Comparative Analysis of Integrated Marketing Communications Mix Strategy - Vodafone vs 3 - Essay Example

? Comparative analysis of integrated marketing communications mix strategy for Mobile Services Providers: Vodafone vs. 3 BY YOU YOUR SCHOOL INFO HEREDATE HERE TABLE OF CONTENTS 1.0 Introduction…………………………………………………………………………........ 2.0 Market review……………………………………………………………………………. 3.0 Literature review…………………………………………………………………………. 4.0 Critical analysis and discussion………………………………………………………….. 4.1 Vodafone………………………………………………………………………… 4.2 “3”………………………………………………………………………………… 4.3 Discussion………………………………………………………………………… 5.0 Conclusion and recommendations………………………………………………………... References EXECUTIVE SUMMARY Both Vodafone and its competitor, “3”, excel in using integrated marketing communications effectively to establish a brand personality and important connections with consumers. Vodafone, however, uses more emotions-based communications strategies that give consumers the impression that Vodafone can enhance their lifestyles and social status. The report identifies why Vodafone excels in integrated marketing communications strategies, whilst 3, though successful in gaining consumer attention, should be altering its existing IMC strategies to build on its current brand equity. Utilising several examples of message strategy with both companies, a critical discussion of strengths and weaknesses is provided. Comparative analysis of integrated marketing communications mix strategy for Mobile Services Providers: Vodafone vs. 3 1.0 Introduction Vodafone, established in 1991, has grown to become the second largest mobile telecommunications company in the world. The company maintains networks in over 30 countries and sustained a total of 439 million active subscribers as of 2010 (Krishna and Mukherjee 2010). The company boasted revenues that were all inclusive of the European sales environment totalling ?8.1 billion (Vodafone 2012), due to competent brand management activities of the firm and the ability to capture more market share than its main competitors. Vodafone’s incredible and rapid success in gaining consumer attention and loyalty was developed as a result of the company’s approach to integrated marketing communications. By definition, IMC is an approach to marketing whereby a blend of promotional methods are utilised to complement one another through highly coordinated communications ideologies. IMC entails effective use of media, including Internet, magazines, television, radio and mobile phone marketing in order to deliver a singular consistent message to important consumer segments (Saylor.org 2013). One of Vodafone’s major competitors, Hutchinson 3G (also known as “3”), is not as successful at integrating a consistent message as its competitor Vodafone, which gives Vodafone a significant strategic and competitive advantage in terms of marketing competency. This report compares the integrated marketing communications strategies of 3 and Vodafone, focusing on the slogans and marketing messages used by both companies, how well these strategies attract customer segments, and an analysis of both companies’ IMC effectiveness. The report further offers recommendations for both companies on how to improve their communications strategies to sustain more quality competitiveness. 2.0 Market review Before analysing the effectiveness of 3 and Vodafone, it is necessary to understand the global market in which both companies compete and operate. There are currently 6.8 billion active subscribers to mobile phone services across the world, which is representative of 96 percent of the world’s total population (dotMobi 2013). It is a market that is saturated with multinational telecommunications competitors in which it is becoming increasingly difficult for competing companies to differentiate products and services without utilising more contemporary and aggressive marketing strategies. Furthermore, the market allows for new competitive entrants in mobile technology, hence there is consistent emergence of new network providers that continue to use integrated marketing strategies in order to build consumer loyalty and establish a positive, competitive brand reputation internationally. The difficulty in this market is that there is such a high volume of adults (such as in the UK) that have subscribership to mobile services. In the UK, 96 percent of all adults have active mobile technologies at their disposal (PR Web 2013). This represents a market that has passed through the growth stage along the product and service life cycle model, making it difficult for mobile phone companies and mobile service providers to extend the long-term viability for revenue growth. In fact, it is estimated that available, global revenues for all current mobile telecommunications companies will retract by 1.4 percent between 2013 and 2014 (PR Web 2013). This is due to the fact that many telecommunications companies attempt to lure consumers to sign up for 24 month contracts, which limits their return business whilst they must remain obligated to the two-year agreements. Furthermore, the switching costs for consumers in this market are very low, meaning that it is not costly or difficult to defect to other competing telecommunications companies that offer either better prices or better network service coverage. According to business theory, one of the largest competitive threats to businesses in saturated markets is the ability of consumers to maintain high bargaining power in the industry (Porter 2013). There are so many different providers maintaining an international business presence in the global telecommunications industry that consumers have the ability to negotiate pricing or simply reject one competitive mobile offer over that of another competing firm in the industry. This is why it is externally driven market conditions and consumer behaviours that complicate attracting and retaining loyal customers. When pricing is no longer an effective competitive tool, it becomes necessary for businesses to adopt modern principles and strategies of marketing that usually include lifestyle-oriented (psychographic) communications strategies to create a brand connection with consumer lifestyle. The industry also demands that considerable market research be conducted on consumer behaviour as it relates to mobile phone usage and needs in order to create effective and relevant integrated marketing communications. For example, in Japan, 55.4 percent of active subscribers to mobile technologies utilise mobile Web services regularly, whilst in Europe 87 percent utilise their mobile phones for text message delivery (dotMobi 2013). This means that there are cultural dynamics which drive the consumer behaviour in different regions of the globe that are not consistent across different continents. This complicates the process of identifying appropriate target markets and building a psychological and/or emotional connection with consumers to provide relevant promotions and communications that will fit with consumer lifestyle and needs. It is difficult, due to the existing market conditions internationally, to establish feedback control systems, which is about gaining important consumer-oriented knowledge that assists marketers in changing brand strategy to better fit consumer needs and preferences and establish a market-based orientation when communicating with potential consumer target audiences (Walker and Mullins 2011). Knowledge about consumers, in this market environment, is highly critical to establishing an effective and relevant (as well as consistent) integrated marketing communications strategy. Fortunately, however, the market provides updated and innovative technology availability which enhances telecommunications companies’ ability to offer more relevant services. The smartphone has changed the dynamics of how consumers utilise their mobile devices, such as improving a demand for mobile Internet capacity, so that companies in this industry can better diversify their service offerings to consumers. In 2012, worldwide, almost half of all global subscribers accessed the Internet using their smartphones (MOA 2013). However, even though this represents opportunities for expanding Internet-based service capacity, the rationale for why consumers find mobile Internet convenient or appropriate for their lifestyles is disparate across the globe, forcing telecommunications competitors to invest much more financial and labour-based capital into the market research process. This can be a costly endeavour to businesses that can easily lose subscribership due to the aforementioned low switching costs in the industry. One further example of what complicates this global market for telecommunications competitors is the disproportion of how international consumers utilise their mobile devices. In Europe, as one example, a higher volume of consumers utilise their phones to play games and listen to music, whilst in Japan a higher volume of consumer segments use their phone for taking regular photos (dotMobi 2013). Therefore, there is market inconsistency between different cultures that strongly complicates the process of gaining consumer attention and finding a lifestyle-based connection that can be exploited through effective IMC ideologies. Japan is a highly collectivist country in which group loyalty and in-group status are highly important (Leng and Botelho 2010). This would, from a cultural perspective, explain why Japanese consumers value the functionality and relevance of photo-taking opportunities on mobile devices. In Europe, which is largely individualistic, consumers are more interested in satisfying their own hedonistic needs through game play and music recreation. The market, therefore, as driven by consumer differences, dictates how telecommunications companies must establish a lifestyle-relevant brand in order to gain consumer loyalty. 3.0 Literature review Marketers operating in this very dynamic and complicated industry must learn how to develop an effective coordination and cohesion between communications and the sales environment (Okyere, Agyapong and Nyarku 2011). Recent research on Vodafone indicated that there was a negative relationship between television advertising and sales success with the company (Okyere, et al. 2011). This indicates that Vodafone may not be competent in creating lifestyle-relevant IMC using television as the medium. The same research indicated Vodafone was using non-television communications strategies to improve sales (Okyere, et al.). Therefore, according to statistics, companies like Vodafone may be investing considerable financial capital into the expensive advertising process only to experience minimal return on this investment. Companies, therefore, must be ever-aware of what drives the consumer responses along the Linear Communications Model of encoding and decoding of messages along any particular medium. There is a theory known as cognitive dissonance which explains why some consumer segments are not responsive to certain communications strategies employed by competitors in this industry. The theory states that consumers are often at odds with themselves, having their beliefs and behaviours disparate from one another (Bose and Sarker 2012). Cognitive dissonance is yet another consumer-driven aspect that alters marketing strategies and communications ideologies of competing firms in this industry. Consumers may have a positive view of a brand (perhaps due to pricing between competitors), yet their overall belief about the service is that it is inefficient for sustaining their lifestyle needs. In this case, cognitive dissonance occurs which seriously conflicts the process of creating relevant messages that will build a solid desire to make purchases with the telecommunications provider. Marketers must work regularly to break down this cognitive dissonance in order to achieve return on investment and gain consumer loyalty to a service or brand. In order to create an effective integrated marketing communications strategy, a business must first conduct an evaluation of their internal strengths and weaknesses and then measure this comparatively to the external market conditions (i.e. consumer behaviour and industry structure). This assists in identifying the purchasing behaviour of desirable target markets and also understand the dynamics of how a business is able to effectively service market needs through realistic assessment of internal operations and capacity. The IMC and evaluation processes ask the question, “Who are we and what message are we trying to send?” and it is only at this point that a business can effectively identify its most viable target markets (Clow and Baack 2010, p.10). It cannot, therefore, be understated that in order to create productive IMC that will create important lifestyle-related connections with consumer segments, there must be advanced knowledge of what drives consumer attitude, sentiment toward the brand, and tangible lifestyle activities of consumers to create effective integrated communications strategies. 4.0 Critical analysis and discussion Having identified the market and consumer-driven factors that determine how to create effective IMC strategies, a critical analysis of the success factors with Vodafone and “3” can be provided. 4.1 Vodafone Vodafone understands the cultural and social dynamics of its consumer target markets, which assists greatly in creating IMC strategies that are aligned with lifestyle. Figure 1 illustrates how Vodafone uses cultural characteristics to create relevant communications. Figure 1: Vodafone advertising recognition of consumer social characteristics Source: The Times 100. (2012). Sponsorship and the marketing mix. [online] Available at: http://www.thetimes100.co.uk/downloads/vodafone/vodafone_9_full.pdf (accessed 17 November 2013). As shown by Figure 1, rather than focusing on some of the more standard competitive tools in competitive marketing (such as price promotion and product functionality), the foundation for lifestyle connection is achieved by showing age- and socially-relevant actors using Vodafone products as they would in a lifestyle, social activity. What this type of imagery accomplishes is that it suggests that Vodafone maintains the ability to improve the self-expansion of consumers whereby they find themselves in a better social position as a result of exposure to the brand. According to theory, when such self-expansion is perceived, consumers develop important brand attachments (Zhang and Chan 2010). Especially with the European youth market idealised in the image in Figure 1, it establishes a foundation for gaining consumer attention using communications that highlight the social condition relevant for target market lifestyle and social needs. Figure 2: Lifestyle Relevant Magazine Promotion Source: Kimberley, S. (2010). Vodafone Group’s mobile ad business up for review. [online] Available at: http://www.marketingmagazine.co.uk/article/996237/vodafone-groups-mobile-ad-business-review (accessed 17 November 2013). As illustrated by Figure 2, the consistency of promotion utilised throughout Vodafone’s IMC strategies is related to the lifestyle needs of consumers. This is how the company is able to differentiate its brand from competition that remain focused on price competition and the tangible functionality of mobile devices to gain consumer attention. Vodafone invested considerable labour and financial capital into identifying what drives consumer way of life and then translates this into a series of cohesive promotions and messages that build connectivity between brand and the external market. Vodafone uses the two catch phrases, Power to You and Make the Most of Now, as a means of staying consistent with how Vodafone believes it can be a valuable lifestyle enhancement. This follows the Apple, Inc. model of marketing in which the company maintains a power-to-the-people through technologies philosophy as part of lifestyle-based marketing practice (Goodman 2011). Apple maintains the highest level of loyalty of any technology brand in the world for being able to use integrated marketing communications to build important relationships (psychologically and socially) with consumers (Goodson 2011). Vodafone, much like Apple, has stopped telling customer segments what they produce and, instead, focus on projecting a set of values that are aligned with consumer values in order to develop customer loyalty. Vodafone focuses on emotional connection with consumer which has, historically, brought Apple a much more powerful brand reputation and differentiated personality from competitors (Robinson 2011). 4.2 “3” Three, unlike Vodafone, utilises a much different approach to IMC than its competitor Vodafone. 3 focuses strongly on the product functionality and pricing in order to make the brand stand out from competition, which is utilised in a variety of integrated communications strategies. Figure 3: “3” Magazine Advertisement Source: Visit 4 Ads. (2013). Hutchison 3G Network – Sony Ericsson Skype Phone. [online] Available at: http://www.visit4ads.com/advert/Sony-Ericsson-Skype-Phone-Hutchison-3G-Network/73122 (accessed 17 November 2013). There is a consistency with the magazine promotions, mobile phone advertisements and other integrated methodologies with the “3” company that shows such conceptions to consumers as reliability, low pricing models, and overall product-related functionality. The company does not deviate from this IMC strategy that builds perceptions of high quality and low price through subscribership to 3 services. Figure 4: In-store promotional material for “3” Source: Visit 4 Ads. (2013). Hutchinson 3G Network – Take Mega Pics. [online] Available at: http://www.visit4ads.com/advert/Take-Mega-Pics-Hutchison-3G-Network/55688 (accessed 15 November 2013). Figure 4 illustrates how 3 manages to use consistency in its IMC strategies, blending product functionality, service delivery opportunities and low pricing models to capture the attention of consumer targets. It is through this methodology that the company is able to differentiate itself from competition, such as Vodafone, which focuses on sending consumers the perception of competency and product-based integrity. It gives the organisation a market reputation of being knowledgeable and proficient which serves the production of a brand personality of sincerity and experience to better enhance consumer needs in mobile technology and service consumption. The integrated strategies of “3” illustrate cohesion between brand and consumer, which has been highly successful since the company has gained 27.8 million subscribers since only 2002. The IMC strategy is designed to influence consumer behaviour by focusing on the company’s strengths as a service and product supplier by making consumer target segments favour the brand based on a singular concept: efficiency. 4.3 Discussion Even though both Vodafone and “3” utilise different integrated communications strategies from one another, both are consistent and unswerving in their unique approaches to gaining positive consumer responses to their communications and product/service brands. If there is going to be a positive return on investment for IMC efforts, the literature indicates this cohesion between brand ideology and consumer needs is paramount. Both companies do an excellent job of maintaining this uniformity in communication style and message development to avoid cognitive dissonance in desirable consumer segments. Both Vodafone and 3 are managing to build high subscribership and ensure higher-than-industry-average revenue growths, with the majority of this sales-based success being attributable to understanding market needs and developing communications strategies that are relevant to these consumer characteristics and demands. 5.0 Conclusion and recommendations Both Vodafone and 3, in their respective global markets, have already established brand recognition through their historical IMC strategies and are now recognised for their unique brand personality attributes in multiple markets. Both companies now have brand equity as a result. The “3” brand should be examining how to reposition the business away from pricing and product since consumer now have trust in the brand and its service competence. This would require focusing more on the attitude-related and lifestyle-related needs of consumers to develop stronger relationships following the Apple, Inc. and Vodafone models of psychographic segmentation and lifestyle marketing. Three could benefit from its existing brand equity by showing consumers, using consistent IMC strategies, that the company maintains certain values and corporate ideologies to build a new brand personality to attract new markets. Loyalty exists with their current target consumers and new messages focusing on similar power-to-the-people philosophy could bring the business more revenues and more global following from consumers that value ethical and/or socially responsible business practices. Vodafone, however, should remain dedicated to its powerful and relevant methodology of gaining consumer attention through lifestyle-oriented communications. Buyers enjoy the ability of the brand (as perceived by markets) to enhance their social condition and lifestyle and research did not uncover any evidence that this strategy should be adjusted as revenues continue to increase year-on-year and subscribership ratios rise respectively. Vodafone can certainly be benchmarked for reducing cognitive dissonance and creating a consistent set of perceptions in many disparate markets that make consumers believe the brand can expand their lifestyles. Three, though competent in using price-related and product-related communications strategies in a variety of different mediums, is not taking advantage of its existing brand equity. If “3” adopts a similar IMC model to that of Vodafone, it is likely that this business will gain more consumer interest in a variety of different global markets. References Bose, T.K. and Sarker, S. (2012). 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