoid. To this end, they need to explore different types of stealth marketing techniques as viable alternatives to reach an increasingly fragmented audience.

Types of Stealth Marketing Techniques
There are a variety of stealth marketing techniques that can be utilized to gain competitive advantage. The six main types of these marketing techniques are: viral marketing; brand pushers; celebrity marketing; bait-and-tease marketing; marketing in video games; and marketing in pop and rap music. While these campaigns come in many disguises, and some seem to be stealthier than others, they each represent a viable alternative to traditional advertising. The most successful form of stealth is when consumers do not even notice the commercial messages.

Viral Marketing
The term "viral marketing" was coined by venture capitalist Steve Jurvetson in 1996 when he described the marketing strategy of the free e-mail service Hotmail whereby each e-mail sent arrived with the appended message "Get your private, free e-mail from Hotmail at http://www.hotmail.com" along with the sender"s implicit recommendation. Thus, viral stealth marketing is simply "word of mouth" via a digital platform. It involves spreading the message via "word of mouse" and ensuring that the receivers have the interest to pass along the message to their acquaintances.[ 12] More specifically, brand pushers are recruited to pose as regular Internet users who casually trumpet the benefits and exotic features of products or services to other young people in Internet chat rooms, newsgroups, and weblogs. By generating word-of-mouth to create "authentic" experiences, viral marketing attempts to harness the strongest of all consumer triggers--the personal recommendation. Receiving a personal recommendation via e-mail from someone you know is by far more credible than an anonymous e-mail. Viral Internet campaigns can also be perceived as more benign by projecting an unbiased image. Essentially, viral stealth marketing tends to use "seeded" e-mails to reach hot prospects, innovators, and early adopters. Consider how Dr. Pepper deployed weblogs to spark chatter on the Internet for its new product.
Dr. Pepper took advantage of the exploding popularity of the weblog, also commonly known as a blog. Blogs are diary-like personal web sites and on-line soapboxes that have become one of the Web"s hottest trends, particularly with young web surfers.[ 13] Unlike old-fashioned personal home pages, blogs are online diaries often written by trendsetting teens. They are typically filled with brief entries that are updated regularly, thereby hooking visitors to come back for the author"s latest ruminations. Essentially, blogs empower individuals to share commentary with like-minded people on issues of their choice, thus establishing interactive dialogues. They tend to include embedded links to other web sites and other blogs and can cover a variety of topics ranging from technology, media, and entertainment to politics, economics, and culture.
While the popularity of blogs has flourished by generally exposing things to the public, Dr. Pepper used it to surreptitiously hype a new product to unsuspecting customers. The new product is a milk-based soft drink with such flavors as "Chocolate Insanity" and "Pina Colada Chaos." To create a nation-wide buzz for the product, Dr. Pepper established an in-house blog that narrates the adventures of a fictitious cow. To appeal to the young crowd, the company created a belligerent bovine mascot dubbed Mad Cow, which was quickly changed to Raging Cow to avoid any association with the livestock disease.[ 14] The company also recruited young adults with popular blogs. The bloggers, who are in their late teens to early 20s, were flown to the company"s headquarters in Dallas with their parents for a week of orientation.
The main task was to spread the word about the new product by developing a "blogging network," whereby the new product was hyped by the young recruits who shared their enthusiasm about the product via their respective blogs and linking to the company"s site without disclosing their assignments. While these young recruits are not compensated with cash, they were rewarded with promotional items such as samples of the product, logo merchandise, and Amazon.com gift certificates.

Brand Pushers
Brand pushers are hired novice actors and actresses who approach unsuspecting people in real-life situations by personally slipping commercial messages in trendy bars, music stores, and tourist hot spots. These actors must come off as genuine by being personable, approachable, and attractive, but not too attractive to be believable. Their main task is to act nice and slide the brand under the prospect"s nose. This tends to create a chain of influence by exposing a product or service to a few trendsetters who in turn influence hundreds more. They are required to maintain utter secrecy about their occupations by signing confidentiality agreements that prohibit them from divulging their secret assignments.
Consider the case of Sony Ericsson Mobile Communication. In April 2002, the company began a stealth marketing campaign to launch its combination cell phone and digital camera. The stealth marketing campaign involved recruiting novice actors and actresses to be embedded as couples at tourist hotspots such as the Seattle Space Needle. These "fake tourists" asked unsuspecting tourists to snap their picture using the new T68i cell phone. The ive was to intrigue unsuspecting tourists with the new high-tech gadget and allowed them to discover the product on their own by actually using it on site. It was also designed to engage consumers interactively in an unconventional manner. Thus, the unsuspecting tourists received a marketing message coupled with a spontaneous demonstration not from a corporate pitchman, but from a much more powerful endorser: an enthusiastic "user" of the product. Sony Ericsson also implemented another stealth marketing tactic whereby two young recruits were planted at opposite ends of a trendy bar playing a video game against each other on their cell phone.
The music industry also uses clandestine marketing initiatives by planting hip-looking guys as "fake shoppers" in a music store where they chat about a great new artist in the presence of unsuspecting store customers. By overhearing the chat, the real customers are inclined to buy the talked-about CD. Other companies have resorted to similar stealth marketing tactics whereby brand pushers are recruited to sing the praises of new products or services in a crowded subway or airport lounge. Even soccer moms were recruited to chatter about sneakers in games. Likewise, in 2001, Italian scooter maker Piaggio hired young, good-looking recruits to ride around Los Angeles and Houston on its colorful, stylish Vespa scooters and park them in places-to-be-seen around town. While the paid drivers did not attempt to sell the scooters, their main task was to create buzz and a cool image.
Additionally, some cigarette makers employ a team of pretty women to flirt with male bar patrons and get to ask them for a smoke. To overcome the indoor bar smoking ban, these women invite unsuspecting patrons to join them outside to sample a new kind of cigarette. Most male bar patrons are unaware that the women are brand pushers. Another stealthy tactic involves recruiting female brand pushers to hand out a packet of cigarettes to unsuspecting smokers by claiming it does not fit in their purses. College students are also considered to be good candidates as brand pushers in undercover operations. They are recruited to pass out coasters advertising a certain brand of beer at college parties. Other students are recruited to encourage their friends to visit a local record store.
Actually, brand pushers represent a clever reincarnation of an old technique. The genesis of this tactic can be traced to the 1920s when Macy"s reportedly attempted to unload a large inventory of unsold long white gloves. The retailer hired 25 well-dressed women to done the gloves on the subway. Riders were bemused and asked the women about the gloves. It took the retailer only a few weeks to sell out of the gloves. The alcohol and tobacco industry also used the "seeding" technique in the 1980s by hiring good-looking brand pushers to offer unsuspecting strangers particular brands of alcohol, cigarettes, or snacks. Some alcohol makers recruit a team of pretty young women as "leaners" to pose as patrons in a crowded bar. They literally "lean" into the bar and ask other patrons to order Brand X for them. To complete the transaction, leaners hand the money over to the middleman who in turn hands back the drink. Since the middlemen in a crowded bar tend to have their guards down, they are more receptive to receiving commercial messages. These unsuspecting prospects are more inclined to think they discovered the brand themselves. Another stealth marketing tactic involves recruiting brand pushers who pretend to celebrate their birthdays by offering unsuspecting hip-looking bar patrons a drink of Brand X to generate local buzz and assess their reaction to it.

Celebrity Marketing
As stealth marketing techniques are becoming more pervasive, some tactics seem to be more controversial than others. Some critics argue that at least one industry has hijacked this tactic by pushing the envelope to the edge. They claim that the pharmaceutical industry has gone too far with the strategy. Much to the chagrin of the major TV networks, their news programs are being used by drug companies to air paid celebrity endorsements posing as unpaid testimonials. Essentially, unbeknownst to viewers, some celebrities are hired by large pharmaceutical companies to discuss their medical ailments and mention specific drugs while they are casually chatting with a talk-show host on the air without disclosing these financial arrangements. Critics claim that such a technique is a commercial masquerading as an interview.
Consider three cases where the major TV networks served as marketing platforms for the health care industry. In March 2002, when Lauren Bacall was interviewed by Matt Lauer, the co-host of the Today show, she mentioned that one of her friends is partially blind due to an eye disease called macular degeneration. Ms. Bacall referred to a new drug, Visudyne, which is intended to treat the ailment. She failed to mention, however, that she was paid by the maker of Visudyne to plug the brand. In July 2002, Ann Wilson, lead singer for the 1970s-80s rock band, Heart, was hired by the maker of a weight-loss device called the Lap-Band. Ms. Wilson appeared on CBS"s The Early Show to tout the device, which surgeons placed around her stomach to restrict food intake. She failed to disclose her financial ties with the maker of the device. Additionally, in August 2002, actress Kathleen Turner discussed her struggle with rheumatoid arthritis on ABC"s Good Morning America and CNN, respectively. While she did not mention any specific company or brand, she referred viewers to a web site co-sponsored by Amgen Inc. and Wyeth, which market Enbrel, a drug that battles her medical condition. Ms. Turner failed to disclose that she was paid for her public appearances by the maker of Enbrel.
Stealthy celebrity endorsements allow pharmaceutical companies to bypass FDA requirements that stipulate that all drug advertising messages should include cautions about a medication and spell out the anticipated side effects. Generally, these side effects are hurriedly mentioned at the end of the message by an announcer in low monotone voice. By using stealthy celebrity endorsements, drug companies tend to directly flout FDA requirements by skipping the side effects altogether....   

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