Marketing Communication Plan for the Hi-Fi Audio Products - Case Study Example

MARKETING COMMUNICATION PLAN FOR THE HI-FI AUDIO PRODUCTS Introduction Today’s age is the age of information. We proudly use terms like ‘knowledgesociety’ or ‘knowledge economy’ to refer to our highly developed and rapidly advancing society. Today we have multiple modes of communication to access a variety of target audience effectively. When looked from the perspective of a marketer or marketing communication planner, these advancements are an opportunity as well as a challenge. It is an opportunity because now the marketers are available with a number of options to choose from, in order to make sure that their products and the key messages reach the target audience successfully. (Varey 2002) It is a challenge because of the fact that every day newer modes of communication are being invented and more rapid to that is the accelerated rate of using these modes creatively. Those marketers who still rely solely on the traditional methods and deny any chances of creativity in the marketing communication, they are ultimately at a high risk, in most of the cases, of being left behind by the more creative marketing communication plans, which are capable of appealing the customers in more efficient manner, provided the claims in these communication plans are supported by the product availability and quality. (Taylor 2004) The knowledge society is not the only dimension that the marketers need to consider, rather there are multiple dimensions that need to be considered and duly taken care of while conceiving, developing and implementing the communication plan. These factors include the changing behaviours and preference of the target audience, the need of the product, availability of alternatives, communication plans of the competitors and so on. Thus it is imperative for the marketing communication planner to take into account all these factors while developing a marketing communication plan. (Hooley et. al 1984) Methodology This marketing communication plan is intended to plan and develop a strategy and plan of action to launch a range of audio hi-fi products. These products include: State of the art turntable Amplifier/digital radio turner DVDs/CDs and mp3 player Four system speaker system In the beginning, this plan will analyze the market situation with reference to the abovementioned products. Various dimensions of the market will analyzed in this regard, such as, consumer demand, search behaviour, brand loyalty, market characteristics and definition, sales and suppliers market shares, market dynamics (innovation, new entry and price trends), product innovation, manufacturing and trade, entry conditions and price trends. Analyzing the market situation is very essential to build an effective communication strategy, thus this would occupy most of the space and will be referred frequently in the later parts of the report. After the analysis part, the second step would be the development of the objectives for the marketing communication. This will include both, the marketing goals and the objectives and would be aligned with the situation of the market already analyzed. Afterwards, we will develop the statement of strategy. This strategy statement will identify and highlight relevant public, logic, and communication channel, type of medium and timing of each strategy. Once the statement of strategy has been developed, our next step would be to sketch the profile of the target audience and each targeted segment of the market from the dimensions which are of the key significance to the marketers and those who implement the marketing communication plans. Afterwards, we will explore and analyze various tactics and plan of marketing action plan. After this, we would move to description of the concerned 3 Ms of the production (which includes, man and women, money and monitoring). Lastly, critical path of these activities will be developed in order to ensure successful and effective implementation of the plan. Analysis of the Market Situation Consumer demand In a recent market research report by Market Assessment Publications Ltd, there are more than 70% of the household are already having an audio hi-fi system. It is also reported that many households posses more than one. This shows that the demand for hi-fi audio system is same as that of any other essential item of household such as television. However, the frequency of use may vary from household to household. It has also been identified in a survey that there is an average life of ten years for these systems. Since already there is great density of the audio hi-fi system, thus a great part of current purchase is mere replacement or the upgrade of the previous system. Thus the demand for these systems is not highly inelastic and thus can be postponed. While purchasing, their choices are dependent on a number of factors. (Data Monitor 2007)Foremost of these is their experience with the previous system. This is followed by the brand name and the reference publicity (word of mouth). This may be due to the fact that despite the facility of product demonstration at various retail outlets, it is not possible to be completely satisfied of one particular product’s qualities like reliability, sound quality, durability and the ease of use, simply by demonstration. (Data Monitor 2007) Search behaviour Various surveys have also revealed that the purchase decision of the consumers for the audio hi-fi products is the planned one, rather than the discretionary one. Furthermore, consumers actively search the market to buy the product keeping in view various associated facilities like free CDs etc., besides the price factor. It has also been found that more than 60% of the consumers visit two to four stores, exploring different brands before making any decision. (Data Monitor 2007) Thus there is an opportunity to overcome the brand loyalty factor. The research further revealed that few of the most important sources where the consumer explores for the available options are through local and international press, especially through consumer magazines like ‘What’ and specialized magazines as well. (Wiggin 2001) Brand loyalty Brand loyalty is one of the most influential factors of the purchase decision. Since the brand name is the synonym of the quality. However, it is an encouraging fact that consumers do consider other options. There is also a significant trend of the retailers’ own-labelled products’ purchase decision. (Wiggin 2001) This trend exists due to availability of the own-labelled brands with a number of adjunct facilities that do not exist with the popular brands like Sony, JVC, Sanyo etc. Thus this factor is an opportunity for our firm. Market characteristics and definition There are various alternatives to the audio hi-fi systems, but most of them are not the close one, rather they vary in their nature to a greater extent (Varey 2002).One of the alternatives is the provision of entertainment services provided by hi-fi systems, such as attending a concert; such alternatives are usually referred as complementary rather than substitute activities. (Wiggin 2001) Another alternative is that of rental systems, however, this option is also insignificant, on account of its temporary nature. It has also been revealed in the survey that if at same rate, a customer is offered to buy either of the one, a new television or a second hand hi-fi audio system, the majority of the customers opted for the second hand hi-fi system. The market is generally segmented into three distinct segments. (Data Monitor 2007)The first segment is that of low priced models such as those supplied under secondary brand names like Alba and Amstrad, and retailers own-label brands such as Goodmans and Matsui, the second segment is the mid-marker models which have more or less closer to the average market price. It includes brands like Aiwa, Sanyo, Samsung and Sharp. The third category is that of premium brands which have very well established reputation in the market, supplemented by highest levels of brand recalls. These brands include Sony, Technics and Kenwood. (Stapleton and Thomas 1997) The scope for independent price mechanism is very much restricted on account of the potential for the supply side distribution, since most of the major suppliers operate in at least two adjacent segments Like the demand of other electronic appliances of such nature, the elements of macro environment are expected to affect the demand of hi-fi system too. These elements include, consumers’ disposable incomes, the level of interest rates, consumer confidence, the age distribution of the existing stock of hi-fi systems in use and the state of the housing market, as evidenced by the comparative slump in demand during the last recession. Demand is likely to be far less sensitive, however, to price factors. (Wiggin 2001) Sales and suppliers market shares Over the period of time, it has been realised that the sales of the hi-fi audio systems have show ups and downs in past 20 years. However, these ups and downs are with the frequency of the arrivals of revived technologies as well as the ups and downs in overall. This is so because the desire to listen music has never and will never cease. (Wiggin 2001) Among the major manufacturers, the share of mid-market brands is same in terms of value as in the case of value. For the premium brands, their share by value is highest but not by the volume. The reverse is the case with the retailer’s own brand. (Data Monitor 2007) Market dynamics: innovation, new entry and price trends The audio hi-fi industry is at the ‘maturity stage’ of the business cycle. The major reason for expected growth in the sales of hi-fi audio systems is due to the expectation as well as past experience of ever-increasing number of households in UK and rapidly growing technology in its application in the audio hi-fi systems. Thus continuous product innovation is the only assurance to their survival. (Data Monitor 2007)Since most of the manufacturers of the audio hi-fi system are producing other related products too, thus they are enjoying the economy of scale as well as that of scope. At the production level, scale economies, technical knowledge and the potentially high costs of R&D are significant barriers to entry both in the UK. In recent past, there are no entry and exit. Brand establishment is well-known challenge in this regard. Like computer and internet, the prices of these systems too start experiencing sharp decline once a newer model gets available in the market. (Wiggin 2001) Marketing and Communication Objectives Communication Goals Our key message will reach the target audience. We will establish our brand name to make it the customers’ preference, rather than an option. We will be enjoying one of the major market shares of the hi-fi audio systems. Marketing Communication Objectives All the possible resources will be utilized so as to make sure that our target audience gets the brand awareness. By using integrated marketing communication, we will make the brand recall of our brand at least to the top three brands. Through aggressive marketing, we aim to be at least the fifth major supplier by value and the third major by volume by the end of this season. Statement of Strategy: Our strategy would be: To launch at the eve of New Year, an aggressive integrated marketing campaign using both controlled and uncontrolled mass media, cross selling and special event promotion targeting those households who wish to enjoy the quality of premium brands at the price of the slightly greater than mid-market brands and capitalizing the extensive experience and already established brand name in other electronic market. Product Differentiation Strategy As we have analyzed that brand name is considered as the synonym to quality, thus it is essential for the long term survival in the market of audio hi-fi devices that we establish our brand name. In such a market, brand name can be attained only when the consumer use it. There are two steps that must be taken in order to convince the target audience to buy it and thus make it a brand name as a result of high quality with comparatively lower prices. a. Comparatively lower prices with same quality b. Capitalizing the experience in other electronic industry and if possible primarily targeting the users of existing brands of our company Details of Target and Segmentation: As already mentioned, there are three types of customers of the audio hi-fi system those who buy low-price or mid-market or premium products. Initially our focus is only those who buy the premium products. Moreover, as the initial customers, we will do CROSS SELLING to those households who are already the consumer of our other electrical products. This is being done because they will have more trust on our brand name, thus they will buy it initially. Besides, we will target those who buy premium products. We are targeting this particular segment because we want to maintain the highest level of quality in order to create a brand image and it is not possible to maintain a highest level of quality to compete with the prices of lower level of products. Once the brand image is established, then we can launch the economy versions for those segments too. At that point of time, our economy versions would be accepted more rapidly as compared to its long term acceptability, if offered today. Tactics and Action Plans: Our major tactics would be based on following points of differentiation Price Differentiation Premium Quality: We would be providing the premium quality at prices slightly higher than that of medium price objects. Although, it would be an additional final burden, yet it is essential to bear if we want to gain profit in the long run. Because, premium quality and same rate so who will buy the newer brand? To prove our quality we want people to use them and to compel them to use it, we need to lower the prices. Cross Selling and Capitalizing Past Experience: As we have seen that what is the influence of brand name. Being new product we do not have any brand image. Thus what only brand image we have is that of the name of our organization, which will be only trusted by those who are the customers of our existing line of products. Thus cross selling would be beneficial. Action Plan The approach used for deciding the action plan and its scheduling is the reverse scheduling. The action plan for implementing the abovementioned tactics would be as follows: Deciding the launching date We assume that our range of products will be launched on 15 December 2007, just 10 days before Christmas. The reason for choosing this particular date is due to the fact that at this time people make more purchase for items like audio hi-fi systems, since salaried people have got the bonus for Christmas and businessmen have their business at peak at this point of time. Curiosity Building Keeping the date of 15 December 2007 in mind, we would start the marketing campaign 2 months earlier, that is, 15 October, 2007. The very first marketing move would be the creation for curiosity for at least one month. The campaign, along with the name of the organization, would aim to create a curiosity about a product that would provide premium quality at lower prices. Once the curiosity is created, on 15 November, 2007, the product’s information will be released. This information will be focused on attracting the customers through the product’s features and connecting the product’s quality with the organization’s existing line of products. Billboards with the name of the brand and ‘coming soon’ will be one of the main media. Aggressive Marketing At the same time, aggressive marketing must be started from November 15, 2007, with special focus on those who are existing customer of our organization. A special discount will be offered to them. All this is intended to create the word of mouth publicity specially, that really matters in case of the audio hi-fi range. The media thus used would be advertising on televisions, consumer magazines and specialized magazines etc. A special promotion campaign will be launched where the mobile publicity will be done. This means that a mobile van will go to famous parks and other such places and will play songs there to attract people’s attentions and then telling them the features and differentiating factors. We will also sponsor some popular TV show. Moreover, posters, brochures etc. will also be developed and distributed to the target audience. Existing distribution channels will be utilized. Budget Heavy expenditures need to be done to achieve the new targets set. However these expenditures are not the exhaustive. Further additions and even cut downs can be made depending on the situation as managers see fit. 3Ms Man and Women (Labour) For manufacturing purposes, we would require around 67-70 labours altogether. 10 in various management capacities, 3 in research and development, 35 in production line, 4 in packaging, 10 in marketing research and 5 for miscellaneous. Existing labour will be utilized for distribution purposes. Money On account of aggressive marketing and lower prices, initially the product will not enable the company to gain positive net cash flow. However, for long term sustainability, it is essential. We can save some money on the distribution process. Monitoring A cross functional team will monitor and assess the outcome of every step against the desired communication objectives. This team will include members from research and development, marketing, sales, finance, board members etc. The purpose of cross functional team is to look at different dimensions of any problem that arises. Certain exit or modification points of monitoring plan will be identified in prior, in order to overcome any deficiency in existing plan. To get the review of the customers and their feedback, we will also maintain a proper feedback system. According to this system, when a person will purchase our product, we will note his contact details. After 3 months, he will be contacted and asked about his feedback on the product. However, the first phase of feedback collection will be from January 15, 2007. The sample size of the customers to be selected for feedback collection will depend on the number of customers who buy our product. Unless they are greater than fifty, all the customers will be analyzed. Works Cited Taylor, J 2004, Marketing Communications, London, Kogan Page. Hooley, G., West, C., Lynch, J., & Wilson, A. (1984). Marketing in the Uk. Great Britain: Published on behalf of the Institute of Marketing. Stapleton, J, & Thomas, M 1997, How to Prepare a Marketing Plan, Aldershot, Gower. Varey, R. 2002, Marketing Communication, New York, Routledge. Data Monitor 2007, ‘Consumer Electronics in the United Kingdom’, Data Monitor Publications Wiggin, E 2001, ‘UK Leisure and Recreation: 2001 Market Review, London, Keynote. Read More