Integrated Marketing Communication - Essay Example

xxxxx No. xxxxx DEVELOPMENT OF AN INTEGRATED MARKETING COMMUNICATION STRATEGY ABC Brunel West London Brunel Business School 09 December, 2011 Table of Contents Contents Page No Executive Summary 03 Integrated Marketing Communication: A Literature Review 03 Elements of IMC 04 Chinese Market Overview 07 Entry Model 08 Research Methodology and Analysis 09 Conclusion 12 Appendix-I: China Export Volume (2004-2007) 13 Appendix-II: China Import Volume (2004-2007) 14 Appendix-III: Leading Foreign Semi-conducting Suppliers in China (2004-2007) 15 Bibliography 16 Executive Summary The primary aim of this report is to study the situation and analyze the feasibility of corporate strategies for the American based global management consulting and IT provider service Hewlett Packard to venture in the Chinese market. Hewlett Packard has observed a great success over the years in US and European markets; however, the company will need a strong strategic infrastructure for internationalization of its marketing mix, target segmentation, supply, and distribution operations. It highlights the intense competitive environment in Chinese market of IT, business consultant, and outsourcing services and critically evaluates the options for long-lasting growth of HP in the target market. Shanghai and Beijing have been significantly analyzed in the report as the initial base for the company. Integrated Marketing Communication: A Literature Review Integrated Marketing Communication (UMC) has shown substantial effects on business world especially with respect to the international networks of multinational companies (Gould, Grein, & Lerman, 1999; Kitchen & Schultz, 2003). It has been considered as one of the major developments of communication of the last phase of the 20th century (Kitchen & Schultz, 1999, p.34) and thus most organizations claim it as the key competitive advantage of their marketing strategies. Duncan (2005) defines the terms IMC as a “collective term for all the various types of planned messages used to build a brand”, marketing communication integrates advertising, public relations, sales promotion, direct marketing, personal selling, packaging, events and sponsorships, and customer service” (Duncan, 2005, p.7). Due to numbers of factors, the significance and recognition of IMC has grown up. These factors include the increasing trends in media fragmentations (Kotler et al. 2005), increasing segmentation of consumer needs (Schwartz, 2001), easy access to consumer database (McGoon, 1999 & Reich, 1998), and the development of a brand’s image-based equity (Schultz 1999 & Wood 1997). Besides application of IMC related to consumers, most of the authors agree that it has significant application to target non-consumer stakeholders as well like employers, investors, and regulators (Belch, 2002). Kitchen (2003) argues that corporate communication and IMC has substantial implications for the cost-effectiveness of particular organizations. Corporate communication targets the stakeholders by applying advertising campaigns, financial relations, and by offering corporate sponsorships (Semenik, 2002), while non-customer stakeholders are targeted to brief them about the reputation of organization through advice and counsel by senior executives (Duncan, 2005). Elements of IMC Marketing communication is changing radically throughout the world. Schultz and Kitchen (2000) suggested that “the marketing and communication manager of the 21st century must recognize that there are multiple markets, multiple marketplaces, multiple customers, multiple channels and multiple media”. This radically changing environment in terms of media explosion, advancement in mode of communication and technology, disintegration of audience, globalization, consumer empowerment, more desire for accountability options and several more factors have improved the growth and emergence of IMC (Semenik 2002, Kotler et al. 2005). Strategic communication plan is one of the most significant elements of IMC which supports the marketers to address all market segments with a single integrated message. The strategic communication plan varies from experts to experts as each one has its own way; however, Rowley suggested several stages in designing the communication strategies while Czinkota and Ronkainen presented the steps to devise marketing communication strategies. Rowley (1998) suggested the stages which include identifying the target audience, determining communication objectives, designing the message, selecting the communication channels, establishing the promotional budget, deciding the promotion mix, and measuring results. According to Czinkota and Ronkainen presented the five basic steps model for the promotion of products or services. These steps includes assessment of marketing communication opportunities, analysis of marketing communication resources, setting of marketing communication objectives, developing and evaluation of alternate options, and assigning of specific marketing communication projects. Additionally, the most important communication tools of IMC are the advertising, direct marketing, personal selling, public relations, trade shows, and sales promotions. (a) Advertising is actually a paid form of a non-personal presentation or promotion of ideas, goods, or services by an identified sponsor. It is a dynamic and growing part facing numerous challenges from competitive scientific world. Therefore new means of evaluation are requires to be found to contribute towards the general efficacy of its communication. Direct mails, outdoor posters, radio, television, magazines, and daily newspapers are the most common sources of advertising. The Hierarchy-of-Effect Model is the predominant model of advertising because it elaborates the awareness, knowledge, liking, preference, conviction, and purchase processes without any ambiguity (Clow & Baack, 2007). Although, the success of advertising message is always unsure, even then its effectiveness can be identified through pre-testing process. This can be implemented by using different types of incentives, values, and distributions. HP can implement this option because it is the most common step used by multinational companies. (b) There are number of methods and measurements which are commonly applied to evaluate the sales promotions. The foremost step is the collection information of customers and the analysis of sales data. Several other actions are part of this segment like comparison of the pre-promotion period, promotion period, and the post-promotion period, analysis of sales data, market capitalization, penetration rate in consumer markets, repeat purchases, and effects of geographical locations etc. Conducting of public surveys provides an idea to marketers to know the consumer behavior, their trends and intentions, and effects of promotion campaigns on the brand image. Lastly, a feedback program can be applied to get an idea about the impact of sales promotions. HP can use all such techniques as it has strong strategic assets to launch such campaigns. (c) Direct marketing is one of the most valuable communication tools because its effectiveness can be simply measured. Customer segments can be differentiated by the application of information database. The responding consumer behaviors can be evaluated within days or weeks after the campaign. In some special circumstances pre-tests can also be done prior to the actual execution of campaign. (d) Marketing Public Relations (MPR) are used to improve and manage the relationships with general public which include customers, stock holders, community, government, and news media. This segment requires high credibility and less sponsorship. Personal selling is a symbol of the trendiest effort with respect to financial issues. It deals with the verbal staging in a discussion with one or more purchasers for the intention of making a sale. This element of IMC is quite flexible, focused, and often produces effective results in a sale and like advertising; it also has some lags between the actual sales and marketing public relations. (e) Effectiveness of sponsorship is one of the most critical and difficult segment of communication tools. One of its effective measurements can be done through the exposure of target markets and their response to the sponsor’s brand. Next step is to measure the impacts of communication campaign. Here the primary objective is to collect the relative statistics e.g. figures about the strength of people knowing about a particular brand before and after the campaign. Feedback of customers through online comments or interviews is also a source of this step. Scrutinizing the ups and downs of sales and market shares is a further technique to review the value of sponsorship campaigns. Chinese Market Overview The industries of information technology and the semiconductor are rapidly progressing in China. In the 11th 5-year plan, the Chinese government has made special plans to grow its semiconductor industry in coordination with information technology. As an average, China is presently earning more than RMB 600 billion since 2007 at a growing rate of 18% per year. SMIC, Hua Hong NEC, HeJian, ASMC, and TSMC (Shanghai) are the major companies in IT and semiconductor in China. SMIC, headquarters based in Shanghai, is the leading company and one of the most progressive companies on global scale as well. In 2010, the company enjoyed revenue of $10.07 million, operating income $43.45 million, and net income $14.01 million which is about 40% of China’s overall market share. The joint venture of NEC and Hua Hong in a 20%-80% agreement is currently the second largest operating unit in terms of sales revenue in 2006. In recent years, China’s IT service and semiconductor industry has observed a healthy growth. The exports of Chinese IT market reached $97.1 billion in 2007 which was an increment of 26.3% to the last year production while in terms of import items; the industry did a business of $78.4 billion, an increment of 10.2% of the previous year. China’s semiconductor industry has been experiencing a healthy growth in the past years. In 2007, the export value of China’s IC market reached US$97.1 billion, growing by 26.3% from the previous year, while the import market amounted to US$78.4 billion, recording a growth of 10.2% (http://www.chinaknowledge.com/Business). Global IT and semiconductor industry is enjoying healthy and growing trends in China during recent years. The foreign companies dominate the chip supplier industry and Intel is the leading foreign company in China with a market share of $8.4 billion in 2006. Just after one year, Intel set up an advanced 300 mm fab in Dalian, and increased its sale revenue by $4.0 billion. Presently Texas Instrument is the second leading company with annual income of $4.2 billion in 2007 i.e. growing by 32.2% from 2006. Entry Model Strategic assets, competitive capabilities, highly professional human resource, and physical influence are critical and obligatory elements for a company to venture international markets (Bradley, 2005). The entry mode of a company entering to a new consumer market largely depends on the expected ease and difficulty levels which the company likely to encounter (Gannon, 1995). Hewlett-Packard will face cultural differences against its long-term strategic objectives of controlling and building the Chinese IT industry through its brand image and services. Language will play the key and deciding role in entry phase. For internationalization, language is a key determinant factor not only to select the target markets but also to successfully execute the marketing plan (Wigley, Moore & Birtwistle, 2005). Since the use of different languages will restrict the wide-range entry, supply, distribution chain of Hewlett-Packard in Chinese market, therefore HP authorities have selected the Shanghai and Beijing as the initial primary target markets because these cities have low cultural barriers due to its educational standards and better exposure to the international influence. The Summer Olympic 2008 minimized the cultural barriers for international companies while Shanghai hosts ATP World Tennis Master Series Tournament during its Asian circuit. HP will need to establish strategic partnership with local operators for its future growth. This entry model involves fewer risks and will enable the HP to grow in future by gaining a gradual conviction from consumer markets and building up solid partnerships with local companies. Research Methodology and Analysis Initially HP will go through the relevant literature review of internationalization and then the guiding material and research will be conducted according to Kolbs model of experiential learning based on four elements i.e. concrete experience, observation and reflection, formations of abstract concepts and testing of these concepts in new situations (Kolb, 1984). Both the primary and secondary sources will be used. A qualitative based research typically requires different sort of information gathering tools e.g. physical observation, field notes, journals, informal and structured interviews, and analysis of related literature (Marshall and Rossman, 1998). In primary research, the HP project managers may use different techniques. Informal meetings, interviews, and discussions will be conducted with the local operators of Beijing and Shanghai. Valuable data regarding the consumer behavior will be collected through public surveys and already published material of leading companies of the industry. A delegation will also visit the China and will held meetings with higher authorities of these companies. The delegation will also attend few seminars on the internationalization in some universities of China. The team of delegation will recommend standard procedures through integrated marketing communication strategies about the supply, distribution, and customer’s marketing mix. In terms of secondary source, a team of HP managers will be detailed to make recommendations through comprehensive study of literature review. It will include an in-depth study of library and online books about the IT industry in China, organizational statistics, internet sites, and academic journals. Primarily both primary and secondary research methods will focus on the questions like how much IMC is important and cost effective for HP to expand its business network in Chinese markets? What sources will influence the internationalization of HP? What will be the major opportunities for HP to grow against strong competitive in China? What necessary steps will be required for HP to adapt the conditions of new market? As a whole the research about integrated marketing communication strategy in China will take about 2.5 months till its completion and final submission to the higher management of HP. Different modes of communications like TV, radio, internet, and print media will allow the HP to get the best online and offline advertising. HP will search for trustworthy advertising partners through initial collaboration. The partners and advertising agencies will be chosen with respect to their performance and reputation. The advertising partners will cater the need of HP to be publicized by electronic, print, and online media. Extensive negotiations will be arranged either the preferred message of advertisement will be beneficial to the company or not. It will specifically include a detailed situational analysis in the context of business environment and to the requirement for the venture. The stakeholders will be preferably involved in marketing communication to judge their needs. Hewlett Packard will exclusively identify the standby options for the project. Additionally the objectives and assumptions of the project will be distinguished according to the desired standards of internationalization. After couple of months or so, the budget for IMC and marketing mix will be finalized. At that time the advertising messages will be launched across the country and it will be completed by measuring its productivity. The measuring of effectiveness of each campaign further intensive research (Duncan, 2005) and the same has to be used by HP. The communication division of HP will be held responsible to keep a constant eye on the content of the ad, design layout, and dissemination of the message. The same department will also be responsible to supervise the business activities in advertising field and track a record of consumer behavior of Chinese market particularly in Beijing and Shanghai. When a company makes some special plan for internationalization of its products, the most significant factor to be catered is the evaluation of cost in the projected target markets (Keegan & Green, 2003). A comprehensive analysis to determine the project size and its cost is the backbone of any project to evaluate its feasibility (Semenik, 2002). After collecting the data related to Chinese markets, HP will analyze the cost, benefits, and risks pertaining to its Chinese internationalization strategy. The information will be analyzed with respect to existing literature and statistics as well as the computer based analysis. Computer Assisted Qualitative Data Analysis Software (CAQDAS) will be applied that assists in the analysis process and in constructing of accurate and transparent results (Gibbs, 2002). The collected data based on both observations (interviews, questionnaires, statistics) and literature will be analyzed by putting it into interpretive, coding and recursive abstraction techniques. The observations made through primary sources will be analyzed through interpretive technique and will be documented in structured form. Literature based data will be analyzed by coding technique while the statistical data will be evaluated with the support of recursive abstraction technique. Conclusion During the last two decades, the business world has observed tremendous emergence in many parts of the world. Along with the substantial growth, the rapidly changing factors like new media, consumer behavior, consumer empowerment, and significance of advertising has forced the international companies to seek innovative ways to communicate their corporate messages to concerned stakeholders. One of the frequently used techniques is the IMC which brings all the marketing communication functions into account to enhance the value of specific brand through some synergistic approaches. In terms of addressing a small and specific target market, it has been observed and proved that traditional media like TV, radio, and newspapers have been found less effective. A big advantage of IMC is that it closely harmonizes the functions of communications with respect to Hierarchy-of-Effect Model. The IT industry of China is one of the fastest growing industries having great financial potential for local and multinational companies. It is a hub of IT and semiconductor industries especially for Southeast Asian countries. A considerable amount of its economic revenue is generated through the manufacturing of hardware. HP, one of the leading companies of IT industry is looking to venture the Chinese market. The company needs to focus on the steps of planning, organizing, coordinating, execution, and evaluation processes. Appendix-I China Export Volume (2004-2007) Appendix-II China Import Volume (2004-2007) Appendix-III Leading Foreign Semi-conducting Suppliers in China (2004-2007) Bibliography Belch, G. E. and Belch, M. A. (2001). Advertising and Promotion: An Integrated Marketing Communications Perspective (5th edition). New York, NY: McGraw-Hill/Irwin Bradly, F. (2005). International Marketing Strategy 5th edition, Harlow UK, FT Prentice Hall China Knowledge, Clow, K. E. and Baack, D. (2007). Integrated Advertising, Promotion, and Marketing Communications 3rd Edition, Pearson Education. pp. 165-171 Czinkota, R.M., and Ronkainen, I.A. (2003). International Marketing, South-Western College Pub; 7th Edition Duncan, T., (2005). Principles of Advertising and IMC, 2nd Edition. McGraw Hill, Boston Gannon, M. 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