Using Integrated Marketing Communication to Build the Brand Equity-Take Nokia For Example
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As a person with knowledge of Integrated Marketing Communication, the author has always brought up to his superiors the viability of strategy formation regarding the analysis of this topic and at times fails to understand the reasons or logic behind certain strategic implementations imposed on it.
By delving into this project paper, the author intends to have better insights into how the Integrated Marketing Communication tools are thought up, formulated and then imparted down. The author hopes to have an in-depth understanding as to how the Integrated Marketing Communication tools enable companies and organizations to compete effectively and profitably in this era of internationalization where competition is extremely intense.
In order to reinforce the learning objectives, two key focal issues were focused upon i.e. innovation and diversity. Innovation was discussed with regard to Integrated Marketing Communication where it was renowned for its developmental capabilities to constantly innovate. Diversity came under strategic thinking and formation as the author considered the diverse culture, political climate, economic surroundings, social environment, technological settings, government policies and legal systems in order to better understand the issues being discussed.
Nokia is one of the world's leading telecommunication companies in terms of profit and sales volume. The company has also the widest presence among all international companies. This is made possible through a positioning strategy of global networking of distributors.
Nokia uses the name of both the company and its mainstream mobile phone labels, and this strategy has allowed the company to pursue an integrated marketing approach directly related to the company name. There are also a variety of Integrated Marketing Communication (IMC) tools available that Nokia could make use of in order to control all of their promotional activities. These tools include a combination of advertising, branding and personal selling. When used appropriately, these IMC tools will be able to help Nokia to consistently disseminate the valuable information that they want to convey to their valued consumers.
However, certain points have to be taken into consideration by Nokia regarding IMC tools. Since their income is relatively higher than most of their competitors, the time for implementation of their chosen IMC tools would take longer than usual, aside from being expensive. But since the goal of Nokia is towards a long-term dominance and stability in the telecommunication industry, then the pursuit of these promotional campaigns will be beneficial for the company in the long run.
The telecommunication industry over the years has developed an efficient and effective process of implementing the policies and tasks necessary to satisfy its consumers and management of companies and organizations. There has been a recent focus on the careful management of the processes involved in the production and distribution of mobile products and services within the industry (1998).
More often than not, small telecommunication companies don't really have the capabilities to implement international marketing strategies. Instead, these companies engage in activities that various schools of management typically associate with implementing integrated marketing strategies. These activities include the manufacturing of innovative mobile phone products, product development, production and distribution.
However, international marketing strategies deal with all operations done within companies and organizations. Activities such as the management of purchases, the control of inventories, logistics and evaluations are often related with operations management. A great deal of emphasis lies on the efficiency and effectiveness of processes. Therefore, international marketing strategies include the analysis and management of internal processes.
Nokia will be the model business entity that will be used in this research based on their history in international marketing strategies.
A. Measuring Nokia’s Performance
a. Financial Analysis
In the fiscal year of 2003, Nokia was able to experience a significant progress in several key metrics. The inventory was reduced from $55 million to $23 million and inventory turns rose from 12 to 26. The cost of revenues, excluding the benefit from previous special charges and the applicable portion of the amortization of intangible assets, decreased from 72.3% of revenues to 67.8% of revenues. The combination of sales and marketing, research and development, and general and administrative expenses was reduced from $ 435 million to $339 million, while at the same time improving on the pace of innovation. Nokia’s total revenue has approximately grown from $1 million in fiscal year 1995 to $ 871. 9 million in fiscal year 2003.
The retailers in Finland represent Nokia’s largest sales and marketing channel which encompass national and regional office supply stores and mass merchants. Distributors represent Nokia’s second largest European channel and generally sell to both traditional and Internet resellers and retailers. In Europe and the US, Nokia’s market share is still relatively high. Nokia has more than 100 international distributors located worldwide.
The company also uses online stores as a venue to sell its products. This is accomplished through the use of e-marketing campaigns and product bundles. The company is able to build awareness of its products and brands through mass media advertising, public relations efforts and branded Internet properties. The company also makes it a point to receive feedback from its customers through market research. The company then uses these feedbacks to refine its product development efforts and marketing strategies (Kotler et al. 1999).
Nokia out-sources all of the designs of its mobile phones to third party manufacturers. This outsourcing extends from prototyping to volume manufacturing and includes activities such as material procurement, quality control and delivery to distribution centres. The company is assured that there is an adequate supply of components to manufacture its products. The majority of the company’s products are assembled in Europe and the US. Distribution centres are operated on an outsourced basis in Europe and the US.
d. Human Resources
Nokia knows that its future depends on the company’s ability to attract new personnel and retain existing personnel in key areas including engineering and sales. None of the company’s employees is subject to a collective bargaining agreement. The company considers its relationship to its employees to be good.
B. Nokia SWOT Analysis
- Nokia has products that boast of a very powerful retail. This includes a reputation for value of money, convenience and a wide variety of products
- Nokia has grown significantly over the years, and has experienced global expansion.
- Nokia’s main competence lies on the use of information technology (IT) to fully support its international logistics system. Therefore, the company can see how their individual products perform within the United States, or even at stores at a glance. IT also supports Nokia’s efficient procurement.
- Nokia is able to deliver good customer care, as the limited amount of work would mean plenty of time to devote to customers.
- Nokia’s lead consultants have established a strong reputation within the market.
- Nokia can afford to change direction quickly if its management finds that the company’s marketing strategy is not effective.
- Nokia has little deficits and overheads. Therefore the company can offer good value to customers on a consistent basis.
- Nokia is one of the world's largest companies in telecommunications but has a weak control of its empire, despite its IT advantages. This could lead to a decrease in productivity in some areas where they have the least control of.
- Since Nokia sells products across many sectors, the company may lack the flexibility that some of its more focused competitors possess.
- Nokia operates globally, but its presence is located in only relatively few countries worldwide.
- Some of the company’s weaker branches lack market presence or reputation
- Some of the company’s personnel still lack the essential skills base in many areas.
- The company is still vulnerable to the temporary losses of its vital staff (e.g. being sick, leaving).
- The company’s cash flow is unreliable especially in the early stages of a new product development.
- Taking over, merging, or forming strategic alliances with other fashion companies while focusing on strong markets like Europe or the Greater China Region.
- The branches of Nokia operate only on trade in a relatively small number of countries all over the world. Thus, this would open the opportunities for future businesses in expanding various consumer markets, such as those in China and India.
- The opening of new locations and branches offer Nokia the opportunities to exploit market development. This could lead to the diversification of the company’s branches from large super centers to local-based sites.
- Opportunities exist for Nokia to continue with its current strategy of establishing large branches worldwide.
- Nokia is continuously expanding, with plenty of future opportunities to exploit for success.
- The local councils of Nokia are in the process of encouraging local businesses with work whenever possible.
- The competitors of Nokia may be slow to adapt to new mobile gadgets especially the ones that the company releases.
- Being number one means that Nokia is the target of competition, the company to beat, both locally and globally.
- Being a global retailer means that Nokia might be exposed to political problems in the countries where the company has operations.
- The production costs of most consumer products have the tendency to fall because of lower manufacturing costs. Manufacturing costs fall because of outsourcing to low-cost regions around the globe. This phenomenon could lead to competition in prices, which in turn would result in the deflation of prices in various ranges. Intense price competition must definitely be considered a threat.
- The latest developments in information technology which could possibly change the markets might challenge the company’s ability to adapt to these changes
- A slight shift in focus of a large competitor might wipe out any market position that Nokia has achieved over the years. This could force the company to specialize in rapid response but good value services to local businesses. This would put so much pressure on the company’s consultancy staff to keep informed with the latest changes in technology where possible.
REVIEW OF RELATED LITERATURE
INTEGRATED MARKETING TOOLS
Advertising refers to the paid promotion of goods and services through a sponsoring organization or company. While marketing has the objective to choose markets that have the capacity to purchase a product, advertising, on the other hand, is the paid communication through which relevant information about the product is conveyed to potential consumers ( 2001).
In a general sense, advertising is being utilized to be able to impart to the consumers the availability of a particular product or service. In a way, advertising is also able to provide critical information regarding the product or service. When an advertising campaign is achieved effectively, this can lead to an increased demand for the product.
There are commonly three main objectives of advertisements: (1) conveying relevant information regarding a particular product or service; (2) persuading consumers to purchase the advertised product; and, (3) keep the company under the watchful eyes of the public (Hancock et al. 2002). Most successful advertising campaigns usually mix the elements of all three objectives. More often than not, newly established products are supported with informative and persuasive ads, while strongly established products utilize institutional and persuasive ads.
Evaluation of Advertising
The existence of Internet and the continued revolution in the world of Information Technology are certainly positive signs for the blossoming of many new advertising opportunities. For instance, Popup ads and email ads have started to invade the Internet. Most advertising firms have also started to exert efforts to make their advertisements appealing to the public (2001).
In recent years, the public opinion regarding advertising has become very negative. They view it as a medium that only promotes lies. This is of course contrary to the purpose of advertisements to encourage the target market to patronize a particular product or service. Nowadays, most advertisements are either perceived as merely stating opinions or portraying a product or service in a totally distorted idea away from reality. It is this alarming situation regarding the true objectives of advertising that have led to an increase in the responsibilities that companies and advertising firms face (2004).
Publicity is a term that is closely related to public relations. While public relations refers to the proper management of all means of communication among the companies and the people involved, publicity, on the other hand, is the careful management of a product or service’s means of communication between the company and the general public. Therefore, it is basically an informative process. However, its main objective is the promotion of products and services being offered by a company. Thus, a publicity plan is being made along the process in order to obtain excellent press coverage for the company’s products.
The most commonly used tool of the publicist is in the form of a press release, but other methods including Internet releases have also been widely used recently. However, in order for these tools and techniques to be effectively utilized by the media, they must be able to generate a great interest from the public. More often than not, the press release is manipulated in order to be a perfect match to the media vehicle that it is being sent to. A publicist’s task is to always ask the company about its characteristics or features that will have a generally good appeal to the public and thus make a good story. The most successful publicity releases are often related to topics that the general public can easily relate to (2001).
Evaluation of Publicity
The advantages of publicity include having low costs, and its credibility. New technologies such as web cameras and convergence are gradually changing the cost-structure.
The disadvantages include the lack of control over how the releases will be used, and the accumulation of frustration regarding the low percentage of releases that are being accepted by the media.
C. PERSONAL SELLING
Sales are an important part of any commercial transaction. The most common approach to personal selling pertains to a systematic process of continuous yet measurable methods in which the person selling describes his offered products or services in such a way that the buyer will be able to visualize how to benefit from the offered products or services in an economic way. Selling is basically a part of the implementation procedures of marketing. It often forms a particular grouping within a corporate structure, employing independent specialist operatives known as salesmen ( 2003).
The continued interrogation in order to understand a consumer’s goal as well as the establishment of a set of feasible solutions by conveying the necessary information that convinces a buyer to achieve his goal at a reasonable cost is the main responsibility of the sales person. On the other hand, the main objective of professional sales is to be able to know the needs and satisfy the wants of consumers effectively, and therefore convert possible customers into actual and reliable ones (2002).
Evaluation of Personal Selling
Some of the distinct advantages of personal selling include the immediate access to feedback, the persuasive nature of the endeavor, the option of choosing a target audience for the sales person, and its capability to give detailed information.
Personal selling may have the tendency to become extremely expensive per exposure, and the gathered information may be different among the sales persons involved. It is a well-known fact that the main objective of selling is to help a consumer achieve his / her goals in a reasonable way. However, this is not always the case. Consumers can easily be persuaded by outside factors to patronize a product or service that normally does not have any interest to them. Some sales people are being commanded by their mother companies to sell to consumers odd products that they don't necessarily need. This anomalous behavior is being supported by incentives of sales personnel to increase their total number of sales, incentives from the companies of service providers to sales personnel to sell their products where other similar products offered by competitors are offered, and the incentive to sell a consumer a product that is in need of being wiped out.
D. SALES PROMOTION
Sales promotions pertain to non-personal promotional campaigns that are meant to have an immediate and lasting impact towards sales. Sales promotion is both a media and non-media marketing communications tool utilized for a limited time in order to boost consumer demand and improve product availability. Sales promotions can be directed to a variety of stakeholders, either to consumers or retailers ( 2002). Sales promotions targeted at consumers are more commonly called consumer sales promotions. On the other hand, sales promotions targeted at retailers and wholesale are more commonly referred to as trade sales promotions. Some sale promotions, however, make use of unorthodox methods and are often not seriously considered by many.
Evaluation of Sales Promotion
The distinctive advantages of sales promotion include its capability to change behaviors in a limited span of time as well as its flexibility.
The disadvantages of sales promotion include its potential for being abused, which could possibly lead to disputes regarding promotion. Sales promotion can also be easily duplicated.
APPLICATIONS / RECOMMENDATIONS
For Nokia to be able to build their brand equity and reach their target markets effectively, a combination of advertising and personal selling is the key strategy and communication tool that must be used. There are various kinds of advertising that Nokia could choose from.
Nokia Television Commercial Campaigns
The TV commercial campaigns are generally considered the most effective mass-market advertising format, even amidst the high prices TV networks charge for commercial airtime. In the world of media and entertainment, a particular television commercial can be broadcasted continuously for months and even years. Normally, television commercial production studios often risk astronomical amounts of money for the production of a mere thirty-second television commercial. In Nokia’s case, the company is financially capable for this kind of huge expenditures. The resulting number of high-quality Nokia TV commercials, those with the best production values and the most popular personalities, will be able to offset the huge expenses later on.
Nokia Billboard Advertisements
Nokia Billboard advertisements must be able to catch the consumer’s attention and thus create an immediate impression. They also have to be readable especially because they are usually noticed in roads and highways while consumers are boarded at vehicles with high speeds. Therefore, the Nokia billboard must only contain a few words in large print, with a clear image in bright colors (Jayaratne et al. 2001).
Nokia Event Sponsorship Campaigns
Sponsoring something means supporting an event or organization through the provision of money or other resources in exchange for advertising or publicity. Sponsorship may also refer to an arrangement to exchange advertising for the responsibility of financing a popular event or entity. For example, In Singapore, Nokia has gained sponsorships of exclusive Green Room Sessions and global world-music events. This particular music strategy initiated by Nokia in the Singapore market has gained success and is now being emulated also in other Asian markets, such as in Malaysia ( 1984). In Thailand, Nokia has also sponsored music events. Nokia Green Nights are also starting to gain popularity in Vietnam because of the brand’s strong appeal to the younger target audience and influenced by cutting-edge music.
The Nokia World of Movies is also starting to get the appreciation of the general public. In Thailand, Nokia was able to secure the sponsorship of the premiere of “The Matrix Reloaded”. In Malaysia, on the other hand, Nokia was among the sponsors of the James Bond blockbuster, “Die Another Day”. And in Vietnam, Nokia became associated with another hit movie, “The Bourne Identity”.
Nokia also has embarked into securing major sponsorships in tennis and golf, most especially in Thailand and Vietnam. In Vietnam in particular, Nokia sponsored the broadcasts of Wimbledon, the US Open and the Australian Open. In Thailand, on the other hand, Nokia World of Golf hosted the yearly Nokia Thailand Amateur Gold Championship. To show its support for Rugby World Cup 2003, Nokia undertook a wide range of promotions in New Zealand where rugby is the national sport ( 1998).
Personal Selling of Nokia Products
Personal selling is normally conducted at the place of purchase. This is especially important because Nokia consumers still have special needs or technical questions. Personal selling remains the major promotional ingredient for intermediary being used by Nokia (1991).
BUDGET FORMULATION (1 day)
TV ($500/30-second ad/station)
Radio ($50-$100/60-second ad/station)
Newspaper ads ($500/ad)
Billboard campaign ($1000)
Flyers ($100 @ $0.10 each)
Hiring of additional sales representatives to visit unserviced locations - $20,000
TOTAL BUDGET: $22, 200 daily
EVALUATION and CONTROL
There are several steps needed in order to evaluate and control the recommended promotional campaigns. First, the recommended promotional campaigns have to be tested first in varying situations and environments, after which a Test-result database must be established for comparisons. The tests have to determine the relative impact of the promotional campaigns, which in turn will be the basis towards evaluating the execution options regarding the appropriate promotion tools ( 2004).
On the other hand, the established test-result database will be the basis towards the creation of more promotional campaign designs and decisions. The data will also provide support for the continued implementation of IMC activities.
Nokia has been able to remain one of the world's leading telecommunication companies for more than a century now primarily because of the execution of the company’s branding and positioning strategies to perfection. Add to the mix the company’s dedication to high quality of service and the formula for success is at hand.
Moreover, the utilization of the appropriate IMC tools is necessary for their products to reach out to people even in different cultures. In this case, it is being recommended that a combination of advertising, branding and personal selling be implemented by Nokia due to its high level of effectiveness.
However, certain points have to be taken into consideration by Nokia regarding IMC tools. Since their income is relatively higher than most brewing companies, the time for implementation of their chosen IMC tools would take longer than usual, aside from being expensive. But since the goal of Nokia is towards a long-term dominance and stability in the brewing industry, then the pursuit of these promotional campaigns will be beneficial for the company in the long run.
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