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1.0 Executive Summary

The report examines and analyses a portfolio of advertisements from Starbucks. The main segmentation criteria used by Starbucks is psychographic segmentation, targeting customers based on their lifestyle and attitudes. Starbucks aims to create loyal customers and reduce brand switching by offering a wide variety of products and special coffees regularly. Using a combined push-pull strategy, the company mostly relies on advertising, promotions, personal selling, Internal marketing, and public relations, all making good use of AIDCA formula. An important part of this strategy is the (basically) exclusive distribution channel used in the UK and the premium pricing strategy supported by augmented products such as after-sales service. Overall, think these adverts serve the company well by communicating why Starbucks is unique.

2.0 Company Description

Starbucks was chosen because it is one of the most admired and successful coffee companies in the world with more than 6,000 self-operated and licensed stores in 38 countries outside USA (Starbucks Coffee Company, 2008). It serves more than 30 different brands of blend coffee as a roaster and major retailer, as well as iced beverages and other related products. In the UK, Starbucks is the leading operator of branded coffee shops based on turnover (Key Note, 2009). Starbucks primarily competes with other coffee shops, which include outlets that are principally involved in selling coffee and other hot and cold drinks, usually along with some snack foods, such as muffins and cakes, such as Costa Coffee and Caffe Nero. Of the approximately 10,000 coffee shops in total in the UK and the Republic of Ireland, the major branded chains account for around 30% of all coffee-shop outlets (Key Note, 2009). In terms of turnover, Key Note (2009) estimates that the total turnover of all coffee shops in the UK and the Republic of Ireland was ?4bn in 2008, with branded coffee shops gaining about 35% of total coffee-shop revenues (about ?1.4bn in 2008). Starbucks also indirectly competes with retailers that offer coffee-shop facilities but are engaged mainly in selling other items, such as department and bookshops, as well as retailers that derive their sales mainly from the sale of food, such as Subway and McDonalds.

3.0 Overview of the Adverts in the Portfolio

Seventeen adverts are included in the portfolio in the Appendix. Ten of these are print adverts, while two are from the company’s US website, two are pictures taken of promotional material at Starbucks shops, one is a screen grab of a television ad available on Youtube, and two screen grabs from Starbucks UK’s Facebook page. Various creative approaches are taken, but mostly you will notice a minimalist approach taken to how the adverts are created, especially in the print adverts and there is generally one clear message in each ad. However, the adverts in the Appendix have been categorised based on the market segment that they predominantly target: serious coffee drinkers, socially conscious coffee drinkers, and non-coffee drinkers, with a fourth category added to reflect the fact that food items are also an important revenue stream for the company.

4.0 Segmentation, Targeting, and Positioning

The main segmentation criteria used by Starbucks is psychographic segmentation, targeting customers based on their lifestyle and attitudes about ‘fairtrade’ food (Solomon et al., 2002). The core consumer for Starbucks is the ‘serious coffee drinker’ (upscale market), which it tries to reach with adverts and other promotional material that reflect the quality of the coffee that it serves, as well as displaying its dedication to providing its customers with the best coffee (Pictures 1, 2, 4). The third ad in the first series is a screen grab from the US website, showing a range of special coffee blends that the customer can try at the store each week for eight weeks. The final picture in this series shows in-store promotion for the company’s new ‘Via’ brand of coffee that customers can buy and brew at home, again targeted at those who want a good coffee experience.

With the increasing emphasis on corporate social responsibility, Starbucks’ is also seeking to develop a market of consumer that are interested in their products being socially conscious. The adverts in this series (Pictures 6-10) talk directly to those consumers who are interested in changing the world, one cup of coffee at a time. So these adverts are still aimed at coffee drinkers, but these adverts help the company to project an socially responsible image – flavourful, lively, multifaceted can define the company as much as the (Starbucks) RED coffee (Picture 9).

Above everything, Starbucks is a lifestyle brand and the company aims to attract a wider demographic of customers and so offers several products for the non-coffee drinker (or the less hardcore coffee drinker) who still wants to be a part of Starbucks’ social environment. The third set of adverts (Pictures 11-15) is aimed at these people, with the first three adverts being for the Frappachino blended beverages, also known as the Summer Drinks flavours, which serve to help the company to reposition itself in developing the non-coffee iced-beverage market. The third ad in the series is especially powerful in getting across the idea that Starbucks is not only about coffee. The final series of adverts (Pictures 16-17) also fits into this category somewhat, because (while the food is accompanied by coffee in both promotions), these adverts also show that there are other reasons to indulge in Starbucks other than coffee.
This STP strategy seems effective, since the serious coffee drinkers, socially conscious coffee drinkers, and non-coffee drinkers segments are distinct segments, have common needs, respond to market stimulus, and can be reached by marketing (Jobber and Fahy, 2006). The segmentation and targeting used by Starbucks allow the company to position itself as a (socially conscious) high price-high value brand.

5.0 Consumer Buyer Behaviour

Consumer decide on which brand they want to choose based on either the functional benefits, the emotional benefits, or both (Jobber and Fahy, 2006). The function or performance benefits of the brand are important to consumers, but they also choose particular brands because it can be used to express their personality, social status, or affiliation (symbolic purposes) or to fulfil their internal psychological needs, such as the need for change or newness (emotional purposes) (Solomon et al., 2002). Some researchers present purchasing as a problem and is often presented as the buyer decision-making model: problem recognition, information search, evaluation of alternatives, purchase, post-purchase evaluation (Jobber and Fahy, 2006). For high involvement products, such as high priced products/services (economic risk) and products/services visible to others (psychological and social risk), the consumer often goes through an extended decision-making process that includes all these steps. However, with the prices ranging from ?2 for a basic espresso to over ?4 for hot lattes, Starbucks’ prices are among the highest in the UK, but in the general scheme of things coffee is a low-involvement product. This means that consumer are often engaged in a limited decision making process, or they may see coffee buying as an impulse purchase or a routine purchase. Additionally, if consumers are loyal to a specific brand, they would tend to buy coffee without much information search or evaluation of alternatives (Jobber and Fahy, 2006).

Starbucks is trying to get consumers to get more involved in the product in several ways. First, Starbucks is marketed as a status item (Pictures 11-15) and so it is more high involvement (has more economic, psychological, and social risk) than unbranded coffee or cheaper coffee from Subway or McDonalds. Second, the company is using various campaigns, such as ‘Bold Coffee’ campaign (Pictures 3 and 7) and the ‘Via’ taste challenge recently conducted in the UK (Picture 5) to get consumers to come into the store continually and try its products. This is a good use of buyer behaviour theory, which predicts that customers may switch brands just to try something new (Jobber and Fahy, 2006). By providing customers with a new flavour to try each week, Starbucks actively manages customers’ natural inclination to try new things. And by emphasising its socially responsible behaviour, Starbucks is also providing consumers with more benefits on which to evaluate its products (Solomon et al., 2002). Starbucks is also making good use of consumer buyer behaviour theory by building a strong brand to which customers are loyal, meaning that these customers do not even consider other brands when they are going for coffee, they will immediately choose Starbucks because it is the coffee for anyone who really loves coffee (Pictures 1-5).

These adverts are generally aimed at all the stages of the buyer decision-making process. For example, Pictures 14 and 15 are adverts that are aimed at the problem recognition stage as these adverts lets the consumer know that these products are available and seek to arouse their motivation to visit Starbucks. Most of the adverts help with information search because they provide information on the functional and emotional benefits that the product can provide. This is the same with evaluation of alternatives, because the aim of all these adverts is to keep Starbucks within the consumer’s evoked set. This is helped by reinforcing the prestigious brand name and providing consumers with a range of tastes and aromas. Pictures 14 and 17 are two of the adverts that are asking consumer for action, to purchase something. Finally, Pictures 6-10 and 12 help with post-purchase evaluation, as it reinforces to the consumer the benefits of paying ?4-5 for a cup of Starbucks coffee and thus reduces post-purchase dissonance (Jobber and Fahy, 2006).

6.0 Promotion

The most common promotional mix elements used by Starbucks are advertising, Internet marketing (Picture 7), personal selling, public relations, and sales promotion. In terms of advertising, Starbucks spend a small percentage of its revenue on advertising (Subhadra, 2003), relying to a greater extent on its image advertising, such as movie and television placement, in order to promote the success of the business (Kembell et al., 2002). When it does advertise, Starbucks uses print media a lot (as evidenced by the majority of adverts in the sample), as the company’s target market tends to be educated people who do more reading than average (Kembell et al., 2002).

In terms of Internet marketing, Pictures 7, 10, and 17 show that Starbucks spends a lot of its promotion time and money on interacting with customers. Its Internet promotions are often done in a manner that lets customers interact with the product or leave comments, even if they are not directly able to interact with Starbucks staff. The company engages in personal selling through their passionate baristas in the store. As indicated in Picture 4, the focus is on customer service by providing the perfect cup of coffee to customers every time. In terms of public relations, Pictures 7 shows one aspect of this, as the company is often engaged in charitable causes and highlights this through its promotional material. Finally, there is also sales promotion, as highlighted in Picture 5, which takes the form of samples.

In terms of promotional strategy, the company uses a push strategy, which involves the active engagement of customers using direct selling channels and emphasising promotion and advertising (Jobber and Fahy, 2006). At the same time, there are elements of a pull strategy being used, as the company has developed a highly visible brand to encourage customers to seek out its products.

7.0 Communication strategy

The message that Starbucks is sending in each advert is very clear. For example, the adverts represented in Pictures 1, 2, and 4 are very clearly expressing the quality of the coffee that consumers should expect to get when they visit Starbucks. The same can be said about the adverts in Pictures 12-16, which clearly show that Starbucks is not only for coffee and also that the high quality that is offered to coffee drinkers are also offered non-coffee drinkers. Similarly, the adverts in Pictures 6-10 clearly express the company’s social conscience.

The adverts effectively communicate the company’s brand values by making good use of the AIDCA formula: attention, interest, desire, conviction, and action (Jobber and FAhy, 2006). The clean palate and the bold fonts used easily catch people’s attention and can generally be read from afar. Similarly, the way the products or brand is presented tend to draw interest. Other adverts present testimonials (Pictures 10 and 17), while several ask for action (such as Pictures 3, 5, and 14).

8.0 Pricing

There are different pricing strategies available to firms and each will be optimal in different situations (Jobber and Fahy, 2006). One strategy is premium pricing, which is also called a high price-high quality strategy, and this allows the firm to charge higher prices because there is something unique about the product. Exclusivity is partially derived from price because more expensive products exclude some consumers who might like to buy them (Solomon et al., 2002). It is therefore expected that the high status products will to cost more than the mundane brand. In line with this, Starbucks’ adverts do not contain pricing information because product pricing is premium, which is due to the company’s commitment to quality products and a high level of customer service. Indeed, the only time price is mentioned in the sample of adverts is when the company is depicting low prices as suspicious (Picture 6) and how higher prices can change the lives of others (Picture 7). In this way, the pricing strategy is again used to reinforce the brand as being socially responsible and helping to justify the price (and reduce dissonance). The premium pricing strategy has to be carried out throughout the life of the product (Solomon et al., 2002). For example, using deep discounts and other price promotions are generally not the best tactics when selling status goods. Therefore, while Starbucks will use promotions where it gives customers things for free for trial (Picture 5), it does not engage in price promotions to any extent (Kembell et al., 2002).

9.0 Product

The marketer has a lot of control over the product offered. The core benefit that Starbucks offers is providing customers with an opportunity to take a break from their busy lives in a relaxing atmosphere. The tangible products that are offered include coffee and tea beverages, whole bean and ground coffee, food items, and coffee-related equipment. In terms of the augmented product, Starbucks offers after-sales service in the form of wireless connections and atmosphere in store, as well as providing customers with some education about coffee and coffee making and an interactive website.

As noted, Starbucks is as much about the experience of drinking coffee (or some other drink) as it is about the coffee or the tea itself. This indicates that Starbucks’ brand is about its product, its people, as well as the in-store experience (Strehle and Cruickshank, 2004). The brand is communicated very effectively by the adverts, especially the repeated brand logo which uses complex graphics to help in product identification. The elements of the brand communicated through the adverts in the portfolio include: high quality coffee, rich taste, variety of choices of complementary food and beverage, warm, friendly, and homelike store atmosphere, and socially responsible/caring.

10.0 Place

Exclusivity is partially derived from whether a good is available. By limiting the number and type of distribution outlets in which consumers are able to purchase the product, marketers restricts access and thus protect the perceived exclusivity of the product (Solomon et al., 2002). To main this exclusivity, the main distribution strategy for Starbucks’ is sales through stores, which is explicitly stated in Pictures 10 and 14 although most of the adverts bring across the message that Starbucks is a coffeehouse. The company is now embarking on the sale of ‘Via’ ready brew coffee, to complement its sales of coffee beans, all of which are available directly from the store only. The adverts are definitely trying to pull customers into the store to try new coffee flavours and new products (Thomson and Strickland, 1999). Having products available only through Starbucks is congruent with the image the company wants to portray.

11.0 Critique and Recommendations

The brief exposition presented shows that Starbucks uses a variety of elements within its adverts, but most importantly, these adverts reinforce the company’s position as a (socially conscious) premium quality coffeehouse. These simple adverts that focus on quality and experience seem to serve Starbucks well by telling the story of what makes the company special; highlighting what customers can expect to get from Starbucks that they cannot get elsewhere. The main areas in which others compete with Starbucks is on price, and so the adverts are reiterating that price is not always the most important thing by communicating the company’s unique position and value to its to customers.

Starbucks’ marketing strategy continues to be one of its main strengths as it uses traditional advertising less than many others, instead relying to a greater extent on its image advertising (Kembell et al., 2002). This has made the company image on its key areas of success and as consumers have become more socially responsible, Starbucks has followed that trend in incorporated that aspect into their image as well. Going into the future, it is important that Starbucks positions its brand as an experience so as to entice new customers.

Bibliography

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Jobber, D. and Fahy, J. (2006). Foundations of Marketing. Berkshire: McGraw-Hill.

Key Note (2009). Coffee & Sandwich Shops 2009. Key Note Market Reports.

Solomon, M., Bamossy, G., and Askegaard, S. (2002). Consumer Behaviour: A European Perspective. Harlow, Essex: Pearson Education Ltd.

Starbucks Coffee Company (2008). Company Fact Sheet 2008. Available online at http://www.starbucks.com/assets/company-factsheet.pdf [accessed 24 March 2010].

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Thomson, A. and Strickland, A. (1999). Strategic Management: Concepts and Cases. McGraw-Hill.

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London’s Ships of Historical Interest Partnership – Marketing Plan

Executive Summary

London’s Ships Partnership is not simply a tourist attraction, but a serviceable brand. Counting Maritime Vessels including the historic 1577 Golden Hinde and the World War II cruiser HMS Belfast, they provide an excellent source of national interest in a nation of naval history and heritage. Despite a reduction in interest and decrease in the amount of tourists these vessels attract, it still remains a worthwhile business proposition with the penetration of international markets. With careful, focused and well-executed marketing, the London Ships has a very real opportunity to attract large numbers of tourists who, every year, visit the UK and its capital city for its unique and undisputed history.

Objectives

The historic London Ships are themselves a valuable and worthwhile source of information that has seen its purpose unrecognised over recent years perhaps by younger generations not reminded of Britain’s rich sea trade and heritage. The main business objective therefore should revolve around the awareness of the London Ships as a brand.One of the four dimensions of brand equity (Aaker, 2000) is brand awareness and is seen as the platform for creating a successful global brand. Focusing marketing efforts towards increasing brand awareness is therefore the most efficient method to achieve the company’s long-term objectives. What follows is a summary of the company’s primary objectives;

a—? Increase the awareness of the work of London Ships Partnership within the tourism market, both domestically and internationally.

a—? Establish the London Ships Partnership as a brand in key international tourism markets.

a—? Increase awareness amongst the tourism market of each member vessel and their historical importance.

An analysis of the marketing environment in the international tourism market is needed to establish these objectives in a measurable approach so as to execute a clear and cohesive marketing strategy.

Marketing Environment

Micro-environment

It is important to analysis the micro environment before establishing a strategy or plan. Detailed knowledge of your company and the surrounding issues help with the cohesion of a strategy, and utilizing strengths whilst being aware of threats will mean you are more likely to achieve objectives at a lower risk. Firstly, we shall examination the internals of LSP with a SWOT analysis, as follows;

Strengths

a—? Long naval history and tradition mean greater pull for tourists.
a—? Weak UK pound; more attractive destination for Europeans.
a—? London Ships Partnership already an established brand.

Weaknesses

a—? Low awareness of LSP amongst younger generation. a—? Recession fears may still stave off spending.

Opportunities

a—? Capital city location; large catchment of tourists. a—? Diverse range of ships. a—? Opportunity to improve website facility.

Threats

a—? Rival tourist ‘hotspots’ means increased competition.

By focusing on strengths, LSP therefore has the opportunity to become an established brand. LSP already have the elements required to form a strong brand such as Memorability, Meaningfulness and Likeability (Keller, 2003). It is a source of rich history, part of Britain’s naval heritage and also covers large periods of history, offering a range of vessels meaning it has strong and durable characteristics that are easily transferable to certain international markets. An example of this would be the inclusion of the oldest vessel on show, a replica of The Golden Hinde, originally built in 1577, highlighting Britain’s rich history.
The weakening of the Sterling against the Euro means that the UK may become a more attractive destination for visitation, especially for tourists who fall within the Euro Zone who will receive more their money. As a result, LSP could benefit from a possible influx of tourists during the winter season for weekend breaks, or longer stays during the summer of 2011.
One counter argument that could be made is that global recession fears may still halter peoples spending of disposable income, resulting in the lessening of holidaying. Although this may increase domestic tourism, it doesn’t help achieve the objective of increasing awareness in untapped international markets.
A possible lucrative opportunity of LSP to increase awareness is the improving of its website. Although already accessible internationally, amendments could be made to the language settings facility, meaning that a language barrier isn’t an issue when customers may research LSP.
This SWOT analysis has provided us with an overview of the internal factors of LSP, but an analysis of the macro-environment will be necessary before deciding upon the best marketing strategy.

Macro-environment

The macro-environment, or external factors, that affect LSP are ever-more critical in a globalised business world. Considering LSP’s primary objective of increasing awareness in international markets, these uncontrollable issues have to be considered before launching a marketing strategy into foreign markets. What follows is a PEST analysis; a summary of external issues and highlights potential problems;

Launching a campaign in overseas countries/markets;

Political

a—? What is the tax system in this particular county? Is there laws or regulations that need to be addressed? a—? Does this country have editorial or advertising standards that you must adhere to? a—? Is this country politically stable?

Economic

a—? What is the GDP of this country? Are their long-term economic prospects stable? a—? What are the inflation or interest rates of this country? a—? How has this country recovered from the economic crisis?

Socio-cultural

a—? Is language a potential barrier for marketing communications? a—? Are there any issues of sensitivity regarding its history with Britain or the ships themselves? a—? Is there a large enough middle-class regarding levels of disposable income?

Technological

a—? How much of the population of this country have access to the internet? a—? What advertising method would be the most efficient, regarding media channels?

Economic issues are likely to be central to the decision making process for a marketing strategy regarding the uncertainty of global markets since the global recession of 2008 took hold of most markets in the west and markets that rely heavily on financial services. The current GDP figures and interest rates of each country will correspond to the amount of disposable income of the mass populous. The tourism market especially relies on economic ‘booms’ when people, and especially the middle classes, have disposable income which is intended to be spent on a non-essential holiday; how have people responded to the recession concerning their spending habits? Social factors may also have a significant impact on holiday makers desire to see maritime vessels; does the country have its own shipping history, therefore diminishing the desire to see such ships in London? This may rule out European countries such as France, Portugal and Spain as a potential target market.

Market Identification

Rather than offering a standard marketing strategy to everyone, it is much more efficient and economical to target a specific target market. This way, all marketing efforts are consolidated into one, clear and cohesive strategy that penetrates the markets chosen and increases the likelihood of successfully completing objectives. In the previous section, we have underlined the issues and implications of launching a marketing strategy on a global scale. Before arriving at a decision, we can segment the market further, deciding upon the most likely demographic to benefit from a marketing strategy.

Our target audience must have a high socio-economic status as a high level of disposable income is required to be able to visit the UK, which is a particularly expensive destination to visit and holiday in. This therefore would not include places of low GDP or markets that are still in recession or slow to emerge to a full economic recovery, such as Greece or Spain. Also, as the Euro currency is currently struggling, it may not benefit LSP to target certain economies within the Euro Zone. As we have established previously, perhaps it would be fair to also not include France or Portugal as they already have their own rich naval history and would therefore already likely be aware of the London Ships brand. Another reason may be lack of demand to see the ships themselves, with these nations having similar tourist attractions themselves, proving that any marketing efforts would be uneconomical. It would be more efficient to focus these efforts towards a market that may be unfamiliar with the ships and its history, thus creating demand which in turn would achieve a longer-term business objective of future sales targets.

Age can be a deciding factor when selecting the right demographic to fit a successful marketing campaign although it was stated in the brief that through workshops and events involving The Golden Hinde, LSP reached over 20,000 children. Families are therefore a possible target, however a difference needs to be distinguished between target audience and target market. If we consider that children up to the age of 16 can be part of the target audience, we should deliver the marketing strategy and message to the parents, who make up the target market. However, we should acknowledge children within the message we try to deliver, to make our campaign more inclusive.
Emerging overseas markets, in particular China, would offer us a huge catchment of middle-class, wealthy couples and families with high disposable income. As China becomes the second largest economy in the world (The Guardian, 16.8.2010) and a booming new free market economy, millions more are moving up to the middle-class and are becoming ever wealthier. In this free market economy, a new China results in wealthy Chinese travelling far and giving other countries a huge boost in tourism. An example of this being an increase of 80% of Chinese tourists visiting its neighbouring country and economic rival, Japan (The Guardian, 16.8.2010). If we also factor in the likelihood of Chinese tourists not already aware of Britain’s naval heritage, and acknowledging China’s huge population, it therefore leaves a large target market that will ultimately lead to an increase in demand. For clarity, here are the findings for Market Identification;

a—? The target demographic for London Ships Partnership are wealthy, middle-class and aged between 30 – 65 who possibly have children, one or more. The chosen market is China.

a—? The target audience includes children up to the age of 16.

Marketing Objectives

We have already established the overall business objectives for London Ships Partnership, but we need to set the marketing objectives. These are required to be quantifiable, clear and within a timeframe (Jobber, 2004). If we consider our target market and audience identified and allowing for any possible budget or labour restraints, we can come to a marketing objective that is realistic, efficient and economical. As follows;

a—? To increase brand awareness amongst our target market by 10% between 30th September 2010 and 30th September 2011.

A modest figure of a 10% increase in awareness is required due to the large numbers that fall into the target demographic. For purposes of clarity, stating the dates in which to complete the objectives helps in the execution and cohesion of the marketing strategy and of all departments of the organisation. Selecting the correct marketing strategy and marketing mix is essential to carry through the stated objective, of which we will discuss in the following section.

Marketing Strategy

Choosing the correct marketing mix is essential and all components must complement each other and be focused upon a single goal. Presented here is each component of the marketing mix and what methods will be selected;

Product

The product in this case is the defining characteristic of this particular brand. Emphasis on London Ships Partnerships brand equity, in particular brand image should be carried through the promotion of the marketing mix to successfully create a strong reputation. The ships themselves are part of Britain’s rich history which penetrates deep into the culture of naval heritage; therefore these characteristics should be part of the message for the marketing campaign. Highlighting brand image creates a strong overall brand and is a powerful tool in changing customer’s attitudes and buying habits.
Considering this, the strategy to employ is the Current Product / New Market. In this case, we are entering a fresh market in an unfamiliar country, but with our service in its current form. This clear direction should help implement and thrust the strategy forward.

Price

The product here is essentially a service and what you receive as part of this service is being part of history; seeing and experiencing hundreds of years of naval heritage. The product, or service, is free. These two elements should be combined to get the correct message across to the target market and in creating a unique selling point. Exclaiming that you have a rich and rewarding experience for no cost shouldn’t be ignored, instead it should be part of the marketing strategy.

Place

Being based in London provides an excellent backdrop for giving the customer an enjoyable experience. London, itself being one of the most famous cities in the world, and having a rich history itself, means that it lends itself well and is consistent with the message that we are trying to get across; history, tradition and heritage. Place as part of the marketing mix, is essentially intangible, which means that it is often uncontrollable as to the experience the customer has. We can therefore, bring another ‘P’ into the mix; People. Delivering the message that LSP has excellent customer service that complements an already enjoyable experience, results in a stronger and more effective message.

Promotion

In purely marketing terms, Promotion is often the most important part of the marketing mix, and is always the last element to execute. To meet our marketing objective we are essentially required to deliver a message to our target market. The strategy for promotion in the case of LSP is Pull Strategy; we are creating awareness followed by demand for the product. Through integrated marketing communications we are able to deliver a message that is consistent and efficient. The marketing communications mix is as follows;

a—? Personal Selling a—? Sales Promotion a—? Public Relations a—? Direct Marketing a—? Advertising

Using these ‘tools’ as an integrated mix we can deliver a single consistent message. Due to budgetary reasons (which we will discuss in further detail) it may be more economical to concentrate on delivering this message through advertising. Advertising is non-personal and is used for mass consumption, usually through mass media. Our primary marketing objective is to increase awareness and mass advertising would be the most efficient way of doing this, and can often be the cheapest option as the message is being delivered to the maximum people in the target market.

Action Plan

Goals Department Timescale
Develop task frame for All 7 Days
marketing campaign

Set budget for marketing Financial 14 Days campaign

Select media channels Marketing 14 Days for promotion and advertising.

Launch marketing Marketing 9 Days campaign

Marketing Budget

An overview of the likely spending on the promotional tools used to implement the marketing strategy must be considered by the relevant department. In the case of the London Ships Partnership there might be issues regarding government grants or council subsidies which would affect the scale and size of a communications strategy. If the funding for the marketing campaign is reliant on a small share of profits, then decisions have to be made regarding the distribution of capital to each promotional tool. Regarding advertising for example, would it be more efficient to spend a high amount on a television advert in China reaching large numbers of people, or a more personal form of advertising to strengthen the message?

Evaluation/Critical Issues

The creation of any marketing strategy should begin with market research. Knowledge of the markets will lead to an understanding of the required target market and the better you know who you are focusing marketing efforts on, the better equipped you are at achieving objectives.

Marketing objectives should be clear, concise and cohesive but is the objective that we decided upon flexible enough to alter after six months, if the strategy isn’t working? This highlights the need to deliver a consistent message as part of the marketing communications campaign. It is far more efficient to deliver one simple message to a specified target market or audience. Therefore, all departments responsible for the strategy need to communicate internally so as to be focused enough to execute successfully.

Earlier in the marketing plan, we highlighted the necessity of analysing the environment, both micro and macro. Some external factors, which are uncontrollable, could prove problematic. An example of this is the current global economic state, and the uncertainty that still remains in some markets. Despite China growing rapidly, it may still be at risk as it may struggle to sustain such huge year-on-year growth, claim investment group Marc Faber. It’s GDP per capita still remains at only $3,600 (The Guardian 16.8.2010). However, despite any cynicism, China is an emerging market with a growing middle-class and is therefore cause for optimism for the UK tourism market and for the London Ships Partnership.

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(Accessed 17.8.2010)

The Guardian (2010) China’s Cash Rich Visit Japan (Internet) Guardian Online. Available from: http://www.guardian.co.uk/world/2010/aug/16/china-rich-tourists-visit-japan
(Accessed 17.8.2010)

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Section 1: Introduction and Background

This report entails the development of a marketing plan for the launch of a new product, a Multi-functional Remote Device (MRD), to be presented to the Investment Committee of JKL Plc. JKL Plc is a large London headquartered multinational FMCG with operations spanning 16 countries across the world. Its turnover for the financial year ended December 31, 2010 amounted to GBP 454 million.

The search for innovative products has led the company to focus on the swift technology evolution within the hospitality industry around the world. This has necessitated the accurate estimation of future developments for maximising customer satisfaction and retention. Environmental scanning and market research reveals that customers are driving the industry towards technology convergence (Bentley, 2007, p2).

The hotel industry presently relies upon stand-alone modes or discrete technology application devices to fulfil customer service requirements, in areas like electronic check-in/ check-out facilities, purchase and use of in-room entertainment or even the control of room settings for different utilities and appliances that are used by the customers during their stay in the hotel.

Due to the continuous nature of the service provided by the industry, it is difficult to install/ retro-fit new technologies in operational properties at reasonable cost outlays. Consequently, it is difficult to consider further technology investments for retrofitting innovative technology developments as a substitute for technologies installed previously. This necessitates the need for investment in technology that encompasses multiple functions for the hospitality industry customer. This need has led to the concept of this MRD that caters to ‘last-yard’ connectivity (Bentley, 2007, p3).

The MRD would enable the shift towards methods and systems to enable integration of all hotel services into a single application that is accessible from such an electronic device. A customer will consequently be able to gain access to and manage hotel services prior to arrival at the hotel, upon arrival at the hotel, within the hotel room, within the local neighbourhood, as well as after departing from the hotel.

The company feels that the product has potential for commercial exploitation. The BOD has decided to progress with the suggestion. This report deals with the marketing of MRD devices to hospitality establishments across the target market in UK.

Section 2: Product Details
2.1. Product Concept

The single integrated application on the MRD is designed to enable access to most of the premium and desired functionalities and services offered by the hospitality establishment to their customers. The hospitality establishments that purchase these MRDs can select the permutation of the functionalities and services that can be accessed by their customers. This would depend on the technology budgets at their disposal. Appendix 1 details the major functionalities that can be accessed through the integrated application available on the MRD.

The integrated single application installed on certain versions of the MRD will enable communication with one or more servers connected to the hotel. The MRD will, for instance, communicate with different servers connected with ordering goods or services from the hotel. It will also communicate with different servers linked to shops, stores or attractions to permit a customer to effect reservations, purchase goods or services, or obtain information.

The development of the MRD will lead to technology convergence. It will also hopefully lead to the deployment of this portable device across the entire hospitality industry spectrum as a convenience and an energy friendly device. This will help maximise customer satisfaction and improve the convenience and comfort levels for hotel customers.

The MRD is essentially an upgrade with a single application that substitutes the operation of multiple remote devices for individual applications of different portable electronic remote devices. An example is the capability of the MRD to interface with the customer’s hotel room controls to organise room features like temperature, audio and video settings, lighting, any other appropriate room settings, or any permutation of the above.

2. 2. Technical Assessment

Both wired and wireless technologies enable the integrated functioning of portable remote devices for availing multiple functionalities concurrently. This enables the hotel customers to access, purchase and use different products and services offered by the hospitality industry.

The convergence of present day technology systems necessitates reliable infrastructure that can function consistently. The major constituents of infrastructure are: (1) Local and wide area data networks (LANs and WANs), (2) Workstation and server operating systems, (3) Network operating systems, and (4) the Data management platform (Wynes, 2005, p3).

The secondary constituents incorporate all-purpose business tools like software for office automation purposes, security tools like virus scanners and firewalls, and supporting applications such as custom reporting packages. The business environment that sustains such infrastructure necessitates robust processes not only for technology selection, implementation and integration, but also for user support and system administration (Wynes, 2005, p3).

Hotels endeavour to distinguish themselves from others to improve revenue streams and profitability. They should look favourably towards converged and intelligent network technologies to improve occupancy levels by attracting and retaining high-value customers, generating fresh recurring revenue streams and steering themselves towards higher operational efficiencies (Wynes, 2005, p3).

The network technology that is prevalent across the industry will also support the MRD introduction across most market segments of the hospitality industry in UK.

2.3. Market Assessment

The European hotel industry is controlled by independent, managed and family owned small hotels. The hotel sectors of UK, Germany, France, and Italy are dependent upon their home markets, whereas other European countries service a larger percentage of international customers. Whilst the UK has the maximum concentration of brands, around 70% of British hotels continue to be small and do not have more than fifteen rooms (Hotelmule, 2010, p1).

Recent market forecasts predict that UK’s ?1 billion corporate hospitality market will grow by only 1 percent this year. The ‘UK Corporate Hospitality Market Development Report’ notes that the market suffered a 5 percent reversal during 2009, when turnover dropped to ?933 million, a five-year low. The growth is expected to reach 11 percent in real terms during the period 2010 to 2015 (Quainton, 2010, p2).

Reports on performance during 2010 confirm robust profit growth within London and stagnation across the provinces. This is confirmed by the London hotels’ double-digit rise in profits, as per latest survey conducted by TRI Hospitality Consulting. However, the performance across the provinces has not been as strong with the industry norm GOPPAR (Gross Operating Profit per Available Room) falling by 1.4 percent. This contrasts with the 13.9 percent growth in London (Hotelnewsresource.com, 2011, p 2).

The performance of hotels in London is remarkable compared to the subdued performance of hotels in the provinces. The improved performance of the London hotels over 2008 levels bodes well for the subsequent 12 months. The economic environment is expected to benefit from the upcoming Royal Wedding and the 2012 Olympic Games (Hotelnewsresource.com, 2011, p 2). This environment augurs well for the launch of the MRD by JKL Plc.

There has been a rise in budget and ‘no-frills’ choices within the hotel industry. There are two distinct markets for ‘luxury’ and ‘budget’ hotels. Another category between these two markets is the mid-market category that comprises mainly of three-star hotels. The average hotel in UK has 12 rooms, unlike the average budget property, which has 75 rooms. Budget accommodation accounted for 12 percent of overall serviced accommodation within the UK in 2008. Nearly all budget hotels fall in the branded category, according to British Hospitality’s 2008 Trends & Statistics Report (Morton-Holmes, 2009, p3). This is largely the intended target market for the various models of MDR developed by JKL Plc.

2. 4. Product Development and Testing/Validation

Manufacturers, operators, owners, and suppliers engaging with the hospitality industry have to be certain that their products fulfil customer expectations in today’s complex and dynamic marketplace. They also need to comply with necessary regulatory and safety standards mandated by different municipal, state and national government agencies. Poor quality goods can lead to customer dissatisfaction, injury and other hazards. Both can also adversely affect the brand image and brand equity of the organisation. Rigorous and relentless product testing is required to ensure that products conform to required standards and regulatory norms. The process entails the assessment of products against detailed standards and regulations (Bureau Veritas, 2007, p2).

It is assumed that all MRD models will conform to the specifications detailed in the product concept and major functionalities in Section 2.1.and Appendix 1 respectively. It is also assumed that the necessary pre-development product concept testing research has been carried out in terms of the market and technical assessments. Concept testing involves qualitative surveys that determine the acceptance of a single or multiple products concept through the deployment of surveys targeted at focused respondents like prospective customers and/or industry experts. Product testing of the MRD will consequently determine if all its versions satisfy industry standards and regulatory requirements.

Testing will also determine whether the MRDs are produced according to required specifications and whether they meet the established criteria of different functionalities. It is intended that product testing will be conducted at 2 beta sites within each category of the target market in the hospitality industry, especially the budget hotels and those considered to be ‘Inns at law’ under the UK 1956 Innkeepers Liability Act.

Section 3: Marketing Plan
3.1. Marketing Analysis
3.1.1. Environmental Analysis

The application of acknowledged and appropriate marketing tools like PESTEL and SWOT analysis facilitates the analysis of the organisation’s market position (Proctor, 2000, p 9).

PESTEL Analysis

A PESTEL analysis enables a complete analysis of the ‘political, economic, social, technological, environmental and legal’ aspects of the marketplace and offers essential information that helps in formulation of marketing strategy (Proctor, 2000, p 9).

Political Conditions
The political environment within UK is stable.
Economic Conditions
Considerable medium and short term risks still exist in the current economic environment.
The recent increase in VAT by the government to shore up its finances has subdued the economic sentiment.
The MRD introduction will lead to better economic performance of the hospitality industry in terms of improved turnover and profitability and immediate savings in energy costs.
Social Conditions
The Company’s introduction of MRD will not require adjustment to social norms since the UK population is largely conversant with the use of high technology electronic devices.
Technology Conditions
There is robust implementation and consumption of high technology merchandise.
The technology savvy population is open to innovative products
Environmental Conditions
Direct savings in electricity consumption will be achieved with the MRD introduction.
Carbon footprint reduction from the use of multifunction electronic devices will lead to savings in toxic material like plastic and non-biodegradable components like silicon chips and sensors.
The MRD introduction will reduce the carbon footprint across the entire supply chain.
Legal Conditions
Innovative products need to comply with UK statutory, regulatory and electronic standards.
Compliances are mandated.
SWOT Analysis

The SWOT analysis of an organisation entails the elucidation of its natural strengths and weaknesses along with its external opportunities and threats. This enables the management to utilise and develop its strengths to take advantage of available market opportunities, lessen its weaknesses and cover threats (Proctor, 2000, p 47). The SWOT analysis of JKL Plc is as follows:

Strengths
First mover advantage in home market
Extensive domain knowledge of electronics industry
Established distribution channels
High technological expertise
Weaknesses
MRD brand focus to be established
No presence in overseas hospitality electronics markets
Opportunities
The UK hospitality market is open to innovative products and related value added services
Increasing requirement for converged broadband and other hotel services offers a strong opportunity to introduce the latest range of services across the board
Threats
Faces serious threats to its first mover position as a MRD provider in UK from aggressive potential competitors
Low technological entry barrier for large electronics’ industry organisations
3.1.2. Market Segmentation

TRI/BDRC, a prominent industry consultancy firm, assesses the overall hotel room stock within UK at 708,412. This figure is roughly in agreement with its peer MGCL’s estimation (Slattery & Gamse, 2008, p11).

MGCL catalogues the range of hospitality establishments in the UK as ‘bed and breakfasts’, guesthouses, farmhouses, motor lodges, youth hostels, motels, inns, and hotels. Another hospitality industry consultancy segregates these establishments into two commercially distinct groups (Slattery & Gamse, 2008, p11). The first group comprises of the bed and breakfasts, guesthouses and farmhouses that are the most haphazard and least successful establishments (Slattery & Gamse, 2008, p12). MGCL’s estimate of 202,000 rooms within these establishments appears to be reliable. However, the annualised availability of such rooms is not expected to be more than 100,000 due to their closure for a large part of the year (Slattery & Gamse, 2008, p12).

The second group comprises of hotels, motels, motor lodges and inns, although they are not distinct segments. Yet, jointly they are considered as “inns at law” under the UK Innkeepers Liability Act of 1956 and are thus different from the former group of venues. It is within this group that the hotel-keeping industry’s professionalism has grown. MGCL estimates the present volume of room stock within this group to be 514,000 (Slattery & Gamse, 2008, p13).

In terms of geographical spread, whilst the hospitality business establishments are spread throughout UK, they have a propensity to be present in the major cities. The largest number of hospitality establishments is found in London and in the South East of England. Each of these locations accounts for 13 percent of the overall national hospitality establishments. The South West, which is a tourist destination region, has the next largest cluster of hospitality establishments. The lowest group of hospitality establishments is found in Merseyside and the North East (NGRF, 2003, p1). Appendix 2 details the corresponding projected employment levels and the change in catering and hotels for the period from 1999 to 2010.

Recent industry research reveals that views on the comparative performance of the different categories of hotels cover a wide range. Some researchers aver that the four-star and five-star hotels viz. the market’s top end is suffering heavily. The best returns are estimated for hotels in the medium level categories, whilst the low budget and luxury hotels are making profits (PwC, 2010, p12).

3.1.3. Target Market

The adopter categories are expected to comprise of hotels and their ultimate individual customers. JKL Plc needs to address target market segments that will minimise the speed to market and maximise the sales and profitability of the company. Of the overall hotel room supply of 708,412, the company should first address the 514,000 room stock pertaining to the ‘inns at law’ group. It is this group of establishments that is professional and profitable.

Within the above target group, the company needs to first focus on the medium level category of hotels viz. the volume target market of two, three and four star categories of hotels. This will also include the budget hotels category, which is expected to continue to perform well in future. This needs to be followed by addressing the luxury and low budget hotel segments.

JKL Plc, with regard to geographical spread, needs to initially address the hospitality establishments that are situated in London and the South-East region of England. This should be followed by the next largest cluster of establishments, which are located in the South-West tourist destination region.

3.2. Marketing Mix

The marketing mix of JKL Plc, as indicated by the 4P configuration of product, price, promotion and placement, is provided below.

The company’s products and related services seek to fulfil the technology convergence needs of its target markets through a permutation of various functionalities offered by the integrated single application housed in the MRD. The functionalities of MRD have been thoroughly detailed in the earlier Section 2.1. The product positioning enables MRD to be considered as a fully-converged convenience device that is energy friendly and helps in improving the comfort levels of all the customers of the hospitality industry.

JKL Plc will differentiate its pricing according to the needs of the different target market segments and the corresponding value added functionalities preferred by the prospective customers. Introductory pricing will be differentiated with the post launch pricing taking into account the first mover advantage. There is no competition within the fully-converged devices market, as yet. However, the pricing structure has taken into account the prices of remote devices that are less converged in terms of the functionalities offered.

JKL Plc needs to engage in extensive promotion and advertising activities. Although it does undertake adequate marketing activities for its established FMCG business, it will need to create a fresh budget for the integrated marketing strategy that includes promotion and marketing activities for the successful introduction of the MRD.
The marketing message for the new product introduction has to be created in consonance with marketing objectives, the target market, other key stakeholders and the vital USPs or features of the product (Scott, 2010, p 17).

The company will need to engage in promotional activities that span the pre-launch, launch and post-launch phases, including participation in industry and trade fairs. It will also need to focus on industry print media including specialised trade and industry journals and magazines.

The MRD will be formally launched and showcased at the British Hospitality Association’s Climate Week that is usually held in the month of March. It is a nationally acclaimed event that promotes green and environment friendly causes. The launch will also be aired on national and local TV and radio.

The company will organise a string of presentations and demos to industry participants, mainly hotels and specialist electronics retail outlets that will stock the product. Such events could also be held in the relevant trade and industry platforms. The firm will also make use of internet tools such as chat rooms, social networking sites like Facebook and Twitter and the organisational website to maximise national reach and encourage product discussion.

The hospitality industry is generally considered to lag behind in technology implementation. This has become a barrier to technology adoption as faster technology evolution constantly renders current technology obsolete (Khosrow-Pour, 2002, p209). However, the major barriers to technology adoption lie in the cost of technology deployment, the standardisation of technologies that are required to be converged and security of the e-commerce payment mechanisms. The speed of adoption is largely related to the above factors, along with the bandwidth speeds that are becoming increasingly important due to the requirement of immense volume of real-time online content.

The major barrier to adoption of the MRD by the company’s customers is primarily on account of the security concerns relating to payment mechanisms. This issue will also be addressed by JKL Plc through its various communications and campaigns to its potential customers.

It has been assumed that the concept testing exercise has also been successfully conducted and the trial rates and repeat rates confirm the potential of the product. The trial rate represents the extent and speed with which customers will make an initial purchase of a new product. The trial rate is checked jointly with the repeat rate to gauge the sales potential and the consumer satisfaction of the brand. A high trial rate along with a high repeat rate signifies that consumers’ need the product and that it fulfils their expectations (Barron’s, 2000, p 1).

The MRD in all its versions will be freely available across all of UK. Adequate stocking will be ensured to satisfy the forecasted demand across all sectors and geographical spread of the industry. The distribution network and its modes will also be in place well before the launch of the product.

3.3. Market Forecast

Budgeting is critical to all marketing plans. The details of the budget for the introduction and launch of the MDR will need to be prepared by considering the different costs associated with MDR kits, the pre-launch beta testing at potential customer locations, press releases, post-launch promotional events and media expenses as well as annual promotional expenses. Table 1 below details the MRD sales forecast and the related marketing budget for 5 years.

It is felt that the sales forecast should be based on the total room stock of approximately 600,000 rooms, excluding the 100,000 that are not available for a considerable part of the year. However, room supply has been assumed to grow at 5 percent per annum. The MRD sales have been assumed to grow from 3 to 12 percent of the target market during the 5 years. The average MRD price of GBP125 in year 1 is expected to stabilise at GBP150 for years 2 and 3, followed by a 20 percent drop in the subsequent 2 years due to economies of scale.

Table 1: MRD Sales Forecast and Marketing Budget for JKL Plc for 5 years

Year 1

Year2

Year 3

Year 4

Year 5

GBP

GBP

GBP

GBP

GBP

Sales forecast
Hotel rooms targeted (numbers)

600000

630000

661500

694575

729304

%age of MDRs sold

3.0%

7%

9%

12%

12%

MRDs sold (numbers)

18000

44100

59535

83349

87516

Average MRD price (GBP)

125

150

150

120

96

Total sales forecast (GBP)

2250000

6615000

8930250

10001880

8401579

Total sales forecast (million GBP)

2.25

6.62

8.93

10.00

8.40

Marketing Budget
Pre-launch beta testing 50 MRD kits

6250

Launch event

150000

Post-launch promotional activities

100000

Post-launch media expenses

200000

Annual promotional expenses @ 1.5%

33750

99225

133954

150028

126024

Total marketing budget (GBP)

490000

99225

133954

150028

126024

Total marketing budget (million GBP)

0.49

0.10

0.13

0.15

0.13

The launch event allocation of GBP 150,000 is considered to be adequate for about 800 invitees. The post-launch promotional activities will include the cost of site displays, press kits, promotional material and merchandising material. It is felt that the post-launch media expenses of GBP 200,000 in year 1 should suffice for the TV, radio and print media. Annual promotional expenses have been considered at 1.5 percent of the annual sales forecasts.

3.4. Evaluation and Assessment

It is imperative that a market feedback mechanism be put in place for periodic evaluation of the new product. Corrective measures will consequently need to be taken to rectify the product malfunctions and issues that are thrown up by such feedback. The resultan

This work was produced by one of our professional writers as a learning aid to help you with your studies

Write a marketing plan for an EU destination (excluding the United Kingdom) aimed at penetrating a market that that is not currently the main market for the destination.

Marketing Portugal to the North American market
Introduction

Portugal is a major tourist destination in Europe, with the capital of Lisbon attracting more tourists than any other European city aside from Barcelona and other tourist areas in the country such as the Algarve and Porto also attracting significant numbers of tourists. However, the tourist industry is still dominated by British, Spanish and German tourists, who make up the majority of the tourists in the country thanks to the prevalence of low cost airlines in Europe (Portugal.org, 2009). This is in spite of the fact that Portugal has around 220 days of sunshine each year, some of the best golf courses in the world, and a unique culture and gastronomy. As such, this piece aims to develop a marketing plan to attract more tourists from North America, specifically the United States and Canada, to visit Portugal. This will be achieved via an analysis of the nature of the environment around the Portuguese tourist industry the rationale for focusing on North America and the specific offerings and competitive advantage possessed by Portugal. These analyses will be used to create a marketing plan, including strategies, tactics and control mechanisms. The marketing plan will utilise available secondary data, as well as identifying and applying any relevant theories.

The business environment and the risks, threats and opportunities facing the country

Tourism is now of significant importance to the economy of Portugal, with the service sector now having surpassed manufacturing and agriculture as a key source of income for the country (Portugal.org, 2009). This growth in importance in Portugal has been mirrored in a significant overall growth in the market for tourism around the world, which offers many countries the chance to capitalise on their natural resources. However, thus far Portugal has been unable to truly harness these opportunities, as it faces significant challenges in opening up its appeal to a wider demographic segment. This is because Portugal is largely characterised as being purely a beach destination, giving the country limited competitive standing in the global market (Yasin et al, 2004).

Another critical issue in the business environment is the drive towards environmental quality and the sustainable development of tourism. This is placing increasing pressure on countries to preserve their natural capital and balance growth with the potential impacts of tourism (Videira et al, 2006). As such, any attempt by Portugal to develop its tourism industry into more areas will need to consider the environmental impacts, and the effects which this will have on the country’s standing as a tourist destination. In addition to this, the global tourism market has faced downward pressure from issues such as SARS and international terrorism, making it difficult to attract tourists from a wide range of markets. This has further increased the demands for quality management and product differentiation; as well as significant market diversification. Costa (2004) argues that this increases the demands on human resources in the industry, and that significant training and development is needed to ensure that Portugal meets the expectations of tourists in the future.

Rationale for the selection of the market chosen as the focus for expansion

The main rationale for choosing the North American market is that tourism plays a vital economic role in Portugal, due to its geographical location and the favourable weather conditions it experiences (Soukiazis and Proenca, 2008). As such, the economic success and growth of the country is strongly linked to the overall growth in per capita income from tourism, which will help bring the Portuguese economy up to the level of its EU peers. However, Soukiazis and Proenca (2008) argue that tourism can only be use to stimulate economic growth if the supply characteristics can be improved to bring in a wider range of more affluent tourists.

This implies that any expansion of the country to attract other tourists should focus on major markets, where the population is sufficiently affluent to make an incremental contribution. As a result, North America is a natural choice due to the high levels of per capita income enjoyed by the United States and Canada. In addition, the fact that tourists from North America would need to take a fairly expensive transatlantic flight to reach the destination means that they are likely to stay longer and spend more in the country to maximise their experience. This will make them more valuable than many European tourists who use budget airlines and stay in cheap lodgings for short breaks. In addition, Lisbon has transatlantic connections with many major US cities, and English is widely spoken as a second language in Portugal, making it easier for North American tourists to visit and enjoy the country (Portugal Economic Studies, 2007).

Products and services offered by the country, and their relevance to the selected market

Portugal has significant products and services on offer, many of which are quite unique in Europe. The country has consistently high levels of sunshine, offering beach holidays, but also has a well preserved rural atmosphere and natural beauty, which will appeal to people from major North American cities eager to see some traditional European culture. In addition, Portugal has many natural thermal baths and medicinal spring, which makes it an attractive destination for tourism for health purposes (Portugal,org, 2009). This could also appeal to older people in North America or those who are concerned by recent health issues such as obesity and wish to improve their health. Finally, the climate in the Algarve region has led to the development of high quality golfing holidays, which is a key service for people looking for a relaxing sporting holiday (Correia et al, 2006). Indeed, the country is ranked as one of the premier golfing destinations in the world (Portugal.org, 2009).

The country’s competencies and sources of competitive advantage

A’guas et al (2000) carried out a portfolio analysis of Portugal to determine the factors which give it competitiveness and attractiveness as a tourist destination. The results of this study indicated that the country’s main advantage comes from its climate and high quality beaches, indicating that the country is primarily seen as a venue for beach holidays, and this is its main source of competitive advantage. However, correlation and multiple linear regression analyses were also used to examine the contingent nature of many of these factors. This analysis indicated that Portugal’s position as a major destination for beach holidays was also supported by its status as a more rural and less developed holiday destination, with a culture and cuisine which had not yet been subverted by the tourism industry, giving Portugual a more unique source of advantage to exploit, and also to protect (A’guas, 2000).

Further to this, Foreign Affairs journal (2008) also supports the mild climate; high quality beaches; and the distinctive Portuguese cuisine as key competencies of the tourism industry in Portugal. This is supported by the fact that Lisbon is a major destination for cruise ships, which provides additional indirect tourism from the passengers taking said cruises. In addition to this, Portugal’s per capita GDP growth has not kept pace with the rest of the European Union, and is now less than two thirds of the average value for the EU-27 group (Background Notes on Countries of the World, 2008). This acts to make services and some goods cheaper for tourists when compared to other tourist destinations such as Spain, France and Italy, and this has supported significant growth in the tourism sector in Portugal, which in 2008 was much higher than neighbouring Spain (Foreign Affairs, 2008).

Aims and objectives for the plan and the setting of future objectives

In spite of the competitive advantage possessed by Portugal, Ramos et al (2000) argues that Portugal’s tourist sector is lacking in clear strategies on issues such as differentiation and market positioning, making it difficult for the country to appeal to specific market segments. This is largely due to dependence on the climate and environmental factors to attract tourists; excessive levels of governmental control; a lack of experience in reaching new markets; and too much dependence on central EU funds for making investments (Ramos et al, 2000). This implies that Portugal is struggling with the first stages of the AIDA marketing model, in that it is failing to obtain the attention or interest of its key market segments (Ferrell and Hartline, 2005). As such, one of the key objectives of the plan must be to obtain a good understanding of the North American market and its key customer segments, and develop differentiated offerings which will appeal to said segments and attract tourists. This will allow Portugal to obtain more attention and interest from the North American market, which is a key part of the consumer decision making process.

Indeed, the evidence indicates that the AIDA model is more appropriate than the other theories for the consumer decision making process, such as the SIVA model (Dev and Schultz, 2005), when considering tourists. This is because tourists are likely to only consider destinations which have attracted their attention, hence product focused models are less likely to succeed. This explains why many destination based tourist marketing advertisements simply focus on putting the destination in people’s minds, rather than attempting to get them to make a decision to visit (Blumberg, 2005). This implies that the main aim of the plan should be increasing the level of attention and interest in Portugal. This can be supported by marketing highlighting the range of facilities Portugal offers, the prices for goods in the country relative to those in North America, and the ease of access on direct transatlantic flights. Future objectives can then be focused on increasing the absolute volume of tourists coming from North America.

Action plan-strategies and tactics for sales, advertising and promotion strategies

Given that this marketing plan is simply aimed at penetrating the North American market, and not attempting to dominate it, it is clear that care should be taken to ensure that the promotion is not too aggressive, and establishes Portugal in a positive light, as an aggressive marketing style in inappropriate for destination marketing (Blumberg, 2005). As such, strategies and tactics for sales should be based on developing relationships with US based travel agents and airlines and incentivising them to promote Portugal as an alternative destination to other major holiday destinations, whilst not being too aggressive. This could be supported by negotiating discounted deals with hotels and accommodation for transatlantic passengers to increase their cost advantages.

This promotional strategy can be reinforced by an advertising strategy which attempts to get North American tourists to consider Portugal as a viable holiday destination, perhaps through comparisons with other destinations. For example, a comparison could be made between the flight time from New York to California and to Portugal, which should be roughly similar. Favourable climate and sunshine comparisons could also be made with Caribbean destinations, which often experience tropical storms and hence may have less sunshine in some months. Ultimately, the aim of the advertising and promotion strategies will be to get people to consider Portugal as a desirable holiday destination, similar to the other mainstream North American destinations, and also provide discounts which will encourage them to make the decision to visit. This will be supported by the relationships with travel agents.

Marketing control – plans for evaluation and feedback

The main consideration when developing the marketing control plans is that, as Portugal is a relatively new destination for most North American tourists, they will may little expectations of their trips, and hence the marketing plan needs to develop positive and realistic expectations of the destination (Blumberg, 2005). These expectations can be understood through the use of marketing surveys which ask tourists what their expectations were before visiting the country and how their visit lived up to these destinations. This will provide feedback for increasing advertising focus in the areas where expectations were exceeded, and toning down the advertising in areas where it was felt that expectations were not completely fulfilled. The control method could include a short survey distributed to passengers waiting to board their return flights from the airport, however care should be taken not to impose this on the passengers who may be tired.

Another critical aspect of marketing control for destination marketing is that the destination marketing will be carried out by a central body which does not have much involvement in managing the destination itself, in terms of the accommodation, facilities and services (Blumberg, 2005). As such, a key part of the marketing control should involve regular communication between the marketing body and the providers of services to ensure that service providers are aware of the nature of the marketing communications and the marketers are aware of the limitations of the service providers, and hence do not make excessive claims.

References

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10. Portugal.org (2009) Welcome to Portugal. http://www.portugal.org/index.shtml Accessed 10th March 2009.
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1. Executive Summary

SmartBackpacker is a paid crowdsourcing app that will provide travelers with up to date reviews, recommendations and tips from other travellers. From the best places to get your laundry done in Timbuktu to the best stall to buy a taco in Mexico City, SmartBackpacker will hopefully become the must have app for all smart travelers.

The success of this app will rest on providing the end-user trustworthy and useful information. The success of this app is also highly dependent on user participation as it is the user who will be posting reviews and sharing their travel knowledge. One of the innovative features of this app is that it will allow users to upload video reviews of places they have stayed, places they have eaten or fun, quirky things that might be off the beaten trail. It is hoped that this feature, along with the clean and easy to use user interface will propel SmartBackpacker to the head of the growing travel app market.

SmartBackpacker is both the name of the company and the first product that this company will be launching. All future products will be launched under this company but with different names to reflect the target market. Future products could include SmartWeekends for weekend travelers, SmartStaycations for those looking for travel information in the UK and SmartBusinesstraveler for business travelers.

2. Mission, Vision and Culture

SmartBackpacker aims to harness the power of the crowd like no other travel app has managed to do before. Printed travel guides such as The Lonely Planet and The Rough Guide have long been essential purchases for tourists. However, these publications are usually updated every two years and don’t provide travelers with up to date information. They are written usually by one person and don’t really cater to everyone’s tastes. Usually they only cover one region or country, meaning that if the traveler is embarking on a multi-country tour they have to purchase more than one of these heavy and expensive guides.

As smart phones become more prevalent and WiFi and mobile coverage now standard even in places far off the beaten track, it makes sense for travelers to leave their cumbersome, outdated travel books at home and travel with their phones loaded with an app that is constantly updating them with useful and relevant information. If one user had a killer Mojito in a bar in Sydney they can share that information instantly on SmartBackpacker. King (2002) argues that, “it is the customer who can decide how and when they access their travel and tourism information and how and through what process they access and purchase their travel and tourism arrangements” (p. 106). SmartBackpacker aims to be at the heart of this customer-focused movement by getting tourists to share information directly with each other, bypassing all the traditional channels.

This business has to be built on a culture of trust. Users have to be able to trust the information that they are being given. It is this trust that will engender positive feelings towards the product and prompt people to post their own reviews. Surowiecki (2004) argues that, “under the right circumstances, groups are remarkably intelligent” (p. xiii). This app will use this group intelligent to improve the travel experience for everyone using this product. SmartBackpacker will be the first in a long line of travel related apps from this company.

3. Company Objectives

The objectives of this product are as follows:

1. To become the most trusted source of travel information in the growing travel app market.

2. To identify the target market and build up strong brand awareness here.

3. To use the knowledge learned and the success of SmartBackpacker as a springboard to launch other paid travel related apps

4. Opportunity Analysis and Research

Tourism is an extremely diverse activity ranging from a weekend shopping trip in New York to a month long trek in the jungles of Borneo. However, one thing that unites all tourism activity is that it usually implies that people are traveling to somewhere new. Information about their surroundings is therefore key to the enjoyment of their experience.

However, because tourism is such a diverse activity, it is important that SmartBackpacker is able to identify a core market within which to operate. Since this app relies on user generated content and crowdsourcing, it is important that, for the most part, the users all share the same broad area of interest. For this reason, SmartBackpacker will be aimed squarely at young, tech savvy travelers who probably already use social networking sites in their daily lives and are used to the concept of crowdsourcing. These are travelers who are either taking a gap year or are taking an early career break. Perhaps the best definition of this market comes from Riley (1988) who states, “in general they are future pillars of society, on temporary leave from affluence, but with clear and unwavering intentions to return to a normal life” (p. 314). This app would also be useful for younger people taking short trips such as weekend city breaks.

4.1. Industry Analysis

4.1.1 Tourism Market

In 2009, visits abroad by UK residents fell by almost 15% on the 2008 figures (ONS, 2010). However, in the second half of 2010 there appears to be signs that international travel is slowly bouncing back.

Jarvis (2009) observes that the backpacker market seems to be bucking the decline that has been witnessed in other parts of the travel industry. Australia, a particularly popular backpacker destination for young British travelers has witnessed an increase in international arrivals. This report would argue that in the recession, young people are probably delaying entering the job market for as long as possible. The backpacker market could also be growing due to the fact that so many people have lost their jobs in the past few years. Instead of rushing back into the job market, these young people are choosing to use the time to travel.

4.1.2 Smartphone Market

The launch of the iPhone in 2007 signalled the start of all out war in the smartphone market. Phones running the Symbian operating system are the current global leaders with Google’s Android system in second place, closely followed by Apple and Research In Motion (Gartner as cited in The Guardian, 2010). Android seems to be the clear winner at the moment, experiencing 22% growth from Q3 2009 to Q3 2010. Symbian lost 8% of its global market share in the same period while Apple also fell by 0.4% (Gartner as cited in The Guardian, 2010). The UK smartphone market seemingly mirrors these global market trends. However, ownership of smartphones is extremely high, accounting for almost 75% of the total mobile phone market.

Apple’s launch of the iPad in early 2010 has also seen a surge in small, portable tablet devices. Although SmartBackpacker will be available on the iPad, the launch of this product will mainly focus on functionality in the smartphone market.

4.1.3 App Market

The growth in the smartphone market has also given rise to the app market. Apps are small applications that users can download, either for free or for a small fee that take advantage of the phones advanced processing capabilities to allow users to get the most out of their phones. Thanks to apps, smartphones are now portable gaming devices, gps devices or ereaders.

Apple have seemingly been the most successful at realizing the potential of this market. Apps are developed by third parties and then put of Apple’s online App store. The developers of these apps receive two thirds of the revenue generated from the sale of their apps. Developers can also incorporate Apple’s iAd system into their apps and earn extra revenue through advertising. The success of the app store has been staggering. Since launching in 2008, the app store has had over 3 billion downloads (apple.com, 2010). Developers who have been able to develop easy to use, useful apps have been quick to see huge rewards. One good example is the company Pusenjak, whose 59p app Doodle Jump has been downloaded well over 3.5 million times. This has made the two developers millionaires (mediamemo.com, 2010).

The App store for Google’s Android is not as well defined in that Apps are not available from a central source, like they are in Apple. Developers have been slow to adopt the Android operating system. However, the surge in the popularity of this system should soon see the popularity of apps on this platform surge as well.

Smartbackpacker initially wants to launch on the Anroid and Apple iOS platforms. It is felt that the centralized market that Apple provides should ensure maximum visibility so the focus of the launch will be on the Apple version of the app. The travel app market is fairly crowded and already well-established brands such as Lonely Planet and Rough Guide have a presence here. However, none of the existing apps make it particularly easy for other travelers to share information with each other. The flow of information is distinctly one-way. As already stated, this app will allow users to post video reviews. This innovative feature, along with the easy to use interface should help to propel SmartBackpacker to the top of the travel app market.

5 PEST Analysis

The purpose of this analysis is to focus on the external factors that could impact on the success of this venture.

5.2.1 Political Factors

Tourism is a highly unpredictable product and one that is sensitive to external shocks. Tarlow (2006) notes that, “tourism sells a highly volatile and capricious product” (p. 84). Terrorism attacks or changes in the global economic situation can change the supply and demand nature of tourism meaning that there is less of a market for this particular product.

However, this report would argue that the need to travel and explore is hardwired within us. As one market dwindles, another one opens up. This report would argue that the target market for this product is a fairly adaptable one. If civil unrest threatens stability in Central America, backpackers will simply plan to travel elsewhere.

5.2.2 Economic Factors

As this report has stated, the global economic crisis has severely affected international travel from the UK. However, there are signs that this is bouncing back. This report has also found that the backpacker market seems to be fairly recession proof. In fact, this report would argue that this particular market could actually witness growth in coming years as young people delay their entry to the job market until the labour market picks up again. The target market for this app would probably prefer to be traveling rather than looking for a job.

5.2.3 Sociocultural Factors

The UK has a strong culture of encouraging gap years. These young people taking a break before starting university are at the core of this products core market. The government is encouraging more people to go to university so it is possible that the gap year market could grow even more in the coming years.

The growth of budget airlines such as EasyJet and Ryan Air has also led to more people being able to take short weekend breaks to European cities. Another target market for this app is these weekend travelers looking for a bit of adventure off the beaten track.

Shani et al (2010) observe that travelers are now more trusting of autonomous sources of information. We trust these autonomous sources such as customer reviews more than we do more formal types of information such as guidebooks. They state that, “the boundaries between the induced and autonomous factors seem to have blurred in recent years” (p. 117). It is the belief of this report that SmartBackpacker can become one of these trusted autonomous sources.

Tourists are now also increasingly motivated by a desire for real experiences in their tourism. MacCannell (1989) states that, “touristic consciousness is motivated by its desire for authentic experiences, and the tourist may believe that he is moving in this direction, but often it is very difficult to know for sure if the experience is in fact authentic” (p. 101). SmartBackpacker will allow tourists to share these ‘authentic’ experiences with each other. Although there is a danger that as more tourists have these ‘authentic’ experiences, the less authentic they actually become. However, the type of tourist that this app is aimed at is inquisitive by nature and will be constantly searching for and sharing new experiences. Fyall and Garrod (2005) argue that tourists are growing increasingly bored of being passive spectators. They want to experience and explore. This report would argue that tourists are the best marketers for destinations so why not harness this power?

5.2.4 Technological Factors

The smartphone market is a fairly new one and this report would argue that it will only continue to grow and become more accessible to more and more people. As it grows, the infrastructure that is needed to support it will also continue to improve. This app relies on people being able to post their experiences pretty much while they are having them. In some parts of the world, this is still hard to do. However, as the technology spreads, this will get easier and easier.

6. Marketing Strategies

The following marketing strategies have to work towards meeting the objectives as set out in Section 3.

6.1 Target Market

This report has already defined the target market for this particular product.

6.2 Product Strategies

McGrath (2001) states that a product strategy is, “like a roadmap, and like a roadmap it’s only useful when you know where you are and where you want to go” (p. 3). It is important that this first product from SmartBackpacker is able to set the benchmark for possible future products. Crowdsourcing is an important way of democratizing the information that is available to us. However, this information has to be trustworthy, otherwise people will simply turn to other products. By clearly defining the target market for each product launched, this company should be able to give people exactly the information they need. A business traveler is unlikely to want the same information as a backpacker so each product has to be specifically tailored to meet the specific demands of each target market. The knowledge learnt from the development of SmartBackpacker can be utilized in the development of future apps for other sectors of the travel and tourism industry.

6.3 Pricing Strategies

Tellis (1986) argues that pricing strategy is defined as, “a reasoned choice from a set of alternative prices (or price schedules) that aim at profit maximization within a planning period in response to a given scenario” (p. 147). He then observes that, “in a shared economy, one consumer segment or product bears more of the average cost than another, but the average price still reflects cost plus acceptable profit” (p. 147).

The main source of income for this company will be from users paying to download the app either from the Apple app store or from the various Android app markets. As Tellis points out, the pricing strategy should reflect the prices of other apps in this category. Based on this, this report would recommend initially pricing the app at ?1.99. It might be possible to look at integrating some sort of advertising feature into later versions of this app, but initially it is important for the user interface to be as clean as possible. This will enhance the user experience and encourage people to use the app to share their tips and recommendations with others.

This report would argue that usual models of consumer decision-making don’t really apply to this particular market. Because apps are usually so cheap, or even free, people can rely on more than one app in that category. For example, someone using SmartBackpacker could also have Lonely Planet loaded up on their iPhone or HTC phone.

6.4 Promotion Strategy

The launch of this product will be supported by a well designed website, a twitter site and also a facebook site. The rise of Web 2.0 has made advertising to a specific target market far easier and far cheaper than it used to be through more traditional channels. The use of these new channels should ensure that the target market is reached and that the product receives maximum exposure. Combined with a low price point, this app should quickly be adopted by those already traveling or those planning trips. This app relies on user experiences so it is important that it is quickly adopted and users start to share experiences with each other.

6.5 Distribution Strategies

As already stated, this product will be distributed through Apple’s App Store and also through the various Android marketplaces. The launch of the first product will be specific to these two platforms but could expand to other platforms at a later date.

Bibliography and References

Arthur, C. (2010). Visualising the smartphone market change: Android leaps, Nokia wobbles. The Guardian, 10 November.

Brabham, D.C. (2008). Crowdsourcing as a model for problem solving. International Journal of Research into new Media Technologies. 14(1), pp. 75-90.

Fyall, A. and Garrod, B. (2005). Tourism marketing: a collaborative approach. London: Channel View Publications.

Jarvis, J. (2009). Billion dollar backpackers: Recession resilient [online]

Available from: http://www.south-pacific.travel/news/whats_new/backpack_jjarvis.pdf

[Date accessed: 23 November 2010]

MacCannell, D. (1989). The tourist: a new theory of the leisure class. California: University of California Press.

McGrath, M.E. (2001). Product strategy for high technology companies: accelerating you business to web speed. New York: Mc-Graw-Hill Professional.

Mediamemo.com (2010). Meet the App Store millionaires: The brothers behind Doodle Jump [online]

Available from: http://mediamemo.allthingsd.com/20100405/meet-the-app-store-millionaires-the-brothers-behind-doodle-jump/

[Date accessed: 23 November 2010]

ONS (2010). International Travel [online]

Available from: http://www.statistics.gov.uk/cci/nugget.asp?id=178

[Date accessed: 23 November 2010]

Reily, P. (1988). Road culture of International long-term budget travelers. Annals of Tourism Research, 15, pp. 313-328.

Shani, A., Chen, P., Wang, Y. and Hua, N. (2010). Testing the impact of a promotional video destination image change: application of China as a tourism destination. International Journal of Tourism Research, 12(2), 116-133.

Surowiecki, J. (2004). The wisdom of crowds: Why the many are smarter that the few and how collective wisdom shapes business, economies, societies, and nations. New York: Doubleday.

Tarlow, P.E. (2006). Terrorism and Tourism, in J. Wilks, D. Pendergast and P. Leggat (eds) Tourism in turbulent times: towards safe experiences for visitors. London: Elsevier, pp. 79-92.

Tellis, G.J. (1986). Beyond the many faces of price: an integration of pricing strategies. The Journal of Marketing, 50(4), pp. 146-160.

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Section A: Loyalty cards as a method of making shoppers go to one supermarket

In addition to gaining customer information, marketing the company, developing relationship with its customers, the ultimate objective of loyalty cards is to retain customer loyalty to drive repeat purchases. Hence, through development of loyalty schemes, the marketers / retail companies etc. aim to ensure that shoppers make repeat purchases. One of the most common reasons behind consumers’ repeat purchases is brand loyalty. A research study conducted by Sullivan’s identifies three major drivers of customer loyalty, which are a) economic driver, b) dialogue driver and c) affinity driver. Application of these theoretical implications in the studied case of Tesco, economic driver refers to factors that restrict the purchase power of consumers as a result of which, Tesco extends credit to consumers, holding their share-of-spend and confining them to its brand. The retailer understands the needs of the consumers through processing the customer information and hence offering them credit rewards. The second driver: dialogue driver facilitates the continued streaming of dialogue (obtainment, processing / analysis and management of data) occurring through the loyalty cards and thus establishing the relationship between the retailer and consumer. The third driver; affinity driver expands when mostly up- market customers sign up for the loyalty card since they love the brand, intends to experience relationship with the brand, as well as receiving recognition and reward offered by the brand. The reason behind this driver is not the motivation of the credit offered by the loyalty card just as by Tesco, but an appreciation to the brand.

Data mining is the process of searching through data, seeking formerly anonymous relationships among the data that are interesting to the user of the data . The most common examples of data mining are: a) process of scrutinizing and recording the contents of shopping basket at the checkouts as carried out by Tesco, b) reading and assessing past consumer behaviour so that customer ranking is generated based upon which credits are approved or disapproved, c) analyzing valuable customers through tracking their purchase habits, frequency of visits, length of loyalty etc., d) restoring, organizing and retrieving the personal information of tax payers as in the case of IRS and so forth. The benefits of data mining that have been extracted from two case studies are: a) extending automation benefits to legacy system along with identification of facts about customers, tax payers etc. b) reducing number of honest taxpayers, c) predicting those products that each customer is likely to re-purchase, d) offering customers with value for their money. Establishing a relationship between data mining and loyalty / rewards cards, the positive impact that have been assessed are: leading competitive market positioning , encouraging repeat purchases, effective process of data analysis and most importantly target marketing as observed by Tesco. The disadvantages of the loyalty cards have been assessed as giving up the personal information, hence giving up privacy, misleading customer and tax- payer information, costly process of promotion and deployment of the loyalty scheme etc.

Section B: Digital data vulnerable to misuse and Penetration of corporate networks

The process and management of data mining is inherent to certain risks such as security threats (breach of confidentiality, integrity, and availability- CIA triad) to the digital data. Hence, it can be concluded that digital data is vulnerable to misuse. In the case of Tesco, although the company ensures that all the customer data is encrypted, however security threats such as a) mishandling of private key (private and public key encrypts the data ), b) breach of security of single user password (if used) through which hardware carrying the encrypted data is accessible, c) requirement of greater bandwidth for digital communication to be transmitted in relation to analogue communication, d) since all tax return data is stored within CDW (one database system), in case of internal and external security breach, the confidentiality, integrity and availability link is broken, e) synchronization failure of the legacy and the newly developed system, f) poor measures undertaken during the course of defining the classification and ownership of data, g) poor control measures of defining access controls of the data. These issues are specifically harmful for the Internal Revenue Service (IRS) because the cost of occurrence of threats is likely to result in loss of billions of dollars in tax revenues, missing out the frauds that the tax- payers are likely to make with an ambition of not paying taxes etc. In case of Tesco, the breach of security of digital data is equally costly and is likely to result in loss of business credibility and reputation as well as generating mistrust between the customers and the retailer realized in the form of loss of business revenues.

In addition to above security threat, penetration of corporate networks is also one of the major threats that IRS and Tesco are encountered with. Corporate networks of both the companies can be penetrated both internally and externally. Hence the internal threats arise from disgruntled employees who aim to cause harm to the business credibility etc. In case of IRS, employees may be motivated by manipulating the figures to alter the taxation figures etc. In case of Tesco, employees can be bribed by external parties to disclose the customer data that has been secured by both Tesco and dunnhumby. The corporate network can also be penetrated from externally through remote access to database that is being provided to the employees, supply chain partners, outsourced IT partners by IRS and Tesco. Secondly, motivated by industrial espionage, the intruders / hackers can successfully launch sniffing attacks, war -driving, denial of service attack so that authorized user is denied to get access of the network, while jamming the network etc. There are many more attacks that can be launched on the company network with an ambition of getting access to the valuable data retained and managed by both organizations i.e. IRS and Tesco. However occurrence of any threats that have been identified, pose extreme consequences resulting in loss of billions of pounds / dollars and most importantly loss of business credibility and communication within the industry.

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Introduction

Shamrock Rovers F.C., self -described as the most successful football club in Ireland(Shamrock Rovers F.C. Membership 2015) had asked the television broadcaster RTE to refrain from showing the club’s remaining matches for the year on television on the opinion that each live broadcast resulted in approximately ˆ10,000 of lost revenue per event.

It is understood that other clubs within the Premier League agree with the club’s position and were very sympathetic to their position. The Premier League clubs felt that it would be good practice for them to be financially compensated when their games were televised, providing hours of television entertainment. (McDonnell 2015). This paper will discuss the notion of free exposure including whether it was good or bad for a business as well as examine decision making within a company with the objective of attaining long term goals. The relevance and connection of these concepts to the aforementioned decision by Shamrock Rovers F.C. will also be discussed and analysed.

The Irish football league, founded in 1921 is an important part of Ireland’s tradition and history. It consists of 20 clubs as well as the Football Association of Ireland, FAI which is the umbrella body responsible for the promotion, regulation and organisation of activities. The unique nature of the Irish sports environment means that the league faces robust competition for a comparatively small market in comparison to its European peers from the GAA Hurling and Football organisation and Rugby in addition to other growing sports (Conroy Consulting 2015). This is in addition to a good amount of television exposure for non-Irish football including the English Premiership. Revenue generation within the League has been described as challenging especially with the economic conditions of the past number of years (Conroy Consulting 2015). How does free exposure or long term planning impact this competitive landscape?

Free Exposure

Studies have shown that when people encounter something repeatedly, the likelihood of having a preference for it or a positive reaction in future is increased. This is known as the mere exposure effect, MEE (Kahneman 2012; Schacter 1987; Zajonc 1968, 2001). Kahneman (2012) explains that repetition results in cognitive ease and a comfortable feeling of familiarity linking this to eventually developing a degree of mild affection for the stimulus in question. The state of cognitive ease denotes relaxation, no threats or need to redirect attention. The main factors contributing to the concept of cognitive ease are illustrated in the figure below:

Figure 1: Causes and Consequences of Cognitive Ease

Source: Kahneman 2012, p.60

Zajonc (1968, 2001) goes further to argue that the mere exposure effect not only transcends conscious experience but that in fact the positive effect of repetition on liking is an extremely important biological fact supported by numerous experiments on humans and animals alike. The MEE effect is very important from marketing and advertising perspective since past experiences plays a significant role in one’s future decisions including consumption and consumer purchases (Kahneman 2012). It could be inferred based on this that repeated exposure for the football clubs within the Irish league through the televising of matches by a major broadcaster would be very beneficial in increasing the profile of the league within the Irish market. Moreover, the leading clubs such as Shamrock Rovers F.C who were more frequently featured stood to gain more in the form of higher recognition of their specific brands in comparison to less featured clubs. This imparts a degree of competitive advantage as a result.

The German Bundesliga, considered to be one of the most successful leagues in Europe (Albach and Frick 2013; Blitz 2012) prioritises maximum exposure of its matches to fans as part of its business model. One of the ways this is achieved is by making sure ticket prices are very low and therefore accessible to a wide spectrum of the market across different age groups and social backgrounds. In addition, the Bundesliga restricts the quantity of season tickets in circulation to ensure that they have as many fans as possible able to actually attend their own team matches (Doyle 2014). Live coverage of matches is generally broadcast by German television companies including Pay TV. The Bundesliga and its clubs leverage the resulting popularity of exposure due to wide match attendances, television and media coverage to generate income by balancing match day ticket sales and media rights with sponsorship and merchandising in addition to transfer income. In actual fact, the clubs on the average generate 21% of their total revenue from ticket sales (Chadwick 2010). In examining the English Premier League, described as Europe’s’ largest football league by value it was found that while the number of live matches broadcast had increased from 60 in 1992/93 to 138 in 2005 accompanied by increase in viewership, attendance of live matches also increased (Ofcom 2005).

The preceding examples lend credence to the assertions of the FAI that more exposure of the game through televised broadcasts was positive for the long term revenue increase for the league and its clubs. Furthermore, it should at the least cause Shamrock Rovers F.C. and the other clubs in the league to re-evaluate their business considerations in coming to the conclusion that free exposure was causing them lost income in match ticket sales and therefore too expensive for business. In the case of Shamrock Rovers F.C. specifically, the question would be whether the club might actually be ceding competitive advantage to others by rejecting the free advertising offered in the form of live match broadcasting. One difference between the Irish league and both Bundesliga and the English Premiership lies in the fact that while clubs in both leagues receive payment for television coverage (Chadwick 2010; Ofcom 2005), the nature of the competitive environment for the Irish league means that the clubs do not get paid for television coverage of matches. This then raises the dilemma of how to balance the tension between maintaining exposure to the market in line with long term goals of increasing league value and short term financial needs. Due to the fact that the clubs are not being paid for exposure, they view this from the perspective of a sunk cost which is about ˆ10,000 per event for Shamrock Rovers F.C. and see no direct relation between this and their immediate profits.

Evidence supports the fact however, that competitive advantages can be created through giving something away for free (Anderson 2009). Examples drawn from the history of companies behind household names like Jell-O, Gillette and Microsoft show that giving something away can be good for business and can be leveraged as a competitive tool. This is particularly useful in a very competitive marketplace where margins are driven down relentlessly (Anderson 2009). In such a situation, it is inferred that an organisation will benefit from recognising the realities of the marketplace in which it operates, undertakes comprehensive analysis of its environment such as carrying out SWOT (Strengths, Weakness, Opportunities and Threats) analysis based on Michael Porter’s strategic forces that affect competition (Porter 2013) to strategically create a business framework that will enable it to tap into creative channels for exploiting what it has in its possession including using the concept of ‘free’ to gain competitive edge, differentiate itself in the eyes of the consumer and convert these advantages to economic benefits for long term sustainability.

Long term decision making

The value of an organisation is based on its long term ability to generate income necessary to support growth that adds to its value. In effect, a firm’s value is understood not only by looking at its present financial income but also weighing other factors like its competitive position, the growth potential for its industry, strength of competitors and the management of the organisation (Rappaport 2005). On this basis, the importance of making plans and setting objectives from a long term perspective is obvious. Sometimes the immediate financial reality or financial expectations of stakeholders can make focusing on long term goals difficult. The company’s strategy based on long term objectives serves as a guide for defining the framework of how the organisation creates value for its stakeholders. This framework is the business model and it defines what choices, trade-offs, sacrifices or tactics are employed in competing within the marketplace (Porter 2013). Hamel and Prahalad (2005) maintain that defining strategic intent usually including a long term desired goal provides stability to a firm’s short term actions and allows for the flexibility to adapt correctly when new opportunities or threats are identified. Commitment to a strategic target requires discipline and effort, often forcing an organisation to be more creative and innovative in using limited resource to attain its goals rather than focusing only on current opportunities or threats and how existing resources match these (Hamel and Prahalad 2005). It can then be surmised that the organisation is challenged, stretched and fitter as a result.

Relating this to the situation with Shamrock Rovers F.C., information on the positive effects of mere exposure and examples of economic advantages possible by giving something away for free; long term decision making could provide the structure and motivation that will guide how it could boost its value and long term sustainability by taking advantage of the benefits of the exposure provided by RTE’s television coverage of its matches which in itself can be viewed as advertisement that the club does not have to pay for. Given the size of the market, economic conditions and strong competition from GAA Hurling and Football organisation, Rugby and the English Premiership on Irish television (Conroy Consulting 2015), it is believed that the exposure for the Irish league and its club gained from televised matches provides a net positive. There are a number of creative ways discussed by Anderson (2009) through which the club might monetise its advantages against its competitors as a result of having more exposure as shown below:

Figure 2: Four basic business models of Free

Source: Anderson 2009, p.27

Looking at figure 2, the club could adopt options 1, 2 or 3 or a combination of all or some of the three. In allowing televised matches without being paid for it, Shamrock F.C. could seek to use its exposure advantage to increase income from merchandising and sponsorship. Increased exposure as shown in option 2 could be used to attract advertisers for placement in prominent places within their stadium since the stadium receives good television coverage as a result of match coverage. Option 3 opens up the possibility that increased exposure for Shamrock Rovers F.C. and associated clubs in the Irish league would make it easier for consumers to accept the prospect of paying to watch football on TV thus opening the door to future income from media rights for the clubs within the league. These three business models as illustrated above, contribute in some form or the other to the success of the German Bundesliga and English Premiership (Chadwick 2010; Ofcom 2005). The Bundesliga for example received 33% of its income in 2006/2007 from television, radio and other media, 21% for match day income, 25% from sponsorship while merchandising and transfer fees constitute the rest (Chadwick 2010).

Conclusion

The intent in this brief was to examine whether free exposure was good or bad for an organisation in its quest to compete in the marketplace. Also addressed is the question of whether or not companies should make decisions based on a long term goal. It was found that exposure whether free or paid for is a positive component of marketing to consumers and increasing awareness and likability based on what we know about the mere exposure effect. Football, because of its entertainment value receives what amounts to free advertisement and exposure in Ireland and other countries such as Germany and England as a result of television match coverage. Successful leagues like the Bundesliga and English Premiership have also capitalised on the entertainment value of the matches covered to broadcasters and receive payments some of which go to member clubs but in Ireland, it does not appear that the economic landscape have allowed the Irish league clubs to achieve this.

The reaction to this situation does not point to reducing existing exposure even if it meant giving it away for free to television broadcasters as envisaged by Shamrock Rovers F.C. which in turn could lead to a reduction in brand awareness, brand equity and income (Aaker 1996). In order to counter short term financial impacts of not getting paid for this exposure and its perceived impact on the ticket sales, strategic planning would enable the organisation define objectives and steps it can employ to leverage the exposure it is getting to create value. Long term goal setting and decision making will be important and helpful for the firm to be able to adapt to short term financial short falls that might arise as a result.

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Introduction

There are a number of factors that compel businesses to trade and market their products internationally. For instance, international marketing enables businesses to (1) increase their customer base and market share, (2) minimise their reliance on any single market and (3) avail benefits of becoming multinational brand (Buckley and Ghauri, 2004). Over the last decade and a half, international marketing has become substantial (Hill, 2012); to the extent that consumers barely notice the fact that a majority of the products they consume routinely are either sourced from international markets or contain components that are sourced from international markets.

Successful international marketing requires a diligent strategic planning process involving the assessment of the business environment and suitability of the target market. A conductive business environment of the target market and the presence of a lucrative market gap render a target market as suitable (Tallman, 2007). Following this assessment, a brand intending to internationalise needs to plan and execute ‘the conception, pricing, promotion and distribution of ideas, goods, and services to create exchanges that satisfy individual and organisational objectives’ (Sak and Shaw, 2004 p. 3). This essay relates to the internationalisation of Nicolites, the company that produces Nicolites electronic cigarettes in the UK to the Indian market. This essay evaluates the suitability of India as a selected target market for the expansion of Nicolites. It also evaluates a suitable entry method for Nicolites in India and suggests marketing strategies for the product as well.

Market Opportunity

Despite being widely considered as hazardous to health, smoking of cigarettes prevails at large across the globe. Therefore, any measures that can reduce the consumption of cigarettes, including providing an alternative for smoking are widely seen as a positive development. Provision of an alternative for smoking tobacco based cigarettes is the core marketing concept behind Nicolites e-cigarette.

Nicolites e-cigarette was first introduced in 2007 in UK (Nicolites, 2015). Nicolites e-cigarette does not have any tobacco whatsoever, and hence it is free of more than 4000 known toxic chemicals and substances present in a regular cigarette (Nicolites, 2015). Nicolites e-cigarette is an innovative product that offers smokers a right alternative for regular cigarette through a true simulation of smoking experience – which is cleaner, safer and healthier. Despite having a glowing red tip depicting a real flame, Nicolites e-cigarette does not require any flame or fire to burn. Moreover, it does not cause any unpleasant smoke and odor, or gather smoky residue on walls, clothes, skin and hair of the users (Nicolites, 2015).

Justification and Evaluation of the Target Market

According to the Datamonitor Market Insights report titled ‘Tobacco in India’ (2011), the overall tobacco industry in India was estimated to be worth approximately INR 58,730 crores (or $10 bn), in 2009. During the period 2004-2009, tobacco industry in India grew at an average of 8.5 percent; whilst during 2009-2014, it grew at an average of 6.5 percent (Tobacco Free Kids, 2015). The overall tobacco market in India is dominated by smokeless tobacco sales which constitutes 75 percent of the market (Tobacco Free Kids, 2015). Out of the remaining 25 percent tobacco market, 20 percent tobacco consumption comprises of smoking bidi, which is a hand-rolled, small, thin cigarette (Tobacco Free Kids, 2015). Thus manufactured cigarettes form only 5 percent of the market. Despite cigarettes being not one of the most popular tobacco products in India, Indians consumed 96 billion cigarettes in the year 2014, making the country the 6 largest cigarette consuming nation in the world and an important target for international tobacco companies (Tobacco Free Kids, 2015). A large, growing product market of cigarettes in India signals a lucrative product market for alternate products – such as Nicolites e-cigarette. Thus it is established that India has a huge potential for alternative products to cigarettes such as Nicolites e-cigarette.

After establishing the existence a lucrative market for Nicolites e-cigarettes in India, it is also important to assess whether the overall business environment of India is conductive for international brands. In terms of political environment, the Indian market has become liberal following the reforms in 1991 (Nuruzzaman, 2011). However, the capital market in India remains vulnerable to political changes (Nuruzzaman, 2011). In terms of economy, India has been growing steadily over the last decade. Last year, the Indian economy underwent a 7.5 percent growth (Ayres, 2015). According to the World Bank estimates, Indian economy has become the world’s third largest economy in purchasing power parity terms (Ayres, 2015). The country has an escalating middle class which will continue to drive its economy and demand. Socially, India has a very diverse population in ethnic, religion, culture and socio-economic terms (Nuruzzaman, 2011). These factors can either be advantageous or disadvantageous for an international brand depending upon how it deals with them. Technologically, the urban centers in India are advancing with most of the urban middle class Indians having access to internet and media technologies through which branding and marketing communication activities can be pursued (Nuruzzaman, 2011). The economic and technological factors of India indicate towards a favorable business environment for Nicolites e-cigarettes. As for the political factors, any adversities posed by the political environment can be easily negated by choosing a right market entry strategy by Nicolites e-cigarette. The social factors of India are unlikely to be impactful upon Nicolites as the company will most likely target a small niche market in India.

Market Entry

Selecting an appropriate international marketing entry strategy is a critical important decision within the process of internationalisation as it can be vital for the sustainable competitive advantage of the company (Buckley and Ghauri, 2004). There are many ways in which a brand can enter a foreign market. These can categorized as (1) direct production – direct entry, acquisition, and joint-ventures – (2) indirect production – licensing, franchising, technical agreements, service contracts, etc. or (3) exports – indirect, direct agent/distributor, direct branch/subsidiary, etc. (Rugman, 2009).

The suitability of one of the above market entry modes for Nicolites depends upon the combination of several internal and external factors (Koch, 2001). For instance, Nicolites is a relatively young, medium size company with around one hundred employees (Nicolites, 2015). The company currently operates only across UK and does not have any international operations. The limited size of the company – and subsequently its resources – coupled with its inexperience in internationalisation makes it very unlikely for Nicolites to adopt a direct production as a market entry method. Direct production methods are the most capital and resource intensive methods of market entry requiring highest levels of commitment from the internationalising firm (Ireland, et al. 2011). Moreover, although Nicolites is the largest UK’s e-cigarette brand (Evening Standard, 2013); it currently does not have the global brand equity and popularity of a multinational company. Therefore, Nicolites is less likely to be able to attract investors to operate franchises in India or secure favorable license agreements for indirect production. Resultantly, the internal factors of the company oblige it to pursue internationalisation through exports.

Exporting local products to a foreign market is perhaps the most simplest and common methods of entry in international markets. Exporting involves sending goods from the home country to another for distribution, sales and services (Ireland, et al. 2008). Since the amount of goods exported can vary, exporting enables internationalising firms to move into an international market in a controlled manner – that is, without risking high capital or making intensive commitments initially. This gradual process of market entry provides internationalising firms with the opportunity to explore the prospects of the target market and gain knowledge and experience before making large investments (McDonald and Burton, 2002). It is noteworthy that exporting strategy is vulnerable to exporting tariffs and can often face supply chain/logistics challenges in getting their goods to the international markets and eventually to the end-consumers (Ireland, et al. 2008). Additionally, exporting firms may also face difficulties in managing and dealing with local distributors (Ireland, et al. 2008).

In case of NIcolites, exporting is the seemingly the most appropriate market entry method, as this method will negate any major risks of failure by allowing the company to gain experience in many facets of international business and particularly learn about the Indian market. This method will incur the least amount of initial costs for internationalisation. Considering that Nicolites’ products are value added finished goods, Nicolites will find it most suitable to continue to use its existing production facilities and supply chain to manufacture e-cigarettes and export it to international destinations. In order to overcome the challenges related to distribution and sales activities, Nicolites can hire its own local managers to avert the disadvantages of underperforming agents in a foreign market. As for the concerns regarding export tariffs, this is less likely to affect the business strategy of Nicolites in India as currently the Indian government has levied heavy taxes on all tobacco products (Narayan, 2015) which make tobacco free Nicolites e-cigarette an attractive alternative for smokers.

Segmentation

Targeting customer segments in marketing strategy enables firms to decide ways for acquiring competitive advantage (Proctor, 2000). ‘A market segment is a fraction of the whole target market that has one or more unique attributes that provide it a distinction and sets them apart from other consumer segments’ (Proctor, 2000 p.24) . Customer segments can be identified through demographic variables – such as sex, age groups, family life cycle, literacy, earning, religion, ethnicity, etc.; and geographic variable – which divides customer segments according to their localities (Proctor 2000). In India, Nicolites should target upper-middle and upper class consumers specifically from young adults and adult age groups – who are open to new technologies and brands – from various professional classifications living in upscale urban centers of major metropolises.

Marketing Mix

After identifying the targeted consumer segments, a firm should then determine a suitable targeting strategy (Kotler, 2000). By applying the marketing mix model in the Indian context, Nicolites can adapt its marketing strategy for Indian consumers. Internationalising firms have a choice of targeting their customers through either a standarised strategy – in which standarised products are sold all over the world – or through adaptation – in which products are localised to meet the preferences of each target market. In the current context, it is suggested to apply a mix of both these targeting strategies.

Product

Nicolites has a trusted reputation as a brand and offers a high level of choice to its consumers in terms of strength and flavour of its products (Evening Standard, 2013). Moreover, Nicolites uses most advance cartomiser technology for e-cigarettes unlike most other brands which use 3 piece models that are associated with poor quality and leak (Evening Standard, 2013). Therefore, it is suggested that Nicolites should export the same high quality products in India to target its affluent consumers; although the company can bring in some variation in the strength and flavour of its e-cigarettes according to local preferences.

Price

From the four basic pricing strategies – that is (1) premium pricing, (2) penetration pricing, (3) economy pricing, and (4) price skimming (Kotler, 2000) – the current pricing strategy of Nicolites can be termed as premium. In India, the company should pursue the same pricing strategy to target its affluent consumers.

Place

In the UK, Nicolites works in conjuncture with a number of high street retail firms such as Tesco, Superdrug, WH Smiths, Co-op, Sainsbury, etc. as well as local newsagents and online (Evening Standard, 2013). Partnering with the National Federation of Retail Newsagents (NFRN), Nicolites has been filling the shelves of local corner shops across the country in pursuit of penetration and consolidation (Ansoff, 1965) growth strategy. In India, Nicolites can similarly distribute its products through high street retailers in upscale posh area of urban centers.

Promotion

Nicolites pursues a push strategy (Kotler, 2000) in UK in which it tries to make its e-cigarettes available in as many high street and corner shops as possible to penetrate the market. However, in India, it should focus on creating a niche market of affluent consumers out of the 5% consumers of manufactured cigarettes through a pull strategy (Kotler, 2000). In this way, it will be able to establish a superior international brand image in the minds of its consumers and increase its attractiveness among them.

Conclusion

This essay concludes that in order to expand the consumer base of the company and negate its reliance on a single market, Nicolites e-cigarette should internationalise its brand and enter the lucrative Indian market – which is the 6th largest consumer of cigarettes in the world – through exports. India has good market prospects for alternative cigarette products and a conductive environment for international businesses. By using a mix of standardised and localised marketing strategies, Nicolites should target the upper-middle and affluent class consumers of the country to pursue its international ambitions.

References

Ansoff, H. (1965), Corporate Strategy. New York: McGraw-Hill

Ayres, A (2015). Economic Growth and India’s Global Rise. Forbes. Available from http://www.forbes.com/sites/alyssaayres/2015/08/17/economic-growth-and-indias-global-rise/

Buckley, P. and Ghauri, P. (2004) Globalization, Economic Geography and International Business’, Journal of International Business Studies 35(2), 1-18.

Datamonitor Market Insights, (20011).Tobacco in India An insight into the Indian tobacco market. Datamonitor Report Published: Feb 11 | Code: DMCM4789

Evening Standard (2013). Nicolites officially becomes the largest UK brand of electronic cigarette. Available from http://www.standard.co.uk/lifestyle/nicolites-officially-becomes-the-largest-uk-brand-of-electronic-cigarette-8463753.html

Hill, C. (2012) International Business. New York: McGraw Hill Education.

Ireland, R. Hoskisson, R. and Hitt, M. (2008). Understanding Business Strategy: Concepts and Cases. Mason: Cengage Learning.

Ireland, R. Hoskisson, R. and Hitt, M. (2011). Understanding Business Strategy: Concepts Plus. Mason: Cengage Learning.

Koch, A. J. (2001). Factors influencing market and entry mode selection: Developing the MEMS model. Marketing Intelligence & Planning. 19:5 351-361

Kotler, P (2000) Marketing Management. New Jersey: Prentice Hall

McDonald, F. and Burton, F. (2002) International Business. London: Cengage Learning.

Narayan, A (2015). Indian Tobacco Giant Tries Short Cigarettes as Taxes Hit Demand. Bloomberg. Available from http://www.bloomberg.com/news/articles/2015-04-15/india-tobacco-giant-tries-short-cigarettes-as-taxes-hit-demand

Nuruzzaman, A. (2011). Indian Futures Market: An Analysis. Research Scholar, Department Business Administration, Aligarh Muslim University, Aligarh, Uttar Pradesh 7(2) Dec., 2011

Proctor, T (2000), Strategic Marketing: An Introduction, London: Routledge

Rugman, A (2009). The Oxford Handbook of International Business. New York: Oxford University Press.

Sak, O and Shaw, J., (2004). Process of International Marketing. International marketing: analysis and strategy (4th ed.) London: Routledge.

Tallman, S. (2007). A New Generation in International Strategic Management. Massachusetts: Edward Elgar.

Tobacco Free Kids (2015). The Global Cigarette Industry. Available from http://global.tobaccofreekids.org/files/pdfs/en/Global_Cigarette_Industry_pdf.pdf

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1.1 Introduction

As has been commented upon in academic research, “today, in the business world, management recognises that customers are the core a business.” Expanding market share for any business relies upon the strength of their ability to be able to attract customers to purchase their product or service. However, it has not been until relatively recently that business has begun to understand that it is not solely the reliance upon attraction of customers that is important to success. Equally, if not more important, is the need to retain the customer and their future loyalty to the product offering or brand, as this is the only way in which the corporation can sustain their competitive advantage over other market players. Moreover, it has also been recognised that there is a significant cost benefit in the retention of existing customers in comparison with adding a new customer and this is especially true in an industry that has reached saturation point, which is certainly the case in the UK mobile telecommunications sector.

1.2 Background on CRM tools and systems

Consequently, it is not surprising to find that an increasing number of businesses are becoming more focused upon the need for including customer relationship management (CRM) processes, tools and systems as a key element of their corporate marketing strategy. Indeed, in a survey conducted by Boston based Bain and Company, which covered 708 corporations across the America’s, Europe, Asia and Africa and resulted in 6,373 respondents, 78% were actively using management tools as a key element of their drive for competitive advantage, with the same percentage incorporating customer surveys within this strategic area. With the advancement of technology, both in terms of software, the internet and other developments, these CRM tools and systems have become more innovative as corporations seek to improve their customer retention and loyalty. It is this particular element of the CRM discipline that forms the focus for this dissertation which, by using T-mobile as a case study corporation, intends to undertake an assessment and evaluation of the impact that such tools have upon the corporation’s marketing department.

1.3 Case study T-Mobile

T-Mobile is a wholly owned subsidiary of the German telecommunications giant Deutsche Telekom. The current brand name was introduced in 2002. Within its sector, the company is the world’s sixth largest mobile communications business, based upon the number of subscribers, and the third largest mobile multinational after Vodafone (UK) and Telefonica (Spain). Globally, the company has over 101 million subscribers. In the UK, T-Mobile has 13 Million subscribers and operates through 294 separate retail locations in addition to its online website. On the 1st July 2010, T-Mobile UK became part of a joint venture with Orange, operating through a new corporation called Everything Anywhere Ltd, which is “jointly owned by Deutsche Telekom and France Telecom.” Together the two businesses account for around 28 million subscribers and share administrative facilities.

As stated, T-Mobile is operating within a highly saturated industry sector, which can be evidenced from recent statistics. For example, as can be seen from figure 1, mobile phone ownership had increased to over 80% by 2008 . More recently, by 2010, this number had risen to around 90% ownership of 2G and 3G mobiles (figure 2), although it should be noted that the number of actual mobiles owned significantly exceeds this figure because many individuals have more than one phone.

Figure 1 Consumer durable statistics

Source: http://www.statistics.gov.uk/cci/nugget.asp?id=868

Figure 2 Communications adoption 2010

Source: OFCOM (2010)

In terms of market share, the statistics show that T-Mobile’s percentage of the UK market has remained relatively static during the course of the five years to 2009, as indeed has that of Orange, the company with which it has now formed an alliance. In contrast, O2, Vodafone and 3UK have achieved significant share growth during the same period. Superficially, at least, this appears to suggest that the latter corporations have not only managed to secure a greater rate of market share growth than T-Mobile but have also been more successful at retaining the loyalty of their existing consumer base. Consequently, this result suggests that there is a need for improvement in the T-Mobile CRM systems.

Figure 3 Mobile phone market shares

Source: OFCOM (2010)

1.4 Aims and objectives

The aim of this study is to evaluate and assess the impact and success of CRM tools and systems within a practical corporate environment, in other words, it seeks to ascertain the extent to which these tools are achieving their goals of customer retention. Therefore, it is intended to resolve the following research propositions:

1. That CRM tools are having the effect of increasing customer loyalty to the T Mobile brand and improving repurchasing levels.

2. That the marketing department at T Mobile have been successful in introducing innovative CRM tools which has provided the corporation to achieve a competitive advantage over its main competitors within the mobile phone sector.

To facilitate the robustness of this dissertation and the fulfilment of the aims that have been set, it is intended to conduct the research within the following framework of objectives. The focus of these objectives will be the mobile sector of the UK telecommunications industry, using T Mobile as the case study organisation: –

To provide a brief overview of the definition of CRM and its purpose within a corporate environment, with particular reference to its development and effectiveness of use within the UK mobile telecommunications sector

To provide a detailed examination of the main challenges faced when using CRM tools and identify the latest technologies that are being used to address these issues.

To provide a critical analysis of the way in which the case study organisation, T Mobile, has introduced CRM tools and systems into their business. Moreover, this objective will also seek to investigate how these systems have been incorporated into the latest strategies developed by their marketing department.

The final objective is to use the results of the research conducted t make recommendations for improvement, if applicable.

1.5 Scope and structure of dissertation

To aid clarity and understanding of the content the remainder of this study has been formatted within the following framework. In the next chapter (2) a critical literature review is presented which concentrates upon the definition of CRM, the various tools and systems that are used to improve and enhance its management, as well as identifying how T Mobile have utilised these tools within their CRM strategy. Chapter three examines the methodology options available to the research and provides the reasoning for the methods that have been chosen, as well as indicating the limitations and how these have been addressed. Within chapter four, the research findings are presented and explained and these are further discussed in the chapter (5) that follows. The final chapter (6) brings the dissertation to a conclusion and, based upon the findings that have been discussed, also contains recommendations that are intended to assist the case study organisations and other in maximising the benefits the receive from effective implementation of CRM systems.

Furthermore, as attachments to the main dissertation, additional appendices have been added. These comprise of a biography that provides details of all the publications and other information that has been relied upon and referred to within this study. Additionally, the appendices contain details of the primary research conducted, such as the questionnaires and interviews, together with full details of the responses received.

Chapter 2: Literature review

2.1 Introduction

The academic and corporate interest in the importance of a relationship that a business can and should develop with their customers has been a part of the corporate strategy for some time . In this respect, it has long been recognised that the extent to which a corporation understands its customer and their needs will have a significant impact upon both their achievement of competitive advantage and in developing appropriate marketing strategy . However, since the middle of the 1990’s CRM has not only taken the theory and art of interacting with customers to a new, more collaborative level, but the concept itself has become almost inextricably linked with the rapidly developing area of information technology and systems . In other words, from a practical, if not psychological aspect, the majority of CRM related studies are now focused upon its development and practice within the internal and external technologies tools and systems available to the corporation.

Therefore, within this critical review of existing literature the intention, following a brief overview of the various definitions that have been applied to CRM, is to focus upon the CRM, how these are implemented in the IT environment, and to also evaluating the benefits and barriers. Following on from this the relationship between these issues and the manner in which they have been implemented within the case study corporation T-Mobile.

2.2. Defining CRM and its purpose

As has been the case with almost every theory related to corporate strategy and management, there have been a number of attempts at providing a comprehensive and robust definition for the term CRM. These have ranged from the complex to the simple. At the former end of this scale is the lengthy definition that was used by Payne and Frow for the purpose of their research study into this area.

Figure 4 CRM definition

Source: Payne and Frow (2006, p.168)

However, as Payne and Frow indicate the term, which gained prominence in the 1990’s, has in the past been defined as “CRM can be interpreted as a process of digitizing a staff’s knowledge about his or her customers.” Nevertheless, in view of the connection that exists between CRM and IT, perhaps the simplest and most appropriate definition that exists can be more succinctly described as it being “information-enabled relationship marketing.”

2.2.1 Purpose of CRM

In terms of the purpose of CRM systems, from the corporation’s viewpoint, the consensus of opinion is that this can be applied to five key areas, which are as follows:

1. Acquisition of new customers

The purpose being to secure new customers whose values equate with those that the firm or its brand is delivering. In financial terms, this will also reduce the fixed cost per customer, which can add further value by, for example, reducing product price.

2. Increasing revenue from existing customers

This is achieved by encouraging existing customers to purchase other products or accessories, which in the mobile environment might consist of additional apps.

3. Improving customer retention rates

Aimed at improving customer loyalty which will result in a continuation of their repurchasing habit

4. Reducing recurring costs

Improvements made to internal/external systems should lead to a reduction in the cost of delivering messages and services to the customer without impacting adversely on quality

5. Reduce costs of acquisition

Helps to improve the efficiency of attracting new customers, which has cost benefits

2.2.2 Key changes brought about by introducing CRM

As can be seen from the following table (1), the design, execution and implementation of the CRM process within the business has an impact upon four key areas of its operations.

Table 1 key change elements of CRM

Source: Gurau et al (2003, p.211)

It is apparent that the two main elements of this change are the effect that it will have upon firstly, the customer and, secondly, the business employee’s. From a customer aspect, the process will be focused upon understanding and satisfying their needs, which at the same time will provide them with a greater sense of being appreciated and respected by the firm as their views are being listened too. The other aspect, which is interrelated with the first, is ensuring the efficiency of understanding that the staff have in terms of operating the new CRM system as, only through this approach will the customer satisfaction determinants be fulfilled.

2.3 CRM theoretical models

There have been several theoretical CRM models developed over recent years, which have set out to provide an understanding of the way that these processes work and the interaction between the various elements. Of these, it is considered the two that provide the greater amount of detail about these processes are the QCI (figure 5) and Payne’s five processes (figure 6) models.

Figure 5 QCI model

Source (Buttle 2009.19) QCI model developed by a consultancy firm

Figure 6 Payne’s five processes m model

Source (Buttle 2009, p.20) Payne’s five process model

The benefit of the QCI model is that it shows the revolving and continuing cycle of the CRM customer based element. In other words, it defines the triple task of which is to win-back old customer, target new ones and continue to learn from the information gathered from the consumer so that the value of the product and brand can be constantly evolving to meet their changing needs and demands. Another important element of this model is that it indicates the bi-directional approach or communication between the various elements, which is essential in the development of a successful customer relationship programme.

Conversely Payne’s model, which has been adapted from Michael Porter’s ‘value chain,’ takes a straight line approach and splits the process into two distinct parts, these being the primary steps, related to external and customer activity, and the supporting direction, which is related to internal operations. In focus therefore, this model is targeting the impact of the relationship between the customers on the one hand and the profitability of the business. Nevertheless, it is apparent in both cases that there needs to be a robust link between all of the component parts and it is this link which has been found to be best created through the adoption and implementation of appropriate CRM IT systems.

2.4 CRM and IT

As this review has revealed earlier, most CRM tools and systems are now implemented through the use of information technology and this is increasingly being seen as the most appropriate manner of controlling and measuring customer relationship. Nonetheless, in terms of corporate acceptance of this situation, this has been slower in materialising. However, this position is rapidly changing as indeed can be evidenced from a survey conducted in 2002 which showed corporate employee’s satisfaction with IT CRM systems increased from 35% in 2000 to 78% in 2992.

It is apparent from this change of opinion that corporate employees have now begun to recognise the main advantages that exist within the new IT developments in CRM, which have been clearly identified within academic research (Table 2).

Table 2 difference between old and IT based CRM

Source: Gurau et al (2003, p.201)

One interesting observation becomes immediately apparent from a review of this list is the increased interactivity force and power of the customer and the impact that this has upon the corporation’s and its drive for competitive advantage. For example, not only does the Internet provide bi-directional between the customer and the corporation, it also allows for the same to occur between customers, which means that their influence upon other and potential customers is much greater within the World Wide Web environment. For this reason, it is important that the best practice is adopted for the CRM systems.

2.4.2 Best practice for CRM in IT

The first important factor to remember, which is linked to that discussed in the previous section is that CRN management tools usage on the internet should not be confined to just being price driven. The reason for this is that most online retailers have resorted to this approach, which reduces its competitive advantage for the firm. In addition therefore, the Internet message also has to achieve customer satisfaction “to increase competitive advantage” against other online competitors.

The level of the customer satisfaction both with the product and with the relationship that he or she enjoys with the firm is a key factor in determining the extent of their loyalty to the firm and their repurchasing behavioural patterns. Moreover, as indicated within the following diagram (figure 7), if there is a significant level of dissatisfaction being experienced, the person in question can act as a disruptive force. Through the communication means available on the Internet, these ‘dissatisfied’ customers can create adverse perceptions in the minds of potential new customers about the quality and appropriateness of the product and brand. This could act as a deterrent, dissuading these new customers from an initial purchase trial.

Therefore, to ensure competitive advantage is maintained a high level of customer satisfaction with both the product and the brand and its service and promotion must be maintained, to such an extent that, as Shrimp and Madden “a triangular love relationship” develops between the brand product and customer.

Figure 7 Customer satisfaction matrix

Gurau et al (2003, p.201)

2.6 CRM tools, systems and their objectives

2.4.1 Use of Internal Tools and systems

With regard to the internal implementation and management of CRM processes, the core factor is for the business to comment this process using a two-step process:

Step one

This step focuses upon the business and customer strategy review. Business strategy is to commence with an overview of the internal and external business environment. Customer strategy involves examining the existing and potential customer base to identify which segment is most appropriate for the business product

Step two

Consists of building a multichannel objective, which means that s number of channels must be managed in an integrated manner

The multiple channels that are referred to in step two above will include a number of activities. For example, perhaps the most important of these is the need for a data depository (or memory bank) from which information can be mined and retrieved. In addition, the business will need to have front and back office applications which a) interface with customers, and b) include back office applications that support internal administrative, supply and logistical processes. All of these elements must be aimed at improving the quality of service marketing that is applied to the external CRM tools. In other words, they should be designed to enhance the service value chain operated by the business and from the business viewpoint, the effective management of its customer base.

Another of the beneficial uses of internal CRM tools is that it can be integrated with other computerised systems, providing information to areas such as the supply chain, resource planning and even financial systems

2.4.2 Use of external CRM tools

In essence, most of the external CRM tools will be related to marketing , especially those that are focused upon the Internet and, in this respect can provide opportunities that can be used to adopt new marketing models that will enable the marketer to get “inside the lives [and minds] of your customer.”

Within the offline environment, many businesses have used these systems for the purpose of direct mailing and the creation of loyalty and reward programmes, all of which are designed to improve customer retention and loyalty. Alternatively, in the online environment the marketers are provide with three main marketing opportunities, which include the development of a brand website and involvement with social networking, as well as online advertising. In relation to all of these opportunities, the focus for the marketer must be upon the creation of an interactive dialogue between the business and the customer to ensure the objectives and needs of each party are met.

However, it is equally important, having implemented these processes, that their performance is monitored, which means that control systems, such as a KPI’s or Balanced Scorecard approach needs to be also included within the process.

2.7 CRM at T-Mobile

In relating the above elements of the literary review to the case study organisation, T-Mobile, the extent to which this corporation has followed the advices and processes described in the previous section can now be identified. It is apparent from a visit to their website that the company is offering similar promotional material and product descriptions to those of other mobile organisations. Furthermore, in terms of building a customer relationship the site also offers a discussion forum, although it has to be said that this is not immediately apparent unless one visits the ‘contact us.’ Similarly, with the same criticism, the company has also engaged with online social networking, though this appears to be limited to the ‘Twitter’ site at present.

Consequently, when all of this activity is added to the data that is collected from the contact us site and the further customer details that are required when requesting help, or making a payment, it is also apparent that the organisation must have the internal CRM systems available to enable it to develop a data depository. From this, the business would be able to produce a targeting programme that can design offers for a specific group of customers, where existing or new.

2.8 Summary

In summary therefore, it can be concluded from this review that the main elements required for the implementation of a successful CRM system that will deliver the goal and objectives of the business, must be based upon the following key factors:

Mission vision

Creating basic functions, structure and content that are designed to deliver customer satisfaction and are designed to prevent the death of the relationship

Commitment

Ensuring clarity of definition, good leadership and help from the supply chain to achieve objectives

Monitoring

Effective management, use and control of the information acquired and evaluating the ongoing performance

Customer orientation

Focus on committed customers and a loyalty programme with financial incentives tend to lead to a greater level of customer satisfaction. Also learning to see the brand through the customer’s eyes

Marketing

Concentrate upon firing up the front line

Within the following chapters, it will be discovered the extent to which T-Mobile’s current CRM tools and systems have succeed in these goals and objectives.

Chapter 3: Research methodology

3.1. Introduction

One of the most essentials prerequisites for the conduct of any study of this nature, which includes both an understanding of the theoretical processes and their transition into a practical commercial environment, is ensuring that the appropriate methodology is chosen for use . The following sections outline the approach that has been adopted for this dissertation.

3.2 Research philosophy

The philosophy adopted for the study has been based upon a combination of the positivism and interpretivism approach. In relation to the former, the benefit is that it allows the researcher to introduce previously published facts and concepts that can be reviewed objectively, for example, in this case such a modus would include previously published academic literature and the opinions of expert observers. Interpretivism, on the other hand, permits the researcher to observe the reactions and perceptions of individuals, which in this case would be those who supply mobile product and the consumers who use them.

3.3 Methodology strategy

With a study that combines the theoretical with the effectiveness of its transitioning into a practical environment, the methodology chosen would rely upon either the quantitative or qualitative approach, or a combination of the two. The former allows for a more detailed and study of specific elements or opinions, for example, as would be gained from the use of an individual case study organisation or the conducting of interviews. The latter relies upon a large scale of investigation and, in this respect the use of existing academic resources or the conducting of a survey would have the desired outcome.

3.4. Choice of research methodology

In considering the appropriate approach that would be suitable for this dissertation, the author has heeded the advice from other academics that a combination of the qualitative and quantitative approach might enhance the results and findings and has therefore decided upon this method. The reason for this choice is based upon the fact that, although only one organisation is being included as a case study, the size of the consumer market is considerable. The intention with the latter is to seek a consensus of opinion from these consumers as to what CRM strategies and tools are most likely to affect their purchasing and loyalty choice and for what reason. The data and information required from these approaches will be amassed through the secondary and primary data collection processes.

3.5. Secondary data collection process

Secondary data comprise two areas of research, both of which will have been pre-published and generally available in the public domain. For the first part, this will include publications related to theoretical concepts related to the key elements of CRM and the models and tools developed which are available in books and journals located in either bookstores, libraries or reputable online publishing websites. The second part is the collection of statistics and other external opinions that have been made available from the Office of National Statistics, the OFCOM regulator and other NGO organisations or expert observers.

3.6. Primary data collection process

Regarding the collection of primary data, three approaches have been used. The first of these was the case study itself, for which T-Mobile’s own website has been used in conjunction with reviews related to the corporation that have been published by other industry observers. However, to appropriate and robustly address the aims and objectives of the dissertation it was also determined that there was a requirement for the researcher to gather information, opinion and evidence from those considered to have a more intimate involvement with the industry sector . To achieve this situation it was decided to use an approach that combined the use of semi-structured interviews together with consumer surveys .

3.6.1. Semi-structured interviews

For the purpose of semi-structure interviews, two employees from the case study corporation were chosen and, in addition, a representative from the OFCOM regulator and a consumer group . The benefit of this approach was that it provided the researcher with the ability to achieve an understanding of the CRM tools and strategies implement by the T-Mobile Corporation, as well as their views and opinion as to the success of these methods.

3.6.2. Questionnaire and survey

The questionnaire took the form of an online survey , which was targeted to social networking groups as well as a similar survey conducted at one of T-Mobile’s retail location, where the corporation’s customers formed the respondents. These surveys, to which only the researcher had access to the results, were aimed at providing a collective consumer view and opinion in relation to the benefits the considered applicable to them from CRM processes. The questionnaire itself was constructed with a range of question styles. From the closed type which was used for responses such as age and gender, to the ‘linert’ style, which is designed to test the degree to which the consumer agrees or disagrees with a specific statement, with five choice options being available.

3.6.3. Ethical issues within primary research

There are issues that need to be appropriately addressed with any primary research. Predominantly, these are related to data and privacy protection. In the design, construction and implementation of the semi-structured and survey used within this particular dissertation the ethical issues were dealt with in the following way. Firstly, as can be seen from the questionnaires, there were no questions that required the divulgence of any person data save for age and gender. In other words, no information of a personal or financial nature was requested. Furthermore, it was made clear to the respondents that their involvement with the survey was a matter of personal choice. With the interviews, again it was confirmed that participation was voluntary and, moreover, that privacy would be protected by not indicating the interviewee by name. In addition, in this case transcripts of the interview were sent to each participant for their agreement prior to the results being included within this study.

Therefore, it is considered that the primary research processes have been implemented in a manner that cannot be seen to have caused harm to the respondents and, furthermore, comply with current protection legislation and codes.

3.7. Limitations

The limitations that can be seen to ‘potentially’ affect the chosen methodology can be described as follows. Concerning the secondary research process, the main concern is to ensure two things. Firstly, it is important to ensure that the data has been collected from reliable sources and is, as far as can be assessed, free from bias or inaccuracies. Secondly, it is also important to ensure that the research relied upon is the most current available.

With the primary research, it is equally essential to ensure that bias is not allowed to affect the design in terms of things like questions. In addition, the other limitation is related to the sample size selected for these events.

Within reason it is considered that, taking into account the restrictions in relation to issues such as time, cost and geographical locations, the research conducted for secondary and primary purposes has reduced the impact of these limitations to acceptable levels.

3.8. Summary

It is the researcher’s considered opinion that the methodology adopted for this study, as set out within this chapter, was sufficiently robust as to add value to current research into the area of customer relationship management and, in addition, has adequately addressed the aims and objectives..

Chapter 4: Findings and data presentation

4.1. Introduction

The findings presented within this chapter include those related directly to the case study data provided in the introductory chapter, as well as the results of the primary interview and questionnaire results.

4.2. Case study and interview findings

One factor that has become apparent about T-Mobile and its development over the past few years is that the UK market share for the business has not increased, in other words, if there has been any customer gains, these have been countered by similar levels of losses. This result appears to indicate that, to date at least, the business CRM process is not perhaps as robust as other competitors are, particularly when compared with O2 and Vodafone. However, this view of the CRM process does not appear to be a viewed shared by the two representatives of T-Mobile who took part in the semi-structured interview.

4.2.1. Interview findings

The full transcri

This work was produced by one of our professional writers as a learning aid to help you with your studies

This essay will present an analysis of some of the reasons for the commercial success of the recent movie “The Hunger Games” a film that generated $155m in ticket sales in the US alone (LA Times, 2012).

One of the key activities of the marketing function is to undertake environmental analysis in order to consider adaptations to the marketing mix which will ultimately lead to higher levels of profitability (Jobber, 2007). A key aspect which the success of The Hunger Games draws upon is a changing social dynamic within the external environment which has seen a preference of consumers for movies over books. As such, it is argued that the success rate of many recent movies including The Hunger Games and other well known films such as the Harry Potter series have come from what is essentially a product adaption from book to motion picture, a conversion which better meets the needs of the consumer (LA Times, 2012).

Other factors that may be seen as relating to the successes driven by considerations in the external environment relate to the timing of the release of the product. A well known definition of good marketing being the right product, in the right place at the right time (Brassington and Pettitt, 2006). In this case, Velasco (2012) argues that the timing of the release of the product was a crucial piece of marketing, in effect the March rollout seeing that The Hunger Games was released into a market which was largely devoid of competition with many competing major motion pictures not being due for release until the later summer period.

Other theoretical considerations which aid one’s understanding of the reasons for the commercial success of the hunger games may relate to customer segmentation and targeting (Kotler et al, 2009). In this case, sources compare the success of The Hunger Games to that of the Harry Potter series. Here it is indicated that The Hunger Games takes advantage of a broader approach to demographic segmentation than that of the Harry Potter films (LA Times, 2012). For instance, while the Harry Potter series has a very limited audience, namely children and those looking after them, The Hunger Games was marketed at a much broader demographic including the lucrative teenage segment. As such, a broader interpretation of the segmentation concept saw The Hunger Games simply having a wider audience to draw upon in the first place. Some sources have also indicated that in its current format as a motion picture, the film has “downplayed” the romantic aspects of the original book in an attempt to further widen the appeal to both male and female segments of the population (Velasco, 2012). Again this may be seen as a key reason for the success of the movie with an audience which is potentially twice as big in comparison to targeting only one gender group.

Other sources in analysing the commercial success of the movie have considered the direct promotional elements of the marketing mix (Brassington and Pettit, 2006) most notably focusing upon contemporary forms of promotion such as social media advertising (Belch and Belch, 2009). In this case, Acuna (2012) argues that The Hunger Games has made use of the most comprehensive social media marketing campaign of any movie to date which has included a raft of activity on social networking sites such as Facebook and activity using other sources such as Tumbler and Twitter. Such activities are designed to effectively amplify the official messages transmitted by advertisers with advertising in the social media often resembling that of traditional word of mouth forms of marketing (Yeshin, 2006). In analysing this element of the marketing mix, one may consider that the use of such promotional activities also links to the segmentation and targeting strategy as previously outlined. In this case, one may see that the teenage to early twenties target audience is also the audience which is most susceptible to social media and other forms of contemporary advertising.

Other sources such as Reuters (2012) go further in assessing the impact of The Hunger Games online and social media marketing campaign. In this case there is a consideration that the marketing campaign on the behalf of The Hunger Games in the social media environment has been so large in scale and so successful that this will limit the amount of money future film producers spend on traditional advertising such as television advertising. Despite this success seen in the context of The Hunger Games, the article (Reuters, 2012) goes on to point out that such a tactic is far from risk free with the previous 2009 film “Bruno” suffering from “bad-word-of-mouth” reviews in the online social environment and damaging the credibility of the offer.

Despite the use and success of contemporary forms of marketing such as online marketing and social media marketing, the films promoters have not neglected classical forms of promotional material with considerable effort being made to raise the profile of the movie through traditional paper based forms of advertising. In this case Acuna (2012) indicated that in the US 80,000 free posters for the film were handed out while another 3,000 billboard and bus shelter hoardings were paid for. All of these may be seen as key methods of raising the profile of a marketing offer in the context of an untargeted marketing audience (Yeshin, 2006).

Having reviewed the evidence there is little doubt that the recent major motion picture The Hunger Games has been a commercial success and that furthermore, a large amount of this success has been due to positive marketing activities. However, the paper has also revealed that in order to create such a marketing success a whole range of activities and factors have had to be taken into account including environmental analysis, effective segmentation and the creation of an innovative marketing mix. If there is a single important factor to be derived from this paper then it is perhaps the need for contemporary marketers to truly understand the changing landscape of the promotional environment in which social media marketing may now be seen as a core area of focus moving forward.

Bibliography

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