Articles Tagged: marketing

The world of business and marketing gets more competitive by the day (Crews, C. and Thierer, A. (2003) 272-285).  Processes of change such as globalisation and technological advancements pit actors in the business world against each other even more confrontationally (Crews, C. and Thierer, A. (2003) 272-285), as time passes.

Marketing communication is an essential element for the effective growth of the company and increasing its sales in the target market as argued by Frances Brassington and Stephen Pettit (2003) . In this report, the marketing communication plan for the Warwickshire golf club is presented to the reader. The plan is deployed using the SOSTAC model and the 3Ms of marketing communication (i.e.) Market, Message and Medium. The report commences with a brief overview on the models being used and the company under debate followed by the discussion of the marketing plan. The report focuses on presenting a marketing communication plan that effectively

In this paper we examine the use of political marketing in the United Kingdom and the United States of America. It focuses on the hypothetical theoretical aspects of marketing frameworks, which are identified and applying these frameworks to the marketing strategies of the political parties within the UK and the US. Additionally, we compare and contrast certain aspects of the marketing frameworks that have been identified with the parties, analysing whether the use of the frameworks are inherently present with regard to their electioneering and campaigning strategies.

Until recently research on advertising appeals focused on either physical products or a comparison in relation to the way in which advertising appeals differed between products and services (predominantly professional services). With the continuing growth in the MICE and 5 star resort hotel market, the purpose of this paper is to look at the effectiveness of rational and emotional advertising appeals with respect to the MICE and 5 star resort hotel sector and provide a foundation for further study in this area.

 

Introduction

“Advertising appeals” are essentially the methods which advertisers employ to sell products and services. Some of the more common forms of advertising appeals include money (saving, making and/or retaining), well being, sex, health, fun, pleasure, love, fear, admiration, convenience, vanity, egotism and environmentalism.

Different forms of advertising appeals are more effective for selling different types of products or services. Likewise, cultural factors play a large role in how well a particular advertising campaign is received by consumers.

Within the Meetings, Incentives, Conferences and Exhibitions (“MICE”) and 5 star resort hotel industry, advertising appeals are generally classified according to whether they are rational or emotional appeals.

The difference between how effective each of these is can only be ascertained when the customer’s preferences are taken into account. However, it should be remembered that the use of advertising appeals is not a precise science and that the difference between a campaign which is highly effective and one that is not can often be the matter of a few words or the use of the wrong colour.

The most important factor with respect to the effectiveness of advertising appeals are the existing customer attitudes toward the product or service and the need or want that the customer is seeking to have the product or service fulfil. It is not therefore surprising that an advertising appeal which is effective in engaging business customers may not fare as well when appealing to leisure customers.

The purpose of this paper is therefore to examine, both by secondary and primary research methods, the which type of advertising appeal (ie rational or emotional) is most effective when selling MICE and 5 star resort hotels to leisure and business clients.

However, it should be noted that due to time and cost restraints the scope of this paper is limited in two important respects. There is no intention to examine customers who have never used a MICE and 5 star resort hotel before and the cultural aspects of advertising appeals is only briefly touched upon.

2. Aims and Objectives

The aims and objectives of this paper are to determine the extent to which rational and emotional appeals apply to MICE and 5 star resort hotels.

While the usefulness of various types of advertising appeals within the service sector generally has been researched quite extensively, this paper seeks to determine whether or not that general research can be applied equally to MICE and 5 star resort hotels. The peculiarity that is thrown up by MICE and 5 star resort hotels is that they have to appeal equally to both business and leisure consumers. Whereas most service businesses can focus on one sector of the market alone, MICE and 5 star resort hotels need to be able to attract both types of customers which can make creating an advertising campaign particularly treacherous as different appeals apply to each group.

Furthermore, each type of customer group can be broken down into various further categories, for instance personal, family, tour groups, returning or first time clients, conference, by income, by age, etc. In light of the innumerable combinations and types of MICE and 5 star resort hotels, it is important to limit the extent of the research. As such, the focus of this paper is limited to MICE and 5 star resort hotels. These types of establishments only seek to attract the right type of clientele and as such are able to focus their marketing on certain sectors of the population and thereby limit the types of advertising appeals they need to rely upon.

3. Providing a rational for the work

This work has both a theoretical and practical basis. From a practical point of view, the MICE and 5 star resort hotel sector is particularly competitive and the clientele is extremely discerning. There are always newer, more fashionable 5 star resort hotels or conference centres opening up and therefore it is extremely important that MICE and resort hotels understand how to market effectively to those sectors which are most likely to use their services.

From a theoretical standpoint, research into the rational versus emotional dichotomy as it applies to the service industry is only now being touched upon. Even where it is being touched upon, the research often starts with the way in which emotional and rational appeals affect the marketing of physical products and then compares this to the way in which service advertising appeals are used. By focusing on a specific industry sector, MICE and 5 star resort hotels, this research is able to provide important feedback to the general theoretical position as to how well that research holds up in specific circumstances.

By examining the most effective advertising appeals for the MICE and 5 star resort hotel sector, this paper aims to provide a solid foundation for both future academic research in this area and also to provide MICE and 5 star resort hotels with practical information which can be used to better tailor their advertising campaigns and most importantly, to avoid making mistakes the damage from which, particularly in a fast paced industry, can take years to undo.

4. Literature Review and Theoretical Framework

In order to determine when it is most appropriate for MICE and 5 star resort hotels to use rational and emotional appeals it is first necessary to create a theoretical framework based on a critical review and synthesis of the relevant work in this area. With such a theoretical framework in place, it will then be possible to come to a conclusion as to the merits of both rational and emotional appeals as they apply to MICE and 5 star resort hotels.

It is first important to clearly define the terms being referred to. An advertising appeal is defined by Wells, Burnett and Moriarty as, “something that makes the product particularly attractive or interesting to the consumer.” There are many types of advertising appeals that can be relied upon (sex, price, fear, etc), but as Albers-Miller note, most authors agree that overall all advertising appeals can be classified as either being rational appeals and emotional appeals. A rational appeal is, “a form of argument and motivation used in the promotion of products and services. Rational factors, including facts and figures, advantages and benefits, are used in an appeal to consumers’ intellects, rather than their emotions” , while an emotional appeal is where, “the basis of an advertising message having strong emotional character.”

Some examples of rational appeals are; for products, the top speed of a car, the processing power of a computer and the memory size of an MP3 player; and for services, the leg room on a flight and the savings made when travelling on off peak public transport. Examples of emotional appeals include; for productions, the sex appeal of a new sports car and the popularity that comes from drinking certain alcoholic beverages; and for services, the possibilities which open up to a consumer once they obtain a certain credit card and the sex appeal of the latest, must-see Hollywood blockbuster which everyone is talking about.

One of the main themes that comes through in the literature in this area is that there has been a lack of empirical research undertaken which focuses predominantly on the role of advertising appeals with respect to service industries. This is somewhat surprising when one considers that most Western economies are now service-based economies. As Mattila notes, this growth in the level of interest in services marketing has not corresponded in a similar level of interest in how service quality is communicated rather, most current research has focused on a comparison between service and goods advertising and even when focusing on services, has concentrated on professional as opposed to retail services.

While the research may not have kept pace with the fundamental shift in the underlying economic foundations of Western economies, it is now quickly catching up with interest in this area increasing.

While the level of general research in the area of advertising appeals and how they relate to service industries increases and the understanding of the differences between goods and services marketing increases, an opportunity exists for researchers to use this developing research base as a theoretical foundation from which to focus on more specific market segments. As such, the focus of this paper, while falling within the broad scope of the current research with respect to advertising appeals in service industries aims to focus in on a much more specific sub-set of this research area; that of the effectiveness of rational and emotional appeals in advertising MICE and 5 star resort hotels.

At the same time as focusing in on a specific area of the advertising appeals in service industries research, it is important that this specific area be considered within the context of the marketing strategies of MICE and 5 star resort hotels as a whole. An organisation which wants to make the most effective use of advertising must have a clear understanding of the market segments that they are targeting and an overall marketing mix which allows them to focus their resources on communicating with that segment of the market. Advertising is only one part of the marketing mix and where the other parts are not working effectively, advertising will not provide the highest return on investment possible.

Finally, it is important to take into account the environment (and in particular the external environment) in which MICE and 5 star hotels operate in when considering which advertising appeals are most likely to be effective. For instance, in times of rapid growth and high disposable income or when tax breaks are provided for entertaining, MICE and 5 star hotels would be wise to avoid focusing on appealing to the cost savings that can be made by staying with them. Rather, at these times, rational appeals are unlikely to be as necessary as emotional appeals as the necessity for a customer to substantiate a decision rationally is not as great.

Before being able to consider the market segmentation that MICE and 5 star resort hotels target, it is important to define the market in which they operate. The market in which they operate can be defined broadly as, for instance, all hotels and resorts, all holidays, all business communication methods, etc; or specifically as all 5 star hotels, all hotels in a particular location, etc. Because of the diverse nature of MICE and 5 star resort hotels, it is almost impossible to come to a determination as to a market in which specific hotel operates as this will be influenced by cultural, geographic and other features. However, it is a little simpler to determine the market segments that MICE and 5 star resort hotels are interested in targeting. The market segments that all MICE and 5 star resort hotels are interested in targeting are business customers and wealthy individuals.

As noted above, advertising is a sub-set of an organisation’s overall marketing mix. As such, before proceeding, it is important that the distinction between marketing and advertising is clearly set out. Marketing has been defined by the (British) Chartered Institute of Marketing as, “the management process responsible for identifying, anticipating and satisfying customer requirements profitably.” Advertising is defined by the Institute of Practitioners in Advertising as, “advertising presents the most persuasive possible selling message to the right prospects for the product or service at the lowest possible cost.”

The marketing mix refers to the “price/value proposition” and is, as expanded on by Kotler, often referred to as the four P’s; Product, Place, Price and Promotion. The Product refers to the good or service that the supplier wishes to sell and which the consumer wishes to buy; Place refers to the convenience of buying the goods or services; Price refers to the cost to the consumer of the goods or services; and Promotion refers to the ways in which the supplier and customer communicate with each other. Advertising comes within the ambit of the promotion function.

When applying the marketing mix to MICE and resort hotels, one observes that in general the Product is appealing (this may not apply to such an extent in countries in which the idea of staying in hotels is a relatively new concept for a majority of the population); with respect to the Place, while requiring travel to reach and therefore not being entirely convenient to most people, most MICE and resort hotels are located close to either business districts or leisure areas (eg beaches) meaning that while the location may not be entirely convenient, the location is generally desirable; MICE and 5 star resort hotels are generally price prohibitive with a strong emphasis on catering for company functions and higher level clientele; finally, with respect to Promotion, MICE and resort hotels rely on strong business focused advertising and word of mouth.

With respect to Porter’s generic strategies matrix, MICE and resort hotels clearly aim for the niche market which is distinguished by high differentiation and high relative costs. That said, while MICE and resort hotels aim to represent themselves as being highly differentiated, exclusive and expensive, they are in fact extremely similar and operate on a low cost principle. As such, it is important for MICE and resort hotels to maintain this façade and to ensure that customers’ experiences of cognitive dissonance are kept at a minimum.

This façade that all “cathedrals of consumption” must maintain, this separation from the mundane events of everyday life, is particularly evident in MICE and 5 star resort hotels. These establishments must be able to offer an entire “package” not only satisfying a guests physical needs, but also satisfying their wish to be deceived, to believe that for the length of their stay they are deserving of the 5 star treatment that they are receiving even through the next day they their office-bound mundane life.

Williamson summarises this “package” element which applies to all purchases best when he writes:

“Advertisements are selling us something else beside consumer goods; in providing us with a structure in which we and those goods are interchangeable, they are selling us ourselves… Ideology is the meaning made necessary by the condition of society while helping to perpetuate those conditions. We feel a need to belong, to have a social place; it can be hard to find. Instead we may be given an imaginary one.”

A supplementary point which arises from Williamson’s statement is that of the language of consumption. Many potential consumers are put off purchasing new goods or services because they do not have experience in having used them previously. For instance, someone who normally eats dinner on the couch in front of the television will be extremely reticent to eat dinner in a 5 star restaurant in which a knowledge of dining etiquette is expected. While this reluctance to try new things increases with age, it can be bridged in several ways. Advertising is a particularly effective means of overcoming potential consumers’ fears of try something new. By using analogies which relate the new product with something that the customer has already used and feels comfortable with advertisers are able to provide new consumers with the consumption queues necessary to use the new good or service and feel more comfortable doing so.

In general, such techniques are not often used by MICE and 5 star resort hotels in places in which their use is understood by consumers. In societies in which the role of these hotels is understood by consumers, the aim of their advertising, is to create demand within the specific market segment that they are targeting. As such, it is almost the opposite of teaching new consumers how to use the services. These establishments are more likely to assume that those they are targeting understand how to use their services and are more likely to try to limit the understanding of their services by the general population. This is usually done through language and by offering services which are extremely specialised (eg tens of different types of facials, massages, etc) which are intended to intimidate the average consumer.

Cognitive dissonance occurs when a person’s expectations are not met meaning that their level of satisfaction is low. With respect to guests’ perceptions of hotels, Saleh and Ryan write that, “…it is imperative that guests’ expectations be realistic and possible for the firm to deliver, otherwise an obvious gap in service quality is created.”

One advantage that MICE and 5 star resort hotels have over other hotels and resorts is that a large portion of their clientele are not required to pay for their own accommodation. In situations in which the accommodation costs are being met by a third party, it is unlikely that any potential feelings of cognitive dissonance will be as strong as those of someone who has booked and paid for a hotel or resort themselves. Furthermore, any such feelings by a guest who is staying at someone else’s expense are more likely to be directed at the payer, who should have chosen a better quality hotel or resort, rather than directed at the actual hotel or resort.

In addition, for guests of MICE and 5 star resort hotels, the actual hotel is normally a background factor (ie to a conference, the beach, an event, etc). These guests have other matters to occupy them. This contrasts with individuals who stay at a resort hotel that they have paid for themselves and where actually being at a resort hotel is the focus of their trip.

As noted above, Mattila focuses on what she believes to be a gap in the studies examining services advertising. She believes that most of these studies focus on tangibilizing the offering or “making the service more concrete” and as a result of this a gap exists with respect to knowledge about the role emotional advertising appeals play in services advertising. What is important to keep in mind when advertising either products or services is that the advertising appeal has to match the product or service type. Albers-Miller et al note that previous research on this point has found that, “a more emotional (value-expressive) appeal should be used for a value-expressive product and a more rational (utilitarian) appeal should be used for a utilitarian product.”

The way in which advertisers determine the best combination of rational and emotional appeal is assisted by the level of involvement model developed by Vaughn and adapted by Foote, Cone and Belding. That model focuses on products but provides a useful tool for understanding the differences between rational (thinking) and emotional (feeling) appeals.

The four options are, high involvement/thinking which relates to high importance purchases such as cars and houses and the message should be based on “long copy, informational demonstration, comparative”; low involvement/thinking which relates to routinely purchased products such as food and items for the house and the message should be based on “coupons and samples”; high involvement/feeling which relate to a customer’s self esteem such as make up, jewellery and clothes and the message should be based on “emotional and visual” triggers; and low involvement/feeling which relates to products which satisfy personal cravings such as alcohol, snack foods and cigarettes and the message should be “creativity and lifestyle” based.

How well these levels of involvement transfer to the service sector is still open to debate. If one was to take the same levels of involvement and attempted to determine which group MICE and 5 star resort hotels fall into, one might have difficulty as they do not fit cleanly into any of the categories.

In general, a large proportion of business-to-business type advertising relies on rational appeals due to the fact that buyers tend to be knowledgeable about the products or services that they are buying and are seeking supportable justification for their purchasing decisions. As Stafford and Albers-Miller note, “…rational informative advertising appeals may help reduce some of the uncertainty often associated with the purchase of services.” That said, in today’s marketplace, it is unlikely that rational advertising appeals would be made without consideration of the emotional aspects. As such, essentially what is being said when one refers to a rational appeal is not that the emotional aspects of the appeal are not present, but that they are used more subtly and as a backdrop to the advertising campaign. As Albers-Miller et al argue:

“…there is no reason not to include an emotional appeal and service information and benefits. Indeed many advertising practitioners would argue that this juxtaposition is one of the aims of good advertising – informing the consumer and stimulating a response through appeals to emotional, right-brain influences. However, there still needs to be some guidance given as to where we lay the emphasis in this area or emotions and rationality. And this is especially true in diverse cultures.”

The importance of emotional appeals is especially important today when product differentiation is becoming more and more difficult. With respect to the MICE and 5 star resort hotel market sector, while some of these hotels are able to differentiate themselves on the basis of location, facilities and other competitive advantages, the general level of such differentiation is not great. Most people using the facilities of a MICE and 5 star resort hotels expect that certain levels of service and facilities are available. As the, “USP (unique selling proposition) is fast disappearing, then what becomes correspondingly more important is the ESP – the emotional selling point.”

With respect to the advertising that MICE and 5 star resort hotels engage in, it is important for them to ensure that they are using the most effective advertising appeals necessary to persuade the targeted market segment. Louise Ha argues that the study of advertising appeals with respect to the services market has been hampered by a failure to differentiate between service firms.

She believes that the type of service firm should be taken into account when determining the appropriate advertising appeals to use and relies on Zeithaml’s classification of services into three categories which are; “high on search attributes (performance of the service can be known before consumption); high on experience attributes (attributes that can only be discerned after purchase or during consumption) such as haircut and restaurants. These services are non-professional services that can be substituted by self-service of the consumer; and high on credence attributes (attributes that consumers may still find them impossible to evaluate after consuming the service) such as medical services and repair services. These are professional services that require special training or license.” MICE and 5 star resort hotels can be classified as being high on experience attributes.

It should also be noted that MICE and 5 star resort hotels operate in a global marketplace. Albers-Miller et al have studied the differences between rational and emotional appeals across cultures (and in particular, Brazil, Taiwan, Mexico and the USA). They conclude that, “culture appears to play a significant role in the use of emotional and rational advertisements for services, and anthropological measures of culture provide some insight into the differences in emotional appeals.” They also note that across cultures business customers, the main target segment for MICE and 5 star resort hotels, “tend to make decisions based on more rational criteria… [and that] across cultures, cognition changes little, while emotions change considerably.”

While the cultural aspects of rational and emotional advertising appeals with respect to MICE and 5 star resort hotels is beyond the scope of this paper, it does provide an interesting area of research for future studies.

While the differentiation between rational and emotional appeals seems like a simple and logical distinction to make, the distinction is largely artificial as an advertising campaign which solely relies on rational or emotional appeals is unlikely, if not impossible. As such, the difference between the two in an advertising campaign is the level of emphasis that is given to one over the other. Both will be used, the decision is rather how best to combine the two for maximum effect.

5. Methodology

When considering the type of methodology to employ the choice is between primary or secondary research methods. Primary research methods refer to those that generally require replies from and interaction with service users such as questionnaires, focus-groups and interviews (ie fieldwork). On the other hand, secondary research methods rely on reviewing books, articles, statistical data, etc (ie deskwork).

While primary research is generally viewed as being superior to secondary research, this is not always the case. Primary research is almost always hampered by cost considerations, the sample size used, the manner in which the sample population has been decided upon, researcher bias, etc. In light of cost considerations, it is almost always more cost effective to ask yourself whether or not someone else has already done this research and if so to begin at that point and then use primary research to fill in any gaps or specific areas which have not been addressed in the depth required.

Secondary research also has its own problems which include such factors as the fact that it is reliant on someone else’s primary research with all the inherent problems that presents as set out above, the researcher is limited to the questions raised in the secondary materials, etc. As such, it is important that in secondary research, the sources of the information to be used are reliable (ie government sources, peer reviewed journals, text books written by qualified authors, etc).

In light of the above considerations, it is important that any market research conducted uses a balance of primary and secondary research methods. In the case of this paper, it was found that there was an array of literature (secondary sources) on advertising and the service sector. However, there was less to be found when one looked at the area of MICE and resort hotels specifically. As such, while secondary research could take us to a point, from that point it was necessary to use primary research methods.

The most common primary research methods are interviews, questionnaires, surveys, focus groups and secret visits. As the objective of this paper is to determine the most effective methods of advertising appeals with respect to MICE and resort hotels, some of the primary methods referred to above will not be appropriate. MICA and resort hotels cover a large cross-section of the market and large distances. As such, secret visits to the hotels would not only be cost prohibitive, but would be unlikely to provide the necessary data required. On the other hand, as most of the users of these services are UK-based, a focus group may be more appropriate for personal holiday makers.

In light of the practical issues of setting up a focus group of business users, questionnaires may be more appropriate for that sector of the market. A decision was finally made to make use of a questionnaire and a focus group. Both would target people who had already used MICE and 5 star resort hotels on the basis that this was the segment of the market that these hotels were targeting. It was decided that an attempt to include customers who had never stayed in a MICE and 5 star resort hotel would be too much for a paper of this length however, it would remain a potential area for future research.

With respect to the design of the questionnaire, it was decided that while quantitative responses are the easiest to compile and analyse, they do not give the depth of information that can be gleaned from qualitative answers. Furthermore, in order to be statistically valid, a quantitative questionnaire would need to involve a large, randomly selected sample base. Due to cost and time limitations, this was not considered feasible and as such, it was thought most appropriate to concentrate on a smaller, specifically selected sample of the market segment being targeted and an analysis of their qualitative responses with a clear statement as to the understood limitations of proceeding in this way.

6. Findings, analyses and evaluation

The purpose of this dissertation is to determine the extent to which rational and emotional appeals apply to MICE and 5 star resort hotels. A review of secondary sources and current research on the topic showed that this is an area which has suffered from a lack of research interest to date. While Mattila’s work provides a strong overview of advertising appeals as they relate solely to the service sector (as opposed to dealing with them solely in comparison with products), her work is quite broad and as such, while it is used as a starting point for this paper, it was necessary to supplement the secondary research and theoretical framework with primary research which consisted of a questionnaire and focus group. Further primary research was deemed not feasible due to cost and time constraints.

In total, 150 questionnaires were posted or handed out. Due to the small sample size, the participants were targeted (eg businesses which book MICE and 5 star resort hotels for conferences, people leaving MICE and 5 star resort hotels, etc). Of the 150 questionnaires posted or handed out, thirty were returned. This was considered to be a reasonable level of returns in light of the type of person being asked to complete them (ie busy individuals who work long hours). A summary of the questionnaire replies are set out in Appendix 2. Due to the qualitative nature of the replies, statistical analysis of the responses is not feasible. However, they do provide an interesting insight into the way in which advertising appeals are able to influence guests of MICE and 5 star resort hotels.

Along with the questionnaire, a focus group was used to try to determine in a more direct fashion people’s attitudes to MICE and 5 star resort hotels and more particularly, what effect advertising appeals had on their purchasing behaviour. As with the questionnaire, the group chosen was not chosen randomly, but rather was selected from people who had already used MICE and 5 star resort hotels in the past. Participants were shown various advertisements (not only limited to MICE and 5 star resort hotels) and asked to discuss various propositions put to them. Once again, the results were qualitative and as such not appropriate for statistical analysis.

While the response to the questionnaire was not particularly high, those individuals that did respond provided some particularly interesting replies. Predictably perhaps, most responses were from middle aged, well educated men. This group is the market segment that most MICE and 5 star resort hotels seek to target with their advertising. However, the strong response by women suggests that those MICE and 5 star resort hotels that are spending most of their advertising budgets targeting men may be missing out on a large segment of the market which may still be relatively untapped.

The growing number of female business travellers has already resulted in changes throughout the hotel industry and it is only a matter of time, if it has not occurred already, that MICE and 5 star resort hotels will follow suite. For instance, Wyndham Hotels and Resorts have added the following features to their list of hotel amenities; “loofah mitts and skirt hangers… networking tables for solo travellers who prefer to each with other travellers… and jogging partners.”

Some of the interesting findings were that both business and leisure customers had similar daily budgets and that while the business customer was more likely to spend that budget within the hotel, the leisure customer was much more likely to spend their budget outside the hotel (tours in this instance were referred to as an outside activity, it is acknowledged that many MICE and 5 star resort hotels get a commission for placing guest on tours or even operate their own). Furthermore, a leisure customer stayed generally at least twice as long as most business customers.

One of the main complaints raised by leisure customers was the need to pay additionally for features which they had assumed were included within the package price. One example given was the Divani Apollon Palace and Spa in Athens. While the hotel was of a high quality and located close to the beach, someone viewing the hotel’s website would believe that the beautiful indoor spa pool pictured was included within the cost of the hotel. It is only when one goes to use the spa pool that one is told that the cost starts at an additional Eur35 per hour. Business clients did not seem to share the same complaint and it is suggested that this might be due to their rooms being paid for by a third party leaving them with money to spend on all the additional services that a MICE and 5 star resort hotel offers combined with the short duration of their stay.

Perhaps most interestingly was the lack of influence on the respondents by direct advertising. One can only assume that as resort hotel customers now come from all corners of the world, that MICE and 5 star resort hotels are limited in the amount of general advertising that they are able to engage in. Most of their advertising would no doubt focus on trying to attract business clients which would generally be accomplished through direct marketing to the appropriate person within that particular organisation. This type of advertising would be strongly based on a rational appeal in order to give the decision maker the justification to be in a position to choose that hotel over others.

Where the MICE and 5 star resort hotels intend to target leisure customers, it is more likely that they will join forces with a travel agency, airline, newspaper or other similar MICE and 5 star resort hotels in other countries to offer special “package deals”. These deals would include for instance a flight and hotel at one low price, a loyalty card, etc.

The focus group provided more scope for a deeper insight into which advertising appeals are more likely to work for which customers. The anticipated divide between leisure customers being more influenced by emotional appeals and business customers being more influenced by rational appeals was not apparent. In fact, the converse was found. The business customers in the focus group seemed most impressed with those MICE and 5 star resort hotels whose advertising relied upon emotional appeals while the leisure customers were more likely to choose those MICE and 5 star resort hotels which relied upon rational appeals.

While at first this seemed like a strange anomaly, closer analysis suggested that a logical reason for this unanticipated finding existed. That reason, it is suggested, comes down to who is paying for the stay. Business customers were more likely to have their stay paid for by their employers. As such, they did not have to justify their choice of MICE and 5 star resort hotel to anyone and therefore were more likely to be influence in their preferences by the emotional appeal of the MICE and 5 star resort hotels that were shown to them. Leisure customers on the other hand have to pay for the stay themselves. As such, they are much more interested to make sure that the MICE and 5 star resort hotel meets their requirements. As they may only take one or two resort type holidays a year, leisure customers make sure that they avoid any sentimentality when making the decision as to where to stay.

Returning to the level of involvement matrix, the results of the questionnaire would suggest that leisure customers who make one or two holiday trips a year to resort hotels invest a high level of involvement in the organising of their holiday and that they prefer rational appeals. This therefore places them within the high involvement/thinking category (this might not necessarily apply to all holiday makers as some might be staying on the basis of a last minute, city break type of whim). While those whose stay at MICE and 5 star resort hotels on business and whose board is paid for by their employer have a low level of involvement, or interest, in where they are going, but a higher level of involvement once they get there in the additional services that the resort offers.

While the business clients who participated in the focus groups were not those making the purchasing decisions, it is suggested that the business customer making the purchasing decision would have greater regard to the rational appeals as opposed to the emotional appeals although this was not confirmed.

One of the most interesting points raised in response to the questionnaires related to the cultural differences that exist between Western countries and China. These cultural differences make advertising a resort in China particularly difficult. The reason for this is beyond the scope of advertising and/or an organisation’s marketing mix and relates to the external environment in which organisations’ operate. In this case, the majority of Chinese, who have grown up under not only Communist rule, but also a Communist centrally managed market system, do not share the common leisure and business language which Western companies and individuals take for granted. As such, any MICE and 5 star resort hotel looking to establish itself in China is not only required to compete against its competitors but also to educate the population in the use of leisure and business facilities. This task, where the population do not even know that they need and want the service, is much more difficult than simply using advertising to sell a product which the population already understand and know they want.

The results of the questionnaire and focus group suggest that general advertising is not a major factor in determining which MICE and 5 star resort hotel leisure and business customers decide to say at. More important factors seem to be brand name, personal recommendation, location and price (for leisure customers) and facilities (for business customers). That said, the results show that MICE and 5 star resort hotels would be wise to ensure that their internal advertising and up-selling by staff of additional hotel facilities (for which an extra charge is incurred) to customers already in the hotel should be reviewed to make sure that all customers have all the information they need to make an informed decision as to where best to spend their money within the hotel.

7. Final discussion, conclusion and recommendation

Advertising comprises only a small fraction of an organisation’s overall marketing mix. That said, advertising is generally the most forward customer facing aspects of the marketing mix and as such is often the first point of contact between a potential customer and a business. In light of this, the form of advertising that an organisation relies upon and therefore the types of advertising appeals used are extremely important for any organisation and especially service sector organisations such as MICE and 5 star resort hotels.

One of the most interesting aspects arising out of this study was that direct, traditional advertising plays a small part in influencing the purchasing behaviour of MICE and 5 star resort hotel customers. Of more importance are more indirect influences indirectly linked to advertising such as brand.

Likewise, it was interesting to note that individuals paying for the stay themselves (when the stay formed part of their annual holiday plans) had a particularly high attachment to the service provider choice and as such were more likely to be persuaded by rational appeals.

8. Recommendations for further research

While this paper touches on the use of advertising appeals in MICE and 5 star resort hotels, time and cost constraints have limited both the type and scope of primary data able to be obtained. As such this area would benefit from additional primary research in the form of a more detailed and extensive quantitative questionnaire/survey which would then be open for statistical analysis.

Likewise the scope of the primary data collected for this paper could be supplemented by analysis of how effective advertising appeals are with respect to customers who have never stayed at or used the facilities of a MICE and 5 star resort hotel; analysis of what the most effective types of advertising appeals are once a guest is in the hotel; and also a comparison of the effectiveness of advertising appeals across different cultures.

List of references

1. Albers-Miller, N. D. & Stafford, M. R.(1999), An International Analysis of Emotional and Rational Appeals in Services vs Goods Advertising, in the Journal of Consumer Marketing, Vol.16, No.1, pp.42-57

2. Boone, L. E. & Kurtz, D. L. (2006), Contemporary Marketing, 12th ed., South-Western, Ohio

3. Chan, R. Y. K., Leung, T. K. P. & Wong, Y. H. (2006), The Effectiveness of Environmental Claims for Services Advertising, in the Journal of Services Marketing, vol.20, no.4, pp.233-250

4. Divani Apollon Palace & Spa, taken from http://www.divanis.com/default-en.htm, last accessed 21st March 2007

5. Ha, L. (1998), Advertising Appeals used by Service Marketers: A Comparison between Hong Kong and the United States, in the Journal of Services Marketing, vol.12, no.2, pp.98-112

6. Hague, P. N. (2003), Market Research: A Guide to Planning, Methodology and Evaluation, Kogan Page Limited, London

7. Hing, N., McCabe, V., Lewis, P. & Leiper, N. (1998), Hospitality Trends in the Asia-Pacific: A Discussion of Five Key Sectors, in the International Journal of Contemporary Hospitality Management, Vol.10, No.7, pp.264-271

8. Jefkins, F. (2000), Advertising, 4th ed., Prentice Hall, Essex

9. Lee, M. & Johnson, C. (2005), Principles of Advertising: A Global Perspective, Haworth Press Ltd, USA

10. Leiss, W., Jhally, S. & Kline, S. (1997), Social Communication in Advertising: Persons, Products and Images of Well-being, Routledge, NY

11. Martin, B.A.S., Bhimy, A.C. & Agee, T. (2002), Infomercials and Advertising Effectiveness: An Empirical Study, in the Journal of Consumer Marketing, Vol.19, No.6, pp.468-480

12. Mattila, A. S. (1999), Do Emotional Appeals Work for Services, in the International Journal of Service Industry Management, Vol.10, No.3, pp.292-307

13. McDonald, M. & Christopher, M. (2003), Marketing: A Complete Guide, Palgrave MacMillan, NY

14. McQuarrie, E. F. (2006), The Market Research Toolbox: A Concise Guide for Beginners, Sage Publications, Thousand Oaks, California

15. Mooij, M. K. (2005), Global Marketing and Advertising: Understanding Cultural Paradoxes, Sage Publications Ltd, Thousand Oaks, CA

16. Morgan, N. & Pritchard, A. (2003), Advertising in Tourism and Leisure, Butterworth-Heinemann, Oxford

17. Mortimer, K. (2001), Services Advertising: The Agency Viewpoint, in the Journal of Services Marketing, vol.15, no.2, pp.131-146

18. Ratneshwar, S. & Mick, D. G. (2005), Inside Consumption: Consumer Motives, Goals and Desires, Routledge, Oxon

19. Saleh, F. & Ryan, C. (1990), Service Quality in Hotels: Servqual Revisited, paper presented for Tourism Research in the 1990s, pp.313-328, University of Durham, Durham

20. Vaughn, R. (1980), How Advertising Works: A Planning Model, in the Journal of Advertising Research, October, pp.27-33

21. Warrington Council Focus Group Script, taken from http://www.warrington.gov.uk/images/Baseline%20-%20Appendix%20C__tcm15-7479.pdf, last accessed 21st March 2007

22. Yadin, D. L. (2002), The International Dictionary of Marketing: Over 2,000 Professional Terms and Techniques, Kogan Page Ltd, London

23. Yeshin, T. (2004), Integrated Marketing Communications: The Holistic Approach, Elsevier Butterworth-Heinemann, Oxford

24. Zhang, Y. & Neelankavil, J. P. (1997), The Influence of Culture on Advertising Effectiveness in China and the USA: A Cross-Cultural Study, in the European Journal of Marketing, Vol. 31, No. 2, pp134-149

Appendices

APPENDIX 1 – QUESTIONNAIRE

This questionnaire relates to your experiences in MICE and 5 star resort hotels and will be used for the sole purpose of preparing my dissertation on the topic of advertising appeals. Your assistance is appreciated.

Section A: Introductory Questions

(Choose only one of the options below each question)

1. Please describe your general use of MICE and 5 star resort hotels:

a. Leisure visitor

b. Business visitor

2. What gender are you?

a. Female

b. Male

3. Which age group do you belong to:

a. 18-25

b. 26-35

c. 36-45

d. 46-55

e. 56-65

f. 65+ 4.

What level of education have you attained?

a. High School

b. Diploma

c. Bachelor degree

d. MBA

e. PHD

f. Other (please state)

5. What is your current job title?

6. How long have you held this position?

a. Less than one year

b. Between 2-5 years

c. Between 6-10 years

d. Between 11- 20 years

e. Over 20 years

7. In which country is your primary residence?

If you have only moved to that country recently, what country had you come from?

Section B: MICE and 5 Star Resort Hotel Usage

1. Which MICE and 5 star resort hotel/s have you stayed at?

2. Why did you stay at that/those hotels?

3. Did you pay for your stay personally? If not, who paid for your stay?

4. How long do you usually stay at a MICE and 5 star resort hotel?

5. Without taking into account the cost of the room, how much on average would you expect to spend each day while staying at a MICE and 5 star resort hotel?

6. Would the spending referred to in question 4 have been predominantly spent inside or outside the hotel?

7. Have you used any of the additional facilities (ie facilities which incur an additional cost) that the hotel offers? If so, which ones?

a. Pay television

b. Pool and Spa

c. Hairdresser

d. Beauty treatments

e. Room service

f. Restaurant

g. Tours

h. Other (please specify)

8. What are the best features of the MICE and 5 star resort hotel/s you have stayed at?

9. Are there any features that you are disappointed with? If so, please elaborate.

10. Would you stay at a MICE and 5 star resort hotel again? Please provide details as to why/why not.

11. Would you recommend MICE and 5 star hotels to anyone else?

Section C: Advertising Impressions

1. How do you decide on a MICE and 5 star resort hotel at which to stay?

2. Was your decision to stay at a MICE and 5 star resort hotel influenced by any advertising that you may have seen?

3. If so, please provide as much information as possible about the advertisement that you saw, where you saw it and how it influenced your decision.

4. How large a part did the brand name of the MICE and 5 star resort hotel play in your choice of place to stay?

5. If you stayed in one brand of MICE and 5 star resort hotel and were pleased with the experience would that influence your decision to stay in the same brand hotel elsewhere?

6. Do you feel that the advertising gave a true indication of what a MICE and 5 star resort hotel would be like? Please provide details as to why it did or didn’t.

Section D: Miscellaneous

1. Is there anything else about your stay at MICE and 5 star resort hotel/s that you would like to add?

Thank you for taking the time to assist with this questionnaire. Please be assured that all answers will be compiled and that any information which could identify you personally will be removed. Should you have any additional questions about this questionnaire please do not hesitate to contact me at: XXXXX

APPENDIX 2 – QUESTIONNAIRE RESPONSE SUMMARY

150 questionnaires were posted and handed out. Of these, thirty were returned. A summary of the returned responses is set out below:

Section A: Introductory Questions

1. Of the responses received, 76% of the respondents predominantly used MICE and 5 star resort hotels for leisure purposes.

2. 63% of respondents were male.

3. A majority of respondents were in the 36-45 age group. There were no respondents from the 18-25 age group and the other respondents were relatively evenly spread across the other age groups.

4. Most respondents had at least a Bachelor’s degree with many also having Master’s degrees. Seven respondents had only achieved a high school and/or diploma level of education.

5. Job titles were extremely varied and included a Managing Director, Human Resources Coordinator and In-house Counsel. There were several middle managers. However the largest grouping worked as consultants (generally IT and accounting/banking).

6. Most respondents had been in their current positions for between 6-10 years although the distribution across the groupings was relatively evenly spread.

7. A vast majority of respondents resided in the United Kingdom. One was from China, three from Australia, one from the United States and several from European countries.

Section B: MICE and 5 Star Resort Hotel Usage

1. The respondents listed a broad range of MICE and 5 star resort hotels around the world.

2. The majority of respondents had used MICE and 5 star resort hotels for leisure purposes

3. All the leisure users had paid for their stays themselves while none of the business users had done so.

4. The leisure users stayed, on average, for a longer time at the hotels in comparison to the business users. Business users generally stayed between one and two nights while leisure visitors stayed up to two weeks (although a three to five night stay was more common).

5. Both business and leisure customers had similar daily budgets.

6. Business customers where more likely to spend their money within the hotel while leisure customers were more likely to spend a larger proportion of their daily budget outside the hotel.

7. Business users were more likely to use any additional facilities (ie facilities for which extra charges were paid) offered by the hotels when compared to the leisure customers.

8. The respondents mentioned many “best” features including the service, the quality and location.

9. A majority of those disappointed with their stays at MICE and 5 star resort hotels cited additional costs and poor service as the most disappointing features. However, the level of disappointment was lower among the business customers.

10. All respondents confirmed that they would stay at a MICE and 5 star resort hotel again. The main reason for this was that these hotels provided a niche service and that even if one was disappointed with one, there were many others to choose from. For leisure customers, a stay at a MICE and 5 star resort hotel was an infrequent, holiday event and as such they were willing to spend a little more than they usually would. For business customers, they generally were told where to stay and as they were not paying for the accommodation, they were happy to continue staying in these types of hotels.

11. All respondents replied that they would recommend most of the MICE and 5 star resort hotels that they had stayed in to others.

Section C: Advertising Impressions

1. All but one of the business respondents replied that the location of the MICE and 5 star resort hotel that they stayed in was decided upon by their employer. The Managing Director replied that he chose the MICE and 5 star resort hotel at which his employees would stay based on factors such as colleague recommendations, facilities and location. The leisure customers generally decided on price, location and recommendations.

2. Only a small proportion of those who responded had been influenced in their choice of MICE and 5 star resort hotel by advertising that they had seen.

3. Many respondents noted that while the initial idea as to where to stay had not based on hotel advertising that they had seen, once a place had been tentatively decided upon, they did spend time reading information about it (predominantly on the Internet). Interestingly, some respondents stated that the airline/travel company advertising was more of a determining factor than any hotel advertising that they saw.

4. Many leisure respondents confirmed that the brand name of the MICE and 5 star resort hotel played a large part in their choice of where to stay.

5. Leisure respondents confirmed that a positive experience in a branded MICE and 5 star resort hotel would influence their decision as to where to stay when a similarly branded hotel was available in another location they were visiting.

6. In general all the respondents, leisure and business, felt that the advertising that they saw was a fair representation of what they experienced while staying at a MICE and 5 star resort hotel. The main complaints were that some MICE and 5 star resort hotels tried a little too hard to be all things to all people and that in many MICE and 5 star resort hotels most extras (which one might expect for free in a middle of the road hotel chain) incurred a fee.

Section D: Miscellaneous

1. Not much was added by the respondents by way of additional information. One respondent who had had experience in a Chinese MICE and 5 star resort hotel provided the following insight:

“MICE and 5 star resort hotels are a relatively new feature in China. An example is the Le Meridien She Shan Shanghai which was opened in 2005. This hotel was built a fair distance from the city centre and with poor transportation links, international customers are thin on the ground.

Local customers of this hotel are heavily influenced by the emotional appeal of the hotel’s brand name. International companies on the other hand are attracted more by the rational appeal of what services the hotel can actually provide them with.

Beyond corporate clients, the hotel also welcomes leisure tourists. These tourists are predominantly white-collar foreigners who reside in Shanghai or the surrounding districts. Interestingly, local citizens do not find the idea of the resort particularly appealing as they do not believe that hotels can offer a fine dining experience and as the concept of a resort is only new, most think of a resort as being a low service quality, low priced hotel in the country. However, this cultural difference will no doubt quickly fade as the Chinese embrace Western ideas of leisure time.”

APPENDIX 3 – FOCUS GROUP SCRIPT

Introduction

Hello. I am XXXXX from XXXXX University and I am writing a dissertation on the effectiveness of rational and emotional advertising appeals with respect to MICE (meetings, incentives, conventions and exhibitions) and 5 star resort hotels. I would like to get your opinions on the ways in which MICE and 5 star resort hotel advertising affects you so that in the future this advertising can be better tailored to meet potential customers’ needs.

There are twelve of you in this focus group and all of you have used MICE and 5 star resort hotels for leisure and/or business purposes and as such you should all have a good idea of what staying at or attending one of these hotels involves. This focus group has been limited to those with previous experience of MICE and 5 star resort hotels on purpose. The reason for this limitation is so that the effectiveness between different types of appeals as applicable to the segment market being targeted could be assessed.

Another workshop may be held in the future which will involve potential customers who have never stayed in a MICE or 5 star resort hotel to try to ascertain how best to convey the hotels’ message to them.

I am not associated with any hotel at all and as such, you should feel free to express your honest views about the advertising campaigns that you will be shown today and feel free to add anything that you think that I may have missed.

Finally, I am recording this focus group for the purposes of my dissertation and I confirm that each of you has confirmed that you are happy for this to occur.

Do not hesitate to ask for clarification of anything said or to raise any questions that you may have at any point.

Choice of Leisure Hotel

Most of you have stayed in a 5 star resort hotel. What are the types of things that help you make a decision between different types of hotels?

• Price

• Location

• Availability

• Advertising

 • Special Offers

• Family friendly

• Food

• Recommendations

• Last minute

• Previously been there

Choice of MICE Hotel

Most of you have either booked MICE hotels for business functions or attended them. What are the types of things that help you make a decision between different types of MICE hotels?

• Price

• Location

• Previously used

• Special offers

• Technical reasons

• Advertising

• Convenience

Advertising Appeals

As part of the market segment that these MICE and 5 star resort hotels specifically target, you are bombarded with advertising aimed at making you decide to stay with one particular hotel over another. These advertisers use a combination of rational and emotional appeals in order to try to convince you to stay with them over their rivals.

Rational appeals are factual or informative statements about a product or service while emotional appeals aim to convince you to purchase the product or service on the basis of some aspect of the product or service beyond its technical specifications.

Product Advertisements

Please look at the following advertisements relating to products that you can purchase and we will then discuss your views on them [show mixture of rational appeal focused and emotional appeal focused advertisements].

• Rank product choices by preference

• What types of things in the advertising swayed you

• Do you have any first hand knowledge of the products being advertised, and if so, how did that affect your rankings

• Are there any advertisements which performed particularly well or poorly - why was that

Professional Services Advertisements

Please look at the following advertisements relating to professional services and we will then discuss your views on them [show mixture of rational appeal focused and emotional appeal focused advertisements].

• Rank professional services by preference

• What types of things in the advertising swayed you

• Do you have any first hand knowledge of the professional services being advertised, and if so, how did that affect your rankings

• Are there any advertisements which performed particularly well or poorly - why was that

MICE and 5 Star Resort Hotel Advertisements

Please look at the following advertisements relating to MICE and 5 star resort hotels and we will then discuss your views on them [show mixture of rational appeal focused and emotional appeal focused advertisements].

• Rank MICE and 5 star resort hotels by preference

• What types of things in the advertising swayed you

• Do you have any first hand knowledge of the MICE and 5 star resort hotels being advertised, and if so, how did that affect your rankings

• Are there any advertisements which performed particularly well or poorly - why was that

Discussion

You have been shown advertisements which relate to products, professional services and MICE and 5 star resort hotels.

You have also had the opportunity to rank and discuss the various products and services being advertised. Now that you have had the opportunity to consider all three sectors, do you believe that there are any apparent differences between them? Are there any products or services you have been tempted to try which you have not tried before (or had been tempted to try but no longer wished to)?

Does anyone have anything they would like to add?

In this paper we examine the use of political marketing in the United Kingdom and the United States of America. It focuses on the hypothetical theoretical aspects of marketing frameworks, which are identified and applying these frameworks to the marketing strategies of the political parties within the UK and the US. Additionally, we compare and contrast certain aspects of the marketing frameworks that have been identified with the parties, analysing whether the use of the frameworks are inherently present with regard to their electioneering and campaigning strategies.

 

CHAPTER 1: THE CONCEPT OF POLITICAL MARKETING

INTRODUCTION

Political marketing has come to be an increasingly exciting and integrated phenomenon that the majority of significant public figures and political employees are vividly aware of. It holds the potential to transform politics as we know it, and exert a tremendous influence on the way everyone’s life is run, but we will only ever reach a greater understanding of the existing and potential consequences of political marketing if we acknowledge and accept the breadth and nature of the phenomenon. The reason why marketing can be attached to politics is that in essence they share some common tenets: the aim to understand how political organisations act in relation to their market and vice versa. Furthermore, marketing, being somewhat more prescriptive, provides tools and ideas about how organisations could behave in relation to their market in order to set aims and objectives, so that at the end they can achieve their goals. It can help an organisation understand the demands of its market. The idea of a political system that meets people’s needs and demands links back to traditional politics: Jones and Moran (1994, 17) argue that British democracy means that the people can decide the government and exercise influence over the decisions governments take. Political marketing is simply a way of doing this in the 21st century with a critical, well informed and consumerist mass franchise.

The evidence suggests that major British parties are not just applying the techniques of marketing, but its concepts. They appear to be determining their policies to match voters concerns (using findings from survey research and focus groups) rather than basing them on ideological considerations. Therefore, they are attempting to become what is known in business terms as ‘market oriented’ and designing their ‘product’ to suit consumer demands. This would imply a new role for political parties, one at odds with the traditional role assumed by the standard literature. It may also cause potential problems for political parties in the long-term, as well as having significant normative implications for politics as a whole.

This paper therefore explores the full potential of political marketing on a theoretical level integrating management, marketing and political science literature to find out how British political parties and the US political parties have used marketing and become market-oriented. It will examine the extent to which the ‘New Labour Party’ in 1997 exhibited behaviour in line with this model and comparing this with the Conservatives in 1979. We would also consider its use in the US by the Republican and Democratic political party and how it has affected the political landscape. It will be seen how the Conservative party used marketing to inform policy design, a model which ‘New Labour’ followed but to a greater extent, using results from market intelligence to push for changes to the role of the memberships and further centralisation of power to ensure a clear organisational structure within the party. In more recent times, the endorsement of George W. Bush (jnr), by the Republican Party in the US and how the product, i.e. his behaviour over the election period leading up to his election win was galvanised through political marketing. It is hoped that this paper will highlight how the implications of political marketing are much wider than at first sort.

CHAPTER 2: EXISTING LITERATURE REVIEWED

Marketing is a form of management or method used primarily by business organisations. It has evolved to include the design and promotion of a product to ensure that the goals of the organisation, the prime one being to make profit in the case of a business, are met. It is not just about selling, or in this case campaigning. As Levitt (1960: 50) argues, that the difference between marketing and selling is more than dynamic. Selling focuses on the needs of the seller, marketing focuses on the need of the buyer. The current marketing philosophy focuses on how firms can satisfy customers wants, and adopt what is called a market-oriented approach as this is deemed the most effective way to meet the firms goals Drucker (1954:37). Cannon (1996:6) found that with business organisations the idea that firms exist, first and foremost, to satisfy customer’s needs has not been accommodated easily into the operations of many organisations. It is likely in this case, to be even more difficult with a political party, which is bound to consist of many ideas and attitudes to how the party as a whole should behave, not the least, different theories of the meaning of democracy and the role of the elites.

Kotler and Andreasen (1987:505), suggest that everything about an organisation, which includes, its products, employee’s facilities, and actions, all communicate something to the general public. Not only the nature of the leader, but also the behaviour and rights of the party’s member’s could be influential in attracting or repelling voters. As Shaw (1994:175) puts it, the British Labour party failed to win the 1992 general election because (amongst other factors), despite changes in policy, the then leader of the party, lacked the time and support to transform the party itself, a fatal weakness, since the character and behaviour of its activists at the time, its ethos, language and rituals, and most importantly, its close association with the trade unions, all alienated the electorate. A party with the wrong approach to gain the attention of the voting electorate is more likely to fail. As Scullion and Dermody (2004:361), argues that the campaigns employed by the political parties were being accused of failing to engage a disinterested young electorate.

In their comparison of New Labour (UK) and New Democrats (US), Ingram and Lees-Marshment (2002:5), state that systemic differences between the countries, the UK and US, substantially condition the scope, focus, and application of political marketing and although American campaigns maybe the breeding ground for technological innovation and birth of political marketing, there is more potential for the use of political marketing in Britain, due to the more centralised nature of political parties and campaigns and to the component delivery of the marketing model. This article found that Labour’s approach was far broader in scope, influencing aspects of its policies, personnel, internal organisation, and leadership behaviour. One should also understand that the use of marketing as a tool for political gains is not a new thing. Eisenhower’s use of direct male in the early 50’s in the US, and in the UK, Margaret Thatcher’s use of the Saatchi and Saatchi advertising agency (Scammell, 1994:23). However, there has been an increasing use of marketing methods in political campaigns over the latter part of the twentieth century (Smith and Saunders (1990: 295), Wring (1997:1131). To date the dominant paradigm has been to adapt consumer goods marketing ideas and frameworks (Baines and Egan, 2001:1), especially the marketing mix concept (Niffenegger, 1989:45). Other frameworks might provide a more fruitful basis for analysis. The broadening theory of marketing was based upon the notion that marketing ideas and techniques could be utilised whenever value is exchanged between two parties, e.g. charities, churches, and political parties, (Kotler and Levy, 1969:10). It was argued later that differences of form and content (Lock and Harris, 1996: 21), and structure and process (Butler and Collins, 1999:55) existed, and that value exchange was not so straightforward. Baines, Harris, and Newman (1999:1) additionally state that this commercial and political difference, when suggesting that political campaigns usually operate with shorter, more intense promotional campaigns, in oligopolistic markets, with polarised levels of voter loyalty, and differing potential for the degree of marketing orientation in different countries. It can be argued here that structural changes in the political landscape had an impact on the perceived need for adoption of marketing techniques. Voters are perceived to be less involved and less loyal than in the past (Ware, 1995: 6). This may partly be due to voter apathy, which is a growing trend in most western democracies. There are a number of factors that are central to the need for marketing in campaigns. They are lack of actual or perceived product differentiation; increasing numbers and frequency of electoral contests and referendum held, or simply because voters have more compelling distractions stimulated by increased wealth and leisure time. To cast ones vote was and is seen as less of a duty than was largely the case in the past. This is why marketing has evolved to be used as a way of demand intervention.

Marketing and political campaigning or vice-versa can be deemed as inseparable, because of its strategic importance to the outcome of any election. Such is the perceived value of marketing that no political party and few individual candidates would challenge the role marketing plays in the modern campaign and electoral process.

With all this in mind, this paper moves on to explore the full potential of political marketing on a theoretical level identifying the literature that a political party might use marketing and become market-orientated. It will examine the extent to which the Labour party in 1997, exhibited behaviour in line with this model and comparing this with the Conservative party in 1979. Additionally, the Republican party of the US would also be mentioned and examined with regard to correlations or differences between the use of this model, in the UK and the US between the political parties.

Therefore the remainder of this paper is set as follow:

Chapter 3: Theoretical concepts of Political Marketing

Chapter 4: Labour Party use of political marketing, 1997-2001

Chapter 5: Conservative Party use of political marketing, 1997-2001

Chapter 6: The use of political marketing in the US in comparison to the UK

Chapter 7: Summary and Conclusion

References and Bibliography.

CHAPTER 3: THEORETICAL CONCEPTS OF POLITICAL MARKETING

Political parties use political marketing to determine their policies, organisation, communication and, ultimately, potential delivery in government. Political parties were traditionally perceived as bastions of ideology, dogma, idealism and rhetoric. In the twenty-first century, however, most if not all-political parties in the UK of varying ideologies, histories, sizes and fortunes are aware of political marketing. The extent to which they choose to use it, the form they adopt, and their success at adopting a market orientation may vary, but all understand the pressure from the political market to satisfy the general populace.

Depending on their nature, political parties can use marketing in various ways. Parties differ in their size and goals. Major parties are large, established organisations whose dominant goal is to win control of government, therefore to win a general (or devolved) election. The Conservative and Labour parties in the UK are major parties and so try to use political marketing to win an election. Their market consists of the electorate, in addition to anyone else who has influence on voters, although the parties do not need to win support from everyone to gain power. Their product includes all aspects of their behaviour. Although a major party generally asks political consumers to vote for it on the basis of what it promises to do in government, its policy promises or party manifesto which it lays out to the general electorate, voters also take into account other aspects of party behaviour such as leadership, party unity, organisation, and the behaviour of members, because these may affect the ability of the party to deliver on policy promises.

The current marketing philosophy focuses on how firms satisfy customers, and adopt what is called a market-orientation as this is deemed as the most effective way to meet the firm’s goals (Drucker, 1954:37). It can be argued here that if a political party implements the marketing philosophy, it will seek to meet voters needs and wants, thus producing voter satisfaction, and in doing so gain electoral support to meet its own goals.

Orientation is a concept that the major parties should adopt, which is based on an attitude towards how they behave in relation to the electorate. There are three main political marketing orientations (Lees-Marshment 2001:692). Market-oriented parties (MOPs) design their product, including policies, leadership and organisation, to suit what political consumers demand, in order to achieve their goal of winning a general election. This does not mean they simply follow what everyone wants to them to do, because this would be impossible anyway, because demands are complex and competing. Instead they need to go through a complex process of stages. This is shown in Box 3.1.

Box 3.1 The Process for a Market-Oriented Party

Stage 1: Market intelligence

Party finds out what voters need and want by:

• Keeping an ear to the ground, talking to activists, meeting the public;

• Using quantitative research (electoral results, public opinion polls and privately commissioned studies) and qualitative research such as a focus group.

Stage 2: Product design Party designs

behaviour (including leadership, members, policies, staff, constitution and symbols) according to voters’ demands.

Stage 3: Product adjustment

Party designs product to suit the electorate at large and then needs to make sure it considers other factors:

• Achievability, determine whether the product design is achievable;

• Internal reaction analysis, to alter design to ensure it will obtain the support of enough MPs and members to ensure its implementation;

• Competition analysis, this is to promote opposition weaknesses and highlight own strengths;

• Support analysis, this is with the view of focusing on winning the support of voters, it does not have, but needs to win.

Stage 4: Implementation

 The findings from stages 1 – 3, must be implemented. The majority must accept the new behaviour broadly. This requires effective and considerate organisation and management.

Stage5: Communication

This includes the so-called near-term or long-term campaign, but also ongoing behaviour. The party ensures that communication helps it achieve electoral success; attempts to influence others in the communication process, such as journalist and opposition parties; and uses selling techniques such as direct mail and targeted communications

Stage 6: Campaign

This can be said to be the final chance for the political party to communicate with the voters.

Stage 7: Election

The party goes through the election.

Stage 8: Delivery

The party carries out promises made once in government.

Box 3.2 The process for a Product-Oriented Party

Stage 1: Product design

The party designs its behaviour according to what it thinks best represents them.

Stage 2: Communication

This includes the so=called near-term or long-term campaign but also ongoing behaviour. Not just the leader, but all MPs and members, send a message to the electorate. The organisation is clear and effective; it is designed to advance arguments.

Stage 3: Campaign

The official election campaign period starts leading up to the election.

4: Election

The general election takes place.

Stage 5: Delivery on promises made during election as stated on the party’s election manifesto

The party will deliver its product in government.

Box 3.3 The Process for Sales – Oriented Party

Stage 1: Product design

The party designs its behaviour according to what it thinks best.

Stage 2: Market Intelligence

The party aims to discover voters’ response to the product, especially voters who do not support the party but might, so that communications can be targeted on them. Informally, it keeps an ear to the ground, talks to party members, creates policy groups and meets with the public. Formally, it uses quantitative research (electoral results, public opinion polls and privately commissioned studies) and qualitative research such as a focus group.

Stage 3: Communication

This includes the so-called near-term or long-term campaign but also ongoing behaviour. Not just the leader, but all MPs and members send a message to the electorate. Attempts are made to ensure all communication helps achieve electoral success, and to influence others in the communication process. The organisation is clear and effective designed to advance arguments. It also makes use of selling techniques such as direct mail and targeted communications to persuade voters to agree with the party.

Stage 4: Campaign

 The official election campaign period kicks in up until election. The party continues to communicate effectively as in stage 3.

 Stage 5: Election

The general election.

Stage 6: Delivery

The party will deliver its promised product in government.

Other parties with different goals may not choose to use political marketing in this way i.e. Box 3.1. However, if the dominant goal of a party is to advance a particular policy, rather than win an election, it maybe more product oriented. Product – Oriented parties (POPs) decide their behaviour or product themselves without much care for the opinions of political consumers, or rather, they assume that voters will realise that it is right and vote for it accordingly. Their process is quite simple: see Box 3.2.

A product – oriented party refuses to change its ideas or product even if it fails to gain electoral or membership support. If a party is a small or minor party, with the main goal being not to win a general election but to put ideas on the agenda, this may be the most appropriate political marketing orientation.

However, most party’s overtime, grow to be concerned about their performance. They may then move to a sales orientation position, retaining the same product or behaviour, but using political marketing communication techniques, see Box 3.3. Market intelligence is used not to inform the product design, but to help the party persuade voters it is right and has sound electoral policies. Sales-oriented parties are often perceived as the more manipulative, because they use marketing to persuade or change public opinion. Current research indicates that the trend in the UK, at least amongst the major political parties, is towards the market-oriented approach (Lees-Marshment 2001). The trend is to evolve from product through to sales and then finally a market orientation, responding to the gradual rise of the political consumer. Major party’s can however, win power using a market-orientation and then switch back to a sales or product once in power. Political parties often find it harder to remain in touch with the public and responsive to the demands of political consumers once they are in government. Other small UK parties tend to adopt any one of the three orientations. Parties such as the Scottish National Party have moved through the classic product-sales-market –oriented cycle.

The use of marketing by political parties is not as easy as the theory suggests. The latest research in political party marketing suggests that despite the desire of both the Conservative and Labour parties to adopt and maintain a market orientation, many obstacles get in the way. This will be fully explained in the following chapters.

CHAPTER 4: LABOUR PARTY USE OF POLITICAL MARKETING (1997-2001)

The Labour party has been one of political marketing’s success stories of the new century, at least on the surface. Using political marketing to become more in touch with the public, reduce any unwanted historical baggage, and even relabelled itself as ‘New Labour’, it first became market oriented in order to win the previous election in 1997. It remains the fullest example of a market-oriented party, following the model to the greatest degree of any party ever seen. However, after obtaining the mandate of power from the UK electorate, the party met many obstacles to delivering on its 1997election promises. This is a major potential weakness: Labour support is very much based on promised outputs, so it needs to be seen to deliver. It is in the context that Labour attempted to maintain a market orientation and retain its electoral support during 1997 – 2001.

Table 4.1 The Labour government and Delivery, February 2000

‘There is a lot of talk at the moment about whether the present government is or is not ‘delivering’. From what you know, do you think that it is or is not delivering on each of the following?

Source: Gallup Political Index

Delivery in government on the 1997 election promises

Delivering the political product as stated previously is not an easy task. It is one of unanswered potential conundrums at the heart of political marketing (Laing and Lees-Marshment, 2002:19). The Labour party understood this. The party talked constantly about the need to deliver. It copied business and started to issue an annual report on its delivery of its promises (Labour Party 1999: 3-7, 2000). Labour undoubtly succeeded in some areas, such as constitutional reform, with the introduction of devolution in Scotland and Wales and the removal of hereditary peers from the House of Lords. However, Labour failed to convince many voters that it had made real improvement to standards in the public services, which is the core part of the 1997 product. Public resentment about Labour’s failures to deliver grew, Table 4.1, gives you the evidence.

There was also dissatisfaction with the Labour party. A report from the Labour party itself based on its private polls leaked in the independent warning that the party’s huge lead in the opinion polls masks the fact that people are turning against the Government because they believe it is failing to deliver its 1997 general election party manifesto. In July 2000 a MORI survey indicated that 57% of respondents did not think the leader of the Labour Party had kept the parties election promises. See the following table:

Table 4.2 Perceived performance of the prime minister, July 2000

Since becoming prime minister in May 1997, do you think, Tony Blair has or has not delivered election promises made in the party’s election manifesto?

Source: MORI telephone survey 20-22, July 2000

Labour therefore still needed to utilise political marketing, but this time to maintain rather than win support.

Stage 1: Market Intelligence

The Labour party conducted substantial market intelligence. Philip Gould conducted focus group work for the party; Greg Crook ran a rolling programme of opinion polling (Cook, 2002:87); the party’s advertising agency, TVWA London, also conducted research (Lawther, 2002:1). Labour also analysed results of elections to local authorities, the devolved institutions, the European parliament and parliamentary by-elections (Cook, 2002:88). It took account of negative criticism despite the overall positive polls and continued to monitor the performance of the opposition. During 1997 – 2001 Labour continually discussed voters’ needs.

Stage 2: Product design

The New Labour product offered to the electorate in 2001 was extremely similar to that offered in 1997, with greater determination to deliver in the second term. Policy: In terms of policy, the focus remained on raising standards in the public services, such as health and education. The party retained its commitment to low income tax and competent economic management. There were slight changes in terms of greater investment in public services in order to improve them, but such moves were made without a call o increase tax. Stephen Lawther, polling coordinator for the Scottish Labour Party, argued that Labour put forward a strong product:

• Minimum wage;

• 1 million new jobs;

• Lowest unemployment in 25 years;

• Lowest inflation in 30 years;

• Winter fuel allowance;

 • Record investment in schools in hospitals;

• Small class sizes;

• A nursery place for every 4 year old;

• 10,000 more nurses in the NHS;

• Working families’ tax credit reduction;

• Scottish parliament (devolution), (Lawther, 2002).

Leadership: As leader, the prime minister continued to exercise strong and determined control over his party and the senior leadership and cabinet in particular. The prime minister enjoyed extremely high popularity scores in public opinion polls until the end of the 1997-2002 periods, when he began to attract criticism for being smarmy, arrogant and out of touch with the national electorate. In June 2000, the prime minister was even slow-hand-clapped by the Women’s Institute.

Internal membership: Changes were made within the party with the aim of making members more involved (Seyd 1999:390-391). Members-only sessions were introduced at the annual party conference, to ensure members had a chance to air their views without damaging the party externally. Partnership in power, a series of proposals to change certain organisational structures within the party, devolved policy-making to the National Policy Forum to provide greater consultation with the membership. Nevertheless, party membership slumped from 420,000 after 1997 election to just 320,000 by mid-1999. Many of those who remained were de-energised (Seyd and Whiteley, 1999). This reflects the limited application of marketing to the membership, (Lees-Marshment, 2001a). The foundations of Labour’s support have been eroded, making it even more crucial that the party satisfy voters through delivery on public services.

Party Unity: The leadership exerted significant control over the party’s participation within the new devolved institutions in the selection of the leadership candidate for the Welsh assembly, which aroused significant discontent among Labour party activists. Another case was the election for the London mayor. After failing to be selected as the Labour candidate, an old left-winger, Ken Livingston, stood as an independent after calls from the public to do so, and won. This was an indication of the discontent at the grassroots of the Labour party: an issue that Labour continues to struggle with, due to its use of political marketing.

Stage 3: Product Adjustment Achievability: Learning in government that delivering on the 1997 pledges, particularly those about the quality of public services, was extremely difficult, the party made promises for the next term of office in terms of inputs rather than outputs, such as ‘x number of nurses or police’ rather than reduce waiting list or lower levels of crime. Inputs are easier to deliver because they are easier to control (Lees-Marshment and Laing, 2002:20). The 2001 pledges were:

• Mortgages to be as low as possible, low inflation and sound public finances;

• 10,000 extra teachers and higher standards in secondary schools;

• 20,000 extra nurses and 10,000 extra doctors in a reformed NHS;

• 6,000 extra recruits to raise police numbers to their highest ever level;

• Pensioners’ winter fuel payment retained, minimum wage rising to £4.20, and most recently to £5.25 an hour.

Internal reaction analysis: The decline in membership that Labour experienced after 1997 suggests failure of internal reaction analysis. The new system of policy-making was criticised for restricting the opportunity for debate at conference and ignoring the work of policy forums (Seyd, 2002:95). The selection processes used for the Scottish parliament, Welsh assembly and London mayor also indicated a lack of internal reaction analysis and generated further discontent.

Competition analysis: Labour engaged in a significant competition analysis in terms of its planning for the campaign. It was keen that voters would see the election as a choice between the parties rather than a referendum on Labour’s mixed record of delivery (Gould, 2002:57, Lawther, 2002:1). Posters reassured voters about the party, saying, ‘Thanks for voting Labour’, but also reminding them of potential problems the Conservatives might bring, with posters headed ‘Economic Disaster II).

Support analysis: Labour analysed voters who were former Conservatives that had defected to the party in 1997, and found that this group would stay with the party. Attention then shifted to mobilising people to vote, as the party feared it could lose support due to a low turnout. Labour played on the emotion of fear at a prospective Tory victory, commissioning the famous ‘wiggy’ poster of the then leader of the Conservative party, warning ‘Get out and vote or they get in’. It tried to put forward the vision that the work goes on and voters needed to give the party more time.

Stage 4: Implementation

The leader of the Labour party insisted on strict party unity: i.e. all ministers had to agree any interaction with the media and the press office of the Labour party, to ensure unified communication from government. The party’s leader had a few difficulties passing legislation. And ambitious MPs knew they had to keep in line with the leadership if they wished to advance their careers. Blair (the leader of the Labour Party) followed the market-oriented party model to fine detail, promoting those who followed the product design and sidelining those who voiced dissent. Nevertheless Labour was criticised for being too ‘Control Conscious’.

Stage 5: Communication

Labour continued to control communication from the party and also central government. The Government Information Service was used to communicate the government’s message and delivery (Scammell, 2001). Government spending on advertising increased massively in the four years between 1997 and 2001 (Grice, 2001). Party communication was also focused on delivery: party political broad casts during the elections to the European parliament, for example, focused on the government’s achievements, rather than European issues. Communication did not succeed in convincing voters that the government had delivered as initially thought.

Stage 6: Campaign

The character of the party’s product and its delivery performance in office determined Labour’s campaign. It focused on the need to deliver, asking for more time to do its job. Labour used target marketing and campaigned most heavily in marginal seats where it was assumed that its efforts would have the greatest effect (Cook, 2002:87). In Scotland Labour sent out targeted direct mail in the form of a letter from both the leader of the party and the deputy leader to segments of the market such as Scottish National Party (SNP) floaters, and Labour also ran health rallies and a pledge day to reinforce key themes. The campaign was closely co-ordinated from the party’s Millbank headquarters, with an integrated marketing communications structure. Responding to market intelligence, significant effort went into getting the vote out, through ‘Operation Turnout’. This assessed the party identification and voting history of electors in target seats and sent a direct marketing message to them to get them to vote (Lawther, 2002). Nevertheless, the underlying public dissatisfaction with public services was brought to the fore when Blair was accosted by the partner of a patient complaining about the poor standards of care in the NHS in a directly personal, but also televised and therefore highly public manner. This indicated the significant voter dissatisfaction with Labour’s performance. Labour was lucky, the Conservative party experienced substantial difficulty in trying to use political marketing, and faced with little alternative the Labour product seemed the best one voters could buy.

Stage 7: Election

The Conservative party would mention this after an evaluation of the use of political marketing. This also applies to Stage 8, delivery, as we already know this cannot be mentioned for the Tories.

CHAPTER 5: CONSERVATIVE PARTY USE OF POLITICAL MARKETING (1997 – 2001)

The conservative party undoubtly tried to use political marketing during 1997 – 2001. After the party lost so badly in 1997 under John Major, William Hague took over as leader. He set about reforming the party organisation and culture, and adopted key marketing principles, initiating a major market intelligence exercise to connect with the people. At the beginning of his leadership he declared (1998a): ‘The Conservative Party is changing. Changing our institutions and our structures; changing the way we involve our members and changing our culture towards the electorate. We are turning our greatest defeat into our greatest opportunity. We are changing the way we do business. However, he proved to be unable to implement such a change.

Stage 1: Market Intelligence

The Conservative party gathered market intelligence throughout the 1997-2001 period. Nick Sparrow of ICM poll gathered formal intelligence on voters’ attitudes towards the party, its leader and the government (Sparrow and Turner 2001). During the formal campaign the party conducted two focus groups per night among possible switchers. In the autumn of 1997, they also launched an exercise called listening to Britain, designed to reach out to voters (Lansley 1999). This consisted of a long series of meetings across the country where MPs listened to discussions on a wide range of topics. A resulting report entitled ‘Listening to Britain (Conservative Party 1999), identified key voter concerns and fed into early policy design.

Stage 2: Product design

Leadership: Between 1997 and 1999 William Hague set the party on a path to produce market-oriented policies and organisation in response to the results from market intelligence. As leader, however, he was an electoral liability. He lacked public standing and continually polled low ratings in relation to the Labour party leader Prime Minister Tony Blair. Hague’s leadership was also beset by continual criticism, defections, challenges and disunity.

Internal organisation and constitution: The leader of the Conservative party at the time reformed the Conservative organisational structure to reflect the concerns of members and voters. The party’s rules over funding were also revised, responding to voters’ concerns about this issue. Market intelligence on the membership led to the introduction of voting rights for individual members, and the membership was also balloted during 1997 – 2001 on several occasions. The organisational part of the product can be said to be market oriented, and laid down the foundations for the emergence of a market orientation in other aspects of the product (Lees-Marshment and Quayle 2001: 204).

Membership: The party adopted direct marketing mail techniques associated with business, using the company Archibald Ingall Stretton (Chambers, 2001). It profiled existing members and then bought membership lists of names for wine clubs, garden centres, rugby etc, for a direct mail recruitment drive. A Conservative network was launched to offer a social and political programme to attract young professionals, and provided training in skills needed for candidates. Conservative Future was created for those members aged 30 and under (Pugh, 2001). However, the membership dropped from the perceived figure of 350,000 in 1997 to the official figure of just 300,000 by the time of the election in 2001. The Tory Party seemed to be in a mixed situation at the time; it needed new members to change its product, but it also needed to change the product in order to attract new members. Organisational changes take very long to fizzle down to the roots.

Candidates: The internal culture of the party also proved a barrier to Hague’s intended changes. The leadership attempted to attract candidates more representative of the population: it encouraged associations to select women and ethnic minority candidates. Women candidates were offered help with a ‘mentoring’ programme and guidelines on interviewing candidates were widely circulated. Both these initiatives appear to have had little impact. Hague also set up a new Cultural unit to encourage the participation of ethnic minority communities and established a ‘listening link’ with ethnic communities and organisations (Mannan, 2001; Norris, 2001).

Policy: Responding to market intelligence, Hague initially attempted to take the party in a new direction on policy, arguing that the party should focus on improving state provision of public services rather than looking to the market and simply reducing taxes. In April 1999, just as the party met to celebrate the twentieth anniversary of Mrs. Thatcher’s first election victory, the then deputy party leader Peter Lilley delivered a lecture, arguing that, ‘Conservatism is not, never has been and never will be solely about the free market’. The speech was designed to mark the beginning of a new ‘compassionate’ Conservatism. However, the speech led to internal rows and Hague began to doubt his market-oriented strategy. In October 1999, the party launched the Common Sense Revolution, with a number of guarantees, responding to market intelligence and the need for achievable promises, such as:

• A parents’ guarantee giving them the power to change school management that fails to provide adequate standards.

• A patients’ guarantee giving a fixed waiting time based on the need for treatment

• A tax guarantee ensuring that taxes would fall as a share of the nation’s income over the term of the next parliament under a Conservative government.

• A ‘can work, must work’ guarantee ensuring that benefit claimants who can work would lose their dole if they did not.

• A guarantee that the Tories would oppose entry into the euro at the next general election as part of their manifesto.

These promises responded to the results from market intelligence. They could have built the party’s overall reputation for honesty and believability. They were also focused on areas of prime importance to voters. When they were first communicated, press coverage was potentially positive: it was seen as a break with the past, a new way forward. It was even compared to the Labour party’s abandonment of Clause IV, when Labour had removed its previous commitment to the workers’ owning the means of production, a change away from an ideology-based statement to one that followed the opinion of the electoral market.

By the time of the election, however, the guarantees had all but disappeared, following a period of statements from senior party figures. For example, in February 2000, Hague suggested that the tax guarantee was an aspiration, not a definite promise to reduce tax, and in June 2000, he admitted that many medical conditions would not be covered by the patients guarantee at first. This undermined the party’s credibility. Voters were left to wonder where the guarantees had gone. This also undermined Hague’s strength and he lost the will to continue to pursue the focus on public services. After this the party shifted its attention to asylum, which was regarded as its core vote. As Kenneth Clark commented, ‘from about half-way through the parliament we stopped trying to broadening our appeal, we narrowed it’ (BBC Question Time, July 2001).

The final general election manifesto was called Time for Common Sense (Conservative Party 2001). The main policies emphasised were those on families, pensions, Europe, immigration and Crime. Although it contained policies on education and health, they did not receive the prominence desired by voters.

Stage 3: Product adjustment

Achievability analysis: The Conservative party was handicapped throughout the 1997-2001 election period by its reputation for failed delivery when it was last in government. It then found new promises, the guarantees, were thought to be unachievable. It tried to water the guarantees down but this only served to generate confusion over just what the Conservative product was.

Internal reaction analysis: Organisational reforms were subject to widespread consultation in the Conservative party and carried through with few problems, Lilley’s speech was heavily criticised internally by the party. A senior campaign official later admitted that there had been an ‘internal failure of policy clearance’. As the party row ultimately led to the abandonment of a strategy focused on public services, it represented a major barrier to the effective use of political marketing.

Competition analysis: One major criticism of the Tory party in 2001 was that they neglected the issues voters most cared about: health and education. However, the Tories were themselves tarred with the same brush from the pre-1997 period. John Crawford, planner for Yellow M, the Tories’ advertising agency, noted that ‘even though Labour were seen to not be as good on health as people thought they might have been pre-1997, I saw a poll on the day, 81% of people thought Labour weren’t delivering on health, even then I don’t think that the Conservative party felt quite as comfortable as they might have done criticising them about it because our record on health wasn’t fantastic either’ (Crawford, 2001). Simply ignoring the issues that voters cared most about and hoping it would not matter was not an effective strategy. It did matter; it made the party seem unresponsive and out of touch.

Support analysis: The Tories took this into account, but unfortunately it encouraged the abandonment of a market-oriented approach. Discussions with internal party staff and figures suggest that Hague lost his panache when the party made no progress in the polls. He then changed to a less ambitious strategy of getting core supporters to turn out. (Senior Conservative Official 2001).

Stage 4: Implementation

Implementation is the stage where Hague really fell down. He faced one battle after another in trying to introduce the initial, market-oriented product design. The idea of a market orientation was fully accepted by the central leadership (Peele, 1998:141-143) but was never fully accepted throughout the party. The initial design to focus on public services was heavily criticised internally by staff and politicians. Hague’s official reaction was to say he would not change this strategy: ‘I will go thorough any number of arguments, take on anyone in debate, endure any criticisms, do whatever it takes to get across this position on health and education’ (Daily Telegraph, 29 April 1999). Overtime, however, declarations focusing on improving the public services were replaced by communications about popular positions on minority issues such as asylum and the euro. The party had not sufficiently adopted a market orientation that would ensure implementation and communication of a product and set of policies designed to suit voter demands.

This can also be seen in the amount of disunity and the number of defections and disunity even at the top levels of the Tory party, such as those of Shaun Woodward in December 1999 and Ivan Masow in August 2000. Kenneth Clark reopened divisions over Europe, appearing on a shared platform with Labour to launch the ‘Britain in Europe’ campaign and even stating ‘I’m in favour of joining the single European currency in principle. I don’t agree with the party’s policy’ (Guardian, 5 July 1999). This gave the impression that Hague was not in control and publicly demonstrated the disunity that damaged the product. Additionally, Hague’s leadership was criticised by senior Tories including John Major and Kenneth Clark from 1999 to 2001. There was always talk of potential challengers to the leadership, such as Ken Clarke and Michael Portillo, as the general election got closer. Overall, disunity, change of direction, defections and lack of cultural change at lower levels of the party prevented implementation, making communication very difficult.

Stage 5: Communication

Communication became more professional but focused on non-mainstream issues: in his New Year message for 2001, Hague identified tax cuts, crime and Europe as the main political battlegrounds. Furthermore, his speeches on asylum were perceived and portrayed as attacks on refugees, and could be interpreted as racist. The Conservatives also failed to communicate an alternative product to Labour. Criticism of the government was not enough to encourage voters to return to the Tories. The party appointed a little-known Scottish advertising agency, Yellow M, to design its advertising, but communication was generally negative. The party began to keep the pound, which is the old-fashioned mini-campaign, more suited to patriotic Conservatives who would vote for the party anyway. In the summer and autumn of 2000 the party launched one policy initiative after another, but lacked a big idea or theme that would hold them all together. As a senior Conservative official involved stated, ‘we were not devising messages and then crafting them in ways that would appeal to the media’. However, the Tories’ failure to persuade journalists and voters had one core cause: the unappealing product that it was trying to sell.

Stage 6: Campaign

As Lansley (2002) noted, the 2001 campaign ‘illustrated forcibly the truth that elections are won and lost over four years, not four weeks’. Division due to failed implementation quickly marred it. The Tories focused on law and order, tax and Europe, one could say that these are not issues voters cared about. This gave the impression of a party that was out of touch. The Conservative party ended the campaign with the same share of the vote as when they started. It was their behaviour, in marketing terms, the product that was the problem.

Stage 7: Election for both Conservative and Labour Parties

The overall election result reflected the way both parties behaved between 1997 and 2001. Labour won a second full term and although its share of the vote fell two points to 42 percent, it lost only seven seats and managed to gain two more. Its second consecutive victory was a landslide, with the party winning 412 seats, giving a majority of 165. Labour gained significant electoral dividends by continuing to use political marketing in office. The Conservatives, however, gained only 32.7% of the vote and one seat. More detailed analysis of the electoral support provides quantitative evidence that Labour responded to voter concerns. When voters were asked to decide which major political party had the better policy on each issue, Labour had a clear lead over the Tory Party. The following table shows this:

Table 5.1 Best party policy on key issues, 2001

‘I am going to read out a list of problems facing Britain today. I would like you to tell me whether you think the Conservative party, the Labour party or the Liberal Democrats has the best policies on each problem’.

Source: MORI Polls, May 2001

The results also reflected the failure of the Conservatives to implement a market-oriented strategy. The British election study (BES) found that a majority of voters did not think that the party would handle the most important issues of health and education well. All polls showed Hague in a poor position when voters were asked who would make the best prime minister, ranging from only 17 to 20 percent were in his support. The Conservatives also lacked governing and delivery competence. Only between 30 and 32 percent of voters believed they were the best party to handle the economy (Gallup poll/Daily Telegraph, 6 June, 2001) and only 9 percent thought the party was the most clear and united about what its policies should be (MORI poll, 15 May 2001, The Times).

Although it is tempting to claim (and indeed was the common view in 2001) that Hague lost because he followed right-wing populist policies, data does not suggest this to have been the main problem. An ICM exit poll indicated that former Tory voters failed to return in 2001 not because the party was too extreme or right wing, but because they felt that the Tories would not improve public services. The Conservatives simply did not offer a viable product that voters wanted to buy. People were dissatisfied with Labour. They were open to the possibility of the Tories: the hostility present in 1997 had gone, but the party failed to produce clear and popular policy responses to the enduring issues of health and education. The party had not adopted a market-orientation approach throughout its organisation and had failed to respond to voters’ needs and desires.

Both cases therefore suggest issues for political marketing. The Tory case indicates that it is not enough for a leader to want to use political marketing. Internal aspects got in the way. When interviewed about this, Andrew Lansley (2001) noted saying there was always a sense that the party should be focusing on issues voters were most interested in, but ‘the difficulty was transforming it into practice’. Indeed, both the Labour and Conservative cases suggest that parties need to pay greater attention to Stage 3, ‘product adjustment’, to avoid such problems: the internal party democracy and marketing aspects are more important than might first appear. It can be argued that Labour has also neglected their internal supporters and product adjustment, which is an issue for them. Blair’s neglect of this stage between 1994 and 1997 may have laid the foundations for some of Labour’s problems post-2001. New Labour’s support is weak and conditional. This will also make delivery in its second term of office even more crucial. Political marketing, in terms of the market-oriented approach, at first seems at odds with internal democracy, membership, tradition and ideology, but infact they may be an important component of the strategy if it is to be an effective tool.

CHAPTER 6: THE USE OF POLITICAL MARKETING IN THE US IN COMPARISON TO THE UK

The use of political marketing by American Political Parties is somewhat unclear. As we have seen from the previous chapters, that the use of political marketing in the UK to determine not just their campaign strategy but also the way they design the political product to be sold, is entrenched within the political parties. The question remains therefore, as to whether American political parties has moved to a similar broad based approach, or continue to be, as they are often epitomized as simply empty vehicles using marketing only to sell a product already designed. Most previous research has only looked at the sales-oriented approaches to political marketing and focus on the campaign.

In their comparison of Tony Blair’s ‘New Labour’ and Bill Clinton’s ‘New Democrats’, Ingram and Lees-Marshment (2002) suggested that ‘systemic differences between the two countries, the UK and the US, substantially condition the scope, focus and application of political marketing’, and although American campaigns maybe the breeding ground for technological innovation, there is more potential for the use of political marketing in Britain, due to the more centralised nature of political parties and campaigns and to the delivery component the marketing model. It was found that Labour’s approach was by far broader in scope, influencing aspects of its policies, personnel, internal organisation, and leadership behaviour. British parties were seen to have more potential to use the market-oriented party model to its full and apply the market-oriented concept to all aspects of the political party including, membership, staff, organisation as well as leader and policies.

The market-oriented party

A Market-oriented party designs its behaviour to suit what voter’s want. It uses market intelligence to identify voter demands and preferences, and then attempts to design its product to suit these. In the British context, the ‘product’ includes party organisation, staff, membership, symbols, conference, as well as leader and policies. In the US, the concept of party membership is not so relevant given its more amorphous nature. However, political marketing can still be applied to the leadership, policies, and overall theme for the party staff, and maybe applied to the party organisation.

The movement toward Bush and the Republican’s adopting a market-oriented design effectively commenced on the night of the 1998-midterm elections. These elections were a sharp rebuke to the GOP’s congressional wing, as its leadership at the time pursued the impeachment of the then president, Bill Clinton. In elections to the US House of Representatives, the Democrats actually gained seats, something that the president’s party had not accomplished since the Zenith of the New Deal era in 1934. Many in the Republican party at the time blamed its congressional leaders, especially the speaker of the house, Newt Gingrich, and moreover, felt that the more aggressive and confrontational style embodied by congressional Republicans could cost the party the presidency and control of both the US House and US Senate in the 2000 elections. With this background, the then Texan governor, George W. Bush (Jnr), the eldest son of the forty-first president, became the overnight front-runner for the Republican presidential nomination in 2000. In 1998 Bush’s landslide victory was a positive note for the GOP in an otherwise disappointing election night. Running for re-election on a record of tax cuts and educational reform, Bush won re-election with 69 percent of the votes. More importantly than Bush’s margin of victory was his impressive performance among groups outside the GOP’s traditional white conservative electoral base. For example, according to exit polls Bush received 49 percent of the Hispanic vote and 27 percent of the Black vote, and 31 percent of the vote from Democrats and Liberals. Additionally, Bush received 65 percent of the vote from women, indicating that he could neutralize the ‘gender gap’ that had become evident in voting behaviour in the US.

Although not officially announcing his decision to run for the Republican presidential nomination, Bush clearly hinted at his national aspirations and his desire to move the Republican Party back to the political centre by talking in his election night that victory of his appeal as a ‘compassionate conservative’. This turned out to be the theme that remained at the front and central to the Bush campaign in both the primary and general election phases of the 2000 election. In other words it was an attempt to demonstrate to the electorate that Bush was a different type of Republican from the congressional brand that had been the dominant and most visible face of the party since 1994.

Stage 1: Market Intelligence – Understanding the Electorate

George W. Bush was very quickly perceived as the only Republican candidate who could unite the party’s economic conservative and social conservative wings as well as appeal to Independents and Democrats. Thus, from the end of 1998 through early 1999, received visits from Republican members of Congress, Governors, State legislators, and others making the case to the then Texan governor, if Bush had not already decided for himself, that he should run for the Republican presidential nomination. Many of the Big state Republican governors, for example, Tom Ridge in Pennsylvania, George Pataki in New York, and Tommy Thompson in Wisconsin were elected and re-elected in Democratic inclined states. Each had been politically successful by emphasising a positive role for government.

Despite compassionate conservatisms vacuous agenda, Bush’s famous name and his overwhelming fundraising advantage ensured that he remained well ahead of his rivals in opinion polls following the official announcement of his candidacy in June 1999. His only major rival was Senator John McCain, and this showed during the early stages of his candidacy with respect to market intelligence, that he only partially understood the electorate. Yes, voters wanted something different after the scandals of Bill Clinton. At the same time they wanted something more than an endorsement-laden campaign that was vague on specific issues.

Stage 2: Product Design – Creating the Political Promises

The next stage in the process is to design the political product to suit the results for market intelligence. The product includes the behaviour of the presidential candidate, as well as the party as a whole. This behaviour encompasses many characteristic, is ongoing and offered in the run up to the election, not just the campaign, and potentially at all levels of the party. It includes the presidential candidate (character, experience, skills, and reputation), but also candidates for congress, staff, organisation, symbols, conventions as well as policies and overall theme. All these aspects are considered because they may have influence on the support a party is able to attract from the market. Some may have more influence than others, i.e., the party’s presidential in the main product, so the focus is on their character. However, the party’s national structure and electoral rules can still affect who is selected as the candidate, and marketing has the potential to influence the general policies put forward at the presidential level.

Stage 3: Product Adjustment

While a market-oriented party will design its product to suit the electorate, it will also adjust the product as it takes into account, the achievability of promises; address internal reaction; adjust to the rival product from opposition; and target specific groups of voters outside of the party’s base. The most important part of the Bush’s product adjustment, was in responding to Al Gore’s campaign. Throughout the 2000 campaign the media had been asked the question as to who the real Al Gore was. As Ceaser and Busch (2001:114) note, there were at least four different phases to the Gore candidacy: Gore the ‘Reformer’ (March and April), the ‘Attacker’ (May), the ‘Affirmer’ (June) and the ‘Populist’ (July). The last incarnation, in which Gore tied the Bush – Cheney ticket to big oil, big drug companies, big insurance companies while presenting himself as the populist champion of the ‘working family’ moved Gore away from the political centre. This not only allow Bush to occupy the ‘vital centre’, but at the same time it allowed him to attack Gore as an ‘Old Democrat’ whose big government programs and tax plan showed that he did not trust the people.

Stage 4: Implementation

The product design is implemented through the party. A majority need to accept the new behaviour and comply with this. The party leadership intent on making the organisation market-oriented and several changes will inevitably encounter some hostility and resistance from some within the organisation. The leadership needs to be aware of these potential problems and either take measure to avoid them or be ready to respond to them.

Stage 5 and 6: Communication and Campaign

Stage 5 includes the so-called near or long-term campaign but also on-going behaviour in a run up to a presidential election. Not just the leader, but also any politician in the media spotlight or dealing with their constituents can send a message to the electorate. Attempts are made to ensure all communication helps achieve electoral success and to influence others in the communication process. Stage 6 is the official general election campaign. The election campaign is the final chance of the party to convey its behaviour in a positive way. The party continues to communicate effectively as in Stage 5. The party will appoint a campaign manager who has clear control of the campaign and can communicate with others in the campaign organisation. The party will train and support all campaign workers, to ensure that they possess a clear knowledge of the product or party and can convey this in an intelligible and attractive manner to voters. It will also communicate regularly with candidates for office. Central to communicating with the electorate in presidential elections is the television advertising campaign.

Stage 7: Voter’s choose which party to buy – The Election Result.

If the party’s political marketing strategy has been successful, the people ‘buy the product’ and thus vote for party. A market-oriented party will be better placed to attract support at all phases of the electoral cycle, although the focus remains on the general election because this is the deciding factor in whether the party wins the election. Not just votes, but opinion polls and surveys will provide a measure of voter support for the product on offer.

Did political marketing work for George W. Bush in 2000? While Bush won the White House with a 271 to 266 Electoral College vote over Al Gore, he did lose the popular vote to Gore, 48.4 percent to 47.9 percent.

Stage 8: Stand and deliver – Delivery

The party will have to deliver the promised product once in government. Delivery is crucial to the ultimate success of marketing and therefore political marketing. In politics, if party’s fail to deliver on promised policies, voter dissatisfaction is likely to remain. Infact it may increase because voter’s where offered what they wanted but did not receive it. A market-oriented party will focus on the need to deliver in order to achieve voter satisfaction.

Evaluating the Bush presidency in this case is difficult in the sense that the terrorist attacks on the World Trade Centre on September 11th essentially heralded a new start to the Bush presidency. However, prior to September 11th, Bush’s ability to deliver and to govern as a ‘compassionate conservative’ was rather mixed.

CHAPTER 7: SUMMARY AND CONCLUSIONS

This paper has looked at the existing literature review covering the use of marketing as a tool by various political parties within the UK and the US. It has talked about the different theoretical concepts of marketing, notably, the process for a market – oriented party, the process for a product –oriented party, and the process for sales – oriented party. We have then used these marketing frameworks to critically evaluate its use by the Labour party during the general election of 1997 to 2001 headed by the prime minister, Tony Blair, and its use by the Conservative Party in the 1997 to 2001 election campaign headed by William Hague. Additionally, we have also analysed its use by the Republican Party under George W. Bush in the presidential elections of the US in 1998.

It will be worthwhile to conclude that although political parties are aware of political marketing, marketing political parties is not easy. Even if parties use this successfully and win control of government, this then leads to the question: what do they do next? The last stage of the process is delivery, and as we can see from the previous chapters, delivery is far from straightforward. Indeed, it is the other big question for the Labour party. This involves other areas of the political system, such as health and education, and the structures of delivery are increasingly important: parliament, the civil service, local government and devolved government all need to work effectively if the market-oriented parties are to achieve success in delivery. There are a lot of intermediaries involved in political delivery. Policy first designed within a market-oriented party then needs to go through Westminster or devolved parliaments, where it is subject to influence by interest groups and charities, other parties, and lawyers developing it into legislation; the civil service, to be implemented; and local government, to be delivered at the local level. This also applies to the US in which policies are put before the House of Senate, and then fizzles through to other government institutions. Such channels provide clear potential for change or blockage; they involve different groups of political opinion and staff, all with their own structures and organisation that may impede implementation, over which national government has little effective control in the dynamics of political marketing.

REFERENCES AND BIBILIOGRAPHY

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Chambers, P., (2001), Interview by Lees-Marshment, J., with P. Chambers, head of direct marketing, Conservative Central Office, London, 18 October.

Conservative Party (1999), Listening to Britain: A report by the Conservative Party, conservative Party, London, Autumn.

Conservative Party (2000), Believing in Britain, Conservative Party, London

Cook, G., (2002), ‘The Labour Campaign’ in Bartle, S., Atkinson, S., and Mortimore (eds), R., Political Communications: The General Election Campaign of 2001, Frank Cass, London, pp. 87-97.

Crawford, J., (2001), Interview by Lees-Marshment, J., with John Crawford, planner at Yellow M (Conservative party’s advertising agency), 7 August.

Dermody, J., and Scullion, R., (2004), Exploring the value of party political advertising for youth electoral engagement: An analysis of the 2001 British General Election advertising Campaigns, International Journal of Non-profit and Voluntary sector marketing, Vol 9, No. 4, pp. 361-379(19)

Dykes, C., (2001), Interview by Lees-Marshment, J., with C. Dykes, head of Development, Conservative Central Office, London, 18 October.

Francis, R., (2000), Interview by Lees-Marshment, J., with Rachel Francis, ‘Listening to Britain’ Officer, Conservative Party, 11 April.

Gould, P., (2002), ‘Labour Strategy’, in Bartle, Atkinson and Mortimore (eds), Political communications: The General Election Campaign of 2001, Frank Cass, London. Pp. 57-68

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Labour Party (2001), Ambitions for Britain, Labour Party, London.

Lansley, A. (1999), Letter to Lees-Marshment, J., about ‘Listening To Britain’, 9 June.

Lansley, A., (2001), ‘Images, Values and Policy: From here to the Next Election’, address to the Bow Group, Conservative Party Conference, 9 October.

Lansley, A., (2002), ‘Conservative Strategy’, in Bartle, Atkinson, and Mortimore (eds), Political Communications: The General Election Campaign of 2001, Frank Cass, London.

Lawther, S., (2002), ‘The 2001 Campaign: An Insider’s View’, presentation by the Scottish Labour Party polling co-ordinator, Political Marketing Conference, Aberdeen University, September.

Lees-Marshment, J., (2001a), Political Marketing and British Political Parties: The Party’s Just Begun, Manchester University Press, Manchester.

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Lees-Marshment, J., (2003b), ‘Political Marketing: How to reach that Pot f Gold’, Journal of Political Marketing 2(1): 1 – 32.

Lees-Marshment, J., and Bartle, J., (2002), ‘Marketing British Political Parties in 2001: An Impossible Challenge? Political Marketing Conference Proceedings, University of Aberdeen.

Lees-Marshment, J., and Laing, A., (2002), ‘Time to Deliver: Why Political Marketing Needs to Move Beyond the Campaign’, Political Marketing Conference Proceedings, September 19-21.

Lees-Marshment, J., and Quayle, S., (2001), ‘Empowering the Members or Marketing the Party? The Conservative Reforms of 1998’, Political Quarterly 72(2): 204-212.

Lees-Marshment, J., and Rudd, C., (2003), ‘Political Marketing and Party Leadership’, paper presented at the PSA conference, Political Marketing Group panels, April.

Lees-Marshment, J., and Ingram, P., (2002), ‘The Anglicisation of Political Marketing: How Blair Out – Marketed Clinton’, Journal of Public Affairs (5/6).

Peele, G., (1998), ‘Towards New Conservatives?’ Organisational reform and the Conservative Party’, Political Quarterly 69(2): 141:147.

Pugh, D., (2001), Interview by Lees-Marshment, J., with David Pugh, Conservative Future, 28 November.

Scammell, M., (1994), ‘The phenomenon of Political Marketing: The Thatcher Contribution’, Contemporary Record, Vol. 8, No.1, pp. 23 – 44.

Seyd, P., (1999), ‘New Parties / New Politics? A case study of the British Labour Party’, Party Politics 5(3): 383-406.

Seyd, P., Whiteley, P., (1992), Labour’s Grass Roots: The Politics of Party Membership, Clarendon Press, Oxford.

Seyd, P., and Whiteley, P., (1999), ‘Middle Class Activists’, Guardian 20 September.

Smith, Gareth and Saunders (1990), ‘The application of marketing to British politics’, Journal of Marketing Management, Vol. 5, No.3, pp. 295 – 306.

Sparrow, N., and Turner, J., (2001), ‘The permanent Campaign: The Integration of Market Research Techniques In Developing Strategies in a More Uncertain Political Climate’, European Journal of Marketing 35(9/10): 984 1002.

Wring, D., (1997), ‘Reconciling marketing with Political Science: theories of political marketing’. In: the proceedings of the 1997 Academy of marketing conference, Manchester: Manchester Metropolitan University, pp. 1131-1144.

 

The double-edged appeal of adventure sports has started to capture the public’s imagination as a result of the combination of sports with the excitement and allure of adventure. In order to better understand the realm of adventure sponsorship and the other ramifications which accompany the subject matter “Strategic Sponsorship: Raising the bar of an undervalued marketing weapon: An inquiry into adventure sponsorship”, the logical starting place to begin to understand the realm is by understanding the words. Adventure denotes “…an exciting or very unusual experience…” as well as “…a bold, usually risky undertaking…” which is a “… hazardous action of uncertain outcome…” . Sports are “…a physical activity or skill carried out with a recreational purpose…” with this activity directed at the attainment of some specific goal, competition, excellence, skill or combinations of the aforementioned. The lack of assurance of the outcome, along with a familiarity of the rules creates the circumstances for an unsure ending that provides the drama and rationale to watch, to see the eventual winner.

 

The preceding adds up to a genre that has caught on with a segment of the public and is catching on. Adventure is a sport that is multi disciplined and has seen a tremendous growth in popularity during the past ten years. The foregoing has seen a commensurate rise in sponsorships as a result. Sponsorship is defined as “…a business deal between two or more parties in which one party meets all or part of the costs of the project or activity in exchange for commercial benefit”. It is a significant aspect of ‘Adventure Sports’ in that it enables teams to compete in various venues for public exposure, meaning magazines, newspapers, Internet sports updates as well as television coverage of significant races. The costs associated with fielding an individual athlete or team includes not only equipment, but also the costs of travel, lodgings, training, physicians, special diet and other allied expenses.

As the popularity of ‘Adventure Sports” has grown so have the rewards for winning. Sports celebrities adorn the packages of various foods, as well as their appearing in advertisements, magazine ads and billboards. These are some of the payoffs that accrue to the athletes and teams. As for the sponsors, their good fortune comes form their logos, banners and other merchandising labels that are picked up in photos and seen in newspapers, sports journals, the Internet and when the events are large enough, television. The advertising as well as publicity payoffs can be either a breakeven proposition for athletes and teams that do not perform well, or a modest return for those athletes and teams that achieve moderate success, to hitting the jackpot with championships and the exposure that accompanies same. The determination of how the investment stacks up against the return on their sponsorship investment is made by the amount of money the company puts up, along with the exposure of the sport and the potential demographic profiles that are reached as well as the cost per impression. The formula to arrive at the proper sponsorship amount is based upon the company’s understanding for the pragmatic nuances involved and a cost/return calculation equated against the potential for the athlete or team to achieve anticipated levels of success.

The newness of these ‘Adventure Sports’ venues means that they are not nearly popular enough to challenge the major sports, however it does provide an alternative that is new, and this appeals to a major demographic group that advertisers covet, 24 through 56, males and females, a broad spectrum of income variables and they are active. The atmosphere associated with any sporting venue is upbeat, social, lively and a perfect selection to appeal to a captive audience. Captive in the sense that they are engaged in watching or, being at an event as well as enjoying the festivities and the drama associated with whom the eventual winner(s) might be. The sports are defined by the way they cause the athletes and teams to ‘push’ the limits to win in head to head as well as against the clock formats in the differing venues that comprise the ‘adventure’ genre. The aforementioned ‘risk taking’ aspect it takes to compete and win does often result in crashes, falls and other sports disaster associated with top competition and is a source of high appeal to fans as they know that each athlete as well as team are giving all they have to win.

As is the case with any emerging trend, in this case adventure sports, the theory associated with sponsorship and actual practice will be examined to determine if it is developing in accordance with historical trends or is indicating a differing approach. The business end of sponsorship entails exacting as much mileage out of the funds provided to underwrite the athlete and / or team through media coverage. The better the athlete / team performs the more they appear in the winners circle with on camera exposure, when there is television coverage. The sponsor’s whose investment result in the aforementioned is thus associated with winners and this association provides a marketing edge which the companies exploit through advertisements in the media via magazines, posters, radio, the Internet, television, and newspapers. The rewards associated with successful athletes and teams are considerable and the downside, meaning poor performances, still garners enough exposure so that the investment is not a loss. Adventure sports associations covering the differing type of venues understand that the sponsors help to fill out their rosters, thus they are sure to see that even the losing teams receive exposure and thus advertising impressions. The preceding results from shots of crashes, spills, second place finishes, spectacular moves and so forth. These glimpses of action occur on a regular basis through the season, along with interviews, media events and other activities to ensure that even the sponsors of losing athletes and teams get their monies worth. This strategy keeps the door open for the athletes and teams to secure sponsors who are aware that their investment, regardless of the outcome, is well worth it.

Chapter 1 – Introduction

In order to understand the growing appeal of adventure sponsorship it is important to understand the source from which this new field has arisen, ‘Sport’. The allure and attraction of sports can be found in the fact that in the animal kingdom as well as human beings, the inborn trait of play is a characteristic of almost all species. In the animal world we see newborns, lions, kittens, pups, and baby elephants engage in play where they test their strength, speed, will and endurance. This prepares them for survival. As rationale beings, humans strive for knowledge, happiness and truth, the distinguishing characteristics that define the difference between the human and animal worlds. Throughout human history games and sports have been a part of the human evolutionary process whereby new physical, social and psychic skills are further developed.

Evidence of the importance of sport can be found in humankind’s earliest beginnings. As we changed from being hunter gathers to hunters, the change required mutual cooperation to increase the chances of success of the hunt. This fostered team-building skills to corner and bring down large sized prey, which in most cases was to big for an individual to confront on their own. The skills of stalking, trapping, hunting, killing and carrying prey caused cooperation and the physical attributes needed for these areas were honed in practice and contests which developed into various sporting activities. As the size of tribes and villages increased, sport was utilized to train for combat to either conquer or protect. Historical findings indicate that these were the uses of sports for many millennia, except for the continued introduction of new weapons and fighting techniques. 776 B.C. marked an important turning point in the history of sports as this is the date of the first Olympic games. And while the events were comprised of military prowess (archery, Javelin, Discus, boxing, wrestling, the shot put and marathon) it marked the first organized event where athletes from throughout a particular country assembled in one location to engage in sporting events. The modern era Olympic Games have continually added new sporting events to keep pace with the development of cultural trends and it now includes baseball, equestrian, boating, basketball, hockey, cricket, squash, tennis, volleyball, handball, and other modern sporting venues.

Every sport has its sponsors; they are an integral aspect of how semi as well as professional athletes and teams are able to compete. Sleight (1998) defined sponsorship as “…the financial or material support of an event, activity, person, organization or product by an unrelated organization or donor”. He continued that funds are “…made available to the recipient of the sponsorship deal in return for the prominent exposure of the sponsor’s name or brands.” Sponsor funds form the backbone of all sports and are important to new and emerging venues such as the ‘adventure’ category. To attract sponsors the individual events, athletes, teams and in some cases their governing bodies do their utmost to ensure that all sponsors receive value for their money as this is the means for them to compete as well as exist. Kitchen (1998) stated that it is necessary to “…target customers in an integrated fashion…” to accomplish certain objectives under a company’s marketing plan. He goes on to add that through marketing communications the target audience to be reached via promotional means is informed, persuaded and reminded, both prospective customers as well as those which are already in the company’s brand franchise. Kitchen explains that a company’s products and or services need to be differentiated in order to appeal to as well as satisfy the needs, desires and wants of target audience profiles.

Brassington et al (2002) concurs on the target audience methodology that he terms “Integrated Marketing Communication”. Under “Product Management” Brassington discusses the importance of reaching diverse market segments to reinforce a company’s brand image in targeted market segments. The marketing problems faced by small firms is compounded by the lack of sufficient monetary resources to match the spending patterns of their larger competitive rivals. Companies with limited marketing budgets, as well as large firms seeking to tap into diverse customer profiles must understand the dynamics of how the marketing mix can serve audience differentiation. Blois (2000) delves into the importance of not only understanding the importance of marketing, he cautions that it is essential to have adequate market research information to reach segmented aspects of the consumer profile. He adds that underwriting new promotional venues provides unique opportunities to stretch marketing dollars and that sports sponsorships are an effective channel for such objectives.

The dependency on sponsorship funds continues even after the sport (in this case ‘adventure’) has garnered television and other media contracts. Formula 1 motor sport is a prime example. With 16 races scheduled on virtually every continent and a multi-million dollar broadcast deal, the sports still relies on gate receipts as well as sponsorships. It is estimated that the average cost of running a top Formula 1 team can range from the high of $250,000,000 spent by Ferrari, through $200,000,000 spent by McLaren Mercedes, Williams BMW, etc. The logos that adorn the sides of the racing vehicles, the paddocks and signage throughout the tracks are a result of sponsorship deals. Even with the tremendous hordes of cash provided by the team sponsors (BMW, Ferrari, Mercedes, Toyota, etc.), the television revenues and gate receipts, the teams would not be able to compete at present levels without the backing of sponsors.

The extremely competitive nature of the business world means that companies must utilize every means at their disposal to extend the reach, exposure and impact of their marketing messages. The number of new companies, products and offerings available for consumers to select from has created a plethora of choices even among the same types of products, thus heightening the task of companies to created and sustain some type of brand loyalty. A recent study uncovered that consumers are doing more brand switching and that they are also shifting from one brand to another and this includes the ancillary products as well. Consumer brand loyalty represents an individual’s “…conscious or unconscious decision…to repurchase a brand continually.” To achieve this end, companies must create an image of the brand that provides them with a competitive advantage. This becomes an extremely valuable asset in marketing products as well as convincing consumers to either try, switch or remain loyal. The foregoing requires a clear, concise, understandable and memorable marketing plan that establishes consistency in the minds of consumers. People tend to be drawn to what they perceive as established, trustworthy, quality oriented, stable, and successful brands, this is the technique that has resulted in such companies as BMW, Mercedes, Rover, General Electric, Sansburys and others who have carefully cultivated their brands to reflect the attributes which consumers respect.

The importance of achieving the objective of a respected brand image cannot be overstated. It entails delivering a consistent message across all product lines through logos, advertising, marketing, packaging, public relations and sponsored events. A careful assessment of some of the brands you purchase on a consistent basis, and even look for when in a strange location is an example of the foregoing. There are specific attributes that attracted you to that brand and the company in question has delivered an image, message, level of quality and consistency that causes you to repeat your purchases. The marketing campaign that achieves this end must present a unified message as well as image. Success in this endeavor requires consistency across the marketing mix, and one of those components is sponsorship. Consumers are marketing savvy, they understand as well as realize that commercials, billboards, magazine ads are directed at them to attempt to influence their decisions. As a result of all these consistent impressions consumers have, depending upon their degree of education and other factors, a slight resistant to such advertising forms ranging from commercials, billboards, magazine ads and radio built in as they understand that these are attempts to sell or influence them. The more successful firms understand the preceding and thus they seek to appeal to our common sense, emotions, humor or intelligence as the alternative. The creative approach in these types of ads gives the consumer credit for intelligence.

The success of stations such as HBO, Cinemax, Stars and other commercial free venues is the proof of the foregoing. Dr. David Schrader (2005) indicates that “Consumers may soon have the technological power to ‘cocoon’ themselves and their families…” from ad messages they chose not to see. Schrader points out “…that a typical consumer…sees some 5,000 advertising impressions…” each day. This figure is up from the 3,000 recorded in 1990. The ‘cocooning’ trend Dr, Schrader noted is based upon futurist Faith Popcorn coining of this phrase to describe what was beginning to take place among consumers as early as 1981. In a recent interview she stated that the “…home has become an armored cocoon…” where the gated communities, working from home and other aspects that permit people to almost completely avoid the outside world, and then do so mostly on their own terms. This idea has filtered over to the world of advertising as well. The concept of developing technology that permits consumers to shield out unwanted advertising and commercial messages and permit only what they have identified as interesting for them is already partly in place with such mechanisms as TiVo.

Sponsorship is not patronage as the later is defined as:

“1. The support or encouragement of a patron, as for an institution or cause.”

It, patronage, is a means whereby a wealthy individual or person supports a talented person in the furtherance of their pursues, be it art, writing, athletics, music, or such. In the 16th, 17th, 18th and 19th centuries it was utilized as a means to these ends, and even today it exists. The patron might be seeking some type of acknowledgement from peers for their intelligence in finding or seeing the potential or talent of the selected individual, and in other instances they might be supporting them until that person reaches celebrity status and then seek reimbursement for their patronage. The types of this kind of support take on many forms. It differs from sponsorship as the boundaries are defined. Sponsorship represents “…a business deal between two or more parties in which one party meets all or part of the costs of the project or activity in exchange for commercial benefit”. And while the individual nuances of sponsorship deals can take on many forms, the understanding of what it is, is universal.

Chapter 2 – Literature Review

Adventure sports are a relatively new field of sponsorship that is just beginning to come into its own as viable corporate tool for utilization in the marketing mix. The relative newness of the field makes it a relative bargain for those firms seeking to enter. Sponsorship represents a strategic investment that can and does reap multiple benefits that are in excess of the fiscal outlay. This is because of the relative inexpensive nature of entry into adventure sports as the field is still developing in terms of fan base and public interest.

Given the foregoing, the research entailed delving into and understanding the varied nuances that comprise the realm of sponsorship as the important variable in examining the subject matter at hand. It was also important to understand the dynamics of the overall marketing mix and the role sponsorship opportunities can contribute to reinforcing brand image and reach. Adcock et al (1995) provide insight on this process under “The Competitive Environment” segment of his book “Marketing Principles and Practice”. Entering the sponsorship arena entails first having a plan whereby the actions and marketing plans of competitors are understood in identifying their strategies, current positioning, areas where they might be vulnerable as well as those areas that constitute strength. Adcock stresses the importance of knowing and understanding what your competitor is doing and why as there might be some valuable information on their approach to reaching your own company’s target audience through unique marketing channels. The chapter “Buyer Behaviour” in Adcock’s book provides a real world understanding as well as education into the nuances that cause as well as make consumers do what they do. Most consumer’s are subject to the influence of the complex patterns and associations that comprise ‘buyer behavior’.

Adcock (1995) indicates that the “…Complex buying behaviour” of consumers is an outgrowth of their own decision making processes along with marketing impressions and outside influences which seek to grab their attention almost every minute of each day. Demand is a characteristic of current as well as potential customers that the company has identified as objectives in its marketing plan along with the varied factors that contribute to their buying decisions. To effectively formulate strategies that maximize factors influencing buying decisions and behaviour a company needs to understand how consumers go about making their purchasing decisions. Some of the questions that Adcock identifies in this regard are:

1. Identification of the degree that consumer’s are aware of the company’s competitive brands and their loyalty to the brand(s) they utilize or purchase most often.

2. Understanding where a consumer makes his/her buying decision. Is it at their home, business or is it impulsive.

3. What external factors influence, impact or cause a consumer to reach a buying decision concerning which brand to select?

4. To what extent are they really knowledgeable on brand differences, if any, and how can their information on the company’s brand be improved?

5. What and who actually influences the decision maker?

6. How, when and where are the best avenues to reach and influence the decision maker to induce trial or brand switching?

7. What competitive advantages does the company’s brand have in impacting upon discernable differences that will influence buying behaviour?

Adcock (1995) analyzes factors such as:

- The factors comprising the buying decision process

- Aspects behind consumers habitual buying behaviour

- The varied psychological factors that enter into consumer buying decisions

- The influence of social variables 

And how to utilize complex buying behaviour patterns to the company’s advantage

The preceding form the basis for making determinations as to:

- Who are the company’s customers?

- How are they segmented in terms of demographics and psychographics?

- What are the variables of market segmentation as it relates to the company and its competitors?

- What are the customer’s psychographics and lifestyle profiles and how are they segmented

- Can target marketing achieve meaningful gains?

The last question concerning target marketing, when combined with the preceding ones, brings up the potential of sponsorship as a defined avenue. Adcock’s (1995) book, while it does not specifically address sponsorships as its main topic, does include it as part of the overall marketing mix. More importantly, his comprehensive analysis regarding marketing principles brings into the picture the other considerations which are included as part of marketing effectiveness. He defines customers as a business asset in that their purchases are the revenue stream that keeps the company in business. As such, one can never lose sight of the customer as the ‘only’ reason they make or provide a service. In Chapter Fourteen, “Marketing Communications and Media” Adcock brings in sponsorship as a marketing variable. He sees the marketing process as establishing a dialogue with the customer through marketing communications. The next Chapter “Promotional Planning” explains the importance of investing in promotions as a means to reach one’s target audience. When making use of this medium, promotions, the mix assigned to this area must be mindful of the message the company is sending to its current as well as potential customers via the message being delivered.

Adcock’s (1995) book is extensive in its subject matter as well as the categories contained in each chapter. Blois’ (2000) book is as comprehensive as Adcock’s in its coverage of theory and actual marketing practice. A copulation of twenty-six academics from around the globe, Blois’ book provides a compendium of information from differing, yet similar views of the subject of marketing. As with Adcock, the book prepares the reader for the ensuing chapters which become increasing complex as they build upon the information supplied in prior sections. In the ‘introduction’ he delves into the subject of “What is Marketing About” , explaining it as the gasoline that enables cars to move. Under the works of Klaus Grunert under Part Two “Understanding and Assessing Buyer Behaviour” the book provides insight concerning why consumer’s make the decisions they make. The importance of understanding consumer behaviour is stressed as a key aspect in the formulation of any marketing plan so that it addresses the underlying reasons and actions that motivate their purchasing decisions. This is particularly useful in designing collateral materials for promotional events such as sponsorships.

Grunert states that understanding consumer behaviour is not only important for the company, the dynamics of this area affects every company associated with the delivery and distribution of the end product. The selection of color, distinctive packaging, product placement, point of sale materials and other factors all come into play in subtle but extremely important ways as part of the buying process. Even when consumers are looking for their regular brand, the effects of a competing brand come into the scenario. If they tend to notice a variety offerings, continued restocking so supplies are optimum, certain information contained on point of sale displays or signs, these can at some point of time, in conjunction with the direction, messages and sophistication of the marketing plan become a rationale to induce either trial or brand switching. In Blois’s book a model of the consumer decision-making process is presented in a four-step sequence as part of the overall consumer behaviour chapter. It indicates that in most instances that a purchase is usually made to satisfy a problem. A problem recognition analysis conducted through a means end” chain concept can help a company determine what factors or influences are motivating a consumer to purchase a product or products.

Blois states that consumers usually have a varied number of alternative solutions to select from in choosing a product or service. He continues that depending upon how complex the purchase decision is the methodology utilized by the consumer is either ‘multi-attribute’ or based upon ‘decision heuristics’. The outcome in many purchase decisions by consumers tend to be influenced by any number of aspects that are within the company’s control and thus can be addressed to help say the decision to select his product. Blois’ utilization of selected academics for differing segments of his “Oxford Textbook of Marketing” utilized Walter van Waterschoot under Part 3 to explain the dynamics of “the Marketing Mix as a Creator of Differentiation”. It is explained that the ‘marketing mix’ refers to the varied components a company may utilize in combination to create demand. Waterschoot states that in order for an exchange of money for a product to take place, there are some preliminary marketing conditions that need to be fulfilled. He adds that when the fundamental aspects of a company’s marketing mix have taken these factors into account, which are termed generic or promotional, then exchange will take place. It is explained that when the decision is based upon generic factors the exchange will take place sooner or later, and when the decision is based upon promotional, then the exchange will take place sooner as opposed to later. This distinction is extremely important in pointing out the value of sponsorships and the role they play in the generation of sales. The immediacy of the consumer purchase decision is influenced by the context of a sponsored event/ This impact can build a company’s image and more importantly sale volume in a fashion that can be measured by equating the beginning of the sponsorship event to any increase in sales. All things being considered equal, if there are no other promotional items in the marketing mix, the resultant rise in sale, or lack thereof, signals a determination of effectiveness.

Kitchen (1998) covers the subject of sponsorship under chapter 21 of his book ad shares the same view as Blois and Waterschoot in terms of its measurability. The resultant incremental increase in sales volume can be determined when promotional venues are utilized within the marketing mix. This ability to see the effectiveness of the selected promotional tool provides feedback as to the effectiveness of the research into consumer buying behaviour patterns and other allied areas. Kitchen cites Tesco as an example of a company that understands the value of knowing its customers. While a direct example of sponsorships was not cited a corresponding marketing component illustrated the importance of understanding the factors that influence consumer-buying behaviour. Kitchen states that it is necessary to utilize promotions within a defined target audience as well as market and utilize an integrated means of information, persuasion and recall to remind both existing and prospective customers of the company. He cites that the differentiation of the marketing mix to appeal to these distinct and important segments cannot be overstated in terms of their importance in achieving increased brand image and product trial or sale. He continues that marketing communications entails utilizing a continuous set of proven and tried techniques not only to deliver advertising messages, but to correspond to and keep pace with the consistently changing aspects of consumer buying behavioral dynamics.

Kitchen adds that in the final analysis all products, not matter how well they are positioned, distributed, priced and thought of in terms of public perception, need to be promoted. And he cites sponsorships as one of those variables that makes a measurable difference. Attention to the components of public relations, direct marketing, sales promotion and sponsorships rely upon a deft understanding of the market being served. Along with effective and efficient planning, follow through and consistent evaluation of measurable results.

Brassington et al (2002) also emphasizes the importance of consumer buying behaviour along with sales promotion and strategic marketing in three distinct chapters. The concept of strategy is explained along with its importance. It is explained that strategy is the matching of activities in a company to the marketing context it operates in as well as the company’s capabilities with regard to resources. Marketing’s input at the differing levels in the company hierarchy influences campaign strategies as well as components. Brassington indicates that marketing strategy is a living on-going process that requires consistent review as well as adjustment which he terms is the “feedback loop”. The case for utilizing sponsorship is cited in the evaluation of marketing strategy, which consists of:

1. Analyzing the company’s market externally provides information concerning the changes being implemented by competitors and thus within the company the marketing staff as well as executives need to be mindful of the consistently changing nature of that environment and take advantage of any opportunities that present themselves.

2. The preceding indicates why any analysis of external factors must also include an analysis of one’s customers as well and this is where the marketing department utilizes its studies of consumer buying behaviour as well as other components.

3. Brassington states that it is important to look at areas whereby the strengths inherent in the product, in terms of consumer perceptions, are put into play as well as maintaining strengths in markets the company is competing in.

4. Lastly, Brassington cautions that in spite of ‘best laid plans’ a company must acknowledge that there are and will be those instances where an effective exit strategy will need to be employed. He states that having this exit strategy planned gives the company a proactive rather than reactive stance which is important.

The range of case examples provided within Brassington’s book provide illumination and a clearer understanding of the points being made.

The adventure sports arena is a still developing entity and since it is basically like any other sport, with the exception of its newness, an examination of its role provides the answer to how this undervalued strategic weapon works. Sleight (1998) provided the foundation for understanding sponsorship with the definition of it being “…the financial or material support of an event, activity, person, organization or product by an unrelated organization or donor”. Sleight added that the sponsor makes funds available to “… the recipient of the sponsorship deal in return for the prominent exposure of the sponsor’s name or brands.” Said sponsor monies are the backbone upon which all sports survive and exist. Formula 1 motor sports, American football, basketball, baseball, Premier League Football, the varied European soccer leagues, golf, bike racing, tennis and any sport you can think of exists as a result of sponsorship funds. These monies underwrite athlete, team, events and/or governing body and augment any broadcast, admission or other income thus generated.

Dr. Schrader (2005) delved further into the varied aspects of sponsorship by illustrating the impact and effect that sponsorship has on brand image, sale generation, publicity, public relations and other areas. Dr. Schrader pointed out that the relative captive audience of sponsorship provides the perfect environment by which to establish, deliver and impact consumer purchasing and trial decisions. He also indicated that because consumers are exposed to over “…5,000 advertising impressions…” each day the closed world of sponsorship, in terms of capturing fan and viewers in an entertainment venue. Friedmann (2005) laid out the key elements of how sponsorship helps to accomplish important goals and objectives for sponsors as it:

1. Enhancement of the Company’s Image and the Shaping of Consumer Attitudes

2. Driving Sales

3. Creating Positive Publicity and a heightening of Visibility

4. Provides a Platform for Differentiation from Competitors

5. Aids in the Establishment of the Good Corporate Citizen Image

6. Enhances Business and Consumer Relations

The case studies utilized were taken from examples provided by Performance Research (2005) and afforded a basis to look into actual sponsorship deals. These covered one adventure type sport, snowboarding, as well as major sports such as baseball. The lessons gleaned from these examples are relevant to adventure sports in that it is the concept and practice of sponsorship is the foundation upon which the continued growth and exposure will be build as a result of fan and consumer interest. Aaker (2000) explained the differences and importance of brand identity, brand equity and brand leadership as marketing and corporate objectives that define success in the marketplace. As the professor emeritus of marketing with the Haas School of Business at the University of California at Berkeley, he has been championing the brand concept as the core of the objective of marketing since the 1990’s.

The aims of the research were to identify the underlying key components inherent in sponsorship, which includes the importance considerations in a company’s marketing mix as well as brand image and public perceptions.

Chapter 3 – Sponsorship Case Studies

3.1 Brand Image

Corporate utilization of sponsorship as part of the overall marketing mix can take on differing reasons for inclusion in a company’s plan. Whatever the reasons for the selection of a particular marketing mix strategy, one aspect heads all lists – preserving and enriching the company’s brand image. And just what is a brand image? It is the ‘brand’s public personality’ reflecting what individuals think both on a conscious as well as subconscious level of a company’s identity or product(s). Bavarian Motor Works (BMW), carefully cultivated the image as the ‘the ultimate driving machine’ to place in the consumer’s mind that their vehicle is the standard by which all other cars are judged. Whether this is true or not, depending upon your personal preference, the image these words brought to mind in repeated commercials is unmistakable. It created a ‘personality’ for the brand that positioned it in a unique niche, neither sports car or family sedan. The image conveyed BMW as simply the best handling and performing vehicle on the market and the company completed that promise with innovative products that fulfilled that idea.

Aaker (2000) analyzed the way in which multiple brands work together to form “…a synergistic system…” which is the brand identity concept. He makes a compelling case for the brand leadership model in that he explains is replacing the older system regarding brands which was pioneered by Proctor and Gamble during the 1930’s. Aaker further explains that when brand equity was introduced in the 1980’s it first seemed to be a fad, however its principles are in use and have been expanded upon since that time. In creating a brand image, the delivery of the product or service must closely approximate what consumers are being told and fulfill their expectations. Done correctly and the company garners a reputation and marketing positioning, done incorrectly and the door is opened for consumers to either try or switch to one’s competitors, and nothing is harder to regain than a consumer who has been disappointed in the delivery of a promise. The marketing mix includes a combination of many variables:

1. Media

The first and most obvious aspect of the marketing plan, after the campaign strategy and rationales have been agreed upon, is the selection of media the company will utilize to reach the public, the percentages utilized and the exposure patterns. Depending upon the size of the company and its allocation for advertising a typical large sized company will use television supported by radio spots, magazine and newspaper ads along with mailings, Internet web site and web site ads, billboards, transit (bus, train, taxi placements etc.) in a schedule whereby each reinforces the other in a carefully designed plan that creates maximum repeat exposure patterns.

Smaller companies without the media dollars to compete with established companies must think of and use innovative means to accomplish the same task, which is compounded by the lack of funds to take prime positioning away from large companies who press their advantage. Thus, the marketing manager must take calculated risks to achieve a measure of exposure that provides enough reach and frequency to compete. The inability to match advertising media spending on a large scale means that additional emphasis is placed on other aspects of the marketing mix such as P.R., events of opportunity, promotional venues and sponsorship. The larger companies also utilize these components, however the nature of these elements provides a somewhat leveled playing field as creativity and innovativeness can approach equaling the clout of better-heeled rivals. For the purpose of example, the following aspects will utilize a smaller firm as the basis for examination as adventure sports holds particular appeal to these types of firms, whereby larger companies tend to stick to the more established sports, dabbling in new fields as a result of having the budget to do such.

2. Public Relations

This area is where a creative marketing manager can gain ground on larger competitors, as well as distance the company from similarly sized firms. Via a carefully constructed series of press releases on varied areas that create an interesting story for pick up, the P.R. side of the marketing mix can represent a genuine opportunity to gain exposure that can vault a company into consumer consciousness. The P.R. aspect can pull stories from all corners of company activities and when planned in a carefully crafted scheduled series of releases spread across the advertising campaign on a consistent basis, it can make up considerable ground on larger advertising budgets.

Public Relations activities encompasses a spectrum of marketing tactics which strengthen a company’s creditability, image and develops goodwill as well as influencing public opinion. Publicity is a function of Public Relations in that it is media coverage.

The following lists the components that comprise Public Relations tactics:

1. Publicity and Media Relations

The media coverage, which is publicity, enables a company to put various stories and message in front of the public through and organized program of releases as well as events that occur throughout the year. The media relations aspect of this category consists of a number of differing method via which the media is contacted and information disseminated, and these are, News releases, media advisories, press kits, press tours, news conferences and calls to editors as well as reporters.

2. Special Events Some examples of this segment of the Public Relations aspect include the utilization of awards ceremonies, stunts, contests, and speeches by company executives, trade shows, fundraisers and open houses. These types of activities provide the stage to draw public attention to the company as well as create traffic where applicable.

3. Newsletters

These are either created in-house or through an advertising agency and generally range between four to twelve pages on average and consist of short articles designed to provide customers, members, clients, and investors with information on what the company is and will be doing as well as other areas of interest.

4. Annual Reports

Publicly traded companies are required to generate an Annual Report of the company’s operations. It includes important financial and corporate developments that transpired in the prior year and serves as a record for shareholders.

5. Speakers Bureau

Through this aspect company executives and spokespersons address various trade and professional associations, civic organizations as well as community groups.

6. Tip Sheets

These are sheets consisting of one or two sides that contain either instructions, advice or other data of use to a company’s customers and/or clients. Tip sheets are utilized to illustrate a company’s expertise and are usually designed as numbered or bulleted lists.

7. Fact Sheets

In general, these usually consist of one page and they provide either certain statistics or data concerning a project or issue.

8. News Sheets and Action Alerts

The dissemination of urgent or recent information is communicated utilizing a one or two page format that is usually intended for the recipient to undertake a specific action. Such usually consists of them making a donation, writing a public official or to consider a change in their purchasing habit.

9. Letters to the Editor and Op Ed Pieces

These communications promote the company’s expertise through a letter to the editor in response to items or articles that appeared in the news, or as a correction or further information that was already been published.

10. Charitable Contributions

The news worthiness of this activity is generally confined to those companies that make large donations, however, this type of corporate activity does generate goodwill and local awareness. Such donations are usually written up in corporate newsletters, web sites and other means of distribution outside of the mainstream.

11. Sponsorships

This is the activity whereby a small company can effectively compete with larger ones, depending upon the sporting or other activity selected. The budgets to sponsor a major racing team, such as Formula 1, Cart Racing, football, or soccer are generally the province of larger companies who dominate this field. Adventure sports and other similarly sized new venues offer a company the opportunity to showcase their logo, message and garner press coverage through events, broadcast and results whereby their affiliation with a particular team, athlete or sport yields return on investment results that generally exceed the expenditure. The value of these types of associations shows the public the company’s commitment as well as support.

All of the preceding areas help to contribute to a company’s brand image in differing fashions, but the objective is still the same. Each opportunity affording exposure either builds, negates or maintains a company’s public brand image. And sponsorships are one of the most visual and consistent of these methods.

3.2 The Nuances of Sponsorship

As a segment of a company’s overall marketing strategy and as a component of the marketing mix, sponsorship activities provide media opportunities that translate into additional press coverage, television exposure, magazine and newspaper articles, newsletter updates as well as branding reinforcement. Sponsorships provide the opportunity to enhance as well as build upon brand associations by associating the company with “…other aspects of life.” It entails a company providing its financial support as well as creative input and media support to either an important event or activity that has been organized by a third party. One time support provides certain benefits, however a longer term arrangement not only provides the company with more Public relations possibilities, it also creates an air of consistency whereby the fans and participants of that activity see the company as part of that activity rather than seeking to profit from specific events. This consistency is noticed by not only the fans, but also the media and thus provides the consistent supporter with additional benefits. As a critical aspect of the Public Relation umbrella sponsorship provides the opportunity for a company to reach a specified target audience and deliver specified messages. It is the unique event-to-event message aspect that makes sponsorship a valuable tool for the marketing message. Through this medium, sponsorship, a company can accomplish the following important marketing objectives:

2. Brand Reinforcement

The exposure offered through the sponsorship of adventure sports permits a company to reinforce its brand message through the consistent utilization of its name, logo, slogan and main advertising campaign message. These preceding aspects are basic inclusions that are a part of any special marketing message delivery that a company elects to select. As a newly emerging sports category, adventure sports provides a company with the opportunity to market to a different psychographics profile within a defined demographic group. For example, a clothing goods manufacturer might either design a special line to appeal to this group, or elect to reach them through sponsorship support in this new avenue. The extreme diversity of sports within this profile means that the adventure sports fan is demographically from almost every conceivable group.

The benefit to a company for utilizing this type of sports sponsorship is that it permits it to reach and or strengthen its brand image with current users as well as enlist trial by new users. The opportunity to further strengthen ties with existing, occasional or new consumers through the sponsorship of adventure sports is not only a plus, it helps to create an image whereby the company is seen as up-to-date, contemporary, adventurous, in tune with new developments, involved and progressive. This translates into a company that must also be applying these attributes to current products, new product rollouts and product development. If a company is in step with the time and new developments then it would appear that this same philosophy would extent to its internal operations and products as well. To cause this as well as any other brand reinforcement attempts to work, the company must deliver on its promise

3. Advertising Reinforcement The informal and festive atmosphere of a sporting event provides a perfect opportunity to reach consumers with the company-advertising message. With the company logo, colors and brand name adorning athlete or team uniforms and equipment the company is provided with brand name exposure and visualization before, during and after the event. It is important to understand that the multitude of advertising message consumers are exposed to (Schrader [2005] pointed out “…that a typical consumer…sees some 5,000 advertising impressions…” each day) means that companies must enlist every opportunity to reach consumers in a semi-closed environment whereby the number of advertising messages they are exposed to is limited. Sporting events provide just such an opportunity in that only sponsor messages adorn athletes, teams or events.

The process via which consumers elect to select a brand is a very complicated. As a result of this, a company’s advertising messages need to be specifically designed to be timely, relevant and impact at each stage of the consumer buying process. This means that a consumer may be thinking of a purchase, has heard the benefit of a particular product, is undecided about which brand to choose and so forth. Aiding in this process through repeated brand and advertising message reinforcement is therefore a plus in potentially swaying a decision. The first step in the consumer buying or decision pattern entails at least the understanding or awareness that a certain brand exists. The extent to which a consumer is aware of a particular brand is the task of the advertising and marketing campaign as well as strategies. In order to impact this decision process a brand must be a part of the consumer’s mental environment, and this is achieved through the various marketing venues. The more a consumer is familiar with, understands and is comfortable with a brand the more the potential of them purchasing that brand increases. The importance of word-of-mouth introduction or familiarization induce a consumer to consider the trial, test or seek more information on a particular brand thus opening the door for a potential purchase or new customer. The significance of these variables as part of the advertising reinforcement process cannot be overstated.

4. Announcements

As sporting events represent a location that creates a semi captive audience, the opportunity to utilize this format to inform the attendees of special or important brand announcements can yield results if conducted in a manner that does not intrude upon their enjoyment of the festivities.

5. Contests & Prize Giveaways

The nature of these events offer the perfect opportunity to announce as well as conduct contests and giveaways, either as part of the overall general marketing plan or as specialized events specific to the adventure sports genre.

6. Sponsorship

As previously defined, sponsorship is “…the financial … support of an activity used primarily to reach specified business goals.” In terms of marketing segment tools, sponsorship “…is the fastest growing form of marketing…” Sponsorship provides the opportunity to accomplish several different marketing objectives at the same time, the following provides an illustration of this statement:

1. Enhancement of the Company’s Image and the Shaping of Consumer Attitudes

Companies often look for ways to improve the manner in which they are perceived by their target audience and the sponsoring of events that appeal to differing market segments allows the customization of the marketing plan to reach the special interests of their overall demographic profile.

2. Driving Sales

When sponsorship opportunities are developed to drive sales, it can be an effective as well as valued promotional tool. The captive audience permits a company the opportunity to showcase products as well as, when applicable, conduct taste samplings as in the case of food product companies.

3. Creating Positive Publicity and a Heightening of Visibility

One of the key objectives of any marketing plan is to maximize the utilization of the budget allocation. Sponsorship offers companies a means to increase their exposure in electronic, broadcast as well as print media through public relations and publicity and via this create an increased visibility of its products, goods or services. The company’s logo, brand name and varying promotions are picked up via coverage in both subtle as well as direct ways and transmitted to the public through the media along with images and photographs. The coverage attained is in excess of the cost it took to obtain the sponsorship and thus results in a positive addition to the overall marketing budget. Maximization of the preceding is accomplished through a comprehensive media campaign that augments the regular media coverage of the event(s) provided by the organizers. It should be noted that sponsorship participation in some instances can help to create media coverage which might not have happened otherwise as the media becomes interested in the sponsors participating and thus deem such events as important.

4. Provides a Platform for Differentiation from Competitors

Simply sponsoring an event or series of events is a means to create a significant differentiation between one’s competitors. Target audiences generally perceive a company’s participation in sponsorship in a positive manner and understand that the company’s funds are furthering that particular sport.

5. Aids in the Establishment of the Good Corporate Citizen Image A benefit of sponsorship is that the company is looked upon a being a good corporate citizen in supporting special interest sports and in doing so helping it not only to grow but receive recognition as well.

 6. Enhances Business and Consumer Relations

The hospitality opportunities afforded by event participation provides a means for companies to mingle directly with consumers and interact with them. Each event provides the opportunity to create and build relationships through varied measures that enhance consumer perspectives about the company.

No other segment of the marketing mix offers as many different ways in which to customize advertising and brand message delivery than sponsorships. It provides a return in investment which yields additional media coverage and publicity multiples unavailable by any other means.

3.3 Case Studies

Chapter 4 – Making a Sponsorship Work Successfully

Sponsorships are an investment whereby a company exchanges cash in consideration for the participation in some organized event or for a highly publicized entity. In order for companies to be successful, they must generate sales and this is a function of their marketing department creating the opportunities for this to occur. The same holds true for the organizers of events. They must also understand the nuances of their business and the benefits of their product to companies in order to build sponsorship opportunities that cause companies to participate. Allen (1998) set forth the 12 steps to successful sponsorships as follows:

1. Take Inventory

The first step in the process is to understand what it is that is being sold. By taking inventory of the event(s) organizers can determine the various attributes of their product that can consist of the following elements:

a. TV and print associations

b. Retail outlet connections

c. Collateral material such as posters, brochures and flyers

d. Banners

e. Tickets available as sponsor comps, in quantity

f. Ticket backs

g. VIP Parking

h. VIP seating

i. Hospitality opportunities for customers, employees and the trade

j. On-site exposure for banners

k. Booth opportunities and positioning

l. Announcement via audio

m. Stuffers for payroll

n. Billboard opportunities

o. Product sales and product displays

p. Appearances by celebrities and interviews

q. Exposure on the internet

r. Public Relations

s. Incentives for employees

t. Other aspects

The preceding list can be expanded upon to include other attributes in the organizer’s quest to attract and secure sponsors for their event, athletes and teams.

2. Development of Media and Retail Partners

After organizers have identified the attributes and pragmatic considerations that are valuable to potential sponsors, the next step is to contact the developed media and retail partners. In terms of business opportunities these two partners should be treated in the same manner as other sponsors and provided with the same rights as well as benefits. The attribute that makes this attractive is the audience, opportunities for sampling, sales potentials and multiple exposures in varying media that can be offered, this in turn can be utilized by others to bring to their own advertisers. Television opportunities provide valuable airtime, and from print media organizers seek special positioning as well as coverage in special sections (termed advertorial). The importance of media and retail outlets is that they are valuable components of the sponsorship offering(s) and thus deserve the same treatment as the sponsors.

Retail partners represent supermarket outlets, drugstore chains, fast-food outlets, along with others. These partners provide organizers with added benefits and attributes that can be utilized by sponsors. Some examples of the foregoing are as follows:

a. Aisle or end aisle displays

b. Register tape promotions

c. Displays inside the store(s)

d. In-store audio announcements

e. Weekly flyers

f. Opportunities for cross promotional activities

g. Bag stuffers

h. Fast food placemats

i. Shopping bag advertisements

And even if the media and retail outlet deals consist of a barter arrangement their importance to the organizers is not diminished in terms of value. These partners provide organizers with benefits that are needed by sponsors and thus are of enormous value in attracting companies with retail products.

3. Development of the Sponsorship Offering

The third component is the development of the offering package and support materials that will be utilized for sponsors. The key to an effective presentation is the avoidance too many levels and too many headings. In addition Allen (1998) recommended not to utilize such aspects as gold, silver and bronze in package identification. The key is to use words and phrases that are universally understood and simply lay out what is being offered. Every sales presentation includes the closing or further information by actual individuals, thus details or special presentation nuances can be work out in these exchanges. The utilization of a one-page fact sheet the clearly layouts out the salient points and aspects of the sponsorship opportunities being offered and the benefits associated with participation.

4. Sponsor Research

Allen (1998) stresses the importance of conducting research on sponsors to aid in tailoring presentations and contacts to their specific needs. Research on potential sponsors can be gathered from a number of viable sources, the Internet, annual reports as background information of these types of activities and or needs as well as the type(s) of branding strategies and marketing plan the company is engaged in. The more that is known about potential prospects the more meaningful will be any discussions.

5. Initial Sponsor Contact

It is pointed out that fact finding through the proper contact at the companies being looked at for sponsorship roles is a better technique that attempting to sell them. The preceding saves time for all concerned as it will become evident through these discussions if a particular company is a viable or potential sponsor.

6. Getting the Appointment

After the initial contact and a brief discussion, if the organizer has prepared and conducted his research, the call should discuss an appointment to go into further depth on varied areas and aspects which would of benefit.

7. Creativity

Once the appointment has been secured it is important to not only be prepared, but to present the reasons for their participation on pragmatic ways. The demonstration must address their basic needs and engender conversation that encourages their participation on the solution process.

8. Getting the Sale

Simply stated, if one does not ask for an order or sale, one cannot get one.

9. Keep the Sponsor Informed

The more the sponsor feels that they are kept abreast of developments, additions and potential beneficial recommendations, the more comfortable they will be with the process.

10. Involving Sponsors in the Event

It is important to seek the sponsors’ attendance at the event through any number of their company’s appropriate representatives. This provides the opportunity for them to see their sponsorship dollars at work, as well as the organizers to forge closer ties.

11. Post Event Information

Whether the sponsor has attended or not they should be provided with an update on the event as well as some visual representations. The preceding should include copies of all materials, collateral, performance affidavit from either radio or television partners. A prepared post event kit should be in place that permits updating after each event. This should then be sent to all sponsors and other partners to keep them appraised of all developments. Each individual sponsor and partner’s kit should contain a personalized letter highlighting the accomplishments and objectives under their participation to illustrate that professional one-on-one touch.

12. Renew for The Nest Year

If the preceding 11 steps have been adhered to, then the 12 step becomes almost elementary.

Chapter 6 - Conclusions & Recommendations

The utilization of adventure sports sponsorship as a marketing tool represents a unique move for companies seeking to gain a ground floor advantage. The diverse mix of sports found within this arena, such as:

1. Mountain – Road Biking

2. Hiking – Endurance

3. Rock Climbing

4. Whitewater Rafting and Canoeing / Kayaking

5. Paintball

6. Off Road and Special Event Motor Sports

7. Snowboarding

8. Target Shooting

9. Surfing / Windsurfing

10. Jet Skiing

11. Snorkeling

12. Tubing

13. Backpacking / Trekking

14. Dog Sledding

15. Mountaineering

16. Canyoneering

define the contemporary nature of this category. The answers to the question posed “Strategic Sponsorship: Raising the bar of an undervalued marketing weapon. An inquiry into adventure sponsorship” asks more of what sponsorship as this underpins all sporting activity. The bold, and exciting nature of adventure sports has captured the imagination as well as participation of a broad demographic profile that pretty much mirror the anti-establishment stance of snowboarders. The people comprising this group are adventurous and seek new forms of entertainment via which they express their individuality. For companies to reach them they need to retool their thinking an approach this realm with unfettered thinking. As it was and is with the Internet, sponsors of adventure sports are entering a new arena where the returns will exceed their financial exposure if they treat it for what it is, rather than what they would like it to be.

The key idea is to examine and understand that new age consumers are diverse and have a broad range of interests. These consumers did not appear from some different world, they are members of existing demographic profiles whose interests and views require companies to find new ways in which to reach these consumers, sponsorship in the new field of adventure sports is a means via which to get them to respond.

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thedailypage.com.2005. Consumer brand loyalty declining. http://www.thedailypage.com/advertise/article.php?id=16

Wikimirror.com. Definition of Sports. http://www.wikimirror.com/Sports

 

Executive Summary - Tesco

This report outlines international marketing strategy for Tesco for its market entry into Sweden with a range of baby wear. The SWOT and PESTAL analysis show that Tesco currently has the resource capabilities to successfully enter the market and implement a market development strategy. The report recommends that Tesco target the high-end market segment with a differentiation strategy.

Business SWOT Analysis

Introduction

This report will assist in understanding and the formulation of an international marketing strategy for Tesco Plc. The report will use PESTLE and SWOT analysis to provide an insight into Tesco’s current market situation. This will help management in making the correct strategic choices in terms of corporate and international strategy in terms of lunching a range of baby wear (infant & toddler clothes) into Eastern Europe (Namely, Sweden). The report will outline how Tesco will make such market diversity and also managing corporate portfolio. We will use the Ansoff Matrix to consider market entry models. The final part of this report will provide an activity plan for Tesco along with a profit and loss account. Measurements and control with contingency plans will also be discussed.

Company Profile

Tesco runs more than 2,300 supermarkets, hypermarkets, and convenience stores in the UK (where it is the market leader in food retail), Ireland, Central Europe, and Asia. Its operations include convenience and gasoline retailing (Tesco Express), small urban stores (Tesco Metro), hypermarkets (Tesco Extra), and financial services through Tesco Personal Finance. A global leader in online grocery sales, it owns a 35% stake in US grocery chain Safeway's GroceryWorks. It is the leading online grocery store and it is now expanding its business with a TV channel and a "retail based education institution”.
 

SWOT and PESTLE Analysis of Tesco Plc

A PEST analysis of the industry will examine the local, national and global influences of political, economic, social and technological factors to understand opportunities and threats well.

INTERNAL  STRENGTHS

•    Diverse ranges of products
•    Open 24 hours a day
•    Strong Cash Flow Position
•    Increase turnover and trading profits
•    Strong Balance Sheet
•    Leading Supermarket Chain
•    Brand Awareness
•    Human resources
•    Online Shopping
•    Capabilities to turn resources into advantages    OPPORTUNITIES
•    Develop brand awareness globally
•    New Markets
•    Market shift to globalisation
•    Health awareness growth –GM crops
•    Innovation & Alliances
•    Low cost brand growth
•    Diversification
•    Non-food – offers untapped new markets with higher margins   

EXTERNAL WEAKNESSES

•    Perception of low quality –(Tesco value brands)
•    Lack of local knowledge of customers and culture
•    Foreign brand
    THREATS
•    New & existing competition
•    Volatility in Price of raw materials
•    Economic recession
•    Market shift to globalisation
•    Takeover bids
•    Far-East low cost brands
•    Extremely high competition for customers and resources   

External Environment – PESTLE Analysis

All of those (political, economic, social, technical, legal and environmental) factors will to some extent apply to the retail industry in Sweden.

POLITICAL – Following the European Integration and Free Trade Agreements, the market has opened up for British Companies to invest in Eastern Europe. Tesco already has 60 Hypermarket store in Hungary.   Lidl is uncompromisingly fighting to maintain its market share with an aggressive pricing strategy.
ECONOMIC - the Retail sector is fairly recession prawn and also very sensitive to changes in interest rates. Since the events of September 11th the world economies have suffered heavily, stocks plummeted and prices are at all time lows. The world economy is however, now on the up post September 11th. Consumers are optimistic and the retail industry is once again booming.
SOCIAL – changes in consumer taste and lifestyle represent both opportunities and threats for the industry. Opportunities in terms of new market and consumers, however, there are added threats in terms of alternative established Swedish national retailers (foreign company bias).
TECHNICAL – Changes in retailing methods as such clothes sales via the Internet is now a common place in retailing. Paperless operation, the management and administration of the company are undertaken on IT systems, which are accessed through secure servers; provide flexibility in the running of the business. As Sweden is at the forefront of technological advancement with national companies like Ericsson, Tesco would enjoy the comprehensive logistic and distribution channels already in place.
LEGAL – National legislation for health and safety both in terms of consumer rights and also in terms of production of own natural renewable resources for making clothes.
ENVIRONMENTAL – The renewable source of resources used in production, namely cotton and wool are environmentally friendly. The threats are in terms of legal consequences for livestock’s in terms of health and safety.  

Market Entry Strategy

We can use Ansoff’s product/market matrix to identify directions for Tesco’s strategic development. This matrix offers directions for strategic option available to Tesco in terms of products and market coverage, taking into account its strategic capability and also expectation of stakeholders   

Markets Existing Protect/build

•    Consolidation
•    Market penetration    Product development
•    With existing capabilities
•    With new capabilities
•    Boyond current expectations
    New    Market development
•    New segments
•    New territories
•    New users
•    With new capabilities
•    Beyond current expectations    Diversification
•    With existing capabilities
•    With new capabilities
•    Boyond current expectations
Source: Johnson, G., Scholes, K., Whittington, R., (2005)

We can see from the Ansoff Matrix that Tesco’s launch of Baby wear in Sweden will involve a market development strategy. As Tesco already sells kid’s clothing (existing product) but Sweden will be a new market. Both capability and market consideration has driven Tesco to into development into new markets. Kid’s clothing is a product that can be exploited in other market segments and also geographical spread internationally. Tesco may encounter some difficulties around creditability and expectations as they attempt to enter the new market. Tesco may not be seen as a credible ‘mainstream’ supplier.

Tesco Plc Target Customers

Tesco must decide which market segment in Sweden it wants to target; this will subsequently determine its generic strategy. If it wishes to with the low cost retailers then it must adopt a cost leadership strategy. Otherwise it will have to look for differentiation so that it can charge premium prices at the high-end market. As the competitive rivalry in the low cost market is intense, Tesco should enter the high-end market with a differentiation strategy. However, before Tesco decides on its target customers, we need to conduct a market analysis, in terms of size of the baby clothing market in Sweden, market shares of all the existing firms in the market and finally segments within the market, to identify particular segments, so that Tesco can target these and adjust its marketing.

Marketing Objective

Tesco could have the following objectives:
•    Profitability, in terms of operating margin (a 10% target)
•    Swedish Market share (a 20% target)
•    Customer advocacy (the number of customers who recommend Tesco branded clothing, repeat business)
•    Respected company (the number of community stakeholders who respect Tesco)
•    Employee motivation (the number of employees who feel motivated to deliver Tesco’s goals)
Tesco must ensure that it sets ‘SMART’ marketing objectives that are measurable, time limited, attainable and relevant.

Marketing Strategy

Tesco’ strategy is clear, with growth being pursued from four areas – the core UK grocery business, non-food, international expansion and retailing services such as financial services, the dotcom business and telecommunication packages. Basically, Tesco is using its strong stable core to keep the business ticking over while it forges new riskier areas of growth. Pushing further into non-food in the next phase (Johnson, G., Scholes, K., Whittington, R., (2005)). Lidl is currently "destroying" the market by selling the products below cost price. Therefore, Tesco’s generic strategy will have to be cost leadership, unless we can successfully differentiate our line of clothing so that we can charge a premium price.

A marketing strategy will involve analysing the markets, and which products to offer. The strategy is implemented through marketing tactics, which involve detailed decisions about factors such as the price and the way the product is distributed. So Tesco must decide on its model of entry in terms of, own stores, Internet selling or joint venture with an existing national retailer.

 

Activity Plan

1.    Market Research
2.    Market Analysis (including demand for baby wear)
3.    Mode of Entry
4.    Marketing Mix Decisions (Place, Price, Product, Promotion) decisions
5.    Methods of promotion – advertising, public relations, direct mail, sales promotion and personal selling

Profit & Loss account

Measurement & Controls

Tesco must also have in place both financial and strategic controls. Financial controls are in terms of profit targets, capital bids and performance appraisal. Strategic controls in terms of overall strategic balance, agreed business plan, optional services and infrastructure and any short-term constraints such as human resources.

Contingency Plan

The contingency plan must be in place to ensure that if the product fails having made large capital investments in new store, Tesco must have other products within its portfolio, which it can launch.

 

References and bibliography

1.    http://www.forbes.com
2.    Johnson, G., Scholes, K., Whittington, R., (2005) Exploring Corporate Strategy Text and Cases, 7th Edition, FT Prentice Hall
3.    http://www.hoovers.com/nike/--ID__14254--/free-co-factsheet.xhtml
4.       ACCA Paper 3.5 Strategic Business Planning and Development (2001) The Financial Training Company
5.       M.E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, 1985
6.       Jeannet, J., Hennessey, D.H, Global Marketing Strategies, 6th Edition, Houghton Mifflin

 

The product is called Joyrider.  It is a robotic lawnmower measured at 800mm by 400mm by 350mm high.  The mower can be programmed via a hand held joystick control.  The product runs on batteries and not diesel or fuel.  This makes it less-pollutant to the environment and environmentally friendly.  It is intended to be predominantly marketed to married couples.  The idea is that it is a hassle free product, unlike conventional lawnmowers, which entails you pushing manually; this can be done with ease via a handheld control device.  Through the use of advertising and market research it is hope that we will be able to gain a 3% market share in the third year of operations.  The main competition will be from B&Q and Home base. 

To what extent does marketing research influence marketing decision making activities?

Marketing is a very commonly used or rather misused word not only in the corporate world but also in our daily lives. Anything which sells is marketable. Our marketing textbooks are inundated with different definitions for marketing. The American Marketing Association (AMA) uses the following: “The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.” [http://www.marketingpower.com/live/content21257.php]

Marketing and Research

Overseas Opportunities of Starbucks Coffee

Starbucks, the Company

In this project, I have selected the marketing and research opportunities of Starbucks Coffee in the Asian region, especially in India. Starbucks Coffee Company is the leading retailer, roaster and brand of specialty coffee in the world, and has more than 6,000 retail locations in North America, Latin America, Europe, the Middle East and the Pacific region. Starbucks is one of the largest retailers of whole bean coffee and opened its first shop in Seattle, USA in 1971. By the 1980s, Starbucks quickly took on the culture of espresso bars in Italy and began producing and selling lattes and mochas. The demand for coffee quickly caught up in America and Starbucks expanded beyond Seattle to also become one of the first publicly traded coffee companies by 1990 (starbucks.com, 2005). Its inclusion in the stock exchange made it possible for the employees to own shares and stock options of the company. By the end of the 20th century, Starbucks has not only expanded beyond Americas and made its presence in Europe and other parts of the world, but has also changed the whole idea of coffee roasting, brewing and serving, bringing in new flavours of coffees and espresso drinks, and people now enjoy Tazo tea and Frappuccino ice blended beverages along with the regular cappuccino, mocha and latte varieties (starbucks, 2005).



Market research reports that ‘the hot beverages market - defined as instant and ground coffees, leaf teas, fruit and herb teas, and chocolate and malted drinks - grew in value terms in the year ending August 2004 by 1.1% over the same period in 2003’ and that ‘the market is dominated by instant coffee (representing 41.2% of total value) and leaf tea in bags (at 37.1%)’ (market research.com, 2005).

Aims and Objectives of Expansion

The products that could be launched in the Asian, particularly Indian market include the regular white and black coffee, espresso, mocha, latte, Tazo Tea and Ice Blended Frappuccino as well as hot/ cold chocolate drinks. What I suggest is not launching of any one specific product but expansion of Starbucks across the Indian region with its unique selling point and concept of famous coffee blends. In Asia, Starbucks has expanded to Hong Kong, Malaysia, Singapore, South Korea, Japan and China. Thus Starbucks seems to have a major presence in all major countries of Asia, except India. India is selected here as a developing and rapidly transforming economy that has recently opened up to globalisation policies to attract foreign investment. I will deal with the opportunities of the coffee market in India in a later section.
 
Starbucks has made its entry into major markets and cities in Asia as in case of Shanghai, Beijing, Singapore and Tokyo but has not yet opened its retail stores across the largely unexplored Indian region. The Indian cities of Bombay, Goa, Delhi and Bangalore are fast developing global centres for business and IT transactions and have recently developed a large market for tourism, software and consumer industries. India being a country of one billion people has a potentially large market for coffee consumption especially in the major cities where the fast paced economy and an urban, youthful and upwardly mobile culture show a definite preference for drinks and beverages. The success of soft drinks such as Coca cola and Pepsi in the Indian market may be considered as definitive examples of the changing Indian mindset. The aims and objectives of the expansion are as follows:

1. Making a foray into the large Indian market with specially brewed and flavoured coffee and tea
2. Targeting upwardly mobile young population of India who have a strong liking for soft drinks and beverages
3. Promoting a stronger coffee culture within India by selling ice-blended Frappuccino coffees suitable for the Indian tropical climate and tea, an already favourite Indian beverage.
4. Assessing the market competition if any and the other major coffee companies in India
5. Making the presence of Starbuck cafes a strong brand statement in major Indian cities
6. Using a very effective marketing campaign to spread awareness for developing a taste for good coffee
7. Using strategic advantages of very few competitors, unavailability of coffee and a large consumer base
8. Working on the opportunities, threats, strengths and weaknesses of promoting Starbucks cafes in the region
9. Using the pricing policy adequately to attract the Indian consumer
10. Promoting specially flavoured coffee and tea along with food such as cakes and croissants for the largely unexplored Indian market.
11. Identifying the advantages and disadvantages of introducing the coffee culture in India, including an analysis of climatic factors, economic factors, social and cultural factors.
12. Delineating the profit and growth factors using business models and analysis of the consumerist approach in a new market.
13. Frequently reviewing the factors affecting the marketing, advertising and consumption of newly introduced beverages and the consumerist attitudes of the region
 

Analysis - Market Factors

Rahman and Bhattacharya (2003) have suggested that India could be defined as a globally emerging market capable of attracting foreign investments. Their paper highlights how the infrastructure condition and consumer orientation in an emerging market favour a first mover. The consumer orientation in India if analysed definitely gives a positive picture for the coffee consumer. The strategies that could be followed for a first mover of investment in a particular industry could be highlighted as sustainable competitive advantages. As Hewitt (2002) has claimed there is a fundamental restructuring of developed–world social and trade policies and this shifts the locus of global dynamism to India, China and other emerging market countries.

India, China and other economies in Asia have already been marked as major economies with emerging opportunities following implementation of globalisation policies in the 1990s. The Internationalisation of technological activity and IT revolution has shifted the focus on these countries as important in the contribution of highly skilled labour, technology, software and services (Rao, 2001). India and China are considered not only emerging contributors to IT development and technology transfer but are also emerging markets having a large urban population and a potential huge consumer base. With Starbucks making a successful entry into the Chinese cities of Shanghai and Beijing, I propose that introducing a coffee/ tea culture that will be international in its brand presence yet geared to meet local needs could be very successful in the largely cosmopolitan cities of India such as Goa, Delhi, Bombay and Bangalore.
 
The Indian Beverage Market report given by the Beverage Marketing Corporation can be seen as emphasizing the consumption of Milk and Tea in India (beverage marketing, 2005). Considering this trend our policies would be focused on marketing tea and milk shakes at the initial phase moving on to infusing a widespread coffee culture at a later stage of our products launch. Till recently, the coffee board directed the sale of coffee in India. Coffee growers within India had to sell 100% of their production to the board till 1994. Thereafter, it was brought down to 30% (market research.com, 2005). This quota system has now been abolished completely since 1997 and since the massive influences of foreign investments and exports trough globalisation. Domestic demand has stagnated over the last few years. However the report suggests that there is an increase in production, purchasing power and enlargement of the beverage market. The Beverage consumption chart is given below. (Source: Beverage Marketing)

 
 
The chart shows a general low consumption of coffee in India which seems to be dominated by Tea, Milk and Soft drinks. Some of the factors for this are analysed here. One of the reasons for low popularity of coffee may be its considerable unavailability in the Indian market. Very few competitors such as Barista and Coffee day that have begun the coffee culture do not produce the wide variety of coffee selection as Starbucks. The concept of cold ice blended Frappuccinos are not promoted or advertised aggressively in the Indian market. Considering the tropical climate and economic factors in the region, I suggest that coffee consumption could increase with the entry of Starbucks in a potentially huge market. Thus the marketing approach is to increase the demand for great coffee by promoting a coffee culture along with taking advantage of the popularity of already existing beverages such as tea and milk. The socio cultural factors are considered here and include the market for coffee, the popularity of tea, the climate, financial capabilities of the consumer and the nature of the economy. My analysis is based on several factors:

1. The importance of tea in the Indian market should not be deterrent for introducing Starbucks as Tazo tea; flavoured tea blends can be easily promoted
2. Milk shakes and Ice-blended Frappuccinos as well as chocolate based drink could be promoted in the major cities
3. Cold coffee and iced drinks can be as popular as soft drinks for the tropical climate of India
4. The coffee culture may need to be promoted, as it does not exist to the same extent as in the west, yet as Starbucks could enter the Chinese market that is dominated by tea as the most popular beverage, the Indian market could also be successfully explored.
5. The marketing approach could thus be focused on promoting tea and flavoured milk shakes initially along with hot and cold coffee for Indian consumers
6. Using the case of China, Malaysia and other Asian countries, introducing Starbucks in places dominated by tourism industry such as Goa and Bombay could be a very successful enterprise.
7. The Indian youth has been catching up with a culture of drinks and beverage consumption and with a growing population of employed youth, the beverage industry could be one of the most profitable in the coming years.
8. I consider that the Indian Beverage industry is growing and the full potential of the industry has not been explored. Considering this factor, an expansion of Starbucks into the rapidly transforming Indian society is feasible
9. In contrast to certain countries in the Middle East such as Afghanistan or Saudi Arabia, where religious, political or socio-economic factors may play a huge role in stopping the introduction of a western beverage at a large scale, India seems to be a potentially open, emerging and changing market
10. A case in point would be the presence of Costa coffee company in Dubai, where Starbucks hasn't yet made an entry and can again be successful with the rise of tourism and an international culture in the city of Dubai.
11. I suggest that market opportunities for Starbucks are strong in Dubai as in Goa, Bombay but considering the fact that other international players such as Costa have not yet entered the Indian market but have made an entry into Dubai, can give a strategic advantage to Starbucks for being the first international mover within the emerging Indian market.
12. An analysis of the advantages and disadvantages of the plan can be done using a SWOT analysis chart.

Strengths –

Introduction of a novel coffee culture
Strong International Presence of Starbucks
Already existing record and experience in the beverage industry
A household name in the west - strong brand name
Reputation and Credibility
A strong marketing and management team dealing with overseas opportunities
Strong professionalism and major beverage company
 

Weaknesses –

Underdeveloped beverage industry in India
Greater demand of tea and milk shakes
A possible lack of understanding of the Indian consumerist perspective and mindset
Coffee culture not too strong
Climatic conditions may not be suitable for regular coffee preference
Low tourism or cosmopolitan culture when compared with Dubai, or Singapore
 

Opportunities –

Rapidly developing economy
Emerging market for consumerism
Open markets and recent shifts to globalisation policies
Attracting foreign investments
Large urban population
Youthful culture and high beverage consumption in major cities
Change in outlook - from traditional Indian values to a more modern and transforming society
Strong presence of International companies and IT hubs bringing in a change of culture
The urban population can increasingly afford higher prices according to international standards
Complete lack of major competitors as advantage
Being the first major International mover in promoting coffee culture - Strategic opportunity
Already existing high beverage consumption such as tea and milk shakes
Largely unexplored market
 

Threats –

Some competition from local markets
Pricing factors - high priced coffee may not suit the Indian consumer
Threats/ political obstacles from local brands

For more information see SWOT Analysis 

Socio-cultural Considerations

Some of the socio cultural factors I have already pointed out include a lack of a coffee culture and traditional Indian preferences for tea and milk, as also explained in the case for China. The beverage Marketing reports already claim that the Asian market is huge and growing. Other potential markets include Russia. A Euro monitor report claims that "Instant coffee dominates the Russian coffee market”, but new research from Euro monitor International suggests that “growing consumer awareness and a burgeoning coffee culture could lead to strong future growth in fresh coffee. Instant coffee has gained popularity in the Russian market primarily due to its convenience. Euro monitor International’s new report "Hot Drinks in Russia" shows that instant coffee accounts for an impressive 90% share of the market in value terms. In 2004 sales of instant coffee reached almost US$2 billion, with the market growing by some 13% on the previous year" (euro monitor report, 2004). This report definitely shows the strong international presence of a 'coffee culture' and the emerging markets that can be explored even within Europe. Despite Russia's strong market growth in recent years we do not predict any major success for Starbucks within the Russian market considering that there are strong competitors such as May Tea and Mellagro food Industries. Any entry of Starbucks, an American company may also have political implications, considering the rudiments of the Cold war era.

In contrast, American companies and major international brands for beverages such as Pepsi and Coca Cola have successfully entered the Indian market and have completely outperformed all local competitors in the soft drink industry. The success of Pepsi and Coca cola in the Asian, especially Chinese and Indian markets also suggest that coffee and tea can be successfully promoted as a hot and trendy drink in Asian markets. As I have shown, Starbucks has already entered the coffee market in Chinese cities but has not yet entered the potentially large Indian market. Considering strong competitive factors in Russia and other European countries, I have selected India as a growing economy and a promising emerging consumerist market as the best possible investment for Starbucks coffee. However the marketing plan could be influenced by certain cultural, social and economic factors, such as the consumption of coffee, existence or growth of cafe culture, demand for coffee and hot drinks, financial conditions of the economy in general and the consumers, price factors and the dominance of home made coffee.

According to business reports by Euro monitor on coffee consumption in India, the emergence of the café drinking culture in India has had a positive impact on the imagery and occasion of coffee consumption. There has been tremendous expansion in coffee drinking experiences and this has stimulated associated rise in coffee consumption at home (Euro monitor, 2005).


Considering commercial implications of this trend, the report also states that coffee volume sales will reach some 13,000 tonnes in 2004, representing growth of 5%. That said, while coffee parlours are increasingly found throughout the country, it is South India that accounts for an overwhelming proportion of home consumption of coffee brewing and drinking (Euro monitor, 2005). Thus the choice of Goa, Bombay and Bangalore in South India as major cities for coffee consumption may be a successful move. Home brewing and making of coffee and a home culture of coffee consumption rather than a cafe culture may be changing for the increased emphasis on coffee consumption at the cafes. Yet the urban markets continue to grow in the Indian subcontinent mainly due to a large population base. The Euro monitor report suggests 'hot drinks still derive most of their volumes and value from urban India, although a discernible trend towards greater rural involvement is visible. Urban India still remains the core that will adopt value-added hot drinks much faster than rural India' (Euro monitor, 2005). The analysis can be concluded with the euro monitor forecasts that suggest that coffee is expected to grow at a larger scale than tea in the next few years. This is stated as follows: Building on a small base and positively impacted by increasing sophistication and product knowledge, coffee sales are expected to performance of all hot drinks over the forecast period. By contrast, tea and other hot drinks will see extremely watered down as consumers seek to explore with other drink alternatives (Euro monitor, report, Indian Coffee market, 2005).

 

Conclusions:

Using the Euro monitor reports and data and considering the potential growth of the coffee and beverage market in India as well as presence of fewer competitors than the European markets, I will put forth the argument that Starbucks can make a successful entry into a potentially large consumer base and emerging market of India taking advantages of a growing cafe culture.

 

Bibliography

Promising future for fresh coffee in Russia
http://www.euromonitor.com/

Market Summaries - Report
http://www.euromonitor.com/Hot_Drinks_in_India

for beverage marketing reports, see
http://www.beveragemarketing.com/
http://www.beveragemarketing.com/coffeeindustryLms.htm

For Starbucks news and reports:
www.starbucks.com

BRAMMER, NATASHA; BEECH, JOHN
USE AND ABUSE OF TOURISM: THE GOAN EXPERIENCE
Tourism Culture & Communication, Volume 5, Number 1, 2003, pp. 23-35(13)
Cognizant Communication Corporation

Zillur Rahman; S.K. Bhattacharyya
Sources of first mover advantages in emerging markets - an Indian perspective
European Business Review, Volume 15, Number 6, October 2003, pp. 359-369(11)
Emerald Group Publishing Limited

Bowonder B.; Satish N.G.
Is economic liberalisation stimulating innovation in India?
Interdisciplinary Science Reviews, Volume 28, Number 1, March 2003, pp. 44-53(10)
Maney Publishing

Hewitt P.S.
Global Aging and the Rise of the Developing World
The Geneva Papers, Volume 27, Number 4, October 2002, pp. 477-485(9)
Blackwell Publishing

de Groot C.G.M.; Verschoor W.F.C.
Further evidence on Asian stock return behavior
Emerging Markets Review, Volume 3, Number 2, June 2002, pp. 179-193(15)
Elsevier Science

Rao P.M.
The ICT revolution, internationalization of technological activity, and the emerging economies: implications for global marketing
International Business Review, Volume 10, Number 5, October 2001, pp. 571-596(26)
Elsevier Science

See marketresearch – Indian coffee section
http://www.marketresearch.com/browse.asp?categoryid=471&sortby=d&g=1&page=3

 

1: Thorntons Analysis

a: Marketing Objectives

The marketing objectives of Thorntons reflect upon the current situation of the organization and the target position set by the company to be achieved for the year 2005. From the Thorntons Marketing plan it is clear that the company generates a major part of its revenue from Cafes and hence the objective of increasing the number of Thorntons cafes in the target market and better positioning of the franchises will increase the sales for the company. Alongside, the brand image of Thorntons for quality and service will further strengthen by the increase in the market share in the café range of outlets thus strengthening the position of the company.



Furthermore, since it is clear that the company’s major sales is mainly during the last three days to Christmas and the increase in the online customers, it is imperative to maintain a robust and quick response website that is not only efficient in handling the orders but mainly user friendly in nature in order to increase the number of online customers. This objective will not only increase the company’s revenue generated through the internet shopping but also increase the market share among the online customers for chocolates and cakes in order to establish a competitive position in the target market.

b: Budgeting

The amount available for the purpose of the marketing which is 5% of the annual turnover (£8m) is allocated to the three major elements as follows.
1.    Advertising and Public Relations: £4m. Since advertising is essential to reach the customers with the appropriate message about the products in order to create awareness as well as increase the sales, 50% of the total budget is allocated for advertising and public relations.
2.    Website £1m. As discussed before, the need for a robust and user friendly website to increase the online sales is high and hence the overall restructuring of the website to make it user-friendly is planned to be accomplished with an expenditure of £1m.
3.    Promotions/Other £3m: Since the company’s main income is during the festival seasons like Christmas and New Year, the need to implement efficient promotional strategies to increase the sales during that part of the year is essential and hence £3m of the budget is allocated to meet the expenses towards promotion and other expenses.

From the analysis of the contribution margin in the data analysis, we can see that the contribution of the investment on marketing is substantially high and this is expected to rise in the subsequent years with increase in sales. This makes it clear that the current allocation of the budget is appropriate to meet the demand of this year as well as cater the requirements for subsequent years.  the allocation of the £1m for the website restructuring can be eliminated or reduced to a minimal value for the year 2006 and further in order to maintain the restructured website rather than spending upon the restructuring frequently.

c: Marketing Tactics

The marketing plan for the year 2005 as discussed in the analysis mainly concentrates upon increasing the sales through the focusing the sales in Thornton’s cafes and seasonal products like ice cream. By effective pricing technique, unfavourable weather conditions can be addressed by efficient pricing of the products and special promotions to encourage the customers to buy the products. The channelling of the products and marketing the products based upon efficient forecasting of the demand aims to increase the sales during the quiet time of the year.

From the budgeting it is also clear that the investment on advertising and public relations is high and in order to efficiently meet utilise this amount the marketing plan devised in the analysis will judiciously allocate the resources in order to increase the return on the investment (ROI). Alongside, from the analysis it is clear that the advertising is the vital element for the increase in sales and hence a higher allocation or a flexible approach to the allocation of the resources to the advertising is adopted in order to maintain a balance between the advertising and promotions. Since it is evident that promotion is a form of advertising, the allocation of the resources can be proportionately split between the two in order to increase the return on investment (ROI).

 

2: Advertising Effectiveness

Frances Brassington and Stephen Pettit (2003)  argue, “Advertising plays the vital role of communicating the information about the product and corporate culture to the target customers in the market”. In the light of the consumer industry, which is under debate in this report, advertising is the primary tool for the competitors to reach the customers in the consumer industry who comprise of everyone in the general public as argued by Isla Gower (2004) . Since the demand in the consumer industry is highly fluctuating and with the exhausting choice of products presented to the customers at all price levels, has apparently created the need for establishing a strong customer base through effectively communicating not only the product information but mainly the corporate culture of the competing organization in order to gain the long term benefit of brand image in the target market.

The process of advertising as explained by Frances Brassington and Stephen Pettit (2003) works by the process of communicating the company’s message about the products and services to the target market. From the above statement it is clear that the process of advertising is mainly to communicate the message of the company which is secondary to the actual message that  is conveyed to the customers since the information contained in the message is the key for the success of a product in a given target market. The initiative of Procter and Gamble to partner with other big organizations in the industry in order to identify the advertising effectiveness is proves the company’s initiative to effectively deploy its resources for advertising to increase the sales and revenue to the company. Isla Gower (2004) argues that the competitors in the consumer industry especially under the category of the Fast Moving Consumer Goods spend vast sums of money in advertising their products not only for communicating the product information but also for establishing their position in the target market in order to create a brand image. Philip Kotler (1988)  says that the advertising effectiveness is concerned with the extent to which the company can retain their position in the target market whilst the efficiency of the advertising attributes to the actual contribution to the sales.
From the above arguments on the process of the advertising it is clear that the message conveyed by the advertisement has a direct effect on not only the sales but also on the long term elements like branding, market share and corporate performance.

Malcolm McDonald (1999)  argues that advertising effectiveness contributes to a strong brand image because of the fact that the message conveyed about the products and promises by an organization actually reflects upon its attitude towards customer service and through efficiently accomplishing the promises and providing effective customer service, the company actually strengthens its position in the target market. the effectiveness of the marketing plan is thus enriched and the brand image of the organization that contributes to the stability and popularity of the company’s products to generate revenue through increased sales is thus also strengthened. Alongside, the fact that an advertisement is the actual element of the marketing mix that reaches the customers either through media or direct marketing, the effectiveness of advertising directly contributes to the effectiveness of the marketing plan of an organization as argued by Marian Burk Wood (2004) .

Corporate performance of an organization as argued by Frances Brassington and Stephen Pettit (2003) corresponds the overall performance of the organization not only in term of sales but also in terms of market share and customer service. this makes it imperative for the organization to present themselves as a competitive and successful brand in the target market which can be achieved only through effective advertising. The fact that the brand loyalty of the customers in the target market is the ingredient for product innovation and market development makes it clear that an organization through advertising effectiveness can enhance its corporate performance.

Since it is evident that the advertising is not only the communicating tool but the final stage of the entire marketing plan and forms the critical element of the marketing mix of any marketing campaign by an organizations, it is thus essential for the competing organizations in any business sector (FMCG Market in this case) to gain advertising effectiveness in order to achieve competitive advantage in the target market and leverage revenue. 

In the light of the above arguments, the venture of Procter and Gamble in partnering with other leading conglomerates for measuring advertising effectiveness is thus justifiable. This will not only increase the return on the investment (ROI) by the organizations on advertising but will also provide room for identifying potential errors to improve performance.

 

3: Creating New Market Spaces

Market segmentation is one of the most argued and highly deployed strategies of competing organizations in the UK business sectors. The fact that by segmenting the target market efficiently and providing customised products and service, an organization can gain increased sales (Philip Kotler, 1988) is increasingly saturated with the extensive use of this strategy as argued by Simon Zadek (2004) . 
The extensive use of the segmentation strategy itself was the result of imitating the competitors rather than creative marketing through identifying new markets for potential customers in new geographical locations as argued by Simon Zadek (2004). Furthermore, he argues that even though the strategy of identifying new markets is not always an easier alternative, the ability to sustain business development in a new market through implementation of the existing innovative strategies like segmentation in the new market space will not only generate increased revenue but also provide the advantage of the first starter in the market. 

The advent of the Internet and the electronic commerce has broken the barrier of geographical limits to business development and has provided the competitors in the market to create new market spaces in through effectively identifying new markets for the products as argued by Gerry Johnson and Kevan Scholes (2001) . The increase in the Internet users and the overall growth in the electronic retailing have created endless opportunity for the competitors to reach new customers with efficient and cost effective means of electronic advertising and promotions so as to create new market spaces. Alongside, in the case of the traditional business itself, Frances Brassington and Stephen Pettit (2003) state that the competitors in any business sector can gain competitive advantage through expanding into new target market and deploying the strategies of product customisation and market segmentation. Furthermore, the authors argue that not only by identifying new market spaces a company can gain competitive advantage, but mainly through effective communication of the company strategy (mission, vision etc) to the managers and employees is necessary for the successful dominance of the market space by the company.

For example, ‘Amazon’ the leading electronic retailer, adopts the policy of staff development and personnel training for both the managers and the operational staff as part of the company’s overall strategy which not only enables the organization to deploy its strategy effectively but also encourages the its personnel to effectively perform their job roles in order to enhance their performance. This approach of the company (Company overview, 2004 ) is the vital ingredient for the growth of the company from an online book retailer to a comprehensive electronic retailer with a vast product range. Another strategy of Amazon that increased its sales is the meticulous presentation of related products to a customer thereby enabling cross selling of the products online. Even though, the competition in the online retailing is tremendously increasing, the market survey by Keynote Plc on electronic retailing has proved that Amazon is the market leader in the category of books and electronic products retailing which is mainly because of the efficient deployment of its strategies in the entirely new market space (electronic business in the 1990s).

Apart from the idea of effective communication of the strategies to the managers and the employees, Frances Brassington and Stephen Pettit (2003) further argue that lucidness in the communication to the managers and staff by the corporate is essential for the successful implementation of the strategy itself. This is further justified by Richard Lynch (2003)  who argues that the clarity in the communication and especially the clarity in the strategy of the company are essential in order to effectively deploy its human resource in order to gain dominance in the new market space.
 
Also, Richard Lynch (2003) argues that a company by  identifying new markets for its products actually endeavours in business development where the company has the potential to gain dominance in the target market through not only being the first starter but also providing quality goods and services as opposed to market penetration where the company faces stiff competition from the existing competitors. It is indeed justified by Richard lynch (2003) that the risk of failing in the new market space or market area is a potential threat but the increase in the stiff competition from the competition is also equally high in the current business trends making it further difficult for the company to grow since the customers already have providers for their needs whilst in the former case the customer’s needs are yet to be satisfied which is a potential advantage for the company to grow rapidly in the market.

4: Pricing

Philip Kotler (1988) argues that price of a product is the vital element that not only decides its sales but also its position in the target market. This is because of the fact that the price of a product decides the affordability of the customer to buy the product and reflects upon the quality of the product. Furthermore, the strategy of pricing not only enables the organization to strategically position itself in the target market but also provides room for the company to identify potential customers and accomplish the process of product customisation in order to efficiently price the goods and services.

Marian Burk Wood (2004) argues that the pricing of a product is critical because it is the major factor that decides upon the overall position of the product in the market. With the growth of retail chains like Asda and TESCO in the UK, the traditional idea of quality comes with high price of the product has been erased and thus the need for efficient pricing is not only to reflect upon the quality of the product but mainly upon the needs of the customers in the target market. The increase in the sales of the own label products in the supermarket chains has proved that  pricing not only increases the sales but mainly enables the company to strengthen its brand position in the target market. JSainsbury Plc for examples has seen increase in its sales after a terrific decline in the early years of the twenty-first century though effectively promoting the economy range of the own label product along with the premium range of products that were sold by the retailer for more than a decade under their own label. The introduction of the ‘Sainsbury Basics’ range of products in every product line is the primary factor for the increase in sales of the company both in volume of sales and in the generation of revenue. The announcement of profit by the retailer in their annual report  published in June 2005 (JSainsbury Plc, Annual report, 2005 ) proves the company’s success in the utilising its existing brand image under premium range of products to promote its economy range of products without compromising quality.

Furthermore, Frances Brassington and Stephen Pettit (2003) argue that the price of a product reflects not only upon its quality but also the value of the product, which makes it unique from its rival products. This is mainly because of the fact that in the intense competing business environment, the customers are surrounded by an exhaustive range of products making it essential for the competing brands to distinguish themselves not only by pricing but also mainly through conveying the value of the product and associating this with the price of the product. The growth of Hutchinson 3G in the year 2004 is a classical example for the above argument. The company when launched in the year 2003 faced decline in sales and did not meet its target sales for the first year even though the product was unique in terms of video conferencing on the phone, Internet bundle features etc., This was mainly because of the sky high price and poor performance of the handsets in the initial years of launching the product which was rectified by not only providing high performance handsets (LG series) but mainly through efficient price plans of the mobile phone tariffs which is the backbone for the growth of the company in the year 2004 (Financial Times, 2005 ). This has not only increased the profitability for he company but has also established 3G as a unique brand that provides cost effective mobile phone price plan to the customers. Even though the technical performance like the reception etc are not competent to other brands like Vodafone in the UK, the efficient pricing strategy of the company is the backbone for establishing 3G as a brand in the mobile phone market in the UK. The argument of Philip Kotler (1988) that by pricing the products not only for meeting demand but also for the survival in the market in environments where the customer needs are volatile will enable the company to gain brand status and increase profitability clearly justifies the above argument.
The above arguments on pricing justify that pricing of the products not only contribute to the short term increase in sales (e.g.: promotions and Christmas Sales) of the product but also for establishing brand image and boosting profitability of the company.

5: Marketing Implications For Brand Managers

Even though, the concepts of consumer behaviour and brand loyalty are extensively discussed by the academic authors in textbooks, the real world scenario of marketing is not always in par with the academic arguments.

In the FMCG industry for example, the consumer behaviour is rather random (Isla Gower, 2004) mainly because of the fact that the consumer purchases the products not only with respect to the needs but also with respect to his/her affordability. This complicated scenario of the consumer behaviour does not always provide accurate forecasting for the organizations through the use of academic methods of analysing consumer behaviour on a two-dimensional perspective (i.e.) analysing consumer behaviour with respect to either consumer needs or buying behaviour. This scenario is profound especially in the category of Fast Moving Consumer Goods industry because of the nature of the goods that even though they are perishable, most of the products have alternative and also fall under the category of optional items to many customers who tend to restrict their expenditure. Hence, in the real world scenario, it is essential to analyse the consumer behaviour on a multi-dimensional perspective with room for innovation as argued by Dr. Lieh-Ching Chang (2005) , who justifies the multi dimensional approach to consumer behaviour in his research on analysing the consume behaviour in the light of sub culture and consumption.

 
Unlike consumer behaviour, which contributes to the sales, the brand loyalty is a more sensitive issues because of the reason that it affects consumer behaviour (Jason Lark, 2005  ). This is mainly because of the fact that the brand image of a product directly reflects upon the extent to which it can penetrate into the customers in the target market. Jason Lark (2005) argues that the traditional methods of branding like product quality and customer service are not successful in the real-world mainly because of the fact that the customers do not always possess the knowledge on the product quality or the services offered by the company. The increase in the co-branding initiatives by many organizations where the Jason Lark (2005) says that an organization can establish itself as a strong brand in the target market by partnering with an existing brand in the market in order to reach the customers with their message on quality of the products and services. This further justifies that the managers in the real world scenario should assess the target market not only for the consumer behaviour but mainly focus upon innovative and methods of branding to maintain brand loyalty among the customers in order to increase positive consumer behaviour.
 
Apart from the above arguments on consumer behaviour and brand loyalty, the concept of market segmentation in the real-world scenario is far more complex than in theory. This is mainly because of the fact that consumers in the target market are not only dispersed in nature making the segmentation difficult, the buying behaviour of the customers are highly volatile and changes with respect to their needs making the segmentation unstable (i.e.) the customer base for a specific market segment is not accurately predictable. This issue of marketing is very critical especially in the electronic commerce scenario where the customer attitude towards a specific product is prone to changes faster than in the real world scenario. The example of Dell Inc the leading computer (laptop and desktop) and accessories online retailer justifies the above argument. The approach of Dell to allow the customers to customise the configuration of the computers on a basic model is a classical example where the company actually implements the product customisation strategy without actually segmenting the target market. This is mainly because of the diverse requirements of the customers with respect to computers and computer related product, which results in an infinite number of segments in the market as argued by Jason Lark (2005).  Furthermore, the fact that by encouraging the customers to customise the products the level of interaction of the customer with the company increases which enables to build a long term relationship for the company thus enabling the marketing managers of the organization to effectively increase their sales. Thus it is evident that even though the academic theories on marketing are justifiable, the real-world application of such strategies requires multi-dimensional approach rather than a singular approach as stated in the academic resources.
 

References:

Books:

Frances Brassington and Stephen Pettitt, (2003), Principles of Marketing, third edition, UK: Prentice Hall Financial Times.

Gerry Johnson and Kevan Scholes, (2001), Exploring corporate Strategy Fourth Edition, Prentice Hall of India Private Limited, India

Malcolm McDonald (1999), Marketing Plans How to Prepare Them How to Use Them, 4th edition, Butterworth Heinemann, Oxford

Marian Burk Wood (2004), Marketing Planning: Principles Into Practice, Prentice Hall

Philip Kotler, (1988), Marketing Management Analysis, Planning, Implementation and Control, New Jersey: Prentice Hall Inc.

Richard Lynch (2003), Corporate Strategy, UK: Prentice Hall

Journals and Whitepapers

Amazon Inc, Company Profile, 2004, Data Monitor Inc

Annual Report, (2005), J Sainsbury Plc, UK: Sainsbury Plc

Ben Hunt (2005), the Judgement has Arrived, Financial Times, June 27th 2005

Dr. Lieh-Ching Chang, (2005), The Study of Subculture and Consumer Behavior: An Example ofTaiwanese University Students’ Consumption Culture, The Journal of American Academy of Business, Cambridge * Vol. 7 * Num. 1

Isla Gower, (2004), Fast Moving Consumer Goods: Market Overview, Keynote Ltd, UK

Jason Lark, (2005), . Impact of personal orientation on luxury-brand purchase value. David. Business Horizons, Vol. 48 Issue 4, p317, 8p;

Simon Zadek (2004), The Path to Corporate Responsibility, Harvard Business Review.

 

Technology is increasingly being utilized to improve or take over traditional business functions.  Marketing is one such area.  While consumers have a wide range of attitude and aptitude regarding technology, most are increasingly tired of traditional marketing practices, rendering such less and less effective.  At the same time, various e-marketing practices and strategies are replacing and spreading across the firm traditional marketing activities, most notably product, promotion, and pricing decisions and the management of customer relationships.  As such, technology acts as a change agent, moving marketing through sweeping changes in both paradigm and practice.  Whether this technological advance can be considered a “threat” to marketing is in the opinion of the marketer; some will see technology as destroying the marketing function, others as it creating opportunities to move marketing to more interactive, effective, and customer-based practice.

 

Technology is changing rapidly, and rapidly changing most aspects of the business world.  One such area experiencing significant change has been marketing. “Digital information and network technologies are reinventing just about every business process, and marketing is by no means an exception” (McKenna 2002, 9).  The marketing industry is currently moving through “one of the most disorienting periods in its history” due to “a combination of long-term changes, such as the growing diversity of media, and the arrival of new technologies, notably the internet” (Anon 2004, 69).  Marketing as a business function once focused almost exclusively on advertising, especially during its period of growth during the 1950s and 1960s.  However, this was a period in which consumers had a limited number of channels by which they could receive and verify information (Rust and Oliver 1994, 73).  Now, however, customers have increased access to variety of product and information about product and companies.  They are also demanding increased and more rapid response from businesses.  As consumers become better informed than they ever have before, some traditional methods of advertising and marketing will simply no longer work (Anon 2004, 69).  This requires a new examination of the marketing function and how it may best utilize and will be shaped by technological advances.  Traditional marketing is both currently threatened and likely to be replaced by technological advances in the near future.

New technologies and their effects

It is beyond debate that new technologies have dramatically affected Western culture as a whole and business practice in particular.  For one thing, technology has dramatically reduced the time and cost involved in global communication and product movement.  For example, until the 1800s, information traveled globally by ship, and delivering a message from India or a similarly distant land to London could take up to six months (McKenna 2002, 173).  By the mid-1860s the telegram had greatly reduced the time involved in such communication, but the cost o sending a telegram of one hundred-words was nearly $700 in today’s dollars (McKenna 2002, 173).  The telephone reduced both time and cost, with a three-minute call from New York to London dropping to $300 in today’s dollars by 1930.  The same call today typically costs less than twenty cents, and an email of unlimited length is “free” (McKenna 2002, 173). 

Television, once the bedrock of many marketing strategies, is becoming increasingly diverse.  As little as thirty years ago, America's three big TV networks reached ninety percent of households during their prime-time audience periods and were a powerful way to market and build brand. Now these major network prime-time audiences are often less than one-third of households, while other ways of marketing have become more competitive (Anon 2004, 70).  Audiences are additionally becoming “more tightly clustered and more highly targetable” (Weiner 2005, 20). Both marketing concerns and media companies respond to these differentiated audiences by “creating more tailored vehicles” to cater them; for example, “where we once had six television channels, new cable packages now offer more than 800” (Weiner 2005, 20).  However,  “many business are still spending considerable sums of money on branding campaigns, ignoring the new technological and social realities that are shifting the marketplace from broadcast to access” (McKenna 2002, 6).  Although there is a lack of consistent evidence, many companies remain convinced that they can “persuade consumers to buy their products by exposing them repeatedly to skillfully crafted messages designed from abstract research and delivered in a staged mini-theater” (McKenna 2002, 27).

Technology has also brought completely new mediums, most notably the Internet.  When Bill Clinton took over as US president in January 1993 “there were less than a thousand pages of publicly available pages on the Internet” (Saxton 2001, 348).  Now the number is almost incalculable.  “It took nearly 50 years for half of all households in the USA to have a telephone, but has taken less than eight years since the launch of the Web for half of all households in the USA to have a PC” (Saxton 2001, 348).

The Internet is, furthermore, a global phenomenon.  “In 2000, for example, 214 countries had Internet access, up from sixty in 1993 and just eight in 1988” (McKenna 2002, 32).  The next few years are likely to see a decrease in dependence on the personal computer for Internet access, as there will be an increase in the variety of inexpensive devices available, and these devices will be wireless and portable (McKenna 2002, 182). 
From a marketing standpoint, “the post-advertising world will be characterized by both empowerment of the consumer and new methods of marketing appropriate to the interactive environment”  (Rust and Oliver 1994, 75).  The goal of marketing has always been “to build the relationship between buyer and seller; its reason for being has been to extend and sustain that relationship” (McKenna 2002, 8).  This goal is still foremost in any marketing function.  “Technology isn’t doing away with that relationship; it’s just changing how it’s nurtured and sustained” (McKenna 2002, 8).  “New technologies don’t simply replace old ways of doing things; they also replace old models of thinking” (McKenna 2002, 8).  While human involvement in the marketing function is diminishing into a totally accessible network, people will still be required to run network functions, interpret data, and make marketing decisions.  “The task for marketing today, as it will be in the future, is to integrate and manage the complexity of network relationships necessary for planning, implementing, and running a marketing enterprise” (McKenna 2002, 16).

In previous times individualized services for all but the wealthiest customers and certainly direct interaction between businesses and large numbers of customers were simply too costly to implement (McKenna 2002, 27).  Technology has changed this, and in doing so has drastically changed the marketing function.

Consumer feelings and their adaptation to new technologies

Consumers vary widely in both their feelings about and their adaptation to new technologies.  Consumers today are increasingly skeptical (McKenna 2002, 88) and are tiring of advertising in all its forms.  This is not surprising:  the average American is reportedly subjected to nearly three thousand advertising messages each day and “consumer resistance to the growing intrusiveness of marketing and advertising has been pushed to an all-time high” (Anon 2004, 70).  However, too many marketing executives still consider brand the shortcut to creation of demand.  Where this “may have been the case when consumers faced far fewer choices, limited media, and many fewer channels of delivery,” in the current environment “where information is increasingly disposable, the marketplace is flush with choice, and price is a high preference, the idea of achieving lasting loyalty seems doomed” (McKenna 2002, 89).

Consumers are reportedly more positive about changes in technology, although perspectives vary widely. These feelings and adaptability among consumers are influenced by both personal affinity for technology and availability of access.  McKenna (2002) divides post-technology consumers into four broad categories: the information explorers, information active, information followers, and information passive.  Information explorers are seekers of technological change, interested in how the tools of technology function and can be made or used most efficiently.  They are well versed in the development and use of technology and are often self-taught.  This group quickly implements new innovations and upgrade regularly.  As a whole, they are “easy to sell, but hard to convince”  (McKenna 2002, 40).  The information active group “don’t care about knowing everything about the computer or the Internet – they just want to access it and use it every day”  (McKenna 2002, 40).  They use technologies heavily for both work and personal information and communication and are content rather than technology focused.  Information followers represent the largest of McKenna’s four groups.  This group can use word processors and access their email, but are not confident in many areas of technological application.  Information followers are typically limited in their use of technology such as the Internet outside of work.  The information passive, finally, have little or no opportunity to use technology.  McKenna reports that this group comprises over four of the six billion people globally, and represent a huge potential market.

Previously, generally accepted social norms typically began as isolated fads, picked up and spread by various broadcast media.  Now norms can be accepted widely in an extremely short time period, often with a large corporation leading implementation (McKenna 2002).  ‘Prosumers,’ a term describing proactive consumers at the vanguard of change, are those whose comments to friends and colleagues regarding brands and products tend to become the mainstream trends six to eighteen months later.  “Such people often reject traditional ads and invariably use the internet to research what they are going to buy and how much they are going to pay for it” (Anon 2004, 71).  Importantly, since nearly half of the prosumers group report distrusting companies and/or products that they cannot find on the Internet, “companies have to be extremely open about providing information” (Anon 2004, 71).

Consumer expectations have also changed dramatically in the past decade with the widespread implementation of technology.  Today customers expect reliable help and support, and reasonably prompt response to their needs and requests.  This is made more difficult by the fact that “new technology penetrated the market so fast that the infrastructure and technology – and many of the businesses involved with them – haven’t had time to develop, let alone adjust to the demands of the market” (McKenna 2002, 75).  For example, a typical online shopper will search a website for a few minutes at best, then move to a competing firm’s website if not satisfied.  “In addition to expecting rapid response time, many clients now also expect interactive, immediate communication anytime of the day, from anywhere in the world” (Johnson and Busbin 2000, 157).  The traditional notions of marketing are “based on a certain assumption of consumer ignorance – the thinking is that consumers will trust the company’s messages and products to deliver as promised” (McKenna 2002, 88).  This, however, is no longer the case.

Consumer preferences have changed in pace with technology. Comparing the top eight preferences with those of twenty years ago, only three preference priorities remain:  price, novelty and speed.  While in the early 1980s, brand quality, convenience, references and utility were all utmost in consumers minds, the first five years of this century have been ones emphasizing choice, access, speed, trust, and simplicity (McKenna 2002, 111). 

As such, access-oriented consumers look for simple, quick, easy ways to find information and meet their varied needs.  As such, new technology and customer practice require “developing new vehicles to turn advertising into engaging customer communication” (McKenna 2002, 8).  Too often, however, marketers use the customer information gleaned from various data tracking to target customers’ customized messages rather than customize services to them (McKenna 2002, 30).  This must change, specifically since customers have been found to relate differently to online or “virtual” purchases.  Computers or similar devices provide not only a sense of power and control, a sense of owning the shopping source, additional opportunity to comparison shop, and increased privacy (Johnson and Busbin 2000, 156-157).  These customer perspectives and adaptation to technologies are both changing the marketing status quo and require a marketing response.

E-commerce

The term e-commerce refers to the transactions of business functions over electronic or technologically based formats.  The most notable support structure of e-commerce is of course the Internet, although a number of companies employed their own micro e-commerce systems prior to the advent of the Internet (McKenna 2002, 142).  When discussing e-commerce today, however, most engaged in this discourse are referencing transactions and information exchanges taking place via some Internet channel.  While some businesses operate solely on the Internet platform, most bricks-and-mortar firms have also established an Internet presence of some type in the past decade (Saxton 2001, 348). 

A typical transaction from a consumer viewpoint would involve an individual customer making a purchase online, usually using a credit or debit card for payment, after which the purchase is shipped.  Customers may simply go to a well-known website if simplicity or speed is a top priority, or may comparison shop across numerous websites if price or choice is of greater importance (Johnson and Busbin 2000, 156-157).  An office manager ordering everyday office supplies such as paper or rubber bands may simply to the Staples website, place the order, and expect shipment the next day.  The same manager shopping for a new copy machine costing thousands of dollars and dramatically impacting office functioning is highly likely to use the Internet to gather information about different copier possibilities, then employ methods in addition to e-commerce to complete the transaction.
>From a business standpoint, e-commerce is one area where having a strong, networked infrastructure is vital to company success.  Such ability to exchange and track information forms the bedrock of both product distribution and of many marketing functions. 

This allows the salesperson in the store to order an item not in stock for a customer, or the customer to check price and availability before traveling to the store.  In this sense, effective e-commerce depends strongly on the interconnectedness of business systems.  For example, “today call enters are computerized customer network managers, receiving and integrating all the various access means – including phone, fax, and Internet requests – and then orchestrating and directing the appropriate responses” (McKenna 2002, 33).  Such integration also influences customer loyalty, alluding back to earlier customer preferences of simplicity and trust.  McKenna (2002) contends that if various technological input devices, such as kiosks, car systems, computers, and cell phones were interconnected, the consumer will “become more dependent on – or even loyal to – the connecting total access system and the standards used to interconnect” (37).  In this sense, technology directly replaces traditional marketing.  The infrastructure itself creates awareness, exploration, and loyalty.

E-Marketing

Most companies are still figuring out how to meld technology and marketing.  The result has often been a variety of attempts at traditional advertising on the Internet, with mixed results.  To successfully e-market, however, firms must view it from a different perspective and paradigm.  First, where traditional marketing overemphasizes awareness, e-marketing is much more focused on relationship (McKenna 2002, 86).  It involves an exchange of information between producer and consumer, not a one-way delivery of message.  The consumer is probably aware of a variety of online office supply store, but is likely to shop at one.  This may be due to discount coupons and specials, rewards programs, or some other factor, but is most likely to be influenced by that site having all the products the consumer needs, at reasonable prices and shipped quickly (McKenna 2002, 87).
Conceptually, e-marketing “is most closely associated with the ‘distribution’ portion of the venerable marketing mix” (Johnson and Busbin 2000, 155).  Distribution needs becomes more sophisticated as markets develop, especially when multiple channels of purchase are involved.  Companies therefore often seek to use distribution to achieve competitive advantage (Johnson and Busbin 2000, 156).  For example, the company that can ship the fastest will often win a customer’s purchase.  Companies able to employ technology to reduce response time are able to meet customer demands more adequately, and initiate a ‘responsiveness gap’ between themselves and rival firms.  Companies “offering increased variety and fast response time have not only shown a history of fast growth and increased profitability,” but “have changed the nature of client relationships and client expectations”  (Johnson and Busbin 2000, 154).

Globally e-marketing becomes even more complex.  As Johnson and Busbin (2000) note, parallel channels of information distribution and product have merged, particularly in companies with global presence, effecting their operations including e-marketing (156). “Global e-commerce marketing, perhaps more than anything in marketing history, requires an understanding of local regulations, as well as political, economic, social, and competitive market dynamics” (McKenna 2002, 186).  The myriad of infrastructure issues in the global arena makes it difficult for many new e-businesses that rely only a single channel of transaction and presence, such as the Internet, to succeed.  Regulations from country to country, cultural issues, distribution and branding all become amazingly complex, causing most businesses engaged in e-marketing on a global scale to acquire companies in each of their geographical areas of their e-operations, or at least get significant help from partners in the local market (McKenna 2002, 185).  Such diversification of channel and introduction of extra-enterprise partners further dilutes the traditional marketing function, spreading marketing across a number of business areas and basing it more integrally on technology.

E-business marketing and strategies

Most businesses have realized, particularly with the imploding of the dot-com bubble just a few years ago, that business and marketing over the Internet is not business as usual.  Strategically, in order to earn and maintain customer trust, e-businesses, even those of established traditional business companies, must establish what McKenna (2002) calls a “persistent presence” in the lives of their customers.  McKenna (2002) contends the companies that will be “most successful at online commerce will be those that already have multiple forms of customer presence” (135).  “When customers become so dependent on a product or physical location that they would not consider filling their need or want any other way, that business has achieved persistent presence” (McKenna 2002, 150).

There are two components key to achieving this lasting market presence and thereby sustaining brand:  multiple points of access and a marketing architecture network (McKenna 2002, 149).  Points of access are basically multiple channels of distribution that have been integrated by a single or shared information network.  McKenna (2002) contends the companies that will be “most successful at online commerce will be those that already have multiple forms of customer presence” (135).  “When customers become so dependent on a product or physical location that they would not consider filling their need or want any other way, that business has achieved persistent presence” (McKenna 2002, 150).

Marketing architecture is the underlying infrastructure that “supports and connects all points of customer support, including suppliers, carriers, services, and content providers,” flowing between producer and consumer, “gathering information, learning, adapting, and responding” (McKenna 2002, 151).  As such, it lays out “the detailed business processes that connect all corporate resources,” both inside and outside the company, that are “involved in continuously delivering persistent presence and customer satisfaction, and for owning the firm’s market space” (McKenna 2002, 153).  For example, enterprise resource planning (ERP) integrates entire business operations, from personnel to warehousing to finance to marketing (Johnson and Scholes 2002, 434).  Information is entered into the ERP system from multiple points, including electronic point of sale systems.  This allows centralized planning of all business functions, integrating and merging business functions and emphasizing relationships over message (Johnson and Scholes 2002, 435). 

Firms are likely to achieve needed persistent presence through four strategies.  First, they must take a market architecture approach to providing consumer access.  “Marketing can no longer be limited to one perspective or to any single medium; it will become increasingly complex, requiring a much broader vision of the future enterprise” than has been seen in the past (McKenna 2002, 141).  For example, Wal-mart’s database structure is second in size only to that of the US government, and links all its stores, distribution centers, and suppliers.  This market architecture allows the company to update its information every ninety minutes, and maintain “four thousand points of presence worldwide” (McKenna 2002, 142). 
Support infrastructure is another important strategic consideration.  One can purchase a Coke almost anywhere in the world because of the company’s extensive infrastructure of franchised bottling companies (McKenna 2002, 143).  Firms with such infrastructure find it much easier to achieve and maintain a persistent presence.  An attitude focused on total access is a third strategic consideration.  Customers have more access to product if a company provides both hard and soft channels to its products and services, such as a physical store in addition to its Internet outlet (McKenna 2002, 144).  It is equally important for companies that already provide both channels to link them, tracking customers and purchases across multiple platforms. 

Finally, firms must be willing and able to invest time, money, and in customer relationships.  Customer relationship management (CRM) is becoming more and more vital to both e-commerce and businesses in general (Rigby and Ledingham 2004, 118).  This technology replaces many traditional customer-tracking activities with records of interactive customer experiences.  CRM technology allows, most importantly, for two-way exchange of information (Rigby and Ledingham 2004, 120).  Marketing now requires “the continuous feedback and distribution of customer and marketing knowledge that it takes to satisfy buyers and rapidly adopt innovative ways” (McKenna 2002, 147).
Companies must now provide increased access as part of their customer service.  McKenna (2002) contends “no company can entertain thoughts of mass customization without molding its business into a service model” (135).

The Four P's

 

In considering the threat of technology to traditional marketing function, traditional marketing must be examined.  Marketing traditionally focuses on the “four Ps” of the marketing mix:  product, promotion, place and price.  Keller (1998) points out that a properly deployed marketing mix both moves customers through exploration and awareness to commitment and builds the brand to create positive, long-lasting, and differentiated associations.  This is true in both a traditional marketing and an access-based marketing perspective. 

Product becomes much more customer oriented with technological change.  “Many of the new access technology developers, such as Apple and DoCoMo, seek a convergence of passive and interactive – designing and delivering products and services that try to minimize complexity while giving the user high participation” (McKenna 2002, 36).  This is often in the form of mass customization, “where a basic product ‘platform’ can be quickly varied for customers at little cost”  (Johnson and Scholes 2002, 494).  Rather than focusing on very specific and unchangeable product features, then, technology already begun changing the previously passive product component of the marketing mix to one that is more flexible and responsive to customer demands (Johnson and Scholes 2002, 494).  Need for service support for products and product quality relative to price also increases.  Technology can literally destroy brands, “as consumers become more knowledgeable about the various offerings in the marketplace” and the features and quality of various competing products (Johnson and Scholes 2002, 494).
Conversely, with technology the importance of place is greatly reduced.  Suddenly the small shop in the middle of nowhere can become almost as accessible as the one in a major urban area.  Further, since companies in non-prime locations often have significantly lower overhead and expenditures, such firms which were previously not competitors in a particular geographic market now of the opportunity for significant market share (McKenna 2002, 28).  Since access is no longer dependent on location, customers are likely to purchase from anywhere from which convenient, secure shipping can be obtained. 

Promotion is also altered by technology.  The Internet “allows marketers to move away from mass broadcast media to more personalized and interactive communication with customers” (Johnson and Scholes 2002, 494).  Where once advertisers set out to convince consumers of a specific need or want, now they must respond to wants and needs provided by the consumers through their market architecture (Anon 2004, 70).  Access provided by an effective market architecture gives customers “the tools to gather information and check out the competition, to compare one product to another and one supplier to another, transforming shopping from an impulse buy to a considered purchase, for even the lowest-cost item” (McKenna 2002, 28).

As such, pricing becomes much more important.  More and more customers comparison shop, particularly for large-ticket items.  “Better-informed consumers can commoditize markets” which makes creative approaches to pricing increasingly vital (Johnson and Scholes 2002, 494).  Customers can now benefit from economies of scale and regional pricing variations enjoyed by firms outside their geographical shopping area.  This puts additional pressure on retailers, which now must compete with a greater number of retail competitors who also carry a particular item, in addition to often competing directly with the product manufacturer.  As such, traditional methods for determining price must give way to new marketing strategies that are both more responsive and broader in outlook (Johnson and Scholes 2002, 494).  

One place providing a dramatic example of the changes in the 4 Ps compared to a traditional marketing mix is competition brought about by online auctions.  For example, a used car dealer previously factored in its location and expenditures for vehicles and advertising, in addition to the types of used vehicles typically available, in developing its marketing mix and marketing strategy.  Depending on its physical location, the dealer might have only a few or at most a few dozen direct competitors.  However, various auction sites such as Ebay and Autotrader not only allow searches for specific vehicles across broad geographic regions, but provide equal promotion for the individual selling a car, who often significantly under-prices a vehicle in comparison to the used car dealer.  Technology then affects each of the 4 Ps of the traditional marketing mix, making marketing as usual no longer efficient or effective.

Marketing management and leadership

The direct threat of technology to marketing in general requires a re-conceptualizing and changing of marketing practice from the management level in firms on down.  As McKenna (2002) notes, “the marketing organization is becoming increasingly fragmented,” and in the future model of marketing focused on customer access, “marketing will be distributed across the enterprise, becoming a shared responsibility” (McKenna 2002, 9, 17).  This means a shift in thinking from what “worked” in pre-technology business environments and a commitment to customer relationships and investment in market architecture.

Marketing executives “need to shift their thinking from trying to capture customers with entertaining commercials and junk e-mail to developing and distributing interactive, easy-to-use services using the new access media” (McKenna 2002, 34-35).  While the planning, building, and maintaining of such a technologically advanced customer response system is often expensive, “in the long run it will pay for itself by realizing cost efficiencies, by attracting new customers, and by engendering more customer loyalty” (McKenna 2002, 30).  In addition, companies that can effectively implement and use new interactive mediums such as a customer response system will do so through a more thorough understanding of the way in which these new technologies can influence and even change human behavior (McKenna 2002, 35).

From a leadership perspective, technological changes have increased the need for department cooperation and sharing of decisions across a firm.  Where once a marketing decision was primarily made by a marketing group, now “decision-making executives across the enterprise can monitor changes and develop relevant programs to respond to market conditions, something that does a lot to sustain customer presence” (McKenna 2002, 178).  For example, where the vice-president of marketing may have previously handled most marketing decisions independently, he or she must now work in concert with others throughout the corporate value chain to design and implement effective marketing strategy.  “Marketing today is a matrix of network of responsibilities shared by the CEO, CIO, director of R&D, vice-president of operations and logistics, vice-president of marketing, and many others” (McKenna 2002, 200).  These various players must communicate with each other, and have access to each other’s data and information.  As such, technology has replaced traditional marketing both in providing information and direction throughout the firm and in facilitating the inter-connectedness of all departments now involved in the diversified marketing function.

Customer relationship and communication

Nowhere is the change in marketing brought about by technology more evident than in customer relationship and communication.  The sustaining of customer relationships, to many the very heart of the marketing function, is rapidly disappearing into the technology network (McKenna 2002, 9).  Where once businesses told customers what they needed and how they could solve problems, now customers tell businesses what they want them to do (McKenna 2002, 27).  Instead of homogenized messages presented through the broadcast media to a broad and often undefined mass audience, customers now send “individualized messages back into the system with an expectation of response” (McKenna 2002, 28).  Technological innovations have allowed an interactive development of customer relationship, enabling continuous and direct communication between producers and customers (Rigby and Ledingham 2004, 121).  This “changes the center of marketing gravity because the customer has the power to initiate the contact and make purchase decisions based on a whole new set of market-induced preferences” (McKenna 2002, 27).
The consumer becomes a more powerful player in the relationship with technological change, with subsequent increased expectations on businesses contribution to the relationship and communication and greater demands.  This is particularly true of e-business transactions.  Online consumers will move quickly to a new site if they encounter difficultly or are unable to locate what they need.  Some online businesses have begun to use the term stickiness rather than brand loyalty or a similar term in reference to their marketing strategies; “they aim to create ‘sticky’ web sties that will help them retain customers” (McKenna 2002, 29).
The wise business recognizes that increased customer access broadens the company’s opportunities to listen to, learn from and about, and respond to their customers (McKenna 2002, 37).  Customer relationships are increasingly maintained through a CRM system.  This computer-based structure, when comprehensive, can “automate every aspect of a company's relationship with its customers, from all the activities needed to target customers through those for product development, sales, service, and retention”  (Rigby and Ledingham 2004, 121).  CRM systems are typically implemented segment by segment, gradually incorporating all enterprise functions relating in any way to customer relationship until a comprehensive structure is achieved (Rigby and Ledingham 2004, 121).  For example, a retailers might start with a ‘smart’ cash register combined with a customer loyalty card that enables them to track the purchases of customers in groups and individually.  This allows the retailer to ‘listen’ to their customers through their purchases and purchase frequency (McKenna 2002, 30).

Organizational culture and change agent

One major change in organizational culture brought on by technology is the fragmentation of marketing.  McKenna (2002) goes so far as to claim marketing “is becoming a technology” (10).  Consider, for example, many traditional marketing functions.  Forecasting, research, and competitive analysis are almost entirely computer-based in most companies today, and have been replaced by computer-simulations, intelligent search practices, and daily market monitoring, respectively.  Service is personalized through interactive software, with computer-based self-service replacing traditional service functions.  Pricing and distribution are managed through supplier networks and networked consortia, with computerized logistics and value-matched decision systems replacing traditional marketing functions in these areas (McKenna 2002, 10). 
Companies are required by the very scope of information and access needs to maintain adaptable information networks.  “Customers want information, price, and availability, while retailers and suppliers want current transaction data categorized by outlet or region” (McKenna 2002, 11).  It becomes imperative, therefore, that corporate culture and values embrace “the value created by new interactive media – allowing the consumer to consciously engage in the relationship process” (McKenna 2002, 37).  Of equal importance, the traditional marketing functions have not ceased to exist with the implementation of technology.  Rather, “marketing techniques for influencing people are being embedded into software and back-end support systems”  (McKenna 2002, 13).

Technology in most firms is introduced and implemented though some change agent, an individual or group that “effects strategic change in an organization” (Johnson and Scholes 2002, 549).  As people typically tend to “hold on to existing ways of doing things and existing beliefs about what makes sense,” leaders in business must strongly link the strategic and operational shifts in the recent marketplace to move marketing from its traditional paradigms to ones embedded in technology (Johnson and Scholes 2002, 534).  From a marketing standpoint, some have even argued that technology is itself acting as a change agent, forcing by its very presence and wide-spread use the changes in traditional marketing practices to ones embodying an access and mutual relationship approach (Lee and Grewal 2004, 169). 

 

Data protection

Privacy and security are two main concerns about the wider accessibility brought on by new technology.  As information flows easily back and forth between customer and producer in today’s marketplace, both customers and businesses are increasingly aware of an increased need for data protection.  McKenna (2002) argues, “assuring the integrity of a customer’s information may well become synonymous with insuring a brand’s integrity” (37).  Security and data protection therefore become an integral part of any firm’s market architecture, ideally allowing for the simplicity of use required by the customer while preventing others from accessing sensitive data.  Individual customers are increasingly employing Internet security software to safeguard the information stored on their personal computers, one often compromised area of data security.  From a business standpoint, the marketing architecture and CRM implemented must provide adequate security and assurance to maintain consumer trust (McKenna 2002, 37).  Neither gaps in implementation of software and data security, and human error which compromises security from time to time, however, are likely to move companies from their current trend towards access and the spread and computerization of marketing functions (Zablah, Bellenger and Johnston 2004, 287). 

 

Conclusion

In conclusion, new technologies require a fundamental shift in the marketing function of business.  As such, they can be either seen as a threat to marketing or an opportunity to fundamentally change and improve marketing practice.  Firms employing the former stance are likely to see a continued erosion of profitability, market share, and marketing effectiveness, while firms seeking ways to re-invent marketing through technology have significant opportunities for improved customer relationships, communication, and growth.  Technology is changing marketing; whether or not this constitutes a “threat” is grounded in the perspective of the marketer.

Bibliography

Anon 2004.  The harder hard sell.  Economist, Vol. 371, Issue 8381, pp. 69-71.
Johnson, G. and Scholes, K. 2002.  Exploring Corporate Strategy.  New York: Prentice Hall.
Johnson, J.T. and Busbin J.W. 2000.  The Evolution of Competitive Advantage:  Has Virtual Marketing Replaced Time-Based Competition?  CR, Vol. 10, Issue 2, pp. 153-159.
Keller, K.L. 1998.  Strategic Brand Management: Building, Measuring, and Managing Brand Equity.  New York: Prentice-Hall.
Lee, R.P. and Grewal, R. 2004.  Strategic Responses to New Technologies and Their Impact on Firm Performance.  Journal of Marketing, Vol. 68, October 2004, pp. 157–171.
McKenna, R.  2002.  Total Access:  Giving Customers What They Want in an Anytime, Anywhere World.  Boston, MA: Harvard Business School Press.   
Rigby, D.K. and Ledingham, D. 2004.  CRM Done Right.  Harvard Business Review, November 2004, pp. 118-122, 128-132.
Rust, R.T. and Oliver, R.W. 1994.  The Death of Advertising.  Journal of Advertising, Vol. 23, No. 4, December 1994, pp. 71-77.
Saxton, J. 2001.  The growth of the Internet, digital television and mobile telephony and the implications for not-for-profit marketing.  International Journal of Nonprofit and Voluntary Sector Marketing, Vol. 6, No. 4, pp. 347-363.
Weiner, M. 2005.  Marketing PR Revolution.  Communication World, January-February 2005, pp. 20-26.
Zablah, A.R., Bellenger, D.N. and Johnston, W.J. 2004.  Customer Relationship Management Implementation Gaps.  Journal of Personal Selling & Sales Management, Vol. 24, No. 4, Fall 2004, pp. 279–295.

 

Abstract

Apple’s portable music player, the iPod, is one of the most successful products of all time, with over 20 million units sold since its launch in 2001. (Coopers, 2006) However, despite this undeniable success, analysts are still divided over why the iPod was, and remains, so much more successful than similar, and often cheaper, offerings from its competitors. Both the branding and marketing underlying the product have been cited as reasons for its success, and thus this research will examine the relative effect of each. In order to achieve this, both primary and secondary research will be used, looking at the reasons for the growth of the iPod, the importance, and development, of the Apple brand name, and the main reasons customers buy an iPod. All these questions are being answered as they have arisen from the in depth literature review, which examines both the key factors underlying the success of the iPod, and the theory underlying the relative strength and usefulness of both branding and product innovation.


 

Introduction

    “How did iPod make a large fortune? By spending a small one. With an iPod and iTunes ad budget of over $200 million since 2001, Apple has outspent Sony, iRiver, and Creative combined by more than 20 times, according to TNS Media Intelligence. The TBWA/Chiat/Day--designed ad campaign has managed to turn the human silhouette, a cubic box, and even the colour white into symbols of Apple.” (Lustgarten, 2005)
    Given that Apple was, until a few years ago, viewed as a company that primarily made computers for very technologically minded people, it’s massively successful move into the personal music player market has amazed many branding analysts, and the “i” brand is now held up as a marketing paradigm, alongside eBay and Amazon. However, not all analysts are agreed on the origin of this success:
“Apple spends a fraction of what Sony plans to (but due to its) product innovation, Apple does not need to spend money telling us that the iPod is ‘like no other’, we can see it for ourselves. It advertises itself, with word of mouth and glowing press reviews reinforcing the brand's differentiation. Importantly, iPod innovation was not a one-hit wonder, but a series of ‘episodes’ Each has packed a punch that combines superior functionality, ease of use and aesthetic appeal. The first iPod offered a step-change in storage capacity, the iTunes Store made online music-buying much easier and iPod Photo has expanded the device's functionality, and so the list goes on.” (Taylor, 2005)
Other brands, too, are showing that product innovation, not advertising, is increasingly becoming the key to success. One would probably struggle to remember Samsung's branding, or any of its advertising, yet its success in selling plasma-/LCD-screen TVs, DVD players and mobile phones has come by offering innovative products that match or surpass Sony's at more affordable prices. Samsung's startling progress is shown by its ranking as the world's 20th most valuable global brand, just one place behind Sony, despite being much less recognised by consumers. Indeed, given the high level of price consciousness, and iPod usage, amongst students, I feel that the question of Apple’s brand image is highly relevant, and thus should be investigated further.
 

Literature review

The success of the iPod: Key factors

Cooper (2006) is an excellent starting point for looking at the factors underlying the success of the iPod player. The article comments that over 20 million units of iPod have been sold since its launch in 2001, and as a result the portable audio player has created an entire economy of accessories and imitators, single-handedly grabbing the music industry and pulling it into tomorrow. He also quotes Jeremy Horwitz, editor in chief of iLounge, a leading online iPod authority, who says marketers can take away some critical lessons from the iPod. His primary lesson is that timing and execution are everything, especially relevant as a lot of experts were initially sceptical of the iPod's success because it was late into the market. However, Apple timed the launch and marketing to coincide with the point where customers were beginning to be more accepting of the concept of an MP3 player, and also where the product was far superior to anything else on the market. (Apple Computers Inc, 2006)
   

Penenberg (2005) also addresses an important success factor: the threat of piracy facing the music and film industry in the digital era. Peer-to-peer (P2P) networks such as ‘BitTorrent’ and ‘eDonkey’, already used by tens of millions of people around the globe, are making it easy to share content, including large music and film files, by breaking up each giant file into tiny pieces. By the end of 2004, about 60 percent of Internet traffic was P2P activity, more than half of it video files, according to CacheLogic, a P2P company based in Cambridge, England. However, Apple is the one encouraging example here: Apple’s success with the iPod and iTunes online store shows that people will pay for copy-protected music if it is convenient and priced fairly. This is an example of a potential success factor outside of marketing and technology: rather than seeing the Internet as a threat, Apple has seen it as an opportunity, and made it as accessible to consumers as possible.

Another interesting find is that Samsung, the world's largest supplier for flash-memory chips, has specifically targeted Apple, in an attempt to turn it into its biggest customer for its NAND-type flash memory. According to a report by market research firm iSuppli, Apple's success with the flash-based iPod Shuffle has prompted South Korea's Samsung to offer Apple a deep discount and be willing to dedicate 40% of its flash-memory manufacturing capacity to seal the deal. (Hasseldahl, 2005) This is a good example of how success has bred success for Apple: the successful launch and marketing of the original iPod has made it easier for the company to launch more models based on the same technology and branding.
   

A final useful article focuses on the impact of the iPod’s popularity on accessories providers, something that has been facilitated by Apple’s willingness to let third parties develop accessories Accessories providers have flooded consumers with over 400 accessories for portable music players, and in fact, the accessories market is actually outpacing the market for players, with the number of available add-ons doubling since 2004. (Kohler, 2005) And even more important for retailers, accessories are pulling in more revenue with even more attractive margins. It is no secret consumer electronics are greedy for gadgets that offer more and more functionality and style in smaller and smaller packages. According to Kohler, the iPod's success was a combination of excellent product design, smart marketing and great timing.

At launch, the product itself boasted an unprecedented amount of memory, a simple interface and an elegant design; and just as important, iTunes was launched as a vast source for legal, accessible digital music content. Add to this plentiful and compelling advertising, and obviously, the precedent set here has more to it than just functionality. (Kohler, 2005) The iPod has style: it makes a statement that people are willing to pay for. Thanks to slick design, smart well-designed marketing campaigns and plenty of advertising, consumers are lusting after for iPod. As such, accessories to this market are not just about functionality: it is about self-expression, with millions of dollars being spent on iPod cosmetic upgrades. The key factor here is Apple’s willingness to allow other manufacturers to make the accessories, thus adding extra innovation and strengthening the brand, whereas Sony keeps a monopoly on accessories for all its products.

Attracting Customers: Branding versus Product

Kohli, Harich and Leuthesser (2005) have produced one of the most recent pieces in this area, with a piece of research focused on branding strategies for new products. They found that meaningful brand names: those that suggest a positive attribute or benefit of the product, are typically evaluated more favourably on overall liking and are easier to recall than non-meaningful brand names. The study reported here is the first such investigation of evaluation of brand names over repeated exposure, and of particular interest are differences in the extent to which meaningful versus non-meaningful brand names benefit from repeated exposure. Results of the study show that meaningful brand names continue to be evaluated more favourably than non-meaningful names, even after repeated exposure, but those evaluations of non-meaningful brand names may improve at a greater rate than those for meaningful brand names. This is of particular relevance to Apple, as its brand name did not have a traditional link to music players, so its large expenditure and repeated exposure could have helped counter this.
   

In a similar vein, Klink and Smith (2001) studied the findings of some prior research, which suggested that a brand's extendibility is constrained by the degree of perceived fit between the brand and extension product categories. However, the authors cite many examples of brands that have been extended successfully into ‘perceptually distant’ domains. Drawing on theories of consumer information processing and product adoption, the authors identify three background traits of prior work that may help explain the discrepancy between prior research and marketplace observation: limited extension information, failure to account for consumers' new product adoption tendencies, i.e. earlier versus later; and single exposure to proposed extensions. In this study, the authors find that the effects of fit disappear when attribute information is added to extension stimuli and are applicable only for later product adopters. The authors also find that perceived fit increases with greater exposure to an extension, as was the case with Apple’s branding of the iPod, and the subsequent extensions of the ‘i’ brand into the market leader it is today.

A useful conceptual model for looking at product launches is provded by Guiltinan (1999), who looked at a typical new product development process and the role of the launch stage in maximizing the chances of profitably achieving acceptance in the target market. He claimed that a launch plan can include strategic decisions, such as relative innovativeness, mass versus niche targeting, and lead versus follow, as well as tactical decisions, including the types of communication and distribution activities to emphasize, introductory pricing, branding, and when to announce new items and delete old ones. Given that other literature offers limited decision-making guidance to managers on how to prioritize and integrate the various strategic and tactical options, Guiltinan’s work is quite unique and presents a conceptual framework that suggests that the strategic and tactical challenges posed in various product launch situations depend in large measure on the specific type of buying behaviour to be influenced.

Depending on the degree of product innovativeness, managers may establish one of three types of desired demand outcomes: trial and repurchase, customer migration, or innovation adoption and diffusion, and the degree to which the desired demand outcome is realized is shown to be dependent on buyers’ perceptions of the new product's relative advantage and of its compatibility with buyers’ values and experiences, which was particularly important for the iPod, as many customers had no idea what to expect. Guiltinan (1999) claims that perceptions of the product on these characteristics are initially influenced by the launch strategy and, given an understanding of these perceptions, managers can then select launch tactics designed to clarify or leverage relative advantages or to demonstrate or enhance compatibility to the target market, in Apple’s case, by developing iTunes, and numerous accessories The framework also demonstrates how the linkages among launch strategy, launch tactics, and the demand outcomes are impacted by the product-market environment, the technological dynamics of the industry, and the firm's resources and capabilities.
 

Research Questions

1.    Has the iPod’s success been driven more by its brand strength, or by the underlying product?

This question is driven by the disagreement between Lustgarten (2005) and Taylor (2005) on whether business success is driven by the quality of the branding, or the underlying product and innovation. This question is of critical importance in assessing the importance of Apple's brand image in attracting customers to the iPod as, given the undeniable innovativeness and success of the iPod; it determines whether this success is more due to the branding or the innovation.

2.    To what degree has the Apple name influenced the success of the iPod, and vice versa?

This question arises due to the work of Kohli, Harich and Leuthesser (2005), who suggested that a brand name with no obvious connections to the product may suffer, and also Klink and Smith (2001) who claimed that prolonged exposure to a brand extension, particularly a successful one, may cause customer perceptions of the brand to shift. In the case of Apple, it has lead to consumers viewing the brand as being associated less with computers, and much more with music and music players, despite computer sales still accounting for the majority of Apple’s business (Apple Computer Inc., 2005)

3.    What are most customers’ primary motivations for buying an iPod product or accessory?

This question has perhaps the greatest potential of any of the three to show to what extent Apple's brand image attracts customers to the iPod, as it can potentially explain the average iPod customer’s buyer behaviour patterns, according to Guiltinan (1999). For example, if the research resulting from this question leads us to conclude that a customer’s primary motivation in buying the iPod is as a fashion accessory, then we can conclude that Apple’s brand image, and the image it has built around the iPod, has successfully attracted customers. However if, as I suspect and as a large amount of the research claims, customers choose the iPod due to its technological innovativeness, then this may show that Apple’s brand image has not been quite such a key factor in the iPod’s success.

 

Research Design

    It is important to answer the first question is such a way that it is clearly mutually exclusive from the third question, (Bryman and Bell, 2003) as there is potential for confusion between the development of the iPod as a product line and a brand in itself, as opposed to individual customer reasons for buying the iPod. The first question focuses more on Apple’s approach to marketing the iPod, including what they found to be the most successful marketing methods, using the ‘5P’ framework of marketing to define the potential dimensions that Apple measured, and looked to exploit.
Answering the first question will largely be a case of using deductive reasoning, and looking closely at other research on similar topics. The most useful research strategy for this investigation would be to conduct a more in depth review of the literature around the iPod, including attempting to gain access to Apple’s original customer research, branding strategy and design brief at the time of product launch. Equally useful would be to gain access to Apple executives, or to examine previous interviews conducted with them, to help determine whether, and if so how, their marketing strategy for the iPod changed over time.
The second question is a standalone question designed to measure how the iPod brand developed over time, emerging from the traditional image of Apple Computers, into its own distinctive identity, and how it has helped the Apple brand develop over time. As such, it is important to identify where the Apple brand was positioned when the iPod was first launch, and thus whether it was positioned to support the iPod, or whether, conceptually, it should have hindered the launch. Within this, it is important to bear in mind the launches of the ‘iMac’ and ‘iBook’, which were arguably the start of the ‘i’ brand line, and whether these brought Apple into a more favourable light with consumers.
In order to answer this question, it will be necessary to examine customer research data from the time of the launch, and previous to it, in order to determine customer perceptions of Apple as a company at the time. It could also be useful to look at Apple’s overall branding and marketing strategy at this time, to see if the company felt it needed to alter its brand image in order to ensure success. This question can offer great insights into the influence of the Apple brand on the iPod’s success, as it can show whether the brand was in a position to support the iPod at time of launch and, if not, how it developed the capability to support the iPod over time.
The third and final question is designed to be answered by direct assessment of consumer behaviours, as it examines buyer behaviour directly. It has the greatest potential to uncover whether it is branding and image, or product and technology, that attract customers to the iPod, and to the accessories, but only if it can be shown to produce some statistically significant data.
As such, this question will need to be answered using detailed primary research, through iPod user surveys, directed both at students, who are traditionally more price conscious, children, whose iPods may well have been bought by their parents, and professionals, who have disposable income, but many competing spending priorities. It is possible that this question will reveal different answers for each group, thus it is important that a statistically large sample is taken from each group, to ensure that meaningful conclusions can be drawn.
 

Conclusions

    Whilst the iPod’s success is undisputed, there is still disagreement over the root cause of this success. This research hopes to cast new light on the key factors in the success of the iPod, and thus hopefully contribute to the understanding of what makes a successful product in general. The main hypothesis is that the success of the iPod can be primarily attributable to either Apple and the ‘i’ labels brand strength, or the fact that the underlying product filled a key niche in the market at the correct time. However, it is likely that there will be no clear cut answer to this research, and that it will be shown that different demographic groups have different reasons for choosing the iPod. Nevertheless, clear cut conclusions should be obtained for some demographic groups, and the research will likely make a contribution to the understanding of the relationship between branding and product innovation, and how the two can combine to create a successful product, with a strong brand.
 

References:

1.    Apple Computer Inc. (Accessed 16th February 2006) www.apple.com
2.    Bryman, A. and Bell, E. (2003) Business research methods. Oxford: Oxford. University
3.    Cooper, S. (2006) Age of the iPod. Entrepreneur, Vol. 34, Issue 1, p. 17.
4.    Guiltinan, J. P. (1999) Launch Strategy, Launch Tactics, and Demand Outcomes. Journal of Product Innovation Management; Vol. 16, Issue 6, p. 509.
5.    Hasseldahl, A. (26th August 2005) Business Week Online.
6.    Klink, R. R. and Smith, D. C. (2001) Threats to the External Validity of Brand Extension Research. Journal of Marketing Research; Vol. 38, Issue 3, p. 326.
7.    Kohler, M. Z. (2005) Booming iPod Biz Broadens Accessories Opportunities. Twice: This Week in Consumer Electronics; Vol. 20, Issue 15, p. 44.
8.    Kohli, C. S. Harich, K. R. and Leuthesser, L. (2005) Creating brand identity: a study of evaluation of new brand names. Journal of Business Research; Vol. 58, Issue 11, p. 1506.
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