Marketing Communication in UK: Honest Tea - Case Study Example

Marketing Communication Assignment Introduction Ceris Burns International observed marketing communication to “encompass all communications between a company and all other parties. It entails all the traditional forms of promotion including advertising, sales promotion, personal selling, publicity, public relations, direct marketing and internet marketing” (Ceris Burns International, n.d.). Honestly it was the thirst of a person that introduced a new product in the US natural food stores. The person was Seth Goldman and his former professor Barry Nalebuff, and the product that was launched was ‘Honest Tea’. During 1998 the brand got officially registered earning net sales revenue of $250,000 in its very first year. In its later years the founders kept on introducing other varieties of natural drinks, such as Decaf Ceylon, Jakarta Ginger, Community Green, Chamolime and many others. The company with its fast growth soon came into the notice of world famous representatives including the president of United States as featured in the New York Times. During 2008 the brand caught the attention of the most famous beverage company, Coca-Cola after it acquired 40% stake of Honest Tea. This was the time when it was actually realised that a better communication strategy can lead the brand to a wider perspective which Coca-Cola could render but was hard for the company itself. As stated by Seth, “All beverage upstarts resent the Establishment because its near-stranglehold on distribution makes it difficult for us to get our drinks to customers” (Silverstein, 2010). After such great achievement in the US market, the founders are placing a decision to face the UK beverage market. As a product related to organic drinks, Honest Tea certainly falls into the group to compel with its social responsibility to serve its customers with healthy and harmless drinks. Hence, there are a lot of rules and regulations that the company needs to follow while dealing with marketing communication strategies. For example, the legal and voluntary aspects, the form of credible sources and other variables while selecting it’s communicating techniques to enter the UK market. Meanwhile, the changing scenario of the economy should also be considered in this matter. Marketing Communication Choices Marketing communications today has a wide range of applicability to prove its effectiveness in the real practice. The concept of marketing communication in the present phenomenon is not only to create brand awareness with a motive to generate high sales volume or capture huge market share. Instead, applying a wider perspective it is used as the means to convey the message of the marketer in an effective manner to the targeted potential customer with the aim to build a strong relationship. Therefore, it has a vital role to be played in regard to the marketing of a new product in a new market. In this case, it is launching the Honest Tea in the UK market (Kotler & Keller, 2006, Pg 496). Certainly as the concept focuses on communicating with customers, it leads to different choices for a product in today’s market. It can be advertising through media publications or Sales Promotional Schemes, e.g. rendering products with discounts. It can be through publicity or building up efficient public relations or can be direct marketing and personal selling. But what is considered to be more powerful among all these variables are the implementation of the advertising and sales promotional activities. Because of the fact that advertisement through proper usage of media can be effective to reach mass customers at a very short span of time and create a positive impulse on them, followed by a appropriate sales promotion technique to ensure the customer satisfaction and enhance the brand image (Kotler & Keller, 2006). As a new launch, it is very important for Honest Tea to gain a certain amount of brand awareness among the targeted customer groups as well as other stakeholders, such as investors and associates in the UK. And thus, the communication scheme should be primarily focussed on the advertisement and then on the sales promotional techniques according to the present market scenario in the UK. Current Marketing Scenario in UK In a given market today it is widely accepted by marketers that media has a great impulse on customers and probably on other stakeholders. This in turn helps the marketers to persuade their targeted customer base in a positive direction. The UK market is also not excluded from the fact. A research programme recently observed that the UK enterprises spend over £40 billion each year on marketing purpose which was indeed much higher than the estimation. This incident according to the researchers was a result of problems faced by the UK enterprises in compelling with the marketing opportunities; and eradicating the difficulties occurred while creating an impulse on the behaviour and choices of the targeted customers and the stakeholders. To be more precise, the UK enterprises are missing out extensive efficiency to meet the competition. There is a lacking in terms of being specific and empathetically shared insight within the stakeholders and the companies (Jenkinson & Sain, n.d.). Therefore, with all these revealed data the UK enterprises are certainly facing a hard time with maximum amount of investment failing to reward the optimum utilization of the media communication process. And this can be useful for Honest Tea by implementing a specific and ethical communication technique to share a common interest with the targeted customers and the stakeholders. This will not only render the company with a sustainable amount of competency but also with a better outcome. The legal and voluntary controls of the UK government in this regard play a significant role to confirm the success of the product. Importance of UK Voluntary Controls in the case of Honest Tea The UK customer’s concern as analysed is growing on the issues related to ethics to justify the rules and regulations prescribed by the UK government. There have been numerous TV shows broadcasted in the British TV channels related to the violation of the voluntary regulations and other legal actions. Thus, the philosophy of ethical issues must be considered while concentrating on marketing communication in order to attain the expected return, i.e. the brand preference of the UK customers and the stakeholders for Honest Tea (Tiwsakul & Hackley, 2005). The CAP and ASA With the sole aim to control the telecasts of product advertisements in TV shows during 1955, related legislations were enforced by the UK government. Gradually this gave rise to the need to have a well structured committee to deal with the problems of unethical advertisements using different media publications, and therefore the (CAP) Committee of Advertisement Practice was established. It was in the year 1962 when the committee for the first time highlighted the requirement of an independent arbitrator to supervise the newly created self-regulatory or voluntary control Code in the favour of public interest and was termed as Advertisement Standards Authority (ASA). Therefore, the regulation certainly has a great impact on advertisement of a product using the media instruments. While to state about the current year phenomenon, in 2010 the ASA regulations have been built up to be more emphasised on the ethical perspective of advertisement principles, to ensure that the ads published are not misleading, harmful, or offensive for the local customers (Advertising Standards Authority, n.d.). The CAP Code was recently renewed and enforced keeping in mind the new era of advertisement and other marketing communication techniques like the digital media. One of the reasons for the renewal of the amendment is that according to the government research there are more than 30 million advertisements which are practiced through press or print media alone every year, making the task of the government harder. As mentioned by the government, the code is proposed to extend its spheres of digital remit aiming on the inclusion of marketing communication techniques highlighted in different company websites and shall be in practice from 2011 (Advertising Standards Authority, n.d.). Ofcom Regulations Apart from the CAP and ASA regulations enforced by the government of the UK, another regulatory framework had been in practice from 2003 titled as Ofcom. This special authority is emphasised in governing five legal bodies, i.e. The Broadcasting Standards Commission (BSC), The Independent Television Commission (ITC), and Oftel, The radio Authority and The Radio Communications Agency. And therefore, is concentrated on a wider perspective of media advertisements. However, it does exclude certain events from its practice like the consumer disputes, BBC programme contents and others (Ofcom, n.d.). In view of the nature of the given product, it becomes very important for the Honest Tea Company to consider the regulations practiced in the UK economy in order to generate an ethical outlook along with stakeholder preference. As the present UK economy states that consumers are progressively becoming aware of the ethical issues and even the government is paying a significant concern on the point. On the contrary, it is the social responsibility of the company that makes the appropriate consideration on the legal matter more vital in selecting a proper communication technique at its crucial stage to enter a new market. Opinion Leaders and Opinion Formers as Credible Sources Taking into view the Two Step Communication model presented by Kartz and Lazarsfeld, there are two very important elements present in any kind of given market which influence the communication technique strongly. It can be the Opinion Leaders or the Opinion Formers. According to the theorists opinion formers are referred to be those who have a special and strong influence on the customer base, like the major participants in governing bodies, analysts, journalists, critics and even corporate heads. While on the other hand, opinion leaders are generally unidentified as they exclude from the group of formal experts. This group does not directly provide an advice to the ultimate customers but do create an influence on them. Another common characteristic of this particular category is that the members often fall in the higher economic class compared to their peer group and posses a belief to try recent products and services (Smith & Taylor, 2004). Importance of Opinion Former The impact of opinion former being among the most respected group of the society has a really important role in creating an impulse on customers as well as other stakeholders by the virtue of their knowledge and position in the society. They can be leaders, priests, politicians, journalists and even trade union leaders to persuade the customers in a positive manner to be beneficial for the company. In a wider point of view the concept is often termed to establish a public opinion that can make a product successful or fall back. Hence, theoretically stating the importance of opinion formers is immense in creating an effective public relation (Reddi, n.d.). Importance of Opinion Leaders To emphasise on the significance of the opinion leaders, the group can be differentiated into two categories, i.e. the formal opinion leaders such as the District Collector, or any other person holding power in the community and the informal leaders. Both these categories have a substantial amount of impact on the customer perception in their local area. For instance, if a general shopkeeper proves to have a detailed knowledge about a given topic he can also become an example of an impulsive informal opinion leader. Certainly, these leaders can be anyone in the society to influence the customers and therefore, becomes vital in the case of Honest Tea (Reddi, n.d.) Credibility in the Case of Honest Tea Both the elements in the model are considered to be quite significant for the Honest Tea Company in its expansion strategy in the UK market. In its initial days, in the US food market the company had been using the two concepts to build up their market preference. First was the publication of New York Times to have the president to prefer the brand and next was The Coca-Cola Company, acquiring 40% of its stake. These were the examples of using opinion formers in creating an efficient public relation. The company also used the opinion leaders who were the national participants of the whole food industry, like the Wild Oats, and Harris Teeter. These efforts certainly made the company’s growth faster and sustainable at the same time (Honest Tea, n.d.). The company in the UK can also use the power of opinion formers as well as opinion leaders. As a former player, it can use the name of its biggest investor Coca-Cola, as it already has a significant impact on the UK customers. To state about the opinion leaders, they are proved to be quite significant in spreading the information delivered by the company in a faster and stronger mode. Due to the constraint on that take part in the inclusion of opinion formers which highly depend on mass media publications, it would be better to emphasise on the other group, the opinion leaders, to reach the customers who are not within the reach of mass media. An appropriate example to be included on this part is the Green Revolution that took place in India. During that time, the messages conveyed on the use of chemical fertilizers and improved seed variety were spread by the farmers who were listeners of All India Radio to the farmers who did not have the access to the media (Reddi, n.d.) The strategy can be used by the Honest Tea Company, to create a strong foothold for its future in the UK market. By generating mass awareness, for instance, through energising the opinion formers which shall in turn generate opinion leaders in the favour of the company proving beneficial as credible sources to build up effective public relation. Changing Technology and Honest Tea in UK Market Today, communication is undoubtedly depended on the technological sector. Any kind of fluctuations in the sector shall lead to a major fault in the adapted marketing communication strategy. To be included, a recent change in the technology sector of USA has influenced the advertising practises immensely in the market. ‘USA Today’ is a famous and highly popular news paper of United States of America. The company authorities announced that publishes of the newspaper shall tend more to focus on the modern aspects and therefore aim at gaining a modern-day visual image. The contents shall be much more emphasised on the production with regard to the digital platform, like the internet advertisements, the advertisings published in iPads and Mobile Phones. But the company with this new strategy is not that successful with a drop in its sales revenue of 1.83 million in 2010 compared to the sales of 2.3 million in 2007. Due to this new era of digitalisation there are many newspaper companies who failed to gain a feasible amount of profit targeted. Only a few numbers of publishing companies stayed profitable in this revolution, e.g. The Wall Street Journal (Silverstein, 2010). This new revolution of digitalisation in the mass media has a great influence on the concept of advertising not only in the USA market but also in the global perspectives. As stated above there are lots of newspaper agencies and publishers who have failed in adhering to the revolution. Considering this change the Honest Tea Company should design its advertisement campaign in such a manner adhering to the digitalization factor that its creates an impulse on its targeted customers. Best Technique for Honest Tea in UK Market Considering the legal facts as well as the marketing communication elements to be opinion leaders and formers, and other given techniques on the modern era, the company in its initial stage can undertake the advertisement and sales promotion technique. This will perpetually create brand awareness within the local customers in the UK market. Advertisement can be through the usage of proper media, like the digital media including TV and Internet, definitely with a concerned view to the ASA regulations as mentioned by the UK Government. In this stage the company can ensure its target to reach maximum potential customers by highlighting its brand preference in the US and also the name of Coca-Cola as the opinion formers of the product. This shall positively generate an appropriate amount of opinion leaders in the market to further enhance the progress of the company. The company in this context can even hire famous personalities which many other big companies have repeatedly opted for, but the strategy is subject to high advertisement costs. However, to concentrate on the issue to imply sales promotion techniques as well, the company should first analyse the competitive environment of the market and render its product in the initial stage at a lower price or serve with a contest to actively involve the customers and sway them into the market sphere of the product. These practises are accepted to be quite beneficial for companies offering a diversification in their product lining as well as for the new launch similar to Honest Tea. This for sure can create a better impulse on the customers easily, as well as create opinion leaders in the favour of the company. The company can also take up the strategy to participate in health awareness programmes concentrating on its targeted customer group, which shall positively attract the potential customers. Precisely on one end the company should carry on with media publications and on the other hand it should concentrate on the part of promotional techniques by offering lower price, contests and participating in health concentric programmes. The company on this note can also use an effective packaging to attract the customers. To be noted, all these strategies are based on assumptions and therefore need to be first tested to be applicable in the market. The pre-testing in any kind marketing launch is termed to be very crucial in order to understand the customer preference and evaluate the product according to the demand. As an example, in 2003 the Levi’s company took the decision to launch new Type 1 jeans in the UK market as usual hiring famous personalities and publishing innovative advertisement in media channels. Despite its strong brand image the company considered a pre-test to assure that the ad campaign will be successful in creating a positive impact on the customers. There are many other huge corporate leads opting for pre-testing their advertisements (McElhatton, 2003). The pre-testing method through conduct of proper research can be beneficial to understand the market demands and choices of the customers. In turn it becomes effective to determine the status of the offered product. This is certainly useful in order to make the product much more likeable to the customers in the targeted market assuring the effectiveness of the market communication technique used. The process of pre-testing starts with the selection of a focus group to render the product and examine their reaction accordingly. The advertisement samples in this regard can be printed in a dummy magazine and then presented in front of the customer or else any one of the samples can be presented along with other samples of competitor’s advertisement. As a result the Honest Tea marketer can ensure their advertisement efficiency and competitive edge in the UK market (Luther, 2001). Conclusion At the present context of business environment no one can indeed ignore the value of an appropriate marketing communication technique to generate a sustainable market share for a given product. Realizing the fact, companies related to different industries emphasise on an effective communication strategy so that the message delivered by the marketer can reach the customers unchanged and create a positive impulse on the targeted customer group. In this context the importance of a proper designed marketing communication technique for the Honest Tea cannot be neglected. It will not only help in strengthening the floor of the company but shall also help the company to understand its global competency. The company thereby is suggested to imply the digital media in its advertisements which shall be the best to reach its targeted customers keeping in mind the recent digital revolution taking place among the large media players in the world market. Conclusively, the best technique suggested for the company is certainly the proper implementation of the advertisement and sales promotional techniques. However, to make it fruitful the company should design its advertisements in such an attractive manner that it does not collide with the rules and regulations prescribed by the UK government during its implementation and can be able to generate a strong customer base to mark the future perspective of the product. 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