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Introduction

The five core concepts of marketing are; consumer needs/wants/demands, products and services, value/satisfaction/quality, exchanges/transactions/relationships and markets (Kotler, et al., 2008). To be able to understand and cater to all these factors, an organisation can use a variety of marketing theories. This report will outline and critique the various principles of marketing, noting the advantages and disadvantages of each. The theories that will be covered are; 4Ps, marketing, ambush marketing, buzz marketing, market segmentation, targeting and positioning, Ansoffs matrix, PESTEL analysis, porters’ five forces and micro-environment factors.

4Ps

Successful marketing is based upon addressing some very basic, key issues. The 4Ps aims to address these issues, and allows a company to understand some very important aspects of their internal operations. The 4Ps are comprised of; product, price, place and promotion (CIM, 2009). Analysing these factors allows an organisation to put their customers at the centre of their marketing, and the company must do everything in their power to deliver the upmost quality and service to all of their customers.

Booms & Bitner (1981) provide a list of attributes that each of the 4Ps may include. Although an old model, it is still very much applicable to today’s business environment.

Product: Quality, brand name, service line, warranty, capabilities, facilitating goods, tangible clues, price, personnel, physical environment and process of service delivery.
Price: Level, discounts and allowances, payment terms, customers own perceived value, quality/price interaction and differentiation.
Place: Location, accessibility, distribution channels and distribution coverage.
Promotion: Advertisements, personal selling, sales promotion, publicity, personnel, physical environment, facilitating goods, tangible clues and process of service delivery.

Furthermore, for the service industry, the 4Ps was extended to the 7Ps. This was mainly due to the higher degree of collaboration between the organisation and the consumer, which the original 4Ps were not taking into consideration(Webster, 1984). This resulted in the framework being extended, to take into account the variety of service attributes that come into play when devising marketing strategies. Service quality is becoming more significant to an organisation, as they can no longer only rely on the benefit of a good to attain and retain consumers (Lusch, et al., 2007). Booms & Bitner (1981) provide many of the attributes that the extra 3Ps encompass. These are;

Participants: Personnel training, discretion, commitment, incentives, appearance, interpersonal behaviour, attitudes and customer behaviour/degree of involvement.
Process: Policies, procedures, mechanisation, employee discretion, customer involvement, customer direction and flow of activities.
Physical Evidence: Environment, furnishings, colour, layout, noise level, facilitating goods and tangible clues.
Ambush Marketing

There is a lot of moral uncertainty surrounding the use of ambush marketing. It is predominantly related to big events and sponsorship deals. Ambush marketing became such a prominent strategy because of the increase in sponsorship deals. This mainly happened because event owners wanted higher returns and it made advertising more effective (Meenaghan, 1998). Furthermore, Meenaghan (1994, p. 79) defined ambush marketing as “”the practice whereby another company, often a competitor, intrudes upon public attention surrounding the event, thereby deflecting attention toward themselves and away from the sponsor”.

Although ambush marketing would appear to hold many benefits for a company, at basically no cost, there have been many academics that criticise its uses. Payne (1998) believes ambush marketing jeopardises one of the fundamental facets of business activity, namely truth in advertising and business interactions. On the other hand, other academics criticise the weak-minded view that competitors have a moral obligation to step back and allow an official sponsor to reap all the benefits from a special event (Meenaghan, 1996). In general, ambush marketing comes down the moral perceptions of the marketing manager. As the majority of companies are in business to make profits, then capitalising on any means necessary will be acceptable, and ambush marketing will be a prominent strategy for them to use.

Buzz Marketing

Word-of-mouth marketing and buzz marketing are very similar, and is a “marketer’s dream” (Balter & Butman, 2005, p. 161) if successfully implemented. However, it is incredibly difficult to define and implement buzz marketing, as “everyday word of mouth conversations tend to be random and spontaneous in nature, occurring in a natural, unpredictable pattern of communication” (Ahuja, et al., 2007, p. 152).

Buzz marketing is usually implemented through building suspense and tensions around the release of a new product, thus causing media and consumers to constantly talk about the product. It is a relatively free way of marketing, and can reap incredible benefits for the company. The only negative for buzz marketing is the fact that it cannot really be controlled in any way, as it is heavily reliant on consumers spreading the message on behalf of the organisation.

The intentions of buzz marketing is obviously meant to be positive, by generating effectively free advertising for an organisation or their products (Ahuja, et al., 2007). However, word-of-mouth works in both a positive and negative manner, as a bad PR story can quickly be spread across the globe. Furthermore, it is most effective across a young audience, meaning that the message will be spread amongst a certain demographic, but not everyone the organisation was hoping for (Leila & Abderrazak, 2013). It is the inability to measure the reach of this type of marketing that makes buzz marketing very risky for an organisation. The message could easily be misinterpreted, there is little control over the direction of the campaign, and it may actually end up causing negative impact on organisation performance (Bloomberg, 2001). Market Segmentation, Targeting and Positioning

Market segmentation has become an essential element of marketing, especially in developed countries. This is because goods can no longer be sold without considering the specific needs of consumers, and who is likely to purchase the product (Wedel & Kamakura, 2000). The main use for market segmentation is to provide guidance on which marketing analysis or strategy an organisation should pursue. Furthermore, Wedel & Kamakura (2000) provide a classification of different market segmentation groups that companies should aim to cater to. This is in regards to a general and product-specific view.

Combining segmentation with targeting and positioning allows an organisation to learn information about their target markets, consumer preferences, competitor’s strengths and customer segments (Natter, et al., 2006). Furthermore, the process of STP should be completed in order, with a segmentation analysis being used as the basis of targeting, which can then be used for positioning. Unfortunately, this can make the process long-winded, as an organisation may want to identify only who they target, or where they should position their product (Kotler, et al., 2006). There is also a great need for behavioural profiling throughout STP, forcing an organisation to conduct even more analysis than they may actually want to (Dholakia & Dholakia, 2001; Kotler, et al., 2002). Although and STP analysis can be time-consuming, it does provide an organisation with a comprehensive overlook on a variety of factors that are intrinsic to an organisations success.

Ansoffs’ Matrix

In a 1957 report, Ansoff provided a comprehensive definition for product marketing as “a joint statement of a product line and the corresponding set of missions which the products are designed to fulfil” (Ansoff, 1957, p. 114). This resulted in the creation of the Ansoff Matrix (1965), which is a comprehensive marketing theory to help guide a company’s strategic growth decisions. It is comprised of four quadrants, with each giving a general direction as to how a company should proceed with their desired growth. The four quadrants of Ansoffs Matrix are (AM, 2015);

Market Penetration: This is about further exploiting a product that exists in an already functioning market. Market penetration is usually made possible through the clever use of promotions, or increasing the attractiveness of a product
Product Development: The product development growth strategy focuses on introducing new products into existing markets. This can either be in the form of a complete new product, or the modification of an existing product.
Market Development: Sometimes referred to as market extension, this factor of the Ansoff Matrix involves an organisations selling its existing products in a new market. This can be aided by market segmentation, which can help identify potential new markets. Some approaches to this strategy include, new geographical markets or distribution channels.
Diversification: Generally known as the most risky growth strategy, diversification involves an organisation developing new products into new markets. There is a lot of risk in this strategy because an organisation will not be knowledgeable on either the product or the market they are entering. Heavy planning and research are vital for a diversification strategy to be successful.

Different organisations benefit from different strategies. For example, a study conducted by Watts, et al., (1998) concluded that the most appropriate strategies for small and medium sized enterprises (SMEs) would be product development or market development. This is because most of these organisations would not have the resources to successfully implement a diversification strategy, and the growth from market penetration would be too slow. A larger organisation may well be more successful in diversification, as they have more expendable resources.

Macro Environment Marketing
PESTEL

PESTEL stands for Political, Economic, Social, Technological, Environmental and Legal. Furthermore, it is a comprehensive framework used by organisations to help analyse the macro-environment factors that are affecting daily operations. A PESTLE analysis “is in effect an audit of an organisation’s environmental influences with the purpose of using this information to guide strategic decision-making” (CIPD, 2015, p. n.p.). After a company has conducted a PESTLE analysis, they should use their findings to help guide any strategic decision making to minimise the impact of external forces.

Political: The main political factors of PEST deals with the effects government can impose on an organisation. This can include things such as, new legislation, changes in taxation, minimum wages, and employee benefits.
Economic: Some of the most important economic factors that a PESTEL analysis will investigate are “the economy systems and structures, resource status, the level of economy developing…” (Yingfa & Hong, 2010, p. 563). If an economy strengthens, then it would usually have a positive effect on the majority of companies performance, however this can be largely dependent on what areas of the economy strengthen.
Social: One of the most significant factors of the PESTEL is the socio-culture factor. The socio-culture factors are usually in continuous change, and “have a massive impact on how organisations are managed, and how leaders have to behave if they want any followers” (Hussey, 1998).
Technology: One of the fastest growing and most rapidly changing factors of the PESTEL analysis is the technological environment (Henry, 2008). Some examples of technological factors include; R&D activity, Automation and Technological Developments (NetMBA, 2015). A company must ensure they are maintaining top quality equipment to produce the most competitive products.
Environmental: The main environmental factors that a company will look at through a PESTEL analysis are, ‘green’ issues that affect the environment, renewable energy sources and waste/disposal (App Rao, et al., 2008). Consumers are becoming more concerned with their environmental impact, thus affecting their purchasing choices.
Legal: Similar to political, legal factors look at how legislation affects a company. This can include, competition law and government policy, employment law and safety law. It is of vital importance for a company to keep up-to-date with all relevant legislation (App Rao, et al., 2008).
Porters Five Forces

Porters Five Forces model can have a huge impact on the direction and shape of an organisations decision making. If conducted successfully it is a great tool to guide all strategic marketing activities. The five components of Porters Five Forces are:

Threat of new Entrants: “New entrants to an industry bring new capacity, the desire to gain market share, and often substantial resources” (Porter, 2000, p. 138).
Threat of Substitutes: “A substitute performs the same or a similar function as an industry’s product by a different means” (Porter, 2008, p. 17).
Bargaining Power of Customers: “Powerful customers can capture more value by forcing down prices, demanding better quality or more service, and generally playing industry participants off against one another, all at the expense of industry profitability” (Porter, 2008, p. 14).
Bargaining Power of Suppliers: “Suppliers can exert bargaining power over participants in an industry by threatening to raise prices or reduce the quality of purchased goods and services” (Porter, 1998, p. 27).
Rivalry among Existing Competitors: “Rivalry among existing competitors takes many familiar forms, including price discounting, new product introductions, advertising campaigns and service improvements” (Porter, 2008, p. 18).
Micro Environment Marketing

One of the most widely used and comprehensive frameworks for analysing the micro-environment is the SWOT analysis. This analysis measures the internal strengths and weaknesses of an organisation, and the external opportunities and threats. Having identified these factors, an organisation should build strategies which may build on the strengths, negate the weaknesses, exploit the opportunities or counter the threats (Dyson, 2004). These strategies can be further guided by the use of the macro-environment analysis, and can supplement the variety of different marketing techniques mentioned above, such as ambush marketing or market segmentation. Furthermore, these strategies can be generated through the use of a TOWS matrix, with forms relationships between the different variable to draw up a variety of strategies that the firm can utilise.

Conclusion

Overall there are a variety of methods that an organisation can utilise in order to successfully analyse the market, and market their products. It is imperative that an organisation knows how to implement both of these methods, as it will have a huge impact on the overall success of the organisation. The 4Ps is a great analysis for a company to conduct first, as it outlines all the fundamental aspects that effect an organisation.

Furthermore, an external analysis should always be conducted, especially the PESTEL and Porters Five Forces analysis. This is because it outlines all important external factors, such as competitions activities or new legislation. Understanding these factors will shape the marketing strategy that a company wishes to pursue. Depending on what the external analysis shows to a competitor, they can then choose which market strategy they wish to pursue. This could involve using an Ansoff Matrix, or just pursuing an ambush, buzz, push and pull or market segmentation strategy. One strategy cannot be anchored to a certain industry or company, as it is only through extensive analysis that a company will know which the optimum strategy is.

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Introduction

The on-going technological advancements in the electronic devices industry make it very competitive (DeGusta, 2012). Companies, therefore, need to be very strategic in their marketing activities. Being among the market leaders in such an industry, Apple lays the emphasis of its strategy on innovation (Lyons, 2010). While it has the advantages of its strong financial position (Johnson et al., 2012), brand name (O’Reilly, 2014a) and excellent data access manager (Webster, 1991), it also has the disadvantages of changing management (Myslewski, 2013) and ineffective use of the cloud (Frommer, 2011). In the external environment, its loyal customer base (Elmer-DeWitt, 2012) and the growing use of smartphones (Gibbs, 2014) may prove to be beneficial for the company, while it may need to beware of the competitive rivalry arising out of technological advancements (DeGusta, 2012), impact of uncertain economic conditions (Reardon, 2009) and pressure from regulatory bodies (Kaynak and Jain, 2012). Based on its concept of differentiation (Nielson, 2014a), it designs and implements its strategies which form the marketing mix. Apple management thus needs to consider the different viewpoints about its strategies in its decision making process.

Situational Analysis
Strengths

Apple leads the worldwide capital market, which makes its strong financial position its valuable asset (Johnson et al., 2012). The closing financial statement of Apple in December 2014 reported a net income which was the largest in the history of public limited companies (Bradshaw and Platt, 2015), making its cash in hand the highest as well (Yoffie and Rossano, 2012). Another advantage that Apple enjoys is its operating system with data access manager, which is superior to that of Windows (Webster, 1991). The $118.9bn brand name of the company is also a strategic strength as it tops the list of the world’s most valuable brands (O’Reilly, 2014a).

Weaknesses

Apple experienced the greatest loss in its history in 2011 when Steve Jobs, the genius mind behind Apple’s innovation, creativity and success passed away (Griggs, 2011). After his death the Chief Operating Officer Tim Cook took over as the CEO of the company (AppleInsider, 2011). This change in management turned out to be a major weakness as Tim is skilled in operational excellence, while Apple is famous for its innovation (Myslewski, 2013). This weakness was most significantly portrayed with the failure in customer experience from the newly launched iPhone5, when complaints were registered about scratches on the phones, spotty maps app replacing Google Maps, leaking light and screen issues (Gross, 2012). Moreover, Apple also has not been able to make effective use of the cloud; it bragged about the iPad 2 as being a ‘Post-PC’ devise, whereas it still needed to be connected to a computer to access or transfer files (Frommer, 2011: 1).

Opportunities

One of the greatest opportunities Apple has in the market is its strong customer base; its customers are more seen like followers of the company. The strategy that Apple may follow is to keep the customers happy and their willingness to pay a premium price will increase (Anon., 2014). In a survey conducted, about 94% of the iOS users stated that they will only consider Apple when buying their new tablet or smartphone (Elmer-DeWitt, 2012). Farber (2013) argues that Google and Microsoft have the potential to manufacture the finest quality products on which Apple boasts, but they lack the potential to manufacture the long queues of people waiting in anticipation of buying their new iPad or iPhone. Smartphone has replaced many devices which people used to carry; watch, pocket calculator, camera and walkman are just a few examples (Gibbs, 2014). This fact creates opportunities for smartphone companies to come up with more innovative applications and features which would be well accepted and used by customers.

Threats

The rapid advancement in technology can be seen as a threat for Apple as all the competing organisations are always in the look-out for options to progress. Research suggests that the use of smartphones has increased like no other technological device (DeGusta, 2012). This automatically puts a pressure on the electronic gadgets producers to be a step ahead of the competition at all times. The unpredictable economic situations also pose to be a threat to electronic device producers like Apple (Reardon, 2009). During the financial crisis, the unemployment levels were high and because of lowering disposable incomes of consumers, luxury items like electronic gadgets were among the first items to be removed from their budget lists, thus shrinking the market for smartphones, tablets etc. (Fawzy and Dworski, 2011). Many smartphone companies are now approaching developing countries to carry out their manufacturing process in anticipation of hiring low-wage workers (Chu, 2014). As a result, there may be a threat of increased pressure from regulatory bodies and social groups regarding the working environment in factories, which may eat up the high profit margins generated by this strategy (Kaynak and Jain, 2012).

Understanding Customers

Some experts believe that if one understands the customers of a brand, he almost understands the brand itself (Clifton, 2009). Some companies like to associate the personality of their brand with the user characteristics, while there are others who would associate the elements of their brand personality with that of their spokesperson (Brengman and Willems, 2009). Apple seems to use the former strategy as it serves its ‘socioeconomically elite’ customers by elite devices (MetaFacts, 2009: 1). Research suggests that Apple owners are economically more sound that those without Apple devices (MetaFacts, 2009 – Appendix Graph 1).

Unique Selling Proposition

The differentiated products of Apple are a source of its competitive advantage (Johnson et al., 2012). Lyons (2010) argues that no company has a better spirit of innovation than Apple. In such a highly competitive market, it is able to ensure that no other company is able to imitate its unique capabilities (Terwiesch and Ulrich, 2013). Although Sony is also able to produce high-tech products, the design and integration of Apple are still not easy to replicate (Rothaermel, 2013). Hestad (2013) identifies the level of intricacy that is taken care of while designing Apple products; even the white colour of the iPod was finalised with the mutual consent of the chief designer Jonathan and Steve Jobs himself. Furthermore, other companies are trying to catch up to Apple’s vertical integration system, but they find it difficult to do so because Apple owns just the right chip manufacturers, standards and controls, whereby all its devices sync easily with each other (Nielson, 2014b).

Segmentation, Targeting and Positioning

The market for smartphone is growing at a fast pace (Visions, 2012), which depicts how important it has become for people where they cannot imagine their lives without their phone (Duerson, 2012). There are different views and ongoing debates about Apple’s target market. There is some evidence about Apple focussing on the tech-savvy youth, mostly students (Appleyard, 2008), however, Apple devices are also widely used by affluent business professionals for their work (Apple Inc., 2015a). Considering the media habits of Apple customers, research suggests that they prefer reading Big Guardian or Grazia and spare about 1-5 hours watching TV per week (O’Reilly, 2014b). They are also seen as being status and brand conscious (O’Murchu, 2015). Because its competitive advantage lies in its design, Apple’s most loyal customers include graphics designers, editors, artists and digital video producers (Franzen and Moriarty, 2015).

Carmi Levi, the VP of marketing at a multinational agency, believes that the marketing of Apple creates a differentiating factor by positioning it as a solutions company, as opposed to a tech company (O’Murchu, 2015). Its easy-to-use technology and user-friendly nature goes with the tagline it introduced for Macintosh: ‘The computer for the rest of us’ (Gartenberg, 2010: 1). The brand position has evolved throughout its journey, but Apple management claims that the brand promise is still the same (Marketing Minds, 2015). However there are controversies about this statement after the documentary “Apple’s broken promises” by BBC Panorama (Thomas, 2014: 1).

The Marketing Mix
Product

The strategy Apple follows is to create the best product which generates a better user experience with every new launch, which is why their focus is not on producing products needed by customers, but desired by them (Bulik, 2008). ‘Simplicity’ and ‘intuitiveness’ are the two major characteristics of its products (DeMers, 2014: 2). The Mac Computer was the first launch by Apple, which was then considered overpriced and was perceived to be targeting only a niche market (Wouters, 2014). The company outstood in the industry for the first time after launching its portable music player, the iPod (Khan, Alam and Alam, 2015). The other products by the company namely the iPhone, iPad and Apple TV further strengthened the company and helped build its brand image (Bulik, 2008).

While Apple’s management states that its product strategy revolves around peoples’ feelings of excitement and pride have when they own Apple products (M2 Presswire, 1998), there are criticisms about its strategy, pointed specifically at the Apple Watch. Critics state that Apple has lost its focus after this launch, as watches have nothing to do with the smartphone or tablet business (Benzinga, 2014). On the other hand, supporters of the Apple Watch think it is a great innovative step, whereby the concept of smartwatches will be introduced in the mass market. It is also considered to be ideal for software developers, who can create innovative apps by using it (Bajarin, 2014).

Promotion

Apple also incorporates its concept of simplicity in its promotion, as it believes that flashy messages, giving too much information are too mainstream and not appreciated by the people (DeMers, 2014). It therefore prefers a simple white background in its commercials with light, catchy music (Wouters, 2014). The communication messages revolve around the emotions aroused by the brand; these include one’s desire and dreams, hopes for the future and urge to be socially superior (Azzawi and Ezeh, 2012).

At the time when iPod was launched, Jobs realised that a conventional form of advertising was required in order to inform the customers about its features. It revolved around the brand’s social acceptability concept, whereby owners would feel proud of owning such a devise (Marketing Minds, 2015). On the other hand, Apple’s promotional alliance in UK and Germany was greatly criticised with assertions that it had probably lost other means of promotion. Through this alliance, Coke was to link its website with that of iTunes and millions of free downloads were offered to music lovers on purchase of Coke bottles (Ward, 2006).

Price

Due to its differentiated products, Apple focusses on premium pricing strategy (Nielson, 2014a). It gives the company an advantage, whereby it does not have to get into price wars with competing organisations. Steve Jobs strategised to give higher priority to profits instead of market share, which resulted in production of high-end products and pricing them accordingly (Nielson, 2014a). Wouters (2014) stresses that Apple has never competed on price, and because of its brand recognition created over time, customers are willing to pay the higher price it charges.

Critics argue that Apple will soon face challenges related to its pricing strategy as other companies may give it a tough competition through their low-priced products (Nielson, 2014a). An example is the case of iPads; research indicates that most of iPad users are not very loyal Apple customers and they may switch to tablets from other companies if they get them at cheaper prices (Anon., 2010b). It is therefore predicted that due to its premium pricing approach, Apple may lose the tablet market to competitors (Anon., 2010b). Chulkov and Nizovtsev (2014) further strengthen the argument by using the iPhone example. After two months of the launch, the company abruptly reduced the price by $200, which resulted in the loss of confidence of the early adopters, who had waited in long queues at the launch time to buy their iPhones. Due to this price change, Apple’s share price also dropped and some analysts predicted that the company would not be able to keep up with the competition if it continues with the same pricing strategy (Wingfield, 2007).

Place and Distribution Strategy

By introducing its own retail outlets and online store along with dealership with other mobile stores, Apple’s approach was to adopt a hybrid distribution strategy (Wouters, 2014). In 2002, there were concerns about the customer service provided by small-scale dealers of technology devices and since Apple did not want its image to be jeopardised, it reduced its number of small-scale dealers to only 1% (Viardot, 2004). Apple’s strong supply chain can be considered as one of the reasons behind its success because outsourcing is also done strategically (SupplyChain 24/7, 2015). It relies on many suppliers all over the world for the same raw materials, so that if one company is not able to provide the material on time, another one can help to keep up with the rising demand (SupplyChain 24/7, 2015).

There are, however, allegations about ethical dealing regarding Apple’s Supply chain as portrayed in the documentary by BBC Panorama, which shows that Apple factories are provided in from dangerous and illegal mines (Thomas, 2014). Although Apple management did claim that those accusations were false (BBC News, 2014), there is no source to prove the truth of those statements as yet.

People

According to Borison (2014), Apple takes pride in its workers who become a source of inspiration for their peers and customers. This example was set forward by Steve Jobs himself, who was said to be the most influential figure in the top 100 list by the MediaGuardian (Anon., 2010a). Employees at Apple state that they feel great about being a catalyst to change because of working in an organisation that emphasises on innovation (Hughes, 2010). Apple claims to provide the best employee working conditions in the technology industry (Nuttall, 2012), however, the investigation by BBC Panorama portrayed long working hours, poor living conditions and intimidating work culture in factories where Apple products were manufactured (Thomas, 2014). In the same documentary, there were also concerns revealed about the suicides at another factory supplying Apple products.

Process

The strategy behind production of Apple’s innovative devices remains mysterious as it is mostly considered as a secret recipe (Panzarino, 2012). All of the devices undergo standard process guidelines set by the company, which include product design, testing, polishing, packaging etc. (Satariano, 2013). Initially there is an idea generation stage, after which a dummy device is created which is tested and after being reviewed by the team of experts, a standard process is devised for its production (Elmansy, 2014). Analysing Apple’s design and creative strategy, one may say that it is not an abrupt plan to invent novel solutions, but it takes an excellent team work, driven by enthusiasm (Elmansy, 2014).

Physical Evidence

According to Gmoser (2014), all the space in an Apple retail store is designed in such an attractive way that it interests people to buy their devices. Singh, Katiyar and Verma (2014) emphasise the importance of store layout and design in creating great customer experience, which helps in translating the desire to a final purchase decision. Due to this reason, the store design strategy was slightly tweaked for Apple Watch. While Apple Stores are normally seen without carpeted floors, the specific design for Apple watches included carpeting on the floor because the store designers overheard a conversation between some customers mentioning that they would not be likely to buy a watch from a carpet-less store (Hughes, 2015).

Relationship Marketing

According to Kotler and Keller (2012), exceptional value creation by organisations does not only result in customer satisfaction, but is raised to the level of customer delight. It is perhaps this customer delight which Apple intends to create through its enhanced user experience (Johnson et al., 2012). The iPad has a CRM tool specifically designed for business users who would need to have customer information such as meeting with clients and the like. This imparts that Apple is not only concerned about understanding its own customers, but it is also thoughtful about coming up with a better solutions whereby they can also deal well with their customers (Apple Inc., 2011). According to Temkin Experience Ratings 2015, Apple is ranked the highest along with Amazon in providing valuable customer experience (Close-Up, 2015). It goes so deep into delivering exceptional value to its customers that it organized a training session, whereby Mac users were given an opportunity to learn different functions of the computer in which they had problems. It was led by expert tutors who ensured that the customer experience was worth the effort and the money they were paying for it (Boudreau, 2008).

Sustainability

Apple claims to be involved in responsible management practices to benefit the environment (MH, 2015). The management plans to employ renewable energy to run its operations worldwide, introducing a new product packaging made from virgin paper (MH, 2015). In order to create such types of forests from which virgin paper would be prepared, Apple formed a partnership with the Conservation Fund (Apple Inc., 2015b). A 2014 report indicates that Apple tops the technology companies list as being most environmental friendly, as it is the only organisation which avoids usage of detrimental chemicals in all its products, thus protecting human health (Ritchie, 2014). Apple also has regulations for its suppliers to be environmentally responsible. On the contrary, the BBC Panorama investigation depicted that Apple suppliers owned mining ships which endangered the marine life and the environment (Thomas, 2014). Where analysts criticise Apple’s aggressive strategies of high-scale production to stay ahead of competition as being hazardous to the environment (Bradshaw and Platt, 2015), Apple claims to have preventive measures to support its high-scale production by using energy obtained from cleaner sources to protect the environment (Apple Inc., 2015b).

Conclusion

Like every company, Apple also plans its strategies and implements them considering its own perspective. In the environment, however, there are different views about understanding the initiatives taken by the company. Positive aspects of these opinions will further strengthen Apple as a brand, however, the negative opinions need to be tactfully handled, as they may do serious harm to the company. Critical evaluation of each aspect of their marketing strategy would make them sustain their strengths and overcome their weaknesses.

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

The marketing communication process represents varied disciplines and tools that are composed of five elements (Finne and Gronroos, 2009). These represent advertising, personal selling, sales promotion, direct marketing and public relations. The above were examined and explored in this discussion where each was found to have individual and specialised use and contribution to the marketing communication process. The process is an interdependent series of marketing efforts that require companies and marketers to take stock of the attributes and shortcomings of their product or service to construct a plan that achieves successful outcomes.

The application of the marketing communication process is not a dogmatic discipline, but rather one that requires an understanding of the relative strengths and weaknesses of each component. This provides the basis for understanding how components can work together to address differing product and service demands.

Understanding Marketing Communication and Advertising

The mass media benefits of advertising is a key component as it offers the means to reach and influence the broadest cross section of consumers in a highly cost effective manner (Gilbody et al, 2005). The mediums employed represent television, broadcast, print and online techniques along with billboards, signs, posters and other forms that put the product message in front of the public. One of the challenges is waste and targeting. The mass media approach means that whilst the ad placements can be positioned to meet certain demographic and psychological aspects of the target audience, the imprecise approaches of television, broadcast and varied print mediums means that the advertising efforts will be either seen by non-target profiles or potentially lost in a sea of what is termed as advertising clutter (Rotfeld, 2006).

Advertising clutter is defined as a large amount of advertising messages that bombard a consumer during television programs, the pages of magazines or in other print or broadcast mediums (Rotfeld, 2006). The number of ads tends to cause consumers to either ignore these efforts or to tune them out unless the creativity used in the messages specially appeals to a consumer need (Fill, 2005).

The above are distinct challenges faced by marketers in the use of advertising that are highly difficult and complex to execute. Whilst consumers can be classified and grouped into general categories, the differing stages represented by their decision making process in terms of readiness and intent to purchase poses additional hurdles faced by using mass media advertising (Chan et al, 2009). Frequency and repetitiveness represent the general tool used to address the above, however, depending on the medium used, such as television and magazines, these measures (frequency) can be highly expensive (Kelly and Jugenheimer, 2008; Fill, 2005).

Overcoming the above costs aspects as well as clutter and the tendency to ignore ads represents a distinct challenge for marketers. The solution lies in crafting a mixture of advertising, personal selling, sales promotion, direct marketing and public relations that provide enough frequency and exposure to counteract the indicated clutter and tendency to ignore ads, whilst meeting the dictates of a cost effective budget.

Contribution of Personal Selling to Marketing Communications

Depending on the nature of the business, the products being offered and the size of the company, personal selling can represent either an efficient or highly costly mode of marketing communication (Baker and Hart, 2008). Whilst in most cases the sales personal are paid by commission, the percentage of the sale that needs to be devoted to this approach has to be high enough to induce top flight personnel to participate (Ross et al, 2005). The potential to sell enough units to enable them to earn a good wage is a critical factor in attracting better qualified individuals (Ross et al, 2005). More importantly, the product has to be suited to this type of approach.

Other challenges include being able to develop suitable potential sales prospects that represent lead generation created by advertising, offers, website visits, promotions and in some cases cold canvassing techniques (Smith et al, 2006). The challenges are to reduce the per unit sales expense low enough to justify its use and the payment of commissions. In terms of an example of the above, this means that the item must be highly suited for direct selling. Insurance, brokerage services, real estate and cars are prime examples (Hendershott and Zhang, 2006). This is due to the complexity of choices in terms of product types where explaining and establishing a rapport with the consumer is a key part of the process (Hendershott and Zhang, 2006; Fill, 2005). The built in margins in these products and services is high enough to absorb the commission and sales administration costs that include hiring better quality personnel.

As pointed, personal selling, in lieu of mass product distribution in stores, chains or using the Internet is not suited to many types of products or services. Typically, companies such as electronics (computers, home appliances, banking and other products or services) utilise amended customer service call in centres where operators are trained to refer customer to a sales department when it is discovered a new or replacement product is either needed or desired (Piercy and Rich, 2009). This is a form of personal selling that is organised as part of normal business functions, in order to aid in generating sales whilst keeping costs low. As is the case with the marketing communications process, in order to address the varied challenges faced by targeting and reaching the right prospects in a cost effective manner, a combination of various segments of the five marketing communications process elements needs to be used that suits the individual situations, products and other aspects of each company. Apple is a key example of a company that uses all forms of the five elements in conjunction with personal selling that consists of the Apple Store outlets, service and the Internet (Muniz and Schau, 2007). It also utilises varied forms of sales promotion, direct marketing and public relations in a multi-pronged effort to reach as broad a potential audience combined with frequency and exposure to create the conditions to generate sales (Shimp and Andrews, 2013). This is an example also employed by automotive and other companies (insurance, banking, etc.).

Benefits of Sales Promotion in Marketing Communications

This is a form that in most cases uses purchase incentives to lure customers to buy based on varied reasons (Gronroos, 2004). It can be seen in supermarkets where varied products and produce carry two for one offers to generate sales using savings as the lure. Other inducements represent discounts during off seasonality buying lows such as January for cars, or May and June price discounts for computer equipment that usually spikes in August, as part of back to school specials (Alawadi et al, 2006). Basically, all companies use some form of sales promotion to generate sales based on seasonality or competitive factors that are used in conjunction with other marketing communication processes.

The key challenge that marketers face in terms of the use of this method is not devalue the perceived worth of their products by using too many sales promotions that customers are quick to see as efforts to gain sales (Alawadi et al, 2006). Apple is a prime example of a company that makes limited use of sales promotions, and when they do, it primarily consists of adding additional memory or other features as part of the normal sales price (Muniz and Schau, 2007). Apple has maintained a high price point for its products by avoiding sales promotions that offer price discounts. The automotive discount wars of the late 1990 and early 2000 showed automotive companies that discounting prices actually hinder bottom line revenues (Baily et al, 2005).

Uses of Direct Marketing in Marketing Communication

This process represents one that includes mailing special offers and inducements to customers and target audiences that are an important generator of sales (Fill, 2005). Huge customer relationship data bases are compiled using point of sale information from dealers and stores, Internet sale websites, customer service intake calls and other methods (Tapp. 2008). It aids in understanding purchase patterns, demographics, and frequency of purchase that are used to put together special mailings. Insurance companies, banks, supermarket chains and many service type industries make extensive use of this method. Today’s electronic mediums such as the Internet, and smartphones have expanded the effectiveness and efficiency of direct marketing (Persaud and Azhar, 2012).

The challenge that marketers face today is that the compiling of these customer relationship databases, along with purchase and contact records has become common practice for large firms (Neslin et al, 2006). The increased competitiveness of firms within varied industry classifications, along with new affordable database software and storage systems means this field of marketing communications has undergone a transformation process (Wilson, 2011). This means that mid-sized and smaller forms are able to effectively use the sales generation benefits of direct marketing in their overall efforts. The new challenge thus represents the creative crafting of customised approached using printed materials (mail) and electronic distribution devised to appeal to customers and target audience using more specialised parameters (Palmer and Loenig-Lewis, 2009). Knowing when customers might seek to replace a product or upgrade their insurance, are keys to effectiveness under direct marketing that helps to generate leads and inquiries.

The challenge that faces marketers is knowing how and when to prospect for sales and customers to induce them to take action, and purchase. The modern interconnected nature of physical locations, Internet websites, emails, online customer service and other areas represents a highly proactive customer environment for every phase of the direct marketing experience (Palmer and Loenig-Lewis, 2009). The understanding of the increased immediacy in reaching and providing consumers ways to receive, or get answers to questions is key to all of the marketing communication process mentioned herein.

How Public Relations Contribute to the Marketing Communications Process

This represents an underutilised form for most firms as they fail to understand the importance of keeping the public informed of developments (Krimsky, 2007). The Internet age has given rise to increased scrutiny concerning all aspects of company operations, products and shortcomings (Krimsky, 2007). Curtin and Gaither (2009) define public relations as the process of supplying stakeholders and the general public with information regarding its operations. However, in today’s information age, company’s face new challenges represented by the increased availability of positive and negative comments by bloggers, product reviewers, and comparative product sites (Droge et al, 2009). The avenue to address these areas represents public relations releases in print, the Internet along with video chats, video conferences and other means highly successful marketing companies such as Apple use public relations to introduce new product innovations, releases, information on upcoming developments and other aspects of operations and products to keep the company’s name and activities in front of the public (Cornelissen, 2014). The challenge faced by marketers is to take advantage of the climate for increased information consumers crave, use this as a positive vehicle that works in consort with other marketing communications processes. This approach represents a highly sophisticated and coordinated approach that looks at marketing communications as a whole, as opposed to piece meal operations.

Subject Conclusions

Whilst it is convenient to think of the marketing communication process in terms of large companies, this does not necessarily provide the needed examples to understand the best approaches. There are countless examples of large companies that have spent huge sums on marketing, only to be out manoeuvred by smaller companies that established a more focused and connected approach to engage consumers.

The main message that was uncovered throughout this examination is that each potential to communicate with the public represents a selling opportunity using the most cost effective and attention getting means available. Today’s Internet and varied approaches to aid in the coordination of advertising (using Internet banner ads), personal selling (using customer service), sales promotion, direct marketing (using email and mobile technologies, along with carefully crafted public relations are examples. The hallmark of successful marketing communications is a consistent theme and message delivery that utilises all of the processes. The challenge faced by marketers is not the size of budgets, but how to obtain maximum exposure, message delivery and consistency that combats competitive efforts and strikes an accord with consumers. This entails the use of all of the processes using memorable messages that consumers can connect and relate to, and then delivering on these promises.

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

It can be said that advertising is a subset “promotions” in the marketing mix decisions and promotions put simply involves the mass communication of the product offering to the target market (Jobber and Ellis-Chadwick, 2013). Other than the obvious reason of persuading customers to make purchases, it is imperative to promote the product offering in order to create an image of the product which becomes one of its differentiating factors (Doyle and Stern, 2006). Furthermore the promotion of a product offering is important to reinforce the information the customers already have about the product (Doyle and Stern, 2006). As mentioned earlier, advertising is one of the components of promoting a product offering and thus it is defined as “the paid presentation and promotion of products or services through mass media such as television, radio, newspapers and the internet”(Doyle and Stern, 2006).

Traditionally, advertising is carried out on the television, radio and in newspapers however disruptive technology like the internet and the phenomena it has made possible has changed advertising and the effect it can have on consumers particularly where it concerns their purchasing decisions (Jobber and Ellis-Chadwick, 2013). Illustrating this point, Google and Facebook have created new environments which are part of the networks to which the planet belongs and which operate at break-neck speed (Jobber and Ellis-Chadwick, 2013). Furthermore, the internet and social networks have also changed the way individuals communicate such that advertisements do not inherently have to be paid – a good review from one consumer to a group of others can be all the advertisement that a company would need (Jobber and Ellis-Chadwick, 2013). In addition to this, advertisements can now be interactive in such a way that the information on the product passed on to the consumer is more targeted and customised (Jobber and Ellis-Chadwick, 2013). Thus this paper will be exploring the impact of online advertisements on consumer purchasing behavior first by outlining the theories of how advertising works, then examining the effects online advertisements on consumer purchasing behaviour .

How Does Advertising Work?

There has been considerable debate on how advertising works however the general consensus has been that there can be no single all embracing theory that explains how all advertising works because they have varied tasks (Jobber and Ellis-Chadwick, 2013). For example advertising that attempts to make an instant sale by incorporating a return coupon that can be used to order a product is very different from corporate image advertisements that is aimed at reinforcing attitudes (Jobber and Ellis-Chadwick, 2013). Nevertheless, the competing views on how advertising works are the strong theory of advertising and the weak theory of advertising (Jobber and Ellis-Chadwick, 2013)– both theories are based on how they affect customers and their end results.

The strong theory follows that a customer passes through the stages of AIDA – awareness, interest, desire and action. This theory argues that advertising is strong enough to increase public’s knowledge and change their attitude and as a result it is capable of persuading new customers to purchase a brand (Jobber and Ellis-Chadwick, 2013)). This is called the conversion theory of advertising: non-buying customers are converted to buyers(Jobber and Ellis-Chadwick, 2013). The product has been criticised on two grounds; one there is little evidence that consumers experience a strong desire before making a purchase because in cases of inexpensive product a customer could very well purchase a brand on a trial basis without any strong conviction that the brand is superior (Jobber and Ellis-Chadwick, 2013). The second criticism is that the theory ignores what happens after action as advertisements in mature markets also targets already established customers of the brand (Jobber and Ellis-Chadwick, 2013).

The weak theory follows that a customer passes through awareness, trial and reinforcement – ATR (Jobber and Ellis-Chadwick, 2013). This ATR model or theory is widely supported in Europe with Ehrenberg (cited by Jobber and Ellis-Chadwick, 2013) explaining that advertising can work exactly the way the ATR model theorises as there is no need for strong emotions like desire and conviction before a first purchase is made. It could simply be a purchase for trial followed by reinforcements.

Consumer Purchase Behavior Theory

“Consumer behavior is the study of the processes involved when individuals or groups select, purchase, use or dispose of products, services, ideas or experiences to satisfy needs and desires” (Solomon and Bamossey, 2006, p6). Schiffman and Kanuk (2007, p3) also take a similar approach defining consumer behaviour as the “behavior that customers display in searching for, purchasing, using, evaluating and disposing of goods and services they expect will satisy them”.

Early economists led by Nicholas Bellouni, John von Neumann and Oskar Morgenstern started to scrutinise the foundation of consumer making decisions (Richarme 2007). They approached the topic from an economic standpoint and focused only on the act of purchase and the most predominant model from this viewpoint is the “Utility Theory” (Richarme, 2007). The Utility Theory viewed consumers as entirely rational and self interested making their purchase decisions based upon the ability to maximise their use of their desired product whilst expending minimum effort (Richarme 2007). Another approach to consumer purchase theory is the psychodynamic approach which; the key tenet is that consumer behavior is determined by biological drivers rather than individual cognition or environmental stimuli (Bray 2008). Perhaps the most widely cited is the cognitive approach which views the consumer as an information procession (Ribeaux and Poppleton, 1978) who actively seeks and recieves environmental and social stimuli as informational inputs which subsequently aids decision making (Bray 2015).

Sheth et al (1991) propose that there are five consumption values influencing consumer purchase choices. The values are functional value, conditional value, social value, emotional value and epistemic value (Sheth et al, 1991). Three fundamental propositions are obvious in the proposed theory and these are:

Consumer choice is a function of multiple consumption values (Sheth et al, 1991).
The consumption values make different contributions in any given consumer purchase choice (Sheth et al, 1991).
The consumption values are independent (Sheth et al, 1991).
Online Advertisements and Its Impact on Consumer Purchasing Behavior

The beginning on online advertising was in 1994 when Hot Wire sold the first ad banner on their company’s website (Bakshi and Gupta, 2013). By year 2000 online advertising spending in the United States had reached $8.2 billion dollars with these numbers increasing to $12.7 billion as more people are connected to the internet and spend more time online (Bakshi and Gupta, 2013). This is a clear sign that online advertising has developed quickly in the last decade. Some of examples of online advertisements includes floating ads, expanding ads, wallpaper ads, trick banners, pop-ups and pop-unders (Bakshi and Gupta, 2013). Now these are the ones instigated by marketers or producers themselves. This paper however puts forward that if advertising (online advertising being no different) is a method of mass-communicating product benefits then online word of mouth or reviews may be considered as an additional method of online advertising albeit the marketers or producers would have very little control as to how such reviews are presented.

Online Reviews

Research has shown that consumer opinion and recommendations actually count towards purchase decision because product review allows consumers to get a feel for the product without making a trial purchase (Murphy, 2015). Recommendation sources according to Andreasen (1968) have a typology as follows: impersonal advocate (mass media), impersonal independent (consumer reports), impersonal advocates (sales clerk) and personal independents (friends) (Senecal and Nantel, 2004). Sencal and Nantel (2004) also report that consumers indicated that for their next purchase of durable goods they would be using first their personal independents as sources of recommendation.

This plays directly to customers’ need for information. Whilst customers could research products through search engines such as Google and Bing. It is never quite like having a first hand account from an unbiased user of the product. Statistics have shown that 80% of online shoppers would change their minds based on online reviews (Murphy, 2015). Supporting this is the fact that in a study carried out in India of the influencers of online purchase decisions, 93% of the respondents indicated that they considered online word of mouth much more reliable than all the other sources of information including the typical online ads (Bakshi and Gupta, 2013).

Thus it would logically follow that having bad reviews would correlate with poor sales whereas good reviews would mean good sales (Murphy, 2015). A case in point is the sale for a t-shirt on Amazon which shot up a staggering 2300% in 2009 after a joke review for the T shirt went viral on the the internet (Murphy, 2015). Till date the t-shirt which features three wolves howling at a full moon has garnered over 2000 reviews (Murphy, 2015). Another example is a study which showed that the biggest influencer for holiday shopping recommendations was from friends and family on social media with 63% swayed by Amazon reviews and 24% were from blogger endorsements (Morrison, 2014).

Social Media/Social Networks

Directly related to online reviews where it concerns online advertising are social networks which could be considered as the platform through which online reviews are exchanged albeit they should be considered separate elements and influencers (Morrison, 2014). Social network platforms such as Facebook which grew by 22% between October 2011 and November 2011 and Youtube which grew 67% percent between the same time frame are the new age medium of online advertising reaching millions of people at a go (Darban and Li, 2012). A study carried out between 2013 and 2014 found that 64% of respondents were convinced of what holiday gift to purchase by a social medium. Social media appears to be so effective that there is at least one social medium guiding consumers through their path to purchase. For example, 58% of respondents to the aforementioned study used Pinterest to find ideas and inspiration, 60% use Facebook to seek promotion whilst 48% share the the purchases they have made on Facebook inspiring others to also make purchases (Morrison, 2014). To this end, 11 out of 12 respondents confirmed that they have made purchases as a result of interacting with the producers on social media or interacting with their peers on social media and getting a sort of first hand advertisement of the product online (Darban and Li, 2012). In addition consumers have also indicated that they are able to communicate directly with producers via social media thus speeding up the purchase process as they also indicated that the length of time it sometimes takes to get the information they need from producers can put them off buying the product in the first instance (Darban and Li, 2012).

General Online Advertisements

In a study carried out on the effects of online advertisements on consumer buying behaviour of branded garments in Pakistan(Afzal and Rabbani Khan, 2015), it was interestingly discovered that there is no direct effect of online advertisements on the buying decisions of branded garmets whereas it was found that there is a significant indirect effect of online advertisements on consumer buying decisions because of advertising characteristics and consumer attitudes (Afzal and Rabbani Khan, 2015). Conversely, in another study carried out it was found that contrary to the the discovery of the study in Pakistan there was a direct link between online banner advertisements and the making of purchases or purchase decisions (Li and Leckenby, 2004) . Interesting another study showed that revenue garnered as a result of online banner ads (which attracted the most revenue) were on a high from 1998 when 56% of revenue made by the respondent company were from online banner ads. However, by the year 2001 these numbers had began falling until 2003 when it was only at 21% (Li and Leckenby, 2004). These studies did not give the reason as to the decline banner ads generated revenue. However the study in Pakistan had reported that consumers seemed to place more stock on word of mouth such as online reviews and a large percentage of the revenue generated by the participating companies were from loyal customers and refferrals (Afzal and Rabbani Khan, 2015). These go back to reiterate the points of discussion in the previous section of this paper as to the effectiveness of social media platforms and online reviews as a method of marketing. Thus it would appear that other methods or forms of online advertisement do not perform as well as social media platforms and online word of mouth it terms of being revenue generators.

The logical question to ask then is why this is so? The answer is not far-fetched and probably lies in the results of a study carried out on consumer perception of online advertisements (Priyanka, 2012). The options provided were entertaining, informative, irritation, credibility, interactivity and purchase. The respondents to these study were further adjusted for age in order to get a clear picture as to the age range of consumers and their perspective (Priyanka, 2012). Of the 100 respondents to the study, irrespective of age, 22 found online advertisements informative, 18 found them irritating whilst 18 respondents have made purchases because of online advertisements (Priyanka, 2012). Of those the respondents who made purchases 6 were between the ages of 41-50 whilst 5 respondents were of the older than 50 age group (Priyanka, 2012). In addition a very small percentage of this age group found online adverts credible which could mean that perhaps if they percieved online adverts as more credible they could be looking to making more purchases (Priyanka, 2012). Surprising this age group also found online adverts less irritating but also less informative (Priyanka, 2012). This could logically be reasoned to be as a result of the fact that most purchasers of this age actually want more information before they make purchases and are willing to suffer through online advertisements perhaps because they are not skilled in surfing social media platforms to gain more information of the product (the study also showed that only a very small percentage of the above 50 age group do not surf the internet or engage in online window shopping) (Priyanka, 2012).

Thus it would appear that forms of advertisement other than social media and online word of mouth walk a tight rope of being irritating and putting the consumer off thereby having a negative impact on consumer purchasing decisions.

Other Forms of Advertisements and its Impact on Consumer Purchase Behavior

In a study of 175 respondents carried out by Iqbal et al (2013) to determine the relationship between brand perception, advertising and consumer purchase behavior. Their findings, analysis and results showed that advertisements had a positive effect on brand perception and consumer purchase behavior, particularly in teenage consumers (Iqbal et al, 2013). Similarly Mel et al (cited by Malik et al 2014) argues that over time, advertisement plays a major role in influencing the consumer such that they become less price sensitive. In the same vein, Ackerbergm (cited by Malik et al, 2014) also argues that advertising is a great source of product learning for consumers. However image advertising and prestige advertising appears to have less significance in creating or instigating a learning process about the product (Malik et al, 2014). In other words, advertisements have a more positive effect on consumer purchase behavior if the advertisement includes informational content (Malik et al, 2014). Added to this is the fact that, it has been discovered that the more interactive an advertisement is the more it captivates the attention of the consumer and the more impact it actually has on consumer decision (Iqbal et al, 2013).

In comparison to online advertisements, the general consensus amongst scholars about traditional methods of advertisements appears to be that there is some positive impact on consumer purchase behavior ranging from product learning, to a decrease in price sensitivity and an increase in actual purchases (Kumar and Raju, 2013). This paper argues that perhaps this is due to the fact that producers or marketing managers have more control over traditional methods of advertisements. Wheresas with online advertisements, consumers are able to ignore the advertisements, pro-actively initiate the product learning process themselves thus controlling what they learn about the product which could be positive or negative.

Conclusion

This paper focused on the impact of advertisements (with a focus on online advertisements) on consumer purchase decisions. The strong and weak theories of advertisement were examined in order to determine the way in which advertisements work. Furthermore, some key elements of online advertising such as word of mouth by way of online reviews on social media platforms were examined in detail as well as their impact on consumer purchase decision. Finally online advertisements in general and how they influence consumer purchase decision was also examined. From the aforementioned examination and analysis, it can be concluded that online advertisements in whatever form can have either a positive or negative impact on consumer purchase decisions. Marketing managers appear to have very little influence on how the advertisements will impact consumer purchase behavior. Thus making the results inconsistent. Perhaps this is because the internet is such a fast-paced and volatile environment. In sharp contrast, it was discovered that traditional methods of advertisements have consistent (across various studies) positive impact on consumer purchase behavior. It can also be concluded that of all the forms of online advertisement, online reviews are perhaps the most volatile and prone to resulting in a negative impact on purchase decisions. Nevertheless, it is also quite likely to bring on the most amount of sales within a short period of time. It was discovered that consumers find some online adverts annoying which also influences their decision to allow the engagement of their attention and consequently their money in making the final purchase. In addition, it was also found that there are positive correlations between online adverts and consumer purchase behavior in that the online adverts triggers the customer’s interest in a product and eventually leads to a purchase.

References

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This assignment explores how business-to-business (B2B) marketing differs from business-to-consumer marketing. It will define marketing for the purposes of this assignment and then explore how it is approached generally. From there, this assignment will consider how B2B marketing is differentiated from consumer marketing, and finally it will investigate the similarities between the two marketing approaches.

Baines, et al, (2008:5) cite The Chartered Institute of Marketing (CIM 2001) definition of marketing as “the management process of anticipating, identifying and satisfying customer requirements profitably”. Marketing is often thought of as a three stage process of identifying the market segments, choosing a segment to target and the establishing a market position relative to competitors in the same market (Jackson, 2015). However, it is helpful to think of the customer as not necessarily being the ultimate consumer, since in order for a consumer transaction to take place, numerous business-to-business transactions will have taken place prior to this (Brennan et al, 2014). Business-to-business (B2B) marketing is, therefore, focused on satisfying the requirements of other businesses within the supply chain. And thus, firstly, one needs to consider how to segment the business market.

These businesses can be classified by type of organisational customers. For example, global or national; public or private sector; small, medium or large enterprises (Macfarlane, 2002) or broadly into commercial, governmental and institutional organisations (Baines et al, 2008). Commercial organisations can be further divided into: distributors, original manufacturers, users and retailers. Each of these make purchases in different ways. For example, distributors’ priorities are the smooth progress of products along the marketing channel from manufacturer to consumer. Thus, they can buy in bulk and then break down the goods into relatively small quantities for re-distribution in the market place, providing both storage space and buyer power whereas users purchase goods or services for immediate consumption within its production processes (Baines, 2008). Manufacturers buy parts, be they finished or unfinished and rebrand them into their own products whereas retailers purchase products to sell directly to consumers.

Thus, organisational buying is more likely to be highly cost-sensitive: for the ultimate business to maximise their profits, they will want to source the most suitable supplier for their needs, whereas the consumer is more likely to be influenced by image and product appearance (Jackson, 2015). Of more considerable importance, B2B marketing is concerned with creating long-term mutually beneficial relationships between the two businesses. This act as a brake on adversarial competitive behaviour, particularly when the ultimate consumer becomes more sophisticated and familiar with the products or services. This happens as markets become more competitive and this in turn affects the organisational buying behaviour (Swinder and Seshadri, 2001).

Organisational buying behaviour is the defined as the “the purchase of product or service to satisfy organisational rather than individual goals” (Parkinson and Baker, 1994:6). Thus marketing to other businesses requires the marketer to adopt processes which take into account the needs of several people rather than just a single individual. However, an alternative approach is supplied by Webster and Wind (1972:2) who define organisational buying as “the decision-making process by which formal organisation establish the need for purchased products and services, and identify, evaluate and choose among alternative brands and suppliers”. From this perspective, the B2B marketer is concerned with the processes of buying, and as such buying is not considered a one-off isolated event to satisfy wants.

The phrase ‘Buyphases’, devised by Robinson et al (1967), refers to the sequential activities that organisations engage in when purchasing products. First, the organisation identifies the need for a product or service, or there is some notion of recognising a problem. There is a gap between the benefits it is receiving now and the benefits it would like to have in future. As a result of this, thought is given to the product specification – the characteristics of the product needed to resolve the problem. Following this, there an active search for information to find products which meet the specification and some assessment of its performance standards, which are then formerly evaluated and then a product or service is selected.

However, some of these stages may be ignored or compressed according to the ‘buy-class’ of the products and services being sought. The ‘buy-class’ is the term used to describe how the nature of the product or service, the frequency of purchase and its relative value and strategic impact (if any) can vary (Baines et al, 2008). “New Task” purchases refer to a first-time buying situation, with higher risks as there is little collective experience of the suppliers/products. “Modified Rebuys” refers to lower risks with some experience and “Straight Rebuy” are routine, familiar purchases. The higher the “buy-class”, the greater the range of people who may be involved in the process, unlike with the ultimate consumer, who is more likely to decide unilaterally. Within an organisation, those who initiate the decision-making process may not be the ultimate decision-makers nor indeed users of the product. In high-value, high risk purchasing, influencers may help set the technical parameters, and from a marketer’s perspective, how to target, and indeed to who to target, may be constrained by gatekeepers who have the potential to control the type and flow of information within the organisation (Fill and Fill, 2005).

Taking into account the above, it can be seen that B2B marketing is about its role within the supply chain, and therefore constitutes a potential source of competitive advantage for the ultimate seller. For example, cost advantages can be obtained for those with high buying power, as they are able to benefit from greater discounts that can be obtained for the purchaser and which can then be passed on to the ultimate consumer (Jackson, 1985).

From a marketing perspective, therefore, B2B marketing is about the trading relationship between two businesses, and organisational buying may involve more complex decision-making processes – particularly when there are low levels of familiarity of the product/service being sought.

Thus, it can be said that organisational buying behaviour is context-specific and varies according to what is being bought and the number of people involved in the process. However, it must also be situated within the dynamics of the environment the organisation operates within (Fill and Fill, 2005). Organisations vary in their purchasing behaviour, for example, decentralised purchasing will emphasise the geographical importance, but highly centralised purchasing departments will focus on tighter controls, reduction in costs and greater consistency (Baines et al, 2008). The external influences are those forces outside of the organisation’s control, for example an economic change affects exchange rates, encouraging or discouraging the purchase of commodities from one country to the next, or a political disruption can affect the distribution channels. At other times it can be social changes, for example consumer preferences for ‘fair-trade’ and an increasing focus on corporate social responsibility can affect organisation decision making (Nichols, 1993).

These influences are depicted below:

Source: Fill and Fill (2005)

They key issue for the B2B marketer, therefore, is they must be knowledgeable not just about the products and services they proffer from a technical perspective, but also have a great deal of specialist knowledge of their customer’s influences and how that affects buying behaviour. It stresses the importance of careful management of the customer both prior to, during and after the sale has been completed. The investment of time and energy to establish and maintain the relationship between the two businesses forms a process described as the ‘key account relationship cycle’ (Millman and Wilson, 1995). This relationship, particularly in large organisations, emphasis a great deal of care and interaction between the two organisations so it is not unusual to have entire teams dedicated to providing services and support to the client (Ojasalo, 2001).

Therefore it can be said that, in practice, that B2B customers are much fewer in number but wield much greater buying power than found in ordinary consumer markets, although this is not always the case, it does stress to the marketer the importance of the supplier and customer relationship (Brennan et al, 2014).

From the analysis above, it demonstrates a number of key differences between the B2B and B2C buying characteristics, which are summarised in the table below (Baine, 2008:660).

Consumer buying characteristicsOrganisational Buying characteristicsNo. of BuyersManyFew
Purchase IntentionSelfOthers
Evaluative criteriaSocial, ego and level of utilityPrice, Value and level of utility
Information SearchNormally shortNormally long
Range of Suppliers usedSmall number of suppliers consideredCan be extensive
Importance of supplier choiceNormally limitedCan be critical
Size of ordersSmall number of suppliers consideredLarge
Frequency of ordersLightHigh
Value of orders placedLightHeavy
Complexity of decision-makingLight to moderateModerate to high
Range of information inputsModerateModerate to high

Although there are many differences between the two sectors, there is some convergence too. All markets have a consumer orientation that emphasises customer needs, and both require the marketer to gather, process and use information about customers and competitors in order to successfully compete (Baines et al, 2008). In addition to this, both types of supplier desire positive relationships with the customers – the profits of all organisations is linked to the mutually beneficial rewards obtained. Wilson (2000) also argues that the belief that organisational decision-making is more rational, and consumer decision-making is more emotional, is a fallacy. For example, consumers also use a wide-range of inputs, discussing buying decisions with others, and seeking out extensive information searches, especially now that Internet-buying permits so much more comparison between products and services, and thus the group buying dynamics are not atypical. Furthermore, the rationality ascribed to organisational buying is overstated, but rather organisational culture dictates adherence to due diligence and other such similar bureaucratic procedures.

It is often said that branding is of less significance in B2B marketing than it is in consumer markets (Baines et al, 2008), however, Zimmerman and Blythe (2013) argue that it is becoming increasingly difficult to distinguish between products. More importantly, organisations do not buy products, but rather people do, so although the type of media selected to communicate the products may differ – the need for strong branding is imperative irrespective of the market. As in consumer markets a strong brand can be a source of competitive advantage. Furthermore, ingredient branding (e.g Intel Inside, or trading logos such as the Red Tractor) which promote the suppliers of the product are themselves becoming sources of marketing (Bengtsson and Servais, 2005).

Perhaps, therefore, the two most distinguishing differences between B2B and B2C marketing is the approach to segmenting the market. In B2C marketing, the approach is more frequently top-down: beginning with a mass of possible customers and then breaking them down to into groups, usually with reference to the psychological, geographical, demographical or behavioural dimensions (Jackson, 2015), and then the marketing mix of ‘place, product, price and means of promotion’ devised once target markets have been determined.

However in B2B marketing, the process is more bottom-up with a much greater emphasis of the characteristics of the organisations already known to the marketers, and then aggregating them into segments which is more likely to emphasis the behaviour dimension above any other (Zimmerman and Blythe, 2013). As a result of this, organisation marketing is more likely to explore the customer portfolio matrix to determine where best to allocate their marketing resources. The customer portfolio matrix assesses the potential attractiveness of a group of customers to the strength of relationships relative to competitors, as the grid below demonstrates:

Customer attractiveness/potential

HighLow
HighCustomers must invest resourcesGood to have customers allocate resources selectively
LowNeed to have customers maintain resourcesDo not need customers, reduce resources

Source: Baines et al, (2008:654)

To conclude, therefore, consumer marketing and business marketing differ in some buying behaviours and the approach of marketing towards is the significant difference, although the principles of marketing are largely similar. This assignment has found there is significant convergence between the two groups but that business-to-business buyers are more demanding and require a strong emphasis on relationship building, and to a lesser extent branding.

References

Baines, P, Fill, C and Page, K (2008) Marketing, Oxford: Oxford University Press.

Brennan, R, Canning, L. E and McDowell, R (2014) Business to business marketing, London:Sage

Bengtsson, A and Servais, P. (2005) Co-branding in industrial markets, Industrial Marketing Management, Vol. 34 (7), p 706 -13.

Fill, C and Fill, K. E (2005) Business to Business Marketing, Harlow: Prentice-Hall.

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Macfarlane, P (2002) Structuring and measuring the size of business markets, International Journal of Market Research, Vol 44 (1), p 7 – 31.

Millman, T and Wilson, K (1995) From key account selling to key account management, Journal of Marketing Practice, Applied Marketing Science, Vol 1 (1) p 9 – 21.

Nichols, M (1993) Third-World Families at Work, Child labor or child care? Harvard Business Review, January – February, p 2 – 10

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Parkinson, S. T and Baker, M (1994) Organizational Buying Behaviour, Purchasing and Marketing Management Implications, London: MacMillan Press.

Robinson, P.J, Faris, C.W and Wind, Y (1967) Industrial buying and creative marketing, Boston: Allyn and Bacon.

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Webster, F. E and Wind, Y (1972) Organizational Buying Behaviour, Englewood Cliffs: Prentice-Hall.

Wilson, D.F (2000) Why divide consumer and organisational buyer behaviour? European Journal of Marketing, Vol 34 (4), p 780 – 796.

Zimmerman, A and Blyth, J (2013) Business to Business Marketing Management, Abdingdon: Thomas Learning.

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‘The Way I See It’: Customer Association and the Success of the Branding Strategy of Starbucks’ Coffee

Introduction

Maintaining an effective brand image is a challenging task, where a company needs to maintain the sense of momentum without losing a sense of continuity (Cagan and Vogel, 2001). The power of the Starbucks brand is exceptionally strong and has been imitated by numerous related and unrelated products and companies around the world (Knapp, 1999: 199). The expansion of Starbucks from just a small coffee provider into a global brand was swift and effective (Schultz and Yang, 1997). Behind this global explosion lay the concept of a Starbucks brand, one which bombarded the customer on all five senses from the smell of the coffee, the modern artwork on the walls to the contemporary music soundtrack and polished pinewood tables (Bedbury and Fenichell, 2003: 107). By February 2008, however, the brand had suffered 40% decline in share price and owing to the current recession is being forced into a programme of store closures (Smales, 2008). Several reasons lay behind this, such as the success of rival coffee houses, the saturation of some areas with Starbucks coffeehouses and the decline in consumer spending at a time of economic hardship. However, this decline in sales was not simply due to exogenous factors: it represented the decline in the brand’s effectiveness. For the first time, the Starbucks brand has been forced onto the back foot. In many previous examples of a strong brand suffering a decline in sales, brands often suffer because the company fails to take stock of the associative aspects of branding – the elements added by the customer to the brand or product based upon their own experiences (Ries, 2004: 196). A company cannot control what the consumer associates with the brand, it can only point them in the right direction. This research will therefore aim to investigate if the Starbucks decline resulted from a failure of strategy that led to negative associations being made with the brand. It is important to see how close the feedback loop is kept in Starbucks, in the extent to which the company tracks and reinforces customer perception of the brand. Put simply, this research will aim therefore to examine the extent to which what Starbucks wants customers to think of them is matched by what customers really think of them. Though sounding simple, it represents a vital part of the branding exercise that can sometimes be overlooked by some, often very popular and successful, companies.

Research objectives

To examine and analyse the branding methods used by Starbucks that created the hugely successful global company

To conduct primary research to establish the associations with the Starbucks brand made by a plethora of consumers, from actual Starbucks customers to a more random sampling to glean a general perception of the associations of Starbucks.

To establish whether the brand of Starbucks has been watered down and lost its brand impact, or whether it simply face increased competition from imitators and a weak global economy.

To analyse the extent to which attempts being made to find a new avenues for development for Starbucks seem like based on an effective appraisal of the strengths and weaknesses of the brand.

Background

The first Starbucks opened in Seattle in 1971 (Michelli, 2006: 2). Originally only set up to roast and sell beans, the first significant step towards their development into a global brand began when Howard Schultz was appointed director of marketing in 1982. On a trip to Milan, Italy, Schultz encountered European Coffee bar culture and aimed to attempt to associate psychosocial meaning of coffee to the stores (Schultz and Yang, 1997). However, this was initially rejected and Schultz thus founded his own chain called Il Giornale. In 1987 Starbucks was sold to Schultz who, after renaming all his Il Giornale stores Starbucks, began its initial period of expansion (Clark, 2007). By 1992, Starbucks had grown to 165 coffeehouses and their first store outside North America was opened in Japan in 1996. After a acquiring a number of other coffeehouse chains, Starbucks expanded quickly and after being initially floated on the stock market in 1992, expanded by 5,000% by 2006 (Michelli, 2006: 3). Schultz retired as managing director in 2000 but returned in 2008 to attempt to return the chain to its initial philosophy and success, claiming that the brand had become diluted and blaming store ‘cannibalisation’ where the fast expansion had resulted in too many stores in some areas. On 1st July 2008, the company announced it was to sell 600 outlets and in the same month the company cut approximately a thousand jobs (Smales, 2008). In January 2009, 300 more stores were announced to close.

Schult’s innovation to the branding was to see an opportunity to ‘transform the traditional American coffee experience from the ordinary to the extraordinary’ (Michelli, 2006: 2). ‘The true size of the Starbucks brand is more subjective than quantifiable,’ (Knapp, 1999: 197). A key component of the Starbucks identity has been the rigid focus on establishing brand loyalty through customer experience (‘one cup at a time’) rather than through aggressive marketing and advertisement. Schultz argues that in the 1990s, Starbucks spent more money on training than on advertising (Schultz and Yang, 1999). The construction of the Starbucks brand took account of the fact that brands tend to absorb all associations around it and therefore was constructed from the very basic aspects of staff training to create a friendly atmosphere to the decor on the walls. It does not franchise its stores in order to maintain full control (Michelli, 2006). It was seen as a company philosophy, not simply a marketing exercise and as such pervaded all departments, each employee, and every aspect of design. For example, Starbucks coffee machines are fixed at a lower level and on the counter allowing the coffee server to maintain eye contact with the customer rather than turning their back on them (Schultz and Yang, 1997). This holistic philosophy was vital for establishing Starbucks as a significant and fundamental coffee retailer. It represented a heightened awareness of brand environmentalism before it had become more mainstream (Bedbury and Fenichelli, 2006: 111). The company even banned smoking from its stores long before smoking bans developed in North America and Europe, simply in order to maintain the aroma of freshly roasted coffee and avoid any inadvertent negative associations of their brand (Michelli, 2006). Starbucks attempts to offer not just an especially well-brewed cup of coffee, but to reinforce their expertise as researchers, purveyors and professionals in providing the perfect cup of coffee for the customer (Bedbury and Fenichell, 2006: 108). Schultz’s attempted to not only transfer the taste of freshly roasted coffee, but to transfer the entire welcoming social experience from Mediterranean culture to North America and beyond. The astonishing success of the experiment means such branding was evidently enormously successful. However, the plight Starbucks has found itself in the last two years suggests that such innovative thinking may well have lost its momentum and a question mark now hangs over its potential for future success. It is not certain if the brand needs more or less innovation: whether changes made in the last decade has made the customer lose sight of the original benefits of the brand (as Schultz maintains), or whether, in fact, the original idea only had a limited mileage. It has been maintained that the company expanded too quickly in a period of global economic health and thus finds itself stranded when faced with a global economic downturn. However, it is not simply that it expanded too quickly – if it could maintain the market it developed, it would likely find the level of expansion more sustainable than it appears. For a company which became an enormous global brand in a very short space of time through an innovative form of thinking, Starbucks now faces significant challenges to maintain and reinforce its dominance of the coffeehouse industry.

Literature Review

A fundamental question of this research is essentially: what has gone wrong with the Starbucks brand? Has negative customer association taken place, or has the positive brand image undergone a dilution and lost its original impact? Branding encompasses more than simply semiotics and imagery, and embraces a plethora of media and psychology (Ries, 2004: 7). Put simply, a product is something which a company sells but a brand is something which a customer buys. Although the history of branding seems relatively short, emerging as a conscious objective in the Nineteenth Century, elements of association can be seen in the Port of Portugal or tea from China from at least the Seventeenth Century. However, branding exercises became an obsessive form of marketing in the mid to late Nineteenth Century, resulting in some of the most longstanding brand-names such as Cadbury, Schwepps, Bovril and Oxo. Branding became very significant after 1869 when Heinz offered successful pickles that were then trusted and enjoyed by consumers, eventually becoming the brand itself. One a brand loyalty has been secured, consumers seem to be reticent to avoid developing and switching loyalties; a factor pointed out in the Heinz slogan ‘Beanz Meanz Heinz’ (Rooney, 1995). Where many identical products existed, attempts were made to increase the value to the consumer. A number of techniques were developed for this method, and many brands were reinforced through sponsorship of expeditions such as Robert Scott’s Antarctic expeditions, were the photographs showing intrepid explorers munching on Cadburys proved to be an important new avenue for reinforcing a brand (Cubitt and Warren, 2000: 118). A strong brand can anticipate longevity in the marketplace: in 1923 the brand leaders in motorcycles and soft drinks were Harley Davidson and Coca Cola and so it is today (Kathman, 2002: 27).

Branding is traditionally seen as receiving its first definition in a memorandum issued by the firm Proctor and Gamble in Cincinnati in 1931 (Kathman, 2002: 25). This articulated the basic principles of brand management as research, development and communication. Branding received a boost by the development of large-scale supermarkets where similar products would be displayed next to each other meaning the package no longer similar encased the product, it had now to sell it. Manufacturers gradually began to develop the principles of creating the image of a brand from visual means. Contemporaneously, Louis Cheskin developed the ‘Principle of Sensation Transference’ which demonstrated that consumers tend to assign expectations and associations of products based on the design, shape, colours of the packages of a product (Ries, 2004). This increased the role of the designer in product development to one selling a product in addition to simply a practical solution. This was exacerbated by the increase of self-select environments in the retail environment. At the core of a branding exercise lies the product itself. This can be surrounded by a primary mantel of branding, the packaging, name, and ways in which the product is presented. The outer mantel is the warranty, the delivery credit, after-sales service and other factors that can augment the product beyond its initial use (Ries, 2004). Almost anything can be branded and it is seen as comprising four main factors: the attributes, benefits, values and the personality. Different brands can focus on different aspects, such as a banking service focusing on the values provided by the product. The characteristic of a strong brand is that it offers significant financial and perceptual benefits, is consistent and focuses on quality and uses a full marketing mix to consolidate performance and position. As Schmitt (2000: 165) notes, ‘products are no longer bundles of functional characteristics, but a means to provide and enhance a user’s experience… consumers want to be stimulated, entertained, educated and challenged.’

The theoretical perspective of branding has undergone resurgence in recent years. Rather than being understood simply as a ‘name, term, sign, symbol, or a design’ or simply a ‘major issue in product strategy,’ (Kotler, 2000: 396, 404), brands have become holistic and sophisticated entities (Keller, 2003). For Kapferer (1997), the brand is simply seen as a sign that uncovers the qualities of the product. Whereas branding traditionally was under the control of the marketing department, the strategy now appears to be much more than this, to the extent of being seen as representing not only the product but the company philosophy (Aaker and Joachmisthaler, 2000). Recent contributions to the literature have included Aaker and Joachmisthaler (2000) who posit the theory of brand leadership model as one which embraces notions of strategy rather than the traditional model of tactics (Urde, 2003). They see the building of branding as encompassing the four challenges: organizational, brand architecture, brand identity and position and brand building. An alternative model is provided by Davis (2000) which sees the brand as an asset. He defines this as a fiscal approach, which attempts to build the ‘meaning of the brand, communicating it internally and externally’ (Davis, 2000: 12). This conception of a brand is one which fits the Starbucks model well, from its staff training to its corporate philosophy, the company sees its brand as having a tangible meaning rather than simply a means to sell a product (Michelli, 2006). This ‘corporate branding’ has received attention also by Aaker (2004) and Schultz and Hatch (2003).

The theoretical and analytical debate of branding in the literature has tended to lag behind the practical success of branding strategies, and so it appears Starbucks’ company philosophy was developed ahead of its theoretical articulation. Starbucks is often used in marketing and business textbooks as a clear example of a successful brand (Knapp, 1999: 199). Given that a brand’s success results in imitation and further theoretical and strategic articulation, it would seem paramount that if the Starbucks example of what can be dubbed a successful ‘holistic’ brand is to be retained, then it would be a significant and important contribution to the debate to establish ‘what has gone wrong’ with what was a runaway success story of effective branding in the 1990s. If the success of this branding strategy is to be imitated then the potential for its longevity should be established. Put simply, are people just bored of Starbucks now the novelty has worn off and there are a plethora of imitators, or can this be seen simply as a ‘blip’ for a brand which holds the potential to be around for as long as Heinz?

Rationale for study

This study in partial fulfilment of the degree will contribute to the branding debate by investigating and analysing a vital aspect of the Starbucks’ brand. Brand strategy can only manipulate customer’s associations and emotions with regard to a product so far, and a feedback loop is essential to ensure that the intended associations are made by the customers (Aaker and Joachmisthaler, 2000). Furthermore, it will contribute to an understanding of the coffeehouse industry and the extent to which the Starbucks phenomenon shows signs of longevity as with other brands.

Resources Required

No extraordinary resources will be required for this study beyond a PC, photocopier and time. The fiscal resources required will be kept minimal.

Methodology

A questionnaire research strategy will be devised in order to ensure a stratified sample. Extremely short questionnaires will be used to establish the associations of Starbucks with a number of individuals. This will be semi-structured questionnaires where it is anticipated that the responses can be graded and coded according to positive or negative associations. A number of research locations will be considered in order to establish the most effective spread of respondents. For example, Starbucks customers will be used in order to provide an index of responses (it can be presumed associations will be largely positive) and then respondents sought from locations where their relationship with Starbucks cannot be seen as being unduly effected by any environmental or temporal variables.

Research Design

Using a short questionnaire such as this means the research will sit between a quantitative form of collecting data and a qualitative in that the results will be analysed using quantitative techniques but little guidance is provided to frame the questions. This means time will need be spent coding the responses and entering them into a spreadsheet program such as Excel. An important dimension of the research strategy includes establishing the sampling procedure. At least part of this research will come from asking individuals in the street, and the location of the researcher and the time at which the research is carried out are all likely to have an effect on the results. The importance of this factor is not just in asking ‘the average man on the street’ but establishing as wide a sweep as possible to examine the associations not just with product users (coffee drinkers) but to examine the effectiveness of the Starbucks brand in maintaining an association with all individuals. A negative response is therefore as important in this case as a positive response and the questionnaire must be carefully structured to ensure that even non-coffee drinkers can consider what they associate with Starbucks. By conducting this research using a variety of media and a variety of locations, it is hoped the potential exists to compare and contrast the different samples, but also to build up as wide a picture of the public perception of the Starbucks brand in the UK as a whole. This can then be compared to the Starbucks brand as represented in Schultz and Yang (1999) and its corporate literature such as ‘The Green Apron Book,’ their website and publicity material, and analyses made in the secondary literature. It is important to recognise that this, in itself, does not signify the success or the failure of a brand, but it may offer some clues into the downturn experienced by the Starbucks brand.

Ethical Issues

It is vital, of course, to receive the consent of the individuals who will respond to the questionnaire. Although each respondent may be given a code, no identifying data will be taken. Unlike brand strategists, the researcher is at great pains not to affect the way in which the customer might view Starbucks and so it is vital to ensure that the respondents are aware that the researcher does not in any way represent the company. It would, however, be courteous to liaise with a Starbucks’ coffeehouse, particularly if attempts will be made to secure a sample of bona fide Starbucks customers, and attempts will be made to ensure that attention is paid to copyright and intellectual property. Contact will be made with Starbucks, informing them of the intentions of this research and requesting any further information that may come in useful but for reasons of independence it would be prudent to maintain a respectable distance from the company itself. Most data regarding the company will be taken from publicly-available sources and published works and confidentiality issues will not pose a problem in this case.

Anticipated Problems and Solutions

The construction of the questionnaire is likely to represent on of the most time-consuming aspects of this study and attempts will be made to ensure that ‘test drafts’ are used and enough time is maintained to make effective evaluations and revisions to the content. Furthermore, establishing a suitable sampling technique is liable to be a difficult task and the number of respondents is likely to vary depending on time of day, day of week and other factors that might make establishing a firm unbiased empirical foundation difficult. Great pains must be taken to ensure that as many respondents are sought as possible, and the temptation to tend to approach those who might appear to the researcher to proffer the greatest likelihood of answering questions is avoided. However, this is a key factor in Social Science research and one that is always difficult to sidestep – even if a more anonymous data collection method was used, the respondents would tend to be self-selecting (Crouch and Housden, 2003: 138). Selecting suitable locations to conduct the research is important and the relationship of the researcher’s location to any Starbucks (or other) coffeehouses must be carefully and fully considered as factors that might well have an effect on results. However, it is this researcher’s opinion that the greater the number of respondents and the greater the number of locations and methods of data collection, the greater the likelihood that any random bias will tend to balance itself out as long as no systematic selection factors are at work.

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The use of social media has increased exponentially, creating a fertile ground for platforms as a medium for advertising (Treadaway and Smith, 2012). However, advertising on social media can be very different from traditional advertising, due to the nature of the medium and the way on which marketing messages may be received (Chaffey and Smith, 2013). However, while there are differences compared to traditional marketing, there are also some similarities; with the stages of planning. The aim of this paper is to look at the way a social media campaign may be developed successfully, and consider the key challenges in managing the messages.

The process of developing a campaign may be broken down in to different stages;

Determine the specific goals for the campaign
Identification of target market
Decision on the marketing message and specific content that will appeal to the target market
Framing of the message, and choice of medium
Communication of the message
Monitoring of the message impact
Adapting the message

These different stages may be seen as akin to the traditional marketing process, with a requirement to determine the specific campaign, identification of the target market, and then the formation of the marketing message that will appeal to the target market, and stimulate the required responses (Kotler and Keller, 2011). However, the way in which it is undertaken differs, in terms of pace and style. Each of the stages can be considered individually.

Goals for the campaign

In any marketing plan it is necessary to determine the goals for a marketing campaign as this will frame the way in which messages are created and communicated. For example, a campaign target may be to increase brand awareness; alternatively, the campaign may be to specifically increase sales, it is important to determine this, as it will impact the message that is developed (Kotler and Keller, 2011). Goals can be clearly defined using the SMART acronym, where the goal should be specific, measurable, attainable, relevant, and time bound, or timely. For example, a marketing campaign may be undertaken with the aim of selling a specific number of items within a specific time, or gaining a specific percentage increase in brand awareness in a specific time.

Identification of target market

Before developing a message, after determining the goal of the campaign, it is important to identify the target market. The primary target market may be defined in terms of the profile of the consumers who are most likely to make a purchase. For example, the target market for the sale of nappies will be parents with children under the age of two, whereas the target market for stair lifts are likely to be primarily those over retirement age, who have mobility issues (Hooley et al., 2007). The target market may be defined in a number of ways; traditionally this will include issues such as demographics, psychographics, life-cycle stage, individual interests and geographical location (Hooley et al., 2007). Social media also provides a significant advantage with the ability to specifically target narrow market segments. For example, utilising Facebook it is not only possible to identify a target market by gender, age, and location, they may also be targeted in terms of their specified interests, such as interests in competitors pages, or complimentary pages, they may also be targeted in terms of behaviour, and whether they have made online purchases (Facebook, 2015).

Developing the marketing message

The message itself will be based on the aims of the marketing campaign, and the type of “call for action” which may be included. For example, if a promoter is selling tickets to a concert, a link to purchase the tickets may be the “call for action” (Chaffey and Smith, 2013). However, motivation to take action should also be provided, such as a simple as time limited offer, or a statement of limited availability to stimulate action (Treadaway and Smith, 2012).

The challenge in the development of the message is ensuring it is received and understood in an effective manner, and gains a sufficient amount of attention to be effective. In all social mediums, algorithms impact on the way in which posts by different companies are seen; the greater the level of popularity for a single post, usually judged through the use opposed interactions, the greater the level of organic exposure (Chaffey and Smith, 2013).

The message needs to appeal to the audience to encourage interaction. Research by de Vries, Gensler & Leeflang (2012) found that certain characteristics were highly influential the way in which posts were interpreted by social media users. For example, posts which included vivid, relevant images, such as high-resolution photographs on mediums such as Facebook, Google+ and Pinterest were able to gain a higher level of interest compared to text only comments (de Vries et al., 2012). Additionally, posts which required an interaction, such as questions, or polls, also stimulated high levels of interaction (de Vries et al., 2012). In social mediums, greater levels of consumer interaction with company posts usually have a positive impact on the perception of the brands, influencing the information search and evaluation stage of the consumer purchase decision making model, and impact positivity on purchase intent (Moe and Schweidel, 2012).

Framing the Message

Determining the content of the message, such as the text and whether images will be used, is only the beginning. Framing the message is particularly important on social media, and can messages gain popularity, and be reposted, or create controversy (Chaffey and Smith, 2013). Framing refers to the way in which something is said; the frames being storylines making message relevant, and the framing effect being the way in which the message may alter an opinion (Chaffey and Smith, 2013). Where issues are framed in a pertinent manner, they are more likely to be heard, especially when linking with other target market interests, for example dominoes is known to offer special deals on Facebook when there are sporting events, Dominoes Pizza suggests deliveries so customers can watch the events on television, without the need to cook or leave the house (Dominoes, 2015). However, mistakes can also be made; Dunkin’ Donuts provides an important lesson, when in February 2015 they sought to capitalise on their position as being Liverpool FC’s official coffee, tea, and bakery provider (McCarthy, 2015). As part of that campaign the company adapted the Liverpool FC crest replacing elements with the Dunkin Donuts logo, generating a high level of controversy. The Liverpool FC crest has two eternal flames each side of the crest, placed in memoriam of the Hillsborough disaster victims (McCarthy, 2015). Dunkin’ Donuts replaced the flames with two milkshakes, and was perceived by the audience as an insult to the victims that were memorialised (McCarthy, 2015). The marketing team were unaware of the meaning significance of the eternal flames, and later withdraw messages, and issued an apology after suffering high level of negative publicity (McCarthy, 2015). This exemplifies the importance in considering the framing of a message (McCarthy, 2015).

Communicating the message

The communicating message may be perceived as the easiest stage of the marketing campaign. However, there are still some considerations. For example, the timing of messages may be important; Facebook analytics demonstrate the different types of messages are more likely to be received positively at different times of day, and on different days of the week (Facebook, 2015; Zarrella, 2009). However, it is also important to ensure that the marketing message can be monitored following its release, as companies can appear highly insensitive and aloof when the firm does not respond, especially if they are pertinent to the campaign (Chaffey and Smith, 2013), such as the criticisms faced by Dunkin’ Donuts in the case cited above. Therefore, the timing of the message needs to be considered to ensure that it can optimise potential, and that it can be monitored in order to ensure there are no issues with the communication, either in terms of the practical element, all the way in which it is being interpreted, including unexpected interpretations.

Monitoring and adapting the Message

In all marketing campaigns, marketers will wish to monitor the way in which messages are being received. Social media differs significantly from traditional media in terms of the information that can be gained, and the speed of feedback. For example, social platforms are able to provide a high level metrics regarding the number of people that have seen a message, and interacted in some way (Chaffey and Smith, 2013). The metrics facilitate an examination of different campaigns, and an organisation may be able to determine which messages are most effective, and which may need to changed in order to ensure optimal use of marketing budgets (Chaffey and Smith, 2013; Treadaway and Smith, 2012).

Key Challenges for Managing Social Media Campaigns

While the above stages have examined how social media marketing may be undertaken in an effective manner for a logical process, successful campaigns should be perceived as part of holistic social media marketing strategy. Firstly, marketers may be tempted to post only marketing messages, but research indicates that interactions with social media users are more likely to take place if there is a pure sales atmosphere (Chaffey and Smith, 2013; Treadaway and Smith, 2012). This means specific marketing messages should be interspersed with more generalised socially interactive messages, and marketing managers need to become experts in creating engaging social communications; Facebook recommend a ratio of 8 to 2, with 8 general interactive messages for every two sales messages (Facebook, 2015).

Additionally, there are certain characteristics that help enhance effective social media marketing campaigns, which marketers should seek to include and leverage. The first is the value of word-of-mouth, and user created content (Godes and Silva, 2012). Word of mouth marketing can help to spread a message exponentially where it becomes viral. A good example is the US airline West Jet and their 2013 “Christmas Miracle” You Tube campaign. The short video from the relatively small airline, and relativity small budget compared to mass media costs, reached millions of viewers as a result of going viral on social media (West Jet, 2013). By 2015 it has received more than 41 million views (West Jet, 2013). The success was due to the appeal of the message which was not direct sales, and created a ‘feel good’ factor.

Sharing and word of mouth are important, however, marketing managers may also benefit from generating user created content, such as reviews, photographs, or even videos. Where content is created by the users rather than the company, it inherently perceived as having a higher level of credibility compared to company generated messages (de Vries et al., 2012). This is also a challenge, to motivate the creation of the positive content. Additionally, they should resist the deletion of negative content; research indicates the deletion of poor reviews etc can undermine credibility of the firm (Godes and Silva, 2012).

The challenge for marketing managers is also in the way that successful social media marketing can create and ongoing relationship with the users (Chaffey and Smith, 2013). Smith and Zook (2011) developed a ladder of engagement to explain this, demonstrating that the greater the level of engagement by social media users with company or brand pages, the greater the level of commitment to the brand, and that it was possible through engagement to turn casual interactions into individuals who are engaged customers, who would then become brand ambassadors and zealots, generating user created, providing important competitive information, and creating a high level of brand support. In the long term, it is this type of user that is likely to be most beneficial with the provision of positive brand messages and user created content that are persuasive to the target market, as well as potentially aiding in the development of product brands and services more directly though their contributions. However, zealots are unlikely to be more than 1% of all users (Smith and Zook, 2011). Bringing all of these factors together, undertaking marketing in an effective manner in a coordinated an ongoing manner provides the potential for an effective social media marketing campaign.

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1.0 Introduction

Internet marketing is the practice of marketing goods and services electronically over the internet (Chaffey, 2003:45-46). As the capabilities of both technology and the internet have expanded it has become easier to market directly and indirectly to a wide market demographic in a cost effective and efficient manner. According to Kasper et al “internet marketing ties together the creative and technical aspects of the Internet, including design, development, advertising, and sales,” (2006:209). Internet marketing also differs from more traditional marketing approaches in that it relies far more heavily on the placement of media throughout the process of engagement with the potential customer, utilising techniques such as banner-ads and Search Engine Optimisation (SEO) to raise the prominence of the organisation in question.

This report will focus on the development of an e-marketing strategy for the Pennine Manor Hotel in Outlane, an established country house hotel which would benefit from enhanced e-marketing to attract a wider range and greater number of visitors for both leisure and business purposes. Currently the hotel has no website of its won and relies on meta-crawlers to publicise it such as the AA hotel guide. Therefore this report will analyse the current activities at the hotel in terms of e-marketing and suggest a range of improvements to increase visitor numbers and revenue.

2.0 Background and Scope

The Pennine Manor Hotel in Outlane is an established country house hotel listed in the AA Good Hotel Guide with a modest 3-star rating. Described by the AA as “an attractive stone built hotel which enjoys magnificent views over the valley”, the hotel is popular with tourists and business users alike for its conference facilities in a panoramic location. However, despite advertising that it has the latest conference facilities available the hotel itself does not have its own website or direct e-commerce facilities and instead relies on meta-crawlers and other 3rd party websites with free advertising to market the hotel in a media context.

This presents three significant challenges. Firstly it now makes the hotel appear unprofessional if they cannot market themselves appropriately (Brassington and Pettitt, 2006:78-79) secondly, by relying on third parties to marketing them the hotel has no control of the image which is portrayed (Avlonitis and Indounas, 2005:47-57) and thirdly, it also give the hotel very limited ability to monitor and measure the success of their e-marketing channel (Gummesson, 2008:116-119). In short it makes the e-marketing element of their overall marketing strategy appear as an afterthought and not as an integrated marketing channel or a tactical approach to marketing and improving the perception of the hotel. Thus, the following section of this report will comprise of a situational analysis using suitable marketing frameworks to establish an operating platform for improvement.

3.0 Situation analysis

3.1 PESTLE

POLITICAL

From a political perspective, there are no direct issues which the hotel must respond to, however in the wider context they must be aware that as the UK economy looks set to fall into a double-dip recession they must consider how they can market their way through such challenging times when businesses and leisure visitors alike cut either their marketing budget or their discretionary spend

ECONOMIC

Economically as the real value of money in the UK is falling and it would appear as if the economy is at genuine risk of stagflation, then the hotel must consider how to spend their own marketing budget wisely to attract a range of guests to the hotel. This will be necessary if they are to survive the predicted period of austerity in the UK economy.

SOCIAL

Socially as UK disposable income falls for most families, the hotel will have to consider how they can market the hotel effectively to a far wider range of potential guests from overseas. It is clear that the UK domestic or “staycation” market is unlikely to be lively in 2011.

TECHNOLGICAL

With technology becoming increasingly powerful and cost effective there is virtually no excuse for not operating a website, nor even operating a skeleton Customer Relationship Management system to keep track of past customers and to consider how to segment the market to attract new guests to the hotel.

LEGAL

Legally the hotel must apprise themselves of legislation relating to e-commerce and security such as data protection and encryption of sensitive customer details. Any e-commerce facilities they operate must be able to handle credit card transactions in a secure manner.

ENVIRONMENTAL

One of the many benefits of e-marketing is the fact that it is extremely environmentally friendly as it does not require costly or environmentally damaging printing and distribution requirements of more traditional marketing methods.

3.2 SWOT

STRENGTHS

The hotel has several strengths, such as its excellent location which is both rural yet easily accessible. It also has an excellent reputation which it should use as part of its marketing campaign. It is clear that the hotel has repeat custom and therefore this offers an excellent opportunity for direct and customised e-marketing to encourage regular customers to return.

OPPORTUNITIES

There are several opportunities available to the hotel, not least of which is that in a challenging market those businesses which market themselves strongly are far more likely to attract custom in difficult times. By operating ahead of their competition in the immediate locality and contacting other businesses who may require their facilities directly this could be an ideal way to attract more commercial guests.

WEAKNESSES

The hotel has left itself exposed in marketing terms by failing to act proactively with regard to its own website or e-commerce facilities. This makes the hotel seem “behind the times” and less attractive to commercial customers, thus they are missing an ideal opportunity to market effectively and directly to many potential customers.

THREATS

The hotel faces direct competition from other similar hotels within a 30 mile radius, although none have the AA recognition or star rating of the Pennine Hotel. Moreover, with the UK economy in its current challenge conditions they must look to market more creatively both domestically and in foreign markets if they are to widen their potential market.

4.0 Objectives

Having established that the Pennine Hotel is well positioned within the market, but failing to market itself effectively against its competitors it is necessary to set out a series of e-marketing objectives using the SMART principle (Specific, Measureable, Achievable, Realistic and Time-based). These objectives are set out below and encompass strategic, tactical and operational objectives.

Conduct an in-depth competitor analysis to establish the strengths and weaknesses of competitors within a 30 mile radius. Use this information to develop and implement an immediate to medium term strategic direction for the Pennine Hotel which targets the gaps in the market. The plan is to be designed within 3 months and the objectives to be implemented in full within 6 months. The plan should be designed to increase guest occupancy by 20% within 6 months.

In line with the strategic objectives conduct a full market analysis which focuses on market segmentation and customer needs. Create a targeted marketing plan which utilises e-marketing channels to directly address the needs of commercial, domestic and foreign visitors, further segmented by repeat and new custom. Establish a range of packages or options which meet the needs of the customers and establish advertising within 2 months to be implemented in full within 4 months. Use metrics to track the effectiveness of the advertising campaigns (Zeithaml et al, 2009:136-141).

Design and launch a website which meets the generic needs of all current and potential guests. This should be themed to showcase the best attributes of the hotel and also designed so as to appeal to both domestic and commercial visitors (eg highlighting contemporary bedrooms and exceptional conference facilities). Website prototype to be created within one month and launched within two months, and the website is to support full e-commerce facilities and have tracking capability to monitor hits to the website and length of browse time on each page (McDonald and Payne, 2006:321-333).

5.0 Strategy

According to Grunroos brand awareness “is a marketing concept that measures consumers’ knowledge of a brand’s existence. At the aggregate (brand) level, it refers to the proportion of consumers who know of the brand,” (2007:118). For the Pennine Hotel it is clear that there is limited brand awareness outside of their immediate geography due to their limited marketing tactics. Thus, the following strategy is proposed to raise immediate market and brand awareness via e-marketing channels.

Given that the Pennine Hotel is not part of an existing hotel chain which can leverage core brand equity, it is recommended that the hotel seek to dramatically increase awareness through their own website which pushes them to the top of search engine rankings in their own right, and simultaneously seek reciprocal partnership arrangements with links from mutually beneficial sites which will also raise brand awareness and appeal to a wider market.

Although it is acknowledged that this may create some initial resource challenges in terms of building the links to partner businesses and also building the website, research by academics such as Chaffey (2006) has demonstrated that effective websites generate their own return on investment extremely quickly. As it is also clear that currently the hotel has no means to generate a website without expert assistance (otherwise it would already be in existence), then they should look to obtain the services of web-design expert who has previously built sites for other hotels. This knowledge will enable the Pennine hotel to benefit from the designers’ previous experience whilst adding their own touches to the website (Chaffey, 2006).

6.0 Tactics

With regard to the actual design of the website which is estimated to take one moth under the plans outlined above, a paper prototyping approach has been adopted with sample images as guidelines from other competitor websites included in appendix 1 (Snyder, 2003). Given that resources in terms of marketing budget are likely to be constrained for the Pennine Hotel, then paper prototyping is a quick and easy method of sketching out what would be appropriate as a website. Moreover, once the site has been built and is fully operational the use of metrics to track customer browsing experiences will offer guides as to how to shape the website to appeal to a wide range of potential guests. As observed by Snyder, (2003) website design is not an exact science and it will require tweaks and adjustment until it fully reflects the needs of the hotel. Moreover, the website design must reflect the hotel brand and must also be easy to navigate and browse. The wireframe sketch is demonstrated below.

7.0 Action

Having established that a website marketing strategy is required will full e-commerce capability the next phase of the process is to design the website in conjunction with market analysis. This will ensure that the website meets not only the needs of the Pennine Hotel in terms of showcasing its capabilities, but also that any gaps in the market are fulfilled in terms of facilities that guests may require. Examples of this include exceptional bedroom facilities, conference locations, spa treatments or convenience to local amenities such as walks or historic attractions. By highlighting the available facilities on the website and also carefully wording the website so that it scores highly on search engine optimisation this will ensure that the website will serve its desired purpose (Lovelock and Wirtz, 2010:214-216).

Within the overall strategic objectives of the Pennine Hotel e-marketing plan it has been determined that the website design and implementation are of immediate priority as the hotel seeks to market through difficult financial times, and also to position itself within the market place as the leading hotel in the area in terms of facilities. Therefore the first action is to seek out a suitably qualified and experienced website designer with experience in the specific area of hotel website design so that the Pennine hotel can benefit from his or her knowledge and experience in this area (Strauss et al, 2008).

8.0 Control

The final issue to consider is one of monitoring and control. This has been touched upon previously in section 5 above, however it is of critical importance to establish and implement a tracking plan which will permit the management team at the Pennine Hotel to establish which elements of the website are the most popular or successful in terms of hits and browsing times. If the website has been carefully designed and is easy to navigate it is then a simple matter to add or remove content to ensure that the website remains fresh and at the top of SEO listings. This should also be checked with reference to very short customer service questionnaires which can be raised as pop-ups on the website. This information will be particularly valuable to the Pennine Hotel in establishing the effectiveness of the website.

With regard to metrics these must adopt a two-phase approach; One strand to concentrate on tracking the effectiveness of the website, and the other to match this against any changes to the website and corresponding uplift or downturn in occupancy or revenue. It is important to recognise that there will be seasonality in demand and thus the longer the tracker can run for, the more effective and useful it will be. An outline 6 month tracker plan is laid out below.

Design and apply index tools which will track and monitor up to 50,000 hits per month.
Establish visitor tracking and block IP addresses of Pennine Hotel employees,
Send automatic reports of usage to nominated emails,
Track SSL,
Track user-defined actions,
Perform ration conversion analysis

9.0 References

Avlonitis, G. & Indounas K. (2005) Pricing objectives and pricing methods in the service sector Journal of Services Marketing, Vol. 19, No.1, pp.47-57.

Brassington. F., & Pettitt, S., (2006) Principles of Marketing Financial Times/ Prentice Hall; 5th edition

Chaffey, D., (2006) Internet Marketing: Strategy, Implementation and Practice Financial Times/ Prentice Hall; 3 edition

Chaffey, D., (2003) E-Business and E-Commerce Financial Times/ Prentice Hall; 2 edition

Grunroos, C., (2007), Service Management and Marketing, 3 rd Edition, John Wiley & Sons, Ltd.

Gummesson, E., (2008) Total Relationship Marketing, 3rd ed, Elsevier.

Kasper, H., van Helsdingen, P. and Gabbott, M. (2006) Services Marketing Management: A strategic perspective, 2nd Edition, John Wiley and Sons

Lovelock, C. and Wirtz, J. (2010) Services Marketing: People, Technology, Strategy, 7th Edition, Pearson.

McDonald, M. and Payne, A. (2006) Marketing Plans for Service Businesses, 2nd Edition, Elsevier.

Snyder, Carolyn (2003). Paper Prototyping: the fast and easy way to design and refine user interfaces. San Francisco, CA: Morgan Kaufmann.

Strauss, J., Frost, R., & El-Ansary, A., (2008) E-Marketing Prentice Hall; 5 edition

Zeithaml, V., Bitner, M.J. and Gremler (2009) Services Marketing: Integrating customer focus across the firm, 5th Edition, McGraw-Hill.

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Critically analyze the role of strategic marketing planning in relation to an organizations’ decision to enter new markets in a global marketing environment. Justify your choice of strategies with examples to support where possible.

Introduction

A critical issue in international market entry strategy is the selection of an appropriate entry mode. Although some important studies have analyzed entry mode choice in the service context (see, e.g., Agarwal and Ramaswami 1992; Bouquet, Hebert, and Delios 2004; Erramilli and Rao 1993; Li and Guisinger 1992), they analyze specific service sectors and thus fail to address the heterogeneity problem of the service sector as a whole.

In the current dynamic and competitive environment, entry mode choice is a decision based not only on efficiency (transaction cost minimization) and value based (development of capabilities) considerations but also on other aspects, such as strategic motives of internationalization or the firm’s competitive position in the global environment (Aulakh and Kotabe 1997; Harzing 2002; Hill, Hwang, and Kim 1990).

In addition, the high costs of integration that economic theories stipulate may not be strictly true for many service firms. For example, professional services are characterized by low capital intensity (Erramilli and Rao 1993). For many service firms, the switching costs may be comparatively small because valuable assets rest more on human capital than on physical assets; thus, investment patterns observed in the manufacturing sector could be different in the service sector (Carman and Langeard 1980).

The key issue in entry mode choice is the compatibility between the firm’s existing capabilities and those it needs to be successful in a particular market (Johanson and Vahlne 1977). As Madhok (1997) proposes, an operation seeking the development of capabilities to create future value will result in a greater proclivity toward collaborative ventures. Firm-specific capabilities, such as firm size, international experience, and tacit know-how, may also play a role.

Larger and more experienced firms typically favour full control modes. Furthermore, the tacitness of know-how that is involved in the market entry may limit its transferability to another firm without loss of value (Kogut and Zander 1993). These circumstances increase the efficiency of resource utilization and the effectiveness of its in-house transfer (Madhok 1997). The strategic motivations and competitive pressures underlying market entry and the particular nature of services may be relevant for the entry decision.

Firms tend to use higher control modes to coordinate more effectively strategies in a multinational network (Hill, Hwang, and Kim 1990), to extend market power by entering new markets, and to exploit market knowledge when following domestic clients or competitors to foreign countries (Li and Guisinger 1992). Strategic motivations, such as setting up a strategic outpost for future expansion, setting up a global sourcing site, and achieving economies of scale by concentrating the important activities in a limited number of locations, may also lead firms to rely on full control entry modes (Harzing 2002).

Consistent with the work of Dunning (1993), we argue that the introduction of strategic dimensions into the analysis of entry mode choice is essential in a world characterized by increasing globalization and the proliferation of cross-border collaborative alliances. Firms are increasingly competing in global rather than national markets. Furthermore, researchers have claimed that entry mode options for manufactured goods cannot be transferred to services because of service firms’ idiosyncrasies (Erramilli 1990).

First, services are largely intangible and cannot be touched, transported, or stored. Second, services tend to be inseparable, so production usually cannot be separated from consumption. Third, services are perishable and thus must usually be consumed at the time of production. Finally, services are heterogeneous, so each service encounter is unique and highly customized (Zeithaml, Parasuraman, and Berry 1985). When entering new markets, foreign investors must cope with the unpredictability of an investment in a politically, economically, and culturally different environment. To mitigate this uncertainty within a TCA framework, firms have been advised to retain flexibility and avoid high levels of ownership (Williamson 1975).

Firms should reduce their ownership levels, seek locally based assets, and solicit the participation of local partners (Anderson and Gatignon 1986; Hennart 1991; Hill, Hwang, and Kim 1990). One major source of uncertainty is cultural distance. Perceptions of significant cultural distance between the country of origin and the target country in terms of culture, economic systems, and business practices have been found to support the use of modes that involve smaller resource commitment (Johanson and Vahlne 1977).

Setting up in an environment with a culture that is different and unfamiliar to the investor increases the difficulty. Another factor of uncertainty is host-country risk. Hostcountry risk reflects uncertainty about the continuation of current economic and political conditions and government policies that are deemed to be critical to the survival and profitability of a firm’s operations in that country (Agarwal and Ramaswami 1992). A highly volatile environment will result in firms that want to minimize exposure to risk through entry methods that offer the necessary flexibility in the face of environmental variability (Erramilli and D’Souza 1995; Kim and Hwang 1992).

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By reducing resource commitment in risky environments, firms minimize their financial exposure in cases in which they can be adversely affected or forced to cease their activity by unforeseen events (Hill, Hwang, and Kim 1990). Therefore, in countries with unstable political and economic conditions, firms should avoid full-control modes and seek shared-control modes.

Marketing Intensity

Under TCA assumptions, the risk of undesired dissemination of a firm’s specific advantage or proprietary asset is an important transaction cost. These expropriation hazards can limit the potential rent an investor may obtain for the exploitation of its specific assets in a foreign investment (Lu and Hebert 2005). Brand name, reputation, marketing skills, and the firm’s strength in sales are key specific assets for international firms. These assets are especially vulnerable to problems related to divulging information to or the misuse of information by third parties.

Brand development and sales strength are established over many years and are rooted in a firm’s culture, systems, and routines. The less control the firm exercises, the more exposed it will be to its partner’s possible hostile or opportunistic actions. Given that the process of creation and maintenance of product differentiation requires time, the undesired dissemination of commercial capabilities to third parties could become the subject of possible misuse and could damage a Size.

The establishment of wholly owned subsidiaries abroad entails significantly higher resource commitments and carries greater risk than other options. Consequently, larger firms have a greater ability to expend resources and absorb risks than small and medium-sized ones and thus are more likely to select high-control and resource commitment modes (Agarwal and Ramaswami 1992). Firms can obtain the necessary resources for investments internally through their own cash flow or externally from financial markets. International activities are time consuming and demanding of managers, and small firms are not always able to sustain the high information costs that are required.

Thus, consistent with OCP logic, limits on the availability of financial, managerial, and political resources implies the need for small and medium-sized firms to engage in entry modes on the basis of risk and commitment minimization. Therefore, we expect the following relationship: Type of International Strategy. Regarding the pursuit of international opportunities, we can distinguish between two broad types of strategies: a global strategy and a multi-domestic strategy. In a global strategy, firms typically attempt to take advantage of the homogeneity of tastes and preferences of customers across countries through a standardized product or service offering.

Interconnections among markets also enable these firms to seek substantial integration and economies of scale on a global level. In general, these characteristics reflect a firm’s ethnocentric orientation (Pelmutter 1969), which implies

(1) The development of international operations in the same way as in the market of origin,

(2) The transmission of information and knowledge from the parent company to affiliated companies, and

(3) The maintenance of a national identity by having people from the country of origin fill management posts in international operations. Thus, service firms that employ a global strategy prefer full-control entry modes to achieve a high level of coordination, synergy, and asset transfer among units. In turn, firms that adopt a multi-domestic international strategy compete mainly at the local level, adapting products and business policies to local markets.

Local subsidiaries typically enjoy considerable autonomy with their own commercial and production infrastructures. Such firms are comfortable with shared-control modes, such as joint ventures, which allow greater flexibility (Hill, Hwang, and Kim 1990; Tallman and Shenkar 1994). Their organization is often poly- The Impact of Strategic Factors Strategic Variables That Influence Entry Mode Choice 75 centric (Pelmutter 1969). Because international operations are viewed as a group of independent companies, control and evaluation methods are determined at a local level, and communications between the parent company and the subsidiaries are limited.

In conclusion, service firms with a multi-domestic strategy are more likely to rely on shared-control modes than firms with a global strategy. Therefore, we propose the following hypothesis: One of the most important strategic decisions managers of multinational corporations have to make is the selection of entry mode into a foreign market. How firms enter foreign markets has been a topic of interest for many researchers in international business and marketing (Agarwal and Ramaswami 1992; Caves and Mehra 1986; Gatignon and Anderson 1988; Stopford and Wells 1972).

The growing globalization of markets during the past two decades has become one of the most crucial issues in business today, representing numerous challenges and opportunities for domestic and international markets (Klein, Ettenson and Morris 1998; Darling and Arnold 1988). As national boundaries continue to disappear, more businesses seek opportunities abroad (Klein et al. 1998). Ettenson and Gaeth (1991) suggest that to compete successfully in this global market, managers need to have a thorough understanding of what consumers in different countries and cultures prefer.

Although the knowledge of what consumers prefer in terms of foreign products and services is an important one, we argue that understanding the level of animosity (war, economic, cultural and religious) of the intended host country is as important and could lead to the success or failure of multinational corporations. Entry Mode Selection The firm’s international experience and product diversification play an important role in entry mode selection (Stopford and Wells 1972). Woodcock, Beamish and Makino (1994) argue that cultural and other national differences between the host and home countries appear to influence entry mode selection. Caves and Mehra (1986) found entry mode selection to be influenced by several industries and firm-specific factors such firm size, advertising intensity, research intensity, industry growth and industry concentration.

All types of entry modes are contingently influenced by locational, ownership and internationalization advantages (Kim and Hwang 1992; Agarwal and Ramaswami 1992). Animosity and Entry Mode An extensive survey of the literature indicates that one of the main areas neglected in strategy research is the impact of animosity (war, economic, cultural and religious) on entry modes. As the opening quote indicates, the clash of civilizations will only increase because differences among civilizations are not only real, they are basic.

Huntington (1993) argues that differences in history, language, culture, tradition and, most importantly, religion will be the driving forces for conflict and history is full of examples of wars that have been fought based on religious and cultural differences. If religious and cultural differences can lead to armed conflict and atrocities, it is plausible that religious and/or cultural animosity toward a nation or culture might also affect how entry of foreign businesses is viewed and evaluated. Hofstede (1983) points out the role that cultural differences play by stating: The national and regional differences are not disappearing; they are here to stay. In fact, these differences may become one of the most crucial problems for management in particular for the management of multinational, multi-cultural organizations, whether public or private (p. 75).

The impact of national culture of the host and the home country has been investigated by a number of researchers (Hennart and Larimo 1998; Erramilli 1996; Barkema and Bell 1996; Shane 1994; Kogut and Singh 1988). Hennart and Larimo (1998) stated that there are two ways through which culture can influence ownership policies: 1) the country’s national cultural characteristics, such as its power distance and uncertainty avoidance can affect the preference of multinational corporation strategy or entry mode and 2) the cultural distance between the home base of the multinational and the target market can influence MNC’s entry mode.

Hennart and Larimo (1998) found that the lower the power distance and the uncertainty avoidance indices of the home base of the investing firm, the greater the likelihood that it will enter the United States with shared-equity ventures. They also found that the greater the cultural distance between the home base of the investors and the United States, the more likely that they will enter the United States through shared-equity ventures.

Erramilli’s research (1996) revealed that the greater the power distance characterizing the firm’s home country culture, the greater the likelihood that the firm will seek majority ownership in foreign subsidiaries and the greater the uncertainty avoidance characterizing the firm’s home country culture, the greater the likelihood that the firm will seek majority ownership in foreign subsidiaries.

Kogut and Singh (1988b) found greater cultural distance between the home country and the host country to increase the probability that Greenfield joint ventures would be preferred to wholly owned Greenfields and to controlling acquisitions. Additionally the greater the level of uncertainty (avoidance in the home country of the investor), the greater the preference for partly or wholly owned Greenfield investments over acquisitions (Kogut and Singh 1988b). The longevity of foreign ventures was found by Barkema, et al. (1996) to be negatively related to the cultural distance between the home and host country.

More recent studies like Arora and Fosfuri (2000) found that cultural distance reduces the propensity of a firm to set up a wholly owned subsidiary rather than using licensing to exploit technological competencies in a foreign country. Although these studies provided a wealth of information regarding certain elements of culture and its impact on foreign entry modes, none of them address the issue of cultural and religious differences that may lead to the civilization clash described by Huntington (1993).

This paper attempts to fill this gap by providing a theoretical argument regarding the impact of war, economic, cultural and religious animosity on entry modes. War, Economic, Cultural and Religious Animosity Klein et al. (1998) conducted a study in China to investigate the impact of animosity on intention to purchase foreign goods. Klein’s model, which developed scales to measure war and economic animosity (defined as remnants of antipathy related to previous or ongoing military, political or economic events), demonstrated the negative impact of these constructs on Chinese purchase intentions related to products from the source of this animosity.

From that study Klein et al. proposed the construct of animosity between nations and concluded that consumers who harbour war or economic animosity toward a specific country are likely to choose not to purchase products manu- Marketing Management Journal, Fall 2005 factured in that hated country. They also found that consumers who are unwilling to buy products from the hated country may find it perfectly acceptable to buy products from friendly countries and showed how the animosity construct is different from the ethnocentrism construct. Kalliny and Hausman (2004) extended the Klein et al. animosity model by adding cultural and religious animosity constructs.

Religious animosity is defined as one’s intolerance of and antipathy toward another person, country or nation because of religious differences while cultural animosity is defined as one’s intolerance of and antipathy toward another person, country or nation because of cultural differences. Kalliny and Hausman (2004) found that cultural and religious animosity impact consumers purchase decision in regard to foreign products. Those who harbour cultural or religious animosity toward a country are more likely not to purchase products fi-om that hated country. Nijssen and Douglas (1999) tested the animosity model in The Netherlands and found support for the theory.

They also found that those who are more willing to travel to foreign countries to have a more positive attitude toward foreign products. Shin (2001) tested the animosity model in Korea and found support for it as well. Country Risk Root (1987) identified four types of risks that play a significant role in MNC’s entry decision. These risks include political risk (instability of political system as in some African countries), ownership/control risks (expropriation), operations risk (local content requirement), and transfer risk (remittance control).

These risks usually play a significant role in determining the amount of resources that MNCs commit in a foreign market. For example, when these risks increase, MNCs may choose to commit the smallest amount of resources to increase their ability to exit quickly when needed. This argument may suggest that licensing or exporting may be the most desirable entry. Companies usually choose the entry mode based on risk/return or cost/control trade off effects (Goodnow 1985; Root 1987). The level of risk can be moderated by the type of control attained (Kwon and Konopa 1992) and although several authors suggested that these risks can be substantially reduced by limiting ownership in a foreign venture (Brandley 1977; Korbin 1983; Vemon 1983), the situation gets more complicated when we talk about war, economic, cultural and religious animosity.

These animosities complicate the issue because if consumers who harbour any of these animosities are not willing to purchase products made in the hated country, then the multinational firm may be forced to consider other options to overcome the animosity problem. Kwon and Konopa (1992) provided the following comparison between exporting and foreign production in regard to risk:

1. Foreign production requires relatively more resource commitment (initial investment, operating costs) than exporting,

2. Foreign production entails relatively greater risk exposure than exporting,

3. Foreign production provides relatively greater control of market than exporting, and

4. Foreign production provides an expectation of a relatively higher rate of return than exporting. International Entry Modes and Propositions Tse, Pan and Au (1997) argue that most past studies on foreign entry mode strategies of MNCs have adopted one of two theoretical approaches, the transaction cost approach or eclectic framework approach proposed by Dunning (1980, 1988). The transaction cost approach is based on the economic rationale that firms will minimize all costs associated with the entire value-added chain.

This approach stresses the importance of firm-specific variables (Agarwal and Ramaswami 1992; Erramilli and Rao 1993; Gatignon and Anderson 1988; Kogut and Singh 1988). Dunning’s (1980) eclectic framework integrates several strands of international business theories on cross-border business activities. Dunning (1980) argues that international business activities are influenced by three types of factors: host country-specific factors, ownership specific factors, and intemalization factors. The host country-specific factors deal with country risks and location familiarity (Hill, Hwang and Kim 1990), while ownership-specific and internalization factors focus on the industry-specific and firm-specific variables.

Of interest in this paper are the four primary international entry modes of joint venture, wholly owned subsidiaries, exporting and licensing. Researchers investigated the choice of entry modes of multinational corporations in regard to control and resource commitment. Several authors suggested that each of these entry modes is consistent with a different level of control (Calvetl984; Caves 1982; Davidson 1982; and Root 1987).

Control is defined as the authority that the investing corporation has over operation and strategic decision making. Resource commitment is defined as dedicated assets that cannot be redeployed to alternative uses without loss of value. Hill, Hwang and Kim (1990) argue that while wholly owned subsidiaries can be characterized by a relatively high level of control and resource commitments, the opposite can be said of licensing agreements. With respect to joint ventures, the levels of control and resource commitments vary with the nature of the ownership split. Alliances For purposes of this paper, joint ventures and strategic alliances are treated equally.

The formation of alliances is a crucial one because a firm can enter a foreign market by itself or by forming an alliance with another firm to reduce investment risks and enhance its competitive advantage. Kogut (1988, p. 319) defines joint venture as, “a joint venture occurs when two or more firms pool a portion of their resources within a common legal organization.” Tse et al. (1997) argue that firms are motivated to form alliances with other firms to reduce investment risks, share technology, improve efficiency, enhance global mobility, and strengthen global competitiveness.

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According to Pan and Tse (1996) foreign firms form an alliance with Subsidiary There is no doubt that globalization has increased competition and moved it from the domestic level to the global level. Due to this new level of competition, MNCs have found it necessary to look for the least expensive resources of production to stay competitive. This has forced some MNCs to look for cheaper resources outside the home country. To take full advantage of cheap labour and raw materials, MNCs may choose to set a subsidiary in a desired host country. Birkinshaw (1997) defines Before You Go, You Should Know: Kalliny and LeMaster subsidiary as any operational unit controlled by the MNC and situated outside the home country.

The subsidiary ownership decision could be a very complex function of several factors including country characteristics, industry characteristics, product characteristics and firm characteristics (Erramilli 1996). The initiative for setting up a subsidiary lies in the identification of an opportunity to use or expand the MNC’s resources (Birkinshaw 1997). The theory of internationalization argues that firms expand globally to realize the value of intangible assets (Buckley and Casson 1976).

Subsidiaries often have unique capabilities and critical links vwth local customers and suppliers and in such situations the ability of the subsidiary to pursue local opportunities and subsequently to exploit them on a global scale is an important capability (Bartlett and Ghoshal 1986; Harrigan 1983; Hedlund 1986). On the other hand, problems encountered by the new subsidiary can affect the entire corporation (Newbould, Buckley and Thurwell 1978). U.S. multinationals were found to have a predominant preference for wholly owned subsidiaries (Stopford and Wells 1972).

Weinstein (1974) found that 62 percent of the subsidiaries were either fully- or majority owned. Gatignon and Anderson (1988) observed that American multinationals had an intrinsic tendency to prefer wholly owned subsidiaries. Although American companies prefer subsidiaries, setting up a subsidiary is more risky than other forms of entry (Yip 1982). For example, when setting up a subsidiary, the entire cost is absorbed by the MNC. In addition, the subsidiary may lack information necessary for success in a particular environment or culture. History is full of examples where companies lost their business to expropriation, confiscation or destruction especially during time of conflict. Consider what happened to the Jews’ businesses in Egypt when the national government was established in 1952.

Many American companies lost their investment when communist regimes were established in countries like Cuba and others. We argue that during times of conflict, the hated country will be more likely to be targeted by citizens and governments. 23 Wild, Wild and Han (2003) argued that the events of September 11, 2001 have literally changed the world. They base their argument on a study that was conducted in the United States and nine Muslim countries where it was found that the majority of U.S. citizens feel that the Muslim world does not respect the American culture and vice versa.

There is a sense of animosity and we think that this sense of animosity will play a role in the foreign entry mode selection. It is plausible to think that companies will take into consideration the level of animosity in the host country and devise their entry strategy accordingly. Based on this argument we propose: Proposition 2: Other things being equal, in countries where war, economic, religious and cultural animosity is low, country risk will be low and multinational companies will be more likely to prefer committing a high amount of resources and therefore a subsidiary mode of entry would be preferred. Exporting is the marketing and direct sale of domestically produced goods in another country.

There are several reasons as to why companies may choose to export. For example, exporting does not require that goods be produced in the target country so no investment in foreign production facilities is required. Exporting allows companies to increase their samples by targeting and selling in foreign markets. Moreover, exporting helps companies diversify their markets, reduce their vulnerability to lags in domestic demand, extending product life cycles, using idle capacity, and reducing unit costs through economies of scale.

Exports also help sharpen competitiveness, broaden contacts, and enhance understanding of global markets and cultures. In addition, the nation benefits from exporting because increased exports create jobs, spur economic growth, bring in tax revenues, and improve the balance of payments (Food Export USA). Marketing Management Journal, Fall 2005 Before You Go, You Should Know: Kalliny and LeMaster Although exporting has many advantages and may seem very appealing to companies especially those that are faced with a saturated home market, exporting has several disadvantages. One of the main issues exporting companies face is the decision of adaptation versus standardization.

When companies are faced with a situation that calls for adaptation, this may increase the cost of the product. Exporting companies may have to develop new promotional materials which may add to the cost of the product and companies that are engaged in exporting may incur added administrative costs. Moreover companies may have to wait longer for payments and finally, exporting companies may have to obtain special export licenses (Food Export USA 2004). As can be seen from the above points, exporting can be a complicated process and may not be easy.

The situation gets even more complicated when cultural and religious animosities are added to the equation. As discussed above these animosities do impact consumer preference and purchasing intentions. Kwon and Konopa (1992) argue that the foreign entry mode choice depends not only on the characteristics of the firm but also on the characteristics of the foreign market. Goodnow (1985) and Root (1987) viewed the characteristics of the firm and the product as internal factors and the characteristics of the foreign market as external factors.

We argue that the level of cultural and religious animosities would fall under the external factors because they are part of the foreign market characteristics. Moreover, we argue that these animosities will play a role in the decision of the exporting country as to where to export and what to export to which country. For example, Saudi Arabia and Kuwait banned Barbie toys from their markets calling them a threat to morality and complaining that the revealing clothes of the “Jewish” toy are offensive to Islam (CBS News 2003; Gulf Marketing Review 1996). The banning of the Barbie toy reveals the cultural and religious animosity between the West and the Arab countries and shows their impact on purchasing intentions.

Our rationale is based on the reasoning that companies engaged in producing products that may be viewed negatively by the foreign consumer should find a local element to help in decreasing the negative aspects that is caused by animosity. Thus we propose: Proposition 3: Other things being equal, the level of cultural and religious animosity will play a role in determining how the foreign product is perceived by foreign customers. Proposition 4: Other things being equal, in countries where war, economic, religious and cultural animosities are high, exporting will not be the preferred entry mode. Licensing is the process by which the right to use intangible intellectual property is granted by one party (licensor) to another (the licensee).

Licensing permits a company in the target country to use the property of the licensor and such property usually is intangible (e.g., copyrights, patents, trademarks, and so forth). The licensee pays a fee in exchange for the rights to use the intangible property and possibly for technical assistance needed. There are a number of advantages for using licensing for the licensor and the licensee. Licensing allows many businesses to enter international markets through creative use of intellectual property rights in partnership with other companies. The low level of risk taken by the licensor for licensing requires little investment on the part of the licensor.

Licensing allows companies to maximize income by expanding market opportunities without large capital expenses. A benefit to the licensee may include rapid entry into a market using technology developed and tested by others (Food Export USA 2004). Although licensing may have a number of advantages, it also poses certain risks to the licensor. When an MNC grants a license to a foreign enterprise to use firm specific know-how to manufacture a product or market a product, it runs the risk of the licensee disseminating that know-how, or using it for purposes other rch into the efficacy of formalised marketing planning (Thompson 1962;

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Introduction

The John Lewis Partnership is a well known British retailer that functions in the department store, supermarket sectors, insurance credit cards, limited manufacturing activities and other business lines that serves the up market consumer segment in the UK that is comprised of middle and upper class customers (Logicalis, 2014). This study will explore the social media strategy of the company’s department store segment.

This analysis has important implications as social media has been hailed as the newest and highly significant addition to marketing and promotion activities for companies (Mangold and Faulds, 2009). Kietzmann et al (2011) advise that social media, in a business sense, consists of the utilisation of low cost tools using words and visual presentation to further the aims, exposure, marketing and promotion of companies. A survey by Hubspot found that 92 percent of companies indicated that social media was an integral part of their marketing efforts (Infused Digital, 2013). However, 85 percent indicated that they are unsure of the best ways to utilise social media tools, or how to link them together (Infused Digital, 2013).

As an aid to this examination an article in Forbes’ magazine that cited the “top 10 benefits of social media marketing” will be used to help in this analysis (Infused Digital, 2013, p. 1).

Table 1 – Top Ten Benefits of Social Media Marketing

(Infused Digital, 2013: Statista, 2014)

In terms of this exploration concerning the manner the John Lewis Partnership uses social media, some theories and applications will be explored: It needs to be remembered that the theories on social media are still evolving, thus result not all of the theories proposed could be included here:

The John Lewis Partnership Social Media Strategy

The social media strategy of the John Lewis Partnership represented an outgrowth of the company embracing digital marketing as it understood the key to competing in the UK retail sector entailed reaching current and potential customers on an ongoing and consistent basis (Mari, 2015). The company’s commitment in embracing digital marketing saw it embark on a defined strategy approach in 2012 to aid in building its brand popularity and enhance the effectiveness of its marketing efforts represented by print, email, mobile marketing, broadcast and its online store (Mari, 2015).

As shown under Table 1, converting new customers, increasing brand power, and enhancing inbound traffic were key elements of a social media campaign. In the instance of the John Lewis Partnership Dosanjh (2012) explained that its overall digital marketing strategy encompassed computer use of online sources such as its website, online store and social media websites on Facebook, Twitter and other social networks along with including these applications on smartphones and tablets. These aspects were mentioned in the points covered by Infused Digital (2013) that represented the strengthening of brand’s storytelling.

The above functionality across varied electronic platforms is an essential aspect of the company’s social media strategy as it offered consumers convenience and accessibility to all of its digital platforms in a framework that maintains a consistent look and functional feel (Dosanjh, 2012). This heightens the customer experience as explained in Table 1, along with increased customer perception (Infused Digital, 2013).

As a further means to understand the effectiveness of the John Lewis Partnerships social media approach, Chaturvedi (2014) provides insights regarding an effective approach;

Table 2 – Tips and Approaches to Effective Social Media Strategies

(Chaturvedi, 2014)

The John Lewis Partnership developed a comprehensive social media strategy that entailed concentrating on customer ease of use, multichannel flexibility and service features under an omnichannel approach. This represents the first area on the above table, along with two way communication that is one of the key aspects of social media. Under ‘control of content’, the John Lewis Partnership oversees all facets of its digital marketing, social media and traditional media in-house or through contracted ad agencies and other relationships (Mortleman, 2014). Other aspects in the above table will be explored in the following section.

Social Media Theory Applications in the John Lewis Approach

In further exploring the social media strategies of the company, Table 3 looks at varied social media theories, and helps to provide insights regarding contributors to successful campaigns and consumer experiences.

Table 3 – Social Media Theories

(Brown et al, 2007; Kaplan and Haenlein, 2010; Griffin, 2011; Durham and Kellner, 2009; Owyang, 2010)

John Lewis’ social media strategy made a commitment to become an omnichannel company back in 2011 (Brandweiner, 2013). Andy Street, the company’s marketing director, stated that this approach stated “We know that about 60% of our customers buy both online and in shops so the approach is to make it absolutely seamless for them to move from one to the other (Brandweiner, 2013, p. 1).

The John Lewis’ new Chief Information Officer in 2010, Paul Coby, determined that the company’s product promotions, point of purchase and marketing strategies had different variations for retail, call centers and online operations (Mortleman, 2014). In crafting the company’s social media strategy, Coby stated that it was imperative to change that situation to a uniform ordering platform in order to facilitate a coordinated shopping experience to serve as the foundation for all marketing, and other efforts (Mortleman, 2014). Whilst the above does not seem to be directly associated with social media strategies, Coby stated that the objective was to have a smooth and seamless internal mode of operation to make it easier for consumers to do business with the company regardless of what shopping mode or division they were interacting with (Mortleman, 2014).

This new unified approach was lauded in social media, as it created buzz for the company (Johnson, 2014). The significance of this multi channel approach as a foundation for the company’s social media strategy was contained in Johnson’s (2014) article. It stated that in excess of 60 percent of adults in the UK use two or more electronic devices (computer, smartphone or tablet) every day, but just 7 percent of companies are able to deliver consistently across these platforms (Johnson, 2014). The connection between omnichannel marketing and social media was lauded in a Deloitte study that found that companies having a multi-channel approach are able to integrate this into more effective social media campaigns (Raj, 2014).These link to the first theory contained in Table 3 represented by word of mouth. Termed as influencer social media marketing by The Retail Bulletin (2015), it represents the efforts of a company to use a strategic approach that targets customers most likely to share stories on products, or the company (The Retail Bulletin, 2015).

Blogs represent one of the major communications components in the influencer process as 81 percent of women trust information conveyed in blogs, and 61 percent wind up making a purchase based on what they read in this social media form (The Retail Bulletin, 2015). From a company perspective, the John Lewis Partnership is able to track buying activities for products featured in blogs, which represent an important measurement factor (The Retail Bulletin, 2015). This was pointed out as an important aspect under Table 2 that looked at performance targets. In terms of negatives, the material reviewed was used to compile a strength and weakness table in the next section.

The John Lewis Partnership Christmas Campaign

As a basis for having an assessment of the company’s social media efforts, its Christmas campaign was selected. In order to evaluate the campaign, the following points will be looked at, along with McLuhan’s media theory and socialgraphics:

Table 4 – Benefits of an Effective Social Media Strategies

(Chaturvedi, 2014)

The campaign represented a brand promotional effort that was aimed at increasing consumer connection with the chain during the Christmas season as the place to shop (John Lewis Partnership, 2011). It utilised various cartoon based animals in differing settings to cause consumer identification with the playful aspects of their youth to spark a warm and positive mental association with the company (John Lewis Partnership, 2011). This potentially ignored single adults and the older generation that might not connect with their child orientation psychological aspects. The campaign ran the risk of not reaching its single adult and older demographic categories that did not have children or strong family ties. However, judging from the success of the campaign, this aspect did not seem to be an inhibiting factor in terms of consumer reach or response. The Bear and the Hare segment for 2013 served to remind consumers of the giving nature of Christmas and featured an interactive downloadable eBook for computers, tablets and smartphones (Devine, 2013). The Monty (the penguin) digital campaign for the 2014 Christmas season continued the frameworks (Butler, 2014).

The above approach represented the content orientation to marketing and social media that McLuhan described concerning the subject matter or influence aspect, which in this case were cute cartoon characters, is more important in establishing a consumer connection than the product or service (Durham and Kellner, 2009).This approach included the theory of socialgraphics that Owyang (2010) described as representing the demographic or psychographic content of the audience.

Concerning overall benefits mentioned under Table 4, the company’s campaign in one weekend generated 7,000 new followers on Twitter, 12,000 new Facebook followers, and 4,600 new YouTube followers (Brownsell, 2013). In terms of Twitter, the campaign generated 86,000 responses and for the entire campaign, the Hare segment generated 4,796,086 views on YouTube, and The Journey had 4,711,086 views (Beable, 2014).

The two-way communication aspect of the Christmas campaign sparked a rash of social media communications with the company regarding the creativity of the ads and how they caused consumers to have a warmer connection with the holiday and what it meant (John Lewis Partnership, 2011). This also had the benefit of sparking performance measurement as brought forth under Table 4 as it caused a dramatic increase in social media followers and interest (John Lewis Partnership, 2011). The company’s control of all aspects of its digital marketing and social media programmes was a key foundation in the creation of its approach to strategies as mentioned by its Chief Information Officer Coby (Mortleman, 2014). In terms of the benefits of an effective social media campaign, the John Lewis Christmas campaign met all of the categories mentioned by Chaturvedi (2014). The following provides a summary of strengths and weaknesses based on the exploration of areas covered:

Table 5 – Strengths and Weaknesses of the John Lewis Campaign

(Mortleman, 2014; Brownsell, 2013)

Conclusion

This analysis for two different years of John Lewis’ digital marketing efforts revealed that the social media approach was based on heightening consumer buzz through interactive elements based on the consumer influence theory approach espoused by McLuhan’s media theory. As a retail operation, the John Lewis Partnership offers essentially the same products as its rivals, thus the difference represents the delivery of services and attention to serving customers. The company’s strategy entailed the promotion of the brand through campaigns that were directly connected to the ideas and themes of Christmas that used cartoon characters and interactive storytelling approaches that were downloadable.

The strategy of creating an aura where the company was portrayed as being in the spirit of Christmas through the story telling aspects of the campaign represented an approach that created media buzz and millions of views on social media. Whilst the campaign seemingly appealed to children and the younger generation, the strategy positioned the company as having the Christmas spirit as it gave consumers a reason to download the free animated versions and also helped to connect with older consumers through the socialgraphic theory that drew on social media to prompt downloads and seek out the company’s social media site. This strategy translated into sales as the company achieved a stellar Christmas sales rise in both years (2013 and 2014).

The downloadable aspect of the campaign that helped to heighten interest in the chain and appeal to the Christmas spirit represented a definitive strength of the strategy devised. The weakness represented the youth skew of the campaign that basically ignored the over 35 demographic. This meant that single consumers, adults without children or those where the children were grown were not the focus of the campaign strategy. This approach relied heavily on the media buzz and approach of the campaign to put the company in the public eye, whilst basically ignoring the single or older generations. Whilst this represented a risky approach that banked on the media and consumer buzz of a campaign that focused on children and the younger generation, it also had a broader appeal as all generations have some sort of psychological connection with Christmas.

Whilst the above skew of the campaign was not directed to single adults and the older generation, this omission did not leave them out entirely due to the psychological implications. The campaign resulted in unpatrolled social media views and hits on YouTube, as well as other social media sites. From a recommendation standpoint the only suggestion that could be made is that the next campaign might include an adult oriented version. This sis stated because the unique approach taken by the company resulted in the most successful Christmas campaigns of the past two years.

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