Strategic Marketing Communication - Coursework Example

Strategic Marketing Communication Introduction Contemporary conditions demands organisations to pay special attention towards their marketing strategy. Marketing assists the companies to analyse the need of the potential customers and at the same time makes the consumers aware of the products and services offered by the company. New age scholars, treat the 4 Ps’ of marketing mix nothing more than just a communication mix. In communication mix different activities interact either in reinforced manner or in conflicting manner to develop an image that might be favourable or unfavourable for the company (p.124). Efficiency of marketing depends on the manner in which the company communicates with its potential customers. Therefore, it can be concluded that marketing refers to the flow of information because the buyer’s perception regarding the products and services offered by the producer is influenced by the information prevailing in the market and buyer’s reaction to it. There is a distinct difference between marketing and marketing communication. The term marketing refers to decision making activity, whereas marketing communication is the process by which marketing decisions are implemented (Lancaster & Reynolds, 2002, p.124). Different authors have different views on the term ‘marketing communication’. Among them the most widely accepted definition is the one framed by Kotler and Armstrong (2004). It defines marketing communication as “presenting an integrated set of stimuli to a market target with the intent of evoking a desired set of responses (Lancaster & Reynolds, 2005, p.185). To communicate with the buyers, different practises used by companies for marketing communication are advertising, branding, direct marketing, publicity, promotion, public relation, sponsorship and online marketing. These above mentioned practices are called “marketing communication managers” and they directly affect the business performance of a company (Mumel, et al., 2007). Traditionally, marketing communication was solely related to print marketing activity but with time it got directly involved with strategy formation for branding and marketing. Companies started relying on marketing communication for creating demand and for positioning the product (goods as well as services) in the target market. In the present world, marketing strategy is undergoing a transition phase where the focus has shifted from customer service to customer relation. Marketing communication comes to rescue during this transition phase. To implement an effective marketing communication all the communication managers needs to be function in an integrated manner. Various insights have been provided on the concept of Integrated Marketing Communication (IMC). One such definition states “Integrated marketing communication (IMC) is a strategic approach to corporate communication that entails the coordination of all company communications to present a harmonious and consistent message to consumers and publics” (Smith, 2007, p.3). The forces of globalisation have made the companies very dependent on their strategic communication plan to achieve the corporate goal. Hence it would not be wrong to say that integrated communication assists a company to gain synergy in its communication process and to develop a better and healthy relation with its customers. Current competitive situation Globalisation has blurred the geographical boundaries and has resulted in increased competition among the various industries. The same argument can be applied to the automobile industry which has a long history. In the early days when the concept of automobile was new to the world, it was US who enjoyed the leadership position. The history of gasoline automobile dates back to1850’s and US was one such nation that developed more and more innovative designs and succeeded in occupying the position of the market leader (Beecroft, 2009, p.1). With time many other European nations started manufacturing automobiles along with America and thus the competition began. In Japan the automobile industry started in1902 as a small business. Automobile industry thus made a late entry in Japan as compared to America and Europe (Shimokawa, 1994, p.4-5). To have an in-depth understanding of competitive situation of the automobile industry in the global market, Porter’s five force analyses was conducted. Figure 1: Porter’s Five Forces (Source: Institute for Manufacturing, n.d.) 1. Bargaining power of the suppliers: There are many suppliers of raw materials, but companies prefer to develop a strategic partnership with the suppliers. There is a marginal difference in the input supplied by different suppliers. The cost of switching from one buyer to another may be high. Companies prefer to develop strategic backward integration for cutting down cost. There exists a high degree of competition among the buyers, but sometime they undergo vertical integration to gain higher bargaining power. Therefore it can be concluded that the suppliers have a moderate to strong bargaining power. 2. Bargaining power of buyers: There are many buyers in the global market. The buyers have ample choice because different companies manufacture a significant number of models. Buyers are highly demanding and their needs change at a fast rate. Buyers prefer a trade-off between quality and cost; hence they are sensitive to both these factors. Buyer’s loyalty is declining day by day. Buyers can develop a backward integration. After considering the above given facts it appears that buyers have a strong bargaining power 3. Threat of new entrants: The automobile manufacturing business requires high investment at an early stage. The market is highly competitive. Consumers are very sensitive to the brand image of the company. Hence the new entrants will face problems while attracting customers. The Governments of different nations impose several legal regulations in terms of taxes, tariffs and quotas which a new entrant may find very difficult to cope with while setting up the business. Therefore the threat from new entrants is low at present. 4. Threat from substitute product Till date the automobiles sector is a unique one that offers mode of transportation for short distances journey. For long distance, passengers prefer airline service as it’s more effective in terms of speed. With development in technology, fast moving trains are giving strong competition to automobiles. Growing concern towards environment protection and campaigns against emission of carbon dioxide is a big challenge for automobiles that use gasoline engines. At present the risk of substitute products is not much high but with time it is expected to increase. Rivalry in between existing competitors: The degree of competition is too high Companies try hard to gain competitive position though cost leadership, innovative technology, style and brand development. Though the competitors are not too many in number but they are large in size. The competitors keep modifying their marketing tactics to enter new markets and to attract potential customers. It can be concluded that there is a strong inter-competitor rivalry. In the global automobile market, US automobile manufacturers like Ford Motor Company, DaimlerChrysler and General Motors were the market leaders for decades, but Toyota Motor Corporation defeated these three big giants and become the market leader from 2006 onwards. (Gopal, n.d., p.3). Critical communications issues Marketing communication is an effective tool used by companies to convey their messages to the potential target buyers. Management uses different communication tools like advertisement, publicity, personnel marketing, relation based marketing, sponsorship and promotion for generating demand and effective positioning of the products. However, these tools will be much more effective if the management integrates these communication processes and develops a proper strategy. While developing the strategy for marketing communication, management takes into account the corporate goals or the mission statements of the company. The management tries hard to achieve corporate goals through effective utilisation of communication tools. The present automobile industry is highly competitive and there exists minor differences between the products offered by competitors. Hence proper communication is needed so that the buyers are able to identify the specific product. While developing the integrated marketing communication strategy, the management takes certain important factors into consideration; these are discussed below: Segmentation of the market: This explains the manner in which the market has been divided into specific parts (segments). Target market: Identifies the target company chosen and the ideal customers. Objective: What the company is planning to fulfil through its marketing communication. Positioning: How the company wants to position its products in the selected market. Tools: Which tool of marketing communication would be most effective in producing the desired effect (Smith & Taylor, 2004, p.47). Often the company fails to integrate its marketing communication activity which results in the loss of competitive position in the market. As for example, a company that relies heavily on the traditional print media might fail to communicate with the young buyers who are more used to internet. The communication plan thus fails to attract the potential buyers. To make the marketing communication more effective, the management should first develop a marketing communication strategy. Marketing communication tools should then be integrated as per the guidelines of the strategy. Failure to do so might result in severe consequences. Few of these are discussed below: It may result in improper positioning of the products and thus the brand image may get eroded. Consumers may misunderstand the information and demand of the product may deteriorate. Company may end up in making high investment in an inefficient communication tool. The competitors may use the loophole existing in the communication strategy of the company to harm the market image. Poor marketing communication may lead to negative marketing preventing the company from attaining sustainable competitive position. Undoubtedly effective integration in marketing communication helps a company to achieve its required goal but at the same time a small little mistake might result in severe consequences and the brand image of the company might get tarnished. Link between marketing communication and organization’s current marketing and business strategy Well balanced branding coupled with positioning strategy helped Toyota to become the market leader in global automobile industry. Marketing objective of a company indicates the goal the company wants to achieve. The marketing plans are thus developed keeping in mind the current market condition and the manner in which it can be aligned to achieve the goals that company wants to achieve. Toyota’s current marketing plan is highly influenced by the current market situation and the brand image of the company. In recent past, to compete with its US counterpart, Toyota enhanced it manufacturing rate so as to launch new cars in the market. It boomeranged and resulted in safety problems and adversely affected the brand image of the company. Toyota had to recall 2.3 million vehicles. This was not just a monitory loss for the company; it also affected the confidence of the consumer. Many customers of Toyota replaced their vehicle with different models of Honda. At present, Toyota’s marketing objective is to revamp the brand image so as to regain the leadership position and to manufacture cars that are economically priced, eco friendly and fuel efficient. The company has integrated its marketing communication tools to regain the brand image. At present the company’s focus is on developing a strong relation with its existing customers as well as the potential buyers. The extent to which current communications activities are integrate: Marketing communication forms a very important part of a company’s marketing plan and is a crucial tool for the success of an organization. The various forms of mass communication are traditional mass advertising channels (television, radio, magazine etc), promotion (coupons, samples, discounts, complimentary offers, premium items etc), direct marketing, personal selling, online marketing (emails, websites, social media, text messages etc) point-of-purchase, store signage, direct mail, press release and word of mouth publicity. Traditionally, there were separate units in an organization to take care of advertising, promotions, public relations etc which functioned individually to meet their respective objectives. Moreover external service providers like public relation agencies, advertising agencies and promotion agencies specialized in their own respective functions. With increase in competition and every company realizing the value of a customer, the traditional concept of marketing communication is getting replaced by integrated marketing communication. Integrated marketing communication is the process through which all the communication tools work together to deliver a single unified message across all target segments. It is worth adopting the integrated marketing communication approach because using more than one form of communication tool delivers a better impact on the audience than using the tools individually. A synergistic effect is created using multiple tools of communication. The starting point of an integrated approach to communication is to place customer at the top of the priority list. (Shimp, 2008, Pp.6-10). Toyota has recently been facing a very serious problem due to technical snags in its accelerator pedal which forced it to recall 2.3 million vehicles in US alone. Prior to this, it had also recalled 4.2 million vehicles in US for the same problem. The impact of the recall has been so large that Toyota lost its market leadership position and moved down to the second spot in 2010 (Simms, 2010). Toyota has been taking various steps to ensure that it regains its leadership position and wins back the trust of its customers. It is in this context that Toyota’s marketing communication and whether Toyota is following an integrated approach to marketing communication would be studied. The marketing communications were designed to communicate a message whose main theme was “safety”. The various marketing communication activities which Toyota has undertaken are as follows: Advertising: Toyota has launched new advertising campaigns in order to address the current crisis. It has launched an advertisement which shows a man named Kenny. It is shown in the advertisement that Kenny is returning home in his Toyota Rav4 only to get the biggest shock of his life where he sees his house broken and fallen apart. The doorknob of his house is seen falling in front of the ledge at his front yard. As he enters the house he is welcomed by workers involved in construction and re-fixing his house. A voice in the background says “Toyota has won more Total Quality Awards than any other automaker and we can all use little more quality these days" (Vranica-a, 2010). Toyota for the first time in its history has launched a corporate campaign which serves as a common platform for many vehicles having the same attributes. As soon as the recall took place Toyota withdrew all the current advertisements that were aired at that point of time which were mostly related to environmental mission and product specification. Promotion: Toyota has implemented various promotional measures in order to boost its sales. In China, gasoline coupons of 88 Yuan (around$1.30) were offered to customers who faced gas pedal problems in their cars. They were also offered small potted plants ((Kurtenbach-a, 2010). It is also offering interest free loans for five years in order to encourage customers who are facing financial problems because of recession. It has also offered two years extended warranties along with a thank you note for supporting the company when they were facing serious problems (Reuters, 2010). Toyota has also partnered with General Motors whereby it imports its cars from Japan through GM and vice versa. This is an effort to improve relations with the American citizens (Wharton University, n.d.). Public relation: The worldwide recall of the vehicles has lead Toyota to shift its focus from advertising to public relations. It has hired a public relations company Robinson Lere & Montgomery to take care of the current crisis (Vranica-b, 2010). Toyota’s president Mr. Akio Toyoda formally apologized to public in US, China and other nations for the inconvenience caused to the customers due to the technical problem (Kurtenbach-b, 2010). Internet: Toyota has been trying their best to ensure that they reduce the hassles faced by the customers as the aftermath of the current problems by making information easily available on what a customer needs to do if his Toyota vehicle gives such problems. In an effort to do so, it has developed a separate section in its website called “Recall” which provides all necessary information regarding the recall episode. It has been sending personal mails to the customers regarding the current status of their vehicles. It has successfully completed sending letters for the following brands; Avalon, Camry, Highlander Hybrid. Letters related to Prius, Highlander, Trucks, Corolla, Venza and Matrix were expected to be sent by April end and beginning of May (Toyota, n.d.). Moreover, customers can enter their Vehicle Identification Number (VIN) to find out whether their vehicle is involved in the recall list. The website provides information on the steps that Toyota is taking to improve the safety features of their vehicles. The website is connected to You Tube which showcases the advertisements. The new safety features introduced by Toyota include Star Safety System and Electronic Throttle Control System. In addition to this, another website has been developed for the customers where information regarding Toyota’s service facilities, location of nearest service centres and so on in order to help customers involved in the recall (Automotive Advertising Network., n.d.). Sponsorship: Toyota has recently sponsored various Winter Olympic advertisements being aired in television. In one of the advertisements Toyota has tried to emphasize their commitment towards quality and has also acknowledged the customers for questioning their reputation. Thus it can be concluded that the marketing communications of Toyota are integrated whereby it has delivered one consistent message based on safety through all forms of communication. It satisfies the rules of integrated marketing communication which are: Consistency of message across all products and audience Consistency over a period of time Placing customers first Recommendations on improving integrated marketing communications: Toyota faces various threats from its competitors especially The Big Three i.e. General Motors, Ford and Chrysler. The biggest advantage of these three companies lies in the fact that all of them are American companies and hence there is a sense of national pride associated with these companies. This is clearly reflected from the fact that in spite of filing for bankruptcy, General Motors has over taken Toyota in 2010 and has achieved the first place in terms of sales. This has been due to the efforts of General Motors to quickly take advantage of Toyota’s current problems which has affected the brand image of Toyota. Ford, Hyundai and General Motors came out with a campaign and offered discounts as high as $1000 if a customer switched from Toyota to any of these brands (Ikematsu, et al, 2010). Hence Toyota needs to come out with new innovative ways of promotion in addition to the discounts and interest free loans. It should come out with a promotional campaign which would involve the customers rather than making them mere spectators. It can come up with a promotional campaign whereby the existing customers can choose any brand of a car in the same segment as the car he owns and keep it for a day or two for trial and then decide whether he wants to purchase the vehicle or not. A campaign of this nature has two advantages: First it would help a customer take a firsthand feel of the car. He can take the car to his friends and others and take their review. Especially if the car brand is an aspiring brand, it would instil a feel good factor in the customer while he flaunts the car in front of others. Secondly if the car is really good, it would spread good word of mouth publicity. Word of mouth publicity is an important marketing communication tool and can be vital in deciding the fate of the brand. The current problem has tarnished the brand image of Toyota. Positive and good word of mouth publicity can significantly revamp the brand image. In order to involve the customers, Toyota can also organize rallies and other sporting events which would help in revamping its brand image. Rallies can be used as a platform to showcase the quality, safety features and power of the vehicles. Toyota can also come out with new cars targeting the youth in the age group 20-30. This age group includes students and customers who are at the early stages of their career. This segment would look for cars which are economical as well as technologically superior. Toyota needs to promote this in the college campuses and universities. As a promotional tool, it can hire interns, pay them stipends and ask them to collect data regarding the need of this segment. The interns can be asked to organize shows and other promotional campaigns in their universities. In the process they can build a database of prospective customers who can be later approached by Toyota. Toyota also needs to ramp up its social marketing initiatives. Toyota has been criticized for using too late and too little communication in the traditional media. As far as social media is concerned it is only recently after the recalls that Toyota has taken it seriously. In the world of FaceBook, Toyota cannot afford to miss out on this powerful tool of communication. It also needs to use Twitter, Flickr, YouTube and Blogs more aggressively for communicating with its customers. Toyota in the recent past has been suffering from a loss of customer loyalty and trust because of the various safety related issues. In order to gain back the trust it can use brand ambassadors who are respected for their quality, dedication and are trusted by the customers. It should identify such ambassadors in each country and accordingly design its advertising campaigns. This would make it easier for the customers to relate with the brand. Toyota has always been known for quality since its inception. The Toyota Production System has been talking about it innumerable times and customers respect the brand for its dedication towards quality. However since the brand image has been tarnished, it needs to take these steps to revamp the image. The world is going through a very turbulent phase because of recession. Job cuts and unemployment has lead to an increase in customer saving. Unavailability of money is one reason for declining sales of Toyota. Hence, other than no interest schemes, it should also come out with financial incentives which would make it easy for a customer to buy a car. It can also come out with lucrative exchange offers, free accessories and so on as a promotional tool. A very important area where Toyota should focus is internal communication. Internal communication refers to the communication between the employees, stake holders, share holders, suppliers and all those who are involved with the company. Everyone involved with the company should be practicing a uniform culture. All of them should have one lingo which is a strong focus on quality. Finally Toyota needs to integrate all its communication to create an impact on the target group. This would help Toyota achieve its goals in a shorter span of time with the same amount of effort. It should make sure that the message it is sending through different communication channels are uniform, consistent and designed keeping the priority of the customer in mind. Conclusion Companies rely heavily on their marketing communication to convey information to the customers though different marketing communication tools. However due to lack of integrity the communication plan fails to achieve the targets. Therefore the management requires developing a strategic marketing communication plan after understanding the present market condition, the goals which the company is planning to achieve and also the changing needs of potential consumers. Automobile industry is one such industry which is highly competitive in nature. From 2006 onward Toyota emerged as the market leaders with the help of its high quality products and loyal consumer. In 2008 the cars produced by the company suffered with major safety issue, but Toyota took this issue quite boldly. Undoubtedly this incident did erode the brand image of the company. But the company had left no stone unturned to regain the position of the market leader. 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