Integrated Marketing Communications - Assignment Example

Integrated Marketing Communications Executive summary This paper aims to propose a marketing communications plan for Friends Electronics System, Ltd, a company that is acquired by The Friends Group of companies which specializes in marketing pest-control devices. The company currently markets three products under the Hawk product range—products that aim to control the birds and mice as pests for industrial and commercial customers. The fourth product, however offers potential beyond the current market. The new product, the Hawk mole controllers, offer benefits that are helpful to addressing needs even to a larger market of agricultural customers. The paper explores the company’s strategy, the segments of the market, target customers, as well as its positioning using the brand framework. Marketing tactics, or the product, the place and the price considerations are derived after defining the company’s strategy. The target market is defined by a primary market and a secondary market. The decision-making process of the market as regards the purchase of such device is explored further, as well as the decision-making unit. The company’s positioning strategy by a brand framework under the brand name Hawk which incorporates the various values and benefits to give the brand a unique selling proposition. After all these have been determined, the prioritized SWOT analysis is conducted in order to look for critical items that need to be leveraged or addressed. After items have been determined, the target audiences for the marketing communications have been identified. The analysis leads to the creation of marketing communications objective for the company, in line with the company’s corporate objective. After the objectives have been determined, the marketing communications plan has been laid out over the course of three years in order to meet the objectives. Here, the plans are laid according to the relative strengths of the marketing communications functions in order to fulfill the objectives. Lastly, an adjusted budget is utilized, based on a revised sales forecast which will minimize the manufacturing costs. Utilizing percentage of sales method for budgeting marketing communications budget, the figure is increased up to 15% of the sales price. I. Situational analysis A. Consumer-characteristics and trends The consumers of the pest-control devices are commonly industrial and commercial businesses. The need for pest-control devices arises from their need to protect their assets and from the pests such as birds and rats. In introducing the mole controller, the potential consumers do not only include the industrial and commercial users, but due to the benefits that the mole controller can provide makes the product into the agricultural market segment. B. Company-resources Friends Electronics Systems, Ltd. is newly acquired by The Friends Group, Ltd. The group has channeled some financial resources to the company, however as mentioned in the case, the company, being new has a very limited financial as well as human resource. C. Competitors-current and potential The Hawk mole controller, as implied in the article is the first to offer such technology in the market that will address the need for mole control. Due to this, the company does not have direct rivals yet in the market for mole control, but more indirect competitors in the form of mole control services—services that are aimed to control moles as in the other pests. II. Marketing objective To capture a substantial share of the market in order to achieve sales objective of 8001- 10,000 units in year 1. III. Marketing strategy A. Segmentation 1. Segmentation criteria Mole controller plays in the pest control market in the country. The pest control market in the country can be segmented according to the types of pests and the relative harm these pests can do to a business. This can also be segmented according to the nature of business, as the nature of business will determine the relative need for pest control of an entity 2. Market segments The market segments for the pests include a market for bird-control, for mice-control, for moles and voles, for insects, etc. Similarly, the market can be segmented according to the nature of businesses, i.e. industrial, commercial, and agricultural—which determines the relative need for pest-control. B. Target Market The market that this pest-control device can serve is beyond just the industrial and commercial customers who need pest-control device to protect their assets, as well as operations. This mole controller can best serve agricultural customers according to the need that is apparent in their operations. The primary target market is comprised of agricultural businesses as this market can be best served by what the mole controller offers. The secondary target market involves the industrial, commercial and residential customers that demand pest-control devices because of the moles ability to bring damage to even waterworks and drainages. 1. Consumer behavior a) Purchase decision-making process (1) Cognitive model (figure) The purchase of the mole controller is a cognitive decision on the part of the customer. As the mole controller serves a need where the financial and social risks are significant, the customers who consider purchase of mole controllers think first before making a purchase. The traditional cognitive decision-making model includes five steps (Duncan 2005, p. 152). The first step is the recognition of the need to address the problem that pests can do to their businesses. After the need has been identified, often through an experience, the search for solutions to the problem in order to address the need starts, which is the second step. The third step involves an evaluation of the alternative solutions in order to address the pest problem. These alternatives serve as direct or indirect competition to the mole controller. When the alternatives have been evaluated and the choice has been done, a post-purchase evaluation on the choice that the customer has made is done in order to consider future purchases as solution to the problem of pest-control. b) Decision-making influences The decision to purchase a mole controller as a solution to a need is not made only by a person, but by a group of people within the business who decides what to do in order to address the problem of pest control. The decision making influencers include the source of knowledge from where the company bases its decision. This could include pest control consultancy services, experts on pest-control as well as agricultural magazines and various literatures. C. Positioning 1. Brand framework a) Values and personality Mole Controller can be marketed under the Hawk brand, only that the Hawk brand association can be expanded to include various personality and values, instead of making the brand Hawk only associated with the devices’ designs. The Hawk brand can incorporate the values such as reliability, safety and excellence in product design. The Hawk brand can embody this personality, so that even when it enters a new market with a new product which is under the diversification quadrant in the Ansoff matrix, the Hawk can come in the same association. b) Benefits According to the case, the benefits of the Hawk Mole Controller include “protection from mole and vole infestation up to an area of one quarter acre using modulated sound disturbance and vibrations within the ground (3)”. Mole controller also uses “reliable and proven electronic technology and were developed to be most effective by the careful selection of frequencies and vibrations.” Since these products only create an environment which are “distasteful to [the animals] and to which they are unable to become unaccustomed (3),” without killing the animals, they are environmentally safe to use, as well as being tested for humans. The mole controller also provides value by offering competitive prices against alternative approaches as well as significant savings from damages that these pests can bring to the business. c) Unique selling proposition The Hawk mole controller is the most cost-efficient pest-control device that offers protection from mole and vole infestations with the use of proven, safe and environmentally-friendly technology without harming the animals and humans, at competitive prices. d) Reason-to-believe The company’s expertise from its other products under the Hawk product line proves to be a major reason to believe for the claim of mole controller. Also, the experience of other customers both in the company’s products as well as the pest-control consulting service that the company provides to its other customers can serve as additional reasons-to-believe for the company’s claim. e) Brand essence The Hawk’s brand essence or top-of-mind recall will be ‘reliable, effective and cost-efficient pest-control devices’. IV. Marketing Tactics A. Product The Hawk mole controller is “a device that is inserted into the ground and provides protection from mole and vole infestation up to an area of one quarter acre using modulated sound disturbance and vibrations within the ground. Moles and voles are particularly sensitive to sound vibration. The MOLE CONTROLLER encourages moles and voles to move to other areas away from the vibration disturbance it creates. It is possible to 'herd' the creatures by using two or more mole controllers (3).” As with the other product lines, the Hawk mole controllers also provide pest-control advice and consultancy to customers as value added services. These services can be incorporated to the whole offer by including various advices in the packaging, or a support center as part of the whole offer, for greater value and better customer experience. B. Place The product has two markets. The primary market includes the agricultural market and the secondary market includes the industrial, commercial and residential customers who are in need of the device to curb damages from these pests. With the primary market being the focus for selling the device, the company can utilize the agricultural supplies stores as main agent and distribution channels for the mole controller. The company can make the mole controllers also available in large retailers, in the agricultural supplies section in order to make them more accessible to the secondary market. C. Price The company utilizes a pricing strategy of more for less for the Hawk mole controllers, which is more value for a competitive price—for a target price of £34.95 per unit. V. Identifying the target audiences A. Decision-makers The usual decision-makers for this kind of purchase are those who are have the authority to avail of the purchase on behalf of the business—usually the business owners, the purchasing officer, or the operations manager. Those who have the last say as regards the money matters for the businesses are the ultimate target audience for the mole controllers. B. Influencers The major influencers in this kind of decision-making are the people within the company that evaluates the alternatives for the problem of pest control, especially mole control. In smaller companies, they can be the same as the decision-makers. In larger companies, they can be different people. These are the ones who gather information about the different solutions available as alternatives. VI. Prioritized SWOT (table) Damage if not addressed Benefit if leveraged Cost of addressing or leveraging Window of time Total Strengths: products well-conceived and very effective -- 2 1 1 4 product expertise lead to customer understanding -- 3 2 1 6 pest-control advice and consultancy -- 3 1 1 5 enthusiastic staff -- 3 1 1 5 Weaknesses: production-focused operation 3 -- 2 2 7 lack of expertise in marketing 2 -- 3 2 7 no sales force concentrated on making sales 3 -- 3 3 9 Opportunities: agricultural customers as primary market -- 3 3 3 9 industrial, commercial and residential as secondary -- 2 3 3 8 Threats: increase in competition when the product is 2 -- 1 1 4 brought to the market *the higher the number, the higher the priority The prioritized SWOT analysis provides a good way to look at the items that the company should either capitalize or address, depending on the priority. The numbers that are used are subjective and depend on the person’s assessment of the item in relation to the company’s operation. The higher the total of each item, the more it should be leveraged or addressed. According to the prioritized SWOT, the strengths that should be prioritized include: product expertise which leads to customer understanding; pest-control advice and consultancy; and enthusiastic staff. The products being well conceived and very effective should also be addressed through continuous product development. The weaknesses of the company in relation to the mole controllers score pretty higher than the other items in the prioritized SWOT analysis. The highest is the company’s lack of sales force that concentrates on creating sales for the company, either directly to the end consumers, or indirectly through agents and distribution channels that in turn sell to the end customers. The other two weaknesses include its production-focused operation which is an inward competitive advantage—an advantage it has to address in order to avoid losing focus on the market and getting behind the competition, and its lack of marketing expertise, which will has an effect on the company’s competitive advantage. There are two opportunities that lie before the mole controllers: the agricultural customers as the primary market which will demand its product most, and the industrial, commercial and residential customers as the secondary market. These two markets should be considered as opportunities for mole controllers. Lastly, a threat that can be identified with the mole controllers is the increase in competition in the market when the technology is introduced. Other players can copy the technology and get into the pest-control industry. This is the least among the priorities of the company in the meantime, as launching its new product in the market is crucial. VII. Marketing communications objectives Matching the consumer’s decision making process, the company can utilize the AIDA hierarchy of effects framework and use the model in crafting objective. With the corporate objective of selling 8001 to 10000 units in the market in order to cut in manufacturing costs and achieve economies of scale, the company can start with such objective as the starting point. By aiming on how the company will be able to get such sales by capturing a substantial share in the market and satisfying them, the company can better utilize marketing communications in that way. In deriving these objectives, due to limitation of information as for marketing research, various assumptions are necessary. One of these assumptions include that 8001-10000 is small in terms of volume that comprises the whole market potential for the mole control market; and that such sales is definitely possible as it is a small percentage of the market. Another of such assumption include that the mole controller lasts for a period of time, greater than one year, that a unit that will count as for the sales will be one unit in sales for the entire year. As for the number of mole controllers that a customer will purchase on the average, since these are businesses, an average of two can be assumed. Since the objective starts with the corporate objective or gaining sales, the objectives can be started backward. Since the action entails purchase of 8001-10000 units in the first year, this translates into 4000-5000 customers served in a year. This means that those who will desire it, as well as those who are interested at it will be more than 5000 customers. As the percentage declines from the awareness level to the action level, the company can target at least 8000-10000 for its awareness phase. VIII. Marketing communications strategy and tactics Given the objectives, the best marketing communications function for the awareness phase is utilizing publicity. By targeting some 8000-10000 people, the company can stage an event which will attract agricultural customers. This event could be a publicity stunt, wherein it will attract the attention of the media in order to write about it in relevant publications. The company can use publicity too by creating a buzz or word-of-mouth among the agricultural community through the new product as well as the event that will host it. The event, attracting extra publicity from other publications also aims to reach the secondary target market. The next phase, which is the interest, can utilize advertising in the distribution channels in the form of leaflets which will educate the target market about the benefits of the product. The same target market that is reached by the event will move now to the interest phase where the same product that is featured in the event they have attended has its information present in the distribution channels. The industrial, commercial as well as residential customers will also be reached through the other distribution channels such as the large retailers. The desire phase can utilize sales promotions in order to induce sales among the market. After getting interested in the product through its many benefits, the company can make the target market shift into the desire phase by providing motivations for purchase in the form of sales promotion, which leads to desired action, which is a sale. This can come either in the form of coupons, discount pricing, etc. As the brand gets to mature over the second and third year, more consumers have already experienced buying the Hawk mole controller. The company can still continue on such plan as its sales continue to grow, however, it has to include more marketing communications function in its second and third year. By the second and third year when the sales is a combination of sales from new customers and returning customer, acquisition and retention of customers forces a balance in the company’s marketing communications plan. In the second and third year, the product brand needs to include either direct marketing in order to provide support to its current customers such as a website, or other portal where added values can be included. Also, as there are post-purchase evaluations after the first year of sales, the company can utilize advertising to provide reinforcement to its claims. In the second and third year, advertising focuses on strengthening the brand claim through product placements for increased and focused association with the brand image. Aside from product placements, advertising can come in the form of ads in respected publications that the target market reads, as well as gaining credibility through testimonials of experts and scholars in the pest-control industry. The company can also utilize more publicity and sponsorship in events that are attended by the target market in order to strengthen the image and presence of the Hawk product brand in the market. IX. Setting the budget Scenario 1 Scenario 2 Target retail price 34.95 34.95 Target sales volume year 1 8001 10000 Retailer's markup 50% Agent' commission 10% of wholesale price Wholesale price to achieve target retail price 23.3 23.3 Agent commission 2.33 2.33 Manufacturing costs 8 8 Allowance for returns/repairs 1.25 1.25 Selling/Promotion/Despatch 5.2425 5.2425 Contribution 6.4775 6.4775 Total income 51826.4775 64775 By pushing sales target from 2000 to 8001, economy of scale is aimed in order to push down the manufacturing costs, and to make the contribution margin of the company acceptable even when distribution channels and agents are employed. The selling and promotional costs, in line with the strategy and tactics that are presented are adjusted to 15% of sales price for three years. X. Reference Pickton D., and Broderick A. (2002), Integrated marketing communications. Philippines: Pearson Education Asia Pte Ltd. XI. Bibliography Duncan, T. (2005), Principles of Advertising & IMC. 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