Effective marketing as a condition for successful innovation management

An innovation is ultimately considered to be successful when it has been adopted by the consumers and the products are meeting the performance timelines set. Innovation is an important element in effective strategic management and its success must be emphasised for the overall competitiveness of the organisation. But innovations are often not successful with the majority of product launches resulting in catastrophic failures. A report by the research firm Nielsen, indicates that less than 1% of new products launched in the South-East Asian region are successful. This was in a study conducted in Indonesia, Philippines, Thailand, Malaysia, and Vietnam. Out of the 12,920 product launches surveyed, only 10 were considered to have met the threshold for successful innovations.

The main reason cited for the poor performance of the innovations was failure to effectively market these new products. Marketing is very crucial in strategic management as the organisation must not only communicate the value it offers to the market but also entice the consumers to come forth and purchase these products. Most companies are observed to spend substantially in coming up with hyped and expensive product launch events but failing to sustain these campaigns through consistent marketing after these launches. Innovation is not simply about coming up with great products: it is also about ensuring that the value of these products is articulated accurately in the market. The consumer will not know about a product unless they are consistently communicated to. Marketing requires consistency and it is the effectiveness of the marketing exercises that eventually determines the success of the innovations.

Some of the successful innovators such as Rexona Invisible Dry in Indonesia have been very good with long term engagement with customers. This demonstrates the fact that innovation is first and foremost about the consumer. Insufficient engagement with consumers means that such consumers are unaware of the innovations when they are launched and when they are introduced into the market. The most effective approach to customer engagement is where the customers are involved in providing suggestions on the most appropriate innovations to introduce. This can be important in strategic innovation management as the consumers get to express their desires as well as helping the organisation to understand how these preferences can be met effectively. In addition to this, customer engagement generates interest and an emotional attachment. The customers are of course interested in seeing whether the organisation has understood them correctly and accurately translated their thoughts and contributions into the resultant product.

Customer engagement and marketing effectiveness therefore play an important role in making innovations successful. The customers need to feel that they are part of the process. They also need to be communicated to effectively. They need to be made to understand what the newly launched product provides and why they should consume it. Marketing also helps to shape expectations where it informs the customers on what they should expect to get when they buy the products. This helps to manage expectations and increase the level of satisfaction. This is because customer satisfaction is a function of expectation. If the expectations are higher than the new products can meet, they become dissatisfied and stop purchasing the product. But when they are satisfied, they not only keep purchasing but also grant it the positive word-of-mouth needed to get others to purchase it. 

Strategic management opportunities in India’s social media landscape

India’s social media provides a number of strategic management opportunities for organisations in China and internationally. This is in line with the prediction that more than 200million women in India will be active social media users by 2020. This is a population that is greater than the whole population of the UK. A further prediction indicates that half of these 200million women will be shopping online. This portrays the social media as an important source of opportunities for brands in India and other international bodies wishing to sell their products within India. The advantage of the online platforms is that organisations can comfortably trade with consumers in different countries. In this case, the Indian market is just as accessible to the organisations outside India.

Another important insight that can be used to refine strategic management plans is the finding that the women are strongly inclined to be part of online communities. Online communities are groups of people who come together as unified by their mutual interests or common characteristics. They can range from a few hundreds to hundreds of thousands and the members of these groups often tend to influence each other. The online communities give members a sense of belonging. As social media users get used to using these platforms, they naturally seek to be part of bigger courses and groups. But what happens in these groups is what tends to be most significant. The dynamics of peer influence and group think exists in groups. In some cases, it is possible for consumption decisions to be influenced just because members want to express their belonging to such groups.

Instead of taking days and perhaps weeks to ask for friends who know about a brand, consumers can get answers in record time by simply enquiring on their profiles and the social media groups they belong to. Referral just got easier because of the social media. The interesting thing about referrals is that they are a very trusted source of product information. Persons who have no interest in exaggerating are seen as a safe bet when it comes to sharing product information. With other platforms for chatting like WhatsApp being more common, strategic managers have to be awake to the reality of online product information search and seek to use it to their benefit.

Online communities based on brands have also been found to be increasingly active and influential in influencing purchase decisions. Research studies have indicated that the customer value tends to be higher among online members of a brand community than those who are not members. This is because continuous interaction and a sense of attachment get the customers to purchase more from the brand. The tendency by consumers to have polygamous brand loyalty is such that they will always have a range of brands to choose from whenever they need to make a purchase. When they actively interact with a brand online, or where the online community they belong to strongly favours the brand, such a brand becomes their preferred choice whenever they need to make a purchase. Strategic management teams in organisations must therefore get familiar with the concept of online communities and position themselves to tap into its projected growing influence in India. 

Strategies for building credibility: the brand as a teacher

One of the ways through which brands can enhance their credibility is by attending to the information needs of their consumers. We are in the information era and consumers like to be provided with as much information as possible. This information must, however, be presented in a manner that enables quick understanding and spotting of the main highlights. As more information filters online, consumers have to process large volumes of knowledge within a short time. This has generated lower attention spans as well as a general sense of impatience as consumers want to grasp the whole essence of a message at a glance. Brands that are able to sift through the information and retrieve what is most credible and relevant to consumers tend to gain credibility. The impact of this can be explained as follows.

Firstly, the brand is able to demonstrate its understanding of the products and services it is dealing with. Consumers do not like to deal with amateurs. They want to be convinced that the persons they have given their trust to know what they are doing and are willing to share their knowledge. Having a wide knowledge about a field gives the consumer the confidence that the brand is well-suited to deal with any issues that could be arising in the course of their operations.

Secondly, it demonstrates trust in the ability of the consumer to understand and assimilate the knowledge being shared. The typical relationship between a teacher and a student is one of trust: the teacher trusts in the students’ ability to learn and assimilate the knowledge being shared. The student honours this trust by doing what is expected by the teacher.

Thirdly, information sharing creates an exciting platform for engagement between the brand and the consumers. The relationship could grow boring and eventually fizzle out in cases where the organisation and the consumer can only discuss the products being bought. At some point, such conversations become monotonous and consumers become more inclined to ignore. But when the subject of discussion is informational, engagement, questions, and presentation of competing viewpoints becomes possible. This helps to not only build credibility but also increase the bond as the understanding between the consumer and the brand is enhanced.

Some of the firms that have implemented this include United Healthcare and Cambria. The two organisations allied to create a programme dubbed ‘the big know’ where they have been creating online courses on topics related to their brands. This collaboration helps the brands educate consumers on insurance packages, risk management, and issues related to kitchen equipment and safety of use. With this approach, the consumers are supposed to gain the confidence that the brands have trust in them and wish to inform them as much as possible. Such brands become more credible. With credibility comes trust and with trust comes an emotional bond between the consumer and the brand. This in turn translates into increased value per customer and growth. 

Strategic productions management: is local sourcing a solution?

In its renewed investment strategy for India, Ferrero has opted to source for its raw materials locally to a tune of 90%. This has, however, come with the commitment that the company will work with local suppliers to enable them improve the quality of their supplies. It brings to the fore the trade-off between international and local sourcing and implications for strategic management. Local sourcing has a number of merits, main among them being that the products acquire the image of local products.

Research into consumer trends around the world indicate that demand for local products is on the rise. The only time the consumer will prefer a foreign product is when there are few local alternatives that measure up to the quality and consumption experience derived from it. The tendency of the consumer to see their own as being beautiful and equal to the international standards tends to be high. This is especially so among countries with a high level of national pride such as India and China. For organisations that opt to maintain their global brands, the alternative approach is to source for raw materials locally. They can then use this argument to appeal to the consumers and emphasise on their products being local.

The second merit of local sourcing is the benefit of gaining access to the existing business networks for these suppliers. In countries such as China where networking is an important element of business success, gaining access to such networks is essential. This strengthens the local positioning of these international brands; enabling them to negotiate and gain affordable access to the existing distribution networks among other advantages. The cost merits can also play an important role. Where an organisation is operating in a low-income country, the cost of raw materials is likely to be much lower. Its presence in the market enables such a company to bypass brokers and deal directly with the primary producers. This saves on the cost of supplies.

On the other hand, local sourcing makes it difficult for the organisations to obtain the best quality supplies. This can be a major challenge in strategic management; especially where product quality is considered to be one of the main strategic elements of the products. If product quality cannot be assured, the organisation becomes less competitive. As can be seen in the case of Ferrero, the decision to source for supplies locally was implemented together with a quality development programme aimed at enabling suppliers improve on the quality of the products. The cost of such a programme must be diagnosed to be less costly than the benefits derived from it. Strategic managers should be able to compare the benefits of local sourcing to the costs and determine whether or not to pursue this strategy.

In Ferrero’s case, the decision was to invest in improving the quality of the milk producers and source for 90% of its raw materials locally. On whether this strategy will work in favour of Ferrero in India, the performance of the company will tell. 

Advert metrics and the media pricing debate

In determining the marketing priorities of the organisations, strategic management teams are concerned with the prospect of realising returns on the investments. There is the general expectation that funds used in marketing will be brought back through increased sales and marketing. These returns are determined by a number of factors including the reach of the marketing messages and the extent to which such messages reach the right target audience. The media owners are aware of these considerations and have often exaggerated the reach and their ability to appeal to the target audience.

It is also not uncommon for per-click marketing platforms to engage in unethical conduct by getting web users to unnecessarily click on advertisements. This can be a challenge for the strategic managers as they’d be paying for services not consumed. The result is reduced returns on investment made in marketing. The other form of unethical conduct is the tendency of media platforms to exaggerate their reach. For instance, websites with thousands of subscribers will quote the large numbers while failing to provide information on the actual number of regular visitors that could be much lower. The advertisements are accordingly priced based on the unrealistically large number while the reality is certainly bound to be much lower.

Metrics for determining the probable returns on investment are therefore a challenge for strategic marketers. In fact, many have clear strategies for marketing medium management where they can determine which of the marketing approaches have worked best. The difficulty is relatively expected because a significant volume of consumers will not purchase from the organisation immediately after encountering advertising messages. They will instead often have such messages in their mind to activate them when the need for such products is encountered.

The other challenge is one experienced by television advertisers. During prime times, the media owners are pressed for time and tend to cut out some of the narratives for the adverts to display what they consider as the core of the message. These punchlines are impossible to understand unless they are being viewed by a consumer who has watched the whole clip before. Besides, the whole narrative tends to be developed strategically to not only attract the audience’s attention but to shape their understanding of the adverts. If these narratives are cut off, the essence of the whole advert is lost. This places advertisers due to a disadvantage.

The dynamics of media pricing and exaggeration of statistics on their impact leads to the need for an objective verifier. Such verifiers would play the role of checking into the claims made by media owners to ascertain that they are accurate. The verifiers would also look into online platforms to ensure that advertisers are not unfairly charged through false clicks on the adverts displayed. Such verifiers help to standardise the landscape and facilitate more effective planning among strategic management teams. Such teams would be able to allocate their marketing budgets with a fairer level of certainty on the returns that can be expected. 

Incorporating culture in strategic management: lessons from Mattel

Mattel is the company that is renowned for its Barbie image. These are dolls reflecting on ladies who are slim and red haired. It has become the enduring and singular image of the brand until recently. And the market seemed to be experiencing brand fatigue; a factor that is believed to have led to a 10-quarter decline in the sales of the company. This image was so strongly associated with the company that it was considered sacred. Mattel can provide examples of effective strategic brand management; especially when it comes to recognising change and accommodating it.

The main thing to appreciate in change management is that it comes with certain levels of uncertainty. Strategic managers ought to be able to foresee these uncertainties and take contingency measures. More importantly, brand managers ought to be bold enough to take risks from time to time. This was the gamble taken by Mattel. Barbie was doll reflecting of a slim, tall, white, red-haired lady. It had been this way for decades and the consumers had literally associated this sole image with the brand. But in seeking to change this image, Mattel opted to accommodate the reality of the socio-cultural diversity in different sections of the world.

Manifestations of beauty differ in different sections of the society and the white slim red haired figure is largely seen as one accommodating one particular cultural reality. As awareness on cultural diversity increases, sections of the society begin seeking affiliation with what they can identify with. This is what was done in the case of Barbie. The doll was redone to accommodate different body shapes, heights, skin colours, hair colours, and eye colours. This was viewed as being more reflective of a real multicultural setting. In other words, Mattel opted to exploit its understanding of culture to become one with the society.

The effect of this strategic change was as immediate as any strategic management team would hope for. Mattel was able to end its 10-quarter decline and begun to record an increase in sales. In 2016, the company recorded year-on-year sales increase of 23% and 16% for the 2^nd and 3^rd quarters respectively. This was an example of a great risk that ended up coming with great rewards. The company recognised a growing appreciation of cultural diversity and sought to attract consumers by accommodating these consumers.

In contrast, Kodak appeared to have undergone what most would describe as perception inertia. They failed to understand the need to completely embrace the digital wave and maintain their lead in the film industry. As opposed to Mattel which declared that there would be ‘nothing sacred’, the film remained sacred to Kodak. The cultural inertia within the organisation became so serious that the top management was unable to get the rest of the organisation to embrace the technology and facilitate its adoption.

But as for Mattel, the challenge can be said to be much greater because it had specifically been associated with the Barbie image. This association was so strong that Mattel was essentially Barbie. Changing this Barbie image translated into the company letting go of everything it has been known to be and instead focus on building a new image. With great risks often comes great rewards as can be learnt from Mattel. 

Influencers and effective social media marketing

Brands that try to forcefully display their logos online often fail to realise the desired results. Brands need to avoid impersonal brand messages and also avoid turning the online influencers into copycats that exclusively share the marketing messages as received. This is not strategic because the social media is a high context environment in which users evaluate not only the message but also the manner in which it has been projected. This technically means that the organisation will not be best placed to understand how to tailor branding messages to suit the brand.

Use of influencers in strategic management works best when they are allowed to assimilate the branding message then translate it into information that their followers would readily accept. Besides, the followers of such influencers are not keen on getting what the brands have to say. Instead, they want to get the influencer’s opinion of the brand and the products it represents. This means that use of influencers is intricate and needs to be carefully considered. One of the factors that ought to be considered is the past preference of such an influencer.

An influencer that has in the past been a champion of a rival brand is unlikely to be effective when marketing. The followers will have associated them with the brand and to some extent attributed its brand personality to their character and personality. If such an influencer turns around to market a different brand, they come out as inconsistent and the commercial intent in their endorsement is exposed more strongly. This robs them of the credibility threshold that is expected to apply to them. Influencers wield their influence from the presumption that they give an honest opinion about products and brands and that they have not been unduly influenced to exaggerate in favour of the paymaster. If an influencer endorses rival brands, it becomes obvious that they have been influenced and this reduced their influence on their followers.

The online user is a peculiar consumer in that they make an effort to distinguish between staged and real situations. If there is any reason to suspect that a message or a scenario has been staged, such messages are shunned. The influencer strategy must therefore be designed carefully to ensure that consumers can believe them and not read through the mutual commercial interests of the brand and the influencers.

More importantly, the influencer ought to be authentic. The authenticity should apply to both their general online activities and the positions taken on various issues. This endears them to a certain niche or group of persons with similar likes, preferences, and conduct. The authenticity makes it possible for the organisation to identify influencers based on the type of consumers they have for followers. Observations are that influencers with a small following but that has maintained a high level of authenticity tend to be more credible and influential. The social media marketer must therefore understand the psychology and history of these influencers and also understand how the influencers are likely to get to the. 

Online as a new market entry platform: The daigou phenomenon

Daigou is an emerging Chinese consumer trend that is literally translated as ‘buying on behalf of’. It works by consumer asking others to buy for them overseas what they cannot access locally. A consumer finds friends and relatives overseas and requests them to attend to their shopping list. They would normally pay a deposit before the actual shopping and the final payment made after shopping has been done and the products are ready for shipping. Daigou can be adopted as a good market entry strategy by brands. In fact, Australian brands are known to exploit daigou as a means of entry into China.

Under normal circumstances, the diaigou arrangement is private and among friends and relatives already known to each other. But as the trend develops, there is a growing presence of private resellers who purchase products needed in China and resells them online to the end consumers. For the foreign brands, this is a cost-effective way of expanding into a new market. These private resellers would be marketing the brands to their respective niches. The consumers could then get accustomed to these brands and seek to contact them directly. This is an opportunity for cost-effective market entry of foreign brands into the Chinese market.

An example of a product exploited by daigous is Weet-Bix. While it retails in Australia for only A$5; the daigous were asking for up to A$50. The disparity in prices is such that the end consumer is likely to seek making direct contact with the manufacturer instead of depending on these resellers. This means that as these private sellers get consumers accustomed to the brands, the foreign companies have the opportunity of identifying a niche and attracting it by offering much lower prices for products they have already become accustomed to consuming. But this approach could also be counter-productive.

The consumer landscape in China is such that trust plays an important role in determining what consumers buy. This is one of the lessons that have resulted in many strategic management failures. The daigous are persons who are trusted by their circles of customers. This trust is so strong that it is possible for them to advise that certain brands be purchased and others be avoided. Since consumers listen to them, it means that seeking to edge them out by trying to reach the market directly could be counter-productive. This leads to the recommendation that a collaborative approach be adopted where brands seek to work closely with these daigous.

But the diagou trend is not without challenges. It is a newly developing area that is yet to be properly regulated or streamlined. This makes it prone to rogue traders and con artists. There may therefore be need to review the structure of this daigou communities to safeguard the end consumer. Online intermediaries such as Alibaba could play an important role in streamlining where the private sellers could be listed on the platforms as sellers. With safe payment provisions available in such online platforms, the dangers of an unregulated daigou community can be minimised. 

Amazon’s music streaming offer to catch the untapped market segments

Before Amazon’s entry into the music-streaming service in the US, the consumers had only two options: to use the free music streaming platforms such as YouTube, or to pay $10 per month. This left a large untapped market of persons who’d want to pay for improved streaming services but be able to pay lower for it. Amazon comes in with an offer for the US consumers where they can get improved music streaming services at only $3.99 per month with premium customers paying $7.99 per month. To understand the possible impact of this strategy, the psychology of price in strategic management needs to be explored.

Under normal circumstances, customers attach value to price where expensive products are often viewed as being of a higher quality while the lower prices are believed to signify low quality. This is what often leads customers to be willing to pay a price even where the same service can be accessed for free. With live streaming services like YouTube being free, one would understand why companies charging $10 per month can attract the high demand levels that they do. The answer is in the perception of value. Those who want the best are often willing to pay a much higher price than the rest of the consumers. But while this may be the general psychology, there is also the question of perceived value and the appropriate price for the services or products.

There has been a general shift in culture with consumers apparently attaching less value to creative content such as music. A significant proportion of the population desires to consume music for free and this explains why free streaming services have become so popular. But as the free streaming platforms become clogged with content, they begin to desire more specialised streaming services that help to customise content and provide them with what they are inclined to like. For this, they want to pay a price; but not a very high price. This is why Amazon’s pricing of $3.99 is likely to be successful. But for this success to be realised, Amazon needs to demonstrate value that justifies the price as opposed to consumers going for the free streaming services.

In strategic management, the organisation identifies its capabilities and competitive strengths. These are exploited for purposes of getting the organisation to beat competitors and succeed in the market. Recent studies have shown that Amazon has overtaken search engines in terms of queries for product information. This success has been attributed to its success in using algorithms where previous search results are used to display results that the consumer is likely to be interested in. This makes search queries highly relevant to every consumer.

This competence can be used by Amazon to improve on the music streaming and making more relevant to individual consumers than is currently used by consumers. For example, YouTube uses general usage data to provide consumers with music options. This is based on what most consumers of the music played tend to watch next. The personalisation is often limited. But Amazon is set to refine this and improve on the level of customisation. With enhanced consumer experience per customer, Amazon hopes to attract and retain most users of live-streamed music in the US and beyond.  

Can smartphone spyware enhance business value?

French retailers have reportedly embraced the use of data gathering technology that seeks to connect the displays of smartphone content and the movement of the consumers. The applications are expected to gather data from consumers in much the same way that the cookies do for websites. This is where the activities of the smartphone user are recorded and used to improve on real time advertising in future. From the strategic management perspective, being informed about the customer is extremely important for effective targeting and improvement of the sales levels for the organisations. But this could come with privacy concerns as most consumers will not have consented to having every movement they make monitored and recorded by the brands.

One of the applications that could be used in this monitoring strategy is the use of motion-activated screens. Assuming that the typical consumer will carry their smartphones in their hands, the cameras on the devices can be used to observe the products picked from the shelves. Alternatively, the smartphones can be synched with the shelf arrangement in retail outlets to identify the counters in which consumers spend the most time. This information can be used to market to consumers in real time with messages being fine-tuned to correspond with the perceived tastes and preferences.

One of the techno-savvy companies that facilitate this is Retency. The start-up provides retailers with antennas that can identify the frequencies of smartphones used by customers visiting the retail outlets. The frequencies help to understand their preferences by identifying the shelves where they have spent most time. They use this information for enhanced direct marketing message design. The software is strategic and can be very helpful in increasing value for money spent in advertising.

Another application of the monitoring technologies is the synching of adverts with the purchasing decisions made by consumers. Software that functions like cookies monitor and collect data to determine how long it takes between the time a consumer views an advertisement on their smartphone to the time they make an actual purchase. This is especially most accurate for online purchases because it is easier to monitor activities undertaken via the smartphones. In implementing this monitoring approach, the strategic managers would be relying on the trend of online shopping among smartphone owners. The data can then be used to determine the effect of different advertising message as well as the characteristics of the swiftest responders for purposes of more effective target marketing.

But as strategic managers seek to exploit this important information, they have to deal with concerns over the privacy issues of those being monitored. Even where monitoring is being done by security agencies for purposes of enhanced security, people are still reluctant to give up on their right to privacy. It is expected that they will be less comfortable with brands doing the same as such monitoring will neither be a necessity nor a legally accepted approach. The growth of this monitoring technology is therefore expected to lead to demand for anti-spyware software which isolates and blocks any cookies designed to gather information from software and transmit it to other quarters.  

Insights for strategic management: Women driving luxury market in India

According to data gathered by ASSOCHAM, there is about 1,200 ultra-affluent women in India with a net worth of $100billion. These women have immense purchasing power and they are a reflection of the growing influence of female consumers in the Indian market. The overall worth of India’s luxury market is $9billion. This is an important development for strategic managers of luxury brands as they’d need to focus more on female consumers in their new marketing campaigns. This would be a shift from the traditional trend in which the majority of communications for luxury brands targeted male consumers.

The women in India are enjoying rising income levels and their role in the decision making processes in families is changing. Traditionally, the womenfolk would constitute the bulk of influencers in family purchase decision making. But this has changed as women become the main decision makers. This change has been driven decisively by two main factors: education/enlightenment and increased inclusiveness in economic opportunities. India as a society has been part of the global movement towards ensuring that there is gender equity in employment and provision of economic opportunities.

One of the areas in which the growing influence of women is experienced is the e-commerce market. Women spend more time online in contemporary India and tend to shop extensively in search of the best deals in the market. For the affluent women, the cost or price is not a major issue and all they need to do is be convinced that they have found the best product they could find. The top five categories of products browsed by female luxury consumers in India include apparel, jewellery, watches, personal care products and electronics. Understanding these online shopping trends ought to inform strategic managers on how to target the web users with content that is likely to interest them.

The changing trend in the market has also led to luxury brands dedicating women’s stores for purposes of building lasting relationships with them. Having women’s stores is a strategy that ensures that a gendered approach is taken to stocking and marketing the products. The branding messages can be shaped to bring out issues and emotions that are important to these women; hence help in building trust and boosting customer loyalty. The gendered approach also helps to ensure that all innovations are relevant and likely to impress the targeted customers.

The trend of women in India becoming more potent customers is largely replicated in other emerging markets. China is one of these markets with the one-child policy being seen to be the main contributor of the trend. Families with only one child would do their best to empower them to secure the best education and run businesses irrespective of their gender. This has been responsible for women in China becoming stronger economically. Other factors such as international gender equity campaigns are known to have taken root globally. This means that the improved performance of women in the economic landscape is a trend that goes beyond India. 

The traditional investment approach to sports sponsorship

The oldest and perhaps most effective approach to investment has been investing in poorly priced assets that are likely to accelerate in value in future. At the point of investment, such assets would be seen as less valuable hence can be acquired at a much lower price. A strategic investor will often try to be the one to sponsor the one asset he/she knows will be highly valuable in future but is currently not being fought over as its value is not apparent to all. Such an asset is then acquired at a very low price and improvements made to it to realise the higher value that the investor envisioned at the point of acquisition. If this principle is applied to investment in club sponsorship, it can be extremely valuable to the organisation.

The value of club sponsorship is determined using a number of criteria. Key among them is the performance of the clubs. The better performers are guaranteed to give their sponsors more coverage in the leagues or tournaments. They therefore give better coverage and publicity for the brand. This is why better performers have their sponsorship deals priced higher than the poor performers. The current deal for sponsorship at FC Barcelona is £120millon per season while that for Chelsea is £60million per year. This disparity can be justified partly by the performance of the clubs. Performance is the easiest metric to measure because the statistics are clear and do not require much research to determine. However, in the interest of prospecting, the sponsor must analyse the trends to understand the likely future performance of the club.

The most profitable deal would be where a sponsor invests in a small non-performing club which then springs suddenly to be at the top of the league for the duration of the sponsorship. Even though such instances have been less common, they cannot be ruled out. This brings in the aspect of understanding of the league and the sport in general. Strategic managers must seek to ensure that they have all the relevant information they need to make a stable decision in this regard. If, for instance, a poorly performing club is noted to have all the fundamental characteristics of a strong team and that they are only derailed by lack of finances, then sponsoring such a team could be profitable. The finances provided would lead to them improving significantly hence realise the value needed by the sponsor.

But even though this is potentially the most profitable strategy, the risks are equally high. The probability that a team at the bottom of the pool would rise to the top is very low. This is because the league leaders tend to be dynamic, highly skilled, disciplined, and well-financed. But where determined to be possible, this would often turn out to be the golden goose that laid the golden eggs. This thinking might just have informed the Nike £900 deal with Chelsea. They may be foreseeing a much stronger Chelsea in the 15yr sponsorship duration and expect to reap more benefits than currently foreseeable. After all, Chelsea appears to possess all the qualities of a potentially great team. 

Strategies sponsors use to get the best of sports sponsorship

In strategic management, investment decisions must consider the trade-off between the cost and benefit. An investment is valuable when its benefits outweigh the cost while it is a liability when it costs more than it benefits. This is why organisations must carefully weigh the value of their sports sponsorship events before making the commitment. In expensive leagues such as the English Premier League, the sponsorship amounts are often huge. An example is the recently signed £900million deal between Nike and Chelsea. Nike is expected to have gone through the motions of the decision making process and determined that sponsoring Chelsea in this £900million deal was the best way to maximise benefits over the period of the sponsorship.

The main considerations made by brands before undertaking sponsorship are: evaluating the performance of the organisation, the size of the fan base, and the passion and commitment of these fans. The size and passion of the fan base is a direct determinant of the level of sales that are likely to be realised when their fans buy the club clothing supplied by the sponsor. This is in reference to a kit sponsorship deal where the sponsor commits to provide the team with kits and also supply clothing to be sold to fans. But the benefit of making revenues from the clothing sold to fans is much lower when compared to the value of publicity and media coverage.

Sports are popular events and it is quite common to have them being watched by millions of audiences and fans around the world. This is especially true in the English Premier League which is among the most popular Leagues in the world. The logos of these brands are displayed on the kits of these players. This means that throughout the duration of the specific game, the audience watching from across the world will be having their attention diverted to the brand regularly. This is very effective considering that the games often take long: over 90mins for football games. The publicity given to these brands help to keep them in the minds of the consumers at all times. This makes it easy for them to remember these brands whenever they are shopping for products that are sold by them.

Research indicates that an average consumer is twice more likely to pick a product sold by a brand they can recognise than one they cannot recognise. In other words, when a consumer is faced with the choice of two brands, they will almost certainly go for the one they recognise. Brand recognition is therefore very valuable. In such cases, the real competition would be between brands that are recognised while the little known brands are badly disadvantaged. Sports sponsorship can therefore be diagnosed as being very important to the organisation and a prudent strategy for strategic managers. It increases brand recognition and this in turn increases the level of sales that the organisation can raise at a given time. 

Sports and strategic branding: The largest deal in Chelsea’s history

Nike and Chelsea have entered into a sponsorship contract that is estimated at a value of £60m every year for the next 15years. The £900m is expected to be operational from the beginning of the 2017-18 season. In this kit sponsorship deal, Nike is expected to supply strips for Chelsea’s first team, women’s team and its academy. This is in addition to the clothing to be sold to the fans of the club around the world. The deal was confirmed shortly after the termination of its deal with Adidas which attracted a penalty of £40million. The club is stated to have been comfortable with the penalty stating that it would be absorbed in the £60million deal for the season with Nike.

Even though the £900million deal is the largest in Chelsea’s history, it is much lower than the current deal between FC Barcelona and Nike which is valued at £120million per season. Other notable deals include a £750million 10year deal between Manchester United and Adidas and £106million a season deal between Real Madrid and Adidas. The large amounts of investment spent in these deals prompts a review of these deals and the rationale for sports sponsorship.

The strategy of sports sponsorship is one that can be theorised as facilitating trust building. This is achieved through association. Sports clubs tend to have millions of fans and admirers around the world; especially in the English and Spanish leagues that have been marketed globally. By taking up sponsorship with these clubs, the investing groups aim at endearing themselves to these fans. They would be having a mutual interest in that they both want the best for their teams. This mutuality breeds trust and a sense of attachment. Even though consumers are largely aware that the sponsorship is mainly entered into to advance the commercial interests of the sponsor, they still get attached to these brands subconsciously. This makes it pragmatic for strategic managers to consider this strategy.

Value for the club sponsors can also be realised through the direct proceedings of the clothing sold to fans. Millions of club’s clothing are bought around the world as fans seek to wear them as a way of expressing solidarity with the brand. These proceeds are collected by the organisation. The deals work by the sponsor committing to provide cash or spend a certain amount of money per season on the club. After these expenses have been incurred, it is upon the organisation to exploit the opportunity to find ways of realising value for the investment. Selling club clothing to fans can be one of these approaches. But more significantly, club sponsorship provides immense opportunities for low cost advertising.

During major events where millions of people are watching from across the world, club sponsors get a lot of coverage for the duration of the events. Any strategic manager would want to secure such an opportunity; provided they are able to afford it and also able to realise value on their investments. This is the reason the value of the deals go higher when a club is more successful. It probably explains why Chelsea’s deal is only £60million while Barcelona’s is £120million a season. FC Barcelona is a prominent club in the Spanish league and has been very prominent in the Europa League. Sponsors of a prominent club get additional coverage because they stay longer in the league. Each time they are playing, the logo or brand name of the sponsor displayed on the kits is openly viewed by millions of audiences around the world. This is the real value of sports sponsorship. 

Moves by Colgate to refine its targeting strategy

Colgate has for long designed its marketing messages to be relevant to the mass market. It has basically targeted ‘everyone with teeth’ in the past. This has been a strategy that has left it vulnerable to competition hence provoking reflections on effective strategic brand management and considerations of the brand image that ought to be brought out to inspire customer loyalty. Organisations that focus strictly on utility run a high risk of losing market share to competitors that are able to meet the needs satisfied just as effectively. This was the challenge that organisations faced in the commoditisation era; leading to branding being developed as a means of differentiation. But the differentiation strategies employed have not necessarily yielded fruit for brands such as Colgate. This has been with reference to its wide focus that has compelled it to use general messages that are applicable to a wide audience.

While targeting for Colgate will essentially be ‘people with teeth’, the company has launched plans to refine its marketing approach. In this new approach, Colgate intends to use data analytics to segment its customers into clusters of people with distinct characteristics. This is in line with the current trend in strategic marketing in which customer characteristics have become the main basis for designing marketing messages. Colgate intends to modify its marketing communication strategy and move away from uniform advertisement into a variable approach where different clusters receive different messages.

The strategic importance of this niche marketing approach is that different groups can be appealed to using messages that are most relevant to them. Products will under normal circumstances be complex and multi-purpose in terms of the number of needs they meet. This is especially with reference to emotional and cognitive needs. For instance, for a young lady of dating age, Colgate would help make them look appealing to the opposite sex. For a young professional, Colgate would be enabling them to look presentable for professional purposes. And for the older customers, Colgate would be strengthening their teeth hence reducing their tendency to decay or break. With these distinct differences, it is unfeasible to appeal to different customers at a time. It increases the risk that the segment not covered at a time would be swayed by a competitor who sends the right message. This is the motivation for Colgate turning to data analytics for effective marketing message design.

To implement this effectively, Colgate has embarked on the development of a data management platform. This platform enables the organisation to interact with customers and draw information about their characteristics and lifestyles. The information is fed into a database and warehoused for analysis at a later time. Customer engagement centres are also to be introduced in different locations in the markets served by the organisation. The customer engagement is expected to get customers sharing with company employees about their perceptions of the product and other relevant pieces of information. This approach is of strategic importance to Colgate because it not only helps in collection of data but also helps to build a strong bond between the brand and the customers. 

Recognising the power of the social media: reflection on McDonald

McDonald’s is one of the laggards among the large companies in recognising and exploiting the social media. The fast food brand is a household name and is commonly mentioned in the social media as users discuss their experiences with the brand. But it was for a long time unable to make good use of these discussions since it had no way of monitoring what was being said about it. But McDonald’s made a change to this in 2014 when it embraced technology and sought to exploit the social media to its advantage. But despite its lateness in coming into the social media field, McDonald’s has demonstrated excellence in strategic agility and management in terms of responding to needs of the consumers that have been expressed via the social media.

The approach taken by McDonald’s was based on the perspective of capacity building. This is very important in strategic management where the organisation must determine what it needs to do and determine whether it has the capabilities needed to do it. The company needed to be able to monitor consumer sentiments over the social media and determined that it needed to have a strong analytical capacity. In line with this, it opted to recruit over 200 specialists that are already versed with the social media and online communications.

One of the main results of this adjustment was determination of concern by social media users that breakfast at McDonald’s was not being served long enough. The complaint was that breakfast could only be served until 10.30am. Through the analytics, McDonald’s determined that the concern was widespread and opted to introduce an all-day breakfast package. The change was hailed as positive and responsive to the needs of the consumers; hence strengthening the relationship between the brand and its customers.

The other result of the analytics was the finding that response was often low and sometimes negative whenever the organisation made advertisements using photos that have been edited for publishing. This finding was in line with the fact that millennials are highly resistant to manipulations. They prefer real images and content and are ready to tolerate mistakes and imperfections just as they are in the real world. They do not find it amusing when brands try to brainwash them with images of perfection when such perfection is yet to be actually achieved. In fact this is one of the loopholes in strategic marketing where the traditional approach to marketing continues to be dominant with marketers trying hard to paint a picture of perfection as envisioned. Millennials want to see the mistakes committed as they would in the real world. This is what McDonald’s was able to do. They focused on real-life moments in their restaurants; capturing all the good and the non-so-good moments. The result was positive. Brand engagement over the social media increased tremendously and the brand was able to bounce back using the social media.

McDonald’s social media monitoring team is based on three digital media hubs. These are based in London, Oak Brook, and Illinois. 

Alibaba’s plan to become a global brand

Alibaba has scored tremendous success in China by demonstrating an excellent ability to exercise strategic agility. By being able to understand the local market better than competitors such as EBay, Alibaba has been able to effectively capture the market. Statistics indicate that 430million customers buy through this online bazaar. That is an estimated one third of all Chinese buying through Alibaba every year. It is a phenomenal success for an organisation operating in an emerging economy. In fact, it is important to evaluate the e-commerce market and what Alibaba could have gotten right to get Chinese consumers trading through it. It's presence has revolutionied e-commerce in China.

The main hurdle in online commerce is trust. Trust is a major issue because the seller is not on site for the consumer to communicate with and evaluate. There is also no opportunity for the physical evaluation of the products before the goods are purchased. This leaves the consumer with only one option: to trust the seller. But this option is not very easy to accept because it gives unscrupulous traders the opportunity to exploit innocent buyers. Trust issues also exist in reference to the sellers who are often defrauded by unscrupulous buyers. This means that mistrust affects both ends of the transaction. The difficulty in establishing trust online therefore suppresses online commerce. Trust is stimulated by the presence of online intermediaries and they play a strategic role in bringing the two groups together.

Intermediaries are institutions or players that can inspire trust from both ends of the transaction. They have networks and resources that enable them to investigate and verify that a buyer or seller is being genuine. They therefore help to establish some level of augmented trust where the transacting parties trust each other by mutually relying on the intermediary. Alibaba inspires the confidence of the consumers by making basic background checks on the sellers listed on their platform. In addition to this, they run active and efficient dispute resolution systems that provide for penalisation of unscrupulous traders by de-listing them or even instituting legal proceedings against them. This raises the minimum threshold needed for consumers to have confidence and trade online.

The other way in which Alibaba has managed to facilitate building of trust is by enabling the buyers and sellers to rate each other. Where a buyer has a poor rating, it means that they are fussy and potentially a risk to the sellers. This informs the decision of the sellers to transact with them. The same applies to the feature of buyers rating a seller where the highest rated sellers are presumed to be most trustworthy. In addition to this, the organisation plays a critical role in facilitating safe transactions through a payment system in which money is deposited with them but released to the seller only after the buyer has confirmed receiving the products. Such a system helps in building trust. Buyers can be confident that their money will not be lost while sellers are guaranteed that the buyers are genuine and willing to pay for the products. It is these features that have enabled Alibaba to grow the ecommerce landscape in China.

With its plans to expand globally, Alibaba hopes to enlist more than 2million businesses across the world. The trust building approach is expected to contribute significantly to driving growth in e-commerce; especially in the developing world where the concept is yet to be deeply rooted.  

Realities of the political environment in strategic management: Brexit and the ad industry

It is expected that the TV ad revenues in the UK will decline by 8% in October. This follows a 5% fall in TV ad revenues in September. It is also predicted that this decline will continue in November with the decline being at 7%. The comparisons have, however, been tainted by the Rugby World Cup which ended in October 2015. This means that as the comparisons show a decline in the 2016 figures, analyst must acknowledge that the TV ad revenues of 2015 are likely to be higher than usual due to the effect of the London Rugby World Cup. November has arguably been said to be the clean month in which the base year was not under the influence of the Rugby World Cup. But this view may not be accurate since the effect of the world cup would normally be evident in the hosting country one man after the conclusion of the tournament.

But concerns about the Brexit having caused the decline in ad revenues in TV are justified such comparisons have been made between the UK and other European markets. Other markets are noted to be performing better than the UK. This has led to fears that the Brexit will continue to hurt the local market before the UK adjusts and adopts sound economic policies that will reverse this pessimism. In fact, the Guardian estimates that as a result of the Brexit, the TV ad market could shrink by about 2% in 2016 alone. This is a significant percentage and ought to be a cause of concern for the industry practitioners.

As the UK grapples with the effect of the Brexit, an issue that needs to be highlighted is the influence of the political environment on strategic management in business organisations. In this case, the industry players in the TV ad industry are the organisations of concern. As a result of the Brexit vote, the UK currency is reported to have plummeted. This forced organisations to cut their advertisement budgets as they had to consider the impact of their dwindling profits. Non-essential items in their budgets were seemingly cut off.

By the trend in the TV ad revenues, it is clear that organisations consider marketing as one of the less important elements of strategic management. Strategic marketers would argue that this is a strategic blunder for the organisations in question. But the alternative explanation could be that in order to cope with dwindling balance sheets, the organisations have opted to rely on less expensive forms of marketing. The online marketing explosion could be one of these beneficiaries. But on the whole, the overall marketing budgets have reduced. The drop in revenues in TV ad revenues are not reflected in the increase of revenues in online ad revenues. This justifies the assumption that organisations consider marketing budgets as less essential expenses.

More importantly, the effect of Brexit demonstrates the effect of political factors on the market and business enterprises. Brexit is expected to continue causing uncertainty in the market. But as has been observed in many previous studies, it is the organisations that manage to sustain aggressive marketing that end up being more successful after the uncertainty has been reduced. A study should be done to compare marketing budget trends on the organisations that will emerge as the big winners after the Brexit uncertainties are done away with. 

Effective research for effective strategic management: insights from Unilever

Strategic management is not purely about deciding how a business will run: it is also about ensuring that the organisation has the right information to guide its decisions. Unilever’s latest model of market research is one that is designed to improve on the thrill and enjoyment of face-to-face interactions. The company dispatched its research teams using trucks that were designed as moving stores. The consumers would be encouraged to purchase the products through promotions and discounts. The customers who make the purchases are then invited for peer-to-peer discussions.

This approach to research is noted to have been motivated by the need to create what Unilever termed as the creative gravity. This approach was viewed as being necessary for purposes of attracting people to come and participate in the research process. According to senior managers at Unilever, this approach to research was strategic because it was able to attract communities of people who had something interesting to say. This was seen as useful as the research teams would obtain quality responses. This is as opposed to the usual approach to research where the researcher involve persons who are uninterested and are likely to be more concerned with getting over the research process than in actual provision of quality information.

But with the Unilever approach, the communities of persons involved would come ready to share insights they have wanted to share with the brand for a long time. This means that the insights would be beneficiaries of long periods of thought and synthesis. The engagements were therefore expected to be meaningful and very informing for the research teams. Any strategic manager would be interested in basing their decisions on information that is factual and comprehensive. These face to face research processes would help with ensuring that this is achieved.

But the dilemma in this approach would be apparent bribery of research participants. Unilever is reported to have free food trucks in exchange for exchange for participation in the research process. The persons who went for the sessions but did not want to participate in the research would pay for the food while those participating would get free food. This goes against the principles of objective research that bar researchers from coercing or enticing people to take part in a research study. The reason why participants are not to be enticed is because the researchers need to be more certain that the information being collected is objective. ‘

Where the participants feel like they owe the researcher some debt of gratitude, they are likely to lose objectivity and give information that they think the researcher wants to hear. Such a pool of participants may not be very helpful in providing reliable information that can guide effective strategic management. But this weakness could be overcome by thoroughly briefing the participants on the need to provide objective evaluations without considering what they might think the researchers would like to hear.

The Unilever approach may need to be contrasted with emerging forms of research such as data analytics to determine the relevant value of each method. But what is clear is that this approach is more engaging and likely to be more enjoyable to both the researchers and the participants. 

Crucial steps for brand positioning

Brand positioning is a creative process that must be distinguished from the more analytical process of crafting a brand strategy. The process of effectively creating a branding positioning comes with a mixture of experience and analytical skills that strategic managers must possess from time to time. The two processes (positioning and strategy) could also be complementary with the requirement of strategic alignment and synergy being pivotal to the success of the organisation.

As the name suggests, brand positioning entails taking the position as a brand. This is where the strategists in the organisation decide on the brand identity or how they would like to be seen by the external stakeholders as well as customers. The decision on what positioning to adopt needs to be a result of thorough research after all alternatives have been explored and the best/most practical positioning selected. Creative strategic managers do not allow others to tell them what their brand positions should be. They stay ahead of the process and objectively and firmly decide on what their positioning ought to be.

The difficulty with this is that in the era of the social media, the consumers want to tell the brands what they are instead of brands being the ones to communicate this. If the brand remains completely flexible and ready to adopt what the social media users are saying about it, it often ends up in failure as conflicting views generate confusion. On the other hand, ignoring the social media sentiments makes out the brand as arrogant, rigid and repulsive. This means that modern day brands must seek to engage with the social media where they can flexibly draw their opinions while directing conversations towards their predetermined brand positioning. This requires a practical, flexible, and highly creative approach.

Successful brand positioning must also be anchored in the real world. It ought to be practical in terms of its targeted aims. These must have a commercial aim to distinguish them from other social causes and non-profit organisations. The positioning should also be such that the consumers can identify with the organisation with ease. The brand should be unreal and too abstract. It should take cognisance of the usual realities that every consumer can acknowledge and probably want to be part of.

Another important element of good brand positioning is its ability to appeal to different categories of customers. This is what distinguishes brand strategy from brand positioning. The brand strategy focuses on execution of campaigns in which the organisation seeks to endear itself to a certain group of consumers. This means that the branding should be designed to be as specific as possible. On the other hand, the brand positioning needs to be one that can be adopted by different categories of customers. This would ensure that the brand positioning would not need to be changed each time an organisation intends to pursue market penetration strategies and go after an unusual group of consumers.

This means that while it is necessary for there to be alignment between the brand strategy and the brand positioning, the positioning must be done in a manner to accommodate a wide range of brand strategies as would be warranted in future. 

Chiat awards: Recognising excellence in strategic thinking

Where excellence in strategic thinking is feted. The big winners at the Chiat awards 2016 were Pedigree, Kraft Mac & Cheese and Comcast's Xfinity. They were recognised for demonstrating excellence in strategic thinking in a number of dimensions. Kraft Mac was recognised for running an innovative marketing campaign in which it was making the customers aware of its decision to remove all the artificial flavours from their products. This had been a follow-up on an earlier decision to inform customers by simply listing ingredients on the packaging of these products. The campaign was considered strategic due to its potential to offset potential controversies and also in the manner in which it was executed. It was very effective in increasing sales and interaction with customers.

Pedigree was recognised for its fact based approach in strategic marketing. It sought to exploit scientific research to demonstrate that dogs make a positive difference in people’s lives. To demonstrate this, the company focused on some of the traits of dogs including their genuine child-like happiness which dogs tend to embrace. Such behaviours bring humour and the happiness is contagious hence very good in relieving tension. By demonstrating that dogs are good for people, and that pedigree pet foods are good for the dogs, the underlying message being projected was that Pedigree is good for people. This provided the consumers with a platform through which they could identify with the brand. Legoland Florida was awarded for designing a hotel with children in mind while Turkcell was awarded for launching an app to help diabetes patients to control their condition.

The Pedigree strategy can be said to be most appealing to the rational consumers. These are people who need to evaluate the value of products to them so as to justify why they should purchase these products. The rational consumers are easiest to reach through messages that appeal to reason. Where possible, scientific proof needs to be provided so that they can demonstrate that the claims they are making about the products are true.

Comcast Xfinity was hailed as being strategic and effective in how it exploited its understanding of the local language culture. It targeted Hispanic consumers by portraying their common language where they flip flop between English and Spanish. The culture is so common that one needs to master both languages to be able to understand when being addressed by these Hispanics. This helped to endear the brand among Hispanics and the company was hailed for being the first to exploit this cultural element successfully and to its advantage.

The Comcast approach is emotional. It seeks to build trust by demonstrating its understanding of the consumers. Trust works by giving the consumers the confidence that since the company understands them, it is more likely to cater for their needs effectively. This is an effective approach to emotional branding and it is very strategic because the bonds formed between the brand and the consumers is unique and difficult to replicate. But whether a branding approach appeals to ration or emotion, the overall effectiveness is dependent on the level of creativity and the extent to which the message resonates with the target audience. 

How should strategic managers handle the frugal customer?

The psychological effect of the customers after the 2008 global recession has been more towards personal austerity measures. Consumers want to be more prudent in their spending. This has become the dominant characteristics of the consumers in most markets; especially among the online consumers. The online consumers exploit the internet for purposes of exploring the offers in the market and obtaining the most attractive offers in record time. This introduces a key dynamic in strategic management: price competition.

As consumers become more frugal in their spending, brands have to capitalise on offers and discounts in order to attract and retain their customers. One of the organisations that have successfully embraced the culture of the frugal customer is Tesco. Tesco’s strategic management approach emphasises on providing value for customers by ensuring that the consumers are provided with the best quality at the lowest possible price. In fact, the company operates with the commitment that it will source for the best discounts in the market for its loyal customers. The success of Tesco provides a clear indicator that the UK customers are increasingly frugal in their approach. The US consumer culture is similar to that of the UK according to a recent research by Accenture.

In its research on consumers of holiday services, Accenture established that 42% of US consumers state that they rarely expect to pay the full price for holiday packages. This implies that they will readily go out in search of the best holiday discounts before making a decision on which ones to purchase. More than 67% of the US consumers were also noted to be willing to buy goods from different websites or stores for purposes of making the best bargains. In other words, price is an important factor and may often override the benefit of convenience. In addition to this, 72% of the US consumers confirmed willingness to try out a new website or retailer if they are to get bargains better than in the rest of the market. Again, price appears to override issues of trust and reputation of the brand.

But while the frugality of the consumer could be a source of threat to the strategic managers, there is also a silver lining. In exchange for being able to obtain the best offers in the market, consumers are increasingly more willing to volunteer personal information. Brands can exploit this opportunity to build their database through the wilful participation of the consumers. 54% of the US consumers are willing to offer personal information in exchange for a possible benefit of being offered the best deals realisable in the market.

Also consistent with the view that customers are increasingly frugal is the finding that 78% of discounts and coupons tend to result in a surge in customer engagement, information sharing, and actual sales. Brand managers can also exploit this characteristic by building trust with customers as the brands that will always give them the best deals in the market. They can also exploit willingness of consumers to share personal information for purposes of improving their strategies; especially the market segmentation and direct marketing strategies. 

Five emerging trends that brands must consider

The main element of strategic management is dynamism and flexibility: the ability to take note of changes in the external environment and conform to them. Organisations must conform to these changes in order to sustain their profitability. The current trends in the market can be clustered into five main elements: preference for affordable luxury, preference for convenience, preference for local brands, evolution of connected customers, and demand for health and wellness.

Affordable luxury is created when organisations introduce luxury products but refrain from exorbitant pricing for these products. Consumers are increasingly in demand for luxury products but do not want to go for what has been known as conspicuous consumption. This introduces a new concept in strategic management where luxury brands could compete on price. Previously, price would not be an issue for the consumers of luxury products. But as price consciousness rises in general, even the luxury market segments are faced with a rising demand for affordable luxury products. Luxury brand managers must therefore factor this in and ensure that their prices are acceptable. One of the markets in which luxury brands are viewed with suspicion is China where certain brands have been accused of exploiting the consumers.

The other trend that strategic management teams need to be aware of is increase in demand for convenience. Consumers no longer want to move over long distances in search of products and services. They want to have these products near them. This means that the organisation needs to make measures for ensuring that the products demanded are highly accessible. One of the measures that can be implemented is creating platforms for delivery and online shopping. Through the click of a button, the consumer can make an order and have the products ordered delivered to the comfort of their homes or offices. This is convenience and it is among the main drivers of growth in e-commerce.

There is also a strong preference for local brands. This means that the customisation approach in strategic management would be most effective in most markets. The consumers want to consume products they can own. This is with exception of cases where foreign products are favoured by the population. For instance, Chinese consumers tend to value foreign products as they associate them with quality and prestige.

The other element for strategic managers to consider is the evolution of the connected customer. Customers increasingly want to be engaged. They want to be constantly in touch with the organisation. They also want to be involved and listened to. This demand has been fuelled by the emergence of the social media as a key platform for communication between consumers and between them and their brands. In line with this, the strategic managers need to ensure that they factor in this dynamic by establishing online platforms on the social media and using them to keep engaged with customers. The demand for being connected can also be exploited by the organisation to track conversations online and learn what is being said about them. This can be useful in driving improvements to product design and service delivery approach.

Vertical integration among management consultancies and implications for ad agencies

The digital technology has been exploited by management consultants to expand their services into managing marketing services for themselves and their clients. It has opened up the landscape and suddenly, the ad agency space is not as complex as it seemed to be in the past. Besides, the digital world is making it possible for organisations to be able to coordinate a wide range of activities effectively. This is in addition to them being able to engage in data analytics and understand consumer preferences in the market. It is a strategic management challenge among the ad agency managers.

One of the factors that make management consultants a formidable source of competition for ad agencies is trust. Having interacted with their clients over time, they have been in a position to build trust. The organisations trust them and give them all the relevant information needed to inform their operations. The nature of management consultancy is that they have to understand the strengths and weaknesses of the client organisation, its strategic focus, and operational approaches among others. They would of course need to understand every aspect of the business before they can advise on what needs to be done. In the event that a management consultancy has guided an organisation from being a loss making venture into being a profitable venture, it builds trust. Such a management consultant can advise the organisation on what needs to be done to market effectively and the organisation will quickly adopt the solutions presented. In other words, competition against newly integrated management consultants would be very difficult; especially where the client organisations have been served effectively by them in the past.

This changing landscape leads to the question: what should agencies do to survive the increasingly complex landscape? The answer to this is simple: a defence-by-attack strategy. This is where a rival attacks the domain of competitors in order to survive. A pure defence strategy where ad agencies desperately try to cling to their market share may be unsuccessful as the newly integrated management consultancies are bound to make inroads. Organisations conduct a lot of research before they decide on whom to contract. They would most often be swayed if they are aware of a consultant that has helped in transforming and growing other organisations within the industry. Besides, word-of-mouth would work to the advantage of successful management consultants. These factors lead to the assumption that if ad agencies opt to simply defends their territories; they would lose in one way or another.

The defence-by-attack strategy works by invading a rival’s territory. As the industry converges to bring together ad agency services and management consultancy services, the ad agencies have to integrate forward. They must develop the capabilities they need to become effective management consultancies. This is the essence of strategic management: dynamism and pragmatic decision making. A change in the competitive landscape warrants a change of strategy. This is what needs to be done by ad agencies.

The same advantage that has worked for the management consultants is likely to work for them as well. The agencies that have successfully served their clients and led to them growing sales and market shares are likely to trust them and refer them to other clients. In addition to this, these ad agencies have the option of increasing value per customer. This can be done by providing management consultancy services to the same organisations that they have acted as ad agencies for. This is because they already understand them and trust has already been developed between them. 

Strategic alliances and its limits: The price row between Unilever and Tesco ended

As the curtain draws on the price war between Unilever and Tesco, independent observers must consider the question on how strategic alliances affect the pricing policy for specific organisations. In this case, Unilever was allegedly demanding for a 10% price hike for some of their products including Persil, Marmite and Ben&Jerry’s ice cream. The row had led to Tesco pulling these products from their shelves hence denying Unilever a significant portion of their distribution channel. It can be expected that Unilever's customers must have been frustrated when they failed toget their favorite product on the shelves as expected.  

Unilever had cited the weakening of the pound after the June Brexit referendum as the reason for it raising its prices. The pound had fallen by 17% before Unilever felt compelled to review its prices to cover the price implication of these costs. The option they considered was to raise the prices of their products. These were being distributed through major retailers such as Tesco hence the latter would be the one to implement a pay hike. Reports from other major retailers such as Sainsbury and Asda indicated that they too had received such demands and were unhappy with them. This provides a typical case study of hitches and disagreements that are bound to arise in strategic alliances.

The main difficulty in strategic alliances is that priorities tend to be in conflict with each other. When this happens, disagreements and bound to happen that could lead to the alliances being broken. The agreement between Tesco and Unilever can be termed as a strategic alliance in which the giant retailer gives shelf space to the latter at a fee. But the concern of Tesco is not purely about stocking the products. It also has standards to maintain.

Tesco has for a long time focussed on offering consumers the best prices possible. Over time, some form of psychological contract has developed between Tesco and its customers. In exchange for patronising the brand, the consumers expect it to offer the best prices in the market. This means that where the brand is seen as going against this promise, it is likely to lose the loyalty of its members. This psychological contract can be fragile and once broken, it may take long for the brand to recapture its lost clients. This reasoning could have informed Tesco’s reluctance to hike prices as demanded by Unilever.

On the other hand, Unilever must have felt not only constrained but also vulnerable. To start with, the price row led to its products being pulled down from Tesco shelves. This means that millions of their customers had to either go without the products or face inconvenience of searching for them elsewhere. This was certain to make Unilever vulnerable to competition because most consumers would opt for the best available substitutes instead taking time to search for their products elsewhere. This is the reality of strategic alliances: one is never too sure or in charge. A disagreement or misunderstanding between members of the alliance could disrupt operations and delay crucial decisions.

In this case, Unilever was forced to reconsider its decision to hike its prices. But the option of developing own distribution channels would be too expensive under the circumstances hence the inconvenience of alliances must be borne by the company. The alternative therefore is to ensure that members of the strategic alliance are allowed to engage with each other before significant changes are made. Consensus building is an imperative in strategic alliances as can be drawn from this case. 

Building brand experiences as opposed to traditional advertising in the pharmaceutical industry

The pharmaceutical industry is highly complex due to the nature of the products and consumers. Users of pharmaceutical products are persons with health problems that need to be dealt with effectively. Their main preoccupation is to ensure that as they consume, the specific need for which the product was intended is sorted out. This means that as brands market, they are supposed to concentrate on getting the customers to have the confidence that they will get the experiences they desire. Pharmaceutical products are not general satisfaction products that consumers simply fee; great about buying: they are actual utility products that consumers are keen on obtaining the desired experiences from...

One of the ways through which pharmaceuticals build brand experience is by providing guidance for the use of their products. One of the leading causes for remedies failing to produce the intended effect is when the drugs and medicines being used are not administered appropriately. Products whose use requires care such as skin care and remedies for other complex ailments have to be applied carefully and accurately for them to be effective. The pharmaceuticals build a brand experience by ensuring that they are available to guide the consumers. The consumers can also seek clarifications on product use from time to time. In addition to this, brands can volunteer to work with the consumers by providing them with prompts and reminders for when they need to undertake certain tasks. For instance, if both the consumer and the brand have agreed on a schedule on application of the remedies, the organisation can have representatives making calls to the consumer to ensure that they do not forget. This increased interactivity and commitment to providing solutions for the consumer is expected to increase the quality of the brand experience. This could increase satisfaction and get these consumers to refer others to the organisation.

The word of mouth strategy is only effective where current consumers have been very satisfied with the organisation. They will have had a pleasant brand experience through guidance and care given by the organisation and would be confident that the friends they refer will be satisfied as well. The effect of the word-of-mouth strategy is very significant in the pharmaceutical industry for a number of reasons. Firstly, consumers are very sensitive about their health and their bodies. They do not want to take risks with their health. They want to be sure that the solution they are about to embrace is the best they can get in the market. This requirement leads to the question of trust and how it manifests into competitive strength for the pharmaceutical companies.

Since consumers would tend to trust the testimonials of persons they already know, a lot of the advertisement messages sent out by pharmaceuticals go unnoticed. There is a general perception that organisations will never provide an objective review of their products and what these products can do. They are expected to make claims that may not be necessarily true. This is why independent referrals are important to the organisation. As consumers get a pleasant brand experience, they are more willing to share about these experiences and recommend the organisation. 

Advertising as a force for tackling stereotypes: Unilever’s perspective

Advertisement influences the thinking in the society by influencing the views of the consumer towards a predetermined end. In the process of getting consumers to acknowledge their brands, organisations engage in strategic message design where the following are considered: the nature of consumers targeted, the thinking of how the organisation perceives itself, understanding of the cultural predisposition of the consumer, and the understanding of the organisation about such a cultural disposition. This is the interplay between economic power and social power in shaping a culture...

Economic power can shape cultural perceptions where organisations with commercial interests assume a certain point of view about a society and its values. Through creative and consistent advertising, the organisation often manages to convince its target audience to see things from their perspective. The views projected could include views about consumption, marriage, sexuality, intelligence, beauty, and many others. For example, the dominant Western culture of materialism is credited to economic influence of organisations over culture. Through consistent advertising, commercial enterprises were able to make members of the society feel like they ought to keep consuming in order to be fulfilled. The advertisements had the effect of linking achievement and satisfaction to consumption. This has become a definite feature of the Western culture.

The other element of culture that has been embraced by advertisers entail advancement of stereotypes about women. Advertisers have consistently portrayed women as being sex symbols in the society. In fact, this is evident in more than 90% of advertisements in which women have been portrayed as sex symbols. It is only in 2% of the adverts that women have been portrayed as professionals and intelligent with more than 50% being seen to portray women in a negative light. These advertisements have the effect of propagating a cultural stereotype that has been embraced in any societies around the world. But Unilever sees advertisement as an important tool for changing cultural perspectives.

Unilever has taken up the challenge of using advertisement as a tool for overcoming stereotypes and is keen to go against the common trend in marketing. According to the company, women may still play their traditional roles in a social setting. But this should be portrayed in a manner that portrays respect for them and not a way that belittles them. For instance, women could be portrayed as cooking in line with the traditional roles associated with them. However, this can be contextualised to portray the critical role they play in the society and not as cooks being lesser human beings.

By choosing to take up this challenge, Unilever hopes to attract customers among persons whose values are consistent with principles of respect for women and acknowledgement of women as worthy members of the society. More significantly, Unilever hopes to be seen as a fan and advocate of the women. This could make them more popular to this segment of consumers. They are either decision makers in purchasing decisions or important influencers; hence getting on their good side could have immense benefits to the organisation. 

Projected trends for mobile marketing in the European, Middle East and Africa region –EMEA

In a study spearheaded by the Mobile Marketing Association, it was established that most of the marketers intend to increase its marketing budget significantly within 12 months. 91% of the marketers surveyed stated that they would be increasing their marketing budgets in the next 12months. This was a study that involved 378 marketers across the EMEA region. However, the budgetary allocations for mobile marketing were noted to be low. For instance, only 10% of the marketing budgets were dedicated to mobile marketing in 62% of the organisations surveyed. This is a finding which affirms prior findings that mobile marketing is unlikely to overtake traditional marketing approaches in spite of the growth in this sector being much higher.

One of the most interesting aspects of mobile marketing was noted to be location based marketing. This is where the location of the mobile phone users is used for geographic targeting purposes. The marketers will often seek to market to consumers located at a certain region at a time. The data can also be used to determine where the most potent customers of the organisation come from. It is one of the fastest growing dimensions of analytics where data is collected and analysed as appropriate. Also popular among marketers is the use of mobile video adverts as opposed to use of texts and digital posters. The mobile videos are widely expected to generate greater interest among the consumers.

The mobile trends in the EMEA regions have also been identified to include multi-screening, use of mobile payments and consumption of mobile video. The latter provides a justification for the preference for mobile videos. But the interesting feature is multi-screening. This is where the users of the mobile phones use more screens. For instance, a consumer would be using their mobile phones or smartphones while at the same time using a computer or watching television. This is a trend that strategic marketers can exploit to increase visibility. If they can get the consumers to see their advertisements on different mediums at the same time, the concentration of such consumers is captured and the message passed more effectively.

The use of mobile payments is a trend that has been very useful to strategic managers around the world. It has made online shopping to become a reality that everyone accommodates and practices. It has demystified the concept of digital cash and has also made it extremely easy for the customers to make their purchases.

The other trend that is associated with mobile marketing is the use of cross-channel campaigns. The campaigns make use of both the social media and the mobile marketing platforms. The most commonly used platform is Facebook which is exploited in 97% of the mobile marketing campaigns. Facebook is followed by YouTube, Instagram, and Twitter at 75%, 70% and 68% respectively.

The trends in mobile marketing can therefore be summarised as follows:

-          It is facing growth annually

-          Characterised by preference for mobile video and location data

-          Multi-screening is an important trend in mobile marketing

-          Cross channel marketing where social media sites are combined with mobile platforms is becoming more common

-          Mobile money is an important element