Marketing Communication - Case Study Example

Marketing Communication Introduction Kuokemoer (2004, p describes marketing communication as the process of communicatingwith consumers and customers. Communication enables an organisation to speak in one voice (Fitzerpatrik 2005, p.94; Donaldson and Smit 2007, p.23). SOSTAC Model is a useful tool for marketing communication, and it will be used to develop a marketing communication plan for Golden Eagle Company’s energy drink, GE Flux. Smith and Taylor developed SOSTAC Model in 1990, and it has proved to be an effective marketing planning tool. Since its development, SOSTAC Model has found a wide usage in the marketing and marketing communications field. SOSTAC is an acronym for the six basic elements of the marketing plan namely Situation, Objectives, Strategy, Tactics, Actions, and Control (Business Services Agency 2007, p.1; Chaffey and Smith 2013, p.538). This study will adopt SOSTAC Model in order to develop an integrated marketing communications campaign for launching a new product. SOSTAC will provide an outline and a structure for building a comprehensive marketing communications campaign plan for Golden Eagle Flux energy drink. 1. Situational Analysis Golden Eagle intends to become one of the world leading companies in marketing of energy drinks. Its energy drinks are becoming a symbol of vitality, giving people the strength to work and play. Its energy drinks have a catchphrase, “Golden Eagle takes you to mountaintop” and this catchphrase acts as evidence to the sort of imagery GE energy drinks wish to portray. The brand Golden Eagle came to existence in 2014, with its first products launched in January 2015. GE energy drinks consist of various ingredients such as carbohydrates, caffeine, among other important vitamins that revitalise the body making it develop physical endurance, concentration, speed, and improved reaction. Golden Eagle intends to make the advertising slogan, “Golden Eagle takes you to mountaintop” its instrument of raising awareness and popularity of the drink. The target market will include athletes, night clubbers, late night shifters, and students. GE is not fully established but within the few years of existence, the company has managed to capture a considerable size of the existing market. The main economic challenge that GE is likely to have is the existing and potential competitors. Its challenge comes from 400 established brands from well-established competitors such as PepsiCo, Red Bull, and Coca-Cola Company among others. However, these companies have not taken a lot of market share because of their little innovativeness in terms of new products (Euromonitor 2015). 1.1. PEST Analysis 1.1.1. Political There is growing demand for energy boosting drinks making the sales of energy drinks grow (Hollis 2013, p.142; Younos and Grady 2014, p.124; Shinde and Ganjre 2014, p.175). As a result, respective governments are devising regulations for these drinks requiring them to be clinically tested. Even if some countries have banned the sale of energy drinks due to their high amounts of caffeine (Maisto et al. 2011, p.180), the current GE penetration progress is impressive. According to Rotstein et al (2013, p.11) and Maughan and Griffin (2003, p.412), energy drinks have a high concentration of caffeine. Evidence from research studies may raise governments’ concerns regarding the consumption of energy drinks. 1.1.2. Economic Energy drinks consumers cut down the usage of energy drinks when there is price inflation. Several studies have shown that consumers do not consider energy drinks to be a necessity, and they prefer to save up on energy drinks purchases to buy essential items. The market for energy drinks is very sensitive to economic conditions, and this may impact the purchasing power of consumers. 1.1.3. Social In this generation, the majority of youths are increasingly exposed to sports activities and other entertainment activities (Theokas et al. 2006; Larson and Verma 1999; Ewing, Seefeldt and Brown 1996). This makes youths become the largest group of energy drinks consumers. As a result, GE has positioned itself to satisfy this group with the right promotional mix, with an aim of increasing its sales. 1.1.4. Technology There is advancement in social media usage and other technological platforms. Golden Eagle has positioned itself well to utilise these technological platforms in its marketing activities. The available platforms that GE will use include Twitter, Instagram, and Facebook among others and these are expected to make a great impact on the consumers. The largest target group which includes the youths can better relate with these technological platforms (Agosto and Abbas 2011, p.43; Boyd 2008, p.119; Ito 2008). 1.2. Market Trends Golden Eagle is mounting increased consumer brand awareness by having its marketing campaign targeted at 18-25-year-old youths. Golden Eagle has also taken a different approach in its marketing by sponsoring extreme sports such as BMX biking and other extreme sports. This is intended to increase the demand for Golden Eagle energy drinks in the market segment that likes extreme sports. Golden Eagle Flux is exclusively produced in the United Kingdom and marketed in more than 7 European countries. However, Golden Eagle mission is to expand to all the parts of the world. Golden Eagle enjoys a 10% market share in Europe. With an increase of sales initiatives to night clubs, it will further boost its market outcomes. The average price for a 500ml Golden Eagle energy drink costs £2.57. Within the two months of operation, it sold approximately 3 million cans of Golden Eagle energy drinks in 7 countries in Europe. Golden Eagle Market Sales (%) United Kingdom +50 France +20 Germany +15 Spain +12 Netherlands +10 Denmark +8 Italy +8 Table 1. Golden Eagle Sales for January and February 2015 Table 1 shows that Golden Eagle is penetrating the market at an impressive rate. 2. Marketing Communication Objectives 2.1. Marketing Objectives i. Achieve GE Flux can-sales of 500,000 during the first six months of 2015 and 1,500,000 by the end of financial year 2014/2015. ii. Achieve market share of 20 percent by the end of financial year 2014/2015. iii. Achieve a net profit of 8 percent at the end of financial year 2014/2015. 2.2. Communication Objectives Golden Eagle’s communication objective is to establish GE Flux as a flavour that is an alternative to the original GE energy drink. To achieve this objective, GE will increase awareness of the new product among existing consumers by at least 80 percent via various IMC plans. The brand attitude and the communication of brand identity will be solidified in order to improve consumers’ purchase intention. The objective is to make 20 percent of the target customers to identify GE Flux as the preferred choice by the end of 2015. The final objective is to increase brand loyalty through increase market share. To achieve this, the objectives of communication will be aligned with the yearlong IMC plan. The initial stages of Golden Eagle marketing communication will be focused on building awareness and then working down the list. 3. Strategy 3.1. Strategic Objectives (SMART) Golden Eagle has used the acronym SMART to set its objectives and plans. GE’s objective is to increase its market share by 5 percent in three years (2015, 2016, and 2017). The company aims to achieve this through pricing and loss leader pricing strategy. According to Strauss (2012, p.118) and Griffin (2010, p.424), the loss leader is a pricing strategy that attracts consumers by offering them sharp discounts on specific items, that is products that are sold at or close to a loss. This strategy is aimed at leading consumers to GE to buy discounted as well as non-discounted products. The objective is also to increase superior customer satisfaction by 10 percent in 3 years through the use of the IT department and superior customer services. The company also intends to have an expansion plan by 2017 that will expand its operations to Asia, African, and America. This will be done through opening manufacturing plants in these continents. Finally, cost reduction techniques such as guerrilla marketing, carpet-bombing method, and referral networks will be used so that it can reduce its prices by 10 percent by 2017. 3.2. AIDA Model AIDA Model will be adopted to help Golden Eagle make its marketing communication effective. AIDA Model involves attention, interest, desire, and action as presented in figure 3.2. Attention Interest Desire Action Figure 3.2. 1 The AIDA Model Figure 3.3 presents the AIDA Model as it will be adopted by GE. Attention Interest Desire Action GE will seek By offering low After capturing Corrective actions to create aware- priced products, the interest of in response to ness of its GE will seek the consumers, consumer product to capture the GE will create reactions and capture interest of a desire through feedbacks customer’s consumers from offering good- attention its competitors quality products Figure 3.3. GE AIDA Model The main objective of adopting the AIDA model is because it has hierarchical effects. The awareness created by communication imparts knowledge of the product attributes, and this makes the consumer to develop an interest for the product’s qualities and attributes (Tyagi and Kumar 2009, p.251). After developing a desire for the product, the consumers are led to the action of purchasing the product. 4. Tactics 4.1. GE Media Objectives and Overall Media Objectives The general media objectives are presented in Appendix 1and the overall media objectives are presented in Appendix 2. 4.2. Media Selection According to Medoff and Kaye (2010, p.138), SMART media buyers know which products do best on which medium and in which market. GE is one of the SMART media buyers, and it has learnt the art of media selection. GE has creative strategies and appeals that will work best for different media audiences. Television adverts for GE will run for 60 seconds and will be aired between and within sports programs. Appendix 4 lists GE media preference and their target audiences. 4.3. Timing Effective timing of communication media is very important in order to capture the widest market possible (Kelly et al. 2015, p.55). GE will do a careful timing of the adverts in order to capture the widest market audience. Television adverts will also be run in the evenings when most of the target audiences are at home. Media timeframe is presented in Appendix 3. 4.4. Creative positioning and message GE can take advantage of positioning in order to create an image in the minds of the target market for its products. According to McDonalds (2007), positioning refers to the process in which the marketers create an image identity in the minds of consumers for their products. To increase their competitiveness, GE will reposition their original energy drinks by changing the product and offer it in the form of GE Flux. GE Flux will have reduced concentration of caffeine. The main objective of repositioning is to eliminate the fear of harmful effects of caffeine. This move will both increase the customer base as well as expand the product line (Kotler 1999; Pride and Ferrell 2004, p.311; Goyat 2011, p.49). 5. Control 5.1. Budget Control This report employs the Objective method (Shimp and Andrews 2013, p.221; Barnes et al. 2013), which GE’s goal is to have 1,500,000 cans sold by the end of 2015 financial year. GE’s project target is £2,020,000, in which GE will use 30 percent (£606,000) of it as its IMC budget. Every amount stated justifies the advertising activities that will help GE achieve its objective. Budget elements are presented in Appendix 5. 6. Action Evaluation and Control GE will use several testing methods to determine the awareness levels of the audiences. These methods will be aligned with specific media vehicles. Audiences will be invited to cinema theatres and before the movie starts, GE Flux advertisement will be broadcasted. A series of questions will be posed to selected people in the audience, and particular attention will be paid in consideration of responses. In terms of sales, corrective actions will be effected every three months in accordance to shifts in sales margins. Corrective actions will be done on sales promotions including discount and bonus packs at the supermarkets and shops. Integrated market should be continuous as it was observed in earlier studies (Schultz 1998). References Agosto, D. and Abbas, J. 2011. Teens, Libraries, and Social Networking: What Librarians Need to Know. California: ABC-CLIO. Barnes , J., Moscove, B. and Rassouli, J. 2013. An Objective and Task Media Selection Decision Model and Advertising Cost Formula to Determine International Advertising Budgets. Journal of Advertising, 11(4). Business Services Agency. 2007. Developing a marketing communications plan using the SOSTAC model. Available http://hospitalitybusinesscoach.weebly.com/uploads/1/2/0/7/120786/12.13.38_sostac.pdf Boyd, D. 2008. Why Youth (Heart) Social Network Sites: The Role of Networked Public in Teenage Social Life. Cambridge: The MIT Press. Chaffey, D. and Smith, P. 2013. Emarketing Excellence: Planning and Optimizing your Digital Marketing. 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Appendix 1: Golden Eagle General Media Objectives Month Reach Freq Weight Continuity Recency Cost April 2015 High High High High Low High May 2015 High High High High Low High June 2015 High High High High Low High July 2015 Low Low Low Low High Low Aug 2015 Low Low Low Low High Low Sept 2015 High High High High High High Oct 2015 High High High Low High Low Nov 2015 High High High Low High Low Dec 2015 High High High High High High Appendix 2: Golden Eagle Overall Media Objectives Reach Effective Reach Freq GRP ERP Cost Continuity April – May 80% 60% 5 1200 900 £438,295 Continuous June-July 70% 40% 3 630 360 £54,820 Pulsing Aug-Sept 80% 50% 4 960 600 £7,400 Pulsing Oct-Dec 60% 30% 2 360 180 £3,700 Pulsing Appendix 3: Golden Eagle Media Timeframe Month Event Vehicle Purpose April 2015 Gymnastics, Montpellier London Marathon Sponsorship Public relationship Sales Promotion Television Creating and Raising Awareness May 2015 Tour de Yorkshire, cycling Spanish Grand Prix Triathlon, London June 2015 Diamond League, Birmingham Sales Promotion Public relationship (endorsement) Sponsorship Television Influence stage July 2015 Great Britain Grand Prix Aug 2015 Rugby League, Wembley Sept 2015 Italy Grand Prix, Monza Oct 2015 Horse Racing Sponsorship Reminder Stage Nov 2015 Rally of Great Britain ATP World Tour Finals, London Sponsorship Sales Promotion Digital (Facebook, Twitter) Dec 2015 Horse Racing, Kempton Sponsorship Sales Promotion Appendix 4 Golden Eagle Media Preference and target Media type Target audience Cinema Advertisement (in block buster movies such as Iron Man, and Fast and Furious among others) Youthful cinema lovers Sports athletes Radio Workers who listen to radio stations in their working places Magazines Magazine lovers Sport athletes Gym instructors and gym visitors Social Media (Facebook, Twitter, MySpace) Generation Y youths High School and college students Event Sponsorship (Marathon, Rally Championships, Athletics, Ball games) Sport athletes Sports fans Youths Appendix 5 Golden Eagle Budget Elements Budget Element Percentage of Budget Media Advertising Cost Prints Sponsorship Cinema Radio Digital Public Relationship Sales Promotion 85% (515,000) £240,000 £134,000 £97,000 £19,000 £900 £4,000 Other IMC Cost 10%(58,000) Evaluation and Control 5%(29,000) Total Control 100%(580,000) Read More