Applying a Conceptual Model for Developing
Communication Strategies for Three Different Firms
Monash University, May 2000
The purpose of this report is to develop a communication strategy for each of three different firms: a bank, an independent butcher in a local shopping center, and a book publisher. The report explains the different strategies by referring to a constructed conceptual model, which allows a firm to develop its own communication strategy and to choose alternative promotion channels.
The report recommends different promotion channels to each of the three firms, and discusses advantages and disadvantages with these channels. The discussion relies much on Kotler’s et.al. discussion about the marketing communication strategy process, but uses various writings and Internet resources to support the discussion.
Marketing, communication strategy, marketing mix, customers, promotion
The purpose of this report is to develop a communication strategy for each of three different companies: a bank, an independent butcher in a local shopping center, and a book publisher.
The report explains why these three companies need three different strategies due to factors such as their size, structure, and product, and recommends various types of promotion that each of the companies might find most suitable to apply.
Based on a discussion of the marketing communication strategy process by Kotler et.al. (1998, Ch.14), a conceptual model has been constructed for the purpose of providing an easier understanding of issues that the three companies need to consider when deciding upon what promotion tools to be used. Various publications, such as textbooks and Internet resources have been used to support the recommended strategies.
1.4 Assumptions and limitations:
The aim of this paper is to present a structural argument to why these three companies need different communication strategies, following the steps outlined in the conceptual model (mentioned in section 1.3). It is a discussion that relies more on rational and logical reasoning than on a need to support the views and findings by a variety of sources, such as books, articles, and theories. It could be argued that this limits the relevance of the discussion (including the concluding recommendations), but it is assumed that the theory held by Kotler et.al. is a widely accepted approach to explaining the marketing communication process, and can thus be seen as providing the ‘backbone’ to the discussion.
2. The Communication Strategy
2.1 Why communication?
Communication plays an extremely important role in marketing; in fact its sheer presence or non-presence in a firm’s strategy determines the life of the firm. A firm may have a much sought-after product, but if it cannot communicate its existence or benefits compared to other products in the market to potential or existing buyers, the firm has nothing gained in producing and developing the product. As noted by Quelch (1991, p.247):
An intelligent marketer recognises the importance of identifying accessible market segments and developing message and media combinations that will reach those segments economically and lead them to act in desired ways.
This statement implicitly contains the core meaning of communication; of three basic roles it plays in marketing: to inform, to persuade, and to remind. If a new product has been developed, or if the firm wants to pursue a market development strategy and try to promote its existing product(s) in new buyer markets, it first needs to inform the target audience that the product exists. Not until potential buyers know about the products will they want to buy it, and can hence be pursued to do so. The third role, to remind, is important for keeping the firm’s customers buying the product, or remembering that it still exists, so that they do not swap over to a competitor’s product and thereby weakens the firm’s market strength and, ultimately, its profit.
As shall be seen in the three different cases presented in this paper, a firms might need to strongly emphasise one or more of the three roles that communication plays in marketing, while another firm may need a stronger focus on the other role(s). This is further explained in the next section that explains the model that is used for the discussion.
It has already been pointed out that the product plays an important part in communication, as without a product there would be nothing to communicate, but two other elements are also important to consider in terms of choosing a communication strategy and promotion tools, namely that of the place and price of the product. Together with promotion, these three elements make up the core of the ‘marketing mix’:
2.2 The ‘marketing mix’ and ‘promotion mix’
An academic approach to the ‘marketing mix’ postulates that it comprises the elements previously mentioned, namely product, price, promotion, and place - the ‘four Ps’. Kotler et.al (1998, p.57) define the ‘marketing mix’ as “the set of controllable tactical marketing tools that the firm blends to produce the response it wants in the target market”, and thus everything the firm does to influence the demand for its product is based on its ‘marketing mix’.
As this paper focuses on the promotion part of the ‘marketing mix’, it shall not go into depth with a discussion about the other three elements, but these are necessary to consider when choosing a path of communication and promotion as all the elements unavoidably interact in this process. Kotler et.al (1998, pp.470-471) see the ‘promotion mix’ as “the specific blend of advertising, direct marketing, sales promotion, personal selling and public relations that the company uses to pursue its advertising and marketing objectives”, and also acknowledges that this mix, although being the company’s primary communication activity, must be coordinated with the other elements of the ‘marketing mix’ for greatest communication impact. Therefore, the ‘marketing mix’ earns the ‘top spot’ of the communication strategy model presented in the next section of this paper, indicating that every step taken toward choosing a promotion strategy stems from the concept of a distinct and individual ‘marketing mix’ that each of the three firms discussed in the paper experiences.
Before looking at each of the three different firms - a bank, an independent butcher in a local shopping center, and a book publisher, and what promotion strategies can be recommended to each of them, the paper now turns to the model that has been constructed and will explain the steps to be taken and issues that need to be considered in determining the various strategies, and the graphical representation of the model that follows enables an easier understanding of these steps.
Figure 1: A Marketing Communication Strategy Model
3. The Marketing Communication Strategy Model
3.1 The pre-promotion step:
As has been agued, each individual firm must coordinate its promotion mix with the other three elements that comprise the ‘marketing mix’: product, price, and place. Thus it follows that the discussion of the three different firms must also contain information about these elements that are relevant to each of the firms. Because this paper does not look at particular existing firms with existing information about ‘marketing mixes’, it shall be assumed that each of the three firms represents a sector of the industry that entails a general understanding of what products and prices exist in that particular sector.
3.2 Step 1: Identifying target audience:
As noted by Kotler et.al. (1998, p.472), the firm must first decide who the target audience is, that is, shall the promotion efforts be directed toward existing or new customers? This is where the firm enters the process of market segmentation, focusing its promotion message on a certain target group of customers, rather that the whole potential market. This process necessitates much though and research by the firm, and is an important step in the ‘promotion mix’, because the firm must also decide a budget for the promotion effort. Questions such as how much the firm must spend on promotion should equal the exact segment of the market that it aims to target, and the firm’s financial strength is also closely related to how large segment of the market it can reach. Obviously, larger firms will be able to target a larger segment, although that not always entails the promotion needs and purpose. As rightfully noted by Cassell (1983, p.6), spending too much is an obvious extravagance, but spending too little can be just as costly in terms of lost sales and diminished visibility. There are various ways to make a budget, but it is not the purpose of this paper to discuss this here, rather to acknowledge that it is an important step in the ‘promotion mix’. All these initial research should preferably be considered in a firm’s marketing plan, which guides the firm through the process according to set objectives and plans, but not all firms have such a plan, or could afford to spend time and money creating one. It might also not be a necessity for smaller promotion strategies.
After choosing target audience, the firm must determine what response it wants from it. As noted by Kotler et.al (1998, p.472), purchase is the final response in most cases. However, the firm must take into account where the audience stands and to what state it needs to be moved in the long process of consumer decision-making. This process can be shown as follows:
Figure 2: Buyer-readiness states (Kotler et.al. 1998, p.473)
When the firm has determined the readiness-state among its targeted buyers, it can decide what role the promotion strategy should serve - to inform, to persuade, or to remind. This, in turn, influences the promotion tool to be chosen.
3.3 Step 2: Choosing message
The next step involves deciding what message the firm wants to communicate to the chosen target audience, and the firm needs to choose the most effective content, structure and format of this message. Kotler et.al. (1998, pp.474-475) mentions three types of appeals that a message can take: a rational appeal, an emotional appeal, and a moral appeal. Most promotion would fit in the first category - relating the content to the audience’s self-interest, but appeals can also be effective by stirring up emotions that motivates a purchase, or include moral aspects what is right and proper. Vicroads, for example, does not rely on rational appeals when it designs the so-called ‘shocking’ television advertisements about drink-driving. Rather, it seeks to stir deep emotional feelings to a moral content by showing repulsive crash scenes, and hope that the audience’s feelings should convince it to ‘buy’ the product (which is to not drink and drive).
This paper is not so much concerned with how these three companies compose their message, rather through what channels it can be communicated, and this is done in the third step of the model.
3.4 Step 3: Choosing channels of communication
There are plenty of ways for a firm to promote a message, and each medium delivers a message in different ways to different prospects, as noted by Grossman (1987, p.2). Depending on what the firm has decided in step 1 and 2, it can choose from two main channels of media; personal channels and non-personal channels:
Personal channels include interactive person-to-person types of promotions, such as face-to-face, person-to-audience, telephone, mail, friends and family, and word-of-mouth. Each of these include two or more people communicating directly with each other, and as argued by Kotler et.al. (1998, p.476), this type of promotion can carry great weight for products that are expensive, risky, or highly visible. Kotler et.al. mention cars and major appliances as examples belonging to this category.
Using personal influences may suit firms where individual opinion is valued more that other mass media sources of promotion. These can be less expensive than non-personal channels, but the main limitation is that these types of promotions can only reach a small population of the market. Hence, if the targeted market is large, using personal channel may become very expensive - if they can be used at all. Firms that promotes service products would also emphasise promotion tools from this group, as the basis for service organisations must be the dialogue, as argued by Irons (1997, p.199), who also adds that word-of-mouth for service organisations is an important support in the promotion process.
Non-personal channels are media that carry a message without personal contact or feedback. All television advertisements belong to this group, and so do billboard displays, newspaper and magazine advertisements and other print media. Kotler et.al. (1998, p.476) also include atmospheres in this group, explaining it as environments that create or reinforce the buyer’s leanings towards buying a product, and events, which are occurrences staged to communicate messages to target audiences, for example, public relations promotions such as press conferences and grand openings.
The firm has to look at the whole ‘marketing mix’ when choosing a method of promotion. It also needs to include its internal environment in the strategy, that is, not just focus on the external promotion channels. Irons (1997, p.217), for example, strongly suggests that employees and intermediaries must be part of the solution for the end customer, and especially so in service organisations where personal interaction is an important part of promotion.
This paper now looks at how three different firms may choose three different promotion strategies, and it begins with looking at what a butcher in a local shopping center should consider choosing.
4. Recommended strategies for three firms
4.1 Firm: A butcher in a local shopping center
What communication strategy could be recommended to a butcher in a local supermarket?
By going through the steps in the constructed model, it should be easy to find a promotion strategy that would suit this firm. First, the firm needs to look at the three Ps: product, price, and place (promotion follows). A butcher produces and sells physical goods, such as meat, but as a small firm he or she also needs to realise that it is selling service as well. Customers can choose to go to Coles, Bi-Lo, or other supermarkets in larger shopping centers or within the local area, and buy the same, homogeneous, product that the butcher sells, but consumers may find the quality of the meat sold by the butcher better than what they can get in the supermarket, and if the butcher has developed good relations with the customers, they are likely to return to him or her.
The second ‘P’ - price - may influence customers to go to the butcher (if the price is lower), or to the supermarket (if price is higher), and the third ‘P’ - place - may have an impact on customers purchasing-decision if they find it more convenient to purchase from the butcher because it is located in the local neighborhood so that they, for example, do not have to go al the way to the closest large shopping center. On the other hand, many customers go frequently to shopping centers to buy provisions and may find it more convenient to buy the meat from a supermarket there if they happen to be shopping at the place anyway.
If the butcher wants to develop a communication strategy, he or she should look at what advantages he or she has compared to its immediate competitors - in this case supermarkets in shopping centers or the neighborhood - and find ways to strengthen these, or do the opposite; to look at his or her disadvantages and try to eliminate or minimise these.
The first step in the model determines the target customers, and for the butcher this is most likely to be the customers in the local neighborhood, so that a butcher in Clayton may choose to target residents living in Clayton. Due to the fact that a butcher probably has limited financial strength, it is probably too expensive to select a larger group of customers. Focusing on segments outside the local neighborhood would also mean an increase in competition (other butchers and supermarkets), and combined with the interchangeability of the physical product (meat), lack of existing relationships to customers, and limited resources, a butcher would not benefit from such as choice.
After targeting the market, the butcher must decide whether to inform, persuade or remind the potential customers. Naturally, a butcher would want to keep the existing customers, and hence he/she would seek to remind them about the benefits buying from him/her. But the ultimate purpose must be to increase sales, and hence the butcher would seek to persuade the target customers to buy meat from him/her. A persuasive approach would also implicitly contain information to new customers and a reminder to existing customers to come back and buy.
The next step looks at the content of the message. This content may vary, but should include a rational appeal - convincing customers to buy due to factors such as convenience, personal service, price, location, and more. It could also contain some degree of sentimentality, for example appealing to the customers to make a purchase at “your local butcher” or to “support your local shopping center”.
The last step for the butcher is to choose channels of promotion, and this decision takes into account all previous decisions and research. The most cost-effective way of promoting to the local population would probably be to use non-personal methods such as advertising - for example, sending out leaflets to every household in the neighborhood. Another alternative would be to advertise in the neighborhood’s own local newspaper. As with every promotion channel, though, there are advantages and disadvantages with advertising. Although it may be reasonably cheap, people may not bother to read advertising leaflets that every day stuff up their mailboxes, and therefore little would be gained in promotion effort.
The butcher could also use sales promotion as a tool to attract new customers and retain existing ones. Sales promotion is explained in Kotler et.al. (1998, p.538) as “the act of influencing customer/consumer perception and behaviour to build market share and sales which reinforces brand image”. Many tools fall into this category of promotion, and one is to offer a sample of a product with a purchase, thereby hoping to ‘move’ the customers from the awareness and knowledge phase of their buyer-readiness state (see figure 2, section 3.2) to the liking phase, and eventually purchase. For example, the butcher could offer customers to try a special sausage, which not many customers may have tried before, and hope that this will increase sales of the product if more customers begin to like the sausage. Redeemable coupons could also be used in connection with an advertising promotion, creating incentives for customers to pay a visit to the store.
To all these promotion efforts, a local butcher can try to build stronger personal relationships with his/her customers, thereby ensuring they will come back. The word-of-mouth channel, which can be explained as the personal communication about a product between target buyers and neighbors, friends, family members and associates (Kotler et.al., 1998, p.476), is extremely important for a local market to survive. Bad service may result in fewer customers, but if the butcher is known to provide good and friendly service, and cheap, high-quality products, he or she is likely to get more customers, and hence, more sales. Therefore, the local butcher should continuously enhancing its reputation and focus on providing that “little extra” of service to its customers.
4.2 Firm: A book publisher
A book publisher is not necessarily bound to one specific location, as is the case with the local butcher, and may not even meet his or her customers ‘face-to-face’. Therefore, an effective communication strategy for book publisher does not need to concern too much about the place of the product, rather the product itself and the price of the product need special attention in the choice of promotion channels. What may be of special importance for a book publisher is to create good relationships with its existing customers, because as long as the price and quality of the product does not differ too much from its competitors, existing customers are likely to make further purchases if they are pleased with the quality and service received. The book publisher may also need to be extra customer-focused and flexible to suit the needs of the customers.
The price of the product may be a crucial determinator for the success a publishing firm as authors that want their books published might not be working fulltime, and hence cannot afford printing high volumes demanding large investment of money.
A book publisher may choose a promotion strategy that is directed both to new buyers and existing buyers, but the promotion tool should not be the same for the two target groups. Existing buyers would need a promotion channel that is focused on reminding them about the service and product provided, while new potential buyers need to be informed about the product and service. For new potential buyers, the book publisher - depending on its size and capabilities - can target a region, a country, or even the whole world. Because customers are not forced to go into a physical store to buy the product, the book publisher has unlimited opportunities to create new customers. The World Wide Web is the major channel that creates an opportunity to reach out to any author, and provides a ‘virtual’ shopping place with no physical boundaries.
The message to new customers should focus on getting their attention about the service, arouse desire by providing examples of books published, and provide opportunities for the target group to obtain action and order the service. For existing customers, the content of the promotion should focus on holding their interest and satisfying their needs. The format of the message is of particular importance, as the book publisher may find his or her firm fighting in an actively competing environment for new and existing customers.
The content of the message may vary, but for both existing and new potential customers the book publisher should try to “stand out” against its competitors, presenting a superior product and a superior service for a superior price.
Two major promotion channels are recommended for book publishers that aim to attract new customers: the World Wide Web and advertisement. Presenting the firm on the Internet requires a minimum financial investment and has thus the potential of attracting new customers at little or no cost. Because the exchange between the publishing firm and the customer requires minimal ‘face-to-face’ interaction, the Web can serve both as an information, communication, and ordering central. Authors can send in their scripts through the web site or e-mail, the book gets produced, and is finally sent to the customer or promoted further to bookstores or book retailers. The firm can construct complete ‘packages’ for the customers so that the whole process minimises work for both parts of the exchange, and the firm can also encourage customers to do most of the layout themselves. Lovelock (1991, p.252) writes that “if customers will accept technology as a substitute for human effort or will agree to perform more of the work themselves, then the service business may stand to cut its costs significantly”.
A book publisher can also advertise in relevant magazines to get the attention from authors that are not happy with their current publisher and look for new alternatives. This is only recommended though, if the firm is relatively financially strong and can afford such advertising - for a small publishing firm, such advertising may not yield positive results. The Yellow pages also provide a source for new customers, and is relatively cheap to advertise in.
If the publisher aims to retain current customers, a personal promotion channel is recommended, such as personalized mail-outs (newsletters, offers, general information) and phone calls, to keep building the relationship with the customers and provide opportunities for further sales.
The recommended communication strategies for the butcher and the book publisher build on the assumption that the two firms are relatively small and not financially strong, and therefore the promotion channels are not too costly but may also reach out and affect only a limited number of potential buyers. The paper now looks at what communication strategies a firm with far more promotion opportunities and seemingly unlimited resources should engage in.
4.3 Firm: A bank
The communication strategy for a large bank is distinctly different from that of a smaller firm, such as the butcher in a local shopping center or a book publisher. In Australia, four large banks dominate the banking industry: the National Australia bank, the ANZ, Westpac and the Commonwealth Bank, and these compete intensively for every single market share there is a chance of gaining. What communication strategies would suit this kind of a firm?
There are several alternatives of effective promotion strategies for banks, and it is impossible to state which of these would be most suitable, due to the fact that banks offer a wide variety of products and targets a wide variety of customer markets, so that individual retail customers, corporations, investors and the government all are potential buyers and necessitate different communication strategies. What can be argued in general, though, and is pointed out by Thompson, Berry & Davidson (1978, p.298) is that every single customer to a bank is its business, and that the bank therefore continuously must provide effective communication channels that take into account all these customers’ needs and wants.
Thus, a bank should develop a communication strategy that continuously informs, persuades and reminds all of its existing and potential customers of its products and services, and there is no promotion channel mentioned in the model that cannot be applied, or should not be applied, to a bank’s operations. One may, however, mention a few promotion channels that normally only large financially strong firms can afford (such as banks):
Television and radio advertisement can reach a large number of potential and existing customers but is very expensive, especially if used frequently, which is a must for a large bank that intensively competes for market shares. Public relations channels are popular among banks, and should be used to gain favorable publicity and build up a good ‘corporate image’. Kotler et.al. (1998, p.519) argue that public relation can have a strong impact on public awareness at a much lower cost than advertising.
The 1997 Annual Report for a Polish bank suggests that market research has shown that over 70 percent of customers gain their knowledge of banking services directly from visits in bank branches or materials displayed on the bank premises (PPA, 1997). These findings would suggest using promotion strategies that aims to inform existing and potential customers through tools such as presentations, posters and information kiosks. Naturally, promotion through the Internet is a must for any large bank, although it must never loose sight of the principal goal: to create long-lasting relationships with each of its customers, and this necessitates personal promotion channels as technology never fully can replace personal interaction, although it helps the business to become more effective and efficient and creates new opportunities for its customers.
By applying a conceptual model based on Kotler’s et.al. approach to the communication strategy process, a firm can follow a step-by-step process toward the development of its own marketing communication strategy, and decide what promotion channels should be used.
This paper has explained how this model can be used for three different firms, and has given recommendations to alternative promotion channels for each of the firms. For the butcher in a local shopping center it was recommended to use advertising, sales promotion, and word-of-mouth promotion channels. For a book publisher, the World Wide Web was seen as the most effective promoting channel, supplemented by advertising, the Yellow pages, personalized mail-outs, and phone calls. Finally it was argued that a bank could use a variety of promotion tools, but promotion through television and radio advertisement and public relations was especially mentioned.
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 Some “dot-com” firms have in recent times been offering a non-existing product or a service and by the sheer present hype in the IT market been able to gain millions of dollars, but their “success” is still built on the notion of that a product exists and is attractable to a target audience.