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Select a retail sector with which you are familiar. What is the likely impact on the sector of a downturn in the growth of consumer spending- What strategies should a (named) retailer in the sector adopt to minimise the threat?

Following the financial and economic crisis in 2007, the reduction in consumer spending had a significant impact upon major high street fashion brands including Marks and Spencer, which saw sales and profitability fall significantly. In response to this, M&S adopted a strategy of contraction, which entailed the closure of a number of stores, particularly in the Simply Foods outlet sector. However, despite the fact that this ostensibly led to a reduction of costs, it can be argued that this approach also had an adverse effect upon the marketing mix and competitive advantage of the business. This was proven by the fact that M&S lost market share as a result of this strategy while other fashion stores, such as Primark and Zara maintained their growth pattern through this period.

It is considered that the strategy M&S should have adopted should have been based upon a more proactive approach. In this respect, there are two elements that the corporation needed to address. The first of these is to ensure that a policy of value chain management is re-enforced, which would reduce costs and therefore prices, while at the same time allowing the business to maintain its profitability levels. For example, had the marketing message for M&S been more focused upon delivering consumer savings rather than news of store closures, which forces additional cost on the consumer in terms of travelling to the store, it is likely that consumer loyalty would have been maintained at a higher level. Secondly, there was a need to ensure, through appropriate marketing research, that the products being offered met with the changing demands and needs of the consumer during this period. Similarly, it is likely that had the marketing focus for the business during this period been more directed towards lower cost elements and savings available to the consumer that this would have also contributed in maintaining its market share within the fashion sector. In other words, the corporation needed to adopt a proactive rather than reactive approach to marketing during the economic downturn.

There is strong movement amongst supermarkets to buy in consumer products which are not traditional supermarket lines (e.g., TV sets). The supermarkets do not carry a full range of these items and are not committed to carrying them all the time. What are the strategic reasons for this kind of activity? What are the risks?

Over recent decades, Supermarkets in the UK have continued to diversify the range and scope of the products and services they offer to their customers. This has included an expansion into non-food products, such as technology and entertainment goods, home furnishings and even the inclusion of service based products, such as banking and insurance offerings.

The strategic reason for this diversification has been driven by two factors. Firstly, there is the limitation being placed upon these corporations through competition legislation. For example, when Morrison’s recently purchased the Safeway chain, the competition regulator imposed a condition requiring the supermarket to invest in some of the stores in order to maintain the competitive equilibrium in the sector. The second factor that encouraged the incursion of supermarkets into new sectors is the fact that the UK retail grocery sector has reached saturation point within the industry life cycle. This means that further growth can only be achieved at the expense of other competitors. This tends to lead to the development of a more aggressive and retaliatory form of marketing, which can be damaging to the brand and its market share.

However, the development of a diversity strategy can attract risks for the brand and its management. In particular, these risks occur in two instances. Firstly, the business will be competing with dedicated competitors in the new sector, who are likely to have more expertise and knowledge about the targeted market, and are therefore able to provide effective competitive barriers to new entrants. Secondly, there is the need for the supermarket to allocate significant resources and capital to the new product or service sector. This resource allocation can have the effect of reducing those available to maintain its core business, in this case the grocery sector, which can result in the business losing share to other competing corporations. Both of these factors can reduce the profitability of the corporation, which can adversely affect the ‘added-value’ it returns to shareholders. It is therefore important for the supermarket to conduct a full assessment of the internal and external business environment before considering such diversification.

Evaluate the benefits of ECR (Efficient Consumer Response) for retailers? Do you think the benefits are sufficient to ensure co-operation between suppliers and retailers? Your answer should be applied to a retail sector of your choice.

Efficient Customer Response (ECR) is a relatively new supply chain process, which is designed to ensure to eliminate the efficiencies that have previously been experienced within the supply chain. For example, the objective is to eliminate inventory wastage and, as a consequence, ensure that the products delivered to the end user satisfies their needs and demands. For example, in the retail fashion sector, ECR would be used not only to ascertain which products are proving most popular with the consumer but also to ensure that the quantity of supply, in terms of sizes etc, is being met.

One of the most innovative methods of ECR within the retail sector has resulted from RFID technology, a process that Marks and Spencer has rolled out through most of its UK stores. The benefit of this system is that it allows the corporation’s direct access to stock movements on the retail floor. For example, a footwear supplier to M&S using this system is not only able to monitor in-store inventory levels in specific locations but also identify those sizes that are proving to be most popular with consumers in this location. The immediacy of the access to this information allows the supplier to both adjust future production schedules to meet the size determinants demanded by consumers and ensure that differentials in location demands are factored into the distribution network. For M&S, the introduction of the RFID has had several benefits. These include a reduction in the cost of storage and wastage and an improvement in the level of satisfaction and quality of service provided to its customers. Both of these improvements have also service to reduce the level of capital required to service the corporation’s inventory requirements and improve its brand image, which has resulted in an increase in profitability for the corporation.

For a retailer with which you are familiar explain how the image of the company is related to its positioning and how this is reflected in the management of the retail mix. Is the company managing these elements well?

The objective of brand image is to achieve the objective of firmly position the organisation as a leading competitor within the target market in a manner that will attract consumers in this segment. Within the retail sector, this means that the corporation needs to pay attention to what has become commonly known as the 7r’s, which include the following:

Product offering
Service offering
Retail pricing
Location
Visual atmosphere
Localised marketing
Quality of customer service

It is the effective management of this mix that will determine both the effectiveness of the brand’s management and impact upon its competitive advantage within its chosen market sectors.

Marks and Spencer Plc is a UK high street retailer which focuses upon three main retailing sectors, these being quality fashion, foods and home-ware products. In the early 2000s, prior to the abortive takeover attempt by Philip Green, it was noted that M&S were experiencing failings in several areas of the retailing mix. For example, in terms of the fashion product offering, the corporation’s products were failing to delivery new and innovative designs that were aimed at satisfying the needs and expectation of the target consumers, particularly those within the younger target audience. Consequently, the corporation’s market share in this area was rapidly been lost to new and innovative brands such as Next and Gap. Similarly, in both its fashion and food products it was failing to deliver to consumer expectations for quality at the right price, thereby failing to address the inroads that other retailers, particular the low-price supermarkets and fashion retailers were making into these sectors.

Furthermore, the location and atmosphere of the M&S stores were also causing a problem. In this respect, it was considered the brand image had become tired and uninviting. This situation was not helped by the adverse impact of the failures in the corporate strategy was having on employees, which meant that the quality of customer service was also was also reducing. It took a change of management in 2004 to address these retail mix problems and revive the M&S fortunes in a positive manner, as evidenced by the fact that in 2008 it returned its first ?billion profit since 1998.

How can service enhance the management of the retail mix? Illustrate your answer with examples from retailers with which you are familiar.

In retailing, service is perhaps the most important factor in determining the success or failure of a brand. In this respect, the term services applies to both the quality of the product in terms of the extent to which is satisfies consumer demands and expectation and the quality of service that is provided by the retailers employees, particularly those on the front line, namely those who have direct contact with the customer. Failures in these areas of the retail mix will result in the loss of the retailer’s competitive advantage and, more importantly, the migration of its core consumer base to other retailers within the same retail market sector.

In the early part of the last decade (2000s), Marks and Spencer, one of the most renowned UK high street retailers, was suffering from service failure in both of the areas described. Its products, particularly those in the fashion sector, were failing to meet with the changing demands of the consumer. In other words, it was failing to deliver new fashion products that would appeal to the consumers at a price that was expected. Similarly, due to a lack of investment in human resource programmes and initiatives, the standard of quality service delivered to the customer by employees was becoming a deterrent to customer loyalty.

Following a change of management in 2004, M&S reinvented its brand image. This was noticeable in its marketing campaigns which, from the fashion aspect, introduced a new range of innovative and exciting products aimed at a wider target audience in terms of age, using celebrities such as Twiggy to enhance its appeal. The ‘Your M&S’ slogan was also extended to the M&S food sector, which has resulted in improvements in the market share attracted to this target segment of the corporation’s consumers. Similarly, investment in HR policies that have increased employee involvement has also resulted in a noticeable improvement in the quality of service being delivered in-store to the customer.

Recommend an internet strategy for a retailer with which you are familiar. Indicate how this strategy fits with their mainstream strategy

With online retailing in the UK expected to double within the next five years , it is not surprising to find that the four main brands in the UK grocery sector, Tesco, Asda, Sainsbury and Morrison, have sought to expand their brand presence within this medium in a manner that augments their mainstream marketing approach through the TV and print media. To compete successfully with these low-cost brands, this means smaller competitors such as Waitrose, have to fully suit .

In essence, to achieve this competitive position and maximise its growth potential in this media, Waitrose would need to adopt a multichannel online strategy. In addition to a corporate website, which Waitrose has already developed, this means that Waitrose needs also to develop other online marketing channels through which to communicate their message to the online retail consumer. These will include the use of social networks, where the business will be able to communicate directly with consumers and address their concerns and also the direct online promotional opportunities available, such as banner and display advertising available on search engines and other internet sites.

Providing the online marketing strategy adopted by Waitrose presents the same characteristics as its in-store experience, this approach will enhance and complement its offline strategy. In this respect, in terms of the website it means that there should be ease of access and navigation , security of payment, sufficient depth in the range of products being offered and a high level of quality service being offered to the consumer. If these issues are appropriately addressed then it will result not only in attracting and retaining online customers, with the resultant increase of revenue generated from this source, but will also improve awareness of the brand when the online consumer is making purchasing decisions in the high street retailing environment. In other words, it is apparent that both the online and offline strategy would complement each other and result in improved the performance of the Waitrose brand as well as the loyalty of the consumer.

References

Arnold D (1992). The Handbook of Brand Management. London: The Economist Books

Hall (2010), Online food shopping expected to double in five years, London: Daily Telegraph

Johnson, G, Scholes, K and Whittington, R (2007), Exploring Corporate Strategy, 8th Edition. Harlow: FT Prentice Hall

Keller, K.L. & Lehmann, D.R. (2006) Brands and branding: Research findings and future priorities. Marketing Science. Vol. 25, No. 6, pp. 740-759

Kolter, P., Wong, V., Saunders J and Armstrong, Gary (2004). Principles of Marketing. 4th European edition, London: Pearson Education Ltd

Levy, M and Weitz, B.A (2008), Retailing Management, 7th Edition, Chicago: McGraw Hill

Porter, Michael E (2004). Competitive Strategy: Techniques for Analysing Industries and Competitors. New York: Free Press

Porter, Michael E., (2001). Strategy and the Internet, Harvard Business Review, March, pp. 63-78.

Srinivasan, R., Rangaswamy, A and Lilien, G (2005). Turning adversity into advantage: Does proactive marketing during a recession pay off? International Journal of Research in Marketing, Vol.22, Issue. 2, pp.109-125

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Introduction

This paper begins by presenting four theories of motivation; Maslow’s Hierarchy of Needs, Herzberg’s Two-Factor theory, Adams’ Equity theory and the Goal Setting theory. Each theory is briefly explained and applied to the Starbucks case after which a critique is given. A section at the end provides recommendations for job enrichment and also relational job design as methods management at Starbucks can employ to maintain an efficient and productive workforce.

Maslow’s Needs Theory

This theory states that humans are motivated by needs which are in hierarchical order from basic to higher order needs; humans address these sequentially starting with physiological, security, affiliation, esteem and topmost self-actualisation (Rollinson 2008). Maslow states that when needs are satisfied they cease to have a motivational effect on an individual (Robbins et al 2014). One view for Starbucks management would be to infer using Maslow’s theory that the job at this point has satisfied the employees’ lower level needs, as such there is a need to consider a new set of motivators related to Maslow’s affiliation and esteem needs. This could include making employees feel like a family at Starbucks, shareholding and availing clear promotion opportunities. However French et al (2011:163) state that, “a person’s frame of reference will determine the order of importance of their needs and societal culture influences that frame of reference.” Thus French et al (2011) contest the universal application of Maslow’s needs hierarchy and argue that employees from different ethnicities and cultures are not motivated by the same needs. Rollinson (2008) gives credit to Maslow nevertheless by stating that perhaps this theory’s main contribution is providing a general framework for categorising needs of different types.

Herzberg’s Two-factor Theory

Herzberg proposes two factors in his theory, hygiene factors and motivating factors. According to Herzberg the absence of hygiene factors, which include pay, job security, working conditions and interpersonal relations among others, would lead to dissatisfaction and their presence does not lead to motivation. Herzberg’s motivators include recognition, responsibility and nature of work among others, their presence would motivate but there absence leads to a neutral state of neither satisfaction or dissatisfaction (King and Lawley, 2013).

According to Herzberg’s theory, the nature of work, like being repetitive, cannot lead to demotivation or dissatisfaction. To employ this theory in the Starbucks workplace Herzberg proposes a two-stage approach (Griffin and Moorhead, 2011) as follows:

First, management should achieve a state of no dissatisfaction by addressing Herzberg’s hygiene factors, this can include among others giving an industry matching pay, improving working conditions and fostering interpersonal relations at work.

Second, once a state of dissatisfaction exists by adequately addressing the hygiene factors, employee motivation can then be achieved by introducing the motivators like more opportunities for advancement, and redesigning the job to take on more tasks and responsibilities.

In the Starbucks case therefore, assuming all hygiene factors are in place, management needs to consider motivators like clear opportunities for achievement, personal growth and promotion. They also need to consider the nature of the work and redesign the job to include more task variety and responsibility, factors that Herzberg argued motivate employees and lead to satisfaction (Griffin and Moorhead, 2011).

Perhaps the main strength of this theory is that Herzberg provided a clear way of how managers can apply it in practice using the two-stage approach above and job enrichment (Griffin and Moorhead, 2011).

Rollinson (2008), states that to test validity of this theory, it has been replicated many times and results have generally supported Herzberg’s theory though not entirely. The main area of criticism is that classifying the work features into hygiene factors and motivators can be problematic as it was noted that both factors could lead to feelings of satisfaction and dissatisfaction differing from person to person (Rollinson, 2008). People differ and Herzberg’s one size fits all classification does not stand in real life tests (Rollinson, 2008).

Modern society is multicultural and so is Starbucks as an employer (Starbucks, 2015 and also Adler and Gundersen, 2008). Applicability of Herzberg’s theory across different cultures differs, and so can be its applicability to people from different cultures yet within the same organisation (Adler and Gundersen, 2008; Rollinson 2008 and also Gambrel and Cianci 2003). Therefore, in this regard, due diligence needs to be taken as to how this theory can be applied to people from different cultures.

While Herzberg’s theory discounts the possibility of Starbucks staff being demotivated by repetitive tasks, the finding of the Starbucks manager might be accurate and for this reason other theories of motivation need to be considered for a solution to this problem.

Equity Theory

The psychologist Stacy Adams postulated that the primary motivating force for employees is striving for equity or fairness. The theory’s starting point is an exchange where an employee gives something, like skills and labour (inputs) and gets something for it like pay and recognition (outputs). The pivotal point of the theory being a reference person or group which the person uses to evaluate one’s own inputs/outputs balance (Miner, 2005). Inequity or dissatisfaction sets in where one notes a disparity with their reference other. Informing the Starbucks manager from Adams’ standpoint calls for a review of dissatisfied employees’ job specification and also the jobs of those these employees can use as referent others. Further Starbucks job designs need to be benchmarked alongside competitors’ like Costa coffee. To maintain an efficient and productive workforce as informed by the equity theory requires Starbucks management to offer the best remuneration package compared to the industry average. Another key factor to be considered when employing this theory is for management to make the employees aware of the basis on which the remuneration package is structured. This will help inform the employees when they make comparison as they understand the basis of their input/output balance.

Adams theory is highly regarded for its simplicity and standing up to the rigours of empirical tests, Rollinson (2008) states that tests have generally supported Adams’ propositions in the Equity theory and its predictions. However, Miner (2005) notes that in field tests of this theory some economically deprived individuals were very productive despite inequity. A conclusion drawn was that economic motivation was greater than equity motivation in the case. This shows that the equity theory can be a limited theory which only centres on one type of motivation. Further the comparison to referent others is subjective, conclusions of equity or inequity are subjective as well, so is the choice of the referent other one uses for comparison (Milner 2005). These drawbacks should be noted by Starbucks management in applying this theory.

Goal Setting Theory

Rauch (2006) explains Locke’s goal setting theory as a proven theory in its assertion that specific and challenging goals improve work performance. Rollinson (2008) further explains that this goal directed effort is a function of goal acceptance and goal commitment which lead to what Locke terms Performance, aided by organisational support and the individual’s abilities. The goal setting theory states that where one’s performance leads to goal achievement, equitable rewards both intrinsic and extrinsic are expected and the rewards determine the level of the person’s eventual satisfaction (Rauch 2006). Using the goal setting theory would require the Starbucks management to make specific individual goals with their disaffected workforce with rewards attached to goal attainment. However, as Landy and Conte (2010) point out modern workplaces are usually organised to work in teams and this theory does not adequately address goal setting in team based workplaces. Another shortcoming of the Goal Setting theory is its appeal to drive employees to unethical practices so that they can appear to be achieving their goals (Landy and Conte 2010) Notwithstanding, Harris and Hartman (2002) point out that research into this theory generally support its assertions. Joint goal setting has indeed been shown to have a positive impact on employee performance in most cases (Harris and Hartman 2002). In the same vein, research also corroborates Locke’s assertion that specific goals with a reasonable level of difficulty often lead to higher employee performance (Harris and Hartman 2002).Recommendations on how the manager can maintain an efficient and productive workforce within the organisation.

Rollinson (2008:240) states that, “to address low motivation, the most common approach for the last decades has been through job-redesign” This section will dissect the possibility of employing this tool in the Starbucks scenario.

Job Re-Design

In the Starbucks case, a job re-design is one of the tools the management can employ to make the job more rewarding both intrinsically and extrinsically. Following on from the discussed theories, Herzberg’s theory perhaps provides the most substantial content to inform job re-design as a motivational tool for the Starbucks management (Herzberg, 2003).

Herzberg states that a job needs to be designed so that the Two Factor theory’s motivators are built into the job (Herzberg, 2003). This process is commonly termed job enrichment (Rollinson, 2008). This encompasses horizontal job enlargement (more tasks) and vertical job enlargement (more responsibility).

Thus the Starbucks staff can have a role that stretches from receiving the inputs, informing on re-order levels, serving customers and being responsible for customer satisfaction for instance. Rollinson (2008) argues that this gives employees a feeling that that their job is meaningful and increases intrinsic motivation and satisfaction.

Notwithstanding the appeal of job enrichment, both Grant (2007) and Rollinson (2008) allude to the fact that results of all tests to this theory are mixed and one cannot make a clear conclusion. The main criticism remains that Job enrichment is built upon Herzberg’s two factor theory and individuals respond differently to an enriched job and not in a standard universal fashion as posited by the Two Factor theory and job enrichment. Not everyone wants an enriched job, some people prefer boring jobs as they pursue other meaningful activities outside work to cater for their needs (Rollinson 2008).

Relational Job Design for a Prosocial Difference

It can be argued that a frontline retail job at Starbucks lacks variety by its nature. Attempts to re-design it and enlarge it horizontally or vertically can be limited and fail due to simply being not much else that can be added to the required tasks. In this respect a different perspective to motivation may be required to maintain an efficient and productive workforce. Grant (2007) puts forward the notion of relational job design. Grant, (2007:393) puts this notion across as follows, “……existing research focuses on individual differences and the task structures of jobs ….. Relational architecture of jobs shapes the motivation to make a prosocial difference”. Grant (2007) advocates connecting employees to the impact they are having on the recipient of their efforts. The recipients can both be internal, like co-workers and management, or external such as customers. Grant (2007) points out that where individuals realise the difference their efforts are making in others’ lives they are motivated and perform better. Thus in Starbucks for instance, employees can be connected to coffee bean producers in developing countries who supply Starbucks coffee beans, and understand for themselves how their efforts are changing lives abroad. They can also be connected to the lonely people who sit and sip coffee in Starbucks and make relationships. Further, employees can be made a part of the corporate social responsibility programmes of the firm so that they can relate their efforts with its positive societal impact.

Conclusion

Several theories of motivation have been analysed in this paper and employed to inform management at Starbucks on how they can maintain an efficient and productive workforce.

Maslow’s Hierarchy of needs provide a useful framework for categorising needs of different types however its one-size fits all approach to motivation is questioned by scholars and practitioners alike and research has not fully corroborated its assertions.

The Two Factor theory has more appeal in the workplace due to the fact that Herzberg provided a clear way of how managers can employ it in practice. Research has also supported the theory somewhat. However it has been noted that what Herzberg classified as hygiene factors have worked as motivators to other people and vice versa. Therefore like Maslow’s theory, Herzberg’s theory has the problem of purporting to offer a universal application, which research disputes as inaccurate.

Joint goal setting has been supported by research and shown to positively impact on employee performance, however some academics point to the fact that the theory is getting obsolete as modern workplaces are organised into teams which are not addressed by the Goal setting theory.

The Equity theory informs management to consider fairness in both job design and remuneration. So that informal comparisons in the workplace do not lead to dissatisfaction. The theory is readily accepted for its simplicity and has held to its assertions in research. However it tends only to consider a single type of motivation-equity, at the expense of other motivation types like economic motivation which has been shown to be stronger than equity in some cases.

Tools put forward in this paper for maintaining a productive and efficient workforce are job enrichment and relational job redesign which takes focus off the tasks and connects employee with the impact of their work in the community for which Grant (2007) argues that people are motivated when they realise how their efforts are helping others.

References

Adler N. J and Gundersen A (2008). International Dimensions of Organizational Behavior. 5th ed. Mason: Thomson Learning.

French R, Rayner C, Rees G, and Rumbles S (2011). Organisational Behaviour. 2nd ed. New York: John Wiley and Sons Ltd.

Gambrel P. A and Cianci R (2003). Maslow’s Hierarchy of Needs: Does it Apply in a Collectivisit Culture. Journal of Applied Management and Entrepreneurship. 8 (2), p143- 161.

Grant A. M (2007). Relational Job Design and The Motivation to Make a Prosocial Difference. Academy of Management Review. 32 (2), p393-417.

Griffin R.W and Moorhead G (2011). Organizational Behaviour. Managing People and Organizations. 10th ed. Mason: Cengage learning.

Harris O.J and Hartman S. J (2002). Organisational Behaviour. New York: Best Business Books

Herzberg F (2003). One More Time: How Do You Motivate Employees. Harvard Business Review. 1 (1), p3-11.

King D and Lawley S (2013). Organizational Behaviour. Oxford: Oxford University Press.

Landy F. J and Conte J.M (2010). Work in the 21st Century: An Introduction to Industrial and Organizational Psychology. 3rd ed. Hoboken: John Wiley and Sons Inc.

Miner J. B (2005). Organizational Behavior: Essential theories of motivation and leadership. New York: M.E. Sharpe Inc

Rauch C (2006). The Goal-Setting Theory. Norderstedt: Druck un Bindung

Robbins S, Judge T. A, Millett B, and Boyle M (2014). Organisational Behaviour. 7th ed. Frenchs Forrest: Pearson Australia.

Rollinson D (2008). Organisational Behaviour and Analysis. Harlow: Pearson Education Limited

Starbucks. (2015). Working at Starbucks. Available: http://www.starbucks.co.uk/careers/working-at-starbucks

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Introduction

This Report traces the history of the London Millennium from its origins as a signature statement with which England proposed to enter the 21st century, through the controversies that dogged its construction, financing, opening and operations during the year 2000, to its re-birth as the O2 entertainment complex in 2007.

The central conclusion that is supported by the Report is that less than three years into its 1997 renaissance as a London entertainment destination, the controversy and the apparent mismanagement of numerous aspects of the Millennium Dome’s operations have been successfully cast aside. The negative public image that was the subject of numerous media and academic commentaries concerning the Dome operations have been overcome by the generally positive reviews enjoyed by the O2 venue.

The Report is constructed upon the following framework. The initial portion of the Report reviews the history of the Millennium Dome project and the significant controversies that were generated at every stage of its existence through the conclusion on the millennial celebrations in 2000. The ‘rebranding’ of the Dome as the O2 entertainment complex is also considered and discussed. In this context an unscientific but topical poll result that suggests a significantly favourable public opinion of the O2 facility is also evaluated.

A sampling of nine perspectives taken from various published sources concerning the Millennium Dome / O2 complex is provided in the Report. The sources referenced are intended as a representative sample as opposed to an exhaustive listing of the available commentaries; the published academic opinions concerning the controversies encountered by the Dome operators prior to the opening of the facility alone exceed twenty in number. The literature survey is used to provide a critical assessment of the costs, benefits and risks attendant to the Dome project.

This Report concludes with the observation that a difficult birth and troubled adolescence have given way to a mature London facility that will be an economically viable and culturally desirable venue for the future.

The Origins and Birth of the Millennium Dome

The Millennium Dome project enjoys the distinction of having been conceived under a Conservative government and raised to its full extent by New Labour. It is submitted that no matter what political perspective is taken on the entire process, there was at all times a genuine political will to make a unique British statement about the country and its attitude towards the approaching millennium (McGuigan, 2004; Myddleton, 2006). The Dome is located on the edge of the Prime Meridian. The architecture is both imposing and unique; often described as ‘iconic’ in appearance, the Dome has a 80,000 m2 glass fibre surface coated with polytetrafluoroethylene (Teflon) that renders it one of the few man-made structures that is sufficiently large that it may be observed from space (Sinclair, 1999; Roche, 2000; Myddleton, 74-90)

A chief difficulty that plagued the Dome concept and project from the outset was the failure of the government generally to solicit grounded, objective, and properly developed costing estimates for the project construction. These errors were compounded when the focus switched from how the building would look upon completion to the actual day to day operation of the facility during the millennial year, and what would happen to the structure once the millennium had passed (Sinclair, 10; Myddleton, 74; Nutt, 2002).

The original construction cost projections for the entire Dome were pegged at approximately ?300 million. By the time the Dome officially opened on December 31, 1999, the construction and facility costs had risen to over ?600 million. A lightening rod in the ever widening public debate concerning project costs was the use of national lottery revenues to supplement the monies needed to complete the project. The Labour government spent an estimated additional ?175 million to keep the project solvent (Nutt, 3; National Audit, 2004).

A particularly trenchant criticism was published by Iain Sinclair just prior to the commencement of the millennial celebrations in the fall of 1999. Sinclair suggested in a fashion that was subsequently proven to be prescient, that the initial excitement over the Dome and its striking appearance would never justify the amount of public money expended on the project (Sinclair, 1999). Concerns over ticket prices, the quality of the exhibits assembled in the Dome’s public halls and an opening night ticket fiasco all contributed an image of a facility that was poorly conceived and badly managed.

The government based its revenue projections on the Dome for the one year of operations through the millennial celebrations on an estimated 12 million visitors. The actual attendance during 2000 was slightly in excess of 6 million persons; perhaps as few as 4.5 million actually paid a fee approaching the face value of ?25 per person (Nutt, 4). The Dome was largely regarded, both figuratively and in reference to its colour, as a ‘white elephant’ that symbolised both government mismanagement of a megaproject and a lost opportunity to make a positive difference to the London infrastructure (Myddleton, 80).

Two decidedly unglamorous but telling positive public benefits were derived from the Dome construction project. The first was the construction of the North Greenwich Underground station (located on the Jubilee Line). The station represents a permanent addition to London’s Underground network (Roche, 2000). The second is more esoteric but perhaps as important to the study of waste water as the new Tube station was to London’s transportation network. The public authority Thames Water devised its ‘Watercycle’ project to utilise reclaimed (i.e. waste water) at the site for all non-potable water uses. Thames Water constructed one of the largest ever in-building water recycling schemes in Europe for the Dome, where up to 500 m3 per day of reclaimed water was used to operate toilets and urinals (Hills, Birks & McKenzie, 2002, 235). Thames Water made two important determinations in the ‘Watercycle’ project – it could meet 55 percent of the Dome water demand at the Dome with reclaimed water; there was a generally positive response from visitors concerning the use of reclaimed water for non-drinking and bathing uses. The Dome thus made a positive contribution to modern urban planning and water use science (Hills et al, 240)

It is plain that money issues and the perception that the Dome was a public works failure continued after the millennium celebrations concluded at the end of 2000. A variety of schemes were proposed for the permanent use of the facility. These included the installation of a full football stadium and supporting commercial uses; a high technology business park and related infrastructure; a hotel and cruise ship port; a large scale casino; an entertainment complex (Myddleton, 81). None was able to generate the critical commercial necessary to move forward until the May 2005 purchase of the site by Anschutz Entertainment, who subsequently sold the naming rights to the entire property to telecommunications giant O2.

The Anschutz purchase was also controversial. Serious allegations were raised in both the House of Commons and the media that Labour cabinet minister John Prescott had improperly involved himself in the negotiations. The primary suggestion of impropriety centred on Prescott’s series of private meetings with the proposed purchaser (who initially sought permission to develop a super-casino), including a trip to the purchaser’s home in Colorado (Guardian, 2006).

Literature review

The sample of literature selected in support of this Report is deliberately wide ranging, as an acknowledgement that the problems encountered throughout the history of the Millennium Dome project and its more recent success are not attributable to a single cause or factor.

It is submitted that the management of the original Dome project both at the government end and on the ground was flawed. There is an unmistakable sense that both of these stakeholders were caught up in the belief that the buoyant Britain that was riding on the benefits of a relatively robust economy and enhanced international status would embrace the Millennium project and support it unreservedly as a matter of national pride. There were parallels drawn between the national attitudes observed at the time of the 1951 ‘Festival of Britain’, an event staged as the country accepted its new post-imperial construction, and the so-called ‘cool Britannia’ image that was advanced as an appropriate reflection of the new Britain by the government, an image that was said to be furthered by the Dome project (Sinclair, 1999;); McGuigan described the structure and the project as an “…ideological shell for neo-liberalism” (2004, 12)

A point that is well made in the academic literature but one that was overlooked in the contemporary criticisms of the project was that visitors generally enjoyed their experiences at the Dome. Hemmington and his colleagues used a large data sampling (880 interviews) to form their conclusion that the Dome visitors surveyed found many positives on which to state their opinions; the commentary stresses again how the Dome management failed to capitalize at the time on the feedback available to them to better publicise the facility (Hemmington et al, 2005, 10).

The Myddleton article is particularly insightful in this respect. Myddleton avoids the limitations of political bias and partisan fault finding in his emphasis upon the good intentions that inevitably power government mega projects of all kinds. Myddleton’s review of the Dome project in the larger context of the Channel Tunnel, the British nuclear power programme and the development of the Concorde reveals that mismanagement and poor lines of authority are a far more common cause of mega project failure than any deliberate or willful act on the part of the government promoter of the day (Myddleton, 2006). Nutt, writing from an American perspective, supports this contention. Nutt uses the now infamous Tony Blair pronouncement that the Dome would represent a “triumph of confidence over cynicism, boldness over blandness” to counterpoint his argument that a series of blunders as opposed to intentional acts doomed the Dome to insolvency (Nutt, 4,5).

Cost Benefit analysis and future uses

On a strict expenditure basis limited to the site and facilities themselves it is submitted that the Millennium Dome project is difficult to rationalise. The financial experts retained to oversee the liquidation of the project assets noted that it is extremely unusual for a public sector company to be the subject of a winding-up. A lottery grant of ?628 million was used to finance the project; little was realised from the sale of exhibits or supporting aspects of the project (National Audit, 2). Given that the Dome was ultimately sold to a private commercial entity, the argument is there to be made that the public benefit of a one year exhibition to which significant admission fees were charged is not worth the cost. The Underground is an entirely separate expenditure. The controversy and public energy expended in delving into the reasons why the Dome project failed to live up to expectations are the further hidden costs that are never recovered.

However, one may also quantify the benefits of the Dome project over the longer term. It is noteworthy that in addition to the technical / infrastructural benefits noted above, contemporary opinion of the renewed O2 entertainment facility appears to be in line with the visitor experiences measured during the Millennium celebrations. An informal survey of this public opinion is attached at Appendix One of this Report. Ten university undergraduates are not a representative sampling of the public; the fact that none of these persons was likely a taxpayer during the periods of greatest financial controversy concerning the Dome is an important factor. The poll does confirm that the O2 facilities are well regarded (Appendix One). The results noted at Appendix One are confirmed in a contemporary market study (Marketing Week, 2007).

It is also observed that the concert acts booked into the O2 arena have tended to be mainstream names that have a resonance with the public. The Appendix One poll gave the venue high marks for the quality of the entertainers attracted to the arena; as with the financial controversies during its formative period, the poll respondents would not have followed acts such as Stevie Wonder or Elton John during the prime years of their careers.

The facility will also be used to host the basketball and gymnastics competitions in the 2012 Olympic Games. The public monies expended in the Dome construction and maintenance will be recouped to a modest degree through this converted temporary use.

Conclusion

It may be that an important ultimate legacy of the Millennium Dome and its O2 successor has been to cement the Greenwich area as a primary London entertainment district as the next decade approaches. The public monies spent on the Dome cannot be rationalised very readily into a balance sheet analysis. The ultimate worth of the entire project will be measured by how well the government handles future mega projects, and whether the recurring lessons of accountability and the need for rigorous data supported projections are learned.

Bibliography

Guardian (Leader) ‘A Hollow man and an Empty Tent’ The Guardian (July 7, 2006) [online] At: Accessed August 25, 2009

Hemmington, N., Bowen, D., Wickens, E. and Paraskevas, A. ‘Satisfying the basics: reflections from a consumer perspective of attractions management at the Millennium Dome, London’ International Journal of Tourism Research, 2005, 10

Hills, S, R Birks and B McKenzie ‘The Millennium Dome “Watercycle” experiment: to evaluate water efficiency and customer perception at a recycling scheme for 6 million visitors’ Water Science Technology, 2002: 46(6-7):233-40

Marketing Week ‘Pros and Cons of the O2 entertainment complex’, 2007 [online] At: Accessed August 25, 2009

McGuigan, James Rethinking Cultural Policy New York: McGraw-Hill, 2004

Myddleton, D. R. ‘They Meant Well: Government Project Disasters’ Institute of Economic Affairs Monographs, Hobart Paper No. 160, 2006 [Online] At: Accessed August 25, 2009

National Audit Office ‘Winding-up the New Millennium Experience Company Limited’, 2004 [online] At: Accessed August 26, 2009

Nutt, Paul C. Why Decisions Fail Chicago: Berrett-Koehler Publishers, 2002

Roche, Maurice Mega events and modernity: Olympics and the Expos of growth in global culture London: Routledge, 2000

Sinclair, Iain Sorry Meniscus – Excursions to the Millennium Dome London: Profile Books, 1999

Appendix One

An informal study of 10 London undergraduate university students concerning their impressions of the London O2 entertainment complex and arena (formerly the Millennium Dome). The study was conducted August 25, 2009.

All respondents were contacted on-line by way of the ‘Facebook’ social media network. All respondents were between the ages of 18 and 25 years of age. Six respondents were female; four were male. All respondents had personally visited the O2 site since its renaming and launch as an entertainment venue in 2007. Each respondent was asked to place a value of between 1 and 5 (with 1 as the lowest rating and 5 the highest) for each of the following questions concerning their personal opinion sought on each element of the O2 complex. The average score for each question is shown in bold below:

1. How do you rate the ease of transportation access to O2 4.5

2. How do you rate site in terms of ease of movement / accessibility 4.5

3. How do you rate the entertainment and the amenities offered at the site (apart from the concerts at the O2 arena) 4.0

4. How do you rate the quality of the concerts and other shows that have been offered to date at the O2 arena 4.25

5. What is your overall impression of the O2 complex 4.2

6. Does the O2 complex add value to London 4.0

The above results are not tendered as scientifically rigorous; the poll as conducted was intended to supplement the analysis set out in the body of the paper.

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1. Introduction

In the following report the marketing strategies of Next PLC, a British based clothing and home products retailer will be researched and analysed before recommendations for possible improvements are provided. This report will analyse the company marketing strategy by assessing the marketing mix or the “4 Ps” of product, price, place, and promotion as well as the environment in which the company operates. Once this is completed, an analysis of the strengths and weaknesses of the strategy will be conducted followed by recommendations on future strategy to ensure further growth.

The Next brand was established in 1982 and now has over 500 stores in the UK while also operating internationally with over 180 overseas stores (Financial Times, 2015). Additional sales channels were added with the launch of Next Directory in 1988 before expanding to include online shopping in 1999 (Next PLC, 2015). This points to an early implementation of a multi-channel retailing strategy which has been a key factor in their growth and success, and they have established themselves as the most advanced multi-channel retailer in the country (Mintel, 2013).

The main target market for Next has long been the middle class in 25-45 age range for both genders interested in mainstream fashion, although there may be a slight increased focus on women’s fashion continuing on from the brand’s early strategy (Next PLC, 2015). The needs of customers are ever-changing and retailers such as Next must ensure their marketing and sales strategies are appropriate to the needs of the market (Chaffey and Ellis-Chadwick, 2012).

2. Market Evaluation

The market is the location where merchandise can be bought and sold while marketing is the process of identifying target markets and setting strategies for product development, pricing, promotion and distribution (Armstrong et al, 2012). Therefore, to effectively analyse the company’s marketing strategy it is important to understand the state of the current environment of the intended target market.

The current economic climate has improved in recent years following the downturn of 2008, however, it is still fresh in the memory of consumers and conservative spending habits will remain for some time.

However, despite constraints on disposable income, clothing purchases continued to be the preferred choice for excess income for consumers prioritising spending. This saw market growth throughout the year with sales increasing by 4.5% bringing annual consumer spend on clothing and accessories to ?49.8 billion in 2013 (Mintel, 2013). This is due to consumer confidence increasing throughout 2013 as the economy recovered and consumers feeling more financially stable (Elliot, 2013).

Since its launch, Next has established itself at the top of the UK clothing market and accounted for 7.2% of all clothing retail sales in 2012, making them the second largest clothing retailer in the UK (Mintel, 2013). Following this success, they surpassed main competitor Marks & Spencer and forecast higher annual profits for the first time (Ruddick, 2014). In a growing market that is in a strong position, Next is in a healthy position due to successful a Christmas period and superior sales and marketing strategies.

3. Marketing Strategy Analysis

The marketing mix is a tool that can be used to easily prepare, on in this case, assess a marketing strategy and it consists of “4 P’s” which are product, price, place, and promotion. Product and price relate to the product or service itself, whereas place and promotion relate to how the company’s offering is delivered and made available to the consumer (Pride and Ferrell, 2012).

Product

This is what the business offers to customers to meet their needs or requirements. As mentioned, Next’s product is primarily mainstream fashion targeting the middle class of both genders in the 25-45 age range. As per the mission statement, the focus is to ensure high quality and fashionable designs for the customer (Next PLC, 2015). This also applies to the other departments and their focus on quality has been a major factor in their establishment as a brand and recent success in growth and gaining ground on competitors.

Price

This relates to the pricing strategy employed by the company and has a major impact on the whole strategy. As a result, pricing must be carefully considered to ensure it is in line with the customer expectations and perception of quality as well as the company’s intended targets and branding. Next’s pricing strategy, just like the target market, occupies a middle ground that is neither market skimming nor penetration pricing. Rather, it occupies a neutral zone and portrays the image of quality and design at a suitable price for the target consumer.

Penetration pricing is often used by new start ups seeking to gain sales and spread awareness by undercutting competitors, whereas skimming has the same target but aims to beat the competition through higher prices that imply better quality (Pride and Ferrell, 2012). While Next may have used such tactics in the past, it now has an established brand and more neutral pricing strategy.

Being a mid-market retailer, this current neutral pricing strategy offers their established customer base continuity and familiarity as they know what to expect and helps to maintain the customer’s perception of quality. It also offers Next flexibility in pricing for promotional or seasonal purposes and allows the retailer to remain competitive across all its sales channels.

Place

This refers to the strategy put in place to allow the product to be put in front of or made available to the customer in a way which is appropriate and convenient.

Next runs a clear multi-channel retailing strategy with various avenues whereby a customer can browse and purchase products. Next now has over 500 stores throughout the United Kingdom and Ireland (Next PLC, 2015) and this was the original channel the brand was built on and remains a crucial part of their strategy. Having several stores around the country allows Next to “cast their net” wide as well as increase convenience for the customers and enable the most important part of clothes shopping, the ability to touch and try them on (Spies et al, 1997).

Stores add the human element to the company through sales advisors, customer service, and general shopping experience. A positive experience shopping in stores can turn an occasional shopper to a loyal customer (Shaw, 2013).

Next’s other channels include the directory, a catalogue through which customer can order and receive their purchase by post, and the online channels through the website, mobile app and social media which allow Next to sell products as well as maintain communication with customers.

These channels offer more choice to the consumer and allow Next to market their products more effectively to a larger target market. Ordering by catalogue or online gives the customer more options on how to shop and with fast turnaround from order to delivery it will suit customers with busy lifestyles (Cherry, 2008). The development and acceptance of new technology such as the internet and the smartphone has made these additional sales channel essential to meet the expectations of customers (Baker and Hart, 2007). Lifestyle changes have lead to changes in how customers wish to shop (Watson, 2012) and the busier social and working lives of potential customers means there is a greater need and demand for convenience (Weiss, 2009).

Promotion

This refers to the methods employed by the company to provide information and make potential customers aware of its products (Bates, 2012). Next’s promotion through advertising has been limited in recent years and often more focused on smaller campaigns, rather than large-scale advertising conducted by retailers such as John Lewis who are known for their television adverts.

Next’s promotions appear to have shifted to focus online with communication, advertising and promotional offers all displayed on the official website. However, the online strategy is not solely reliant on their website and the increasing use of social media such as Facebook and Twitter has attracted much attention from the retailing world (Forbes and Vespoli, 2013). Next has fully utilised the potential social media offers with regular updates on Facebook, Twitter, YouTube and photo sharing sites such as Instagram. By promoting offers and advertising their products to the millions of followers on their pages, often through the use of celebrities sporting their products, Next has bolstered its sales, profits and growth substantially.

4. Assessment

The main strength for Next and their marketing strategy is their established brand, as evidenced by their recent successes. This means brand awareness is already present and their clear design philosophy that is both fashionable and affordable has allowed them to build a customer base of loyal, regular customers. This combined with their use of a multi-channel retailing strategy and effective utilisation of online sales and promotion has allowed them to gain a firm foothold at the top of the UK clothing market.

Their products and pricing strategy is effective at targeting their target market and is current with the trends and needs of the customers. Next ensures it stays current with market requirements due to constant communication with customers through its multi-channel system while also providing more choice to the customer and ensuring customer loyalty (Loftus et al, 2008). Customers who use multiple channels are also more likely to spend more than those that don’t (Shankar & Winer, 2005) and this can only benefit Next’s accounts.

A possible weakness in Next’s strategy is that while a target market is established and targeted effectively, the target market itself is rather broad. The customer specification covers a large age range in the middle market of the middle class. This can be seen as quite vague and can make it difficult to design, produce, and price products without a clear customer specification (Keillor, 2007).

This may also explain another possible weakness, the lack of clear celebrity ambassador. With no clear customer image in mind, the company cannot recruit a well known individual to model and promote their products to the appropriate target market who seek to replicate the celebrity.

5. Recommendations

With the rise of online shopping, most opportunities for Next will revolve around optimising and expanding their service to suit digital marketing.

Next could use the data gathered through its multiple channels and social media to optimise store space to ensure that displayed products are those which are most popular, whilst the less-purchased items are saved for their online sites that require lower running costs. This will allow the store space to be optimised and used more efficiently, with less clutter and more in-demand items the stores will be more cost effective and should have a positive reaction from customers who find the items they seek to be clearly displayed, in stock and available in store.

As mentioned in the assessment, Next may benefit from narrowing their target market to be more precise in their target customer specification. With a clearer target in mind, products can be produced that are more appropriate for the customer and this should result in an improvement in efficiency and profitability. It will also benefit the company’s branding and promotions as they can recruit a brand ambassador that the target customer can relate to and seek to replicate (Lamb et al, 2010).

While Next already has a large and successful online presence, these changes could allow them to better target their online demographic with appropriate imagery, advertisements and promotions which will help in strengthening their brand image, increasing sales, and attracting new customers.

6. Conclusion

Next holds a strong market position in a marketplace that is steady and shows growth. Their marketing strategy has been consistent since its launch, targeting the same target market with quality, fashionable products at a reasonable price. Having always been an ambassador for positive change, embracing new sales channels and technologies, Next now has an established brand and customer base which shows the success of its marketing strategy.

However, there is always room for improvement and while their current strategy has served them well, it can benefit from some optimisation that should ensure they remain at the top of the clothing market and remain ahead of competition that may threaten their position through more precise marketing strategies.

7. Bibliography

Armstrong, G., Kotler, P., Harker, M. and Brennan, R. (2012). Marketing: An introduction (Second Edition). Boston, Mass: Pearson.

Baker, M. and Hart, S. (2007). The Marketing Book (Sixth Edition). Abingdon: Routledge.

Bates, S. (2012). Brand recognition—what do people say about you? Leader to Leader, 2012(65), 27-32.

Chaffey, D. and Ellis-Chadwick, F. (2012). Internet Marketing: Strategy, Implementation and Practice (Fifth Edition). Cambridge: Pearson Education.

Cherry, R. (2008). Catalog: The illustrated history of mail-order shopping. New York: Princeton Architectural Press.

Elliot, L. (2013). Consumer confidence edges up as triple-dip recession fears recede. The Guardian. Available: http://www.theguardian.com/business/2013/may/31/consumer-confidence-edges-up

Financial Times (2015). Next PLC Business Profile. Financial Times. Available: http://markets.ft.com/research/Markets/Tearsheets/Business-profile?s=NXT:LSE

Forbes, L. P. and Vespoli, E. M. (2013). Does social media influence consumer buying behavior?: An investigation of recommendations and purchases. Journal of Business & Economics Research, 11(2), 107-111.

Keillor, B. D. (2007). Marketing in the 21st Century. West Port, CT: Praeger.

Lamb, C.W., Hair, J. F. and McDaniel, C. (2010), Essentials of Marketing. Boston: Cengage Learning.

Loftus, B., Mulliken, J. and Sharp, J. (2008) The Multichannel Imperative. Boston: Boston Consulting Group.

Mintel. (2013). Clothing Retailing –UK October 2013-Next Group. London: Mintel International.

Next PLC (2015) Our History. Next PLC. Available: http://www.nextplc.co.uk/about-next/our-history.aspx

Pride, W. M. and Ferrell, O. C. (2012). Marketing. Boston: Cengage Learning

Ruddick. G. (2014) Next Profits to Overtake Marks & Spencer after Christmas Sale Surge, The Telegraph. Available: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10548020/Next-profits-to-overtake-Marks-and-Spencer-after-Christmas-sales-surge.html

Shankar, V. and Winer, R. S. (2005). Interactive Marketing goes Multi-Channel. Journal of Interactive Marketing, 19(2), 2-3.

Shaw, J. (2013). Shopping (First Edition). Cambridge: Polity Press.

Spies, K., Hesse, F., and Loesch, K. (1997). Store atmosphere, mood and purchasing behavior. International Journal of Research in Marketing, 14(1), 1-17.

Watson, T. J. (2012). Sociology, Work and Organisation (6th ed). Abingdon: Routledge.

Weiss, Y. (2009). Work and leisure: A history of ideas. Journal of Labor Economics, 27(1), 1-20.

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1.0 Executive Summary

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

2.0 Company Description

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

3.0 Overview of the Adverts in the Portfolio

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

4.0 Segmentation, Targeting, and Positioning

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

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

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

5.0 Consumer Buyer Behaviour

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

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

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

6.0 Promotion

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

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

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

7.0 Communication strategy

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

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

8.0 Pricing

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

9.0 Product

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

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

10.0 Place

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

11.0 Critique and Recommendations

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

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

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

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London’s Ships of Historical Interest Partnership – Marketing Plan

Executive Summary

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

Objectives

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

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

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

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

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

Marketing Environment

Micro-environment

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

Strengths

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

Weaknesses

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

Opportunities

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

Threats

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

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

Macro-environment

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

Launching a campaign in overseas countries/markets;

Political

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

Economic

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

Socio-cultural

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

Technological

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

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

Market Identification

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

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

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

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

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

Marketing Objectives

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

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

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

Marketing Strategy

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

Product

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

Price

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

Place

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

Promotion

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

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

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

Action Plan

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

Set budget for marketing Financial 14 Days campaign

Select media channels Marketing 14 Days for promotion and advertising.

Launch marketing Marketing 9 Days campaign

Marketing Budget

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

Evaluation/Critical Issues

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

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

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

Bibliography

Aaker, D and Joachimsthaler, E. (2000) Brand Leadership. NY, US, Free Press Business.

Jobber, D. (2004) Principles and Practice of Marketing. 4th Ed. London, McGraw Hill.

Jones, G. (2007) Organisational Theory, Design and Change. 5th Ed. NJ, US, Prentice Hall.

Keegan, W and Green, M. (2005) Global Marketing. 4th Ed. US, Pearson Prentice Hall.

Keegan, W. (1999) Global Marketing Management. 6th Ed. NJ, US, Prentice Hall.

Keller, K. (2003) Strategic Brand Management: Building, Measuring and Managing Brand Equity. 2nd Ed. NJ, US, Pearson Education Ltd.

Van Gelder, S. (2003) Global Brand Strategy: Unlocking Branding Potential Across Countries, Cultures & Markets. London/VA, US, Kogan Page.

The Guardian (2010) China Overtakes Japan As Second Largest Economy (Internet) Guardian Online. Available from: http://www.guardian.co.uk/business/2010/aug/16/china-overtakes-japan-second-largest-economy
(Accessed 17.8.2010)

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

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Section 1: Introduction and Background

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

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

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

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

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

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

Section 2: Product Details
2.1. Product Concept

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

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

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

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

2. 2. Technical Assessment

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

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

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

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

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

2.3. Market Assessment

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

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

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

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

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

2. 4. Product Development and Testing/Validation

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

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

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

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

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

PESTEL Analysis

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

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

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

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

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

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

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

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

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

3.1.3. Target Market

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

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

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

3.2. Marketing Mix

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

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

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

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

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

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

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

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

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

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

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

3.3. Market Forecast

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

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

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

Year 1

Year2

Year 3

Year 4

Year 5

GBP

GBP

GBP

GBP

GBP

Sales forecast
Hotel rooms targeted (numbers)

600000

630000

661500

694575

729304

%age of MDRs sold

3.0%

7%

9%

12%

12%

MRDs sold (numbers)

18000

44100

59535

83349

87516

Average MRD price (GBP)

125

150

150

120

96

Total sales forecast (GBP)

2250000

6615000

8930250

10001880

8401579

Total sales forecast (million GBP)

2.25

6.62

8.93

10.00

8.40

Marketing Budget
Pre-launch beta testing 50 MRD kits

6250

Launch event

150000

Post-launch promotional activities

100000

Post-launch media expenses

200000

Annual promotional expenses @ 1.5%

33750

99225

133954

150028

126024

Total marketing budget (GBP)

490000

99225

133954

150028

126024

Total marketing budget (million GBP)

0.49

0.10

0.13

0.15

0.13

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

3.4. Evaluation and Assessment

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

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

Marketing Portugal to the North American market
Introduction

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

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

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

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

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

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

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

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

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

The country’s competencies and sources of competitive advantage

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

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

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

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

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

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

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

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

Marketing control – plans for evaluation and feedback

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

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

References

1. A?guas, P. Costa, J. and Rita, P. (2000) A tourist market portfolio for Portugal. International Journal of Contemporary Hospitality Management; Vol. 12, Issue 7, p. 394.
2. Background Notes on Countries of the World (2008) ECONOMY. Background Notes on Countries of the World: Portugal; April 2008, p. 5.
3. Blumberg, K. (2005) Tourism destination marketing – A tool for destination management? A case study from Nelson/Tasman Region, New Zealand. Asia Pacific Journal of Tourism Research, Vol. 10, Issue 1, p. 45-57.
4. Correia, A. Videira, N. Alves, I. Ramires, C. Subtil, R. and Martins, M. V. (2006) Tourism golf scenarios: The Algarve case. Tourism & Hospitality Research; Vol. 6, Issue 3, p. 179-196.
5. Costa, J. (2004) The Portuguese tourism sector: key challenges for human resources management. International Journal of Contemporary Hospitality Management; Vol. 16, Issue 7, p. 402-407.
6. Dev, C. S. and Schultz, D. E. (2005) In the Mix: A Customer-Focused Approach Can Bring the Current Marketing Mix into the 21st Century. Marketing Management; Vol. 14, Issue 1.
7. Ferrell, O.C. and Hartline, M. (2005). Marketing Strategy. Thomson South-Western.
8. Foreign Affairs (2008) The West Coast of Europe. Foreign Affairs; Vol. 87, Issue 2, special section p. 16.
9. Portugal Economic Studies (2007) 2 Macro-Accessibility In Portugal: 2.8 Travel Risks. Portugal Economic Studies; 2007, p. 37-38.
10. Portugal.org (2009) Welcome to Portugal. http://www.portugal.org/index.shtml Accessed 10th March 2009.
11. Ramos, P. Salazar, A. and Gomes, J. (2000) Trends in Portuguese tourism: a content analysis of association and trade representative perspectives. International Journal of Contemporary Hospitality Management; Vol. 12, Issue 7, p. 409.
12. Soukiazis, E. and Proenca, S. (2008) Tourism as an alternative source of regional growth in Portugal: a panel data analysis at NUTS II and III levels. Portuguese Economic Journal; Vol. 7, Issue 1, p. 43-61.
13. Videira, N. Correia, A. Alves, I. Ramires, C. Subtil, R. and Martins, V. (2006) Environmental and economic tools to support sustainable golf tourism: The Algarve experience, Portugal. Tourism & Hospitality Research; Vol. 6, Issue 3, p. 204-217.
14. Yasin, M. Alavi, J. Sobral, F. and Lisboa, J. (2004) A Shift-Share Analysis Approach to Understanding the Dynamic of the Portuguese Tourism Market. Journal of Travel & Tourism Marketing; Vol. 17, Issue 4, p. 11-22.

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1. Executive Summary

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

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

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

2. Mission, Vision and Culture

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

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

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

3. Company Objectives

The objectives of this product are as follows:

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

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

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

4. Opportunity Analysis and Research

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

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

4.1. Industry Analysis

4.1.1 Tourism Market

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

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

4.1.2 Smartphone Market

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

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

4.1.3 App Market

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

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

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

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

5 PEST Analysis

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

5.2.1 Political Factors

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

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

5.2.2 Economic Factors

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

5.2.3 Sociocultural Factors

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

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

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

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

5.2.4 Technological Factors

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

6. Marketing Strategies

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

6.1 Target Market

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

6.2 Product Strategies

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

6.3 Pricing Strategies

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

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

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

6.4 Promotion Strategy

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

6.5 Distribution Strategies

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

Bibliography and References

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

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

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

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

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

[Date accessed: 23 November 2010]

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

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

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

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

[Date accessed: 23 November 2010]

ONS (2010). International Travel [online]

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

[Date accessed: 23 November 2010]

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

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

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

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

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

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

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

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

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

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

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