Integrated Marketing communications used by HP

Integrated Marketing communications used by HP This case study analyses the marketing communication theories adapted by Hp as it progressed to being the worlds number one pc manufacturer in 2007. Its emergence as a global company in 1957 opened a window of opportunity. The theories addressed will aid in forming a combination of the key concepts used by Hp for its global campaign to increase customer loyalty and boost sales. A number of practises are seen to have developed along various communications and marketing theories. However, critical analysis of Hps 63- year development will show a lack of adherence to some very useful models by some academic scholars. A viable description of marketing through effective communication was made by Smith (2002), à ¢Ã¢â€š ¬Ã‚ ¦strategy of choice in a competitive environment is proactive, two -way communication, in which organisation plan for and initiate relationships with the people important to their success, emphasising dialogue over monologue and using various techniques to interact with their publics. Background Hewlett Packard, known as HP, is an electronics producer which was founded in 1939 in California by Bill Hewlett and David Packard. Since its birth the company has gained prominence around the world, becoming a major leader in the industry of electronics and technology. Early product designs produced by the company include inventions such as the resistance-capacitance audio oscillator named Model 200A. It is the manufacturing of products such as the Model 200A that have shaped the future for technology and helped pioneer many of todays products. In 1966, HP introduced the worlds first computer. In 1968 the company then unveiled the first desktop scientific calculator and named it the personal computer (PC). It was this event which boosted HP in to mainstream significance during the 1980s and became leading players in the technological industry. This was established in 1995, when HP entered the home computing market. In 2001the company merged with Compaq forming HP Compaq. This merger ensured efforts were made to further establish the brand as a leading company in the IT and computer industry. This was done through aggressive marketing tactics done through the concept of Integrated Marketing Communication (IMC). 1. Critical evaluation of the role of integrated marketing communications in the success of Hewlett-Packard since 2001 Joep cornelissen (2008) definition of corporate communication is as follows: Corporate communication is a management function that offers a frame work for the effective coordination of all internal and external communication with the overall purpose of establishing and maintaining favourable reputation with stake holder groups up on which the organisation is dependent. But using of this approach is not always good as some critics may say despite of 20 years of debate most practitioner still see that integrated marketing communication is emerging discipline (eagle and kitchen 2000) rather than fully formed concept. Like many other concept that have yet to fully develop it is subject to fully varying and some times colourful terminology. Thus 360 branding, total branding , whole egg, seam less communication, new advertising, orchestration, relationship marketing, one to one marketing, integrated marketing and integrated communications (Pickton and Broadrick 2001) have all been used to describe all or part of integrated marketing communications concepts promoting the charge that integrated marketing communication is yet another fad. What most observers agree on is that integrated marketing communication is good idea but very hard to implement in practice Like all companies, HP is a company whose primary aim is to make a profit. However whilst this is a common company goal, there are still necessary guideline which should be followed in order to achieve this. Fill (2006) recommends that à ¢Ã¢â€š ¬Ã‚ ¦the process of developing corporate strategy demands that a series of objectives be set at different levels within an organisation. Grunig et al (1992) states that two-way communication, a form of communication which is also practiced by PR practitioners, is a helpful tool from which a mutual understanding can be developed between stakeholders. One of criticisms of HP was that the company was focused more on the advancement of technological innovation. The corporate image of the company was seen as being obsessed with innovative progression and undermining the value of its customers. Shutz et al (1992) cited in Clarke (1997, pg 93) states that such actions are damaging to a company and that customer based communication must be practiced at all times. You cannot depend on the product alone to build consumer confidence. Its the rapport, the empathy, the dialogue, the relationship, the communication you establish with the customer that makes the difference. These separate you from the pack. For all of HPs innovative output and diverse range of products, its market position was infringed through a lack of market research and poor internal organisation. Smith (2002) refers to the work of Tom Harris, who is a leading advocate of integrating communications. He describes integrated communications as an outside-in process that begins with an understanding of the consumer publics, particularly their wants, interests, needs and lifestyles. Fill et al (2001), however, argues that many practitioners deliberately persuade a target audience to behave in a particular way, while others persuade them. In whatever instance it might be, understanding the customers needs, which may in turn change their behavioural pattern, is not a necessarily bad evil. Hp deliberately changed their communications strategy to affect the buying behaviour in their customer through effective brand campaigns that brought mutual satisfaction to both consumer and HP. Clarke (1997) explained that for consulting firms to effectively handle marketing and communications they must reflect the overall objectives of the organisation. Todays market calls for a strategically integrated approach to marketing communications. Hp would have to reorganise its marketing communication s division in to one that is coherent to attract customers. Oliver (2001) defined this as the system Theory - which she said evaluates the relationship and structure as they relate to the whole. Market research builds the right perception and recognise the needs and behaviour of current and future customers; evident in the theory of cognition. The history of HP showed there was lack of strategic planning and changes on marketing and communication structures were needed. During 1960s, consumers probably did not know any better or did not have a chance to choose; and this could force them to adhere to HP products. However, now a days Kotler et al (2008) affirms consumers receive thousands of information per day. In this context, in 2002, HP realized that the company needed to invest in its corporate image. So, the company launched brand advertisement campaigns. In 2006, they create the Computer is personal again, which had focus on personal relationship that public have with its computers. By analysing the competitors, this campaign was based to convince customer that the best way to buy a PC was in a retail shop, where they could touch it. This was an opportunity to differentiate from its main competitor Dell, which has a strong internet sales record. Fill (2009) believes that the marketing segmentation is necessary to meet the consumer need and to have a functional and competitive-level strategy. The Computer is personal again campaign was structured to appeal to young generation, which the company believed to be customers with similar needs and responses. HP targeted the youth market and position itself as a customer loyal corporation. In this scenario, the marketing communication strategies combined channels online and offline and integrated all marketing efforts such as PR, sales, advertisement. Shimp (2000) states that mixing marketing communication elements is decisive to achieve the target public and a specific objective. Also. HP emphasized advertisement and sales promotion in order to maximize the sales, creating a Synergistic effect. Undoubtedly, every channel used by this campaign had a consistent message, which complemented each other. Cornelissen (2008) says the company should communicate on ongoing basis and themed m essages reinforce perceptions of how an organization wants to be seen. Marketing Integration Holm (2006) states that Smith (1999) developed a tool, from which there are seven levels through where marketing integration can occur. Holm says these seven levels are: Vertical objectives integration It means that communication objectives fit with marketing objectives and the overall corporate objectives. Horizontal/functional integration Marketing communications activities fit well with other business functions of manufacturing, operations and human resource management. Marketing mix integration The marketing mix of product, price and place decisions is consistent with the promotion decisions, e.g. with the required communication messages. Communications mix integration. All the 12 communications tools are being used to guide the customer/consumer/client through each stage of the buying process and all of them portray a consistent message. Creative design integration The creative design and execution is uniform and consistent with the chosen positioning of the product. Internal/external integration All internal departments and all external employed agencies are working together to an agreed plan and strategy. Financial integration The budget is being used in the most effective and efficient way ensuring that economies of scale are achieved and that long-term investment is optimized. Let us examine personal again campaign at each of these seven levels: Vertical Objective Integration: level of coordination between communication objective, corporate objective and marketing objective. . Corporate objective: Customer loyalty, profit, growth, market leadership, commitment to employees, leadership capabilities and global citizenship. (Source: www.hp.com) Marketing objective: To increase market share, compete with Dell, target young generation Communication objective: Focus on personal relationships to PC and show consumers the different tasks made possible by HP technology Synergy can be seen among these objectives. All advertisements were base on same theme where celebrities from different field were talking about how HP PC and technology is part of their life. Faces were not shown in any of the commercials and focus was on different tasks that HP makes easy. It reinforces customer loyalty which is corporate objective of HP. Advertisements in this campaign were appealing to young generation and through social media viral effect HP reached new customers which were otherwise non-respondent to traditional media, thus increasing market share. Horizontal/functional Integration: fit of MarCom and business functions like operations and HRM HP had strength in selling through retail stores in consumer segments rather than selling online which was Dells core competence. New campaign communicated that PC is a commodity which is close anyones personal life, its a part of life rather. It pushed customers to visit the nearest retail store to touch, feel and learn how HP technology can be useful to them. Marketing mix integration: How well the promotion (with communication message) goes with the other 3 Ps of marketing mix Although the general theme of the campaign was universal throughout the 100 countries where HP was doing business, some variation can be seen according to place and price. For example in India personal again campaign was supported by Business is Personal Again campaign that targeted SMEs. Although the basic theme remained unchanged, local celebrities and eminent personalities were used for promotion in particular places. Communications mix integration: Different communication tools portray a consistent message Every channel used to communicate message delivered consistent message. TV commercials, internet promotion, PR program, newspaper, billboards, reality shows etc. whichever medium was used for MarCom in personal Again campaign was complement to each other and had same tone/message. Creative design integration: creative design is in accordance with the positioning of the product With this new campaign HP wanted to acquire a trendier brand image. They wanted to target youth market and position itself as a consumer loyal company. Personal again campaign was very much on the line. It relied heavily on animations. Hand gestures were used to convey connectivity, assurance, and emotional connect. Celebrities shown in the commercial were those, who are followed by young generation. Events which were of special interest of youth, like Super Bowl and reality show meet or Delete were focused for marketing communication. Internal/external integration: Internal departments and external agencies work in synergy according to an agreed plan Personal Again campaign was designed by GSP, which is HPs advertising agency since 1996. All previous campaigns were also handled by same agency. Although not much evidences about the extent of coordination of HP and GSP are provided in the case but because of this long period of relationship; mutual trust and understanding between both can be expected. Financial integration: efficient utilization of budget ensuring long-term investment optimization Not sufficient information is provided in the case about budget allocation of Personal Again campaign Also, HP used celebrities in its advertisement in order to emotional connect the public. Fill (2009) citing Patzer suggests that the physical attractiveness of the communicator, particularly if it is the source, contributes significantly to the effectiveness of persuasive communications (Patzer in Fill, 2009, p.43) Celebrities from different field expressed how PC makes their lives easy. The identification of young people with celebrities encouraged the sales and reinforced customer loyalty. The brand value of HP increased 9% after the campaign. The celebrities enables the message to stand out among the clutter and noise that typify many markets (Fill, 2009, p.509). This concept was used by HP to persuade the sales and making the product more attractive to the target public through association with MTV channel. However, Fill (2009) adverts there are two main concerns about the use of celebrities on campaigns. The first one is if the celebrity fit in the image of the brand and if they will be acceptable by the target audience. The other is that the public may remember the celebrity, but not the brand. The use of celebrities and the creation of a realty show Meet or delete on the campaign Computer is personal again influenced the consumer behaviours as it motivate them to buy. Dibb et al (2001) say there are several factors that can persuade a purchase such as personal, psychological and social influence and describe motive as energy giving a persons activities towards satisfying a need or where achieving a goal (Dibb et al, 2001, p.133). Shimp (2000) affirms that advertising may influence consumer to buy items they may not need. The consumer buying decision process has 5 stages: problem recognition, information search, evaluation of alternatives, purchase and post-purchase evaluation, according to Dibb et al (2001). HP created awareness to young people by offering a PC not as commodity, but as extension of person life. The buzz generated by launching first videos on the internet and after in TV made consumer looking for more Knowledge about the product. However, the main goal of t his campaign was to interact with consumers, which could be helpful in the post-purchase evaluation phase as customers could trust that HP would be there if they need anything. Instead of creating a campaign to compete directly against Dell, HP could have done a public relation strategic planning. Smith (2002) citing Al Riel and Laure Riel explains that The purpose of advertising is not to build a brand, but to defend a brand once the brand has been built by other means, primarily public relation [à ¢Ã¢â€š ¬Ã‚ ¦] (Al Riel and Laure Riel in Smith, 2002, p.9). A PR plan could identify and evaluate the organization viability and reputation, where a mutual beneficial relationship between company and consumer could be build, according to Smith (2002). The lack of market research and planning were the main problem of HP. By realizing a SWAT analysis, the company could have set clear objectives and develop a marketing and communication targets that would be the foundation for a nine steps strategic public relation plan. This plan would be beneficial to HP as company goal would be based on research and evaluation. Also, it would allow the HP to monitor the competi tor as a point of reference. HP used or could potentially use the following marketing tools to aid their Personal Again campaign. Category Communication Tool Media Broadcast: Television (Meet or Delete) Print: Newspaper, Magazines Internet: Social Networking Sites, Blogs, Interactive websites, Viral Video, Direct Response and Interactive Online ads featuring celebrities Adverts on websites such as: Yahoo, MTV, MySpace, MSN, Weather Channel, CIO, Forbes, Entrepreneur, InfoWorld, CNet. HPs own interactive websites: www.meetordelete.com and www.fingerskilz.tv Social networking and blog sites Outdoor Billboard Sponsorship Celebrity endorsement 2. Discuss the importance of branding, branding strategy and brand positioning to Hewlett-Packard in developing competitive advantage Brand can be defined as identifiable product, service [..] augmented in such a way that the buyer or user perceives relevant, unique added values which match their needs (Chernatony and McDonald, 2005, p.25). Xie and Boggs (2006) believes that a brand is a result from product differentiation and strategy of market segmentation. Organizations are changing their communication strategy to keep the consumers attention on the corporation and not anymore on the products. Until 2002, HP had not developed a unified image as the company used to invest less than 10% of its advertisement budget on brand ads. HP has focus to being innovative and to diversify its products line, but lack in market research and in position itself to get a competitive advantage from the competitors. Having focus on the corporate branding means the organization behaviour will have more exposure and be more visible and transparent in its activities. When corporate branding works, it is because it expresses the values of desire that attract key stakeholders to the organisation and encourage them to feel a sense of belonging to it (Hatch and Schultz, 2001, p. 1046). So, in 2003, this company introduce Operation one Voice in order to have a consistent message and an identified image for the external and internal public. Chernatony and McDonald (2005) believe that a successful brand has as objective to build a positive relationship with costumer, where feelings of commitment and belonging are presented. For a long time, HP has negligence the importance of connect with consumer. Just in 2006, to differentiate from competitors, HP redefined the PC as personal and not anymore as commodity. From decades, HP has an advantage from competitor for investing in technologic research. However, in the beginning of 90s, the consumers had more options and the competitors such as a Dell revelled themselves with a strong presence in the market. A positive point is that HP has a monolithic identity structure to reinforce the corporate brand, where all the products carry the corporate name. That strategy is a fundamental tool to build a strong reputation. The advantage of using a corporate branding is to apply the vision and culture as part of sales promotion and also to add a unique organisational value. Cornelissen (2008) believes that structure core emphasises the alignment between vision, culture and image. Also, he suggests using the toolkit developed by Hatch and Schultz to analyse the alignment or gap between vision, culture and image, by questioning the interface between those tree elements. Hatch, M, and Schultz, M. (2001) Bringing the corporation into corporate branding, European Journal of Marketing, vol. 37, no. 7/8, pp. 1041-1064. HP vision aims to be leader in its segment, to invent technologies and services that add value to business and also to create social benefit to consumers lives. Its identity seeks to be an innovative company, which produces range of quality products. In this context, there is not an alignment between vision and culture, because HP had not differentiated its strategies from competitors, imitating Dell direct sale tactics. Also, it seems to have a gap between culture and image as consumer have not perceived HP as an organization worried about their needs, but more concerned about develop new technologies .However, vision and image seem to be alignment as the company has a clear idea who is its main stakeholders and it understands the importance to communicate with them on ongoing basis. HP also is involved in corporate social responsibility projects and those help to communicate and reinforce its vision to its stakeholders. For a long period, HP prioritized its objectives, instead of the customers needs. Its products were advertised separately and interestingly did not use a lower price tatic as competitive advantage. According to Sengupta (2007), the position of a brand is determinate by the target consumers. Position then represents the essence of the brand as perceived the target consumer in a multi brand market'(Sengupta, 2007, p. 17). So, HP strategically reinvented the computer, giving a personal touch. In this context, the organization added 9% value to brand in 2007. Sengupta (2007) adverts that the company need to know who they are first and then create awareness in order to position the brand. By interacting with costumers through blogs and website, HP is changing the way how the public perceived its brand. The importance of position correctly a brand can be recognized in Sengupta citation: Position creates uniqueness, credibility, sustainable and valued place in consumers mind for brand (Sengupta, 2007, p. 17). Chernatony and McDonald (2005) affirms that a successful brand is a result of how much value the customers add to a product or a service. HP repositioned the brand, by differentiating the concept of PC. Xie and Boggs (2006) affirm that products and services are quickly imitated and homogenized, maintaining credible product differentiation is increasingly difficult, requiring the positioning of the whole corporation rather than simply its products (Xie and Boggs, 2006, p.349). HP has been investing in technologic research since 1960. In the beginning, the company had focus in hospital equipments and it seems HP looked just to niches, instead of looking the entire market for a long term strategy. However, its brand has extending to computers, printers and digital cameras. Because HP was recognized as an innovative company, this image was transferred to the news products lines. Consumers recognize the name and make associations that enable them to lower the perceived risk and in doing so provide a platform to try a new product (Fill, 2009, p 508). HP expertises in computers were extended to printers and digital cameras. Chernatony and McDonald (2005) states that one factor of success on brand extension is to build and sustain a favourable reputation for a parent brand. Reputation also is an important aspect on consumers loyalty. After decades, HP understood the importance to look what the brand means to the customers. By knowing the core associations that co nsumers perceived the brand, it is more likely to be successful in an expansion. HP targeted young consumers as this public and the company share values such as interest for technologies and innovation. That helps to create a connection. In 2006, a blog, which was part of HP association with FIFA World Cup website, attracted more than 180 thousands visitors. 3. Major challenges ahead for Hewlett-Packard Recommendations HP had certainly done good job on the front of integrated marketing communication by launching the new campaigns and other supporting campaigns. But while doing that there were some areas which were not addressed HPs ability to recognise the need to change its marketing and communication strategy purposefully led to its growth by 2007. Smith R.D. (2002) described campaigns as systematic sets of public relations activities, each with a specific and finite purpose, sustained over a length of time and dealing with objectives associated with a particular issue. Management was able to change the structure, process and relationship within the company to establish lasting partnership with its customers. The advertisements were able to persuade customers in to buying by evoking an inherent desire to be part that a celebrity group. However, to be able to sustain this flow, Hp will have to develop long term strategic marketing communications plans through continual market research and development. Extensive use of celebrity endorsement by having a long term association with celebrities there is a risk that any indecent behaviour of celebrity may affect the companys image. Company was over focused on advertising and under used other elements of communication mix like personal selling, sales promotion, PR. As the company grows in size and market share with huge number of customers, company also needs to address the retaining of existing customers. As small and medium business sector is emerged very attractive segment company should try to acquire number of customers in this segment as in the last campaign some critics said that the campaign was more focused on consumer sector rather than SME and corporate. In the current era of globalisation the economies are interlinked and interdependent on each other. There are new challenges arsing from this kind of phenomenon. To overcome from this kind of situation Doole and Lowe (2001) describe the companies are adopting a long term strategies, where marketing programmes and process are standardised and at the same time it has been adapt to local needs. It is important to understand the differences and similarities between local markets. Due this globalisation where new markets are opening like India, China, Brazil the company must adopt the strategy according to the culture of these countries Fill (2009) states from marketing communication perspectives, the prevailing culture in a region must be respected, otherwise it is likely that a brand and or organization will be rejected (Fill, 2009, p. 842). Kotler (2002) Multi-brand strategy: Multi-brand strategy enables a company to lock up more distributor shelf space and to protect its major brand by setting up flanker brands RECOMMENDATIONS Use the multiband strategy in future to acquire the more shelf space and beat the competition. Use personal selling as tool to improve sales. Use combination of push and pull strategy. More emphasis on sales promotions in store Use of PR to retain existing customer and maintain good relationship with stakeholders. Become more interactive with consumers through new media (develop message board and forums) Focus on corporate advertising as well as consumer advertising Continuous development of innovative new products Integrate at Different Levels of management. Put integration on the agenda for various types of management meetings whether annual reviews or creative sessions. Horizontally ensure that all managers, not just marketing managers understand the importance of a consistent message whether on delivery trucks or product quality. Also ensure that Advertising, PR, Sales Promotions staff are integrating their messages. To do this you must have carefully planned internal communications, that is, good internal marketing. Think Customers First. Wrap communications around the customers buying process. Identify the stages they go through before, during and after a purchase. Select communication tools which are right for each stage. Develop a sequence of communications activities which help the customer to move easily through each stage. Build Relationships and Brand Values. All communications should help to develop stronger and stronger relationships with customers. Ask how each communication tool helps to do this. Remember: customer retention is as important as customer acquisition. Develop a Good Marketing Information System which defines who needs what information when. A customer database for example, can help the telesales, direct marketing and sales force. IMC can help to define, collect and share vital information.