Thinking Made Easy

Sales Promotion

Sales Promotion

Introduction

            The most marked example of progress in marketing communications is the emergence of Integrated Marketing Communications (IMC). Many organizations now consider IMC to be a key competitive advantage of marketing. The marketing communication industry is passing through critical times as a result of rapid changes in the media and marketing landscapes ( 2001;2000). With use of sophisticated databases, IMC can show the same powerful innovation and potential contribution that was once associated with great advertising campaigns ( 1998:  2000). Communication tools are no longer one-voice mechanisms, but part of an integrated chorus of communication activities.

            IMC attempts to combine, integrate, and synergize different elements of the communications mix, as the strengths of one are used to offset the weaknesses of others. IMC has grown in recognition and importance for effective marketing as driven by the following trends:

§  Allocation of budgets away from mass media advertising

§   increased media fragmentation

§  increasing segmentation of consumer tastes and preferences

§  easier access to consumer databases and computational resources

§  reinforcing consumer loyalty via relationship marketing

§  and, building and increasing a brand's image based equity

            IMC can thus be defined or approached in a variety of ways, although each definition suggests five key features that are significant in IMC (2000).

1.    The primary goal of IMC is to affect behavior through directed communication

2.    The IMC process should start with the customer or prospect and then work backwards to the brand communicator.

3.    IMC should use all forms of communication and all sources of brand or company contacts as prospective message delivery channels.

4.    The need for synergy, with coordination helping to achieve a strong brand image.

5.    Finally, IMC requires that successful marketing communications needs to build a relationship between the brand and the customer.

            A basic IMC principle is that communication is the foundation of all human relationships ( 2002). Communication is concerned with the exchange of information, ideas, or feelings and the successful development of a communications strategy requires extensive learning and coordination throughout the communications network. Marketing communication is the collective term for all the communication functions used in marketing a product, and the purpose of marketing communications is to add persuasive value to a product for both customers and the company ( 2002; 1998; 2002).

The distinct tools of the marketing communications mix are:

§  Advertising (1995;1998)

§  Public relations (1997; 1998)

§  Sales promotion (1995; 2000)

§  Direct marketing (1998; 1998; 1999)

§  Personal selling ( 2000;  1998)

§  Exhibitions (1993)

§  Point-of-purchase communications (2001)

§  Cybermarketing (2002;  1998)

§  Sponsorship ( 2000)

            In this paper, we will focus the discussion on one of the integrated marketing tools which is sales promotion. Sales promotion has been rapidly increasing its popularity over the past years. This paper will discuss the reasons and the benefits that sales promotion has contributed that leads to its growth.

 

 

 

Reasons of Growth of Sales promotion

            Sales promotion has grown substantially in recent years. There are several reasons for this dramatic growth in sales promotion. First, consumers have accepted sales promotion as part of their buying decision criteria. It provides reluctant decision makers with an incentive to make choices by increasing the value offered by a particular brand. Second, the increasing tendency of businesses to focus on short-term results has helped spur growth in sales promotion, which can provide an immediate boost in sales. Product managers also tend to view sales promotion as a way to differentiate their brand from that of competitors in the short term. Third, the emergence of computer technology has enabled manufacturers to get rapid feedback on the results of promotions. Redemption rates for coupons or figures on sales volume can be obtained within days. Finally, an increase in the size and power of retailers has also boosted the use of sales promotion.

            In short, the growth of sales promotion is due to its demand for accountability, short-term orientation, consumer response to promotions, proliferation of brands, increased power of retailers and media clutter.

            Historically, the manufacturer held the power in the channel of distribution. Mass marketers utilized national advertising to get directly to consumers, creating a demand for the heavily advertised brands that stores could not afford to ignore. With consolidation and the growth of major retail chains, however, retailers have gained the power to demand incentives from manufacturers to carry their products. Many sales promotions are designed to provide benefits to the retailers.

            In marketing, sales promotions are non-personal promotional efforts that are designed to have an immediate impact on sales. Sales promotion is media and non-media marketing communications employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability. In short, sales promotion is a promotional method which uses special short term techniques to persuade members of a target market to respond or undertake a certain activity. As a reward, marketers offer something of value to those responding generally in the form of lower cost of ownership for a purchased product, for example lower purchase price or money back, or the inclusion of additional value-added material, for example something more for the same price.

            Oftentimes, sales promotion is confused as advertising.  For instance, a television advertisement mentioning a contest awarding winners with a free trip to may give the contest the appearance of advertising.  The delivery of the marketer’s message through television media is certainly labeled as advertising, however, what is contained in the message, namely the contest, is considered a sales promotion. There are two factors which differentiate the two marketing tools. These are whether the promotion involves a short-term value proposition, for instance the contest is only offered for a limited period of time, and whether the customer must perform some activity in order to be eligible to receive the value proposition, for instance, customer must enter contest. The inclusion of a timing constraint and an activity requirement are hallmarks of sales promotion.

            Sales promotions are used by a wide range of organizations in both the consumer and business markets, though the frequency and spending levels are much greater for consumer products marketers. 

            Sales promotion may not seem as stylish and sophisticated as mass media advertising, but expenditures on this tool are impressive. In recent years, sales promotion expenditures have grown at an annual rate of about 9 to 12 percent, compared to a 6 to 8 percent rate for advertising (2000).

            Consumer-product firms have made a tremendous commitment to sales promotion in their overall marketing plans. During the 1970s, consumer goods marketers allocated only about 30 percent of their budgets to sales promotion, with about 70 percent allocated to mass-media advertising. Today, some estimates show that for many consumer goods firms, the percentages are just the opposite, with nearly 75 percent being spent on sales promotions ( 1998).

Objectives of Sales Promotion

            Sales promotion is an integrated marketing communication tool that is used by marketers to achieve the following objectives. First, sales promotion aimed to build product awareness. Sales promotion techniques are used especially when the product being promoted is new in the market. In order for the customer to be aware of the availability of the product, sales promotion is an effective way. Several sales promotion techniques are effective in exposing customers to products for the first time. These customers can serve as key promotional components in the early stages of new product introduction.  Moreover, as part of the effort to build product awareness, several sales promotion techniques possess the added advantage of capturing customer information at the time of exposure to the promotion.  In this way sales promotion can act as an effective customer information gathering tool which can then be used as part of follow-up marketing efforts.

            In addition, sales promotion also aimed to create interest from the potential customers. Marketers find that sales promotions are very effective in creating interest in a product. This objective of sales promotion was in fact the most important use of sales promotion especially in the retail industry. An appealing sales promotion can significantly increase sales and customer traffic.  Internet marketers can use similar approaches to bolster the number of website visitors.  Another important way to create interest is to move customers to experience a product.  Several sales promotion techniques offer the opportunity for customers to try products for free or at low cost.

            Moreover, sales promotion is an important information provider. Generally sales promotion techniques are designed to move customers to some action and are rarely simply informational in nature.  However, some sales promotions do offer customers access to product information.  For instance, a promotion may allow customers to try a fee-based online service for free for several days.  This free access may include receiving product information via email. Especially with a new product proper information dissemination is very important for the customers to buy the product or service.

            Furthermore, sales promotion also stimulates customers demand. When the customers already is aware and much informed with the specific product or service, next to it is the most important use of sales promotion, to build demand by convincing customers to make a purchase.  Special promotions, especially those that lower the cost of ownership to the customer can be employed to stimulate sales.

            Finally, sales promotion reinforces the brand. Once customers have made a purchase sales promotion can be used to both encourage additional purchasing and also as a reward for purchase loyalty. Many companies, including airlines and retail stores, reward good or “preferred” customers with special promotions, such as email “special deals” and surprise price reductions at the cash register. With these promotional techniques, the customers would prefer to purchase more and even be a loyal buyer of the product.

 

Types of Sales Promotion

            Sales promotion can be classified based on the primary target audience to whom the promotion is directed.  These include:

·      Consumer Market Directed

                 With this classification, customers are the primary target of the promotional activities. Sales promotion is primarily intended to appeal to the final consumer.  Consumers are exposed to sales promotions nearly everyday, and as discussed later, many buyers are conditioned to look for sales promotions prior to making purchase decisions. 

·      Trade Market Directed

                 Trade Market directed is a classification which targets not only the customer but also the business partners and distributors. Marketers use sales promotions to target all customers including partners within their channel of distribution.  Trade promotions are initially used to entice channel members to carry a marketer’s products and, once products are stocked, marketers utilize promotions to strengthen the channel relationship. 

·      Business-to-Business Market Directed

                 A small, but important, sub-set of sales promotions are targeted to the business-to-business market.  While these promotions may not carry the glamour associated with consumer or trade promotions, Business to Business promotions are used in many industries.

 

Consumer Sales Promotion

            Consumer sales promotion is a term promotional technique which is used to entice and induce consumer to try and purchase the product and service in some way. Consumer sales promotions are directly associated with product purchasing.  These promotions are intended to enhance the value of a product purchase by either reducing the overall cost of the product or by adding more benefit to the regular purchase price. As we noted above, promotion techniques can be used to achieve other objectives such as building brand loyalty or creating product awareness.  Consequently, a marketer’s promotional toolbox contains a large variety of consumer promotions.

The following are the different types of consumer sales promotion techniques:

1.  Coupons

2.  Rebates

3.  Promotional Pricing

4.  Trade-In

5.  Loyalty Programs

6.  Sampling and Free Trials

7.  Free Product

8.  Premiums

9.  Contests and Sweepstakes

10.               Demonstrations

11.               Personal Appearances

 

Trade Sales Promotions

            Trade sales promotion is a promotional technique which aimed to push the product through the channel by encouraging channel members to purchase and also promote the product to their customers.  For instance, a trade promotion aimed at retailers may encourage retailers to instruct their employees to promote a marketer’s brand over competitors’ offerings.  With thousands of products competing for limited shelf space, spending on trade promotion is nearly equal that spent on consumer promotions.

            Many sales promotions aimed at building relationships with channel partners follow similar designs as those directed to consumers including promotional pricing, contests and free product.  In addition to these, several other promotional approaches are specifically designed to appeal to trade partners.  These approaches include:

1.  Point-of-Purchase Displays

2.  Advertising Support Programs

3.  Short Term Allowances

4.  Sales Incentives or Push Money

5.  Promotional Products

6.  Trade Shows

Business-to-Business Sales Promotions

            The use of sales promotion is not limited to consumer products marketing.  In business-to-business markets sales promotions are also used as a means of moving customers to action.  However, the promotional choices available to the B-to-B marketer are not as extensive as those found in the consumer or trade markets.  For example, most B-to-B marketers do not use coupons as a vehicle for sales promotion with the exception of companies that sell to both consumer and business customers.  Rather, the techniques more likely to be utilized include:

·      price-reductions

·      free product

·      trade-in

·      promotional products

·      trade shows 

 

            In addition to the classification of sales promotion according to the target market, it is also classified according to the primary objective of the promotion. Sales promotion is also classified as monetary sales promotion and non-monetary sales promotion.

            Majority of past studies concentrated mostly on the effectiveness of consumer sales promotion on the monetary gains of the promotional technique (1990; 1996;  1994). However, in practice, a range of both monetary and non-monetary sales promotions are used ( 1990; 1998), and there are important differences between them. Monetary promotions, for instance, shelf-price discounts, coupons, rebates and price packs, tend to provide fairly immediate rewards to the consumer and they are transactional in character; non-monetary promotions for example, sweepstakes, free gifts and loyalty programs, tend to involve delayed rewards and are more relationship-based.

            In assessing the effectiveness of sales promotions, it is necessary to examine both types.

            Below are two case studies which promotes effective sales promotion.

 

Case Study 1

Pernod Ricard S.A. Creates Highly Effective Trade Promotion Strategy by Streamlining Call Centers

 

            Selling spirits into supermarkets and licensed premises is a complex process. Companies in this industry must know who their trade customers are, understand their buying patterns, keep them stocked, and develop compelling promotions to stimulate consumer demand. To improve its ability to manage relationships with both on-trade and off-trade outlets, Pernod Ricard S.A. deployed Oracle’s Siebel Consumer Goods to 600 sales and marketing professionals and Siebel Business Analytics to 20 staff members across France. Since deploying the Siebel applications, the company has reduced the time it takes to plan and organize individual trade promotions and has improved customer account management. Pernod has also enhanced its ability to anticipate and respond to consumer needs, as well as deploy its new commercial strategy in the on-trade business.

 

            Pernod is one of France’s leading spirits companies, with annual sales of 54 million liters. The company markets a globally recognized portfolio of brands, including Pernod, Pastis 51, Aberlour whisky, Havana Club, Martell, and Zubrowka vodka. Pernod derives 23% of its revenues from overseas markets, and the company operates three manufacturing plants across France. In its home country, Pernod’s products are marketed through two distribution channels.

 

            The “off-trade” channel, which includes up to 10,000 hypermarkets and supermarkets, contributes 64% of the company’s total sales volumes. Pernod has the second-largest sales force in this sector of any French spirits company, with 80 staff members responsible for organizing sales promotions and providing distributors with specific services such as special instore promotional events or the latest information on the spirits market.

 

            The “on-trade” sector spans more than 80,000 bars, hotels, and restaurants, each of which has a dedicated sales contact, a specific product range, and a unique promotional strategy. Pernod has up to 300 sales professionals targeting this important sector.

            Prior to implementing the Oracle solution, Pernod used two separate, outmoded, and expensive-to maintain systems to manage relationships with its on-trade and off-trade customers.

            According to Vincent Meunier, Pernod’s Chief Information Officer, this commercial strategy needed to change. “We wanted all our customers to experience the same high-quality service regardless of the channel they used--either direct or indirect,” he said. “Our two disparate legacy systems made it difficult to create a clear picture of our customers’ and end consumers’ needs. We needed to replace these fragmented systems with one unified sales, marketing, and service platform.”

 

Rich and Flexible Consumer Goods Functionality

            Pernod implemented Siebel Consumer Goods to 600 connected and remote staff members across France. For the first time, sales, marketing, finance, and other departments share a single, comprehensive view of on-trade and off-trade customers across all channels. Pernod uses Siebel Consumer Goods to manage every aspect of the customer relationship--beginning with preplanning sales calls and scheduling customer appointments. When a salesperson visits or contacts a customer, the salesperson records all the details of the meeting into Siebel Consumer Goods, running on a Fujitsu tablet PC. Siebel provides a consolidated view of the customer, including the customer’s profile, buying patterns, and pricing.

During each visit, customers can place sales orders directly with the Pernod representative and inquire about existing orders. Rich analytics functionality enables the sales teams to evaluate trade promotions, compare their performance against pre-established targets, and improve the effectiveness of future campaigns based on past experience.

 

Effectively Manage Trade Promotions

            By providing a single view of the customer, Siebel Consumer Goods enables Pernod’s sales and marketing teams to effectively manage trade promotions, including the use of posters, point-ofsale materials, branded glassware, and promotional events in bars and nightclubs. Pernod uses the Siebel application to manage thousands of product tasting sessions that the company conducts each year in supermarkets. Pernod also uses Siebel Consumer Goods to profile and target individual retail outlets, schedule appointments, book hostesses, arrange the delivery of products and promotional stands, as well as analyze the results of each tasting session. Moreover, the company has reduced the time it takes to plan and organize individual trade promotion campaigns. “The marketing functionality in Siebel Consumer Goods is excellent,” Meunier said. “Last year, we launched a new product called ‘51 Lemon.’ Siebel was instrumental in helping us to execute the entire campaign launch. We used it to monitor sales in real time at the outlets where the product was being sold.”

            Soon, end user consumers will also be able to contact the call center to ask about products and promotions and to make other general inquiries. Pernod has experienced numerous benefits from its Siebel customer relationship management (CRM) system. Most importantly, the company now has a shared, up-to-theminute view of its market. “We now immediately understand what’s happening on the shelves and in the bars and clubs,” Meunier said. “Oracle’s Siebel Consumer Goods has created the framework for a highly effective indirect commercial strategy.” Oracle’s Siebel Consumer Goods is also making the 400 sales professionals significantly more efficient. “They can productively plan their sales calls in Siebel, compile the data they need from the customer, and then move on to the next sales call,” Meunier said. “The improved customer knowledge also means that salespeople are concentrating the appropriate amount of time on the most important customers. This strategy is not only improving our efficiency, but also enhancing customer satisfaction and loyalty.”

 

 

Case Study 2

 

Leading Nursery Distributor Harvests Bountiful Sales Increase with Innovative incentive promotion

Company Profile

            One of the largest nursery product distributors, with 31 outlets, serving landscaping contractors in 15 major metropolitan areas. As one of the country’s largest distributors of nursery products, this company knows a thing or two of growing things. In their long history, they evolved from a family-owned greenhouse to a leading national nursery distributor.

Situation

            For the previous seven years, the nursery distributor used travel incentives during their business months to help boost sales and fend off intense competition. Their landscape contractor customers, who range from large companies to one-man shows, were awarded vacation packages for increasing purchases. However, when their vacation package vendor suddenly went out of business, they needed some customer care assistance and a new approach to incentives.

Solution

            In a fiercely competitive industry, the nursery needed help to maintain or even boost their sales. With the help of the Loyaltyworks team, the company turned from a potential nightmare to a successful incentive promotion. Their vacation certificate vendor suddenly went out of business leaving their customers with worthless certificates. The distributor needed new certificates and heavy customer service support to fix the situation.

            Loyaltyworks came through and has helped the distributor to design an incentive program for the coming spring season. In place with the travel incentive promotion with a program using Gifts and Getaways, a complete plat form for incentive promotions based on achieving performance plateaus or levels.

            Based on the distributor’s objective, Loyaltyworks helped to establish the promotion structure and value proposition. The structure was composed of multiple reward levels at several hundred dollar increments with a selection of rewards at each level. Customers earned credits, redeemable for rewards, based on incremental purchases made in the spring quarter. The earning potential increased as the customer’s purchase percentage increased. For example, 30% growth in purchases would result in two times more reward credits than a 15% increase.

            With thousands of travel and brand name merchandise options in their standard catalog, Loyaltyworks had the ability to put together a powerful reward selection. Travel and merchandise rewards were selected based on the interests of the distributor’s customer based. The rewards were prominently displayed on a promotion-specific Web site, which serve as an invaluable communications tool.

            Sales representatives personally invited customers to join in the promotion, and the value proposition proved strong enough that nearly all invited customers participated. When the five-month promotion concluded, the contractors redeemed their credits from a robust reward mix that included golf clubs, fitness equipment, tools and assortment of vacation and sporting event packages.

            Loyaltyworks handled the entire rewards fulfillment process from customer service to delivery.

 

 

 

Outcome

            The promotion was an unparalleled success which delivers very impressive results. Sales among the customers in the program increased by 208% over the previous year, and the company saw overall sales of 12% during the months of the promotion. Moreover, it was far more cost effective than the travel incentive they had used in the past. The nursery distributor paid a nominal fee for Loyaltyworks to set up the Web site and customized rewards redemption platform. After that, the only costs the distributor incurred were the rewards their customers redeemed for. Plus, because the earning structure was based on incremental sales, the program paid for itself many times over.

            Compared to the vacation certificate option, based on breakage model, the distributor found Gifts and Getaways to be a low risk option. With the vacation certificates, the company had to purchase a quantity up-front from a vendor, who based their pricing on the assumption that given percentage of the certificates would never be redeemed. Whereas, with the Gifts and Getaways, the company only paid for rewards based on the achievement of the promotion’s objectives.

 

 

Benefits of Sales Promotion

            Sales promotions can offer many consumer benefits. Past studies have concentrated on monetary saving as the primary consumer benefit (1993). However, there is evidence to suggest consumers are motivated by several other benefits, including the desire for: savings, quality, convenience, value expression, exploration and entertainment.

            These benefits are further classified as either utilitarian or hedonic (1994; 1982). Utilitarian benefits are primarily functional and relatively tangible. They enable consumers to maximize their shopping utility, efficiency and economy. In general, the benefits of savings, quality and convenience can be classified as utilitarian benefits. By contrast, hedonic benefits are more experiential and relatively intangible. They can provide consumers with intrinsic stimulation, fun and pleasure. Consistent with this definition, the benefits of value expression, exploration and entertainment can be classified as hedonic benefits.

            Based on the distinction between the types of sales promotions and promotion benefits, (2000) showed that monetary promotions provide more utilitarian benefits while non-monetary promotions provide more hedonic benefits. These relationships are a matter of degree rather than absolutes; for example, coupon promotions may still provide some hedonic benefits such as the enjoyment in redemption, although its main benefit of saving is utilitarian (1994).

            In accordance with the congruency theory, according to  (1955),   the basic principle of congruity states that changes in evaluation are always in the direction that increases congruity with the existing frame of reference. In other words, people have a natural preference for consistent information. The principle has been examined in many marketing contexts, including studies of brand extensions and advertising appeals. Applying the congruity principle to sales promotions, it is expected that sales promotions will be more effective when they provide benefits that are compatible with the benefits sought from the promoted product. The relevance of this principle is evident from some past studies of sales promotions. For example, loyalty programs are more successful if they provide incentives that are compatible, rather than incompatible, with the brand (2002). Likewise,  (1997) suggest the effectiveness of loyalty programs is enhanced if program benefits directly support the target product’s value proposition.

            Congruency effects for sales promotions were directly tested and confirmed by  (2000), who showed that monetary promotions are more effective for utilitarian products as they provide more utilitarian benefits, which are compatible to those sought from utilitarian products.  In addition, non-monetary promotions are more effective for hedonic products as they provide more hedonic benefits, which are compatible to those sought from hedonic products. For example, price cuts are more effective than free gifts for influencing brand choice of laundry detergent that is utilitarian products whereas sweepstakes are more effective than price cuts for influencing brand choice of chocolates that is a hedonic product. However, it is noted that there are other factors that may impact on the congruency effects, including the product life cycle, purchases situations and consumer demographics. Another possible factor is culture.

            Good sales promotion can be an inexpensive way of increasing awareness, of reaching new buyers or extending the buying choices of existing audiences. As an essential part of your campaign they should be planned from the beginning. While sales promotions can often be done cheaply, there should always be a line item for this activity in your budget, no matter how small.

            Because sales promotions often involve working with other organizations, they can open doors into the wider community. By building mutually beneficial relationships, you could also be paving the way for sponsorship. Remember never devalue your product. This is really easy to do if you are desperate, which is why the best sales promotions are usually planned well in advance.

            In summary, the benefits of sales promotion can be enumerated as follows:

1. Sales promotion can access businesses to communications channels such as lists, clients or advertising
2. Sales promotion creates the 'feel good' factor for clients or customers.
3. Sales promotion reinforce the company's image
4. Sales promotion also provides rewards to clients or audiences
5. Sales promotion can stimulate relationship from working and learning from each other
6. Sales promotion can increase sales with a low costs
7. Sales promotion gives better seats, priority booking, private viewings, cheaper prices, learning opportunities and so on

 

Conclusion

            Sales promotion is one of the integrated marketing tools that have gained its popularity over the years. Sales promotions are activities that shape buying patterns attract new audiences or increase sales. Sales promotion is seen as interfacing with price. Sales promotions can include the provision of sampling or learning opportunities, joint promotions or collaborations with third party networks, special events, giveaways and competitions, discounts, incentives, value adding and rewards. Its growth accounts for the acceptability of the customers that sales promotion is part of their purchasing. It is also becomes popular over the companies because of its low cost and short term duration which can substantially increase its sales.

            A carefully planned sales promotion can deliver long-term benefits to your organization. Sales promotion can make the customers feel good with the feeling that they have receive discounts or reward in their purchase of the product. It can also stimulate product loyalty among the customer which can boost the sales of the product or service. Too often they are used as an afterthought to get people through the door. Not surprisingly, they usually look like last minute panic measures and that can signal failure, not success.

            One well-planned, far-reaching promotion is better than heaps of little one-offs that bear no relation to your overall strategy. The work involved in developing sales promotions can often outweigh the apparent benefit if you measure the results in the broadest possible context. As the sales promotion implies, the ultimate goal is sales or transactions. However, promotions can be planned to increase sales over a long period within a specific market segment, so it is not always about immediate results.

 

 

 

Marketing Research

Marketing Research

Problem Definition

A problem in general is the tension or the gap between the desired and the present states. Problems arise when expectations differ from reality or when there is a discrepancy between where you are and where you want to be. The gap between expectations and reality illustrates the size and complexity of the problem. Problem definition is one way of organizing information and assigning personal meaning to it, although as  (1981) states, "reality is always more complex, inchoate, contradictory, and inexplicable than our images and metaphors of it."

In problem solving area, importance of solving the "right" problem has long been acknowledged. One great problem solver,  is quoted in (1975) as saying that "The formulation of a problem is often more essential than its solution, which may be merely a matter of mathematical or experimental skill."  coined the term Type III Error for solving the wrong problem to emphasize the importance of avoiding it ( 1968). With ill-structured problems,  (1973) suggest that "The process of formulating the problem and of conceiving a solution is identical, since every specification of the problem is a specification of the direction in which a treatment is considered."

 

A problem definition provides the frame through which current conditions are perceived to be in conflict. In management science, the significance of solving the right-problem has been recognized increasingly since the 1970s. It has been widely noted that the understandable human tendency to quickly eliminate a problem, coupled with the proliferation of effective solution techniques, tools, and technology encourages a "solution-mindedness", that is, focusing on solution alternatives too soon at the expense of defining the problem first ( 1975; 1968; 1973). However, failure to pay due attention to this issue has the potential of jeopardizing the effectiveness of an entire problem solving activity. Solving the wrong problem may prove to be more detrimental than ignoring the problem altogether. Even though the interest in this area has been growing, neither the theoretical work that is being done nor the time, effort, and resources devoted to it in organizations, seem near the amount justified by its importance ( 1976; 1981).

The study by  (1976) has focused on the entire problem solving process and yielded interesting results regarding problem definition phase. They analyzed this phase in two sub phases: recognition and diagnosis. Recognition is where the problem is sensed and the need for problem solving is acknowledged. It starts with the accumulation of the stimuli of the problem, as stimuli build up beyond an "action threshold" (a point where problem cannot be ignored), action is evoked.

Then the next step is diagnosis in which management tries to understand the stimuli and establish cause-effect relationships in the situation. And this involves a process of information gathering "to clarify and define the issues." Challenge, of course, is the diagnosis task where the problem is defined. Of the 25 cases that  (1976) studied, 14 involved some formal treatment of diagnosis task. In the rest of the cases, there was no evidence of it indicating that whatever the definition of the problem was when the stimulus was initially perceived, that definition was taken for granted.

At this level, individuals with varying abilities, biases, motives, and hence different views on the problem at hand have to interact within the defined and the informal power structure of an organization with the purpose of achieving what will be the official definition of the problem. How these individual factors combine and yield a resultant effect is a complicated issue. It has to do with the culture, politics, and implemented strategies within the organization. For instance, an organization in which a lot of creative people are employed does not necessarily display creative action (1995).

Then there are organizational factors influencing the way a problem gets defined. Whether the individual or organizational factors affect the problem definition more is possibly too difficult a question to answer. There have been efforts in investigating it although so far inconclusively (1998). Organizational problems are in general complex problems that are always accompanied with time pressure. "Time pressure" is known to bring out irrational reactions in people ( 1977). It can also be responsible for leading them to the use of simple heuristics such as careless analogies (1983).

 (1980) analyzed some of the factors or "themes" that come out during the problem definition phase in the organizations in the sample of study mentioned in the previous section. "Political pressure" is probably the most potent factor on the organizational level (1982). They identified the ways in which politics play a part in definition (or formulation) process: fear of retaliation by the politically powerful, e.g. fear of identifying a problem that results from a past error by an upper level executive; desire for the acquisition of power; and the use of political power to influence the problem-formulation process. Political concerns, they found, can cause people to cover up the problem or withhold essential pieces of information. Some on the other hand, may accept the powerful people's definition of the problem without question because of political fear.

Organizational attitude or culture towards problems and change is also important in this respect. Lyles and Mitroff (1980) found "avoidance and denial of problems are related to the use of political influence to stabilize the organization in the long run." However, trying to preserve the status quo by not attending to problems generally results in having to deal with them later only after they have become more severe.

One prescriptive model put forth by  (1989) that seems to accommodate for many demanding aspects of organizational problem definition processes. A quick comparison of the descriptive models of problem definition ( 1976;  1981) summarized earlier in this article and Smith's prescriptive model indicates the most substantive tasks that do not seem to get a fair share in real world processes: first three tasks in the "Development" phase of the prescriptive framework. Development phase is where most of the political battles of organizational problem definition are played out. Overt and effective treatment of this phase is crucial in attaining timely and healthy closure on the problem definition process.

This is also very important in increasing the likelihood of successful implementation of eventual solutions. Direct involvement of all interested parties when possible, or at least indirectly accounting for their objectives and values, are necessary conditions of a successful problem solving effort.

 

Issues on Problem Audit

 

 

Complexities arise because people have different expectation levels. Each person has a different perception of reality. Before progress is possible, the manager must initiate a general understanding of what the problem is.

When the problem is defined, gather facts that will help you form a solution. This task can be as formidable as defining the problem. Facts that help to solve the problem have to be:

Ø  Meaningful and related to the problem or the results.

Ø  Reliable in which a decision must be based on unreliable facts is guaranteed to be a bad one.

Ø  Timely in which decisions should be based only on known and available data. What you don't know or what will be available tomorrow is worthless today.

Ø  Tempered with intuition. Management has had a death grip on decisions the last few years. It's refreshing to see intuition or management by the seat of your pants returning.

 

After gathering the facts, use what-if questions to develop alternative plans. Each decision has three basic elements:

·         All decisions involve choices between alternatives. The goal is to choose the alternative that has the lowest cost and the highest chance of success.

·         The decision-making process involves logic, intuition and emotions. It impacts people's lives. Consider all factors equally.

·         The purpose of a decision is to achieve a predetermined goal.

 

However, there are still two factors in which would influence the problem definition process. These include individual factors and organizational factors.

Individual level

As far as problem definition task is concerned, the problem solver perceives the raw data and processes these perceptions far enough to recognize the "task environment", that is, the components of the problem or the terms in which it is presented (1972).

Next, the individual transforms this into his "problem space" which is the problem solver's mental representation of the task environment: it is his interpretation of where the goal is, where he is in relation to it, and what kinds of acts he must perform to get to it. Then depending on the way the problem solver conceived of the problem space, he uses various kinds of information drawn from the memory, or given externally, to process data so as to move towards the goal.

The process involves two basic tasks: information intake and its processing. In terms of both, the problem solver has to work within the limitations of the short-term memory and therefore in a serial manner (1982). How the data is taken in and how it is processed can vary across different individuals depending on innate and acquired differences. According to this view, what is taken in and the way it is evaluated is a function of both what is given and the brain's circuitry, not counting the effect of past learning. It goes without saying, then, that in a given problem situation, not every individual can be assumed to have the same view on that situation, even if all other factors, motives are held the same.

 (1971) had developed his well-known "psychological types". He posited two types in terms of the way the data is taken in, sensation and intuition; and two types in terms of evaluating information, thinking and feeling; and combinations of these produce different types of individuals. In short, people with sensing as primary style rely on senses, hard facts and details; whereas intuition type people tend to look at the whole situation, the relationships between things, and focus on hypothetical possibilities of the situation rather than facts and details.

In terms of information evaluation, thinking types approach problems with impersonal, formal methods, and they tend to look for similarities among different situations since their orientation is towards generalizing. In contrast, feeling types use their value judgments to evaluate information, tend to look for differences since their orientation is towards particularizing, focus on judgments of good or bad, right or wrong.

In addition, heuristics that are known to be used by human beings in new situations, and potential biases that these may introduce into the problem solving processes can also have great effects on problem definition task (1981).  (1982) studied many such heuristics, but probably the most relevant one in this case is the "adjustment and anchoring" heuristic. They found that people tend to anchor their judgments on initially presented information. Drawing inference from a similar situation is an effective way in comprehending a new situation, however, it can also become a bias if not used cautiously.

"Past experience" has been shown to have significant influence on how people approach problems.  (1946) demonstrated that it can have a negative effect when it gives people a mental preparedness to approach a problem in the same way they successfully solved similar problems in the past.  (1945) showed the same effect which he called "functional fixation". It is important to recognize this effect in problem definition activities since people may have a bias towards forcing a definition of the problem similar to ones they had success with before.

People may exhibit different behavioral reactions when faced with a new problem.  (1977) discuss two types of irrational attitudes seen under high level of stress. "Defensive avoidance" is the attempt to simply avoid the problem by ignoring information about it, or the feeling of low confidence with regard to taking effective action, or relying on others for decision. On the other hand "hypervigilance" is the typical panic behavior where the problem solver acts hastily and makes decisions based on insufficient information. Needless to say, these types of approach will practically always lead to ineffective problem defining or omitting the phase entirely.

A very important factor in problem definition is creativity. Creative people are effective problem solvers. They are generally thought of as people who can think of unusual solutions that others cannot. "Seeing a problem in an unusual way", "seeing a relationship in a situation that other people fail to see", "ability to define a problem well", or "the ability to ask the right questions" are considered as necessary traits for creativity (1981; 1959). As  (1975) put it, "it is the creative question to which a creative solution is the response."  (1959) suggests that redefinition is logically opposite to functional fixedness. Indeed, creativity can be thought of as the negation of all fixations, biases, narrow thinking. Another aspect of this is that creativity is the ability to "challenge assumptions" (1970). Each assumption imposes a limit on the problem space. Hence it is critical to establish their validity in order not to rule out alternative avenues if doing so is not justified.

 

Organizational level

Every individual in an organization differs in abilities, biases, motives and views on problems at hand. However, in organizations, a problem is not approached by every individual with the same level of interest or enthusiasm. There usually are some "owners" of the problem who have more definite views about it and who are eager to work hard at convincing others of their views. (1980) found that such a person's "credibility", which is determined by past history of success or failure, social status, education, and the methods of problem presentation, was very important in whether his view was accepted.

The level of "commitment" of some people to a particular view was a positive factor in problem formulation in 60% of the organizations, because that meant those people were concerned about the issue. In some cases, commitment had some negative effect such as delaying the process and creating bad feelings. The study found that the quality and quantity of "empirical support" for a particular view made it eligible for serious consideration, but did not insure acceptance.

 

 

Well-defined Marketing Research Problem

 

 (1994) suggests that a well-defined marketing research problem tends to have three common characteristics.

1.    The problem should be stated as a question

2.    The problem statement should express a relation between 2 or more variables

3.    The research problem should be related directly to decisions that management need to take.

 

A good problem definition should suggest the problem owners specific ways of how to consider all relevant parties or stakeholders to the situation at hand; find ways to identify all of them without forgetting or ignoring any and weed out those that need not affect the process, identify the ways in which each of the relevant ones enter the picture.

In addition, the problem definition should give the whole process a clear direction, a purposefulness; this direction being a rational combination, the "resultant vector" of all the parallel or conflicting purposes of various stakeholders (we know that with a different set of purposes, the situation at hand may not even pose a problem), a shared vision, shared values.

Also, it is important that in defining the problem it should be creative. It should see the situation with minds free from bias, institutional blindness, political fear, limits of personal cognition, limits of open or tacit assumptions.

Moreover, it is also important to be bold. In problem definition, it is important to initially look at the situation from as high above as thinkable, and define (draw the boundaries of) the problem as broadly as possible.

Furthermore, in problem definition it is important to try hard to keep from skipping over the problem definition and analysis phases, and jumping on to solving the problem; keep from solution-mindedness, from worrying about feasibility and/or available solution alternatives.

Further, it is also important to be objective. Problem definition should be fact-oriented, try to consider all relevant information in the process when it is the right time to be realistic.

 

 

 

 

 

 

 

 

 

 

 

Marketing Standardization or Localization?

Marketing Standardization or Localization?

 

Introduction

            Globalisation around the world – has been one of the most hotly-debated topics in international economics over the past few years. Rapid growth and poverty reduction in China, India, and other countries that were poor 20 years ago, has been a positive aspect of globalisation. But globalisation has also generated significant international opposition over concerns that it has increased inequality and environmental degradation. The most common interpretations of globalisation are saying that the world is becoming more uniform and standardized through a technological, commercial and cultural synchronisation coming from the West.  These perspectives equate globalisation with Westernisation.  However, there are other assessments that argue from viewing globalisation as the process of hybridisation, which gives rise to a global melange.

 

            The process of globalisation is commonly recognised to be characteristic of contemporary international developments.  Contemporary processes of globalisation have several dimensions or faces: technological, cultural, religious, economic and political. None of these is in itself good or bad. All should be understood as ambiguous, with potential for good and evil, but in the current phase of globalisation it is important to distinguish the different faces of globalisation and identify with a potential to pursue the good. Globalisation implies two distinct phenomena. First, it suggests that political, economic and social activity is becoming worldwide in scope. Secondly, it suggests that there has been an intensification of levels of interaction and interconnectedness among the states and societies (1991). Among these relations are those created by the progressive emergence of a global economy, the expansion of transnationals links which generate new forms of collective decision-making, the development of intergovernmental and quasi-supranational institutions, etc. (1990). Consequences of globalisation are controversial and not necessarily positive. Severe questions rise about the accountability of such diverse international organisations and agencies as the International Monetary Fund (IMF) and North Atlantic Treaty Organization (NATO), which challenge the very idea of sovereign state.

            On the other hand, the term “globalisation” is elusive and multifaceted; although globalisation is a real and dramatic intensification of existing international patterns, we need not accept its current direction as inevitable. Critics of present global developments call for the development of popular accountability on the part of national and global institutions, for more public control over these institutions, for a true internationalism, and for just alternatives to the criminal activities of international financial institutions (2000a; 2000; 2000;  2000). Ideally, external pressures on international financial institutions such as the World Bank will lead to substantive internal reforms, or to the demise of such institutions.

What is the role or the warranty of law in responding to the controversies of globalisation? Although law and legal forms play a central role in facilitating and warranting the global exchange of persons, capital, and culture, the place of justice in this world order is not clear (1997). Advancing human rights demands its own law, one that is independent of national law and sometimes deliberately at odds with states ( 1997). A movement on behalf of indigenous peoples seeks to establish a universal declaration of such rights, quite independent of the law established by conquering colonial powers. The United States (along with other leading Western powers) has claimed a commitment to human rights and has challenged other countries on human rights issues, but this posture is hypocritical given its own dismal historical record on the implementation of such rights (2000). In a parallel vein, global business and finance engage in hypocrisy by campaigning against many forms of regulatory law in Western developed nations, while calling for adherence to "the rule of law" in developing nations (1997). The World Bank's perspective on law has been market-focused and has failed to recognize the protection of human rights and of settled indigenous communities as legitimate purposes of law (1999).

 (2002) note that the fast food industry has now extended throughout the world. Originating in the United States, fast food restaurants are often considered as a characteristic of the new global culture. These fast food restaurants are illustrated as informal, have uniform service to anyone regardless of social status and focuses on giving quick-service to its customers. The fast food industry grew out of a cultural philosophy that greatly values friendliness more than propriety, basically more than traditions of gracious living and democratic consensus over status-based divisions (1969, 1985,1991).

            Firms within the fast food industry fall into the category of a competitive market structure. According to (1997), the competitiveness of a market refers to the extent to which individual firms have the control or power to influence market prices or the terms on which their products are sold. It must be noted that “the less power an individual firm has to influence the market in which it sells its products, the more competitive the market is” (1997).

            An example of a firm competing in the fast food industry is McDonald’s Corporation. McDonald’s Corporation is one of the market leaders in the fast food industry. It has more than 30,000 local restaurants which serves nearly 50 million people in more than 119 countries each day. McDonald’s Corporation is one of the most popular and valuable brands in the fast food industry. The corporation recognized that in order to be successful, the corporation has to be flexible and adapt to the changes that society may bring

            In particular, this paper will be concentrating on McDonald’s Corporation with regards to its strategic marketing planning. This paper will be discussing the importance of understanding competitors and how this understanding may facilitate successful planning of marketing activities. The purpose of this paper is to give the researcher wide knowledge over strategic marketing planning and apply this knowledge in assessing the strategic marketing planning of McDonald’s Corporation in particular context with its competitors such as KFC. An in-depth analysis of fast food industry is required as to facilitate the researcher in its aims for the paper.

Strategic Marketing Planning

 Strategy is very important for any organization as it offers the direction the organization would like to pursue to attain its objectives. In the recent years, the integration of strategic planning and functional marketing has been perhaps the most relevant development in the field of marketing management as marketing managers have all the more realized that tactical marketing decisions must be made within a wider strategic framework.

In addition, it is necessary that management of the marketing function be built upon purposively defined and analytically based marketing strategies. Strategic marketing planning offers the analytical process which develops efficient marketing strategies. The strategic marketing planning, according to Allen (2006), involves basically three stages: (1) segmenting the market; (2) profiling the market segments; and (3) developing the market segment marketing strategy. Please refer to figure 1 for the outline.

            After analysing the market segments, customer interests and the purchase process, the firm must then establish the strategic marketing plan. This strategic marketing plan document usually constitutes ( 2006): (1) situational analysis – Where is the company now? – i.e., characteristics of the market, key success factors, competition and product comparisons, technology considerations, legal environment, social environment and problems and opportunities; (2) marketing objectives – Where does the management want the company to go? – i.e., product profile, target market and target volume; and (3) marketing strategies - What should the initiatives be taken in order to attain its objectives? – i.e., product strategy, promotion strategy, pricing strategy, distribution strategy and marketing strategy projection.

Industry Analysis

            Upon close examination of the fast food industry, the researcher has assessed using Porter’s five forces model that firstly the competition in the specific industry is very strong as there are several numbers of rivals that can compete on one location as fast food is a commodity and typically, there is also low switching cost upon opting for another fast food service. In addition, these rivals may also introduce new items in their menu or introduce a totally different menu, for example, serving Mexican food (tacos, quesadillas, etc.) instead of American (burgers, french fries, etc.). it must also be noted that fast food industry rivals can compete on price.

            In terms of the threat for potential new entrants, the researcher has assessed that it is rather weak as it is very difficult to establish a chain which will serve as many international locations such as McDonald’s Corporation. Also, the cost of entry is very expensive especially is planning to expand as globally as McDonald’s. It must also be noted that it is also difficult to beat the brand name value of McDonald’s as it has been established and well-known for decades already.

            Next, as for the bargaining power of buyers, the researcher has assessed that in the fast food industry, it is very strong. As noted earlier, fast food is a relative commodity. Basically there are a lot of other fast food chains to choose from because the market structure is competition. Moreover, buyers usually have no incentive to be loyal. So what if they choose another fast food? Furthermore, switching cost or opting for another fast food restaurant is relatively low.

            After that, the researcher has assessed that the bargaining power of suppliers is weak. Just like fast food chains, their suppliers are providing commodities with a market structure of strong competition as well; hence, there are still many suppliers to choose from. In addition, this competition among suppliers may facilitate driving down prices as well.

            Another company that can be scrutinized is Honda.

 

Target Market and Customer Base

 

The target market and customer base of Honda is actually diverse as the company has various business operations not just in one country but several of them. Thus, for instance in Japan in which their customer base is high, the company have its plans to integrate the company’s three existing domestic automobile sales channels – Primo, Clio and Verno into one Honda channel last March 2006. This integration enabled the Honda customers to purchase and service any Honda brand automobile at a single Honda dealer and to maintain a continuous relationship with the same dealer for future sales and service needs as a means to achieve a high level of satisfaction.  In addition, Honda announced plans to introduce its luxury brand, Acura, in Japan, by fall 2008.  The Acura brand will offer distinctive products with a core focus on advanced, leading edge technologies that are always ahead of the times.

 

The goal of sales channel strategy are to maintain Honda’s ability to respond to changes in society and the automobile market and to continue to provide the diverse values desired by customers and meet increasingly sophisticated customer needs.  In turn, this will enable Honda to maximize the joy and satisfaction of existing customers earned through the three channel structure in Japan as Honda aims to restructure and strengthen its domestic automobile dealer network by creating new value for the customer through Acura brand products and through efforts, Honda steadily increased the number of Honda customers and made significant progress in achieving the autonomy of its dealers. The Japanese automobile market has now entered a stage of increasing maturity, and the surrounding society and marketplace are in a transition stage as well. In this increasingly competitive environment, the most important factor is to always continue improving the lifetime satisfaction level for the customers who have already chosen the Honda brand. Honda decided to integrate its existing channels into one Honda channel where customers will be able to purchase and service any Honda brand automobile and to continue receiving high quality sales and service from the same dealer for future needs whether that be replacing their current vehicle or adding another one. Honda also aims to build a dealer network that places the Honda brand at the forefront by maximizing use of existing facilities and manpower and by optimizing the location of sales facilities.

Aside, introducing Acura to create new value for the customer and to continue to achieve further growth and to take a big step forward in Japan Recently, the values desired by the customer have become even more diverse and customer needs are becoming increasingly sophisticated in the automobile market and will enable Honda to achieve further growth and take a big step forward in its home market of Japan as well as accelerate its effort to maximize customer joy and satisfaction and by challenging, Honda will pursue the goal of consistently achieving annual sales of more than 800,000 units.

Source of Competitive Advantage

Honda conducts its operations in Japan and throughout the world, including North America, Europe and Asia. A continued economic slowdown, recession or sustained loss of consumer confidence in these markets, which may be caused by rising fuel prices or other factors, could trigger a decline in demand for automobiles, motorcycles and power products that may adversely affect Honda's results of operations. Prices for automobiles, motorcycles and power products in certain markets may experience sharp changes over short periods of time. This volatility is caused by many factors, including increasingly fierce competition, short-term fluctuations in demand from underlying economic conditions, changes in import regulations, shortages of certain supplies, high material prices and sales incentives by Honda or other manufacturers or dealers. There can be no assurance that such price volatility will not continue or intensify or that price volatility will not occur in markets that to date have not experienced such volatility.

Overcapacity within the industry has increased and will likely continue to increase if the economic downturn continues in Honda's major markets worldwide, leading to further increase price pressure. Price volatility in any or all of Honda's markets could adversely affect Honda's results of operations in a particular period. Honda has manufacturing operations throughout the world and exports products and components to various countries. Honda purchases materials and parts, and sells its products in foreign currencies. Therefore, currency fluctuations may affect Honda's pricing of products sold and materials purchased AS currency fluctuations have an effect on Honda's results of operations and financial condition, as well as Honda's competitiveness, which will over time affect its results. Thus, regulations regarding vehicle emission levels, fuel economy, noise, safety and noxious substances, as well as levels of pollutants from production plants, are extensive within the automobile, motorcycle and power product industries. These regulations are subject to change and are often made more restrictive. The costs to comply with these regulations can be significant to Honda's operations.

Honda's financial services business offers customers various financing plans designed to increase the opportunity for sales of its products. However, customers can also obtain financing for the lease or purchase of Honda's products through a variety of other sources that compete with its financing services, including commercial banks and finance and leasing companies. The financial services offered by us also involve risks relating to residual value, credit risk and cost of capital. Competition for customers and/or these risks that are specific to the financing business may affect Honda's results of operations in the future. Honda purchases raw materials and certain components and parts, from numerous external suppliers, and relies on some key suppliers for some items and the raw materials it uses in the manufacture of its products. Honda's ability to continue to obtain these supplies in an efficient and cost-effective manner is subject to a number of factors, some of which are not within Honda's control. These factors include the ability of its suppliers to provide a continued source of supply and Honda's ability to compete with other users in obtaining the supplies. Loss of a key supplier in particular may affect our production and increase our costs. Honda conducts its businesses worldwide and in several countries through joint ventures with local entities, in part due to the legal and other requirements of those countries.

 

Conclusion

Marketing is a universal activity that is widely applicable, regardless of the political, social and economic systems of a country. However does it nor mean that consumers in all parts of the world must or should be satisfied in exactly the same way (). This is largely the effect of globalisation to the formulation of international marketing strategies, the insertion of the adaptation of such strategies to the particular country in which the MNE operates. Consumers from various countries are significantly different due to varying culture, income, level of economic development, and so on. Therefore, consumers may use the same product without having the same need or motive, and in turn may use different products to satisfy the same need. The issue of globalisation suggests that the quality of management processes explains why some global marketing strategies fail while others succeed, contrary to conventional wisdom that management processes for global marketing should not be highly centralised and standardised since not enough attention is paid to the inputs of local management and the learning process across the different markets. Some studies investigate the linkages between standardisation of marketing and other functions such as sourcing, manufacturing, research and development, and find such linkages to be important. The ability to carry out global marketing strategies also depend upon comparative management attributes.

 

 

 

Marketing Planning and Implementation

Marketing Planning and Implementation

 

Introduction

            Market planning is a continuous process. A marketing plan must be revised annually, on the basis of what's working and what's not, and according to new goals, services, or target markets. Remember that it's necessary to assess your changing goals and target markets in the context of your organization, and to offer new products and services as needed. Business succeeds by creating and keeping customers. They do this by providing better value for the customers.

            Marketing management constantly has to access which customers they are trying to reach and how they can design products and services that provide better value. But the problem in marketing management is the environment they are operating is constantly changing. Marketing planning is the process of adapting to the changes in the environment in order to survive and decision making of the necessary changes in the marketing mix.

            Marketing plan is important to identify resources of competitive advantage, gain commitment to strategy, get resources needed to invest in and built the business, inform the stakeholders in the business, set objectives and strategies and to be able to measure performance of the business.

            After all has been planned, implementation then follows. The hardest part of the process is the implementation because this is when the whole planning will be put into action.

Definition 

Strategic Planning

            Strategic planning can be used to determine mission, vision, values, goals, objectives, roles and responsibilities, timelines, etc. It is a management tool. It is used for one purpose only, to help an organization to do better job, to focus its energy, to ensure that the members of the organization’s direction in response to a changing environment. Strategic is a disciplines effort to produce fundamental decisions and actions that shape and guide what an organization is, what it does, and why it does it, with a focus on the future. It is strategic planning because it involves the process of preparing the best way to respond to the circumstances of the organization’s environment, whether or not its circumstances are known in advance. Being strategic means being clear about the organization’s objectives, being aware of the organization’s resources, and incorporating both into being consciously responsive to a dynamic environment. It is planning because it involves intentionally setting goals and developing an approach to achieving those goals.

            Strategic planning aims to exploit the new and different opportunities of tomorrow (1980). The strategic planning process consists of six identifiable stages: environmental scanning, evaluation of issues, forecasting, goal setting, implementation, and monitoring. Strategic planning determines where an organization is going over the next year or more, how it's going to get there and how it'll know if it got there or not. Typically, the process is organization-wide, or focused on a major function such as a division, department or other major function.

            Strategic planning is one of the only ways a top management team can plan for economic, demographic, competitive, technological, and regulatory changes that affect the way your organization operates.

            Strategic planning is a continuous and systematic process where people make decisions about intended future outcomes, how these outcomes are to be accomplished, and how success is to be measured and evaluated. Strategic planning will help you capitalize on your strengths, overcome your weaknesses, take advantage of opportunities, and defend against threats to your organization. It offers a systematic means of analyzing the economic and competitive prospects for your business and helps in charting a long-term course of action. Strategic planning must be a dynamic process.

            The main objective of strategic planning is to strengthen the management decision making process by having it recognize and address key internal and external factors that affect the business. It is undertaken to improve organizational performance and serves as the foundation for future management actions including the business and operational plan. It is also a means for the organization to adapt its services and activities to meet the changing needs of its environments. It helps the organization relate to what it should be doing to meet the needs of its clients. Strategic plan will help define strategies that meet the external and internal challenges facing your organization

            Foremost, the strategic planning process will help you to build a vision for the future describing the characteristics, qualities and behaviors you wish to see in your organization and to which all can subscribe. The process can improve efficiency and effectiveness as well as decision making in the organization. The planning process will also enable you to recognize and take advantage of opportunities emerging from today's business environment. Apart from contributing to the subsequent business and operational planning cycles, a significant benefit of the strategic planning process will be the team-building that takes place among decision makers within the company.

Strategy        

            There are different views on the definition or the concept of the strategy. Here are some of the views of different authors.

            Firstly, the concept of strategy has been borrowed from the military and adapted for use in business. The word "strategy" comes from the Greek strategos, referring to a military general and combining stratos (the army) and ago (to lead). Strategy also refers to the means by which policy is affected, accounting for  famous statement that war is the continuation of political relations via other means.

            According to  (1969),  definition of strategy as "the art of the employment of battles as a means to gain the object of war" is seriously flawed in that this view of strategy intrudes upon policy and makes battle the only means of achieving strategic ends. Concluding his review of wars, policy, strategy and tactics,  arrives at this short definition of strategy: "the art of distributing and applying military means to fulfill the ends of policy."

             (1979) notes that strategy entered the management literature as a way of referring to what one did to counter a competitor’s actual or predicted moves. also points out in that there is very little agreement as to the meaning of strategy in the business world. Some of the definitions to which Steiner pointed out are that strategy is what the top management does that is of great importance to the organization. It also refers to basic directional decisions which are the purposes and missions. Strategy consists of the important actions necessary to realize these directions. Strategy answers the questions: what should the organization be doing and what are the ends we seek and how should we achieve them.

             (1994) points out that people use "strategy" in several different ways. As defined, strategy is a plan, a "how," a means of getting from here to there. It is a pattern in actions over time. It is position which means it reflects decisions to offer particular products or services in particular markets. Moreover, it is perspective which means a vision and direction. argues that strategy emerges over time as intentions collide with and accommodate a changing reality.

            According to  (1980) in his book, The Concept of Corporate Strategy, "corporate strategy is the pattern of decisions in a company that determines and reveals its objectives, purposes, or goals, produces the principal policies and plans for achieving those goals, and defines the range of business the company is to pursue, the kind of economic and human organization it is or intends to be, and the nature of the economic and non-economic contribution it intends to make to its shareholders, employees, customers, and communities."

             (1986) argues that strategy is about competitive position, about differentiating yourself in the eyes of the customer, about adding value through a mix of activities different from those used by competitors. It means deliberately choosing a different set of activities to deliver a unique mix of value. Thus, strategy is both plan and position.

             and  (1980), of Kepner-Tregoe, Inc., define strategy as "the framework which guides those choices that determine the nature and direction of an organization. urge executives to base these decisions on a single "driving force" of the business. Their argument on the definition of strategy is a matter of mainly as a perspective.

             (1993) takes a similar view as with which he claims that decisions about which products and services to offer, the customers to be served, the market segments in which to operate, and the geographic areas of operations should be made on the basis of a single "driving force."

            Thus, strategy has been borrowed from the military and adapted for business use. It is about means. It is about the attainment of ends, not their specification. The specification of ends is a matter of stating those future conditions and circumstances toward which effort is to be devoted until such time as those ends are obtained.  

            Strategy is concerned with how you will achieve your aims, not with what those aims are or ought to be, or how they are established. Strategy is one element in a four-part structure. First are the ends to be obtained. Second are the strategies for obtaining them, the ways in which resources will be deployed. Third are tactics, the ways in which resources that have been deployed are actually used or employed. Fourth are the resources themselves, the means at our disposal. Strategy and tactics bridge the gap between ends and means.

            Strategy is the joint province of those who govern and those who manage. Means or resources are jointly controlled. Those who govern and manage are jointly responsible for the deployment of resources. Those who manage are responsible for the employment of those resources but always in the context of the ends sought and the strategy for their achievement. Strategy emerges from the pattern of actions and decisions. Strategy is an adaptive, evolving view of what is required to obtain the ends in view.

            In short, strategy is perspective, position, plan, and pattern. Strategy is the bridge between policy or high-order goals on the one hand and tactics or concrete actions on the other. Strategy and tactics together straddle the gap between ends and means. Therefore, strategy is a term that refers to a complex web of thoughts, ideas, insights, experiences, goals, expertise, memories, perceptions, and expectations that provides general guidance for specific actions in pursuit of particular ends.

             Another definition is that strategy is the direction and scope of an organization over the long-term which achieves advantage for the organization through its configuration of resources within a challenging environment to meet the needs of markets and to fulfill stakeholder expectations.

Differences

            According to  (2002), strategy is not the same as strategic planning. Here are some of the differences between strategy and strategic planning.

            Strategic planning and strategy differ in their emphasis on the assumed environment. Strategy is generally considered to assume that current knowledge about future conditions is sufficiently reliable to ensure the plan's reliability over the duration of its implementation. Strategy views future as predictable. It assumes current trends will continue in the future years.

            In contrary, strategic planning assumes that an organization must be responsive to an environment that is dynamic and hard to predict. Strategic planning views the future as unpredictable. Strategic planning expects new trends, surprises and changes. It views planning as a continuous process.  Strategic planning stresses the importance of making decisions that position an organization to successfully respond to changes in the environment. The emphasis is on overall direction rather than predicting specific, year-by-year, concrete objectives. The focus of strategic planning is on strategic management which is the application of strategic thinking to the job of leading an organization to achieving its purpose. Most strategic plans discuss priority goals no farther than five years out, with operational objectives identified for only the first year.

            Strategic plans outline core strategies which is the primary focus of the organization's resources to best achieve its mission, and usually contain a description of longer-term program and administrative priorities which are the long term goals and objectives. A strategic plan may also include or primarily emphasis is the actions to be taken in the next year. This considers a range of possible futures & emphasizes strategy development based on assessment of the organization's internal (strength and weaknesses) and external (opportunities and threats) environment. In contrary, strategy focuses on setting long range objectives. It assumes a most likely future and emphasizes working backward to map out a year-by-year sequence of events.

            The question that strategic planning is trying to answer is “are we doing the right thing based on our current understanding of environment? How can we best use our resources to achieve or mission?" While in strategy, the question is “what should we be doing each year for the next 3-5 years?

            One distinction between strategic planning and strategy is that strategy often are largely an extrapolation of the present mission, issues, opportunities, etc. into a predictable future rather similar to the present. Strategic planning assumes turbulence and changes, ponders future alterations in missions, markets, and customers, considers a variety of trends that may impact the organization, considers opportunities and threats both internal and external to the organization, and seeks possible new future issues and alternative strategies to resolve them.

            Another difference between strategy and strategic planning is that strategy is the means while strategic planning is the process to determine the means.

Similarities

            Strategy and strategic planning may have many differences but still it has similarities. One of the most important similarities between the two is that it has both goals that should be achieved in the end. Both have looking in the future for the best of the organization. Both guide any organization during turbulent market conditions. Both look into the future and provide an opportunity to influence the future, or assume a proactive posture. Both provide better awareness of needs and of the facilities related issues and environment. Both help define the overall mission of the organization and focuses on the objectives. Both provide a sense of direction, continuity, and effective staffing and leadership. Both can plug everyone into the system and provide standards of accountability for people, programs, and allocated resources.

 

Discussion

            Strategic planning provides a framework for continuous, productive change within an organization. It also provides a framework which supports the identification of issues and which provides a structure for their effective and profitable resolution.

            A strategic planning process asks important questions: What is your business particularly good at doing?  What skills and other assets underpin this success? How rare are those skills and core competencies? How does your organization benchmark against other organizations in your sector? What do your customers really want? How can you maximize profit and investment opportunities? Who are your competitors and what can you do to beat them? Who are the stakeholders in your business and where do they think the business is going?  

            The goal of Strategic Planning is to compile an environmental scan on a body of information about the environment. Environmental scanning includes the external factors that may become a problem to the organization or the threats. Broad issues should be singled out as potentially having significant effect on the facilities planning and management industry. This can provide information from clients and peer institutions. The prioritized needs and expectations resulting from the survey are crucial as a basis for setting objectives. It defines the organization’s fundamental reason for existence and establishes the scope of its business. This can broadly describe the results of what the organization wants to achieve in light of needs and relevant issues. Strategies should be specific, measurable actions and directions designed to reach the objectives established. Strategies are fulfilled through creation, continuation, change, or elimination of programs.

            A satisfactory strategic plan must be realistic and attainable so as to allow managers and entrepreneurs to think strategically and act operationally. When doing the strategic planning it is important to define the organization’s mission,   vision, values, general and specific objectives, goal, and the strategy. The three major keys to successful strategic planning and implementation are commitment, credibility, and communication. There must also be a commitment to implementing the strategies recommended by the strategic planning committee. The leaders should implement programs and services and commit allocations to meet the objectives of the strategic plan. Credibility is created and maintained through representative participation, adherence to the complete process, and clear documentation. The strategic planning committee should have representatives from all areas of the organization and adhere to the steps of the process. The committee should document all of its research and activities to serve as the basis for the strategic plan and its background materials. There should be nothing exclusive or secret about strategic planning. It should be open to all for review and input. Everyone should feel a sense of ownership over the final plan. Such personal commitment will facilitate the implementation process. It is important to explain the principles and goals of strategic planning to everyone in the organization. An additional aid to implement the strategic plan is to create an integrated system by which the strategic plan becomes the "benchmark" (measuring stick) for progress in our organization. It then becomes a system of accountability. The strategic plan can then become the context from which programs and services flow.

Conclusion

            Strategic planning is the key to assuring that our organization is prepared for the challenges of tomorrow. Strategy is the means to achieve the challenges of tomorrow. Strategy may be is not the same as strategic planning but it is still interrelated with each other. These terms just differ in some aspects.

            Strategic planning, as well as the strategy, is important in the business organization. It is important in marketing planning. It is a process in which we can through the future. It provides forecast of what well be happening in the future. Also, it the guides the business to the right track and the organization can formulate a strategies beforehand.

            Strategic plan implementation is the difficult part of the whole process because this is when the whole process would be in action. It is just important to make sure that the strategic plan has credibility, well communicated with the whole organization, and that there is commitment throughout the organization for it to be successful.

 

Marketing and Branding

Branding usually is shorthand for identifying a positive image with a specific facility or organization. Some organizations claim superior heart care or perhaps focus on the birthing experience as being the most outstanding in the community. Transformations in the business-to-business market have forced a rethinking of the concept of integrated marketing communication (IMC). (1991) An effective IMC program for today's business-to-business environment requires a carefully planned and well-managed relational customer database an orientation towards specific targeted customers and prospects and a psychology-driven prospecting sales approach. Despite the advances achieved in business-to-business IMC, however, marketers should not automatically abandon traditional media, techniques, modes and methodologies. Instead, they should combine these proven techniques with new IMC methods to ensure success. Radical innovations in marketing have never really replaced traditional techniques and have proven to be effective only when integrated into earlier models. The business-to-business marketplace, computer software and "cyberstuff" not withstanding, is for the most part made up of mature markets; and with maturity comes sophistication. It is by necessity that marketing communication is an evolutionary process. It must satisfy the ever-increasing demands and emphasis placed on it as the single surviving, sustainable, competitive edge in the marketing environment. An environment where today parity and look-alikes abound. "Customer behavior" holds the key to understanding what it is that moves specific groups of prospects closer to a decision to commit and buy. Or what it is that fortifies an already favorable buying climate. Psychology plays a vital role in the process of building customer profiles, modeling and segmenting using finite criteria. Customer perceptions and behavior are crucial to crystallizing that all important key to a successful marketing plan; identifying the individual customer within your targeted niche markets (1994).

 

 

True, a multifaceted relational database-driven approach packs a far more potent wallop than any single advertising component in terms of positioning, brand building/product awareness, and cementing that all important bond - customer loyalty. However, a mix of print media advertising, direct response incorporating customer interactive programs, public relations, sales promotion, customer newsletters, industry trade shows, symposia and conferences, hosting customer open houses, training seminars and focus groups, and producing professional and clearly defined literature, all blend to create tremendous forward momentum and yield a virtually seamless and more powerful overall IMC program. Additionally, today's arsenal of marketing tools should not exclude even the most modest of Internet web sites. CD-Rom, multi-media and floppy-disc presentations also have become staples. These elements are no longer viewed as unnecessary luxuries. They have become symbolic of state-of-the-art, forward-thinking companies. The study identified four stages of IMC development: tactical coordination of marketing communication, redefinition of the coverage of marketing communication, application of information technology, and financial and strategic integration. For the first stage of IMC development, the study found that integration involves a high level of interpersonal and cross-functional communication within the organization, across business units and with external suppliers. Moreover, organizations are proactively participating in the integration process instead of relying on advertising agencies and other suppliers.

 

 

 

Integrated marketing communication (IMC) amalgamates different communication functions to optimize resources and directly connect communications activities to organizational goals and the resulting bottom line. In implementing an IMC program, public relations professionals may audit communications-related spending across the organization, develop shared performance measures, employ database development and issues management to assess stakeholders, determine all contact points for the company and its products, and monitor internal and external trends that may influence the company. They may also develop businesss and communication plans for each local market and hire team players. They should also overcome barriers to the implementation of IMC such as fear of change, hierarchical organizations, territorial battles and functional silos, inside out communications planning, short-term planning, lack of database development and media fragmentation. Playing the game means leading the evolution by aligning communications where it can add the greatest value today. Yesterday's successes are not good enough to carry tomorrow's challenges. Value-added communications strives for two ideals: efficiency and effectiveness. The way to achieve this is by integrating the communications function into a single planning system. Called integrated marketing communications, or IMC, this process creates true accountability by maximizing resources and linking communications activities directly to organizational goals and the resulting bottom line. Also driving the need for integration is the failure of traditional mass communications to reach highly fragmented, disenchanted audiences. IMC overcomes this by working to influence the behavior of target audiences over time. Traditional mass communications influences these long-term behaviors only marginally. (1994) Thus, "given that there is a need for the public relations, marketing and advertising functions to become more aligned, practitioners in our increasingly complex environment must possess the knowledge, skill and ability to function efficiently." (1994)

 

 

Having established the importance of communication for their organizations, practitioners must acquaint top management with the IMC process itself. While the academic definitions of IMC continue to evolve, they share several elements in common: The IMC process starts with the customer or prospect and then works back to determine the forms and methods through which persuasive communications programs should be developed. Influencing or directly affecting behavior is the ultimate goal. (1993)  IMC thus becomes a "new way of looking at the whole, where once we only saw parts such as advertising, public relations, sales promotion, purchasing, employee communications, and so forth. It's realigning communications to look at it the way the customer sees it -- as a flow of information from indistinguishable sources. ( 1994)

 

 

 

 

 

 

 

 

 

 

 

Marketing in a multinational environment

Marketing in a multinational environment

There is a growing consensus that traditional western marketing methods will not work in new territories, and many companies acknowledge that they need to think differently. Three years after Kellogg's first ventured into India in the 1990s, for example, its sales stood at an unimpressive $10 million. Most Indian consumers preferred a traditional breakfast, so cereals simply didn't appeal to the mass market. Kellogg's rethought its strategy and developed a brand of "breakfast biscuits" called Chocos. Available at roadside tea stalls for 10 cents, these are now selling well.

Marketing in emerging economies can be an intimidating task. What most companies in the developed world would see as a basic marketing infrastructure is largely absent. There are non-existent or poorly developed distribution systems, relatively few communications channels and, often, unpredictable political and economic backdrops. But the potential for revenue generation is still extremely attractive. Coca-Cola, for instance, predicts that its $2 billion investment in India, China and Indonesia--which together are home to more than 40 per cent of the world's population--can produce sales in those countries that will double every three years for the foreseeable future.

The argument that consumers in developing economies are becoming more westernized does hold if you focus on the closing income gap. Today, they are far more affluent than they were before their countries liberalized trade, but they are still poor by western standards. This is the first big miscalculation that the multinationals can make. In most developing countries the mass market will remain poor well beyond the planning horizons of most companies. The proportion of consumers in emerging markets who have westernized buying preferences and purchasing power to match is tiny. Also, it is not a given that consumer tastes will converge with those of developed markets.

But marketing success will require more than increased cultural sensitivity. Multinationals have tended to approach emerging markets with assumptions that are often at odds with reality. Take segmentation, for example: fine-grained segmentation works only if its costs are low and the returns are high. Time has a low opportunity cost in nations where the vast majority of consumers are low earners. So the labor-saving benefits that sell western consumers ready-to-eat meals and two-in-one shampoos are unlikely to be effective in developing economies. Also in these nations the rich minority can hire others' time at low cost and are therefore less attracted to products positioned on their labor-saving benefits. This does not mean it's impossible to sell products such as fast food, but they need to be marketed on their status and fashion appeal rather than convenience.

Direct marketers can turn to English-language multinational lists to avoid the problems and costs associated with testing international markets. Benefits of multinational lists include mailing control packages or catalogs in English, making offers in US dollars and filling orders from the US. Performance in each country should also be monitored by comparing the number of responses received with the number mailings sent.

 

Online marketing

 

 

Online marketing = global customers: the internet has made the world smaller and has opened up global markets to every company. Jess explains how you can use your website to attract customers worldwide.

 

 

 

 

Good design for maximum usability

Many people will form their first impression of your company by its website--so your company website represents your company.

In business, people visit websites for quick information--that's why they're not phoning you--and if your website (your company) annoys them, they might not return. Although it's tempting to make your website, and therefore your company, look state-of-the-art, you shouldn't put anything on it that will slow down visitors' Internet connections, such as large images, flashing banners and pop-up windows. Always remember that different countries have different types or speeds of connection.

Many people print out pages of information from a website to read later. Make sure they can do this easily by keeping information short, and by ensuring that each webpage is a fixed width and length that will print out properly onto a standard size of paper. Try to keep images to a minimum as they take time and space to print out.

Marketing your products online

Decide who your potential customers are and make it clear from the homepage what products. goods and services your company can offer; the visitors that explore further will be the ones more likely to buy. Although it is tempting to use the homepage to publicise the company's history, success and stature, this is much better done on a separate page.

Visitors should be able to find what they want quickly, so navigation should be as easy as possible. It's also a good idea to have a link to the homepage and a 'Contact us' link on every page.

The importance of good language

The common language of business, and therefore of the Internet, is English so you need to make sure your website is written in good English, even if the content of your website is also offered in other languages. A common mistake is when somebody in the company speaks English and then thinks that they can write the English-language content. This is also true for other marketing materials. You should make sure that somebody with proper English writing skills writes your English-language content.

Always check spelling and grammar, otherwise your company will appear unprofessional. Don't just use the spell-check in the package you are using, because it won't be able to tell you that you haven't used the correct version of a word or the correct grammar--so what you are writing might not actually make sense! Even if you do not employ someone to write the content for you (and my company, Tick Communications, can do just that), you really should at least get a professional to proof-read it for you.

Your website can be an easy way of displaying your full sales brochure without incurring printing and postage costs. You can also communicate with specific customers using private areas of the website only accessed using a password or similar device.

For instance, using a private area for one client, you can provide a personalised brochure and price list, display delivery dates, deadlines, or a timetable of work to be carried out, or track the delivery of goods and services to your clients. This is particularly useful where you might experience difficulties with time zones, fax lines, postal delay or language difficulties when communicating by telephone.

Finally, once you have your website doing what you want it to do, remember to keep it updated. Check it thoroughly and regularly to make sure that all the information is still relevant, and that new prices, goods and services are included.

Glassmediaonline.com

The publishers of Glass, dmg world media, also offer an online service through our website www.glassmediaonline.com. This website keeps readers up to date on our exhibitions and conferences; provides brief information about the contents of upcoming issues of Glass and Glass International magazines; and offers on-line subscriptions to the journals.

It was introduced in response to growing demand from glassmakers for an extra source of information in addition to the journals, the Glass/Glass International Directory, and the World Glass File market study. Since then, www.glassmediaonline.com has been under constant development and further improvements and changes are planned over the coming months.

It remains a major part of the information service we provide for glassmakers.

 

Strategic Brand Management Communication Plan

Strategic Brand Management

Communication Plan

 

            Brand is a collection of images and ideas representing an economic producer, more specifically; it refers to the concrete symbols such as name, logo, slogan, and design scheme. Brand recognition and other reactions are created by the accumulation of experiences with the specific product or service, both directly relating to its use, and through the influence of advertising, design and media commentary. A brand is a symbolic embodiment of all the information connected to a company, product or service. A brand serves to create associations and expectations among products made by a producer. A brand often includes an explicit logo, fonts, color schemes and symbols which may be developed to represent implicit values, ideas and personality.

            According to  (1998), the reputation for quality, style and reliability are judged to be superior by consumers. A strong brand allows its owner to expend market share, command higher prices and generate stronger financial results than competitors.

            However, stock market analysts argued that intangible characteristics that form a brand matters. For them, “a brand is worth only as much as what flows through to shareholders.” ( 1998)

            Some marketers distinguish the psychological aspect of a brand from experiential aspect. The experiential aspects consist of the sum of all points of contact with the brand which is also known as the brand experience. The psychological aspect, sometimes referred as the brand image is a symbolic construct within the minds of the people and consists of all the information and expectations associated with the product or service.

            Marketers engage in branding seek to develop or align the expectation behind the brand experience, creating the impression that a brand associated with the product or service has certain qualities or characteristics that may be special or unique. A brand image may be developed by attributing a personality to or associating an image with a product or service, whereby the personality or image is branded into the consciousness of consumer. Therefore, a brand is one of the most valuable elements in an advertising theme, as it demonstrates what the brand owner is able to offer in the marketplace.

            A brand which is widely known in the marketplace acquires brand recognition. Where brand recognition builds up to a point where a brand enjoys a critical mass of positive sentiments in the marketplace, it is said to have achieved brand franchise. One goal of brand recognition is the identification of a brand without the name of company present.

            The art of creating and maintaining a brand is called brand management. Brand management is the application of marketing techniques to a specific product, product line, or brand. It seeks to increase the product’s perceived value to the customers thereby increase brand franchise and brand equity. Marketers see brand as an implied promise that the level of quality of people have come to expect from a brand will continue to present and future purchases of the same product. This may increase sales by making a comparison with competing products more favorable. It may also enable the manufacturers to charge more for the product. The value of brand is determined by the amount of profit it generates for the manufacturer. This results from a combination of increased sales and increase price. Brand management begins with the understanding what brand really means. 

Accordingly,  (1989) define brand as a symbol, design, or mark that enhances the value of a product beyond its functional purpose. Brand names play a critical role in the marketplace competition because brand names enhance the value of products and are difficult to copy. "For many businesses the brand name and what it represents is its most important asset which is the basis of competitive advantage and of future earnings streams. Yet, the brand name is seldom managed in a coordinated, coherent manner with a view that it must be maintained and strengthened" (1991).

(1989) has pointed out that the brand name also adds value for the manufacturer and for the retailer. But the ability of a brand name to add value for the consumer is, of course, logically prior. A brand name adds value for the manufacturer and the retailer only because it adds value for the consumer.

According to , a brand is defined as "a means of identification," or "an arbitrarily adopted name that is given by a manufacturer or merchant to an article or service to distinguish it as produced or sold by that manufacturer or merchant that may be used and protected as a trademark."

Brand management should aim to build into customers' minds a set of perceptions and attitudes relating to an offering, leading to positive buying behavior. To achieve this goal, managers must know a great deal about their customer base. The power of a brand is measured by its effect on buyers. A powerful brand will cause its customer base to either defer or refuse to purchase if the brand is not available.

Branding is comprised of two elements--external and internal to the customer ( 2006). Internal brand elements include the following:

·         Personality, which relates to customers' description of the brand;

·         Culture, or the social context within which a brand is perceived, as in the case of Mercedes' "engineering excellence"; and,

·         Self-Image, which encompasses what we feel the brand says about us

External elements include the following:

·         Physique, or the physical characteristics of the brand that makes us want to know what it does;

·         Reflection, which relates to the target user or customer being nurtured; and,

·          Relationship, that is, customers should have identifying relationship with the brand itself.

The function and art of branding is a major contributor to the success of a product or service sold by the company that markets it. In this paper, the researcher attempt to use an integrated marketing communication to bring up the reputation of a Japanese cosmetic brand, SKII, in its current crisis in China.

Integrated Marketing Communication

 (2001) suggested that modern marketing calls for more than just developing a good product, pricing it attractively, and making it available to target customers. Companies must also communicate with current and prospective customers, and what they communicate should not be left to chance.

A basic IMC principle is that communication is the foundation of all human relationships (2002). Communication is concerned with the exchange of information, ideas, or feelings and the successful development of a communications strategy requires extensive learning and coordination throughout the communications network (1999). Marketing communication is the collective term for all the communication functions used in marketing a product, and the purpose of marketing communications is to add persuasive value to a product for both customers and the company (2002;  1998l, 2002).

The distinct tools of the marketing communications mix are:

·         Advertising ( 1995;  1998; 2002)

·         Public relations (PR) (K1997;  1998; 1992;  2001)

·         Sales promotion (1995;  2000;1998; 1998)

·         Direct marketing ( 1998;  1998; 1999)

·         Personal selling (2000;  1998; 1998)

·         Exhibitions (1993; 2001;

·         Point-of-purchase communications ( 2001)

·         Cybermarketing ( 2002:, 2000;  1998)

·         Sponsorship (2000; 2000;1991;  1999;

Each component has a specific task to achieve and the message is greatly enhanced if it is reinforced by other tools in the mix ( 1998).

The five main elements of the promotional mix, advertising, sales promotion, PR, personal selling and direct-response media, outlined by Fill (1995), vary in their effectiveness across a number of different characteristics.  (1995) summarizes three key qualities including their ability to communicate, costs entailed, and control maintained by each individual tool. Each variable has a different capacity to communicate and to achieve different objectives, which highlights the fact that each tool will affect the overall marketing campaign differently.

Although marketing communications has been used for several years as an umbrella term to refer to the various communication functions used by marketing, the strategic integration of these functional areas is what makes IMC a new approach to reaching consumers and other stakeholders (1993; 2002; 1993). In an IMC process model (2002), IMC is viewed as different from other customer-centric processes in that its foundation is communication, which is the centre of all relationships and is considered to be a circular process as opposed to a linear one. The model reveals an ongoing, circular process that creates brand value in the form of sales, profits, and brand equity, and there is no starting and stopping related to obtaining, retaining, and growing customers (2002).  (2002) breaks down the major elements of his model and definition to help explain meaning. The cross-functional process means that all departments and outside agencies must work together in unison in planning and monitoring phases of brand relationships. By creating and nourishing stakeholder relationships, new customers are attracted and then interacted with to find ways to satisfy their needs and wants. The idea of profitable customer relationships is important because not all relationships are of equal value to the company. Strategically controlling or influencing all messages refers to all aspects of the marketing mix. Encouraging purposeful dialogue identifies that customers are tired of being talked at by companies and want the opportunity to interact.

IMC can thus be defined or approached in a variety of ways, although each definition suggests five key features that are significant in IMC (2000).

1.    The primary goal of IMC is to affect behavior through directed communication

2.    The IMC process should start with the customer or prospect and then work backwards to the brand communicator.

3.    IMC should use all forms of communication and all sources of brand or company contacts as prospective message delivery channels.

4.    The need for synergy, with coordination helping to achieve a strong brand image.

5.    Finally, IMC requires that successful marketing communications needs to build a relationship between the brand and the customer.

 

 

 

Integrated marketing Communication Plan for SKII in China

 

Situation Analysis

The SK-II is one of the country’s premium skin care range. The SK-II line features premium sunscreens, skin whitening and general skin care products, has been available for twenty years and is sold in 14 countries worldwide, including the US, China, Singapore, South Korea and Australia.

However, in March discrepancies came to the fore over levels of the heavy metals chromium and neodymium in the products.  Chinese government officials announced that illegal levels of chromium and neodymium had been found in 12 SK-II products. The local Chinese media began to heavily cover the story, noting that these materials could cause liver disease, blindness, skin sensitivity, and other which are relatively very frightening effects.

In March 7, a woman in Jiangxi Province said she had bought the SK-II anti-aging cream with the hope that “the concentrated treatment would work to help even out 47 percent of the deep lines and wrinkles after 28 consecutive days of use” as the ad for the product promised. Instead, the cream created an allergic reaction that left her in pain. Besides, the product was also believed to contain caustic ingredients. So the woman took SK-II and its maker, Proctor & Gamble, to court. The provincial industrial and commercial administration quickly carried out an investigation on the case. The lawsuit resulted in P&G winning on the “skin damage” claim, but losing on the “false advertising” claim. P&G paid compensation to the woman and rewrote the wording for their SK-II product claims.

But, following countless denials that its consumers were not in any danger, it now seems that Chinese authorities are now in agreement with company officials. In a joint statement between the Ministry of Health and the General Administration of Quality Supervision, Inspection and Quarantine, the report confirmed that the product line posed no danger to human health.

In addition, South Korean authorities said that they had found traces of heavy metal in the Japanese-made formulations, but that the levels were ‘too little to worry about'.

At the time, P&G said that the findings by the Korean authorities confirmed the company's claims that the SK-II line was safe. Subsequent testing was carried out both by watchdog authorities in Taiwan, Singapore and South Korea and by P&G in all the markets where the product line is sold in Asia. Evidently no test revealed that the formulations proved any threat to human health.

P&G have been relieved to know that SK-II will be back on the shelves relatively soon in China, but the damage to the brand will undoubtedly take longer to put right.

Innovatize dot com commented that P&G has no excuse not to be prepared with the situation since it has experienced these types of problems. According to it, it was just another PR problem for multinational and local consumer product in China. They suggested that P&G should have been very forthcoming about allowing funds and publicly and proactively encouraged product return just to be in the safe side on the first day.

 

Goal

            With the current situation of Proctor and Gamble’s SK-II, their main goal is to enhance the image and reputation of the said brand to the customers by improving their marketing communication specifically on their public relations.

SWOT Analysis

Internal Factors (Strengths and Weaknesses)

Internal Factors	Strengths	Weaknesses
Management	Experienced and supportive of introducing innovative products to marketplace.	Past product failures may restrict product vision.
Personnel	Enthusiastic and innovative staff assures product commitment	With many product lines, key personnel may be re-assigned.
Finance	Excellent growth potential with recurring revenue	The cost for developing the product may require extensive initial capital expenses.
R & D	There will be continuing efforts to maintain market leadership position by differentiating the product through features and enhancements.	Capital in time and money may be lost in R&D for enhancements that either do not work or will not be marketable in a successful way.

 

 

External Factors (Opportunities and Threats)

External Factors	Opportunities	Threats
Consumer/Social	There is an expanding market with strong growth potential for new sales and increased revenue	Limited access to additional markets.
Competitive	Since Proctor Gamble is a market leader, a built in market potential exist	New entrants with a strong existing market may provide competition if they include this feature in their product line.

 

Strategic Marketing Plan

Corporate identity is a valuable management resource because it affects every aspect of corporate life. A company's image, reputation and managed perception, the three components of corporate identity, influence the performance of its share price, sales, acquisitions, divestments, recruitment and other activities. Establishing a clear identity has become a difficult task due to the trend towards cross-border mergers, the growing importance of environmental concerns and the increasing similarities between products and services.

In the current situation of P&G’s SK-II, it affects it corporate reputation in China. However, there are some strategies which can be done to build up the SK-II reputation and credibility.

Although the brand is only a part of all company actions, marketing communications vehicles such as advertising, direct mail, public relations, trade shows, seminars, and collateral material play an important role in communicating brand. Thinking of these activities as brand conveyors is a useful way to understand their role. They allow you to communicate the organization and brand drivers that make up the heart of the brand.

Consistent with its objective to build up their reputation and credibility towards the customers, SKII would develop a solid message platform that clearly and consistently communicates their product features and benefits in a way that incorporates its brand principle, personality, and associations. The overall strategy serves as a springboard to infuse brand messages fully into additional strategies. Strategies that pull messages to target audiences, by using third parties to help place SKII’s messages in front of its target audiences.

Secondly, SKII would communicate would use third parties to communicate its messages and in order to establish credibility with all target audiences. Third parties include analysts, media, award givers, happy customers, and online newsgroups/list serves.

Strategies to push messages to target audiences, by putting SK-II information directly in front of its target audiences, include the Use direct communications tools to seed brand to target audiences. Tools include direct mail, advertising, collateral material, web site, and current employees.

From among the different tools of marketing communication and with SK-II current situation, we specifically use public relations to bring back the reputation and credibility of the products to its customers.

By its nature, public relations is devoted to serving particular interests by presenting them to the public in the most favorable light. The goal of the public relations is to create, through the organization of news and advertising, an advantageous image for his client, be it a business corporation, cultural institution, or private or public individual; toward an end of the making of favorable public opinion, many research techniques and communications media are used. The earliest form of public relations and still the most widely practiced is publicity. The principal instrument of publicity is the press release, which provides the mass media with the raw material and background for a news story. The growth of modern public relations is generally attributed to the development of the mass media, which accelerated the spread of ideas and increased the importance of public opinion by giving more people access to current events.

 

Tactics

A massive revolution is permanently changing the rules of marketing. This revolution is characterized by the shift of marketing dollars from media advertising to other forms of marketing including sales promotion, public relations, direct mail, database marketing, catalogs, special events, sponsorships and trade promotions.

The new conventional wisdom is that even after the current recession is over, things will never be the same as they were in the glory days of advertising. The lavish ad budgets of the past must give way to more targeted, more diverse ways to sell goods and services, maintain consumer confidence and build brand loyalty. More than ever, this will require a custom mix of advertising and promotion and direct response marketing and public relations.

And more than ever, it will require that these various elements be coordinated and integrated. It will require that the marketer speak with one voice not only to consumers but also to all those who influence their purchase decisions. That means that every component of the communications process must work together.

            Some of the tactics that can be done by SK-II to build up their reputation in China’s customers using public relations are the following.

1.    Build marketplace excitement before media advertising breaks.

      Today, most marketers recognize that the announcement of a new product offers a unique opportunity for obtaining publicity and for dramatizing the product. They also understand that the news of the new product must precede the advertising break. Once the advertising is seen by the consumer, the product is no longer news to the media.

2.    Build a core consumer base.

Marketers are increasingly recognizing the value of maintaining consumer loyalty since it costs far less to keep a customer than to get a new one, especially in these days.

Organizing and cultivating brand faithful has proven to be an effective way to maintain consumer loyalty--it's not just movie and rock stars that have loyal fan clubs.

3.    Build a person-to-person relationship with consumers.

      Personal advice could be given directly to the customers of SK-II on how to apply the cosmetic products they offer.

4.    Turn satisfied consumers into advocates.

SK-II will be compiling all users of their cosmetic products. Questionnaires will be sent to SK-II users. Based on the responses and follow-up phone and personal interviews with promising prospects, SK-II will identify role models in selected markets who had both attained success with the product and achieved their personal or professional goals.  Satisfied users of the product will be the spokesperson for the brand. They will be booked for extensive media interviews in their market interviews which focus on messages on the effectiveness of the SK-II cosmetics which can not be advertised.

5.    Influence the influential.

Many public relations programs are designed to target influencers rather than consumers. The influencer may be an authority figure like a teacher, a doctor or a pharmacist. But it could be someone that has a different kind of one-on-one relationship with the consumer, someone like a beautician. A famous model could also be used to promote the product.

Performance Evaluation

The evaluation of the campaign will be based on how well we reach our target market and achieve our communication objectives. First, we will be analyzing consumer response to the advertisements on the various media. Simply stated, we want to see if our ads are effective enough to catch our target market’s attention and interest. Second, we will be evaluating customer experience with our product. We plan to accomplish this through surveys at the events we sponsor and through mail and telephone calls to registered owners. In this way, we can achieve a better understanding of the effectiveness of the both the advertising and the product itself.

Most marketing communication projects are kicked off with a creative brief or creative platform--a form that is filled out by product management and marketing communication management that describes the project's purpose, audience, content, message, and tone. Brand-savvy companies include a place on this form to fill in what brand messages will be woven or, at the very least, how the piece will strengthen the brand. This brings the role of brand up to consciousness, an important part of keeping branding efforts on track.

 

 

 

 

 

Marketing

Marketing

Introduction

Marketing is the process of building a positive predisposition in a potential customer's subconscious mind. It is every action and activity that leads to developing a trust relationship and getting a person ready to make a purchasing decision. It starts with defining who you are and what you have that other people need. It is a process of research, planning and communication to reach a specific goal. According to  (2003), marketing is the process of creating customers for your services in enough quantity and in a timely fashion to generate profits and be successful. It is an investment in the future of your business. Consistent with the objectives of this plan to create sustainable awareness and brand positioning, marketing communication strategies are identified to the advantage of the said product.

            But according to  marketing is just starting. It is yet to meet many more challenges. In their article “Marketing in the UK”, they conducted a survey as to how many of their respondents used the fundamentals of marketing in their businesses. Only about 1/3 of their clients claimed that marketing is a big part of their businesses and is constantly in use. Furthermore, only about 18 percent knew of recognizes its high value and thus have greatly affected their company. Many of businessmen, not only in the UK but around the world need to value the existence of marketing (2000).

            There exist primarily four ways to up a firm’s marketing and financial state (1999).  According to Ruskin-Brown, one or a combination of the four can be used all at the same time. These ways are:

·         Increasing sales volume

·         Increasing Price

·         Cutting costs

·         Reducing Investment

The combination of any of the ways can be predicted in pre-defined patterns. For exampling, if one is to combine price and the volume in sales, the revenue increases dramatically. According to , the initial three options are “within the remit of the organization’s management”, thus can be implemented easily. However, the final option rests in the jurisdiction of the Board (1999).

In book, one of the key concepts of marketing is positioning and market segmentation.  According to the same author, at the peak level, the market segments into two: one- the group who inputs money to the company (consumers, customers, investors); and two- those who often use up the monitory resources of the company (employees, suppliers, and channels) ( 2001).

            The marketing teams of companies must be able to use positioning and market segmentation concepts on target markets. The most important choice that an entrepreneur must make is to know which of the target markets would be potentially beneficial and how these target markets would react to the marketing strategy applied to them (2001).  

            However recent articles and studies point out to the ethical dilemmas faced by marketers and their host companies. According to previous researches, target consumers and marketers have different perceptions as to the issue on marketing ethics ( 2003). According to the same authors, marketers should fist consider consumer interest and marketing ethics before implementing their plans.

            According to , marketers should take their time to carefully study and evaluate consumer views and their idea on marketing ethics before hand (1997). This would cement the idea of marketing ethics to the company’s planning and strategy formulation processes ( 1997).  “Ethical Implications assessment” is greatly needed before putting into action any marketing plan.  Furthermore, one must take into consideration financial, market, and competitive objectives, consumers’ interest and ethical integrity before making any marketing judgment (2003). But according to , International and even local companies choose to implement a myriad of techniques in order to implement their marketing strategies despite many public outbursts in recent times (1987).

            Marketing should also focus on ethics concerning marketing segmentation and implementation. However, it is always up to the company as to whether they would choose to employ this marketing strategy or not. It would always be up to the consumers if the strategy would be effective or not.

PUMA

Puma

 

Introduction

            One of the most popular brands of shoes nowadays is Puma. One can only surmise how the shoe company been successful in the shoe business. Not only they are popular because of the company’s history but of its inventiveness ingenuity, fusing sports, lifestyle, and fashion.

 

Timeline

            The history of Puma dated back in 1924 when the brothers Dassler founded the "Gebrüder Dassler Schuhfabrik" in Herzogenaurach, Germany – a every successful company which fitted many an athlete with Dassler shoes at the Olympics in 1936. The most prominent was, of course, Jesse Owens.

In 1948, the brothers decided to separate and set up their own companies to avoid further arguments. Adi Dassler founded Adidas, and Rudolph Dassler founded Puma. It is in the same year Puma also introduced its first football shoe, the PUMA Atom.

In 1958 PUMA's signature formstripe was introduced. This would begin the intense battle between Puma and Adidas to get their shoes onto the feet of world-class athletes that would span the next several decades. This intense race to market new technologies spawned copyright and infringement lawsuits until 1960 when Puma, behind in sales by a nine to one ratio, paid West German track star Armin Hary to defect from Adidas and wear Puma shoes. In 1962 Pele becomes the World Cup champion for a second time while wearing Puma shoes. Six years later, the Puma leaping cat logo as we know it today was launched. The same year Puma had a number of successful models, including the "King" soccer shoe worn by Eusebio at the 1968 World Cup and the "Suede" (later called the Clyde) worn by the Black Power runners Thomas Smith and Lee Evans at the Mexico City Olympics. In total, four ahtletes bring home gold medals while wearing Puma; Tommie Smith in the 200m, Lee Evans in the 400m, Willie Davenport in 110m high hurdles, and Bob Seagren in pole vaulting.

The first success wearing Puma shoes in American football Quarterback Joe Namath – known as Broadway Joe – in his Puma shoes leads the New York Jets to Super Bowl III in 1969.  

In 2000, a great history of Puma, its foray into sports couture ware, it enters a partnership with Porsche and Sparco for fireproof footwear for racecar fans.

In 2001, Puma and Yasuhirp Mihara Puma enters further partnerships, it teamed with Jordan Grand Prix to enter the world of motor racing. Moreover, Puma launched an international cooperative line of footwear by the Japanese designer, Yasuhiro Mihara, which blended the look of sport and fashion. Travis Pastrana, world champion motor-cross races was also signed.

In 2002, concept retail stores of the company opened in Europe, Seattle and Melbourne. Further on, Puma announced a partnership with Neil Barret in 2003. Now it the shoes span sports, lifestyle, and fashion, and Puma has become also the official supplier of footwear, and fireproof racewear of the BMW Williams F1 team.

            The collaborative partnership between Puma and designer Philippe Stark was in 2004. The partnership’s revolutionary footwear collection was also launched in the autumn of the same year. Furthermore, Puma AG and Mild Seven Renault F1 team sign a multiyear contract.

With the popularization of urban styles, Puma shoes are in high demand. One of the most popular styles of Puma to date is the Roma, launched in 1970 in celebration of the Rome Olympics. The reissued versions remain highly in demand as do many reissued versions such as the Puma Suede, Puma Basket, and Puma Clyde originally launched in the 1980's. While Puma sales only account for a small portion of the overall athletic shoe and apparel market, the company has been successful in expanding into niche markets like yoga and motorsports shoes, apparel and accessories and the brand continues to dominate on the world soccer stage because of its stylish cutting edge designs and dedication to change and innovation.

Discussion

            Puma has this as its strategy, “to be the brand that mixes the influences of sports, lifestyle, and fashion.” And true enough the shoe company has been trying to fuse the creative influences from the world of sport, lifestyle, and fashion. In order to achieve the company is set to achieve these goals with the brand template emphasizing PUMA’s distinctiveness, individualism, spontaneity, internationalism, and sporting heritage. One of the leading Puma products are: Puma Roma, Puma Suede, Puma Sky II, Puma Basket, Puma Clyde, Puma SpeedCat, and Puma Easy Rider.

Much of Puma’s inventiveness and way of thinking was to Tony Bertone. While Nike and Adidas spent most of the past decade maintaining the ridiculous charade that they manufactured sportswear solely for sports use - despite the fact that 85 per cent of all trainers are bought for non-sports use, and trainer companies churn out hundreds of variations that blatantly cater to a fashion-conscious consumer - Puma argued that, actually, people wore sportswear as leisurewear because they applied a sports approach to their leisure lives. Puma's new public manifesto would be "the brand that mixes the influence of sport, lifestyle and fashion". Bertone says: "I was targeting the sneaker enthusiast, not the guy who buys shoes for running. The days of buying a pair of trainers to fit in are gone. Nowadays I see more people making arguments to buy something to be different." So Puma moved the goalposts. It continued to develop clothing for athletes, but launched several leisure-friendly ranges including the Sports Lifestyle collection, collaboration with the fashion designer Jil Sander; and Nuala, a yoga clothing line with supermodel Christy Turlington. By diversifying, by being honest about the type of consumer it was targeting and by admitting that it was OK to buy trainers just because they looked good, profits soared and the company found itself relevant once again  (2002)

According to  (2002) there are those, however, who feel Bertone's strategy of fashion tie-ins and lifestyle-led brainwaves - the most recent being the company's 96-Hour Suitcase, a collection of everything the modern man might need on a 96-hour business trip, neatly tucked away in an aluminum suitcase - has been a short-term fix, one that has ultimately damaged the company. They feel these ideas detract from Puma's heritage as a serious sports label; the very thing trainer spotters co-opt brands for in the first place.

Marketing Strategies

The company focuses initially on sports-oriented individuals and then later on, after realizing that regular people are its bigger market, shifted its focus to it. Teenagers, mostly males, are the shoes’ largest market. And most of them are from Germany and other European countries.

Sports like football, basketball, and soccer are some of the company’s focus, especially on its design inventions. In fact, Puma wants to be the no. 1 brand in soccer shoes. Puma will be shaped into a value-price-point, soccer-oriented brand for the 25-plus age group and will begin earning a profit by 1991, said Michael Grindfors, president of Etonic Tretorn Puma, during the recent Super Show here. Grindfors said the company is going to become the number-one (brand) in soccer footwear and apparel, but it will be in other categories. The new Puma product, which retailers may begin previewing in July, could be delivered by the end of the year.  

Aritmos' early-February acquisition of Puma boosted Etonic Tretorn Puma sales to more than $900 million worldwide, but the Swedish-owned company has not begun applying the brakes. A golf and tennis ball company with "good brand names and turnaround" potential would fit in nicely as a fourth brand and has put the company on the acquisition path once again, Grindfors noted. The possible acquisition, he said, may take place in the next 12-18 months

            Aside from that, Puma also is gaining strong connections in the entertainment world, Puma opened a flagship store in Los Angeles last June, the first-ever for the firm. Located in the Third Street Promenade, the 3,000-square-foot store carries a complete line of apparel, footwear and accessories. The store is decorated in a mid-century, modern style with Noguchi tables, Le Corbusier chairs,'60s sofas, and bright, red glass walls. Designer Stephen Kanner described the approach as cosmopolitan and a departure from more traditional sportswear stores. "We opted for a boutique feel to distinguish Puma from its hard-sell competitors," he said ( 1999).

In addition to its Hollywood connection, Puma also has a strong customer base in Tinseltown. "Los Angeles is one of our most successful Puma markets," stated Amber Fredman, Puma's director of marketing. "There is a demand for Puma in that area, which made it a legitimate testing ground for our retail business." Fredman said that more Puma stores are planned pending the success of the Los Angeles site (Foot News 1999).

Puma's marketing plan (1999) also comprised of introduction pumabusiness.com in December for company news and financial updates, simultaneously with an modernized version of its present site, puma.com. Fredman said the updated site will be an added sales outlet for some of Puma's riskier products and styles that have limited brick and mortar channels. She added that Puma must prove itself to retailers again in regard to basketball and cross-training products. The site will help with this.

Plus, Puma is also venturing out football category after a decades-long hiatus. In running, the Cellerator, a high-end style, was created for spring 2000. New cross-training products are in the works for fall 2000. And, in a bid to take advantage of Puma's popularity among the alternative and extreme-sports customer, the Lateral collection, which includes the Aqua, Snow, Dirt and Cement lines, is in the concept stage for Puma Worldwide. According to Fredman, a limited number of carefully chosen styles from this category will be offered to the United States in spring 2001 ( 1999).

 

Brands

            Developed to address weaknesses inherent in foam, which was the industry standard in mid-sole construction for decades, Puma's CELL system was the first mid-sole component not dependent on foam for performance. Based on honeycomb-shaped Polyurethane Elastomer cells, PUMA's CELL system ensures cushioning, stability and durability for more than twice the distance provided by foam-based shoes. Unlike foam, which breaks down by one-third within 300 miles of wear, PUMA's CELL technology maintains 90 percent of its original cushioning properties for up to 600 miles (1997).

            PUMA set also its television campaign -- a retro-futuristic perspective on PUMA's revolutionary advanced CELL technology -- was developed over the past two months by Gyro Worldwide, the highly acclaimed Philadelphia-based advertising agency that specializes in marketing to the alternative youth culture, and was produced as the first commercial endeavor by Jonathan Dayton and Valerie Faris, producers of the 1996 MTV music video of the year, "Tonight Tonight" by the Smashing Pumpkins. PUMA named Gyro Worldwide its advertising agency of record in September 1996 ( 1996).

Such advertising campaign set the stage for a major turnaround of the PUMA brand in the United States, and comes on the heels of PUMA AG's announcement last month of its strategic partnership with Monarchy/Regency Enterprises, a leading Hollywood film producer or co-producer of such blockbuster hits as "Pretty Woman," "A Time To Kill," "JFK" and "Free Willy." Monarchy/Regency's standing in the entertainment business enables PUMA to further step up its marketing efforts in the United States  ( 1996).

 

Essence of brands

According to Maura Keller in the brand management game, it's all about how to make the market (which are the people) know your products and your brand. Branding is the ground that places the "big picture" perspective into focus and determines where a company takes and makes its future. It's the philosophy and core behind all business development  (2005)

Further on,  (2005) added that the sure-fire way how to understand brand is to associate it to a company's reputation. More specifically, a brand is all the thoughts, feelings, associations and expectations that the customer experiences when exposed to a company's name, trademarks, products, buildings, signs, symbols and people. Brands are far more than just a marketing concept or an asset on the company's financial statement. A brand--whether it is corporate or product brand--includes all visual and verbal elements that are combined to communicate the brand promise. Consistently and accurately executed, the brand's corporate or product mark, collateral and advertising become an instant communicator of the essence and value represented by the brand and the company.

The role of brand management plays in any business. A business must have a brand to be competitive in the market, because clients and consumers will be using the brand as something to direct them to buy, and to somehow understand and differentiate the product. In many categories having a brand is no longer an option, but now is the price of entry. Moreover, many products are so similar that the brand is the only thing that is different. In many cases it is the consumer's perception of the brand that shapes their view of the product itself  (2005) Because bad brands or having no brands at all have its greater consequences, such as inconsistent messages, failure to differentiate, inconsistent and ineffective corporate identity, improper employee training, and neglect of public.

Creativity isn't just in the way a brand is developed, but it also resides in the marketing communications you use to communicate your brand to the marketplace. LaPoint has found that public relations play a key role in building company brands. "The No. 1 way a PR campaign can build one's brand is through credibility," LaPoint says. "Nothing builds a brand more than good press. You can spend all your money on advertising and still not get the same results as through good PR, which is practically free. Seeing a company's name in print, whether in a press release, a news bite or a feature article, will stick in the minds of one's target audience more than an ad, simply because of the mentality: 'Hey, I read about them so they must be good.' Anyone can purchase an ad but it takes a special company to get in a story."  (2005)

Puma Trainer

Photo Courtesy of Amazon.com

Puma v1.06 Trainer comes with red, white, and black color, and is made up of a super light fiber that is covered with a PU coating for an extremely thin but leather like upper for an incredibly low weight. Integrated in its body is a lace system for clean kicking surface. TPU injected, external heel frame. It has DuoCell in the heel and EVA forefoot. The out sole is composed of Ever track rubber. The shoe is best for any sports, most preferably basketball, football, soccer, volleyball, and tennis. Its light weight enables the person to move with ease, without having trouble maneuvering in different steps and moves. Not only that, the shoe, with is groovy style can be best worn in any casual occasion giving everyone that sporty looks, confident personality, and cooler get up.

Its brand - Puma v1.06 Trainer – is very essential to marketing since it exudes the impression of being sporty (trainer) and hip (its style). Stressing the point that those who wear sporty look always exudes the atmosphere of being confident.  

Brand Positioning

Puma	Brand N
The brand that mixes the influences of sports, lifestyles, and fashion	Shoes include different styles of Sports, lifestyle, out-door, fashion, and beach.
Foamless (CELL system)	With foam-based shoes
“Pick me up” in its hang tags	Ordinary hand tags

 

 

As written above, while Nike and Adidas spent most of the past decade maintaining the ridiculous charade that they manufactured sportswear solely for sports use - despite the fact that 85 per cent of all trainers are bought for non-sports use, and trainer companies churn out hundreds of variations that blatantly cater to a fashion-conscious consumer - Puma argued that, actually, people wore sportswear as leisurewear because they applied a sports approach to their leisure lives. Puma's new public manifesto would be "the brand that mixes the influence of sport, lifestyle and fashion" (2002)

This way, the shoes enthusiast – he may not necessarily a sports-oriented individual may have the choice to buy the shoe since it is solely for sports-inclined people.

PUMA's CELL system ensures cushioning, stability and durability for more than twice the distance provided by foam-based shoes. Unlike foam, which breaks down by one-third within 300 miles of wear, PUMA's CELL technology maintains 90 percent of its original cushioning properties for up to 600 miles ( 1997). And another new marketing scheme also includes a picture of the Puma cat on the cover of the box highlighting one eye of the animal. On the store shelf there will be bright orange hangtags stating "pick me up." "We have to get people to pick them up," said the Puma senior vice president John O'Rourke. "Once we get the consumer to pick them up, we've got them."

            Furthermore, Puma has positioned its lightweight business around the word "quick" and will use that word as a marketing tool.

"The bridge that people make is that a quick athlete is a better athlete," said O'Rourke of the new brand positioning, which includes the catch phrase: "Puma, The Quickness of Light."

            Such ventures of marketing styles and tools help consumers to appreciate and if not differentiate the shoe from other branded shoes. “Pick Me Up”, for example, although comically done, ensured to rivet people to look it out. Once this being looked out, chances are they will be able to notice, enquire about the shoes, and best of all, if they like it, and buy them.

Celebrity Endorsement

            The effectiveness of celebrity advertising has been linked by some authors, to the process of social influence. In a seminal work, authors had it distinguished two forms of social influence. The first, termed "informational social influence," refers to "influence to accept information obtained from another as evidence about reality." The second, "normative social influence," refers to the influence to conform to another person or group  (1989)

The perfect celebrity endorser is Paul Bettany, him a not basketball player and sports superstar, but an actor who the main cast in the movie Wimbledon.

            The Wimbledon is a romantic comedy about a washe-up tennis pro (take note: a sports individual) named Peter Colt and an up-and-coming tennis star called Lizzie Bradbury during Wimbledon Championships.

            And this is necessary, since Puma shoes stick to its goal to mixes sports, lifestyle, and fashion is what the movie and Paul Bettany are all about. The movie is all about sports and so, those who are sports-inclined persons would want to buy the shoes since it is featured in this great sports movie, and at the same time, those who are not so much with sports would still want to buy the shoes since Paul Bettany, a non-sports personality, wears it. Likewise, with the fashionistas.

Special Interest

Today’s retail industry must contend with a changed economic climate characterized by a recession, tight credit, a shortage of money, and high overhead. In addition, smarter consumers have made the job of retail management more complex. The changing business and economic climate necessitates that retailers obtain access to capital to finance new niche marketing strategies that target consumers. Merchant bankers can offer financing and support services to the retail industry (1993)

Nevertheless, since Puma shoes were virtually sold out long before through retailing environment they would still sell best in the years to come. As long as people still find to shop, and they still stroll along malls and other retailing sections, Puma would still sell. The marketing tools like putting “Pick me up” hang tags would enormously help in the selling. Advertising thru media like television and billboards help also in the awareness of the company’s products. What about online? Amazon.com, ebay.com, and a host of online shopping sites also help gain shoppers. Not only they give the most detail of the items, they can also be very convenient. 

           

Discuss the main challenges faced by a company producing products or services in China for sale on the domestic market.

Discuss the main challenges faced by a company producing products or services in China for sale on the domestic market.

 

Introduction

            Competition, typically the most powerful external force, is increased by the advent of globalization. The number of companies and the number of countries where these companies operate and the way governments are dealing with the impacts of globalization is accelerating. The interaction of changes in government policy and business innovation has actually made globalization even faster. If a company does not become a global, it would simply be shut out of new markets. This is what pushed firms around the world to adopt Corporate Governance. Also, a company must be able to make contact with its consumers. According to most theories on strategic management, the customer is the ultimate judge of competitiveness; that is, by buying the products of a firm, the customer indirectly decides which firms will continue to exist and which firms will go bankrupt. (2002). The reasons for the turmoil are numerous: a sputtering economy, increased global competition, the implementation of new technologies that displace jobs, the deregulation of certain industries, and the general consolidation of other industries, such as banking and health care. Observers will see a continuing progression in the ruinous steps which have forced the industry into a socio-politico-economic corner. The industry is likewise linked closely to the policies of governments, the earnings of banks. The industry’s approach to dealing with political institutions has not always been brilliant. It tends to be good on technical issues, although it has not always fully presented the longer-term options, in order to make the choices and their implications clear.

                        Globalization is a word often used but vaguely defined. Globalization is understood as the integration of the economic, technological and social advancements of the countries around the world. The advancements in the aspects of technology and science have brought the world together. The first attempt of globalization was in the era of colonization and discovery. Today, globalization plays a major part in the betterment of the economy of many countries. But many have also failed to see the gap that globalization can bring to underdeveloped countries.

The impacts of globalization on the business world are many, but the most important is competition. All of this competition is pushing multi-national companies into strategic responses. As global competition increases, many companies are forced to reevaluate their position in the global marketplace. For some companies this entails strengthening their domestic position against competing foreign products. Other firms respond by expanding their undertakings into foreign markets. For many, collaborative/cooperative agreements with other businesses are an effective alternative to the more traditional approaches (1993). In effect this would create a problem for those who are responsible for the management of companies. Management of companies, especially multi national companies, has to apply the appropriate strategies needed to respond to the opportunities and pressures created by the process of globalization of business.

Globalization is universal and inescapable. It affects economic, political, social, cultural, technological, and environmental conditions. Increased integration of the world’s economies offers widespread opportunities for development of nations across the world. This enforces on countries, institutions, business organizations and individuals to conform to universal standards, rules, norms, expectations, and requirements.

Countries have embraced outward-oriented economic policies and have lowered barriers such as import tariffs and open themselves up to investment and trade with the rest of the world. This increases the integration of economies around the world, particularly through trade and financial flows. The formation of a universal market open to all countries around the world, on all continents, facilitates increased international trade in goods, services and foreign investment.

Some countries are becoming integrated into the global economy more rapidly than others. Most countries that have been able to globalize their economies are experiencing reduced poverty and faster economic growth. As living standards increase, it became possible to make progress on other issues such as social equality, environmental and labor standards and other economic issues.

            The same goes true for businesses. International business is increasingly developing multi-national networks composed of alliances, affiliates, licensees, and other partnerships. The most rapidly changing route for large multi-national companies entering overseas market / international business is through a growing variety of joint ventures and strategic alliances (1993).

Multi-national companies have come to characterize global business, and to dominate industries and national economies. Multi-national companies evolve from domestic firms that go beyond simple exporting and importing activities to acquire foreign affiliates. The growth and prosperity of the company become interlinked with business linkages to foreign firms. As the business linkages deepen between the two companies, the need for broad coordination and cooperation emerges (1995).

Many companies increasingly understand the significance of a growing global marketplace. They realize that exporting and establishing overseas ventures are no longer the only choices they have in participating in international business. Cooperation, like in the form of an alliance, with businesses abroad is becoming significantly evident as an alternative response (1993). Alliances have become an important strategic option in international business (2002).

            The presence of an emerging worldwide market underscores the necessity for firms to develop strategies that will enable them to compete successfully on a global scale. Although many strategies are available for companies to pursue -- cooperative contractual relationships, strategic alliances and joint ventures, and the establishment or acquisition of overseas production facilities -- the need for globally oriented companies to get their products into foreign markets is paramount ( 1993).

A strategic alliance means forming a long-term collaboration between at least two firms without one firm fully owning the other. A strategic alliance presents two distinct properties: long-term commitment and contribution to strategic performance of the partnering firm(s) (2002).

Strategic alliances are not a guaranteed formula for successfully competing in international business. Many companies believe that alliances are necessary to reduce the risks associated with operating in an uncertain and fast-changing global marketplace. Yet the nature of alliances is essentially one of a trade-off between risk-sharing and innovation. Risk-sharing may help ensure that a company obtains or maintains a competitive position in the short run, but innovation and the ability to adapt to changes in the world market are far more important in determining a company’s position in the long run ( 1993).

In collaborations and alliances there may well be factors that remain hidden. Not all technologies are disclosed to the partners and some knowledge will remain confidential. For example, Coca Cola has many franchise bottlers whose job is to process and bottle the condensed Coca-Cola syrup, but the recipe for which is never disclosed. The bottlers understand this and make a profit by working at the lower end of the value chain (2001).

 

China’s Markets

            Despite many years of development, risk management remains problematic for the majority of organizations. One common challenge is the human dimension, in other words, the way people perceive risk and risk management. Risk management processes and techniques are operated by people, each of whom is a complex individual, influenced by many different factors, the problem is compounded by the fact that most risk management involves people working in groups. The issue of corporate social responsibility is increasingly becoming the object of attention from government, opinion formers and institutional investors. Until now, the way in which environmental liabilities should be reported has been rather vague. ‘Managing Environmental Risk’ looks at the different types of risk, the legal issues, and how risk can be mitigated using insurance and other financial measures. It clearly explains the relationship between environmental issues and business performance and how companies can meet the challenges.

            Given the influence of economic and political factors, there is a risk that regulatory attitudes may stiffen again. Some people believe that in good economic times the public becomes more concerned about the quality of the environment, with politicians and regulators following suit, and that in lean economic times, jobs and the economy become the primary concern with the environment suffering. If so, one can expect the attitude of environmental regulators to swing back and forth like a pendulum in sync with the ebb and flow of the economy. The environment change pose distinctive challenges to the creation of an adequate knowledge base concerning both the environmental perturbations and the vulnerability of human and ecological systems to the shaping of appropriate societal responses, and to the enhancement of the capability of the current global state system to respond effectively (1999). The capabilities are important because in many industries environmental issues can significantly affect companies' financial results (1995). Unless environmental issues are handled in ways similar to those used to manage other business risks and opportunities in those companies, then environmental control will remain an internal regulatory function superimposed on the company's core business concerns rather than become part of the process of maximizing shareholder value ( 1992).

            Competition between business organizations put pressure on the company to produce products of excellent quality at a competitive price which won’t bring about a negative return of investments. Sometimes, the lack of resources, manpower and capital and the high demands for a product would influence business organizations to employ strategic collaboration. As stated, two obvious examples of this would be increasing adoption of global products standards in IT industry and homogenization of consumer demand through the world.

Globalization in effect raises the expenses needed to run a company into staggering amounts. Sometimes, the company won’t be able to cope up with such financial demands and thus would rather collaborate with other companies than suffer loses or worse be closed.

The motivations for strategic alliances are complex and varied. The major external forces behind international strategic alliance formation are often interrelated and may stem from varying causes. The key identifiable current factors seem to be the globalization of markets and technologies, the shortening of product life cycles, and the consequent need for enterprises large enough to take advantage of scale and scope economies, and to be able to access adequate resources and competencies. Other factors exist in specific situations (1998).

A motive behind the conclusion of strategic alliances is the need for speed in reaching the market or the need to compete in all major markets. In the economic world of the 1990s, first-mover advantages are becoming dominant, and often the conclusion of an alliance between a technologically strong company with new products, and a company with strong market access is the only way to take advantage of an opportunity in time.

Alliances are the fastest means of achieving market goals to meet an opportunity, if the partners each have strong resources and competencies, but alone insufficient to achieve critical mass.

A second reflects the continued importance of national boundaries: government preferences for 'local' firms in industries such as aerospace where an alliance with a national or regional firm may be a necessary requisite of sales to either the military or a national airline.

The most important motivation for alliance formation, however, is the increasing cost, risk, and complexity of technology. The high cost of technological development has encouraged companies to collaborate to share both the costs and the risks of this activity. The need to limit financial risk is a further factor advancing alliance formation as opposed to merger/acquisition or organic development. Even the world's largest and most international companies can no longer 'bet the company' on the next generation of semiconductors or jumbo jets; in many industries the cost of a competitive R&D budget has risen to the point where it is no longer possible to 'go it alone' (1999).

In other cases, collaboration may take the form of interaction between assemblers and component suppliers - a common situation in the automotive and electronic appliance sectors.

            The need for strategic environmental management will only intensify as affluent consumers demand better environmental quality while economic growth presses increasingly on ecological constraints.

Business managers and analysts could use this approach to:

- uncover hidden liabilities or risks in potential acquisitions;

- estimate the value of investments that would reduce environmental exposures;

- measure the self-insurance value of environmental control programs;

- benchmark a company against its competitors; and

- communicate its environmental strategy to financial analysts.

 

There prioritizes issues according to their likely significance for future earnings and risks. Companies have positioned themselves differently with respect to these environmental issues mainly through decisions taken in years past for broader business reasons. Where mills and forestlands are located, what products they turn out and what technologies are imbedded in the capital stock are historical factors that largely determine companies' exposure to impending environmental issues. Just as a company's present exposures are determined by past decisions, a company's current environmental management decisions will determine its future exposures.

There was a study at Yale School of Management signifies that companies can affect the way financial analysts evaluate their environmental issues by developing a consistent internal position on how the environment adds value to their business by linking environmental performance data to key financial valuation criteria by collecting broader data on the financial implications of environmental risk and opportunity by developing better techniques for quantifying and comparing the financial impacts of environmental risks and opportunities and by placing relevant environmental financial data into the mainstream of their communications with analysts and investors (1997). To be useful, the financial implications of environmental issues must be expressed in a way that can be incorporated into the valuation frameworks currently used to assess conventional business risks and future prospects. For each company and each scenario, the financial impacts on revenues, production costs, investment spending, and the value of owned assets were estimated individually for all years of the forecast period and then reduced to discounted present values using an estimate of the firm's weighted average cost of capital. Thus, the scenario was related to each company's shareholder value. Thus, environmental issues create winners and losers among companies, depending on their exposures and potential compliance costs. When industry and environmental experts participated in scenario development, they were asked to use their best judgments to assign probabilities to the occurrence of each scenario. Since many of the impending environmental issues are one-time occurrences, the use of judgmental probabilities of this type is appropriate and unavoidable.

            An example of an international business in china is the Ocean Park. Obviously, the tourism industry plays an important role in the world, no matter environmentally or on the economy. It is believed that the tourism planning within the industry is extremely significant. In Hong Kong, tourism has been a very important aspect in their economy. For this paper, one of Hong Kong’s main tourist attractions, the Ocean Park will be examined with regards to its core competencies and competitive advantage.

            Since its opening in January 1977 as a non-profit organization, the home-grown Ocean Park has developed itself into an attraction connecting people with the nature by attracting more than 76 million tourists by the end of last year. Ocean Park has also been named one of the "10 Most Popular Amusement Parks in the World" by Forbes.com ( 2006). The company sees this recognition as a source of pride for their staff and the people of Hong Kong. The park will continue to offer new and exciting attractions as well as events and programs to bring people closer to nature. It was also chosen by Hong Kong citizens as the most favorite scenic spot in Hong Kong last year.

There prioritizes issues according to their likely significance for future earnings and risks. Companies have positioned themselves differently with respect to these environmental issues mainly through decisions taken in years past for broader business reasons. Where mills and forestlands are located, what products they turn out and what technologies are imbedded in the capital stock are historical factors that largely determine companies' exposure to impending environmental issues. Just as a company's present exposures are determined by past decisions, a company's current environmental management decisions will determine its future exposures.

 

CONCLUSION

Therefore, the pervasiveness and complexity of risk presents strong challenges to managers. Perhaps the most important challenge is to coordinate the management of risk across areas within an organization. There is based on developing scenarios for significant future environmental issues and seeing how companies are likely to be exposed and financially affected under each scenario. It uses probabilities derived from past experience and expert judgment to weight the possible scenarios and uses these weights to forecast a likely financial impact and to construct measures of financial risk. In constructing scenarios, the first step is to identify environmental developments that are likely to have significant financial impacts that are significant environmental issues might emerge throughout the product life cycle.

 

ARE CONSUMERS TRULY “OVERLOADED” WITH MARKETING INFORMATION – OR NOT?

ARE CONSUMERS TRULY “OVERLOADED” WITH MARKETING INFORMATION – OR NOT?

 

Introduction

 

            Providing information clearly, concisely and in a consumer-friendly way -- whether through fliers, packaging, advertising, the Web and/or personal service -- can be an important tool for supermarkets and brands. Information overload is a problem that keeps on growing -- as do the number of technological solutions. We all know and experience the problem firsthand on a daily basis. There's just too much data coming at us from all directions - journal articles, newspapers, e-mail, web pages, Internet discussion groups, intranet information, notes databases, phone mail, and more.

            As businesses continue their intense competition for new customers and strive to retain the ones they have with increasingly frequent promotional campaigns, information overload has become a common ailment among your customers. Consider that the average consumer has to wade through a daily flood of mail and telephone solicitations; television, radio and print advertising; blimps, billboards and other media blitzes. While consumers are looking for value as never before, they are becoming increasingly frustrated by the torrential flood of information they must digest, and understand. The result is that communications have less and less impact. And the return-on-investment for marketing efforts is squeezed thinner and thinner.

            The taking in or information of the consumer and how this affects consumer behavior is affected to a large extent by the process of perception. This, in relation to information overloading, will be discussed in this paper.

 

Body

 

An attribute of desirable markets include adequate and reliable market information which is provided to market participants, both producers and consumers ( 1999). However, researchers report that consumers are confused by an abundance of less-than useful information about virtually every product’s specific benefits, correct dosages, uses, contents, and many more. This though has not stopped consumers from sampling and even buying products.

            The collection and dissemination of marketing information involves not merely the passive receipt or acceptance of information offered by sellers but active efforts to collect data from other sources, such as governmental institutions and trade associations. Moreover, the collection of information would be of little value unless it is interpreted and disseminated with skill and intelligence. No small part of business success is attributed to the skill with which specialized marketing research departments and companies collect, analyze, and distribute factual information that serves as the basis for marketing decisions. Also, some marketing institutions such as brokers and resident buyers owe their existence, in large part, to their skill in obtaining, analyzing, and distributing information concerning sources of supply, prices and price trends, and other market conditions ( 1999).

Qualitative studies suggest that many consumers who go into a store specifically to purchase a supplement come out without buying anything. They're so confused that they become paralyzed. This kind of situation not only happens with buying supplements. This happens in all other things. Due to vast information being fed to consumers, unwanted and wanted, consumers become confused of what to buy.

Communications glut in the marketplace is more than just an inconvenience, it's also the reason the reader never finds the needle in the haystack. Customers may have difficulty understanding essential information or may entirely miss what the marketing department has worked so hard to develop and disseminate because of too much useless information. The end result is a waste of time and money ( 1997), on both the parts of the consumers and marketers.

The solution to this is to provide only the useful information that could help the consumers and not confuse them instead. Home Depot is an expert in its category on providing useful information to customers in the form of signage, books, magazines, workshops, fliers and in-store help. All of these assist the shopper through the decision process (1999). An understanding of how consumer perceptions affect consumer buyer and behavior is also important.

A major goal for providing marketing information is to have an enduring emotional impact on an audience by facilitating their creation of personally relevant understandings of an advertisement. Perceived utility is the key to a marketing program's impact - does it contain information that people can understand and use? Marketers should give structure, order and access to marketing information through the use of graphic devices and text formats that help users navigate and understand complex data. Cognitive learning theories are also tapped to create appropriate hierarchies for complex information (1997). This is achieved through a process of cocreation in which consumers integrate marketing information content with their own attitudes, beliefs, and values to produce the meaning of an advertisement or commercial ( 2006).

            Several researchers in the area of consumer behavior have studied how people organize knowledge in a categorical manner in memory. However, early work in psychology on categorization and time also asserted that there seemed to be basic temporal categories, and that these are part of larger networks of on-going cognitive processes (2001).

The creation of a full sensory and emotional experience for the customer can open marketing opportunities in the future, but there has been little research work carried out in recent years on the potential of haptic perception as a marketing tool (2002). The buying decision for materials is a complex process as it represents a mixture of technical, economic, and emotional factors that determine the motivations and actions of the consumers (2006).

There is a lack of scientifically based information concerning the sense of touch, either as a direct experience with a product or regarding the contact with our skin, but we know that touch is a very important factor in many products and services ( 2004). The role of touch and its implications on customer behavior (1992) or the importance of touching products during the buying decision process and the lack of it in non-touch-media like e-commerce and mail order ( 2003) have been researched.

The reconstructive view of memory holds that the memory for the same event is different each time it is recalled and that the person doing the recalling is unaware of these changes. We present an experimental paradigm that assesses advertising's influence on consumers' own memory of their beliefs. It has been demonstrated that advertising can unconsciously alter consumers' beliefs as reflected by a change in how consumers recall their earlier reporting of these beliefs following an advertising exposure.

That is, advertising that causes consumers to remember differently earlier (preadvertising exposure) reported beliefs and in which the change is in the direction of the advertisement's message is an advertisement that contains information the consumer has unconsciously adopted as their own and therefore is likely to be personally relevant and to have an enduring impact on their emotions (2006)

            Consumers and marketers generally distinguish between two types of information used to make decisions: internal and external. Internal information is that which the consumer has gained through experience; external information is information they may have encountered that attempts to influence their beliefs. When making their decisions, consumers prefer to believe they are relying on their own internally generated information because "people rarely derogate themselves as sources of information" (2006).

Many researchers have sought ways to measure a marketing information tool such as advertisements integration into consumers' internal belief systems. For example, consumers may be asked to rate their involvement in the advertisement, their emotional reaction to the advertisement, or the personal relevance of the advertisement. Such measures rely on questions about the advertising itself but often fail to reveal the true impact of the advertisement on consumer cognition. These measures may be biased by other information such as brand "liking," which may result in a "halo effect" that distorts how a person responds to the copy test questions. More broadly, such measures depend on the consumer's ability to self-report; and as mentioned in the initial paragraph, consumers may not be able to do that accurately. This may be in part due to cultural factors, where consumers tend to discount the influence of advertising ( 2006), and in part due to cognitive factors, in that they might not have the ability to accurately access that information ( 2004).

Due to the increased phenomenon of stimulus satiation, it is more important than ever to ascertain how the properties of a material are perceived with our senses. If marketing strategies place more emphasis on increasing consumers' perceptions of a product, this could lead to more sustainable impressions and reactions in the purchasing process. In the marketing aspect, perception was considered the cutaneous stimulation and the kinaesthetic stimulation that convey significant information about objects and events ( 1998).

 

Conclusion

 

            Consumer behavior is affected by marketing information that consumers themselves get. Marketing information is helpful in that it provides the consumers the information they need about the product or service before buying it. However, too much of a good thing is bad. Too much information chokes the consumer instead of helping them. The value of perception is also important in consumer behavior. Decisions are affected by consumer’s perceptions on certain products and services. This affects decisions more than the other marketing information that they get. As mentioned, if marketing strategies place more emphasis on increasing consumers' perceptions of a product, this could lead to more sustainable impressions and reactions in the purchasing process. This is more helpful than overloading the consumer with too much useless information.

 

 

 

INTEGRATED MARKETING COMMUNICATIONS: THE CASE OF HSBC AND W/W ELECTRONICS LIMITED

INTEGRATED MARKETING COMMUNICATIONS:

THE CASE OF HSBC AND W/W ELECTRONICS LIMITED

 

Concept

 

            Integrated marketing communications is a strategy utilized by a company by coordinating “advertising, sales promotion, personal selling, and publicity in order to present a single consistent image for the product and the company” (2005). The concept also refers to the process of unifying all the promotional activities of a company “to deliver a consistent and positive message” because of the recognition that all the possible contact points of the company with customers is significant starting from the person at the reception desk to the chief executive officer. ( 2005)

 

            Every company that wants to maximize all the channels of communication with customers should utilize its resources to develop a single integrated message to be communicated by all the members of the organization to the areas of the market that they reach. Next to the message, the manner of communications and the people identified as recipients of the message, and the purpose of the message should be identified. Thus "All Marketing Communications should be 1) clearly positioned, 2) directed to a particular target market, 3) created to achieve a specific objective and 4) undertaken to accomplish the objective within budget constraints (2003)".

Benefits of Integrated Marketing Communications

           

            Utilizing integrated marketing communications have several benefits, which are corporate cohesion, client relationship, interaction, motivation and participation (1999). Corporate cohesion refers to internal unification of the efforts of the company and the external communication by the all members of the organization to the target market. When all the members of the organization are aware of the message that the company wants to convey to the public and the objectives attached to the message then all members of the organization are united by the company objective and the message being sent. When the company is united on the message to be communicated to the public then the unified efforts are magnified because of the single message that organization members are all communicating.

 

            The communication of a single, clear message by the members of the company results to the development of client relationships that serve as the competitive advantage of the company. Customers are better able to remember a company, brand or product if they receive a consistent message from the organization through the different channels of communication. HSBC is a company that communicates the message that it is the world’s local bank. This company gives the message that it is an international company but despite its global operations, the company has a firm hold on local communities, because it takes time to know the specific needs of every market. Employees adjust to the circumstances of their customers. Transactions through the teller involve conversations in the language that the client is most comfortable and in a manner that respects the beliefs and practices of the domestic market. The same message is conveyed through television advertisements.

 

            Integrated marketing communications provides an organizational atmosphere conducive to the free flow of communications. The exchange of ideas ensures that creative and logical ideas are contributed and the development of a message, the identification of the approach and strategy of communication, and the system of accomplishing the project constitute the best plan for the company.

 

            Integrated marketing communications motivates the members of the organization. When a group of people in-charge of the different areas of marketing is involved in the process of developing an integrated marketing communications plan, creative and analytical ideas are exhausted resulting to an excellent plan created by a team of experts. Sending a single message also motivates the members of the organization because everybody starting from the people in the reception area to the delivery personnel and up to the managers are made to think of ways of communicating the message through their tasks. Since HSBC claims to know the needs of the local market then the tellers should know the acceptable manner of making transactions and negotiations in the local branch.

            The result of the utilization of integrated marketing communications is a plan attributable to all the divisions of the organization. There is no internal politics because everybody contributed to the plan and its implementation and everybody takes responsibility for the result of the plan.

             

Developing a Single Organization Message

 

            A single organization message means that the company communicates a uniform message in all the channels of communication that the company is utilizing for a brand, product, service or company name. This does not mean that the company chooses to send a single message through a particular channel only. HSBC is a company that communicates a clear message for the type of service that the company offers to domestic markets in different countries. It does not market a particular service, only the mastery of the local market that the company stands for. Wiseworld Electronics Limited on the other hand is a company based in Hong Kong engaged in the trade of electronic products of Samsung and Fairchild Semiconductors. The company communicates the message that the company retails quality electronics products at a wholesale price. The company does not manufacture and produce products of its own but it sells the quality brands Samsung and Fairchild. This means that the success of the company’s marketing communications plan depends in part upon the brand equity of the products it sells. Despite the difference in characteristics, both companies have identified the message that they want to convey to the public.

Positioning of Integrated Marketing Communications

 

            The marketing mix helps organizations develop an integrated marketing communications plan based on the consideration of product, price, place and promotion (1999). These factors should also be integrated in the plan and implementation of the marketing communications strategy of an organization. ( 2004) This is because a plan will not work if the message delivery is not appropriate in terms of the product being marketed, the price relative to the claims of the company, the environment where communication was made, and channels of communication used by the company. There should be consistency between the message and the marketing mix of the company and correct positioning of the marketing communications.

 

            HSBC markets a service, so the company should makes sure that the message covers the service it offers. The company cannot claim to the public that it is the world’s local bank if its services are limited only to the cities in the different countries. Wiseworld Electronics cannot claim to sell quality electronics products if it markets products that are not known or known to be of only average or fair quality. Both companies should also weigh the price they designate in the message relative to the actual service or product received by customers. The plan will not work for HSBC if it has branches in both rural and urban areas but it imposes an excessive interest rate for loans that locals cannot afford the service. W/W Electronics will also fail to attract customers if it sells Samsung and Fairchild products at a higher price than other retailers do and it does not update its stocks to include new versions of the products it sells. 

 

            There are three areas of coordination that the company should consider in the planning and implementation of its marketing communications. These areas are brand essence, target market and the persuasion tools used to link the communication of the brand essence to the target market. (1996) In terms of brand essence, it is important that the company have a comprehensive idea of the brand marketed and the equity of these products. Brand involves tangible and intangible qualities. Tangible aspects of the brand include the visual design of the logo or symbol attached to a product or service or it is the physical appearance, packaging and warranties of a product or service. HSBC use the following name and logo to represent the services of the company.

 

Wiseworld Electronics Limited does not have a logo but it communicates the company message through its name and address in company listings and in the list of authorized distributors of Samsung and Fairchild.

 

 

            Despite the difference in the tangible brand equity of the companies both have intangible brand essence attached to their names. HSBC is known to be present in every corner of Hong Kong and in other countries. It offers finance and banking services and serve customers based on the needs of the locality. Wiseworld Electronics Limited on the other hand was able to create a network in the market through their established retail contacts and agents in Hong Kong because the market of the company includes primarily retail stores, companies that use semiconductors in their products and a certain percentage comprising of households.

 

Integrated Marketing Communications Directed at a Target Market

 

            The target market is the second area of coordination. Identifying the target market is important because this addresses the question to whom will the company send the message. Determination of the target market requires research on the best prospects for the message and the segments of the market that can influence other consumers or the audiences of the channels of communication. The best segment of the market for HSBC depends upon the services it offers. Loans and credit cards are for working single and married individuals who need to purchase houses, cars and even smaller purchases such as weekly groceries. Insurance are marketed to car and house owners, employees wanting to receive pension after retiring and businesses seeking insurance coverage for the different aspects of their operations. Wiseworld Electronics Limited targets businesses that use semiconductors or electronic products in their production, retailers and households who purchase directly from the company.

            There are also various influencers of the target population. HSBC has business partners in the areas providing a complementary service to its own. Businesses selling cars or real estate agents may recommend HSBC in case their clients want to obtain insurance for their vehicle and car purchases. Wiseworld Electronics may be recommended by long time customers, comprising of businesses, to other businesses requiring the products that Wiseworld Electronics trade. Hong Kong provides an environment for the development of strong and reliable business networks.

 

Audiences of the channels of distribution comprise the recipients of the message sent through the different channels of distribution. Apart from the recommendations of entities not part of the company, HSBC and Wiseworld Electronics also utilize other channels of communication such as advertising, personal sales and other persuasion tools. Although companies may have a target audience, the message may reach other segments of the population. HSBC commercials viewed in televisions and print media advertisements are seen by any person in the world. Wiseworld Electronics on the other hand have a smaller market reach because of the scale of its operation but nevertheless it’s the name of the company is part of the list of authorized distributors of the website of Samsung and Fairchild which means that the people in Hong Kong wanting to purchase products from Samsung and Fairchild are informed of the dealers they can contact in Hong Kong.  

           

Objectives of the Marketing Communications

 

            The third area of cooperation is the consideration of the tools of persuasion to be used in communicating the message. The tools used should be appropriate to the message and the target market. There are five main areas of persuasive tools: 1) public relations; 2) direct marketing; 3) promotions; 4) packaging and 5) advertising. The task of the marketer is to effectively communicate the essence of the company, brand, product or service being marketed. Essence that will be communicated refers to that deemed most important to the target audience.

 

The actual sending of messages happens through the different persuasion interfaces. Consumers receive the message when they are faced with actual selling messages containing words and pictures in television commercials, billboards, store promotions and other places. Target market also receives the message through trials or actual consumption. A customer of HSBC and Wiseworld Electronics will come back and make another purchase after experiencing becoming satisfied with the services of HSBC and using the products traded by Wiseworld Electronics. Customers also receive a message through the different channels but the message may be different from the actual message on the company, brand, product or service. The association may be an emotion, celebrity, learning or other ways of association. Customers encounter the message through the point-of-purchase information given by sales agents.

Marketing Communications and Budget Constraint

 

            Different companies have different financial capabilities for marketing communications. HSBC is a multinational company with resources for a marketing communications plan integrating the different channels of communication. Wiseworld Electronics is a distribution company for Korean electronics products to different companies in Hong Kong and in Asian countries without sufficient resources for a marketing communications plan targeting a global market. The nature of the business of the companies also determines the marketing communications plan appropriate to the company. HSBC targets households and employees so the marketing plan of the company is to reach out to as many households and employees as possible. Thus, the company invested in an advertising campaign shown in different international channels as well as billboards and print media advertisements. Wiseworld Electronics need to reach out to other businesses using the products it trades and to retailers. Thus the company has developed a wide spread network among companies in Hong Kong and in other Asian countries through personal business deals that the company pulled through to the satisfaction of its buyers. The approach of Wiseworld Electronics is more personal when compared to the indirect marketing communications approach of HSBC because of the difference in the circumstances of the companies. The success of these companies lies in their ability to maximize available resources in integrating all appropriate areas of marketing communications to send persuasive messages to their target markets.

Scope of strategic marketing

 

Scope of strategic marketing

Marketing is a philosophy that leads to the process by which organizations,

groups and individuals obtain what they need and want by identifying value,

providing it, communicating it and delivering it to others. The core concepts

of marketing are customers’ needs, wants and values; products, exchange,

communications and relationships. Marketing is strategically concerned with

the direction and scope of the long-term activities performed by the organization

to obtain a competitive advantage. The organization applies its resources

within a changing environment to satisfy customer needs while meeting

stakeholder expectations.

Implied in this view of strategic marketing is the requirement to develop

a strategy to cope with competitors, identify market opportunities, develop

and commercialize new products and services, allocate resources among

marketing activities and design an appropriate organizational structure to

ensure the performance desired is achieved.

There is no unique strategy that succeeds for all organizations in all

situations. In thinking strategically about marketing many factors must be

considered: the extent of product diversity and geographic coverage in the

organization; the number of market segments served, marketing channels

used, the role of branding, the level of marketing effort, and the role of

quality. It is also necessary to consider the organization’s approach to new

product development, in particular, its position as a technology leader or

follower, the extent of innovation, the organization’s cost position and

pricing policy, and its relationship to customers, competitors, suppliers

and partners.

The challenge of strategic marketing is, therefore, to manage marketing

complexity, customer and stakeholder expectations and to reconcile the

influences of a changing environment in the context of a set of resource capabilities.

It is also necessary to create strategic opportunities and to manage

the concomitant changes required within the organization. In this world of

marketing, organizations seek to maximize returns to shareholders by creating

a competitive advantage in identifying, providing, communicating and

delivering value to customers, broadly defined, and in the process developing

long-term mutually satisfying relationships with those customers.

Understanding marketing – antecedents

The fundamental management issue in marketing is to determine a superior

value position from the customer’s perspective and to ensure that, by

developing a consensus throughout the organization, value is provided,

communicated and delivered to the customer group. The core concepts

of marketing are needs, wants and demands which directly affect the identification

and selection of relevant customer values reflected in products,

services and ideas that the organization provides, communicates and delivers

in the form of exchanges to build long-term satisfactory relationships

with customers (Figure 1.1). Needs are the internal influences which prompt

behaviour, e.g. biological needs refer to a person’s requirements for food,

air and shelter while social needs refer to issues such as security, personal

gratification and prestige. Wants are culture bound and may be satisfied

using a number of technologies, e.g. a teenager may listen to music on one

of the rock radio stations or on DVDs played on a computer. Demand

refers to the ability and willingness of a customer to buy a particular

product or service which satisfies the want and the more latent need. A

student may want a BMW but can afford only a bicycle. The organization

may set out from the start or be established with those objectives

or, more likely, as a result of trial and error and experience, the organization

evolves into a position over time of being the desired source of value.

The core concepts of marketing may be decomposed into a number of

basic components:

 Provide the value

– product planning

– packaging

– branding

– pricing

 Communicate the value

– advertising

– personal selling

– directmarketing

– sales promotion

 Deliver the value

– channels of distribution

– logistics

– servicing

Successful organizations recognize value positions and ensure that learning

occurs throughout the organization as a result of discovering the value

position. Choosing the value position is one of the most important strategic

decisions facing the organization. Once chosen, it the task of management

to ensure that everyone in the organization directly contributes to delivering

the chosen value.

Marketing and sales orientations

A sales emphasis is very different from a marketing emphasis in the organization.

Four important areas where they differ separate the two approaches:

organizational objectives, orientation, attitudes to segmentation and the

perceived task facing marketing in the organization (2002). A sales

emphasis results in objectives which are aimed at increasing current sales to

meet quotas and to derive commissions and bonuses. Little discrimination is

made between products or customers in terms of profits unless these differences

are written into the incentives. In contrast, objectives with a marketing

emphasis take profits into account. Marketing objectives include an explicit

consideration of product mixes, customer groups and different communications

and ways of reaching the market in attempting to achieve profitable

sales and market shares at acceptable levels of risk.

The selling and marketing orientations produce very different emphases in

the organization. A selling orientation predominantly reflects a production

approach whereby something is produced and the task is to sell it thereby

increasing consumption (Figure 1.2). A focus on sales means a focus on individual

customers rather than market segments or market classes. Such organizations

are very knowledgeable about individual accounts and the variables

which influence specific sales transactions but they are less interested in developing

an approach to an entire segment of similar needs and wants in the market.

A technology orientation is similar to a sales orientation except that the

organization also engages in product research and development (Figure 1.2).

A marketing approach attempts to determine ways of offering superior

value to the more profitable segments without damaging individual customer

relationships. A marketing approach reflects an integrated approach based on

research and feedback. Customer needs are first evaluated through market

research, an integrated marketing effort is developed to satisfy customers so

that the organization achieves its goals, especially those affecting shareholders.

This is a customer orientation and contrasts very bluntly with a narrow

competitor orientation based on sales in which the organization by capitalizing

on the weaknesses of vulnerable competitors or by removing its own

competitive weaknesses attempts to obtain high sales and long-run profits

In many situations marketing evaluates itself and presents its case to senior

managers of the organization based on sales, efficiency or, worst of all, internal

awards, not marketplace outcomes or financial success. Senior managers deal

with issues that involve the allocation of resources and how such allocation

affects the return on investment. These hurdle rates are calculated differently

from one organization to another but they need to be understood for a

marketing programme to be effective and accepted. In a business world

dominated by financial considerations the ability of the organization to

produce award-winning marketing programmes or attractive but fuzzy images

in TV commercials is not of much value. Traditional marketing thinking

assumes that the organization is in complete control of the marketplace,

whereas interaction and market integration are required.

Strategic marketing concept

Marketing has been defined as the management function responsible for

identifying, anticipating and satisfying customer requirements profitably.

Marketing is, therefore, both a philosophy and a set of techniques which

address such matters as research, product design and development, pricing,

packaging, sales and sales promotion, advertising, public relations, distribution

and after-sales service. These activities define the broad scope of

marketing and their balanced integration within a marketing plan is known

as the marketing mix. A modification of a definition of marketing by

(2000) suggests that marketing is the management process that seeks to

maximize returns to shareholders by creating a competitive advantage in

providing, communicating and delivering value to customers thereby developing

a long-term relationship with them. This definition clearly defines the

objectives of marketing and how its performance should be evaluated. The

specific contribution of marketing in the organization lies in the formulation

of strategies to choose the right customer, build relationships of trust with

them and create a competitive advantage ( 2000). A marketing

strategy consists of an internally integrated but externally focused set of

choices about how the organization addresses its customers in the context of

a competitive environment. A strategy has five elements: it deals with where

the organization plans to be active; how it will get there; how it will succeed

in the marketplace; what the speed and sequence of moves will be; and how

the organization will obtain profits ( 2001).

The organization must identify the problem that its customers use its products

and services to solve. It is also necessary to identify the benefits customers

seek from using a product or service available in the market. A market consists

of all the potential customers who share a particular need or want who might

be willing and able to engage in exchange to satisfy that need or want.

A marketing orientation helps to define the organization’s business. Marketing

is concerned with problem solving and customer benefits. The organization

must be able to answer the following questions:

 What is the problem customers are trying to solve?

 What benefits do customers seek?

 How well does the organization’s product solve this problem and provide

these benefits?

A statement that the organization is in the movie business is not very useful.

An organization is not in the movie business because that says nothing about

customer needs. Some movie organizations assumed they were in the movie

business when the entertainment business left them behind!

Marketing is a philosophy that encourages the organization to ensure that

the needs and wants of customers in selected target markets are reflected

in all its actions and activities while recognizing constraints imposed by

society. This marketing concept first received formal recognition in 1952

by one of its leading exponents, the General Electric Organization – the

marketing concept:

Three aspects of this statement are interesting: the customer orientation; the

profit orientation; and the emphasis on integrated organization effort. These

three aspects are fundamental to the adoption of the marketing concept.

Marketingmeans, therefore, being oriented to the needs of customers rather

than emphasizing what is convenient to produce. Effective marketing requires

that the organization analyses the needs that its products are supposed to

satisfy. Customers do not buy ‘coffee’; they buy a warm stimulating drink or a

unique caf´e experience if it is Starbucks. Likewise, customers do not buy sisal;

they buy a material to make baling rope to tie things together or fibre to serve

as backing for a floor covering.

The organization should realize that many alternative products may satisfy

the needs identified; there usually are many substitutes – for coffee include

tea, cocoa, alcohol or soft drinks and for sisal include polypropylene fibre or

polythene sheeting.

The real lesson of a marketing philosophy is that better performing organizations

recognize the basic and enduring nature of the customer needs they

are attempting to satisfy. It is the technology of want satisfaction which is

transitory ( 1982). The products and services used to satisfy

customer needs and wants change constantly.

The adoption of a marketing philosophy confers specific authority and

responsibility within the organization in regard to the provision, communication

and delivery of customer value. Marketing is concerned with all parts

of the organization; it is more than a set of tools, it is an orientation which

pervades the thinking of the organization as a whole.

Internal marketing

In addition to equipping the organization to cope with the outside world

of customers and competitors, it is also necessary to train and motivate all

staff within the organization to provide the appropriate level of service to

customers. Internal marketing is very closely related to human resource management

and the way in which the organization develops its own distinctive

corporate culture. Internal marketing is the task of successfully hiring, training

and motivating able employees who want to serve customers well. It is

obvious that it is necessary to determine the organization’s internal culture

before venturing forth to serve customers in the external world. This internal

market must be motivated to react in a certain desired way which is best

described as marketing-like (1984).

Internal marketing helps employees make a strong connection to the

products and services sold by the organization. Without such a connection

employees may unwittingly undermine expectations set by the organization’s

marketing communications. When people believe in what the organization

does and stands for, they are motivated to work harder and their loyalty to the

organization increases. According to  (2002), however, in most organizations

internal marketing is done poorly, if at all, and few organizations

understand the need to convince employees of the organization’s mission

and purpose; they take it for granted.

Since satisfying customers is central to the task of marketing, it is essential

that everybody in the organization who deals with customers must be imbued

with a sense of marketing which means internal marketing for some and

external marketing for others. Customers exist, therefore, both within and

outside the organization. By focusing on customers, in this way a different

perspective of the organization is obtained. In traditional organizations the

chief executive and senior manager appear at the top of the chart with sales

and other front-office people at the bottom. In many such charts customers

are not represented at all.

A contrary view, driven by a strong sense of marketing and especially

internal marketing places the customer on top, the front-office people next,

middle managers below that and finally senior managers (Figure 1.4). As the

front-office people meet and serve customers, they should receive a lot of

attention within the organization. Middle managers exist, in this view of

the world, to support the layer of middle level operators. It is important to

note that everybody is somebody else’s customer. That is why the customer

is placed on top and is so important to the survival and growth of the

organization.

Responsibility in marketing

Marketing should distinguish between the individual customer’s short-term

needs and wants and the longer-term welfare of society. For example, large

cars greatly contribute to the pollution and traffic congestion of cities and

cigarettes cause major health problems, even death, for smokers and for those

who inhale the smoke. It is necessary, therefore, to integrate profitability

requirements with health, ecological and environmental constraints.

For many years writers on marketing have been at pains to point out that

the principal function of marketing ‘is not so much to be skilful in making

the customer do what suits the interests of the business as to be skilled in

conceiving and then making the business do what suits the interests of the

customers’ (1957). In a present-day context, to be skilful in

conceiving the real interests of customers, the organizationmust balance environmental

considerations against profitability requirements; society’s welfare

against individual needs; and the long-term welfare of customers against

their short-term wants. For these reasons, therefore, we must broaden the

marketing concept to include wider dimensions.

The two major assumptions behind marketing are that consumers know

what they want and are informed and highly rational in satisfying their

wants, and that customer sovereignty prevails (1986).

These authors argue that if the organization were right in assuming that

customers know what they want, then the key issue would be to create the

product, create awareness of it and make it available at an acceptable price.

The fact is that both goals and corresponding wants can be unstable, with

wants being only vaguely articulated as consumers remain open to persuasion

as to what might better serve their interests ( 1986). This

is especially true in high technology markets where new product development

is frequently technology driven.

The marketing concept also assumes that the customer is sovereign, i.e.

organizations follow the dictates of the market in regard to exactly what

should be provided. But customers do not always know exactly what they

want and they may be unsure of their trade-offs among product or service

attributes. Many organizations see no inconsistency in referring to marketing

as the basis for management while at the same time accepting that customer

perceptions are important and can be influenced.

Social and ethical constraints

Social responsibility in marketing means accounting for the relationship

between marketing and the environment in which it operates. Social responsibility

refers to the obligation of the organization, beyond the requirements

of the law, to take into practical consideration in its decision making the

social consequences of its decisions and actions, as well as profits. This view

of social responsibility implies constraints on the organization more rigorous

than arise if the organization attempted to fulfil its economic and legal

requirements only. The reasons for a greater interest in social responsibility

stem from the greater involvement of business with government and the

influence of myriad stakeholders in the organization: shareholders, institutional

investors, employees and other regulatory and environmental bodies.

The more important dimensions of the environment which relate to an

appropriate application of marketing are the social and moral environment,

the business environment and the physical environment.

In recent years ethical issues, social and moral standards which are acceptable

in a society, have become very important in marketing. Trust is a related

issue which is an essential ingredient in building long-term relationships

between organizations and their customers. Trust is well placed where ethical

standards are upheld. It is misplaced where ethical standards are ignored or

flaunted. Both trust and ethics are highly dependent on culture and vary

according to the culture and background of customers. Organizations operating

in many cultures have greater difficulty in coping with a heterogeneous

set of customers, drawing on disparate cultures for their ethical standards.

One example will illustrate the issue. In a questionable practice, with

strong implications for marketing responsibility, advertising agencies in the

US have begun to assist pharmaceutical organizations to recruit patients for

clinical trials. According to Thomas Harrison, the Omnicom Group, Inc.,

parent organization of advertising agency BBDO Worldwide, BBD Worldwide

and TBWA Worldwide:

There is potentially a real ethical clash of science and business in such a

development.

There are clear benefits for the advertising agency as becoming involved

early in the process can be lucrative and can greatly increase the chance

of acquiring the account if the product is ultimately launched. For the

pharmaceutical organization the involvement of the agency can shorten the

time and costly process of getting a drug from development to market. In

these circumstances there could be a temptation for the agency to modify

the test results or at least present them in such a way as to favour the

pharmaceutical organization in anticipation of eventually being retained to

produce the advertising campaign and thus obtain high advertising fees. This

is a conflict of interest – a potentially controversial practice that directly raises

ethical questions for marketing.

Environmental responsibility in marketing

The view that marketing has a special responsibility when discussing the natural

environment is also well developed. By promoting product manufacture

and usage, the organization may be encouraging resource depletion, pollution

or other environmental deterioration. Most organizations believe that it is

not sufficient to make profits and generate employment while ignoring an

obligation to society regarding the preservation of the natural environment

even though their behaviour is within the law. Some organizations, however,

continue to ignore this implied obligation claiming that their behaviour is

not illegal when they dump chemicals in watercourses, over-package products,

or damage the atmosphere. Such organizations often cite a concern for

the feasibility rather than the propriety of believing that they should not

be expected to take action to protect the environment if their competitive

position were to be jeopardized. In a general way, social responsibility is an

investment in future profits which should be made even at the expense of

short-term profits.

Providing customer value in marketing networks

Superior market positions depend on the organization’s customer base, relations

with suppliers and partners, relations with customers (e.g. brand equity),

facilities and systems, and the organization’s own endowment of technology

Scope of strategic marketing [11]

and complementary property rights. These are the organization’s assets or

resource endowments which it has accumulated over time.

In addition, the organization possesses certain capabilities, the glue that

binds the organization’s assets together and enables them to be used to

advantage (1994). Capabilities are so deeply embedded in the organization’s

routines and practices that they cannot easily be traded or imitated

(1989). The organization’s competitive advantages are

derived, therefore, from the nature of the its products, markets, technological

orientation, resources and knowledge.

Providing customer value means delivering on a whole range of promises to

the customer. Products and services that customers perceive have a superior

value compared to those of competitors are demanded while others are

not, hence, the importance of the concept of ‘value-added’ defined as the

component of customer value provided by an individual organization within

the overall business system. Value is derived from the business system in

which the organization operates.

Each organization leverages other participants in the system – customers,

suppliers and particularly others who complement the organization in what

it provides – in creating that value (Figure 1.5). The value-added chain runs

from suppliers through the organization forward to the customer aided by

partners in the context of a competitive environment influenced by economic,

political, legal and cultural factors. At each stage of the value chain there exists

an opportunity to contribute positively to the organization’s competitive

strategy, by performing some activity or process in a way that is better

than one’s competitors, and so providing some uniqueness or advantage. If

an organization attains such a competitive advantage which is sustainable,

defensible, profitable and valued by the market, then it may earn high rates

of return even though the industry structure may be unfavourable and the

average profitability of the industry modest.

A long-term marketing orientation draws together suppliers, customers,

competitors and partners in the business system to create value in the marketing

system. It is the business system as a whole that creates value. The

marketing system consists of five major participant groups:

 customers

 competitors

 partners

 suppliers

 the organization itself.

Viewing the value in the business system as the result of a network of

important relationships highlights two important factors. First, decisions

made by one organization affect and are affected by decisions by other

organizations. Second, organizations often make decisions that are normally

associated with those of other actors in the system. Thus, the organization

makes important decisions which affect suppliers, just as suppliers make

important decisions which are normally thought of as in the purview of

the organization. Because so many decisions are part of a network in which

a decision in one organization directly or indirectly influences decisions in

other organizations, major decisions must be consistent with the goals of the

participants in the network and their products. Herein lies the importance

of the contribution of the leading organization – the organization making

the key contribution to the establishment and growth of the business system

(1993). This key contributor of value or the business system leader

emerges in the early stage of the evolution of the business system to begin the

process of continuous improvement which draws the entire business system

towards an improved future.

A fundamental service provided by the business system leader is to encourage

and persuade other organizations in the business system to complete the

full value mix for customers by attracting ‘follower’ or ‘imitator’ organizations

and thereby prevent them from developing other emerging business

systems. The multitude of decisions in the business system must complement

each other to maximize their overall positive impact on value. Within this

framework the organization must decide its overall product–market business

system strategy which has two elements – decisions on product–market segments

and decisions on positions to adopt within the business system itself

(Figure 1.6). The organization’s resource base enables it to decide the appropriate

positions on which to focus in the business system. Decisions regarding

the relevant product–market segment to serve are discussed in Chapter 3

while decisions regarding the appropriate position in the business system to

select are examined in Chapter 6.

Sources of marketing advantage

Sources of marketing advantage are reputation, brands, tangible assets, knowledge,

customer service and people. To be worthwhile the marketing advantage

must be sustainable. It must, therefore, be tangible, measurable and

capable of providing competitive protection for some time. An illusory

marketing advantage is one that is easily matched by competitors. The organization’s

marketing advantage depends on how well it chooses its strategy:

 Concentrating on selected market segments.

 Offering differentiated products.

 Using alternative distribution channels.

 Using different manufacturing processes to allow higher quality at lower

prices.

Superior skills and resources, taken together, represent the ability of the

organization to do more and better than its competitors. Superior skills are

the distinctive capabilities of people in the organization that distinguish

[14] Strategic Marketing

them from people in competing organizations, e.g. superior marketing skills

that lead to fewer product failures in the marketplace or superior selling and

distribution skills which lead to fewer returns of unwanted products and

improved customer satisfaction.

Organizational resources and marketing capabilities

Organizations are endowed with different amounts and types of resources and

capabilities, which allow them to compete in different ways. Organizations

which are better endowed have lower average costs than competitors and can

provide products and services at lower cost or provide greater customer value.

These resources are difficult to transfer among organizations because of transaction

costs and because the assets may contain tacit knowledge

(1996). Such resources and core capabilities of the organization, particularly

those which involve collective learning and are knowledge based,

are enhanced as they are applied (1990). Resources and

capabilities which are distinctive and superior, relative to those of rivals, may

become the basis for competitive advantage if they are matched appropriately

to market opportunities ( 1996). These

resources may, therefore, provide both the basis and direction for the growth

of the organization itself, i.e. there may be a natural trajectory embedded in

a organization’s knowledge base (1993). Hence, the importance

of studying the organization itself when attempting to predict its likely

performance.

Resources and capabilities determine the organization’s long-run strategy

and are the primary source of profit. In an environment which is changing

rapidly and where consumer tastes and preferences are volatile and myriad,

a definition of the business in terms of what the organization is capable of

doing may offer a more durable basis for strategy than a traditional definition,

based solely on needs and wants of consumers. Defining markets too broadly

is of little help to the organization that cannot easily develop the capabilities

to serve such a broad market.

The organization’s ability to earn profits depends on two factors:

 the success of the organization in establishing competitive advantage over

rivals; and

 the attractiveness of the industry in which the organization competes.

As was seen above, the two sources of competitive advantage are:

 the ability of the organization to reduce costs; and

 its ability to differentiate itself in ways that are important to customers.

The ability to establish a cost advantage requires the possession of scaleefficient

plants, access to low-cost raw materials or labour and superior

process technology. Differentiation advantages derive from brand reputation,

proprietary and patented technology and an extensive marketing network

covering distribution, sales and services.

The attractiveness of an industry depends on the power the organization

can exert over customers, rivals and others in the business system, which

derives from the existence of market entry barriers. Market entry barriers are

based on brands, patents, price and the power of competitive retaliation. These

are resources which are accumulated slowly over time and a new entrant can

only obtain at disproportionate expense (1991). Other sources

of market power such as price-setting abilities depend on market share which

is a consequence of cost efficiency, organization size and financial resources.

(1991) has integrated these ideas in a way which serves as a very

convenient summary of this discussion (Figure 1.7).

Strategic marketing effectiveness

Marketing’s role in strategic planning for the organization means identifying

the optimal long-term positions that will ensure customer satisfaction and

support. These optimal positions are determined largely by fundamental

changes in demographic, economic, social and political factors

(1982). Thus, strategic positioning is more likely to be guided by longterm

demographic and socioeconomic research than by surveys of consumer

attitudes, the hallmark of the market-driven organization.

Value in marketing is a combination of product or service quality, reasonable

or acceptable prices and responsive service. It is noteworthy that

marketing value combines high quality with acceptable prices. It is not

low quality products at low prices or high quality at high prices. Value in

marketing means delivering on a whole range of promises to the customer.

Marketing effectiveness is not necessarily revealed by current marketing

performance. Good results and growing sales may be due to the organization

being in the right place at the right time rather than having effective marketing

management. This is frequently the situation during the entrepreneurial

phase of an organization’s growth and development. The innovator frequently

has considerable discretion in the market. At this stage the driving force is

entrepreneurship rather than marketing. With acceptance of the product or

service in the market and with the rise in competition which normally accompanies

the acceptance of a new product or service, performance becomesmore

marketing-dependent.

In a competitive environment, especially where customers have learned

how to respond to various offerings, the situation changes. Improvements in

marketing in the organization might improve results while another organization

might have poor results in spite of excellent marketing planning. It

depends on how well the organization matches its own resources against

those of the competition to attract and hold the loyalty of customers.

The marketing effectiveness of the organization in serving customers in the

face of existing and potential competition is reflected in the degree to which

it exhibits five major attributes of a marketing orientation:

 demonstrated customer philosophy

 integrated marketing orientation

 possesses adequate marketing information

 adopts a strategic orientation

 experiences a high level of operational efficiency.

The performance of the organization on these individual attributes may

be used to indicate which elements of effective marketing action need most

attention. It should be recognized, however, that this evaluation provides

general information only but has the merit of obtaining an approximate

measure of the orientation of the organization.

Key marketing success factors

The organization attempts to convert skills and resources into superior market

positions and thereby meet performance objectives. A knowledge of the key

marketing success factors is essential to enable the organization to invest

in markets and marketing to ensure performance objectives are attained.

By identifying the key success factors the organization can identify ways of

obtaining the greatest improvement in performance for the least expenditure.

The key success factors of any business are the skills and resources which exert

the highest degree of leverage on market positions and future performance.

Having identified them, the organization attempts to selectively allocate

resources towards these sources of leverage. The drivers of market position

advantage are the high leverage skills and resources that contribute most to

lowering costs to or creating value for customers.

Marketing focus on customers

Marketing means identifying values desired by customers, providing them in

some way, communicating these values to customer groups and delivering

the value. Customer values refer to those benefits focused on solving customer

problems and not merely on the products and services themselves. The focus

is on the customer and on solving problems faced by the customer.

This is an integrated longer-term view of marketing (Figure 1.8). Seeking

value from the customer’s perspective means building a long-term mutually

profitable relationship with customers instead of trying to maximize profits

on each transaction. An emphasis on relationships rather than individual

transactions focuses on the customer as the profit centre, not the product.

It also means that attracting new customers is an intermediate objective

in the process of maintaining and cultivating an existing customer base.

This interactive approach views marketing as a continuous relationship with

customers in contrast to the more traditional and almost adversarial view

which is short term and focused on immediate sales.

The first sale to a customer is often very difficult, costs a lot and results in

little or no profit.With a strong continuing relationship the customer becomes

more profitable. Such long-term relationships are established through the

exchange of information, products, services and social contacts. In this way

the organization–customer relationship is commercialized.

The fundamental issue is to understand the customer’s perception of value

and to determine a superior value position from this perspective and to ensure

that, by developing a consensus throughout the organization, that value is

provided and communicated to the customer group in selected markets. The

role of marketing in the business system is:

 To understand the customer’s perception of value – identify the value the

organization expects to provide.

 To determine a superior value position for the organization – provide the

value expected.

 To determine the appropriate positioning and brand strategy – communicate

the value.

 To distribute and price the product/service – deliver the value to the

customer.

Internal Marketing and Motivation

Internal Marketing and Motivation

            Currently, the world of business had already focuses on recognizing the significance of human capital in the industrial age which changed their paradigms regarding people management. Different companies that have become successful in their respective industry had been able to reconsider their employees, thus they no longer treat employees a resource whose main role is to offer goods and services, but considered them as important to the capability of the entire organization, particularly in the aspect of services (2008).

            Internal marketing involves the process of getting all the employees to love the brand, which in return, will help to induce and persuade the customers to love it (2005). It was first introduced and proposed in the service literature in 1970’s as a solution to the problem of delivering high quality of service (1998 ;2004).

            According to  (1990) internal marketing focuses on ensuring that the employees are consistently aware of delivering service quality. Employees realize the significance of their position in the company, which help to satisfy individuals. On the other hand,  (2000) recognized important elements of internal marketing which include: employee motivation and satisfaction, customer orientation and customer satisfaction, interventional coordination and integration, marketing like approach and implementation of specific corporate and functional strategies (2004).

Internal marketing is commonly connected on the issue about motivation and satisfaction of the employees. Internal marketing include the application of motivation as a perquisite for their success in marketing of different services. Thus the entire management must be aware of motivations exact connotation in order to understand its use to the business. Motivation is the process of developing the desire within an employee in order to perform a task to his or her greatest ability based on own initiative of an individual (2005).This is primarily because of the fact that roots of the internal marketing concept focuses on the efforts to improve the quality of service. Internal marketing can help in order to motivate employees by focusing on 4 E behaviors which include: energizing, enabling, empowering the team members and ensuring that they have achieved objectives and recognized and awarded for what they have accomplished ( 2005).

One of the important aspects connected with internal marketing is viewing employees as internal customers.  (1981) stated that internal marketing is the process of “viewing employees as internal customers, viewing jobs as internal products that satisfy the needs and wants of these internal customers while addressing the objectives of the organization.” Since then, the said term had become popular in marketing literature. This is supported with the idea of (1977) which stated that it is vital to satisfy the employees in order to satisfy the customers. By enabling the management to view their job offerings as products and their employees as customers, it pushes the managers to devote the same care to their jobs as they devote the purchasers or customers of their services (1976). In connection according to (1991), internal marketing is all about the process of attracting, developing, motivating and retaining those qualified employees via the job-products which help to satisfy their needs and demands. Due to that, internal marketing primarily focus on the process of treating employees as customers – which is considered as a strategy which help to shape job-products in order to fit the needs of the employees.

            In the process of motivating the employees, it is vital to focus on the satisfaction of the employees. This is because of the fact that marketing of services of what customers buy focuses on the performance and labor of human. As a result, the process of attracting the best personnel, retaining and motivating them had become the most important process in any organization. This is particularly vital in cases or events where in the quality of service is the only differentiating factor between the performances of the competitors. This can be observed in the service industry, particularly in the tourism sector where in the customers are highly demanding of the employees, together with the employees who have high expectations from their roles and jobs as a source of important self-actualization and self-development. Under this situation, the impact of applying internal marketing approach will help to create more satisfied customer-contact employees who appreciate the logic as well as benefits of courteous, empathetic behavior in clear manner, particularly in the process of dealing with the customers, which will help to create greater satisfaction of the customers (2000).

 

 

 

 

 

 

 

What is the Connection between Brand Image and Brand Loyalty?

What is the Connection between Brand Image and Brand Loyalty?

 

Introduction

            What do Volvo, Guess, Calvin Klein, Ford, Armani, Nike, Adidas, and Microsoft have in common? They are all brand names, which are known all over the world! Most of us easily recognize the logos and names of these brands, and think of them as something that are indispensable and at the same time, enticing and addictive. Many patronize these brands and a lot more others, despite their expensive prices, because of its good quality. Some people also buy these brands to enhance their style and fashion statements, which can be provided by using these brands. Furthermore, many patronize these popular brands to uplift their reputation in the society for many believe that people who have branded products are well off and educated. With the use of these brands, they determine the ‘status quo” of the persons who use them and what they can contribute to the society, for most who patronize these expensive brands are those who have stable and high-paying jobs. With these, it can be observed that the brand image of a certain product or products determines the loyalty of its consumers and its success in the market. 

            Due to this, this paper aims to study and state the connection between the brand image of products and the brand loyalty of its consumers. This paper discusses the meaning of brand image and brand loyalty, and talks about the connection of the two concepts. In addition, it states also the relation of using different media in advertising and endorsing the products.

Brand Image

            It has been reported that the phrase “brand image” gained notoriety when sales patterns began to show that feelings and visuals associated with brands were powerful motivators to purchase products, and it is not just products that consumers buy, but it is their associated personalities and values (2006). People like people who are like them and value the things they value, and same goes for brands, as people will buy products whose brands represent things they value and like, whether it is fun, power, money, intelligence or numerous other qualities ( 2006). Brand images are also powerful when a particular brand, product or service becomes associated with specific persons having specific images, such as the association of the tennis athlete Maria Sharapova with the latest model of Canon camera, the Power Shot. This also makes the product or service even more expensive and more “elite”, being associated with certain celebrities or popular athletes.  

            Furthermore, great brand images are instant, positive and unique among competitors, and can be reinforced through such vehicles as packaging, ads, promotions, customer service and word-of-mouth (2006). This makes good brand images easy to determine, for it draws out a positive reaction from the consumers. On the other hand, weak brand images elicit a slower and less certain reaction ( 2006), for not being popular and not patronized by most consumers. In this light, it can be deduced that the brand image of a certain product or service determines its success in penetration of the market and brand loyalty.

Brand Loyalty

            Brand Loyalty is the consumer’s conscious or unconscious decision, expressed through intention or behavior, to repurchase a brand continually (2002). Brand loyalty occurs because the consumer perceives that the brand offers the right product features, image, or level of quality at the right price ( 2002). Moreover, consumer behavior is habitual because habits are safe and familiar, and in order to create brand loyalty, advertisers must break consumer habits, help them acquire new habits, and reinforce those habits by reminding consumers of the value of their purchase and encourage them to continue purchasing those products in the future ( 2002).

Brand loyalty then is associated with the behavior or attitude of a consumer towards a product or service, and the ability of a consumer to patronize the product or service, using them or buying them continuously. The role of advertising is also crucial in determining the products’ or service’s exposure to the public, therefore, serving as information source regarding the features of the product or service. Media and advertising serves as good vehicle to influence the public, thus, may make or break the image of a certain brand. With this, companies are trying their best to produce a good brand image of their product by making good advertisements of the product or service, at the same time, building up the company’s reputation and market success by ensuring the good exposure and quality of the product or service they endorse.

Connection of the Two Concepts

            Due to the fast-changing world today, companies are trying their best to improve and develop their products and services to retain their customers and attract new ones. This goal of companies and business firms does not only seek to increase their profit from the market, but also to render service and satisfaction to their consumers. This is why companies strive to improve the brand image of their product or service to obtain the brand loyalty of their consumers and their employees as well.

With the pleasant brand image a company creates, it also becomes a means of attracting great talent, serving as a great motivator for engaging employees in their workplace (2004). In addition, employees who join companies with attractive brand reputations are significantly more likely to be satisfied with their managers, much more likely to feel a sense of personal accomplishment, feel as though they are working on the same team toward the same goals, and believe that they meet or exceed customer expectations (2004). It has been reported that marketing to employees is as important as marketing to customers, for enthusiastic employees lead to enthusiastic customers (2004). Employees are also consumers, so introducing them a good brand image allows them to be also loyal to the product of the company as well.

Furthermore, it has been reported that the term brand has come to mean more that just the name of a product and the logo associated with it, but companies see branding as a marketing function and an important tool for creating and maintaining customer loyalty (2003).  (2003) also adds that by keeping a brand message consistent, it raises a brand’s value as customers buy into the brand and trust its message (). Thus, brand image is an important asset for a company, and media plays a vital role in building up its image. Strategy of companies also include improving their packaging to be made appealing to customers, setting their timing and collaboration, and teamwork (2003). These factors somehow determine the brand loyalty of consumers and their continuous patronage to a certain product or service. In this light, companies device ways on how to improve and develop their products and services to create a good brand image to the consumers and their employees. Creating a good brand image impresses consumers, which arouses their curiosity regarding the product or service, and allows them to try the product. Liking the product may lead to the consumer’s continuous patronage, and, thus, fosters a good relationship between the company and the consumer, resulting to the consumer’s loyalty to the product or service.

 (2004) reports that a great deal has been written about the emotional component of branding (). In essence, the most powerful differentiators available are not related to the features and benefits of the product, but rather the emotional, experiential, and self-expressive benefits of the product or service, and ultimately, customer loyalty is established because customers like doing business with a particular brand (2004). This connects brand image to brand loyalty by the feeling of satisfaction customers get in using a particular brand, as influenced by the image the brand has. Therefore, consumers base their loyalty to a brand, depending on its image and their personal preferences or usage of the brand. This also involves the brand’s performance and cost, which goes with the lifestyle or preference of the consumer.   

 It has been reported that the image surrounding a company’s brand is the principal source of its competitive advantage and is therefore a valuable strategic asset (2002). This is why the image of a brand must be built up by creating a broad brand vision or identity that recognizes a brand as something greater than a set of attributes that can be imitated or surpassed ( 2002). With this, to ensure the loyalty of consumers to a particular brand, companies disseminate a strong and clear message that their brand distinguishes them from other competitors, and defines their philosophies (2002). In addition, a strong symbol or logo can also help to generate brand loyalty by making it quickly identifiable ( 2002). In simple terms, the relationship of brand image to brand loyalty is that brand image defines and determines the customers’ brand loyalty to a product or service. This means that in general, the two concepts have a direct relationship. When brand image is good, brand loyalty is also good, and when brand image is unpleasant, then brand loyalty is poor and weak. It can be deduced that both the concepts are interdependent from each other, and that the fate of the company depends on them. Aside from the qualities of a good brand of being cost-effective, reliable, popular, quality-wise, durable and has been existing for a long time, brand image also depends on the feedbacks that consumers have on a specific product or service. The feedbacks influence other consumers, and somehow determine brand loyalty. Brand loyalty is therefore a consequence of the positive brand image the company created for their product, which are determined by the quality, usage, and cost of the product, and the effectiveness of advertising the company used for the exposure of the product or service.

 

Conclusion

            The reason why many of us patronize certain products is our high regard for these signature brands and the brand image they create. From these, it can be deduced that companies are successful in creating and maintaining the brand image of their products. Brand image determines the totality of the brand’s representation, while brand loyalty refers to the feelings and attitudes of consumers to a specific product or service. Their relationship is that brand image determines the brand loyalty of consumers to a product or service. Having a direct relationship, the effectiveness of brand image fosters brand loyalty, and thus, a good brand image determines the prolonged and continuous patronage of consumers with products or services. Media and advertising also play essential roles in this phenomenon, being responsible for giving out information to the public. A chain reaction happens, for the efficacy of media determines the brand image, and in turn affects the brand loyalty of certain individuals regarding a product or service.

           

 

           

 

 

 

 

 

 

ASTRAZENECA PHARMACEUTICAL COMPANY: CASE STUDY

ASTRAZENECA PHARMACEUTICAL COMPANY: CASE STUDY

 

 

 

Introduction

 

            One of the international pharmaceutical companies struggling to compete in the pharmaceutical market is AstraZeneca International. Operating in over 100 countries, it can reach sales of $24 billion, with an operating profit of $6.5 billion (2006). This case study explores the company, specifically how it operates under the growing but pressured pharmaceutical industry. It explores the basic structure of AstraZenca, as well as the key external drivers that impacts upon it. It also explores and discusses how the organization adds value to its products and services. The future strategic directions of the organization are also identified. Suggestions are provided, on how the organization can improve and can rise above the competition.

 

AstraZenca International: Profile and Organization Structure

 

          AstraZenca International claims to be one of the world's leading pharmaceutical companies, dedicated to the discovery, development, manufacturing and marketing of high quality, effective prescription medicines that bring benefit for patients and add value for shareholders and wider society (2006). However, it seems that those statements were not merely blind claims as the company has evidences of its success. Their products are available in over 100 countries (2006). In 2005, the totaled sales reached $24 billion, with an operating profit of $6.5 billion (2006).

            Albeit the issue of limited research and development of pharmaceutical companies (Piachaud, 2002), AstraZenca International is one of the companies that basically invests considerably on R&D. The company spends over $14 million every working day on the research and development of new medicines that meet patient needs (2006). Also, it employs

12,000 people in research and development at 11 R&D centres in seven countries: Sweden, the UK, the US, Canada, France, India and Japan (2006). Furthermore, the company has some

14,000 people at 27 manufacturing sites in 19 countries, and generally employ over 65,000 people worldwide: 58% in Europe, 28% in the Americas and 14% in the rest of the world (2006). Although the company is headquartered in London, and has the R&D headquartered in Sweden, it currently enjoys a major presence in the United States (2006).

 

            Aside from its handful of employees, AstraZenca International is of course made up of Board and Senior Executive Team (2006b). The Senior Executive Team is composed of: David Brennan (Chief Executive Officer); Bruno Angelici (Executive Vice President for Europe, Japan, Asia Pacific and ROW); John Lundberg (Executive Vice President, Discovery Research); Martin Niklasson (Executive Vice President, Global Marketing and Business Development); Barrie Thorpe (Executive Vice President, Operations); Tony Bloxham (Executive Vice President, Human Resource); Tony Zook (Executive Vice President, North America); Jonathan Symonds (Chief Financial Officer); and Barry Patterson (Executive Director Development) (2006b).

 

            On the other hand, the Board of the company consists of positions such as Non-Executive Chairman of the Nomination Committee, Non-Executive Deputy Chairman, Non-Executive Director, Executive Director Development, Executive Director and Senior Non-Executive Director (2006). The Board Committee is basically made up of four departments, which are: Audit Committee, Nomination Committee, Remuneration Committee, and Science Committee (2006b). Several core remit of the committee include review and report to the board on: the scope of and plans for audits of the Group by the external auditor and the internal audit function; the implementation of the external and internal audit plans and the handling of any material issues arising from those audits; etc. It also brings attention to the board issues such as: any significant concerns of the external auditor about the conduct, results or overall outcome of the annual audit of the Group; any significant concerns of the Chief Internal Auditor about the conduct, results or outcome of internal audits; etc. (2003). The group is also responsible on: overseeing the establishment, implementation and maintenance of the Group’s Code of Conduct and other related policies and establishes procedures for the receipt and handling of complaints concerning accounting or audit matters; appointing and agreeing the compensation for the external auditor subject; and reviewing and approving the appointment and any dismissal of the Chief Internal Auditor (2003a).

            The Nomination Committee has a different responsibility. It is responsible on making proposals to the Board for any new appointments of Executive or Non-Executive Directors of the Company ( 1999a).

 

            The Remuneration Committee, then, is responsible on making recommendations to the Board of Directors on the Company’s policy for executive remuneration and to determine, on behalf of the Board, the entire individual remuneration package, including the terms and conditions of employment and the retirement/severance provisions ( 1999b). This Committee is also responsible on making recommendations to the Board for the Company’s Executive Share Option Scheme and Employee and Executive Performance Bonus Schemes (and any other similar schemes) and to exercise the powers of the Directors under the rules of such schemes (1999b).

 

            Finally, the Science Committee review and assess the international competitiveness and quality of science within the Company. Specifically, it covers the strengths and limitations of the Company’s R&D science in the Research / Therapy Areas in which the Company is active or is considering becoming active; and enabling Science and Technology (2003b). It also considers the effectiveness of the Company’s delivery on specific projects in those areas, and the adequacy of the Company’s R&D skills base in those areas. It also handles significant scientific advances and their potential impact on the Company, and any other significant developments in the scientific environment which may affect its interests (2003b).

 

SWOT Analysis

 

            The strengths and weaknesses of AstraZeneca International were derived from the annual reports and articles about the company that are readily available in the Internet.

 

Interestingly, the company claims that its core strength is derived from its outstanding portfolio of products, its global reach and, above all, the creativity and commitment of its employees. It has ten products each with global sales of over $1 billion i.e. products such as Nexium, Seroquel, Crestor, Arimidex and Symbicort (2005). The global reach of the company is also becoming strong, as it is starting to show signs of success in China, growing their business there by over 200% over the past five years. Strong growth is also being achieved in other Asian countries, in Latin America and in Eastern Europe ( 2005).

 

On the other hand, there are also several weaknesses that serve as barriers for the success of AstraZeneca. One of them is some failures of gambles on important pipeline medicines. Specifically, one case that tells this is the gamble of the company on Iressa – a supposed-to-be breakthrough cancer drug. The drug failed to show a survival benefit. There have been safety flags raised with Crestor, for cholesterol, and with experimental drugs Exanta, a blood thinner, and diabetes drug Galida (2004). It may create a reputation for the company as a business making unsafe or ineffective drugs (2004).

 

Another weakness of the company is that it is also being affected by the drug shortage crisis. For instance, AstraZeneca has discontinued its Cefotan products. Cefotan has been in short supply due to manufacturing problems and there came a point when the company had reached zero supply ( 2006).

 

In terms of opportunities, the company has many to be glad about. First, its recent success in countries such as China, Latin America, and Eastern Europe can open up many possibilities. Another opportunity for the company is the increasing need for innovative drugs, especially on diseases that are currently difficult to cure such as cancer and diabetes. The company has the potential to create breakthrough drugs as shown in their development of Galida and Crestor.

 

            Finally, threats for the company are plenty, specifically the current condition of the pharmaceutical industry. One problem is the increasing cost of prescription drugs. There has been more and more demand for budgets of those who have been paying for healthcare (2005).

Pricing pressures were placed on the industry through legislation not only in major established markets, but also in China and India (2005). There are also concerns on productivity and innovation, as well as on drug safety, competition, reputation, and regulation 2005). These threats, if not carefully planned and addressed, may hamper the growth of AstraZeneca to a great extent. Many pharmaceutical companies are struggling to meet these demands just to survive.

Drivers

 

            There are four main drivers of pharmaceutical industry. Piachaud (2002) stated: “From the standpoint of the pharmaceutical industry, the impetus for change is the result of a combination of political, economic, technological and social factors; all of which have helped redefine the dynamics of this particular industry”. Those were the same factors that affect the operations of AstraZeneca.

 

Political

 

 

            The company is obviously being influenced in the political perspective. In the previous years, the issue on whether or not Crestor or Galida is safe has been a political issue in the United States. There were basically different factions that are against or favor the drugs, affecting the whole marketing strategy of the company.

 

Economic

 

AstraZeneca is being affected by the economics of the pharmaceutical industry in terms of increasing prices of drugs as well as increasing demands. There has been an increasing need to demonstrate the economic as well as the therapeutic value of their medicines to those who pay for healthcare (2005).

 

Social

 

 

The social concern of the company is how well the consumers will accept and see their products. Drug safety is one issue here. Accordingly, decisions on acceptable benefit/risk profiles for medicines have the potential to be positively or negatively affected by a number of factors. These include pre- and post-marketing clinical data and regulatory judgments that reflect society’s concerns and aspirations (2005). The norms of people toward drugs can also be an issue, as there are some who do not take drugs seriously, resulting in the decrease of market share.

 

Technological

 

            The pharmaceutical industry is characterized by stiff competition. The international competitors of AstraZeneca are international, research-based pharmaceutical and biotechnology companies that also sell branded, patent-protected, prescription medicines (2005). Being ahead in R&D, specifically in technologies, is a must because it will leverage a company to the top. Technologies may ease working loads; make them faster and more accurate.

 

Added Value

 

 

            The added value that AstraZeneca offers to its customers are: patient benefit and safety continue to be the core priority; Safety, health and environmental issues remain a fundamental Company consideration; the individuality, diverse talent and creative potential that every employee brings to the business are fully valued and respected; they maintain high ethical standards in their research and development of new medicines; they maintain high ethical standards of sales and marketing practices in all countries of operation; they make a positive contribution to the communities in which they operate; as a minimum, they meet national and international regulations; their CR or customer responsibility commitments are expanded by encouraging their suppliers to embrace standards similar to their own; and new and emerging issues relating to CR are dealt with appropriately and effectively.

 

Future Strategic Directions

 

            The company has 5 main strategic priorities, which are: products; pipeline; productive use of resources; people; and reputation. In products, the company plans to maximize sales growth by: releasing the full potential of their marketed brands throughout their lifecycle; growing their position in existing markets; expanding their presence in key emerging market; and vigorously defending their legitimate intellectual property rights (2005). In pipelines, the plan is to deliver a portfolio of differentiated medicines that meet patient needs by: successfully delivering the next wave of products in development; further improving the productivity and efficiency of their drug discovery and development; strengthening the pipeline through appropriate external targeted acquisition, licensing and partnership opportunities; and rigorous management of their portfolio of products in development, to mitigate risks associated with new innovative products (2005). In terms of productive use of resources, the company plans to improve its leadership, maintain best practice, and develop new practices. People are also a concern, as the company plans to strengthen more the company culture and create more programs to motivate employees. Finally, as a remedy to one of their weaknesses – reputation- the company sought to maintain the trust and confidence of patients, customers, employees, shareholders, regulators and wider society by: understanding their needs; ensuring that they deliver on their business promises; and living up to their core values and publicly stated standards of ethical behaviour, wherever they have a presence or an impact (2005).

 

            Based on the reports, the main aim of the company is to improve its management and marketing strategies. In the next years, it can be predicted that the company will become more concerned with its employees and customers, and will release programs to inform them how important they are to the company. Furthermore, the company will also become aggressive in marketing as it tries to sort out loopholes and problems in areas of distributions such as in the United States and China.

 

 

Conclusion

 

            So far, as can be reflected from the paper, AstraZeneca International is fairly successful in meeting its endeavors as an international pharmaceutical company. Its strengths such as being able to reach more global scale, strong product portfolios, and the ability to convince customers can be attributed with the main drivers that were discussed earlier. For instance, the strong product portfolio or the popularity of the company’s products may be due to the fact that some of its products have been given enough media exposure of their controversial characteristics. Positive or negative, the company had enjoyed being recognized because of those exposures. The good thing is, some of the issues are not yet closed and in most of them, the company won the case. Being able to increase distribution into past places where sales were down can also be due to the increasing demand in prescribed drugs, and the increasing cases of cancer and diabetes around the world. The issue on high cost of drugs can also be pinpointed as factors as consumers look for better alternatives if not on price, on the cost and quality. On the contrary, the company has to work on and improve its R&D so as to avoid similar incidents such as that of Crestor and Galida. R&D should firstly conclude and proven that the products being developed are safe and will not be the object of criticism by medical experts. The company should also work on its reputation. Fortunately, they already figured this out. A good Public Relations practitioner should be hired to clear the name of the company. The company should also improve its logistics to keep in track and manage drugs that are difficult to obtain and are limited in supplies.

Marketing

Marketing

Primary Segments

            A company must have a target population or segment to become successful, for serving the whole market not only consumes the time and energy of the business but its resources as well. For that matter, business firms must focus on market segmentation. Market segmentation is the process by which markets are divided into homogenous groups of customers, each of them reacting differently to promotion, communication, pricing and other variables of the marketing mix (2001). In addition, market segments should be formed in that way that differences between buyers within each segment are as small as possible, thus, every segment can be addressed with an individually targeted marketing mix ( 2001). Given the fact that each consumer has individual needs, preferences and personalities, market segmentation is useful to cater efficiently to their needs.

The concept of marketing covers four primary segment valuables, namely, geographic segment, demographic segment, psychographic segment and the behavioral segment. The geographic segment refers to the land region distribution of the consumers, whether they belong in a rural or metropolitan area ( 2001), the region of the world or country, its size and its climate ( 2006). This segment is important to assess the location of the consumers, for the proper and efficient allocation, innovation and invention of products and services. The second segment is the demographic segment, which pertains to the age, gender, sexual orientation, marital status, family size and life cycle, income, occupation, education, socioeconomic status, religion, nationality, race or ethnical group ( 2006 and  2001) of the consumers. This segment is also important to assess the individual needs of the consumers and so that the business firm can create products and services suited for their individual needs. The third market segment is the psychographic segment, referring to the personality of the consumers, their life style, social status, values and attitudes ( 2006 and  2001) towards products and services. This is equally important as the two other segments for it can determine the consumers’ preferences in using a specific product or service. This segment refers to the personal usage and fondness of a consumer to products and services. Lastly, the behavioral segment pertains to user behaviors, brand loyalty of the consumers, and the intensity of product use ( 2001). This segment determines the frequency of the use of the product and their constancy in using specific products and services.

In relation to dividing the MBA students, the market segment applicable would be the demographic segment. This segment is useful for it covers the age, gender, nationality and race of the students. It would be easier to introduce a product or service if this segment will be used and focus only on the students’ needs. In addition, it covers the economic status of the students, which determines also their use and loyalty to a product or service. The implementation of using the demographic segment can also help companies assess their potential of producing goods and services to cater and serve the individual needs of the MBA students.

Implementing Marketing Campaigns with Limited Resources

Given only limited resources, there are still some ways on how to implement successful marketing campaigns. One of the methods that can be used in implementation would be distributing direct mails, flyers or written surveys. Giving out direct mails involves direct marketing, producing and distributing written materials to a target audience, and involves skills such as good writing ability, working with a deadline, creativity and technical expertise ( 2006). This method is appropriate when an organization has a limited budget or is unable to reach the members by other methods (2002). Furthermore, written surveys or mails can be mailed separately or included in newsletters or annual reports (2002), and can be a gateway to promoting the projects or campaigns of specific organizations. In this way, the donors or members can also freely express their feelings, beliefs and needs regarding the organization’s projects and can contribute some ideas to improve the idea.

            Another method is by conducting telephone calls to generate a wealth of information (2002), and promote campaigns. This method is useful on informing the donor or staff how they can be involved with the projects of the organization, how can they benefit, and express their continuous support for the organization ( 2002). Through this method, the organization may query the donor regarding the quality of your current programs or service, and determine if the member would utilize options such as email, electronic fund transfers, or credit cards, and ask the donor if they would consider participating in focus groups ( 2002). Telephone calls would be a good vehicle of information to advise member or donors with upcoming projects and campaigns being done by the organization.

            Lastly, compared to the mentioned methods, conducting focus groups provide intensive interaction among members. In the focus group setting, the organization can demonstrate a product, service or activity, promote campaigns and projects, and gauge as well, the emotional intensity of the participants’ reactions and even provide solutions to problems when asked to consider creative options ( 2002). One disadvantage of this method is that they represent the ideas of only selected donors, thus an organization may wish to compile data from several focus groups, and use this information, along with other data, to feed your evaluative thinking ( 2002). This fosters good participation and discussion from both parties, and talks about new projects and campaigns for the improvement of the organization and their charities, and discusses plans and fundraising campaigns for their benefit. This not only help the company to promote and implement their projects or campaigns, but also to gather information from the charities, support them, create a good and lasting relationship, promote cooperation and unity among the members, and work together to reach their long-term objectives, and create new ones.

Motivating Channel Partners

            Managing channel partners or members is a difficult and continuous process. It somehow helps determine the success of the company in its objective to penetrate and conquer the market. Companies continually improve their products not only to serve their consumers and profit from the trade but also to encourage their channel partners with their dedication. The dedication of the companies’ channel partners depends on the reliability of their products or services (2005). Companies must also give attention and importance to communication. Good communication helps the companies and their channel partners with their negotiations and dealings to effectively compromise with certain issues. Communication also helps with fostering a great relationship and resolving conflicts among channel partners. Furthermore, companies must also focus in giving benefits to their channel partners (2005). Benefits serve as good reinforcements and enable channel partners to continue supporting the company. It has been reported that in highly competitive markets, with so many manufacturers competing for the same customers, channel partners, such as distributors and dealers can afford to be choosy about which manufacturer’s products they will push (1990), so it is important to motivate channel partners for a continuous flow of business. Motivating channel partners involves three elements. The first element is finding out the needs and problems of channel partners, which deals with the size of manufacturers and differences in needs (19903). Identifying their problems would help to devise efficient solutions and in turn, make negotiations easier for channel partners. (1990) explains the second element as offering support to the channel partners that is consistent with their needs and problems (). Offering support to the company’s channel partners assures them of their importance, and shows the value of their services to the company. This not only makes their problems easier to handle, but also gives them confidence to face greater challenges in the future, knowing the company supports them. The last element is building a continuing relationship based on mutual commitment, which is necessary for successful domestic or international marketing channels (1990) for it assures the personal involvement of the channel partners to the business, enhances their partnership, and contributes to the stability of the business in the market.

PART B – Elements of Strategic Choice

PART B – Elements of Strategic Choice

 

Strategic Choice and Strategic Option

            In order to provide an analysis and understanding of the statement indicated the difference between a strategic choice and strategic option must first be known. It has been reported that a strategic option is a set of related options that form a potential strategy, such as entering a new market or a new country, while on the other hand, strategic choice is the course of action that appears possible to take, and its simplest form is taking an option or not taking it (1999; 1994). As such, a strategic option refers to the situation or element that must be decided upon taking, while strategic choice pertains to the decision, whether or not one has to take a strategic option or not.  In this regard, the different elements of strategic choice become essential to take note off, as they are the ones decided upon in making good strategic decisions. In addition, strategic choices are important in taking strategic options for obtaining competitive advantage and success of the organization.

 

Elements of Strategic Choice

            Elements of strategic choice include the broad competitive strategy, the direction of development, and the method of development. Competitive strategy refers to the different techniques or courses of actions of organizations to stay competitive and good performing in their industry, with reference to the performance of their competitors in the market ( 1999). Having a competitive strategy means that an organization would have to take note off three generic strategies open to them, namely, cost leadership, differentiation, and focus (‘). Cost Leadership strategy emphasizes efficiency, requiring a considerable market share advantage or preferential access to raw materials, components, labor, and many others, and involves low-cost strategies that could help the company gain significant market share ( 2007). With reference to Wimm-Bill-Dann’s strategy, it can be observed that the company has been successful in implementing and using the cost leadership strategy, as their production was characterized by efficiency due to their strategic access to raw materials in Russia. The company’s good access to raw materials enabled them to maintain the affordability of their products, thus, helping the company obtain a significant increase in market share. The second strategy is the Differentiation Strategy, which involves the production of a new product, which offers excellent value for the customers’ benefit, and to be able to do so, extensive research, communication and innovation must be done ((1980)’ 2007). This strategy was also exhibited by Wimm-Bill-Dann or WBD, as the company came up with the production of new product lines in order to meet the needs of its continuously increasing market. From yoghurt, juices and other dairy products, WBD further diversified its products by producing beer, cheese, bottled water products, and anti-smoke hoods (2005). The last generic strategy that can be used for the competitive strategy of any organization is the Focus Strategy, emphasizing on specific or particular segments from a larger market (2007). This was also exhibited by WBD, as the diversification of its products aimed at targeting specific market segments, thus, continually indicating its success and market advantage over its competitors. A variety of strategies are available for the organization, thus, a strategic choice can be made, based on its need and situation.

            The different generic strategies or competitive strategies discussed are being used by an organization to obtain its competitive advantage over its competitors. Such competitive strategies dictate or set the direction of an organization for its development and growth. Development within the organization is one of the most satisfying achievements that an organization can obtain, as it involves a variety of positive effects and advantages for the organization, such as increase in sales, profits, performance, and improvement. The direction of the development of an organization, such as the WBD is typically from a basic or traditional phase to a more advanced one. From a traditional strategic planning, that regards competitors as rivals, create vertically integrated structures, organize for size and efficiency, reduce the bargaining power of its consumers, and compete for maximum market share within a well-defined industry, an organization can opt to adopt a high-performance strategy formulation, which sees competitors as partners, disaggregates and focuses on core competences, optimizes agility and adaptability, engages and delights the customers, and creates a virtual market across industries (). In this regard, the direction of the development of the organization depends upon the different competitive strategies that it can employ. As such, this involves development planning, which focuses on the future of the organization (2003). Practically, setting the direction of the development of the organization is based on the different problems and crises it experiences, thus, making the competitive strategies all the more relevant to its development. With reference to the case of WBD, the company’s endeavors of diversifying its products set its direction to aim at becoming an international manufacturer of dairy and juice products. In this regard, the direction of WBD’s development, which is aiming to become an international company, is being met through its competitive strategy of product diversification.

            The third element of strategic choice is the method of development. In making a strategic choice, it has already been mentioned that competitive strategy is the means used for setting the direction of the development of an organization. However, to be able to make sound decisions and choices in aiming for the competitive advantage of the organization over its competitors, choosing the best and suitable method/s for development must be done. Choosing the method of development requires selecting the method requirements and deciding on what type of instrumentation to utilize and why (1997). In this regard, one example of the method of development that an organization can use is its business-unit strategy, which involves designing a profitable, effective business model that requires a clear understanding of how the firm will generate profits, and of the different strategic actions it must undertake (.). One specific business-unit strategy an organization can implement is organization alignment, which explores how the various component parts of an organization synchronize their activities to create integration and synergy (2006). Alignment as a strategy involves the effective and efficient coordination of all of the organization’s resources, including human, financial, and physical resources (2004). In relation to the case of WBD, it has employed the Product Pyramid Profit Model as a strategy, by diversifying its products, having different set prices and volumes. The base of this model expands to feed the brand’s overall cash flow, thus, indicating a constant regeneration of value at its tip (2004). The use of this model has given WBD the opportunity to target different market segments at a time, thus, significantly contributing to the profit of the company. The use of such a model as the method of development of WBD has brought significant advantages and benefits to its production and operations, indicating its success in the market. Therefore, the elements of strategic choice have provided WBD with adequate strategic options to use in order to make effective management decisions. In this regard, it can be perceived that the relationship that exists among the three elements of strategic choice is that the competitive strategies are used as means in setting the direction of a specific organization to achieve its goals or objectives, and these means are in the form of methods, such as in the forms of business strategy models.

 

Strategic Option and Success Criteria

            In the beginning of this essay, the difference between the definition of strategic choice and strategic option has been specified. With such definitions, it can be perceived that there is a strong relationship that exists between two concepts, where a strategic option refers to an element from which a strategic choice has to be made. However, making a strategic option is not entirely an easy task, as it depends on success criteria, from which the success and the failure of certain strategies depend upon. An example for making a strategic option is evident for both consumers and manufacturers. A strategic option of manufactures may include what products or services it would offer to which markets (1999). Likewise, wide varieties of strategic options are also available to consumers, such as in choosing what products or services they would be purchasing. In this regard, both consumers base upon certain success criteria and producers, which allow them to both make effective and sound decisions. This involves the use of Key Performance Indicators or KPI in order to help a specific organization to define, measure, and attain its organizational goals, thus, needs to be quantifiable and in line with objectives or goals of the organization (2007). Some of the success criteria that can be used in order to make strategic options include the satisfaction of the client or customer, the defects or complaints with the product or service, the time and cost of manufacturing the product or rendering the service, the profitability of the product or service, and its safety ( 2007). Concerning such success criteria, the most important criterion in terms of strategic management and marketing is the satisfaction of the clients, which determines the success of any organization in the industry. As such, certain points must be taken note off by producers, such as remembering that consumers look for differences in the benefits in the product or service that would influence them, and assess the affordability and financial risk related to the commodity (2002). In this regard, an organization, such as WBD can use different strategic options, including retrenching, cost reductions, expansion, maintenance, collaboration with other agencies, switching strategies, and improving the quality of its services ( 2006). This was exhibited by WBD when the company decided to continuously diversify, being a means to their aim to improve the quality of their products. In addition, WBD was also able to reduce its operative costs by setting their plants at strategic locations, from where they would be able to obtain abundant raw materials.

 

Conclusion

From the discussion, it can be deduced that making strategic options that are based in certain success criteria influences an organization in terms of making their strategic choices. It must be taken note off that strategic options refer to the situations or objects, from which strategic choices are based upon. In order to make effective and sound strategic choices that involve the use of different strategies and methods, strategic options that are based on different quantifiable success criteria would have to be made effectively. In essence, both concepts and its underlying concepts have significant relationships with one another, thus, confirming the statement, from which this discussion is based upon.    

 

Marketing

Introduction

Each individual is a consumer. Each of us has the power to purchase and make use of a certain product. As consumers, we are influenced in different aspects, and the products we purchase are determined by our personal preferences and our need for the product. As consumers also, it is important that we know our rights in purchasing and using a product to fully utilize our resources.

Consumers are one of the most important aspects in the concept of marketing and in the marketing process. It is one of the factors that affect the different marketing strategies. It has been reported that in the process of creating a marketing strategy, a company must consider many factors, where some are more important than others (1994). Some of these factors are the price of the product, its path or channel of distribution and customer relationship.

Pricing and Product Policy

            It was reported that pricing is the manual or automatic process of applying prices to purchase and sales orders (2006). It is used in marketing and business to increase the profit of a company and to justify the production of a certain product. The monetary value corresponding to a specific price depends on different aspects, such as the raw materials used in its production, the labor incorporated, and the demand for the product.  (2004) mentioned that the purpose of price is to recover customer-perceived value for your product or service and not to recover costs (). The author also added that the four main components of price are the marketing strategy, customer value or willingness to pay, competitor’s prices and the cost; and as a part of the marketing mix, price must be consistent with the marketing strategy in that it accounts for the target segment’s price sensitivity and the value proposition.

            It has been reported that the pricing strategy is based on competition within the market place and being able to keep the product competitive with others (2005).  Different companies need to keep up with their competitors or rivals, so as this happens they must select the “going rate” as the price of their product. This is often the strategy of companies when the market place is flooded with suppliers and consumers who are not known to be loyal to a specific brand. Pricing a product too high will not be beneficial, as consumers can get the same product from another supplier at a lower price. By pricing the product too low will do the same as the it might make the consumers feel that the product is inferior or a cheaper version. This is why a company in this situation must keep their price in line with others. However, to maximize or increase their share of the market, the company could develop a marketing strategy to increase consumer awareness and familiarity ( 2005).  With this comes the role of advertising and technology, or the distribution channels.

Channels of Distribution

            The sales of a product will not be as effective without the use of a good advertising. This is how the consumers will notice a product.  (2004) stresses the importance of channels of distribution in the marketing mix (). According to him, customers must have access to a product or service to be able to purchase it. The purpose of this system of distribution channels is to provide an efficient means of getting a company’s products to customers and customers to the products. All companies use channels of distribution, whether they sell directly to and customers using a sales force or use a multilevel system made up of many different entities ( 2004). Furthermore, the author categorized the channels into two: the direct and the indirect channels. A direct channel is one where the product or service remains under the control of the company from production to customer; it implies a sales force, which is dedicated to the company’s products, but is expensive to train and maintain. While the indirect channels are independent parties paid by the company to distribute the product; these can reach more customers but are not necessarily working for the company (2004).

             (2004) explains that a useful way to think of channels of distribution is as a value-added chain, where the beginning of the chain consists of suppliers that provide raw materials: labor, technology, or other factors of production; the firm then uses the channels or intermediaries that enable customers to gain access to the product or service (). The author also added that the intermediaries are used only if they add value to the system and are compensated for the added value. Moreover, in using indirect channels, they must be convinced to carry the products of the company, just as and consumers must be convinced to buy them (2004). Another point made by the author is that channel members are an extension of the firm, but not a substitute, particular in the case of independent, indirect channel members, customers may associate problems in the channel with the company even if they are not your fault. Thus, it is in the best interests of the company to motivate the channels to act in both of their interests.

            Furthermore, it was mentioned that channel structures must adapt to changes in its environment, so constant innovation can be done for better results (2004). With this, different types of advertising media should be used, such as the television, radio, printed ads and the internet.   

Customer Relationship Management (CRM)

             (2000) reports that the goal of every company is to satisfy and retain customers; the key to its business performance (). This is why different companies continue invest in research and development and in advertising to improve and promote their products. This is done essentially to satisfy and increase more customers. It has been reported that Customer Relationship Management includes the methodologies, technology and capabilities that help a company manage customer relationships ( 2006). (2004) emphasized that CRM is a strategic activity where the purpose is to develop and manage long-term relationships on a customer-by-customer basis, where the key is customer satisfaction (). The author added that completely satisfied customers are produced when companies go beyond customer expectations in the relationship; where outstanding customer service is provided by going beyond the physical product or service attributes to the augmented product, which is, seeing that what the company is selling is not just the product itself but the product and services the company can offer to differentiate the product from competition. Moreover, a popular way to maintain loyal customers is through loyalty or frequency programs, which reward customers for repeat purchases. These include raffles and coupons, which offers cash or big prizes. Long-term relationships can also be established through mass customization in which the customer sees the company as providing a product or service tailored to his or her needs (2004). The author also emphasized that the loyalty of a customer through long-term relationships presents economic advantages, and these include increased profits derived from profit margins produced over the term of the relationship, increased revenues from greater purchase volume, lower costs of serving loyal customers, referrals to new customers, and price premiums (2004).

             (2000) states that quality, satisfaction, and loyalty ultimately affect financial performance, both directly and indirectly (). The authors added that there may be a tension between them, as producing a high-quality product or service at an attractive price indirectly affects financial performance through its effect on external customer perceptions of the purchase-consumption experience. However, internal quality may also have a direct effect on costs and revenues, as services are produced and delivered at a time and place that is typically dictated by the customer. Thus improving service quality often requires an increase in personnel and operating or contact hours, which raises operating costs (2000).

Conclusion

            Consumers help dictate the flow of a business. The production and the success of a company depend on the demand of its customers. This is the reason why companies must always improve and advertise their products for the sake of their customers, with advanced technology and extensive research. The companies must also allocate reasonable prices to their products to be purchased by the consumers. In this way, both the consumers and the companies gain from the trade.

 

 

 

 

 

 

 

Market Paradigms Issues and Challenges – Social Network Marketing

 

1.0 Introduction

In the era wherein technology affects every individual directly and indirectly, internet presence is critical particularly for companies that are motivated to grow fast ahead of the competitors, grow in line with the industry or to simply catch-up and defend an existing status. Such a strategy aimed at increasing the organisation’s operational efficiency especially that operation is increasingly becoming boundary-less. Apart from e-mails, internet forums, blogs, minisites, search engine listings, web directories and websites, internet presence is made possible by social networks. Social networks technically refer to social structure made of individuals which are called nodes and is connected online. Famous social networking sites are MySpace, Facebook, Multiply and orkut among others.  

Since the goal is to commercial diversity the target market, social network marketing is applied. This is an advertising method that makes use of social network services and to increase the web presence of a specific company. Advertising tactics range from direct advertisements and viral marketing which spreads throughout the site. Likewise, advertising could take the form of providing niche social networking sites which focuses on specific products and brands. One of the most used advertising medium in social networking sites is the creation of a commercial profile. Companies can create pages whereby users of the site can view, browse and even become fans of such a company and its products and services.

2.0 Problem Statement

The effectiveness of social networks-based marketing strategies is an area that is unexplored. A major challenge therefore is to evaluate the value and usefulness of social media marketing. The key question that will be answered in this study is – How effective are social network sites as a new medium of advertisement? Other research questions to be given answer to are:

1) What are the advantages and disadvantages of social network marketing to the companies?

2) What are the limitations of social network marketing?

3) What makes social networking sites suitable for advertising?

 

3.0 Study Objectives

The main aim of this study is to evaluate the effectiveness of social network sites as an advertising medium. It also aims to assess the value and usefulness of social networking sites in terms of building brand awareness. Specifically, the study purports to:

·     Determine the benefits and detriments of social network advertising

·     Distinguish the limitations and challenges of social network advertising

 

4.0 Methodology

The research strategy that the study will utilize is the descriptive method. A descriptive research intends to present facts concerning the nature and status of a situation, as it exists at the time of the study (Creswell, 1994). It is also concerned with relationships and practices that exist, beliefs and processes that are ongoing, effects that are being felt, or trends that are developing (Best, 1970). In addition, such approach tries to describe present conditions, events or systems based on the impressions or reactions of the respondents of the research (Creswell, 1994).

In this study, primary and secondary research will be both incorporated. The reason for this is to be able to provide adequate discussion for the readers that will help them understand more about the issue and the different variables that involve with it. The primary data for the study will be represented by the survey results that will be acquired from the respondents. On the other hand, the literature reviews to be presented in the second chapter of the study will represent the secondary data of the study. The secondary sources of data will come from published articles from books, journals and theses and related studies.

 

 

 

 

Marketing Tourist Attraction

 

Executive Summary

            This paper is about tourism marketing. The paper aims to evaluate the market potential of Bath, a popular tourist destination in the United Kingdom. It is also the objective of this paper to analyze the segmentation strategy and to determine the characteristics of the target markets. The purchase decision of the target markets will also be discussed alongside with the factors that affect decision-making process of the consumers.

The key findings of the report are:

• Bath attracts only a small portion of international visitors
• Domestic Tourists are still the major visitors to Bath
• Foreign Visitors especially, those that come from France visit Bath because of its cultural heritage and history
• The market is ageing both domestically and internationally
• The ageing consumer is one of the most promising domestic market
• The lifestyle, values and attitudes of the target markets are changing

Bath is a world heritage site; that alone attract many visitors. Leisure and holiday trips predominate followed by visiting friends and relatives and business trips. Bath is a strong tourist destination because it is accessible by road, rail and air, it has a national and international profile, a distinctive sense of place and high quality urban environment, it offers diverse attractions with some major draws and particular strengths in heritage, culture and shopping.

The most serious threat to tourism in Bath, especially domestic tourism, is the invigorated destinations and products, both domestically and internationally and the growth of low cost carriers.

 

Introduction

Bath is among the ten most visited tourist destinations in Britain. Bath is most famous for its hot springs. Bath is the only place in England that has hot springs. The Romans are the ones who pioneered in Spas. The city reached its fashionable pinnacle in the eighteenth century. The city of Bath is one of the few completely Georgian cities in the world. It ranks alongside Venice, Florence and Edinburgh as a world heritage site. Bath’s hot springs, Roman Baths, splendid Abbey and Georgian stone crescents have attracted visitors for centuries. Bath is truly a unique city that managed to maintain its heritage while promoting community advancement. This small city is renowned throughout the world for its beauty and breath taking Georgian Architecture. This World Heritage site is visited by about two million people from all over the world. It is also famous for being a festival city. In late spring, the Bath International Music festival takes place for two weeks ( 2007).

Market Place Review

General Market Condition: England

The population in the United Kingdom is growing. The growth in population in recent years has been caused by international migration. The United Kingdom has an ageing population this is caused by the diminishing fertility rates and mortality rate. Because of this there is a declining proportion of the population aged under 16 and an increasing proportion aged 65 and above.

There are different issues that have affected the United Kingdom domestic market. The oil price hike and the threat of terrorism and avian flu have combined with the additional challenges created by shifting UK consumer behaviour and demographics to generate challenging trading conditions for domestic tourism. The emergence of low cost carriers and the development of many regional airports have meant that United Kingdom consumers have been unable to resist the lure of cheap flights to exciting destinations. The outbound tourist travel continues to grow because of the increase in budget flights and the poor image of UK public transport. The ageing population is also expected to create a new trend in domestic tourism. Older consumers are more active and work longer than generations before them. They will be relatively well travelled and will search for new destinations ( 2007).

 

General Market Condition: West of England, Bath

Overseas tourism to the United Kingdom continues to grow. Even if tourism is greatly affected by external events such as terrorism and natural disasters, the effect of such events only last for a short period of time, causing changes in demands rather than an overall reduction. Bath, together with the rest of the West region only attracts a relatively small percentage of international visitors. The domestic tourists are the major visitors to Bath. However, recent figures show that there has been no significant increase of visits by domestic tourists in Bath (2006)

 

Bath: Competitor Analysis, Market Share and Niche Markets

Bath is s strong tourist destination due to the following reasons:

o   It is accessible by road, rail and air

o   It has a large, relatively affluent and growing resident population combined with a buoyant and expanding economy

o   It is a destination with a national and/international profile, a distinctive sense of place and high quality urban environment

o   It offers diverse attractions with some major draws and particular strengths in heritage, culture and shopping

o   It has an attracting array of festivals and activities which draw visitors from outside the area

o   A good range of accommodation base

o   Professional and focused destination marketing and management ( 2006)

The City of Bath attracts high volume of tourism relative to population. There are a significant proportion of overseas visitors. It is mostly visited by up market, largely adult groups. There is a range of age groups of tourists who visit Bath but middle and age groups are the majority. Leisure and holiday trips predominate followed by Visiting Friends and Relatives and business trips. The most serious threat to tourism in Bath comes form new and invigorated destinations and products, both domestically and internationally ( 2006).

 

Segmentation and Targeting Analysis

            Market segmentation according to (2000) is the prerequisite for selective market operation. It means splitting consumer markets into homogenous subgroups of consumers. There are two fundamentally different concepts of market segmentation. The first is ‘a priori’ (criterion) segmentation. This departs from a predetermined criterion such as purchasing volume and loyalty. In a priori segmentation, the marketing objective determines how to divide markets into smaller units. The second concept is ‘a posteriori’ (similarity) segmentation. This rests on the assumption that subgroups in a consumer population are homogeneous in terms of motives, attitudes and/or activities. This mental and behavioral homogeneity is likely to make them react to product offerings and promotional efforts in a similar manner. Market segmentation, applied to tourism is the division of the tourist market into more or less homogenous subgroups, or tourist market segments, based on a certain common characteristics and/or behavioral patterns.

 

Market Segmentation Bases

There are different ways to segment a market. The fundamental segmentation variables for consumer markets focus upon geographic, demographic, psychographic, and behavioristic dimensions ( 1991).

Geographic segmentation is carried out on the basis of the market’s origin.

Sociodemographic segmentation is based on social and demographic variables such as gender, age, family lifecycle, education, occupation and income. Psychographic segmentation comprises personality, motivation, and lifestyle variables. Psychographic segmentation makes it possible to divide different markets on the basis of lifestyle and values (2003). It is based on the differentiation of the tourist market on the basis of psychological and motivational characteristics such as personality, motivations and needs. Behavioral segmentation is the identification of tourist markets on the basis of activities and actions undertaken during the actual tourism experience.

 

            In order to make an effective market segmentation strategy segmentation bases such as demographics, sociodemographic and psychographic. In segmenting the market and identifying the target market, it is important to know the geographic origin of the consumer. It is also important to identify different social and demographic variables such as gender and age in order to determine the buying behavior of the consumer. The decision making process of the consumer can be understood more clearly if psychological and motivational characteristics will be studied.

 

Target Markets

            The characteristics of the target markets will be discussed based on demographics, sociodemographic and psychograpic bases. Because of space constraints only the domestic market and the French Market will be discussed.

 

Domestic Market

Tourists in the 35-54 age group are the most likely to go on holiday, and the most likely to visit local attractions. This may be due to the fact that this age group is consist of parents, whose children may put some restraints on the choice of holiday destinations. The domestic market is segmented based on people’s core values and definitions of quality. Value-based segments will differ in their brand choice, behavior, lifestyles, leisure activities and interests and so a deeper understanding of their purchasing behavior, inclination to travel and general views on life can be achieved. The following are examples of the market segments:

• High Streets – The high street segment are generally externally referenced. They are interested in fashion brands. Style is more important than functionality or individuality. They are an active segment moderately interested in intellectual pursuits, arts and culture ( 2007). 
• Discoverers – The discoverer segment are independent. They do not care what other people think. Style and brand do not have a big influence on them unless it represents values they are seeking. They look for functionality rather than style. They value good service. They live a relatively relaxed paced of life. They enjoy intellectual challenges but arts and culture are not a significant part of their personality ( 2007).
• Cosmopolitan – Cosmopolitans are strong, active confident individuals who do what they want rather than following any particular fashion Cosmopolitans view themselves as stylish, but individuality rather than fashion is most important and they are quite happy to adopt traditional values when they feel they are appropriate. They are risk takers; this is reflected in their purchase, but also in their desire for things that are new and different and provide them with new challenges, both physical and intellectual. This includes an appreciation of art and culture. Life for this group is full and active, yet peace and relaxation is still valued ( 2007).

International Market

France

Thirty-three per cent of visitors from France to England come for the purpose of holiday. Visiting friends and relatives (VFR) are the purpose of 32 percent of the French tourists. Business travelers account for 25 per cent. Overall visits from France to England are evenly spread throughout the seasons. Holiday visitors (29%) come to England in April and June. October, November and December are the most popular period for VFR visitors, which make up 26 percent of French tourists ( 2007).

            Almost half of all visitors from France (47%) are aged below 35. The largest age category for French visitors was 25-34 (21%), followed by 35-44 (20%). The proportion of visitors aged 55 and above has increased steadily over the past five years, reflecting the aging population. The French Holiday market segment is consist of High Income Young Families and Middle Income Couples ( 2007).

            The French are reluctant to speak English through a lack of confidence. French people look for good deals. The French prefer to stay in mid-range accommodation. Country house hotels are popular in France. Bed and breakfast are popular, but mid-range and above rather than budget. Because of price issues, youth travelers prefer to stay in hostels or university accommodation (2007)

 

Consumer Decision Making

What Attracts Domestic Tourists

England excels in the provision of Unspoilt Countryside and History and Heritage. These also attracts British visiting England. England also attracts domestic tourists through its Local Produce, Arts and Crafts, facilities of Camping and Caravanning, Activities for Children and Myths, Legends and Folklores. The beaches and the coastline also motivate domestic tourists.

Source of Information

Previous experience is the most popular source of information when choosing accommodation, while advice from friends and relatives and the internet are important factors (2007).

 

 

 

What Attracts French Visitors?

• History, Heritage and Culture – French visitors are attracted to England’s rich history, heritage and cultural attractions.
• Countryside – French visitors are interested in England’s natural scenic beauty and countryside.
• Shopping – Another reason why French tourists visit England is shopping for traditional English products and trendy items ( 2007).

French Tourist’s Perception of England

• Close geographically
• An island culture
• Its Europe without being Europe
• Colonial past means excellent museums and galleries
• Educational, especially for children
• A place to learn English, especially for children
• Good for a weekend away ( 2007)

Source of Information

French tourists rely mostly on travel agents for information and booking. The internet is second choice when deciding on the destination and booking the trip (2007).

 

 

Multiple choice exam

 

UNIT EXAM 1 (CHAPTER 1-5)

PRINCIPLES OF MARKETING

 

 

INSTRUCTIONS TO THE CANDIDATES:

 

Please carefully read the following questions and circle/tick your correct answer in the answer sheet provided in this Study Guide.  Give yourself time for rechecking after completion of test.

 

 

1.             2.             3.           4.             5.             6.             7.           8.             9.               10.           11.                 12.               13.             14.               15.             16.           17.               18.           19.             20.             21.             22.               23.               24.             25.

Marketing seeks to create and manage profitable customer relationships by delivering _____ to customers. competitive prices superior value superior service superior promotion   At work, customers decide to satisfy needs and wants through exchange.  What occurs at this point? selling customer service marketing transaction marketing   One of the following is the call of the Information Age where the customer asks: “This is what I want, will you make it safer?” “This is what I want, won’t you please make it?” “Can you make it safer and sell it cheaper?” “This is what I want, can you provide more options?”   A tremendous advantage of modern communication and advertising tools is that marketers can zero in on selected customers with carefully _____. selected customer profiles customized products flexible pricing ranges selected targeted messages   Modern companies are improving their customer knowledge and customer _____satisfaction. appreciation awareness connections none of the above   Disney has been successful in selecting an overall company strategy for long-run survival and growth called _____. a.       tactical planning b.      strategic planning c.       futuristic planning d.      relationship marketing   Paul Pierce is busy working with other managers evaluating the products and businesses making up their company.  Paul is engaged in _____. a.       strategic business unit analysis b.      preparing a business portfolio c.       portfolio analysis d.      marketing planning A common practice among marketers is to identify and develop new markets for their existing products.  This practice is called _____. a.       market development b.      product development c.       market penetration d.      market skimming   TelStar Plastics is in the process of dividing a market into distinct groups of buyers with different needs, characteristics, or behavior who might require separate products or marketing programs. What is this firm doing?  a.       market development b.      market diversification c.       market penetration d.      market segmentation   A marketing audit covers which of the following areas of a business? a.       marketing department b.      sales department c.       advertising department d.      all areas   Under Schwab’s two-tiered system, customers had to be either online or offline. What was not a result of this system? Customers continued to place orders over the phone. Phone customers had to pay twice the commissions. Customers became confused. The two-tiered system was a failure.       The new model will fundamentally change customers’ notions of convenience, speed, price, product information, and service. This new consumer thinking will affect _____. a few businesses every business established businesses starting up businesses   The Internet gave birth to a new species of e-markets, _____ that operate only online. brick-and-mortar companies click-and-mortar companies Old Economy the click-only dot-coms   s of e-commerce envision a time when the Internet will replace all but which of the following. magazines newspapers stores food markets     A recent study found that more than one out of three messages that hit e-mail inboxes are _____. a.       effective b.      failures c.       unwanted d.      too lengthy   The most commercially influential demographic group in history is _____. a.       generation X b.      baby boomers c.       generation Y d.      seniors   A company’s marketing environment includes various _____, which consists of any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives. a.       teams b.      audiences c.       markets d.      publics   _____ households are now growing faster than _____ households. a.       Traditional; nontraditional b.      Large; traditional c.       Nontraditional; smaller d.      Nontraditional; traditional   The primary concern with the boom in e-commerce and Internet marketing is _____. a.       pornography b.      ripoffs c.       privacy d.      ethics   Firms that take an environmental management perspective will hire ____ to influence legislation affecting their industries to their advantage. a.       mediators b.      lobbyists c.       negotiators d.      politicians   What went wrong with Coke in 1985? a.       Management defined its marketing research problem too narrowly. b.      The research looked only at taste and not feeling about dropping the old Coke. c.       No account of intangibles was taken. d.      All of the above   Patti Lovelace is making a presentation to the owners of her company.  She is trying to convince them to conduct some current marketing research.  Which of the following would she not emphasize as a benefit or selling point? a.       assess market potential and market share b.      understand customer satisfaction and purchase behavior c.       measure the effectiveness of pricing and accounting d.      measure the effectiveness of distribution and promotion activities   Survey research, called the backbone of primary research, is the most widely used method for primary data collection and is best suited for gathering _____ information. a.       personal b.      preference c.       attitude d.      descriptive   Small organizations can obtain most of this type of data available to large businesses with minimal effort.  What type is it? a.       census b.      Internet c.       secondary d.      primary   Recognizing that surveys can be abused, several research associations have developed _____ and _____. a.       research conduct; standards of ethics b.      research ethics; standards of conduct c.       safeguards; public policy d.      research ethics; safeguards

 

  

 

UNIT EXAM 2 (CHAPTER 6-10)

PRINCIPLES OF MARKETING

 

 

INSTRUCTIONS TO THE CANDIDATES:

 

Please carefully read the following questions and circle/tick your correct answer in the answer sheet provided in this Study Guide.  Give yourself time for rechecking after completion of test.

 

 

1.           2.             3.           4.               5.             6.           7.           8.           9.             10.               11.               12.               13.                   14.               15.                     16.                 17.             18.             19.             20.               21.               22.                   23.             24.                 25.

The average Harley customer is _____. a.       the Hell’s Angels crowd b.      a young adult in his or her 20s c.       a teenager d.      a 46-year-old husband with a median household income   What is one thing that Wal-Mart does not do to cater to the Asian market in one Seattle store? a.       Wal-Mart stocks a large selection of CDs from Asian artists. b.      Wal-Mart stocks videos from Asian artists. c.       Wal-Mart stocks Asian-favored health and beauty products. d.      Wal-Mart puts out white bows because Asians think it is a lucky color.   All of the following make up a person’s lifestyle except _____.  a.       AIO dimensions b.      interests c.       dissonance-reducing buying behavior d.      opinions   If the experience is rewarding, she will probably use the camera more and more.  Her response to cameras will be _____. a.       a learning experience b.      a belief c.       reinforced d.      a dissonance experience     Relative advantage, compatibility, complexity, divisibility, and communicability are characteristics of _____. a.       alternative evaluation b.      dissonance-reducing buying behavior c.       influence of product on rate of adoption d.      habitual buying behavior   Business buyers tend to be more rational and _____ than consumer buyers. a.       orderly b.      objective c.       subjective d.      team-oriented   What is the decision-making unit of a buying organization called today? a.       buying committee b.      buying center c.       buying team d.      lone ranger   What must the marketer to governments need to know? a.       who the key decision makers are b.      identify the factors that affect buyer behavior c.       understand the buying process d.      all of the above   Almost all of the government organizations maintain Internet sites offering up-to-date _____ and _____. a.       advice; agency data b.      information; advice c.       addresses; phone numbers d.      information; contact persons   After reading a trade publication at work, you as chief purchasing agent at TideWell Electronics, have discovered that the largest market in the United States is the _____ market. a.       consumer b.      institution c.       business d.      government   Why does Proctor & Gamble offer products that compete with one another on the same supermarket shelves?  a.       Different people want a greater selection/more choices. b.      Different people want different mixes of benefits from the products they buy. c.       P&G has little competition. d.      Retailers request it.   Markets can be segmented into groups of nonusers, ex-users, potential users, first-time users, and regular users of a product.  This method of segmentation is called _____. a.       user status b.      usage rate c.       benefit d.      behavioral   Under what circumstances can local marketing be quite effective? a.       when pronounced regional differences in demographics and lifestyles are present b.      when pronounced local differences in demographics and lifestyles are present c.       when pronounced regional and local differences in demographics and lifestyles are present d.      when regional and local differences in demographics and lifestyles are similar   Superior Auto Sales, a chain of high-end used car dealerships, wants to sum up its company positioning and brand positioning in a formal way.  Superior’s management would use a _____. a.       mission statement b.      vision statement c.       position statement d.      positioning statement   Once it has chosen a position, a company must take strong steps to deliver and communicate the desired position to target consumers.  Locate the step below that is not correct. a.       The company’s marketing mix efforts must support the positioning strategy. b.      Positioning the company calls for concrete action, not just talk. c.       Designing the marketing mix involves working out the strategic details of the positioning strategy. d.      Its service personnel, retailers, and advertising messages must match correctly.   If you are looking for enlightenment in all the wrong places, _____ companies are eager to help.  Feeling good is the new religion.  These companies are the newest of the new prophets, turning the old notion of hope in a jar on its head. a.       auto b.      cosmetics c.       toy d.      food     _____ are those products purchased for further processing or for use in conducting a business. a.       Unsought products b.      Specialty products c.       Shopping products d.      Industrial products   _____ occurs when two established brand names of different companies are used on the same product. a.       Brand extension b.      Brand equity c.       Co-branding d.      Internal marketing   _____ means that services cannot be separated from their providers, whether the providers are people or machines. e.       Service intangibility f.       Service inseparability g.      Service variability h.      Service perishability   _____ means that the service firm must effectively train and motivate its customer-contact employees and supporting service people to work as a team to provide customer satisfaction. a.       Service inseparability b.      Service intangibility c.       Service variability d.      Internal marketing   Every product seems to go through a life-cycle.  Which of the following is not a major challenge presented by the PLC?        a.    All products eventually decline.        b.    A firm must be good at developing new products to replace aging               ones.        c.    The firm must be good at adapting its marketing strategies.        d.    It is difficult to plot the stages as a product goes through the stages    With what groups do firms conduct concept testing for new products?             a.         suppliers             b.         employees             c.         target consumers             d.         focus groups           Companies use simulated test markets to test new products in a simulated _____ environment. a.           e-commerce b.           shopping c.           trial use d.          competition-free   It’s What’s Hip, a chain of 18 music and CD stores, has discovered that carrying a weak product during the decline stage of the PLC can be very costly to a firm, and not just in profit terms.  Which one of these is not likely to be one of those costs? a.      take up much of management’s time b.        frequent price and inventory adjustments c.         requires advertising and sales force attention d.        few concerns about company image and other products   In general, which choice would a company make toward declining products? a.           maintain or harvest them b.           harvest or drop them c.           maintain, harvest, or drop them d.          maintain or drop them

 

 

 

 

UNIT EXAM 3 (CHAPTER 11-15)

PRINCIPLES OF MARKETING

 

 

INSTRUCTIONS TO THE CANDIDATES:

 

Please carefully read the following questions and circle/tick your correct answer in the answer sheet provided in this Study Guide.  Give yourself time for rechecking after completion of test.

 

 

1.             2.           3.             4.               5.           6.             7.               8.               9.             10.                     11.             12.           13.           14.             15.               16.                         17.             18.             19.             20.             21.             22.                       23.                 24.             25.

The price of an executive is a _____, the price of a salesperson is a _____, and the price of a worker is a _____. commission; wage; salary wage; commission; salary salary; wage; commission salary; commission; wage   _____ are the sum of the _____ and _____ for any given level of production. a.       Fixed costs; variable; total costs b.      Fixed costs; total; variable costs c.       Variable costs; fixed; total costs d.      Total costs; fixed; variable costs   _____ is a company’s power to maintain or even raise prices without losing market share. a.       Variable cost b.      Pricing power c.       Target cost d.      Fixed cost   Using _____, a company bases its price on how it thinks competitors will price rather than on its own costs or on the demand. a.       sealed-bid pricing b.      cost-plus pricing c.       dynamic pricing d.      market share leadership                                         The more _____ the demand, the higher the company can set its price. a.       elastic b.      external c.       internal d.      inelastic   A company sets not a single price, but rather a _____ that covers different items in its line that change over time as products move through their life cycles. a.       pricing range b.      pricing structure c.       pricing loop d.      pricing cycle   What will by-product pricing allow a seller to do?  Keep in mind that the seller must sell the by-products at a price that covers more than the cost of storing and delivering them. a.       increase the main product’s price b.      make extra profit c.       reduce the main product’s price d.      none of the above   Meldanado Equipment Company charges all customers within a given geographical area a single total price—the more distant the area, the higher the price.  What is it called?          a.    geographical          b.    zone          c.    uniform-delivered          d.    FOB-origin   To prevent profit loss in the short run due to a forced price cut, a company might employ one of these strategies. Which one? a.       increase the product quality b.      reduce standard services c.       increase marketing communications e.       reduce the workforce   The most common complaint about abuse of scanner-based computer checkouts is     _____. a.       failure to provide the correct price b.      overcharging customers c.       wasting time in line arguing about prices d.      none of the above           Caterpillar Company charges premium prices for its heavy equipment.  It is successful because _____. a.       the equipment is high quality b.      its distribution is unparalleled c.       its customer support system is strong d.      both a and b   Distribution channel decisions often involve _____ with other firms. a.       short-term commitments b.      long-term commitments c.       major problems d.      financial losses   The most common type of hybrid marketing channel is the _____. a.       dual distribution system b.      multichannel distribution system c.       administered franchise d.      horizontal multichannel system   The difference between distribution centers and storage warehouses is that the former are designed to _____.          a.    store goods for longer periods          b.    hold larger volumes          c.    move goods rather than just store them          d.    none of the above   Companies use third-party logistics providers for all of the following reasons except one.  Which do you think it is?          a.    It is more efficient to use them in many cases.          b.   They can perform the services at less cost.          c.    The company is free to focus more on its core business.          d.    ICC and the federal government are beginning to mandate and regulate                  some industries.   _____ cofounder Bernie Marcus made this statement of his company.  “All of our people understand what the Holy Grail is. It’s not the bottom line.  It’s an almost blind, passionate commitment to taking care of customers.” a.       Wal-Mart’s b.      Target’s c.       Home Depot’s d.      Kroger’s             _____ are sometimes several stores grouped together where dozens of stores offer prices as low as 50 percent below retail on a wide range of items. a.       Independent off-price retailers b.      Factory  outlets c.       Specialty stores d.      Superstores   _____ may include in-store demonstrations, displays, contests, and visiting celebrities. a.       Franchises b.      Sales promotions c.       Agent promotions d.      None of the above   Wholesalers are always rethinking which _____ count most in building strong customer relationships and which should be dropped or charged for. a.       products b.      services c.       franchises d.      agents   Because _____ invest little money in their equipment, their materials-handling and order-processing systems are often outdated. a.       retailers b.      agents c.       wholesalers d.      brokers   _____ has a core value of humility and it finds tremendous strength in the color brown. a.       UPS b.      CEO c.       US Army d.      USPS   How does UPS communicate with customers through the company’s several Web sites? a.       Customers can learn more about UPS’s business-to-business services. b.      Potential clients can browse through success stories of UPS’s Fortune 500 customers. c.       Corporate clients can establish lines of credit. d.      all of the above           A company’s total marketing communications mix consists of a special blend of advertising, sales promotion, public relations, personal selling, and direct-marketing tools that the company uses to pursue its advertising and marketing objectives. This is also called _____. a.       direct marketing b.      integrated marketing c.       promotion mix d.      competitive marketing   Short-term incentives to encourage the purchase or sale of a product or service is called_____. a.       direct marketing b.      sales promotion c.       personal selling d.      public relations   Bait-and-switch advertising _____. a.       attracts buyers under false pretenses b.      is unethical c.       is illegal d.      all of the above

 

 

 

UNIT EXAM 4 (CHAPTER 16-20)

PRINCIPLES OF MARKETING

 

 

INSTRUCTIONS TO THE CANDIDATES:

 

Please carefully read the following questions and circle/tick your correct answer in the answer sheet provided in this Study Guide.  Give yourself time for rechecking after completion of test.

 

 

1.           2.             3.               4.           5.             6.               7.           8.             9.           10.           11.             12.             13.             14.               15.             16.                 17.             18.               19.           20.               21.           22.             23.               24.

Mass-promotion tools include all of the following except _____. a.       advertising b.      sales promotion c.       public relations d.      personal selling   Managers must rely on large _____ along with more quantitative analysis when setting advertising budgets. a.       optimal investments b.      patronage rewards c.       doses of judgment d.      discounts   Advertisers are increasingly shifting larger portions of their budgets to media that cost less and target more effectively.  All of the following benefit greatly from this shift, except _____. a.       outdoor advertising b.      cable television c.       network television d.      digital satellite television systems   What is not an objective for trade promotions? a.       to get retailers to carry new items and more inventory b.      to get retailers to advertise the product c.       to gain more shelf space d.      to get salespeople to sign up new accounts   _____ use several tools.  Some of these are:  the news, speeches, and special events. a.       Advertising agencies b.      Advertising specialists c.       Public relations professionals d.      (POP) specialists   Which of the following communication and promotion tools involve direct connections with customers aimed toward building customer-unique value and lasting relationships? a.       personal selling b.      direct marketing c.       e-commerce d.      both a and b   Many companies offer their sales forces incentives to perform well.  Which one of these is not a common incentive in the United States?             a.   cash a.       trips b.      savings bonds c.       merchandise Today, most companies still use direct marketing as a _____ for marketing their goods.          a. supplementary channel or medium b.           major marketing mix element c.           compliment to personal selling d.          technique reserved for mature and international markets    Kiosk marketing is primarily used for _____. a.       consumer marketing b.      business marketing c.       consumer and business marketing d.      industrial marketing   What is the common goal that both direct marketers and consumers want?             a.         honest marketing efforts             b.         well-designed marketing efforts             c.         efforts that consumers will appreciate and respond to             d.         all of the above   To win in today’s marketplace, companies must become adept not just in _____, but in _____ in the face of determined competition. a.       managing customer relationships; managing products b.      managing products; managing customer relationships c.       benchmarking; managing products d.      managing products; benchmarking   _____ is the analysis conducted to determine what benefits target customers value and how they rate the relative value of various competitors’ offers. a.       Customer value analysis b.      Competitive marketing strategies c.       POP promotion d.      Advertising specialty   Few firms can be the best at more than one _____ at the same time.  FedEx has achieved this. a.       captive-product pricing b.      value discipline c.       advertising objective d.      promotional intimacy   Why is _____ profitable?  The reason is because it ends up knowing the target customer group so well that it meets their needs better than other firms that casually sell to this same group of people. a.       prospecting b.      direct-mail marketing c.       niching d.      catalog marketing   Which is not one of the four orientations that companies have moved through over the years? a.       market oriented b.      pay attention to customers c.       (POP) oriented d.      competitor oriented   A Chinese New Year television ad features a dragon in a holiday parade, adorned with red Coke cans.  The spot concludes, “For many centuries, the color red has been the color for good luck and prosperity.  Who are we to argue with ancient wisdom?”  This is an example of _____. a.       localized positioning b.      joint venturing c.       product invention d.      straight product extension   Firms that stay at home to play it safe _____. a.       lose their chances to enter other markets b.      risk losing their home markets c.       are far more stable d.      both a and b     Adoption of the Euro will do all of the following except _____. a.       decrease much of the currency risk b.      make countries with previously weak currencies more attractive markets c.       highlight differences in pricing and marketing from country to country d.      create a homogenous market   When economic and political boundaries fall, _____. a.       social and cultural differences will remain b.      local rules will not be a problem c.       social and cultural differences will fall also d.      both b and c   There are three major links between the seller and the final buyer.  They are seller’s headquarters organization, channels between nations, and channels within nations.  These make up a _____. a.       whole-channel view b.      direct-distribution channel c.       large-scale channel d.      none of the above   The marketing concept is a philosophy of customer satisfaction and _____. a.       mutual interest b.      mutual gain c.       innovation d.      needs met   A type of economic discrimination in which major chain retailers avoid placing stores in disadvantaged neighborhoods is called _____. a.           embargo b.           licensing c.           redlining d.          tariff   In the new millennium, social scientists have noted a _____. a.           stronger infatuation with material things b.           stronger need to buy c.           reaction against waste d.          both a and b       While reading the newspaper article about Hainsworth & Sons’ lawsuit, you see that the company is under question about several marketing decisions it has made.  Which of the following is not a typical marketing decision that might be questioned? a.           selling decisions b.           product decisions c.           price decisions d.          employee decisions       Companies that are able to create _____ in a socially responsible way will have a world to conquer. a.           the most satisfaction b.           the best promotions c.           new customer value d.          new product

 

 

FUNDAMENTALS OF MARKETING

PEST Analysis

Introduction

            For this marketing analysis, I chose to do an analysis for a fictional website named Jet.com. It is very beneficial to create such a website today, especially if it is a search engine. It has been proved many times that search engines are in fact the most used sites ever devised. Examples of such are the search engines Yahoo! and Google.

            This paper will focus on the marketing analysis of the fictional search engine and would thus employ the use of PEST Analysis. The PEST analysis can give us a better view of the environment the company is moving in. It may also provide useful insights as to what the company should do, in any case.

 

Company Overview

            Jet.com is a newly founded company. It is a search engine similar to Yahoo! and Google. To be able to come up with a good marketing strategy, it has decided to conduct an environmental analysis. One of the best tools to use to analyze a situation and an environment is through the use of PEST analysis.

 

 

PEST Analysis

Political

            Government regulations and other legislation now mandate the integrity, accessibility and long-term retention of data in any company. Regulations also prescribe severe financial and criminal penalties for organizations that fail to meet established standards, forcing many organizations to seriously re-evaluate the way their data is handled and secured.

            Furthermore, as the web is really very wide and is difficult to monitor, the governments around the world have submitted laws concerning the monitoring and the restrictions in the web. As for Jet, it needs of course to comply with these laws, though there may be a number of restrictions. These restrictions however would not entirely mean loss of profit. Legal matters must be handled with utmost care in order to be shielded from unwanted fines, penalties or even bans.

 

Economic

            Trends in the economy, inflation and deflation may also impact the company. Also, increase in the number of internet savvy countries could mean additional revenues for the company. Trends are not as easily predictable in web based companies. Therefore, Jet must always be on the lookout for economic trends, the devaluation of currencies, and other such happenings in the economy.

            These trends should not be feared, rather, they should be taken advantage of. Jet should learn to “ride on the waves” of the endless economic trend. It must always be equipped with the necessary tools and countermeasures to alleviate any possible setbacks faced when the trend worsens. In any case, the company should always be careful and should always take note of the needs of the company, should anything happen.

 

Socio-cultural

            The internet has presented many changes to the culture of modern man. As the name suggests, internet connects many people together no matter how far they may be. The internet has been a tool for connection, and a tool for rediscovery. Many long forgotten mementos may be recovered with the use of the internet, provided a website has uploaded that memento. Interconnectivity is the prime usage of the internet, as well as easier information dissemination. Through the internet, new and old information alike can be easily accessed. This provides endless arrays of wonders to any human. Culturally and socially, many nations can be brought together with the use of the internet. The internet can provide two countries with conflicting personalities many possibilities of togetherness.

            In the case of Jet, it can provide interconnectivity and recovery of information just like any other search engines. Also, it must adapt to the culture of the host country. And it must further provide information and other advanced options other than the ones found it search engines. This would be of great advantage to Jet.

 

Technology 

            Technology can help further the concept of interconnectivity. The internet itself is a product of technology. No one may have dreamed that one day; they can see their loved ones overseas with just one click. This is the concept that helped put up one of the most advanced and complex programs ever devised by man. The internet has not yet been completely mapped; therefore, the possibilities are endless.  However, the internet may also create many more competitors.

            In the case of Jet, it must make use of the endless possibilities that the internet may offer. It should take advantage of any possible idea that could mean that it may be taken up to the next level so it may outdo any other competitors.

                       

 

 

 

 

 

Fundamental of Marketing

Apple computers Inc

Apple was founded by and in 1976; Apple Computer Company revolutionized the personal computer industry and epitomized the rise of clean industry in the New West. Located in the Santa Clara Valley, in California, the company's first product was the Apple I, a single-board computer with on-board read-only memory (ROM), which sold for about $650 without a monitor or keyboard. Orders instantly soared, and Jobs and Wozniak quickly brought out the Apple II, which included a keyboard, color monitor, and expansions for peripheral devices (2003). In 1984, Apple introduced the Macintosh, which was aimed at the business and education markets, by which time the company had already not only changed American industry but had reshaped entire areas of the West around silicon.

 

In 1996, after a series of CEOs failed to keep Apple profitable, Steve Jobs returned under the rubric interim CEO and soon launched a new marketing and licensing relationship with Microsoft. In 2000 his direct sales concept, the Apple Store brought the company back to profitability (2003). Apple Computers Inc is considered to be one of the innovators in the computer industry. It brought about different changes to the industry; these changes are still visible in the present.  The company’s products were used as a basis by other computer company’s in designing the specifications and physical characteristics of their product. It also serves as a meter of how computer products are designed

Market Orientation to implement

Market orientation was evident in the idea to involve staff in making the kinds of internal changes to policies and procedures that could be linked to market place performance that external customers would value. This involves more than traditional marketing skills. The more orthodox marketing approach to try to change staff attitudes by formal communications alone was rejected as superficial and unidirectional. The shift to market orientation and customers first meant that the logic of existing organizational knowledge was reframed, seen from a different perspective. Thus, new knowledge was indeed ‘discovered’ in a new patterning of the verities (2000). An organization’s strategic values are the rationale for the viability of a business and link the organization to its environment. These values are reflected in, and are a reflection of, the prevailing culture within the organization (2000).

 

As organizations are collections of people, the climate or culture of an organization is dependent on how the employees view that organization and its goals. Through the medium of work people co-operate so that their personal goals can be incorporated into organizational goals. A market orientation is the culture which most effectively and efficiently creates the behaviors that lead to the provision of superior customer value (2000).The marketing orientation that the company should implement is deeper customer focus. This type of orientation provides assistance for the company to achieve their goals and provide effective service compared to competitors.

Recommendations for profitable relationship

Satisfied customers become loyal, and loyal customers are more profitable. Relationship marketing tries to optimize individualized communications and interactions with customers and prospects to develop a long-term profitable relationship with them. Relationship marketing uses a multitude of channels. Direct mailings, e-mails, telemarketing, and the Internet are the most commonly used to reach, convince and communicate with customers more effectively, to support sales staff efforts, and to enhance customer service. But most of all, relationship marketing is technology-driven. Database and data mining technology combined with call centre and web technology, enable the marketing manager to efficiently develop customer contacts (2004).

 

 A relationship marketing database contains customer characteristics, transaction and contact data, and allows analyses that enable the marketer to more efficiently reach specific target groups with the right offer, and turn them from first-time buyers into loyal customers and advocates. The effectiveness of relationship marketing depends on the extent to which customers can be kept satisfied and loyal in a profitable manner (2004). To have a profitable relationship with customers it will be best for the company to make use of various communication technologies with clients so that the company can be updated on what interest the clients and so that customer satisfaction can be implemented.

 

 

 

 

Consumer Behavior: The Case of Maladep

 

 

 

 

 

 

 

 

 

Consumer Behavior: The Case of Maladep

 

 

 

 

 

 

 

 

Table of Contents

TITLE PAGE..........................................................................................................1

TABLE OF CONTENTS........................................................................................2

I. Market Overview

1.1  Market Trend .......................................................................................3

1.2  Competition with Related Products/Services........................................3

1.3  Consumer Behavior on Shaving and Depilation...................................7

II. Analysis of Product Launch

            2.1 Introduction, Adoption and Diffusion in the Market...............................7

            2.2 Characteristics of Consumers who adopted the product....................12

            2.3 Marketing Techniques to Stimulate Adoption......................................13

III. Analysis of Product Failure

            3.1 Psychological Motivations...................................................................17

3.2 Existing Depilatory Products in the Market.........................................19

            3.3 Role of Peer Pressure and Behavioral Rituals....................................20

IV. Research Reasons for Failure

            4.1 Focus Group as Participative Technique............................................21

4.2 Sample and Questionnaire..................................................................22

V. Recommendations

            5.1 Possible Re-launch.............................................................................23

            5.2 Attitude Change..................................................................................24

 

I.  Market Overview

1.1 Market Trend

            Having a hair free body is essential for many women and also for men. Summer means less clothing, bikini clad bodies and ultra smooth limbs, so the demand for hair removing treatments becomes high. Fashion also dictates the type of hair removal treatments and clients. Currently, men are moving into bare skin. They are increasingly seeking the services of salons to have smooth, hair free chest and back (2004 ). Such practice is a new cultural phenomenon in the United States and in the Europe. Given the historical emphasis on the relationship between masculinity and the presence of hair, such shift indicates the changing ideals of attractiveness for men.

Industry types says that the growing interest of men in skin care and healthy living along with the quest for youthful look has been the trend. In the case of male body hair, women are helping the trend. There are a lot of women who do not like hair on men and men listen to them. According to the Nair Company, a survey of 1000 women found out that 90 percent of women from ages 18 to 44 find back hair unattractive among men. The company has released its roll on version of Nair for Men, a male depilatory cream. During the last five years, male grooming products and fashion magazines has awaken the sensibility in men (2003).

1.2. Competition with Related Products/Services

            Depilation is a temporary hair removal which may include waxing, sugaring, tweezing, shaving and depilatory creams. Among beauty salons, waxing is the most commonly used method. It involves hot and cool waxing. The hot wax depilation method has long been established and was superseded by the cool wax method which is now used more extensively and there are many waxing systems available to provide this form of service to the clients (2004).

            The oldest form of hair removal which has been passed down from generations to generations is sugaring. It is a mixture of sugar, water and lemon juice boiled to form sticky paste. Manufacturers have developed products similar to the process and safer to use. This sugar paste is thought to be gentler to the skin than other waxing methods because it can be used at a low temperature and natural ingredients do not cause much irritation to the skin (2004).

Plucking is used in salons but only for the eye brows. There is also a depilation machine available to the general public allowing the mass plucking of the hair that can be used in the legs and the arms.

Perhaps the most prevalent form of male depilation is through shaving. With this method, an electrical shaver or a wet razor is used with soap or a cream. The hair itself is cut off at the skin level and then grows apparently within 24-48 hours (2004). In the study by  (2005), the most frequently reported methods for reducing and removing body hair were: regular razor, electric razor and electric clippers. Many also reported the used of shaving creams mainly with razor.

 

According to Euromonitor, the UK market for men’s shaving products reached EUR 134.6 million in retail value in 2004.

   Figure 1. Sales of Shaving products in the UK in 2003-2004

At the world level pre and post shaving products accounted for EUR 2203 million in 2004.

   Figure 2. Sales of Shaving products worldwide in 2003-2004

With the bulk of men’s grooming products, 42% of sales are razors and blades. This can be explained by the custom of shaving which men had over the years. The sales of men’s grooming products are expected to grow to an average annual rate of 4% to 2009 according to the Euromonitor. The growth is even fuelled by the increased penetration, new retail concepts and high value product launches. The strongest potential for growth is in the U.K., France, U.S. and South Korea ( 2005).

Shaving and the basics remain to dominate the market for men’s grooming. However, the offer in shaving products is getting more sophisticated and is shifting from simple shaving to skin care. The market is being transformed by new entrants and new offerings. More and more offerings are made in the retail markets. Nivea, Gillette, Mennen and L’Oreal are dominating the mass market. In the prestige channel, Biotherm and Nickel pioneered the market which was followed by global brands such as Clarins, Decleor and Clinique(2005).

The increased sophistication does not guarantee that the conventional basic shaving products will be abandoned. Sophisticated products provide more comfort and ease to users but it does impact on the price. Traditional brands are thus expected to continue offering their successful basic products but new developments in their products are likely to be done. Post shaving products and skin care products are also widely marketed. For instance, L’Oreal penetrated the men’s grooming market with the ‘L’Oreal Men Expert’ range which featured shaving products with an after shave representing skin care(2005).

1.3 Consumer Behavior on Shaving and Depilation

            Body image issues were the key factors for body hair reduction and removal. The most significant reasons include cleanliness, sex appeal and body definition/muscularity. Males indicate that they feel cleaner and looked more refined or masculine after shaving or trimming their body hair. It has also been found that body depilation among males were tried on their own accord. It is interesting that men reported no external influences in their choice to shave which suggest that the idea was spontaneous in nature. Other factors include talking to someone about the experience, influenced by media and saw other people engage in the practice. Factors such as relationship status, off season of a sport and climactic differences are also likely to curtail shaving behaviors. Shaving and trimming become less important when males are not in romantic relationships. It also becomes less important during the off season of a sport and climactic off season (2005).

II. Analysis of Product Launch

2.1 Introduction, Adoption and Diffusion in the Market

In the process of developing new products, test marketing and commercialization are considered to be the final stages. Test marketing involves a set of commercial experiments to test the acceptability of the product and the appropriateness of the proposed marketing strategy. Such studies are conducted in one or more isolated geographic markets. The accumulated data is used to refine the marketing strategy and is necessary, the product itself. If the sales of the product have been adequate in the test market, commercialization follows. Commercialization follows the full scale production and the implementation of a marketing plan (2004). This stage marks the introductory stage of the life cycle of the product.

The timing of the new product introduction plays an essential role in determining its success and failure. Because of this, it becomes critical tom plan the commercialization of the products whilst the new product is being developed. The timely release of the new products must be carefully planned before its release. Effective market research can also be sued to develop messages that will create awareness among consumers and convince them about the effectiveness of the product. On the other hand, targeting must be more than advertising campaigns. It must establish closeness to the consumers as they consider the possibility of buying the product. Targeting the new product will entail attention to the competitive strategy of the firm which includes pricing, customer education, distribution and service. The extent in which each of these variables is addresses depends on the market, the availability of substitutes and the product itself (1993).

After the introduction of the product, the next objective is to acquire consumer acceptance. The process of product adoption requires the stages where the consumers learn about new products. Upon the awareness of the product, the consumer exhibits interest. If such attitude is sustained, the consumer is more likely to buy the product which may be considered to be the initial trial of the product. Such trial will either reinforce or reverse the initial impression of the consumer towards the product. Hence, product adoption takes place when the consumer decides to continue to purchase and use the product in a regular basis (2004). Despite such decision, the consumer will seek regular confirmation that the decision to adopt was correct.

            The consumer adoption process can be classified as follows:

1. Awareness. Individuals first learn about the new product but they lack the information about the product
2. Interest. Potential buyers start to look for information about the product
3. Evaluation. Potential buyers consider the benefits that can be taken from buying the product
4. Trial. Potential buyers makes their initial purchase to test whether the product is useful or not
5. Adoption/Rejection. Based on the product trial, the consumer will decide whether or not they will continue buying the product

Diffusion is the process that describes the rate of adoption made by the consumers as a response to the new products. There are typically five categories of adopters: innovators, early adopters, early majority, late majority and the laggards (2004).

• Innovators are likely to become the first buyers of the new product. An approximate of two to three percent of the relevant market is compromised by this group. They are likely to belong in the younger, more affluent and more cosmopolitan group.
• Early Adopters are next to the innovators to try the product. They constitute at least 13 percent of the consumers. This group tends to be more locally oriented than the first group and is well respected within their communities. They are opinion leaders and are very influential in the buying pattern of other consumers
• The Early Majority constitute 34 percent of the target market. They are either slightly above the average in terms of social and economic status. This group is influenced by advertising activities and sales people as well as the Early Adopters.
• The Late Majority also constitute 34 percent of the target market. This group exhibit moiré resistance to change and risk taking as compared to previous groups. They tend to belong to the middle and older age group and are well off than average in terms of socio economic status.
• Laggards constitute the remaining 16 percent of the market and are the last to buy new products. This group is price conscious and low income. By the time they decided to buy the product, it has already reached its maturity.

Figure 3. Model of Product Adopters

Possible Reasons for Product Failure

Most product projects fail. An estimated 46 percent of the resources which a firm uses to conceptualize, develop and launch new products are spent on products that either fail commercially in the market or never make it to the market. For every four projects that enter the development process, only one becomes commercially successful (1993). There are many reasons why products fail.

Poor Marketing Research: the insufficient or faulty marketing research has been cited by mangers frequently as the number one cause of new product failure. This is brought about by the lack of thoroughness in identifying the real needs of the marketplace or in identifying the early signs of competitors taking the offensive. Managers are likely to misread the consumers needs, do little field testing and overly optimistic forecasts of market needs and acceptance. Another common mistake is to think that the products will be adequate to the consumer because it is perceived as such by the designers or the R&D department. The important thing here is to determine the real needs of the marketplace through market surveys and interpret them for product development (1993).

Bad Timing: The mistake of moving too slow or too fast stems from flawed planning, organization or control. Many failures of new products resulted from not moving quickly in a limited narrow window of opportunity. At some cases, there is a shift in the preferences of the consumers during the developmental cycle.  The competitor may move more quickly to the new products and seize the market opportunity. The need to move quickly also creates problems. Rushing the development of new products leads to short cuts which when taken may result to disasters. As such, key steps and procedures are overlooked such as market studies and field trials (1993).

2.2 Characteristics of Consumers who adopted the product

            One possibility for the apparent adoption is the cultural phenomenon known as the Metro sexual. This term has invented by Mark Simpson in 1994 as he described a narcissist in love not only with himself but also to his urban lifestyle; a straight man in touch with his feminine side.  It can be referred to the fashion-conscious urban heterosexual man with a strong aesthetic sense. Mainly, he was addressing a man who has a higher rate of consumption. Until recently, the grooming needs of men are limited to products such as shampoo, soap, shaving and after shaving products. The evolution of social positions started the evolution of other needs (‘Understanding the Male Cosmetics Market’, 2005). Thus, fashion and cosmetic brands capitalized on metro sexuality to develop the market.

This heterosexual spends a great deal of time and money to improve and maintain his appearance and lifestyle. Other possibility may include the sales strategies adopted by companies to gain profit from untapped market segment. Heterosexual and gay men like women are subjected to the effects of media on their body image. The shift in the economic affluence of people also produces an increased equality between men and women. Pressure increases on men to take care of themselves better and do something to look more attractive to the audience (2005).

2.3 Marketing Techniques to Stimulate Adoption

For a specific product to be sold, the consumer has to know it exists. In this sense, the marketer has to communicate or promote the product in order to achieve a degree of awareness. The media is used as an effective tool to tell the consumers of the new product and perhaps about its trial incentives. For marketers, the introductory year is often an investment against the future profit potentials of the product. To promote the product, the company can incorporate the use of conventional media tools to technology advancements. In this way, the communication strategy will be able to meet the needs of a wide range of c