Differences in Applied Marketing Communications for FMCG, Goods and Services

Differences in Applied Marketing Communications for FMCG, goods and services

Presentation of Master’s Thesis

Guna OzolinaJune, 2008

Research background and motivation• In 2006 GDP amounted to 16,1 billion euro at current prices, with real GDP

exceeding the level of the previous year by 11,9% , whereas 7% increase in goods-producing sectors and 13,1% increase in services sectors (CSB, 2008)

• The significant growth of the service sector and its impact on growth of GDP has drawn increasing attention of the Latvian Government to the issues and problems following the growth of both sectors: goods-producing sectors and services sectors (CSB, 2008)

• Advertising in media (ATL activities) in Latvia has increased by 27% during 2006 and by 24% during 2007; In total ATL activities constitute 108,2 million euro in 2006 and 133,7 million euro in 2007 (TNS, 2008)

• The most rapid increase is facing online advertising (118% in 2006, 80% in 2007), followed by magazines (42% in 2006, 45% in 2007) and outdoor (77% in 2006, 24% in 2007); speaking about shares of different media in Latvian media market, it is visible that usage of newspapers (29% in 2005, 25% in 2006, 22% in 2007) and radio (12% in 2005, 11% in 2006, 10% in 2007) is slightly decreasing while usage of TV (36% in 2005, 36% in 2006, 35% in 2007) is almost constant [TNS and LAA, 2008]

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Problem identification• Fierce competition, thus, new and creative ways how to attract customers

should be applied

• Environment around customers is oversaturated with communication messages (each of us is reached by min 1400 advertising messages a day); Do the messages and channels differ in context of distinctive subjects (FMCG, goods, services) of communication?

• It is becoming harder to reach audience by ATL activities, due to:

– Media become manifold and fragmented according to interests, lifestyles and needs

– Use of integrated marketing communications (IMC) increases, thus, focus is not put only to advertising but also to other IMC tools; consequently, the amount of communication messages fighting for attention of customers grows

– New technologies emerge; by the help of them customers can escape their selves from ATL

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Research questions

• Major question: is there any difference in application of marketing communications for distinctive product classes?

• Minor question: are there any key principles to be observed by communication managers in practice among distinctive product classes? What are these principles?

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Unit of analysis• Unit of analysis: marketing communications mix and its application for distinctive

product classes

• Motivation for unit of analysis:

– Marketing communications mix (Promotional mix) is one element (one P) of marketing mix; whereas marketing mix is one of the most often applied marketing concept for any product class

– Despite changes in Ps of marketing mix for distinctive product classes (4 Ps for goods and 7 Ps for services), the concept of Promotional mix remains the same for all product classes in terms of definition and content

– Marketing communications mix consists of various tools which give an opportunity to compare and analyze promotion messages, appeals, and channels for distinctive product classes

– When marketing communication tools are used coherently, IMC are applied; now marketing professionals consider the use of IMC as self evident

• Sub-unit of analysis: distinctive product classes (FMCG, goods and services) in four selected industries

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Empirical relevance and limitations of the study

• Empirical relevance:

– Plenty of theories, majority of them referring to goods

– Services marketing differs from goods marketing (result of discussions 1950-1980)

– Practical inside for communication managers

– Insight for potential employer

• Limitations:

– Industry: B2C, four most advertised industries in media during recent three years

– Geographical: products available in Latvia

– Sample size: 74 cases (17-20 products / industry; 23-26 products / product class)

– Theory: marketing communications mix

– Information: secondary data sources (3 consumer magazines and LETA online data base with 9 national daily newspapers and 11 magazines) and primary data sources (73 websites (60 local, 13 international), 29 points of sale, 21 interview about 30 products)

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Structure and content of the studyMarketing environment

Overview of consumer marketsMarket information about selected products and industries

Theoretical framework

Product and its classesCommunication model

Marketing communications mix

Research and analysis

Primary data (direct observation of products’ web pages)Secondary data (content analysis of print ads)

Secondary data (content analysis of press releases)Secondary data (content analysis of publicity)

Primary data (personal observations in shops / saloons)Primary data (personal interviews)

Conclusions 7

Methodology

• Research design: exploratory research

• Research method: qualitative and quantitative research

• Information sources: primary and secondary data

• Sample: 74 products from 4 industries

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SampleFMCG (26 products in total): Hair cosmetics (Dove, Pantene, Garnier), Eye cosmetics (Maybelline), Bateries (Duracell), Washing powder (Tide), Cleaning aid (Domestos), Pre-paid mobile cards (Zelta Zivtina, BiFri), Box software based on subscription (Kaspersky Internet Security), Yoghurt (Rasa, Zilonitis), Bread (Hanzas maiznica, Fazer), Tea (Lipton), Soup (Knorr), Drinks (Coca-Cola, Nestea), Books (Zvaigzne ABC, Valters&Rapa, Jumava, Janis Roze), Magazines (Deko, Mans mazais), Music records (Upe, MicRec)

Goods (25 products in total): Epilators (Braun, Philips), Washing machines (LG, Samsung), Hair dryer (Philips, Braun), Vacuum cleaner (Electrolux), Box software (MS Windows, MS Office), Mobile phones (Nokia, Samsung, LG), Laptops, printers (Hewlet Packard), Cooking equipment (Electrolux, Westel, Whirlpool), Refrigerators (Samsung, Snaige), TV (Samsung, Sony, Philips), Video&Photo cameras (Samsung, Panasonic, Sony)

Services (23 products in total): Beauty (Kolonna, Baltic Nails Studio), Solarium (BlueBox), SPA (Tropic&Fitness, Baltic Beach Hotel), Laundry, Cleaning (Irve), Mobile telecommunications (Tele2, Bite), Internet (Telia, IZZI, Baltkom), Digital TV (IZZI, Baltkom), Restaurants (Tikai Karotes, McDonalds), Cafeterias (Double Coffe), Bistro (Kebabs Fix, Cili Pica), Concerts (FBI, MicRec PM), Cinema (Forum Cinemas), Theatre (Daile Theatre, National Theatre) 9

Theoretical framework• Product and product classes

– FMCG: tangible and shortly durable

– Goods: tangible and durable

– Services: intangible, inseparable, heterogeneous, and perishable

• Communication model

– Communication message (AIDA model, USP framework, appeals, testimonials)

– Medium (TV, radio, print, outdoor, internet)

• Marketing communications

– Advertising (product oriented, institutional)

– Sales promotion (consumer oriented, trade oriented)

– Public relations (press releases, conferences, interviews, community involvement, event sponsorship, company’s magazine)

– Personal selling (sales consultants, sales presentations, samples / trials)

– Direct marketing (direct mail, catalogues, telemarketing, online shopping, database marketing) 10

Empirical findings and conclusions

on major research question

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Communication message (1)

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Moral appeals are applied more often for FMCG than for goods and services. The motive for this activity grounds on fact there is low brand loyalty in FMCG sector because products are frequently purchased and relatively cheap. Moreover, majority of products use more than one appeal, consequently consumer is flooded with variety of emotional and rational appeals, while moral appeals are used rarely. Thus, moral appeals are used as a tool to differ from other FMCG available to consumer. This is wise approach because currently trend of environmental protection is topical as well as special subgroup of so called “green thinkers” has been emerged and number of their followers is growing

Please see next 3 slides

Communication message (2)Appeals (content analysis of print ads)

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Appeals and testimonials (direct observation of web pages)

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Communication message (4)Appeals (personal interviews)

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Additionally to communication message’s appeals testimonials are applied mostly for services than for goods and FMCG. The primary reason for celebrity usage is ensuring credibility. This is essential issue when level of product’s intangibility (product display is not possible), inseparability (consumer is involved in production process) or heterogeneity (hard to achieve standardization) is high.


Communication message (6)Testimonials (content analysis of print ads)

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Communication message (7)Testimonials (personal interviews)

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There is tendency that application of AIDA model and USP is more successful (simultaneously used at least three components) when product is highly tangible. The finding could be explained severally. First, producers of FMCG advertising are more professional than those who produce for goods and services. Besides, from author’s own empirical evidences the majority of customers of advertising agencies are exactly FMCG companies. Second, product’s features of FMCG are easier to comprehend than product’s features of goods and services, thus, for FMCG application of AIDA framework and USP is simpler.


Communication message (9)Usage of AIDA model (content analysis of print ads)

FMCG Goods Services

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Communication message (10)Usage of USP (content analysis of print ads)

FMCG Goods Services

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Advertising (1)

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Durables apply less ATL activities. Application of internet as advertising media is very seldom because majority of sample goods do not consider web page as essential communication channel (results of observation of web pages), application of other media is limited to availability of content – commercial, print, jingle and outdoor – if it is not available internationally, neither it is available in local market. Therefore the most effort for goods is focused on other IMC tools, mainly, sales promotion and personal selling.

Please see next 1 slide

Advertising (2)ATL activities and media mix (personal interviews)

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Advertising (3)

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More tangibles products are advertised more. Marketing communications of FMCG applies advertising tool more frequently than other product classes. It grounds on fact that FMCG have short duration, they are purchased often and they have low brand loyalty. Thus, by continuous advertising activities, certain FMCG brand is regularly kept in consumer’s memory in order to be as the choice of number one when the need arouses. Intangible products are purchased more seldom, their price is more expensive and buying decision process is longer than for FMCG. Thus, for long term buying processes the role of advertising is least, while increases the role of brand, reputation, and relationship coherently managed by the rest of IMC tools such as public relations, sales promotion, personal selling and direct marketing.


Advertising (4)Advertising activity (content analysis of print ads)

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Advertising (5)

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Services apply more institutionally orientated communication than product orientated communication. The motive for this activity is simple – if product’s intangibility is higher, then additional credibility is needed in order to convince consumer the service is qualitative, therefore, company’s reputation and image start to play a great role in comparison to tangible products.


Advertising (6)Advertising type (content analysis of print ads)

FMCG Goods Services

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Public relations (1)Message type (content analysis of press releases)

FMCG Goods Services

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Public relations (2)

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There is direct relation with product’s intangibility and amount of press releases and publications as a result. If intangibility is higher, there are distributed more press releases, thus, greater number of publications is reached.



Public relations activity (content analysis of press releases)

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There is no clear tendency between number of positive, negative and neutral publications for each product class and extent of applied public relation tools. Author explains this fact due to basic objective of public relations – manage relationship with company’s (and its products’) stakeholders, thus, it is very dynamic and tailored process that could not be looked across larger scale such as product class


Public relations (5)Impression generated by publication (content analysis of publicity)

FMCG Goods Services

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There are no significant difference in application of public relations tools depending on product classes just personal interviews are not used at all for goods sector. However, there probably might be differences.

Moreover, there is difference in application of public relations tools depending on resource ownership of the company. Most of local and mixed capital companies consider public relations just as tools with whom to generate positive publicity and organise internal events, not as tool with whom to expound management’s decisions within company. Thus, there is smaller usage of such internal communication tools as internal magazine and internal attitude measurement in the product classes whose sample contained less international companies – mostly service companies.


Public relations (7)Application of various tools (personal interview)

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Public relations (8)Resource ownership (personal interview)

FMCG Goods Services

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Sales promotion (1)

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Current activities of application of trade oriented sales promotion depends on extent of product’s tangibility. Namely, FMCG and goods are applying trade oriented sales promotion, while services are less active. Motive of the finding is grounded on general cooperation concept between product’s producer and its partners. In FMCG and goods sectors they are dealers, in services sectors they most often are partners working on terms of franchise or own network of shops or just individual shops / saloons. As in Latvian market the latter is not yet widespread while the former is, it is obvious that trade oriented sales promotion is applied more for FMCG and durables than for services.


Sales promotion (2)Application of various trade oriented tools (personal interview)

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Sales promotion (3)

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Consumer oriented sales promotion is most applied in FMCG sector followed by services sector, while goods sector is focusing more on trade oriented sales promotion and other IMC tools. Thus, there is no any reference to product’s features. Author thinks the finding grounds on the current situation of Latvian market.

The most popular consumer oriented sales promotion tools for any product class are price-offs and event marketing. As the motive for this action is simplicity of use and lack of consumer insights and knowledge about competitors. Additionally, in sector of FMCG the most often applied sales promotion tools are samples, bonus packs and contests; in sector of goods – contests, while in sector of services - loyalty programs and premiums. To sum up, there are yet observable some tendencies of consumer oriented sales promotion appliance according to product’s features.

Refund is the most unpopular consumer oriented sales promotion tool. This fact is based on several reasons. First, companies do not want to face unpredictable losses that could occur in cases when product does not meet consumer’s expectations. Second, there exists aspect of subjectivity. And finally, companies are rather reluctant to apply new tools if they are not tried by somebody else before, they do not realize that being a pioneer gives competitive advantage.


Sales promotion (4)Application of various consumer oriented tools (personal interview)

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Sales promotion (5)

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Application of various sales promotion tools (observation of shops)

Personal selling (1)

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Application of personal selling is directly dependant on product class and its features. If intangibility is higher, personal selling is more intensive. Personal selling tools as sales consultants and sales presentations are mostly applied in service sector, while tools as samples and trials are mostly applied in FMCG sector, and then followed by goods sector.


Personal selling (2)Application of various tools (observation of shops)

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Direct marketing (1)

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Direct marketing is applied rather equally for any product class. Although such tool as direct mail / e-mail is most often used in FMCG and services sectors, while online shopping and mail catalogues are most often applied in goods sector, but telesales is most widespread in service sector. To authors mind, choice of direct marketing tools is based on features of certain product rather than product class.


Direct marketing (2)Application of various tools (personal interview)

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Communications in general (1)

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Generally, communication activities of any of sample products are generated by application of various marketing communication tools more or less coherently, thus, IMC are applied. Although not all of marketing managers interviewed really know meaning of the term. However, this fact does not influence general application of IMC but definitely leaves impact on extent of application.

International companies have more serious approach for planning of communication management. Communications and its budgets are planned resulting from overall financial target, certain communication activities are based on researches and regular measuring of attitude changes is more than two times obvious for international companies than for mixed and local ownership companies.

Communications in general (2)

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Ownership plays role in IMC, especially while organising communication functions and structure, planning and taking decisions of communication management. There is more emphasized role of internal communication in international companies. They comprehend the internal communication is not just about organising events for employees but also regular informing and expounding of management decisions. More than half of local and mixed ownership companies, while asked about internal communication, answered there is no problem for them to meet and communicate about certain issue on the spot, just when the need arouses. They assume internal communication as everyday’s relationship among employees therefore mixed and local ownership companies mostly see internal communication as entertaining events for employees. While just international companies understand the role of internal communication is not only team building but educating any employee about company’s overall objectives and each employee’s particular role in its achievement, where internal magazines and regularly scheduled face to face meetings are essential.

Conclusions on minor research question

There are 3 equally important principles, that should be taken into consideration while marketing distinctive product classes:

– Theoretical knowledge gives valuable principles and rules that create overall framework for own understanding of marketing manager

– Classification of products according to their features shape certain framework for own understanding of marketing manager

– Professional experience integrated with the frameworks of theory and product classes results in unique approach

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Suggestions for further research

• The following hypothesis:– differences in applied marketing communications could be categorized

in context of distinctive product classes – FMCG, goods and services– theoretical knowledge, knowledge about product and professional

experience are equally important criteria for successful marketing management

• The following researches:– impact of company’s resource ownership on applied marketing

communications– extent of IMC usage in certain companies or industries– impact of IMC usage extent on different company’s functions such as

management, production, human resources both in service organizations and goods organizations

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Literature (1)• G.E. Belch, M.A. Belch. Advertising and Promotion. An Integrated Marketing Communications

Perspective (7th edition). Boston : McGraw-Hill / Irwin, 2007, pp.820;• B.L. Berg. Qualitative Research Methods for the Social Sciences (3rd edition). USA: Allyn & Bacon, 1998,

pp.290;• F.Brassington, S.Pettitt. Essentials of Marketing (2nd edition). England: Prentice Hall, 2007, pp.545;• M. Easterby-Smith, R. Thorpe, A. Lowe. Management Research. London: Sage Publications,1997,

pp.172;• E. Gummesson. Qualitative Methods in Management Research, London: Sage Publications, 1991,

pp.212;• P. Kotler. Marketing Management: Analysis, planning, implementation, and control (8th ed.). Prentice-

Hall International Inc., 1994, pp.545;• E.J. McCarthy. Basic Marketing: A Managerial Approach. Homewood: Irwin, 1987, pp.749;• T.A. Shimp. Integrated Marketing Communications in Advertising and Promotion (7th edition). Mason,

OH: Thomson/South-Western, 2007, pp.629;• M.R. Solomon. Marketing: Real People, Real Choices (5th edition). New Jersey: Prentice Hall, 2008,

pp.608;• V.A. Zeithaml, M.J. Bitner. Services Marketing (1st ed.). McGraw-Hill Inc., 1996, pp.700.

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Literature (2)

Articles:• R.P. Fisk, S.W. Brown, M.J. Bitner. Tracking the Evolution of Services Marketing Literature.

Journal of Retailing, Vol.69, Number 1, Spring 1993, p.61-103;• V.A. Zeithaml, A.Parasuraman, L.L. Berry. Problems and Strategies in Services Marketing.

Journal of Marketing, Vol.49, Spring 1985, p.33-46;

Web addresses:• TNS www.tns.lv• Latvian Advertising Asociation www.lra.lv• Central Statistical Bureau of Latvia www.csb.gov.lv• Hewlett Packard www.hp.lv• Competition Council www.kp.lv• Latvian Press Publishers Association www.lpia.lv• Latvian Traders Association www.lta.lv• Centre of Agriculture Market Promotion www.ltvc.lv

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http://www.tns.lv/

http://www.lra.lv/

http://www.csb.gov.lv/

http://www.hp.lv/

http://www.ltvc.lv/

Differences in Applied Marketing Communications for FMCG, Goods and Services

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