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Sthapit, Erose

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Hillesland, J., Rudolph, T., Meise, J. K.., Gisholt, O., Bendixen, A., Fjeldstad, T., Nordflt, J. &

Clement, J. (2013) Fundamentals of retailing and shopper marketing. Harlow: Pearson


Based on the literature review of Hillesland et al.s book titled Fundamental of Retailing and Shopper
Marketing, I have picked some topics that I consider important, for example, sales promotion, brand portfolio
and portfolio decisions, shopper segmentation model, consumer confusion, retail chain positioning and store
atmospherics. Personally, I consider these topics to be important from both company and consumer perspective
particularly in todays marketplace and in aiding Hillesland et al.s (2013) argument about the need to change
the marketing principle as we know today. I believe that these subjects deserve further discussion and might
even contribute to minimum wastage of the hundreds of billions that are spent as part of marketing. In this part
of the assignment, I have argued that sales promotion is not necessarily bad business practice, the need for
companies to move away from justifying the addition of brands and sub-brands into their brand portfolio, the
sheer negligence of manufacturer and brand owner towards shopper segmentation, consumer confusion as a
vexing problem in todays marketplace, the misconception among marketers about differentiation as the main
element in retail chain positioning, the significance of how consumers perceive stimuli in the store environment
and the need to understand consumer information processing as a more bottom-up approach. I have gathered
materials from different sources to support my arguments and to get an in-depth understanding of the topics. The
content below introduces the chosen topics and includes my opinions, arguments and reasons why they are
important and relevant.

Sales Promotion
Hillesland et al.s (2013) states that although hundreds of billions are spent on sales promotions, hardly anything
is tracked or noticed. In addition, 65% of the marketing budget is wasted. The authors argue that the marketing
discipline as we know it today has to change. The above argument can be illustrated by an example. A price
promotion is agreed by a manufacturer and a retailer in 200 supermarkets. Products are sold 30 percent cheaper
than normal and the manufacturer sets aside 600,000 for promotional materials. However, the promotion is just
offered in 110 supermarkets while the other 90 shops only wanted to do the 30 percent price reduction and use
their own standard posters. Sales volume in the promotion period increased by 12 percent while the retailers that
offer their own price promotion increase their sales by 18 percent. On contrary, half of the material is thrown
away, and 80 percent of the posters and displays used are displayed incorrectly and ineffectively. The
manufacturer does not make any profit. Only posters and displays for around 40,000 or 6.7 percent of the budget
are effective or noticed by customers in the supermarkets. What does the example tell us? In my opinion, it is a
cut price offer, a promotion that is badly administered, less effective and does not reflect the importance of sales
promotion.

Hillesland et al. (2013) further argue that selling the product at a lower price is neither the best method to build
more value into a brand, nor the ideal way of competing. However, it can be argued that it is what happens every
day in most of the consumer goods industry, where consumers feel that most brands are equal and unless sales
promotion is done, consumer will not buy a particular brand. Personally, as a consumer I prefer price cuts to any
other forms of promotion and perceive different brands as being equally satisfactory and interchangeable. In fact,
for many categories from salad to toothpaste, I do not have any brand preference at all and just pick these
products based on the place on the shop, price or something else that gets my attention. The reason why this
topic is important and needs to be discussed further is because the influence of sales promotion is not limited to
immediate economic response but also to long-term relationship building. It offers immediate value and
inducement to enter into a transaction and then a loyal relationship (Dahlen et al., 2010). It a realistic example
of what is prevalent in todays market place and is unavoidable while 70 percent of all brand decisions are in
fact made after the shopper enters the store. Therefore, on contrary to the authors views, I believe that sales
promotion encourages brand switching and to build brand loyalty (Lamb et al., 2007). According to the Global
Marketing Effectiveness Report (as stated in Hillesland et al., 2013) 70 percent of marketers believe that shortterm revenue boosting campaigns is more important than long-term intangible brand building while Clancy &
Trout (2002) reported on 40 out of 46 categories where the impact of branding was less evident. In todays
marketplace, shoppers are getting more and more loyal to discounters that offer special offers on the day-to-day
or weekly shopping and only visiting the hypermarkets for the special and stock-up- items (Hillesland et al.,
2013). Moreover, research studies have shown that within product categories, complete loyalty is relatively rare
phenomenon, which most consumers being variety-seekers, accepting and switching between alternatives within
a product category. In my understanding, it is important to understand that it is the area where the consumer
perceives no unique value, and individuals are trading down to mass-value providers that offer good enough
quality for rock-bottom prices (Menon & Kahn 1995, Ratner et al., 1999).

I come across sales promotions every day, for example, while purchasing daily consumer goods at a local
supermarket, Lidl, a German retail discount chain that sells based on low price level. In my opinion, Lidls lower
price does not necessarily mean poorer quality. In fact, the retail discount chain competes with other retailing
cooperatives in Finland. Although their floor area and the range of goods they carry might be far smaller, but
their return on investment is not bad at all (Patten, 2008). Lidls market share increased from 4.8% in 2011 to
6.6% in 2013 with a turnover of 820 million Euros between 2011-2012. Finnish households increased their
spending in Lidl stores by 20% during the past year. Based on the statistics, it shows that the retail discount chain
has been able to deliver what its customers want and that growing number of consumers seeks to purchase from
the same supermarket brand and their brand products. Lidl established its first store in Finland in August 2002
and now has 141 stores around Finland (Invest in Finland, 2014). In my opinion, Lidl adheres to the concept of
everyday low prices, i.e. forging sales promotions through special offers; buy one get one free etc. and
providing an assortment of products with relatively steady prices. I visit the store for its discount image and
perceive it as an intelligent and deliberate choice. Another reason is because Lidls products live up to my

expectation. I am satisfied with the offered products and make repeated purchase. This example strengthens the
fact that the most important factor for grocery retailers continues to be price. Nobody is growing faster than
discounters and soft-discounters. In addition, consumer prices have fallen and those who started buying grocery
items at discount stores have not switched back to their traditional stores as most of the times customers often
act habitually purchased from the category before, they have limited time, and they are not too involved in the
purchase (Hillesland et al., 2013).

It can be further argued that sales promotion is not bad business practice to overcome competition by the
manufacturer and in the context where consumers have become less loyal and their purchase is mainly based
upon price, convenience and value (Murthy & Bhojanna, 2010). It is instrumental in providing the bedrock of a
campaign: stock of product into warehouses, commitment to push product through the supply chain,
negotiating preferred supplier status with key retailers, buying category-shelf space and product facings, and
supporting all activities at point of space (Dahlen et al., 2010). However, considering the large amounts of money
spent on sales promotion, it is important to understand how sales promotion work to produce considerable
savings in time and money (Mullin, 2010). The functional question of where, when, how and priced must be
addressed. In my opinion, there has to be a balance between effectiveness, efficiency and budget. In fact, while
setting the budget, the manufacturer and the brand owner need to assess what changes or reinforcement in the
target market and purchase intention have to be effected in order to achieve the marketing objectives and how
much will a specific input cost to achieve a specific outcome and how appropriate is that expenditure likely to
be (Dahlen et al., 2010)

I agree that sales promotion is a short-term measure to increase the sales immediately; but it is very difficult to
stimulate consumer demand only through advertising (Murthy & Bhojanna, 2010). Families no longer sit around
the TV set and thus are not a captive audience (Dahlen et al., 2010). For example, 77 percent of interactive TV
viewers are choosing to record prime-time TV programmes and are skipping past the advertisements while 8 out
of 10 teenagers are channel hopping, in the commercial breaks. In addition, the most worrying for brand owners
and media though is the fact that 90% of consumers who are able to, avoid TV advertising altogether and that
the average person is influenced by less than 4 percent of advertising (Dahlen et al., 2010). What does the
example tell us and why is it important? In my opinion, the examples show that traditional advertising that relied
on the notion of the interruption of captive audiences is totally irrelevant for most customers (Dahlen et al.,
2010). It is important because marketers need to understand that advertising does not interest customers in the
same way anymore and that traditional advertising is losing its effect. On contrary, internet has become a
fascinating medium for advertising (Hillesland et al., 2013). However, it is imperative to understand that in
todays world control of viewing is increasingly in the hands of the viewer and not the sender of communication
(Dahlen et al., 2010). Therefore, in order to engage or attract consumer interest through any form of
advertisement, the marketer must consider content that the consumer wants and that gives him or her value. In
other words, there is a need for creative content (Hillesland et al., 2013).

On the other hand, I believe that it is also important to understand why it is not straightforward and obvious to
move research resources from advertising to promotion effectiveness for companies. In fact, it is not carried out
in most of the FMCG (fast-moving consumer goods) companies. The reason is that companies do not know what
the effect of these sales promotions are having (Hillesland et al., 2013). I believe the answer to this question and
the above example by Hillesland et al. (2013) would be to undertake a strategic approach to sales promotion. In
my opinion, sales promotion needs to be conceived, integrated and implemented professionally. I consider it to
be essential to budget and calculate whether or not they are going to make money during the promotion and to
assess and communicate marketing results (Mullin, 2010). Lastly, I believe that such an approach to sales
promotion may help to ensure that the hundreds of billions spent on sales promotion is spent wisely and is a step
towards changing the way how marketing is done in todays marketplace.

Brand portfolio and portfolio decisions


I have observed that brand portfolio and portfolio decision are exceptionally important because they have a major
impact on the companys revenue and profitability. However, the complexity of some brand portfolios can be
staggering. For example, Nestle has 8000 different brands. Newell-Rubbermaid has 500 brands. Kraft foods has
59 different brands with over $100 million in annual revenue. It can be argued that such brands created with a
prospect for a new business are overestimated, for example, as prediction of customer demand simply turn out
to be wrong. General Motors, for example, continues to struggle with the Saturn brand, 22 years after it was first
publicly announced in 1983. Saturn contributes little to GM in the way of profitability, and the brand adds
substantially to the organizations complexity (Calkins et al., 2005). If the portfolio includes profitable and
growing brands that have little overlap, the company will do well. If the company is made up of poorly
performing brands that compete with each other, the company will struggle (Calkins et al., 2005). Therefore, I
believe that it is important to justify the addition of brands and sub-brands to the portfolio and evaluate whether
the brands have a unique position in the market, or does it overlap with other brands (Aaker, 2004) because it is
inefficient to have multiple brands with excessive overlap. Another important task for brand owners is to examine
whether all of the variants are moving out of the supermarkets and warehouses with required speed and whether
there is sufficient shelf space for the best-selling SKUs (Hillesland et al., 2013).

It can be further argued that companies must move away from justifying the addition of brands and sub-brands
to the creation of focus and clarity by eliminating or dialing down marginal or redundant brands after they have
outlived their usefulness. In my understanding, it is vital to understand that companies with wide brand portfolio
must reduce the number of brands and customer offerings although the decision to drop an acquired brand is
often not so easy (Aaker, 2004) because a reduced portfolio with the least profitable variants delisted is not
necessarily catastrophic but enables the company to focus on the most profitable ones. In so doing the company
has automatically taken out some fixed cost by reducing overall complexity of the company (Hillesland et al.,
2013). Aufreiter et al. (as stated in Dahlen et al., 2010) state that brands are losing their distinctiveness, becoming

commoditized and getting lost in the clutter of saturated categories. In addition, Aaaker (1991) provides
supporting claim by stating that brands are being mismanaged. Unilever, for example, in February 2000
announced a strategic plan designed to accelerate sales growth and increase operating margins by focusing on
few, stronger brands. The goal was to reduce the 1600 brands under its management to around one-quarter of
that number and to focus on those leadership brands with enduring consumer appeal, worthwhile sales and
growth prospect (Aaker, 2004). What does the example tell us and why is it even more important in todays
marketplace? In my opinion, the example shows that building all of the brands simultaneously and maximizing
the portfolio in total are often very different things, and the best way to build a portfolio is often to focus on
some brands at the expense of others (Calkins et al., 2005). It is even more important in todays marketplace to
understand the significance and complexity of portfolio decisions because it helps companies to achieve branddriven simplicity by focusing their time and investment on existing and successful brands. I agree that in the
short-term the company will lose some volume share but there is increase in profit (Aaker, 2004).

On the other hand, it is also important to assess the causes of brand proliferation and overlapping offering because
it leads to lack of focus and confusion in the marketplace. In fact, the result is a mess; while customers have a
hard time understanding what is being offered and what to purchase (Aaker, 2004). I believe that one of the main
reasons is that people within organizations charged with coming up with a new product or even new product
modifications in order to fuel growth are inclined to exaggerate the newness of the product, the sales prospect,
and its prospect for long term success (Hillesland et al., 2013). Another reason is that companies often think of
their benefits instead of consumer needs when they launch new brands, and the two are different. If a consumer
does not see the benefit or how the brand is different to others in the category, they will simply not buy (Dahlen
et al., 2010). In my opinion, successful brands need to enter into peoples consideration set by being accessible
on the store shelves while eliminating overlapping offerings. In summary, I believe that optimizing each brand,
in the absence of a broader perspective might not be right for the company as whole (Calkins et al., 2005) and
that companies must use more time on current portfolios, rather than on innovation (Hillesland et al., 2013).

Shopper Segmentation
It is surprising to learn that most brands dont have a shopper segmentation model and focus primarily on
consumer segmentation.
Allocating money for shopper research is still a tough battle for many manufacturers, and other manufacturers
sometimes get carried away by shopper research (Stahlberg & Maila, 2012). In my opinion, it is vital to direct
the companys sales and marketing resources towards the group of people that are the potential buyers and
consumers. The reason why it is important is because 70 percent of all brand decisions are made in the shop and
that marketers need to use significant amount of their resources to reach to their major shoppers. In fact, retailers
and brand owners should look at their shoppers as profit centres (Hillesland et al., 2013).

A chocolate manufacturer, for example, runs a yearly in-store promotion where a customer could win a week
for two in south of France after having bought their chocolate brand. Their major shopper segment consisted of
young, single women between 20 and 26 years old. When the manufacturer did their shopper segmentation, they
found out that the major shoppers and consumers in big supermarkets were actually women between 35 and 50
with families, working and with good income. Younger women were hardly visiting these big supermarkets.
They also found out that this shopper segment of women did not want to win a trip to France; they wanted a
holiday together with their families (Hillesland et al., 2013). What does the example tell us and why is shopper
segmentation models more important than ever? The example shows that identifying and targeting the shopper
segments help retailers and brand owners enormously when creating successful shopper programmes. My
response to why shopper segmentation models are more important than ever is because it will help the brand
owners to organize the chaos of shoppers into groups and to organize the chaos of products into groups, and then
to introduce the appropriate groups of people to the appropriate groups of products (Sorensen, 2009). In addition,
having insights into shoppers buying habits is not enough (Hillesland et al., 2013), while true intimacy with the
shopper is the necessity. It involves understanding what shoppers do and is going to do in the shopping
environment and why, and with this knowledge, brand owners can better tailor and deliver both the message and
offer to encourage trial and long term brand loyalty (DeHerder & Blatt, 2010).

When conducting shopper segmentation, I believe that it is important to include shopping missions as a
segmentation approach together with demographic factors such as age, sex, domicile and income level because
demographic factors are fairly easy to get from external data sources and do not necessarily tell much about the
customers buying behavior. Shopper mission study conducted by Roland Berger & Partnering Group, on
convenience stores found to have six shopper segments: main shopper, top-up shopper, impulse shopper, distress
shopper, grab-and-go shopper and habitual shopper. Different shopping missions are associated with different
needs, and consumers choose stores depending on the need at a given time (Stahlberg & Maila, 2012). Based on
my personal experiences, I visit the nearest grocery and convenience store, Siwa, one of the supermarket chains
in Finland, particularly during weekends to save time and because it is convenient . In reference to Roland Berger
& Partnering Groups shopper segments, I would consider myself a grab-and-go shopper, who enters Siwa to
buy a pizza and who invests a minimum amount of time to quickly satisfy his hunger.

Besides conducting shopper segmentation by asking the shoppers how they shop using different research tools
from internal sales data to questionnaire, it is also important that brand owners should observe and get to know
shoppers behavior and understand who their shoppers are, why they are in the supermarket and when they are
there (Hillesland et al., 2013). Behavior is the critical in-store factor. Also, it is widely recognized that it is more
reliable to observe what people do than to ask them what they do. Therefore, if behavioral data is available, it
will be more reliable and relevant as shopper behavior it is strictly a behavioral matter (Sorensen, 2009) and may
offer retailers to create a variety of shopping experiences addressing the distinctive needs of groups of shoppers.
I do agree that it would be easier for retailers to respond to a small number of large groups inside the store far

more intelligently and in more targeted way then they can do to a large number of smaller groups. However, in
defense of the segmentation schemes producing large number of groups, these may be effective outside the store,
where various advertising media may be targeted distinctly to more varied groups (Finne & Sivonen, 2009).

Consumer confusion
I have observed that consumer confusion is an increasingly vexing problem and calls for better marketing and
brand management in retailing (Hillesland et al., 2013).

Consumers are swamped with immeasurable

information on more products sold through more channels and promoted in more ways than ever before. I believe
that it is important to discuss this topic because consumers are faced with this problem everyday in todays
marketplace, it causes dissatisfaction (Criticaleye, 2010) and make the shopping process more complicated
(Zentes et al., 2011).

Personally, I feel that many markets offer bewildering number of products, including many product-line
extensions that present only minor emotional or rational differentiations. In my opinion, companies with a
reputation for generating customer confusion will lead to lower levels of purchaser brand choice and frequency
of visits because confusion contributes to a negative mental state, which is uncomfortable and unpleasant for
consumers and leads to frustration, irritation, anxiety and even anger (Hillesland et al., 2013). In fact, it is realistic
to say that the greater the number of things to be considered, the more difficult the choice as a typical household
buys around 4-500 different products during the year (Criticaleye, 2010). There is no doubt that consumers have
a hard time trying to keep up with the product names, attributes, and advertising message as most brands have
become interchangeable and no longer offer differentiated products (Hillesland et al., 2013). A typical grocery
store might carry ten brands of ketchup in three different sizes while Costco will carry only one brand of SKU.
Costco is the sixth largest retailer in the US and the ninth largest in the world (Krafft & Mantrala, 2010). Another
example is the German discounter Lidl that has only 1600 SKUs in their stores. Moreover, some years ago,
IKEA reduced the number of SKUs in many of their warehouses from around 30,000 to 10,000. Their bestsellers
got more space and slow moving items were removed. The response from the consumers was more products as
the buyers saw the attractive products more often (Hillesland et al., 2013). What does the example tell us? It
shows the need for clarity and ease of shopping.

Based on my personal experiences, I believe that the shopping environment (the store layout, variety of products
on offer, arrangement of the merchandise, music, color, lighting, etc.), especially product relocation within a
store contributes to confusion, and may lead to frustration and aborted purchases. I feel that when retailers change
the positioning of product categories within the store during sales periods, it may cause consumers to spend more
time searching for the product they seek and temporarily make them indecisive and inactive. Another factor that
may contribute to consumer confusion is the store layout. At times it is nearly impossible for consumers to get
out of the stores without visiting the entire stores. Therefore, it is important that retailers must manage to
standardize their shop layouts because 80 percent of shoppers time is spent moving from place to place in the

store, not buying but searching for their products. When thinking about the small amount of products that a
family might buy during a year (4-500), it would be a good idea to place more of these items in the main street,
to shorten the shopping time and help shoppers find their core products faster (Sorensen 2009). On the other
hand, pricing can add to the stress and confusion especially when factoring in the relative benefits of loyalty
schemes, money-off, percentage off, three-for-two offers, etc. because of a distressing sense that there might be
an even better deal to be had by waiting (Criticaleye, 2010).

Based on my personal experiences, I feel that one of the ways to reduce consumer confusion is to train sales
people better. I feel that it is an important step towards reducing consumer confusion because at times, I myself
have become a confused shopper. I become inactive and even suspend the decision making process and try to
seek help from the sales people. Sales associates should be available to assist shoppers when and where
consumers need help. Solomon et al. (2010) also provide supporting claim by stating that the consumers
encounter with a salesperson is a complex and important process. Another strategy to reduce consumer confusion
would be to narrow down the set of alternatives. Retailers need to stock products that are highly valued and
remove unhelpful/duplicate products. It is better to offer enough choice to meet a range of needs, but not so
much as to confuse. Moreover, I believe that encouraging brand loyalty is the key factor to reduce consumer
confusion as it reflects habitual purchasing and requires less decision-making, information seeking and brand
evaluation. In other words, the greater the brand differentiation, the greater the loyalty and the easier it is to shop
in a confusing environment (Criticaleye, 2010).

Positioning for retail chains


The large variety of shopping centers and the expansion of product offerings by traditional stores have intensified
retailing competition. Retail positioning is therefore an important consideration (Pride & Ferrell, 2013).
However, most retail chains tend to focus most of their efforts on operations and very little on positioning. In
fact, the main issue for retail chains is that the positioning goes hand in hand with their operations. In fact, it is
important to understand what lies at its core because it can add attractive values to a retail chain (Mathur, 2010),
attract customers to the shops (Hillesland et al, 2013) and create a image of the retailer in the customers mind
relative to its competitors (Dahlen et al., 2010).

It can be argued that a general misconception about positioning of retail chains is that most marketing managers
believe that differentiation is the main element in a position. In fact, it is not. Firstly, it is important to understand
the subject; retail positioning is about identifying an unserved or underserved market segment and serving it

through a strategy that distinguishes the retailer from others in the minds of those customers (Pride & Ferrell,
2013). Secondly, marketing managers must find out how to deliver on what is most important in the category
rather than trying to be different. In my opinion, it is not about differentiation when doing positioning;
particularly looking for what is different in their brand compared to competitors and with a vague notion of their
customers. In fact, it is about what is the most important driver for customers when they choose in the category
(Hillesland et al, 2013) and the assessment of category needs has to be done from customer needs (Dahlen et al.,
2010). In other words, the starting point is evaluating customer requirements based on a full review of customer
store experience (Dahlen et al., 2010) and probing deep into the customers collective and individual mind
(Eduardo, 2013). In fact, differentiation for a retail chain is not a tool for growth. Differentiation is a goal that is
achieved when the chain really delivers best on most important drivers in the category (Hillesland et al, 2013).

Also, it is important to identify which drivers will make more people visit the shops more often in the retail chain
category by conducting research, particularly, a regression analysis or a conjoint analysis using mathematical
models (Hillesland et al, 2013). In addition, perceptual maps are used to profile the relationship against
competition, requirement of category and customer needs, and the value proposition of the retail brand benefits
(Dahlen et al., 2010). Supermarkets, for example, display a wide range f positioning strategies while in every
retail category there are a handful of drivers that are important for customers when making their choice, known
as retail mix - location, price, ambience, customer service, advertising, promotion etc. However, these drivers
will only be relevant to consumers when they offer them a functional or emotional benefit to provide high
proportions of useful shopping value. In other words, the customers life will have to become cheaper, easier or
more pleasant because of it (Floor, 2010). For example, if the driver is price, best price is what matters (Hillesland
et al, 2013). For example, Aldis positioning strategy, when it first entered the UK market, was the lower-priced
no frills sector which it succeeded in achieving. Aldi manages it positioning through tight control of product,
store format and price positioning (Brandes as stated in Dahlen et al., 2010).

Shoppers and the in-store atmosphere


In most marketing literature, decision making is assumed to be top-down. However, it can be argued that
consumer information processing is more bottom-up in nature because majority of the decision making occurs
in the store (Hoch & Deighton 1989) and the display of products exercises a strong influence on customer
behavior. In fact, in my opinion, to comprehend the strong effect different kinds of display could have on
customer purchases demands a better understanding of how consumers perceive stimuli in the store environment
known as atmospheric effects or in-store atmospherics (Hillesland et al, 2013).

In-store atmospherics

influences how people feel about the products, which in turn affects the way they feel about the store.
Consequently, the products in the store will be evaluated differently on what type of atmosphere the retailer
creates (Schlosser as stated in Hillesland et al., 2013). Solomon et al. (2010) provide supporting claim by stating
that the store environment experts a major influence: shopping is like a stage performance, with the customer
involved either as a member of the audience or as an active participant. The quality of the performance is affected

by sales people or other customers, the image of a particular store and the feeling it imparts and the store fittings
and promotional materials which try to influence the shoppers decision.

On the other hand, a behavior where a customer is walking around the store, looking at the products, is an
example of a bottom-up process. In my opinion, it is a different kind of decision making than top down that is
largely influenced by bottom-up processes, relies on non-conscious processes during decision making, vision is
an input used in cognitive processes and cognitive processing. I believe that these factors further point to the
profound influence of in-store atmospherics on the decision making processes. It can be considered as one of the
most profitable (Hillesland et al, 2013) and a very strong tool in the hands of the retailer as in-store environment
arouses emotions in the customers and then these emotions affect their customer behavior (Pradhan, 2009).
Findlay (2002) suggests that the correct emotional combination of pleasantness and arousal created by store
atmosphere can stimulate shopping behavior within the store. On the other hand, I believe the more of a taskoriented shopping trip it is, the less effective atmospherics will be. That is, the more of a shopping trip where the
customer is striving to keep 8-10 items in his or her mind, the more artificially administered stimuli will risk
disturbing that recollection process. However, in defense of in-store atmospherics, I believe that it is worth
repeating as a kind of package for the assortment in the store as they have a very strong effect on consumer
behavior (Hillesland et al., 2013).

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Pride, W.M. & Ferrell. (2013). Marketing 2014. Cengage Learning
Ratner, R.K., Kahn, B.E. & Kahneman, D. (1999). Choosing less preferred experiences for the sake of variety.
Journal of Consumer Research 26, pp.1-15
Solomon, R., Bamossy, G., Askegaard, S. & Hogg, M.K. (2010). Consumer Behavior. A European Perspective.
Prentice Hall
Sorensen, H. (2009). Inside the Mind of the Shopper: The Science of Retailing Hardcover. FT Press
Stahlberg, M. & Maila, V. (2012). Shopper Marketing: How to Increase Purchase Decisions at the Point of
Sale. Kogan Page
Zentes, J., Morschett, D. & Schramm-Klein, H. (2011). Strategic Retail Management: Text and International
Cases. Gabler Verlag
2. Dahlen, M., Lange, F. & Smith, T. (2010). Marketing Communications. A Brand Narrative
Approach. John Wiley & Sons
Based on the literature review of Dahlen et al.s book titled Marketing Communications. A Brand Narrative
Approach, I came across different topics and have selected ones that I consider to be important and required
further discussion. As part of this assignment, I have started with a discussion on marketing communications
and have argued that the interactional and dialogue approaches to marketing communication are both justifiable
and compatible in todays marketplace as more and more companies are seeking to enter into a meaningful

dialogues with their customers, which enables more spontaneous and creative communication geared towards
solving business problems and to exploit business opportunities. I have then followed with a discussion on brand
narrative and focused on why it is important as a holistic approach to successful brand communications requires
a persuasive narrative. In addition, I have also discussed on how vital it is in todays marketplace for ongoing
brand narratives to be built and maintained in order to involve consumers and reinforce the brands story in all
brand encounters with numerous examples (eg. Green & Black, LEGO, Levi and Volvo). The third subject of
discussion is word-of-mouth which is essential for adoption of products and to achieve the life-time customer
value of repeat purchase, and have also discussed its greater impact and relevance from my personal viewpoint
and in todays digital era of Internet. Among many case studies that I read, I found it important to discuss
Destination Australia as it shows not only the effect of marketing communications on consumer behavior, but
also the effect on different cultures which undermined its success. It is relevant in todays marketing
communications context because if marketers fail to emphasize on the need to understand its target audience,
then it will affect the success of marketing communications and undermines the success of any marketing
campaign. The $180 million campaign was banned in many countries, did not generate any major increase in
visitor numbers; instead the number of tourists declined, criticized for not taking into account specific cultural
issues in target markets while developing a global marketing communication and finally withdrawn in February
2008. Another topic that I have chosen is integrated marketing communication (IMC) and have discussed its
significance in the twenty-first century, from both company and consumer perspective and the need for planning
in order to deliver a consistent message and how without IMC, a brands marketing communication becomes
less effective. Lastly, I have concluded with an argument that the goal for any relationship marketing must be to
retain existing customers rather than attracting new customers to keep the business headed in a successful
direction and the need for changing levels of brand communication and to invest in relationships with customers
to build and sustain brand longevity.

Significance of two-way dialogue in marketing communications


Marketing communications is concerned with engagement: the planned, integrated and controlled interactive
dialogues with key target audiences to help achieve mutually beneficial objectives (Dahlen et al., 2010).
However, in marketing, prominence was given to mastering the practice of one-way communications (Jenkinson
& Sain, 2003) which views the process as linear, similar to injecting its audience with information. It still has a
significant role, especially for audiences who prefer transactional exchanges (Fill, 2006). However, marketers
attempt to plan and craft persuasive messages that in many cases are not persuasive at all (Jenkinson & Sain,
2003). Dahlen et al. (2010) state that todays marketing communications has to be integrated, and must be able
to grow with the target audience; as well as reflect a two-way perspective which stresses on mutuality and shared
perspectives (Fill, 2006). In my opinion, ideas about how marking communication must work in todays world
must be founded on the notion and significance of the level of interaction that the organization and its stakeholder
audiences desire. However, it is also important to understand that two-way communication based on the
interaction with audiences who desire continuing contact or dialogue for those who desire a deeper, more

meaningful relationship (Fill, 2006), is at the heart of marketing communications (Dahlen et al., 2010). In fact,
being willing and able to enter into a dialogue indicates that there is a new emphasis on the relationships
organizations hold with their stakeholders (Fill, 2006).

It can be argued that the interactional and dialogue approaches to marketing communication are both justifiable
and compatible in todays marketplace (Fill, 2006). The reason why I keep this particular viewpoint is because
consumers correspond to the dialogue, which enables more spontaneous and creative communication geared
towards solving business problems and exploit business opportunities (Jenkinson & Sain, 2003). I believe that
such approaches help to inform, reassure and persuade consumers of the appropriateness of an organizations
product or service in matching their needs and wants. For example, GE extended its Ecoimaginaton ideal from
a linear television narrative to an interactive opportunity for customers to participate in the brand story and Nike
IDs Create your own shoe application provides a nonlinear online complement that allows consumers to Just
Do It. These examples further demonstrate how traditional linear, one-way, transmitted communication process
is being replaced by interactive, two-way, nonlinear dialogues (Dahlen et al., 2010).

It is an interactive process of learning together and that mutual understanding can take place even when the
parties agree to differ (Ballantyne, 2004). However, I believe that there must be a meaningful exchange of
information, because the organization needs to know that its messages are being received and interpreted in the
ways in which they were indented. It is not simply about sending messages out to the audiences but requires a
two-way process, a meaningful dialogue (McCabe, 2008). Personally, I feel that in todays marketplace new
technologies and new communication infrastructures give increasing numbers of people the opportunity to
experience both interactive and dialogue-based marketing communications. Moreover, I believe that it is more
important than ever for marketing practitioners to know when to move from one-way to two-way, to interactive
and dialogue based marketing communications (Fill, 2006). In summary, I consider that the importance of
understanding target audience requirements and the need to create long-term meaningful dialogue are the key to
successful marketing communications dialogues (Dahlen et al., 2010).

Brand Narratives
Every product has a name, a logo, unique packaging all material markers of the brand. In fact, they are the
shells of meaning which will speak to target audiences and carry the brand story. However, I have observed that
without a story, they are devoid of meaning and will only be informational and not transformational (Dahlen et
al., 2010). The most famous brands have markers: a name, for example, McDonalds and IBM; a logo the
Nike swoosh; a distinctive product design feature (the Harley engine sound) or any other design element which
is associated with the product. They have also filled them with meaning: the brands narrative. I believe that it
is important to discuss this topic because branding is about narratives, an ongoing connecting dialogue between
company and customer. It must be engaging, enjoyable experience; having a premise and a point; and be
memorable. People generally interpret the meaning of their experiences by fitting them into a story and remember

narratives (Dahlen et al., 2010). Stories translate information into emotion, and best stories stick to consumers
brain and their heart. I feel that applying storytelling principles to a brand development strategy simply makes
the journey more efficient and effective. For example, the brands with the strongest emotional connection with
their customers, for example, Apple, Jet Blue and Haley-Davidson, are masters at storytelling. They are good at
creating a story that the bulk of the storytelling responsibility is left to their cheer-leading customers (Conley &
Friedenwald-Fisherman, 2006). It is a co-creation, started by the company and ultimately joined and improvised
by the consumers and the brand communities (Mootee, 2013).

I believe that this is even more critical for challenger brands which enter mature markets and need to evoke a
brave new story through the visual identity of the brand against the competition (Denning, 2011). I agree that
tactical positioning is important for creating awareness, clarity and linking for the brand. In fact, a brand has to
capture all elements of tactical positioning name, logo, packaging, advertising, website and all other brand
encounters with target audience. However, all these elements need to be immersed in a narrative. Green & Black,
for example, started by a pioneering organic food company entered the mature market of chocolate category in
1991with a high quality, bittersweet dark chocolate bar packed with 70% organic cacao from Belize. It is now
the biggest organic chocolate brand in the UK and in the US. Green & Black achieved this by building a brand
narrative of ethical, organic quality differentiated by salience and emotion from traditional manufacturers
(Dahlen et al., 2010).

In my opinion, consumers are more interested in the brand narrative and that tactics like products and packaging
of products are dependent upon the long-term brand narrative because the most effective integrated marketing
communications are driven through a core brand narrative. In fact, all of the key elements of the marketing
communications strategy and process feed out from, and into, the brand narrative and for a holistic approach to
successful brand communications require a persuasive narrative (Dahlen et al., 2010). I believe that the brand
narrative, once communicated, becomes a promise that the company makes, and is therefore, the promise that
the company have to keep (Mootee, 2013). In my opinion, brand narratives in themselves are relatively easy to
dream up. However, the difficulty is turning that narrative into a reality by ensuring that the company actually
delivers on the implicit promise in the narrative (Belk, 2010). Wal-Mart, for example, faced the wrath of
consumer for its unconvincing storyline of investing in small local businesses as a big business bad practice
(Denning, 2011). LEGOs profit margin declined between 1994-2004 because of its inconsistent brand narrative,
lack of integrated marketing communications and over diversification with ventures into clothing, theme parks,
online gaming and movies that ultimately diluted the brand. Similarly, Levis brand is once again in decline
because of it outdated imagery, lack in promoting a lifestyle narrative and expansion beyond the core blue jean
lines as well as links with mobile phones and iPods (Dahlen et al., 2010). On the other hand, Green & Black
seem to have succeeded in keeping the brand promise. In addition, if IBM can turn itself into a company that
actually provides business solutions, rather than simply pushing boxes, it succeeded in the marketplace (Denning,

2011). If the company does not keep the brand promise, there will be gap between the desired perception of the
company and the actual perceptions (Mootee, 2013).
Lastly, I believe that it is now vital in todays marketplace for ongoing brand narratives to be built and maintained
in order to involve consumers and reinforce the brands story in all brand encounters (Denning, 2011). Volvo,
for example, owned the category for safety. The strength and actual metaphor safe cage soon became its
weakness because of conventional command and control approaches to communication which is
counterproductive, that resulted in a limited brand narrative. And so Volvo has now reconstructed a story built
on being fun, cool, ecologically sound and something to be shared with friends; all different stories but all
consistent with the overreaching brand narrative: Life is Better Lived Together. LEGO, on the other hand,
used online platform to engage users in online dialogues which are essentially user generated to deliver a
consistent content of the companys narrative. This approach allowed thousands of individual stories to be born
which make up the total LEGO brand narrative. The use of consistent content of the brand narrative to customers
and with integrated marketing communications programmes, the company has been successful in recreating the
LEGO legend. In my opinion, it is a suitable approach to build individual stories through communication and
content and to create engaging, ongoing brand narrative (Dahlen et al., 2010).

Word of Mouth
Word of mouth is a type of personal communication about a product. It reaches buyers through neighbors,
friends, family members and associates (Kotler & Armstrong, 2006) and is independent, unbiased, and lacking
in vested interest (Silverman, 2011). As a consumer, news and scandals about brands are at times topic of
conversation and generate much positive and negative word of mouth (Dahlen et al., 2010). Based on the
literature review, I have observed that there is a growing acknowledgement of the financial value of consumerto-consumer recommendations for a brand (Kirby & Marsden, 2005). However, given the importance of word
of mouth as a marketing tool and the ill effects of negative word of mouth, it can be argued that most companies
have not attempted to quantify its impact on sales (Goodman, 2009). In fact, little work has been done to compare
the financial value of positive recommendations to the financial value of negative recommendations. In my
opinion, these are important questions to consider because the marketplace is a mixture of brands having strong
advocates and many times equally strong detractors. In fact, I believe that the impact of word of mouth on
consumer responses is very often greater than planned communications because since it involves face-to-face
communication, it might have substantially greater impact on recipients (Zeithaml, 2012). Second, the source is
not seen as being from the company but from other customers (Dahlen et al., 2010). Third, word-of-mouth
communication can be more damaging since it is communicated to many others (Zeithaml, 2012).

Based on the literature review, my understanding is that opinion leaders or innovators are first to adopt brands
before helping to diffuse them throughout the rest of the market. In my opinion, these trendsetters can be used
in facilitating word of mouth communication about a new product or other innovation (Rogers, 1995). Apple

Computer, for example, has long relied on its consumer following to spread by word of mouth their satisfaction
with Apple products such as PowerBooks, iPods and iPhones (Pride & Ferrell, 2010). In fact, word of mouth is
particularly relevant to the introduction of new products or services where connected marketing can help ignite
conversations in target markets which result in positive word of mouth and ultimately add value to the brand.
For example, the importance of word of mouth marketing was demonstrated by a U.K trend watcher, Haymarket
Publishing Services, in its study in 2002 that shows the primary motivators for people to try a new product or a
new brand. The strength of advice from friends and families (60%) and seeing others using the brand (27%)
suggests that word of mouth can have a powerful influence on the decision of a customer to try and buy a new
product or brand (Hutchinson, 2005).
I believe that in todays world, brand organizations are beginning to understand the power that digital tools play
in opinion sharing. The Internet and other digital device have made the spreading of opinion as virulent as viral
communication can get and which is made available to multitude of people and institutions (Obbelode, 2013).
Word of mouth takes place in many ways: on Web-based opinion platforms, in forums, news groups, blogs etc.
In my opinion, the companies most effective with this kind of marketing are those who give their customers
reasons to talk about products to others, and then facilitate that communication. One good example comes from
Amazon.com, the worlds biggest internet retail store. Amazon encourages its customers to chat with one another
and to send in their own book reviews, which are published on Amazons website. Amazon also encourages its
customers to help each other figure out how to use companys products through word of mouth feedback (Xu &
Fulton, 2009).

I feel that it was important for me to partake in this particular topic discussion because individual purchases of
products and services are manifestations of strong, enduring and complex relationship (Dahlen et al., 2010) and
at times as a consumer I rely on others opinions, word of mouth and electronic word of mouth as well as inform
myself through forums and blogs to gain more information before making a purchase decision, particularly,
travel bookings. I peruse Internet based opinion forums, newsgroups and blogs to find word of mouth
information and to inquire about other participants experiences and level of satisfaction. Some of the reasons
why I keep this particular viewpoint are to reduce risk and to save search effort, however, keeping in mind the
credibility of the source of information. I believe that when stored in memory is not sufficient to make a purchase
with confidence, consumers utilize an external search which is frequently purchase specific and social acceptance
is a main purchase motivation (Dahlen et al., 2010). In fact, 90% of consumers trust other consumers and their
recommendations concerning buying advice (Pride & Ferrell, 2010). In addition, I share my travel experiences
through the internet on Web-based opinion platforms such as tripadvisor.com and bookings.com. All in all,
internet search engines are becoming information source of choice that offers a rich search experience. Moreover,
in reference to Dahlen et al. (2010), I believe that word of mouth marketing and its elements must be seen as a
catalyst for spreading the word, which is among the best central strategies that any company can use to draw
from the strength of the idea even in todays marketplace. Lastly, as the life-time customer value of repeat

purchase is vital to companies, the further spread of word of mouth is essential for the adoption of products
(Dahlen et al., 2010).

Analysis of Case Study: Destination Australia


The notion of place branding refers to the promotion of a nations economy, countries, cities and regions to try
to create and maintain strong brand positioning strategy. In 2006, Australian tourism had faced the unique
problem of interest shown in visiting the country not being translated into actual tourist inflows. Tourism
Australia commissioned Saatchi and Saatchi to promote Australia. The desired communication effects were to
promote the country as a rough and wild but friendly place for tourists. The advertisements in the So Where the
Bloody Hell are you? campaign featured a total of 11 scenes and 13 still images depicting a diverse range of
experiences on offer in Australia. The campaign acknowledged the impact of opinion leaders and influential
customers. Initial response was very positive, encouraging many additional tourists to visit the country.
However, the campaign became controversial from the start in some of the target markets (Dahlen et al., 2010).
What does the example tell us and why is it relevant in todays marketplace from a marketing communications
perspective?

The example shows not only the effect of marketing communications on consumer behavior, but also the effect
on different cultures which undermined its success. I believe that part of the problem with marketing
communications is the way marketing is communicated. In this case, Tourism Australia did not take into account
the impact that the campaign would have on other cultures. The reason why the example is relevant in todays
marketplace is because if marketers fail to emphasize on the need to understand its target audience, then it will
affect the success of marketing communication. I believe that it is vital for marketers to take into consideration
the differences between cultures that they want to appeal to into account (Gerber & Plessis, 2009). Personally, I
feel that the case study lacks a thorough understanding of the consumer and the environmental factors which
surround them, which is even more vital of marketing communications in an international context. I believe that
where we can reasonably expect to understand the important facets of consumer behavior in a domestic context,
it is far less likely to be the case in different and separate markets where culture, tradition and other factors may
result in vastly different meanings attached to the communication message. Therefore, in order to succeed, a
sound understanding of different cultures is required, particularly those of the target audience. If it is
underestimated, then the results can be devastating (Fill & Hughes, 2006).

Tourism Australia was criticized for not taking into account specific cultural issues in target markets while
developing a global marketing communication. The campaign attracted the rage of many visitor country
regulators because of the use of the swear words bloody and hell. UK banned it for the use of word bloody
while Canada banned it for the opening line in the advertisement of the campaign. Asian countries were
particularly distressed. Due to the alienation of different cultures, the $180 million campaign did not generate
any major increase in visitor numbers; instead the number of UK tourists fell by 2.3%, Japanese tourists by 5.7%

and the number of German tourists dropped by 4.7%. Tourism Australia withdrew the campaign in February
2008 (Dahlen et al., 2010). I believe that market research prior to launching the campaign in the global market,
would have played an important part in identifying areas of similarities in order to allow for the development of
a single consistent message, which is the objective in this case study (Fill & Hughes, 2006).

Integrated Marketing Communication


I believe that the transition from promoting to communicating with customers has changed marketing
communications from both an organizational and consumer perspective. In my opinion, getting close to the
customer is as self-evidently obvious as it is fundamentally important. If marketing communications is the
pathway through the customer, then any approach should start by looking at the customer (Dahlen et al., 2010).
This topic is of particular interest to me because in the twenty-first century, integrated marketing communication
(IMC) is even more important from both company and consumer perspective because when faced with an IMC
approach; the customer will understand the different information and will not be confused by the vast amount of
it from all contact points (Kitchen & Brugmann 2010), while companies adopt it to create synergy among
different marketing elements to achieve short and long term gains (Dahlen et al., 2010).

Based on the literature review, my understanding is that IMC is about planning in order to deliver a consistent
message. I believe that the focus must be on a rigorous planning process that will identify appropriate target
audiences, set specific communication objectives for these target audiences, develop marketing communication
that will accomplish those objectives in a consistent way, and find the best ways to deliver the message. In IMC,
one is setting communication objectives and selecting media to maximize their ability to effectively reach the
target audience. However, rather than considering various ways of using advertising or some form of promotion,
the planning and execution of all marketing communication should be integrated (Percy, 2011) but together they
must present one clear, coherent message (Dahlen et al., 2010). In fact, it can be argued that without IMC, a
brands marketing communication could actually be significantly less effective because the lack of coordinated
communications planning and the delivery of a consistent message, could lead to multiple portrayals of a brand
in the market. If there is lack of a consistent look and feel to all of a brands marketing communication there will
be no synergy (Percy, 2011). For example, LEGOs profit margin declined between 1994-2004 because of its
inconsistent brand narrative, lack of integrated marketing communications and over diversification with ventures
into clothing, theme parks, online gaming and movies that ultimately diluted the brand (Dahlen et al., 2010).

In my opinion, with a consistent look and feel, the overall impact of the campaign is much greater than the sum
of its parts because the processing of each piece of marketing communication is facilitated by the prior processing
of other messages in the campaign (Percy, 2011). The most successful communications are those in which the
consumer receives one message from various sources (Dahlen et al., 2010). I believe that a promotion that
contains the same general look and feel as the brands advertising, which is carried over with the packaging and
reflected in in-store merchandising, means that prior exposure to any of these pieces of marketing

communication will aid in the processing of the others. On contrary, if each of these pieces has its own unique
look, there will be no prior learning or foundation available when a consumer sees it (Percy, 2011). In fact, it
may lead to an incoherent brand image, which can negatively influence consumer behavior and recall behavior
(Kitchen & Brugmann 2010) given the short attention time and instant gratification of consumers today (Dahlen
et al., 2010).

From adoption point of view, IMC requires fundamental changes to the way that marketing communications
have traditionally been practiced (Chitty et al., 2011). However, technology has made integration possible and
IMC programs have already been adopted by various organizations, such as FedEx and Dell (Kitchen &
Brugmann 2010) while some argue about its wide adoption by companies (Percy, 2011; Ang, 2013). Based on
the literature review, one of the major barriers is the structure or organizational make-up of a company or agency.
At its core is the organizations inability to manage the interrelationships of information and material among the
various agencies and vendors involved in supplying marketing communication services (Percy, 2011). Lastly, I
believe that successful implementation of IMC theory needs enterprise to adjust its organization structure (Shin,
2013). LEGO, for example, was able to rebuild the companys brand narrative that literally means play well
through organizational restructuring and alterations to the supply chain, and particularly through the application
of integrated marketing communications after making losses in four out of the seven years between 1998-2004
and losing $250, 000 a day (Dahlen et al., 2010).

Relationship Marketing
I have observed that the narrow concept of relationship marketing has its roots in a business-to-business
orientation and often describes an expansion of personal selling, account management and the management of
the marketing/customer interface. Morgan and Hunt (as stated in Dahlen et al., 2010) offered a broader
perspective by defining it as all marketing activities directed towards establishing, developing and maintaining
relational exchanges. It is a strategic approach that aims at making consumers feel sense of relationship or
personal connection with the brand. Tesco differentiated itself from Sainsbury and other discounting grocery
stores by building a relationship brand rather than competing through an everyday low pricing attack in 1990s.
Tesco targeted young mothers and toddlers, an underperforming sub-segment of consumers to experience the
brand in a more individualized way by offering advice on pregnancy planning, immunization and dietary
considerations. This allowed young mothers to experience the Tesco brand as all customers do (Dahlen et al.,
2010). What does the example tell us? In my opinion, Tesco has tried to create tight relations with sub-segments

of customers, through relationship strategy i.e. by gathering information and using it intelligently to provide soft,
personalized and customized advantages (Pelsmacker et al., 2010).

Harley-Davidson, for example, created the Harley Owners Club which has about 200, 000 members worldwide.
Besides motorbikes, Harley-Davidson also offers an insurance programme, a travel agency, an emergency
roadside service, two magazines, member competitions and 750 local chapters. Nestle regularly sends
information to young mothers. It employs qualified dieticians to operate its customer lines and runs a chain of
baby cafes to cater for families away from home (Pelsmacker et al. 2010). The examples show the importance
of relationship marketing in building long-term and mutually beneficial customer relationships by creating and
maintaining relationships of value (Dahlen et al., 2010). However, it can be argued that the goal for any
relationship marketing must be to retain existing customers rather than attracting new customers to keep the
business headed in a successful direction. Marketers still tend to spend and exert more effort on gaining new
customers rather than on keeping current customers satisfied and loyal. In fact, the part of marketing budgets
assigned to promotional activities aimed at attracting new customers is five times greater than the budget spent
on current customers. In my opinion, the efforts involved in attracting new customers are much higher than those
required to keep the current customers loyal. On the other hand, some claim that companies can realize profit
increases of 35-85% just by decreasing customer loss of 5%. Moreover, the profit per customer will also increase
the longer a customer stays with the company (Pelsmacker et al. 2010). Therefore, it is important to discuss this
topic further as there is a need for changing levels of brand communication and to invest in relationships with
customers to build and sustain brand longevity (Dahlen et al., 2010). In fact, an equal amount of attention and
resources should be devoted to keeping the customer base that already exists because many firms make the
mistake of focusing on new customers at the expense of existing customers. From a broader perspective, my
understanding is that marketers must view relationship marketing as a process in which customers are developed
and satisfaction and loyalty are increased over time, thereby deepening the relationship (Reid & Bojanic, 2009).
I have observed that relationship marketing benefits both, the firm and the customer as it has been demonstrated
in a number of studies that profit increases when customer loyalty increases while customer can obtain social
benefits from these relationships (Bejou & Palmer, 2006). However, communications will only achieve customer
complicity if the organization/customer relationship is a meaningful part of the consumers life (Dahlen et al.,
2010) and results in trust, mutual respect and commitment to continue the relationship rather than a hard sell
selling tactic or a single event which are not connected with each other (Ma & Ta, 2013).

References
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Bejou, D. & Palmer, A. (2006). The Future of Relationship Marketing. Routledge


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3. Tidd, J. (2010). Gaining Momentum. Managing the Diffusion of Innovations. Imperial College Press
This assignment in based on the literature review of one of the chapters in the book Gaining Momentum.
Managing the Diffusion of Innovations. The chapter is titled Understanding Consumer Response to Innovations
by Qing Wang. The authors (Wang) view of innovation begins with the assumption that it is costly to develop
and, many have failed on their promises. Secondly, numerous studies have been carried out to explore the success
or failure factors for innovation, relatively few studies have explored factors influencing the process of new
product adoption. Wang (2010) has sought to examine consumer responses to innovations. I believe that it is
important to discuss this topic further as it is under researched in the area of innovation management.
Wangs (2010) view of why consumers respond to new technologies/products differently is restricted to
consumer related characteristics and innovation related characteristics. From a broader perspective, I believe that
it is important to include all the four major factors, for a better understanding of the factors that influence the
process of new product adoption. These factors are innovation, consumer, firm and environment related
characteristics. Based on the literature review, I believe that innovation related characteristics include relative
advantage, relative cost price, perceived usefulness, ease of use, and network externality (Shane, 2009). Wang
(2010) states that a number of consumer related characteristics are found to be critical to for new product
adoption, such as consumer innovativeness and lifestyle. Consumer innovativeness is measured by the
behavioral profiles of different adopters such as socioeconomic status, personality variables, and communication
behavior. However, it can also be argued that consumer innovativeness also leads to over adoption, for example,
the status-conferring aspect of a consumer innovation may be so important to an individual that adoption occurs,
even though other perceptions of the new idea would lead one to expect that the innovation might be rejected
(Rogers, 1995). Others consumer related characteristics include class, risk deposition, geodemographics,
economic value need, and word of mouth behavior. The firm related characteristics comprise firm size, firm
marketing efforts, and firm reputation. The environment related characteristics that drive new product trials and
repeated purchases include infrastructure, availability and demand for related products, and market conditions.
Moreover, Rogers (2003) proposes that relative advantage and relative price determine the success of an
innovation.

In relation to the above argument for the need to include firm and environment related characteristics for a
holistic understanding of the topic, I believe that firm characteristics, size and reputation of the firm introducing
a new product influences its adoption because potential adopters are likely to try a new product from a reputed
firm and may respond to the same innovation differently. In addition, firms marketing mix efforts such as
advertising; sales force and distribution significantly influence both trial and repeat purchase for a new product.
On the other hand, environmental factors also contribute toward the purchases of a new product. Presence of
right technological and economic infrastructures is important for the adoption of innovations. The availability
and demand for related products such as complements and accessories also determine the rate and level of
adoption of a new product. The market conditions at that time of new product introduction also influence first

and repeat purchases. In addition, competitors actions to the introduction of the new product innovation are also
likely to affect a new products purchases (Shane, 2009).
Besides the four characteristics described above, I believe that the probability of individuals adoption and
subsequent diffusion of an innovation throughout a social system depends not only on perceived newness and
the degree of behavioral change required, but also on certain innovation attributes influencing adoption (Lantos,
2010). In other words it is also important to understand the perceived uniqueness of the new idea, process or
technology. The Innovation Profile, an instrument that calculates potential adopters perceptions about an
innovation, is a promising predictive tool based on a prior evaluation of attributes to explore the factors
influencing the process of new product adoption. Reliability, applicability and effectiveness are central to
innovation adoption process. I believe that focusing on innovation attributes may provide managers with realistic
Innovation Profile that they can use to develop specific, tailored strategies to ensure the successful
implementation of particular innovations (Dearing & Meyer, 1994).

Another important aspect that Wang (2010) fails to address in the discussion is the need to collaborate with
employees and consumers in the whole process for better adoption of the new innovations. I feel that managers
need to assess organizational members perceptions of innovation attributes and employ this information as a
diagnostic tool to evaluate the fit of an innovation within the organization, to anticipate problems arising as a
result of innovation, and to modify innovations to reflect the changes that stakeholders deem necessary (Johnson,
2005). It is closely related to open innovation where different stakeholders participate in the new product
development process. In fact, product development done in an open manner leads to a broader set of adoption
opportunities for consumers while knowledge sharing and collaboration can allow organization to acquire
necessary knowledge and capabilities more efficiently than in-house development (Bidgoli, 2010). I feel that an
important aspect of open innovation is the direct involvement of consumers in the new product development
process. In my opinion, such an approach will help both the company and consumer to grasp how innovation is
perceived (new technology, new attributes, new benefits etc.) as firms evaluation of product newness may not
reflect consumers perception of innovation (Aledda, 2013). In fact; perceived newness of a product can
negatively affect consumers adoption intention of the product (Wang, 2010). On the other hand, the continuing
growth of digital environment cannot be neglected as it offers opportunities and challenges about how to model
adoption behavior and the diffusion process for new products and technologies. The digital environment can
alter the quality and quantity of information that potential adopters use in deciding whether and when to adopt
an innovation facilitating both word of mouth and marketer controlled communications (Mahajan et al., 2010).
Also, my understanding is that the categorization of consumers along their technology adoption also provides a
unique approach to segmenting the market as different adoption categories need different marketing strategies
(Bidgoli, 2010).

According to Rogers (2003), only about 0.2% of studies within the diffusion-of-innovation paradigm have been
devoted to consumer behavior after the technology has been acquired. This calls for the need to address this
critical gap, and investigate the drivers and the consequences of new product usage (Tidd, 2010). In my opinion,
information on post adoption consumer behavior would yield important marketing insights to provide alternative
strategies that are unique to specific consumer groups. The prospects for an innovations success can be greatly
enhanced by researching how different consumer group form and evolve in reaction to the innovation. In fact,
the development and launch of future innovations can be improved by understanding the development of post
launch behavior groupings. In addition, individual behavioral segmentation can also lead to isolating important
variables of segment differences (Bidgoli, 2010).

References
Aledda, R. (2013). Key Success Factors of New Products / Product Innovations. GRIN Verlag
Bidgoli, H. (2010). The Handbook of Technology Management: Supply Chain Management, Marketing and
Advertising, and Global Management v. 2. John Wiley & Sons
Dearing, J.W. & Meyer, G. (1994). An Exploratory Tool for Predicting Adoption Decisions. Science
Communication
Johnson, D. (2005). Innovation and Knowledge Management. Edward Elgar Pub
Lantos, G.P. (2010). Consumer Behavior in Action: Real-Life Applications for Marketing Managers. M.E.
Sharpe
Mahajan, J., Muller, E. & Wind, Y. (2010). New-Product Diffusion Models. Springer
Rogers, E.M. (1995). Diffusion of Innovations. Free Press
Rogers, E.M. (2003). Diffusion of Innovations, Fourth Edition. Free Press
Shane, S. (2009). The Handbook of Technology and Innovation Management. Wiley-Blackwell
Tidd, J. (2010). Gaining Momentum. Managing the Diffusion of Innovations. Imperial College Press

3. Tidd, J. (2010). Gaining Momentum. Managing the Diffusion of Innovations. Imperial College Press
This assignment in based on the literature review of one of the chapters in the book Gaining Momentum.
Managing the Diffusion of Innovations. The chapter is titled Diffusion of Pharmaceutical Innovations in Health
Systems by Rifat A. Atun, Ipek Gurol-Uranci and Desmond Sheridan. The authors view on diffusion of
pharmaceutical innovations in health systems begins with the need to understand the importance of innovations
to sustained improvements in health, the factors which encourage or hinder innovation and adoption of more
holistic approach to policy making and regulation. Atun et al. (2010) argue that the diffusion of innovative
medicines has not been adequately explored, and do not take a holistic view of innovation and health delivery.
In my opinion, it is important to discuss the topic further to get a better understanding of the narrow efficiency
measures that create complexities in the diffusion and adoption of pharmaceutical innovations in health systems.

Based on the literature review, it can be argued that policies based on partial view of innovation can adversely
affect innovation. A partial view that focuses on technology push alone may encourage investments in R&D that
lead to outputs not valued by users. On the other hand, the partial view that focuses on market pull alone may
lead to the development of products or services that the market wants but risks detachment from technological
development. I have observed that both of these dominant approaches tend to be generic rather than domain
focused (Atun et al., 2010). Compared to other industries, the innovation process in the biopharmaceutical
industry has some characteristics that are unique to this knowledge-intensive domain. It is characterized by
lengthy life cycle, regulatory environment and multiple stakeholders involved in decision making as well as very
high risk during the development. In the past, only 1 out of 5, 000 product ideas on average was eventually
launched on the market, and only 1 out of 10, 000 substances used to become a marketable product. Modern
information technology has dramatically increased efficiency and effectiveness in the biopharmaceutical
innovation phase. However, only 3 out of 10 drugs generate revenue that meet or exceed R&D revenues, and 20
percent of products with the highest return generate 70 percent of total revenues. Another important feature is
that new technologies and solutions are developed over time by working in both laboratory and at patients
bedsides. All in all, it is critical to understand these unique features of the innovation process in the biopharma
sector while the predominant innovation models are shortsighted in this context (Gassmann et al., 2008).

I have learned that the health system is composed of interacting elements that include financing, resource
allocation and provider payment systems, stewardship and organizational arrangements and service provision.
My understanding is that policy makers manage these elements through regulations to achieve health system
objectives and goals. This interaction affects the way rules, norms and enforcement mechanisms are
implemented to generate system responses (Atun et al., 2010). Also, the political environment defines the broad
spectrum of government involvement in health care, ranging from financing to regulatory interventions which
are at times counterproductive (William & Torrens, 2007). I believe that governments should encourage the
adoption and diffusion of health-improving innovations and mechanisms that efficiently allocate resources to

most cost-effective inventions (Atun et al., 2010) because counterproductive regulations undermine the health
systems that do not result in comprehensive solutions (Gostin, 2014).

I believe that it is important to understand how changes in the health system elements and regulations influence
the uptake and diffusion of innovation. Many countries have introduced cost containment policies that
underscore the dangers of a partial understanding of innovation. For example, price controls have severe effects
on the R&D for future drugs as it reduces profitability of new innovative drugs. With lower expected profits,
drug companies would be less willing to risk hundreds of millions of dollars on R&D. Hence, in my opinion,
with fewer breakthroughs, treating diseases will be more expensive (Feldstein, 2011). On the other hand, I
believe that how adequately prices and profits indicate the kinds of drugs that consumers want to buy determines
the pace and direction of drug innovation. I agree that high prices on new drugs encourage continued innovation
but a drugs price must reflect its value to its consumers (Acharyya & Kar, 2014). Similarly, for drug innovators,
reference pricing is a distinct disadvantage, and many simply stopped pursuing innovations within the
therapeutic categories (Trumbull, 2012). Reference price appeared to decrease compliance among low-income
persons and reduced the utilization of innovative drugs, but also reduced out-patient visits by these patients (Atun
et al., 2010). Their introduction did not necessarily decrease the drug price as intended by many governments
while pharmaceutical expenses continued to rise. My understanding is that the use of reference price as a
reimbursement benchmark implies that government will only pay a specific price covered by insurance while
any excess above the reference price has to be paid by the insured person (Leidl, 1997).

Moreover, parallel imports lower the innovation level welfare of both poor and rich countries because parallel
imports allowed by rich countries to ensure market access for their poor patients may worsen market access for
poor patients in poor countries and may not cater to the poor countries at all. It is a mechanism in which a drug
is purchased in an European Union Member State, where the price is lower, repacked and sold in another member
state, in which its price is higher (Acharyya & Kar, 2014) On the other hand, generic entry promotes market
competition, which in turn may overweigh the effect of revenue loss and provide a positive incentive for
pharmaceutical manufacturers to increase investment in R&D. However, in a regulated market, price regulation
undermines generic competition, which in turn reduces its favorable effects on pharmaceutical innovations
(Sloan & Hsieh, 2012).

Moreover, at present, cost-sharing schemes as a regulation alone are unlikely to sustain good quality public
services while limited drug budgets are a constant source of political tension (Seiter, 2010). It encourages the
use of generic low-cost drugs and delaying the introduction of new innovative drugs (Atun et al., 2010). Based
on the literature review, cost sharing is interlinked with the rest of the health-care system through its reliance on
the systems resources (Seiter, 2010). On the other hand, disease management programs may lead in higher
pharmaceutical costs, while an appropriate increase in the uptake of innovative medicine leads to few
hospitalization, improved quality of care and therefore overall cost saving and improved health outcomes (Atun

et al., 2010). In addition, health insurance keeps consumers from baring the full weight of medical costs and
helps firms to create incentives to invest in R&D (CBO, 2007). In contrast, lack of insurance coverage restricts
access to essential treatment (Blustein as stated in Atun et al., 2010), reduces the utilization of prescription drugs
(Cunningham as stated in Atun et al., 2010), and hinders the uptake and diffusion of innovations (Atun et al.,
2010).

Based on the literature review, I feel that regulatory intervention such as price control, reference price, cost
sharing schemes etc. aimed at rationing novel technologies or services to reduce cost and improve efficiency
may adversely affect effectiveness and indeed overall cost of the health system. In fact, a partial understanding
of innovation processes leads to efforts that do not result in comprehensive solutions as reduction in service or
technology access in one part of the system causes increased utilization of services in other parts. All in all, I
agree with Atun et al.s (2010) views that there is a new for more holistic approaches to policy making, with
careful examination of the possible impact of regulatory interventions on system objective.

References
Acharyya, R. & Kar, S. (2014). International Trade and Economic Development. Oxford University Press
Congressional Budget Office. (2007). Research and Development in the Pharmaceutical Industry. CBO
Feldstein, P.J. (2011). Heath Care Economics. Cengage Learning
Gassmann, O., Reepmeyer, G. & Zedtwitz, M. (2008). Leading Pharmaceutical Innovation: Trends and Drivers
for Growth in the Pharmaceutical Industry. Springer
Gostin, L.O. (2014). Global Health Law. Harvard University Press
Leidl, R. (1997). Health Care and its Financing in the Single European Market. IOS Press
Seiter, A. (2010). A Practical Approach to Pharmaceutical Policy. World Bank Publications
Sloan, F.A. & Hsieh, C.R. (2012). Health Economics. The MTI Press
Tidd, J. (2010). Gaining Momentum. Managing the Diffusion of Innovations. Imperial College Press
Trumbull, G. (2012). Strength in Numbers: The Political Power of Weak Interests. Harvard University Press
William, S.J. & Torrens, P.R. (2007). Introduction to Health Services. Springer

4. Solomon, R., Bamossy, G., Askegaard, S. & Hogg, M.K. (2010). Consumer Behavior. A European
Perspective. Prentice Hall
Based on the literature review of Solomon et al.s book titled Consumer Behavior. A European Perspective, I
came across different topics and have selected ones that I consider to be important and required further
discussion. I have started with a discussion on the significance of brand communities in todays society as
branded goods or services often serve as a shared interest and followed by an argument that a brand community
is not just people who are lumped together but are devoted customers who share a community hierarchy, social
norms and relationships that are formed through consumption activities. The second topic that I have chosen is
materialism, in which I have focused on the shift from materialism to downshifting in order to avoid
overconsumption and its serious impact on the environment. Lastly, the discussion focuses on socio-cultural
factors and its significance in influencing consumption. I have concluded with an argument that socio-cultural
factors provide the framework for all consumption.

Brand Communities
Interactivity between brands and consumers are becoming even more common in marketing (Meister, 2012).
Consumers are increasingly organizing communities based on their consumption of and attachment to particular
brands, so called brand communities (Solomon et al., 2010). I believe that it is important to discuss this topic
further because the importance of brand communities is increasing significantly as in todays society branded
goods or services often serve as a shared interest. My understanding is that brand communities are exemplary
for the new type of community because they are non-geographic and can exist anywhere or even virtually. On
the other hand, brand communities have today reached a high level of popularity that spans almost all product
categories. Marketers have discovered this tool for relationship building with their customers particularly in the
twenty-first century to achieve lifetime relationships between brands and customers (Solomon et al., 2010,
Meister, 2012). In my opinion, their primary focus is a shared interest in a brand (Muniz & OGuinn, 2001) and
a shared communitys values and meanings are the frame of reference that influences consumption behaviors
(Davis & Piven, 2013).

It can be argued that a brand community is not just people who are lumped together; my understanding is that
they are devoted customers who share a community hierarchy, social norms and relationships that are formed
through consumption activities. It is interesting to learn that brand communities revolve around everyday
activities which may sufficiently guide peoples consumption and social activities to form the bases of
subcultures of consumption (Davis & Piven, 2013). Another interesting aspect is that brand communities may
transcend geographical boundaries and include various consumer groups (Muniz & OGuinn, 2001). It can also
be further argued that brand communities are built not from a need to express shared identity but from a desire
to meet members specialized needs and provide social links brand affiliations. In my opinion, the focus lies on
values and needs (Muniz & OGuinn, 2001). Therefore, the notion of brand communities need to go beyond

image-building endeavors while the idea is to help members to satisfy a variety of needs, from finding
information and emotional support to enhancing self identities (Davis & Piven, 2013). Brand communities play
a vital role in the brands ultimate legacy and are part of the brands larger social construction. Although a brand
community is commercial in its nature as they form around brands and have a great influence on brand loyalty,
brand equity and other company goals yet they solely observe privately organized non-commercial brand
communities and do not consider brand communities initiated by a firm (Muniz & OGuinn, 2001). I believe
that customers appreciate the opportunities to form direct relationships with the people behind the brand as well
as with other customer (Davis & Piven, 2013). Personally, I feel that getting together and sharing experiences is
another form of reward for consumers. In my opinion, as marketers seek to increase marketing efficiency,
customer loyalty and brand affinity by building brand communities, they must understand what brand
communities require and how they function (Fournier & Lee, 2009). In fact, it should go beyond purchasing and
foster interaction with the brand and other customers (Kapferer, 2004). Research suggests that longer term brand
community membership and higher level of participation in that brand community increases the probability of
adopting a new product from a preferred brand and decreases the probability of adopting a product from an
opposing brand (Thompson & Sinha, 2008).

Materialism
Based on the literature review, I believe that consumers vary in the importance they attach to worldly
possessions, and this orientation in turn has an impact on their priorities and behaviors. Materialism refers to the
importance people attach to worldly possessions (Solomon at al., 2010). In my opinion, materialism is one of
the values that have become increasingly prevalent in Western cultures where people gauge satisfaction in terms
of what they have or have not acquired in life and in terms of desired possessions (Hoyer et al., 2012).
Materialism is also a competitive striving to have more than others (Mooij, 2010) and maybe considered a more
general value underlying other consumer values, thus reassuring that an obvious way of realizing ones values
is through consumption (Solomon at al., 2010).
According to Mooij (2010) possessions make people happy and are valued more than people. However, it can
be argued that materialism does not directly relate to happiness, for example, a bigger house, a nicer car, or more
expensive clothes. In fact, research actually indicates a weak connection between material possessions and
happiness. My understanding is that there are indications of a value shift from materialism to greater interest in
environmentally sustainable products and services (Solomon at al., 2010). In fact, financially strapped consumers
who previously placed a high value on materialism began shifting away from this value. They have been seeking
to spend their time wisely and gain hedonic value from positive experiences, smaller purchases, and other
alternatives to materialism (Hoyer et al., 2012).

It can be further argued that the priorities of materialism tend to emphasize the wellbeing of the individual versus
the group, which may conflict with family or religious values. In my opinion, this conflict may help to explain
why people with highly material values tend to be less happy. Hoyer et al. (2012) provide supporting claim by

stating that materialism leads to value conflict between the individual orientation of materialism and the group
orientation of family-oriented values and a reduced sense of wellbeing. In my opinion, refocusing on experiences
makes sense because the happiness associated with acquired possessions fades quickly, while the positive
feelings associated with experiences linger longer (Hoyer et al., 2012). On the other hand, materialism can be
directly implicated in the excess consumption that threatens our environment (Mooij, 2010). My understanding
is that large numbers of consumers are trying to reduce their reliance on possessions by downshifting (Solomon
at al., 2010). I believe that in a highly materialistic society, downshifting is quite subversive and challenges the
notion of social status, competitive consumption, materialism, and the more is better. Success is subsequently
redefined as contentment and meaningful work, as is having time to participate in fulfilling activities with loved
ones. Based on the literature, it can be stated that downshifting has increased in popularity because of its
environmental connection. Consuming less, reusing goods, and recycling items make downshifting a natural ally
with the green movement (Mansvelt, 2010).

Significance of socio-cultural factors in influencing consumption


Based on the literature review, it can be stated that there is a dual aspect of consumption. It fulfills a consumer
material need and a socio-cultural need (Mascarenhas, 2007). My understanding is that consumption is
embedded within the social, cultural and symbolic structures (Mascarenhas, 2007). Commodities have symbolic
meaning or signification that extends far beyond what the producer intended. I believe that consumer tastes are
determined not privately but socially, that is, within social groups; consumption takes place within social
structures or the social structure is the site of consumption. All acts of consumption have social and cultural
dimensions while consumer spending is influenced, to a greater extent, by powerful socio-cultural forces
(Sheehan, 2010). Thus, in my opinion, it can be argued that consumption is best understood within a sociocultural context in (Mascarenhas, 2007) because a consumer is a socialized individual, who has personal agency,
but whose feelings, thoughts and actions are subject to a range of socio-cultural factors. These consist of
influences from the cultural and social environment and range from the overall society and its culture to
significant others such as family, friends and colleagues (McDaniel et al., 2011). Socialized consumers act
collectively with others in groups. The desire to belong to a group, and to feel, think and act collectively, is a
very strong human urge. Socio-cultural influences on the consumer are stronger, purer and more focused in a
group setting (Sheehan, 2010).

In reference to Mead (as stated in Sheehan, 2010) it can be further argued that society and groups exists prior to
the person. This means that a person must be conceptualized as being born into and developing within an already
existing society, with its groups, social-structures, classifications, shared meanings and collective ways of
feelings, thinking and acting. Therefore, the mind and sense of self of an individual consumer must evolve in
this socio-cultural context. Hence, this further strength the argument that the behavior of the consumer is best
explained as part of a prior social whole (Sheehan, 2010). Samli (1995) also provides supporting claim by stating
that individual factors, which include gender, age, family life-cycle stage, personality, self concept, and lifestyle,

are unique to each individual but are prescreened and further modified by socio-cultural factors by individuals.
In fact, the broadest and most persuasive of all socio-cultural factors shaping consumers decision making is
culture, the symbols, values, and beliefs, that is, the total way of life, shared by members of a society. For
example, someone of a Chinese origin might shop for specific ingredients at an Asian supermarket while some
consumers are influenced by trends and will want the latest must have toys, fashion items or technology. Each
of these levels of sociocultural influence forms a base for market segmentation because they combine to affect
a consumers lifestyle. This societal environment has a significant impact on how consumers evaluate, buy, and
use products (Lantos, 2010). Therefore, in my opinion, it is safe to state that socio-cultural factors influence
every decision the individual makes and individual consumer factors interact with socio-cultural factors
simultaneously and continuously.

It can be further argued that socio-cultural factors provide the framework for all consumption. For example, from
eating olives for breakfast in Turkey to drinking vodka in lieu of water in Poland or from recycling everything
in China to recycling almost nothing in the United States, all are outcomes of socio-cultural factors. This further
asserts that socio-cultural factors are the most significant influencers of consumer action both individually and
in aggregate. In addition, socio-cultural factors affect consumer choice in different cultures. On the other hand,
socio-cultural factors, in time, change as consumer behavior slowly modifies them (Samli, 1995). In reference
to socio-cultural theory, also called the group theory that considers humans as social animals views the persons
buying behavior being influenced by the family and society. In other words, a persons buying decision is
influenced by culture, subculture, social class, reference groups, family etc. (Bose, 2010). Research on the sociocultural significance of consumption focuses on three aspects: the production of goods and the symbolic images
associated with them, the ways in which individuals and groups respond to and use these products, and how this
intersection between consumption, social structures, and cultural practices is the place where people define their
individual and collective identities (Dittmar, 2007). All in all, believe that marketers must understand the way
peoples culture and its accompanying values, as well as their subculture and social class, influence their buying
behavior (McDaniel, 2011).

References
Bose, C.D. (2010). Modern Marketing: Principles and Practice. PHI Learning
Davis, R. & Piven, I. (2013). Social Media Branding: Manifesto for the Branding Revolution. Robert Davis and
Inna Piven
Dittmar, H. (2007). Consumer Culture, Identity and Well-Being: The Search for the 'Good Life' and the 'Body
Perfect' (European Monographs in Social Psychology). Psychology Press
Fournier, S. & Lee, L. (2009). Getting Brand Communities Right, Harvard Business Review 87 (4), pp. 105
11
Hoyer, W.D., MacInnis, D.J., & Pieters, R. (2012). Consumer Behavior, Cengage Learning

Kapferer, J.N. (2004). The New Strategic Brand Management: Creating and Sustaining Brand Equity Long Term
(New Strategic Brand Management: Creating & Sustaining Brand Equity). Kogan Page
Mansvelt, J. (2010). Green Consumerism: An A-to-Z Guide (The SAGE Reference Series on Green Society:
Toward a Sustainable Future-Series. SAGE Publications
McDaniel, C., Lamb, C.W. & Hair, J.F. (2011). Essentials of Marketing. South-Western College Publishing
Meister, S. (2012). Brand Communities for Fast Moving Consumer Goods: An Empirical Study of Members'
Behavior and the Economic Relevance for the Marketer. Gabler Verlag
Mooij, M. (2010). Consumer Behavior and Culture: Consequences for Global Marketing and Advertising. SAGE
Publications
Muniz, A. & Thomas, C. OG. (2001), Brand Community, Journal of Consumer Research, 27, pp. 412-32
Samli, S.C. (1995). International Consumer Behavior: Its Impact on Marketing Strategy Development. Praeger
Sheehan, S. (2010). The Economics of Abundance: Affluent Consumption and the Global Economy (New
Directions in Modern Economics). Edward Elgar Pub
Thompson, S.A. & Sinha, R.K. (2008) Brand Communities and New Product Adoption: The Influence and
Limits of Oppositional Loyalty. Journal of Marketing 72 (6) pp. 65-80

5. Hooley, G., Piercy, N.F.& Nicoulaud, B. (2012). Marketing Strategy and Competitive Positioning.
Prentice Hall
Based on the literature review of Hooley et al.s book titled Marketing Strategy and Competitive Positioning, I
came across different topics and have selected ones that I consider to be important and required further
discussion. I have started with a discussion on sustainable competitive advantage as it is a key to compete
successfully in todays marketplace rather than to copy a competitor. It is then followed by a discussion on viral
marketing and its significance in todays world where consumers are more involved than even before in
controlling communications and message delivery. Another topic that I have chosen is new product failures and
have focused on the factors leading to new product failures and what steps can be taken in order to reduce the
high failure rate associated with innovation. Lastly, I have conclude with a discussion on significance of speed
in new product development and particularly why managers must appreciate the value of being fast at innovation.
Sustainable Competitive Advantage
Based on the literature review, it can be stated that while many companies see the customers facing implications
of competitive advantage like branding (P&G), customer service (Nordstrom), shopping experience (Target), or
shopping convenience (Amazon), it is the unique, difficult to replicate, broad application aspect of sustainable
competitive advantage (SCA) that allows supply to be an important source of competitive edge (Rogers, 2009).
According to Enz (2009) a company can compete successfully when it has a competitive advantage. However,
it can be argued that building a competitive advantage is not enough, the key to success is building a sustainable
competitive advantage (Rogers, 2009). Therefore, in reference to Hooley et al. (2012), my understanding is that
companies must identify those resources that can help create a competitive advantage, and ideally an advantage
that can be sustained. Hooley et al. (2012) state that sustainable competitive advantage can be achieved when
distinct resources are employed that is resistant to competitor imitation or duplication. However, it is important
to understand that a firm may have unique and valuable resources, but unless it has the capability to use those
resources effectively, it may not be able to create a sustainable competitive advantage. Therefore, companies
must have the ability to coordinate its resources and putting them to productive use (Rogers, 2009). In addition,
not all resources and capabilities are equal in their ability to help an organization achieve sustainable
performance (Enz, 2009) as some resources are easy for competitors to copy such as capital, plant and machinery
(Hooley et al. 2012).

My understanding is that the resources that will most likely create sustainable advantage must have a number of
characteristics such as offer competitively superior value to customers, resistant to duplication by competitors
and their value can be appropriated by the organization (Hooley et al., 2012). On the other hand, I feel that it is
vital to understand that capabilities taken together are the source of a firms core competencies and these
competencies form the basis of competitive advantage. If a resource or capability is valuable, unique, nonsubstitutable, or difficult to imitate, and if it also can be applied to more than one business area, it is called a core
competency (Enz, 2009). McDaniel (2011) refers to resource or capability as assets and skills of the organization.

Assets include patents, copyrights, locations, equipment, and technology that are superior to those of the
competition. Skills are functions such as customer service that the firm performs better than its competitors.

For Ryan Air, building a core competency as a low cost carrier came from assembling a bundle of resources,
including a fleet of easy to maintain aircraft, flying into regional airports, managing customer service costs and
selling primarily through an online distribution channel. In addition, I believe that when a firm earns a
persistently higher level of profit than its competitors, it is believed to possess a competitive advantage. Ryan
Air reports net margins of 18 percent compared to margins of 6 percent for Aer Lingus and EasyJet, 4 percent
for Lufthansa, and 3 percent for British Airways. Starwood has identified several capabilities that it sees as
contributing to its competitive advantage, such as strong brands, extensive loyalty program, location in major
cities, diversified property types, economies of scale and diversified assets and cash flows (Enz, 2009). Nike is
a good example of a company that has a sustainable competitive advantage. Others include Rolex (high-quality
watches), Nordstrom department stores (service) and Southwest Airlines (low cost). In contrast, when Datril was
introduced into the pain-reliever market, it was touted for being exactly like Tylenol, only cheaper. Tylenol
responded by lowering its price, thus destroying Datrils competitive advantage and the ability to remain on the
market. In my opinion, this example shows that without a sustainable competitive advantage, target customers
dont perceive any reason to support an organization instead of its competitors and that imitation of competitors
indicates a lack of competitive advantage (McDaniel, 2011).

Resources, such as brand reputation, relationships with customers, effective distribution networks and
competitive positioning occupied in the marketplace, are potentially significant advantage generating resources
(Hooley et al., 2012). In addition, a firm enjoying the resource of close relationship with key customers might
be more difficult for a competitor to copy than one offering cut-price bargains. On the other hand, establishing
unique relational bonds between firms and their customers, and co-marketing partners is one of the most difficult
business tasks to replicate. I believe that customer relations are frequently cited as an advantage, but the ability
to develop intimate supplier business relationships is extremely difficult, in part because suppliers are typically
viewed as part of the firms cost structure, not its assets. Companies quickly start to squeeze money from
suppliers, leveraging volume to get lower prices. Such financial advantages are hardly unique and can be
duplicated. The adversarial mindset that this creates is not conductive to suppliers becoming a sustainable
competitive advantage for many companies. In my opinion, the solution to the problem would be a win-win
mindset because harvesting supplier ideas and resources suffers unless the supplier sees something in return for
its investment of intellectual, financial or physical capital. I believe that this is where sustainable competitive
advantage is most frequently found. It is co-creating value where both the supplier and the buyer work together
to create something different than either team could do alone (Rogers, 2009).

Moreover, I believe that the notion of sustainable competitive advantage means that a successful firm will stake
out a position unique in some manner from its rivals. In my opinion, companies need to build their own

competitive advantages rather than copy a competitor. All in all, I believe that marketing managers should
continually focus the firms skills and assets on sustaining and creating competitive advantages (McDaniel,
2011) and that marketing resources must be viewed as a foundation for differentiation in the marketplace
(Hooley, 2012).

Viral Marketing
In todays world consumers are more involved than even before in controlling communications and message
delivery. Consequently, advertisers are finding it more and more difficult to reach marketing-shy, fragmented
audiences. Therefore, many brand owners are finally realizing that the most powerful selling of products and
ideas take place not between marketers to consumer but consumer to consumer viral marketing (Kirby &
Marsden, 2005). Viral marketing involves creating a marketing message with the intention that people will
forward it to friends. In my opinion, it has a significant advantage over spam messaging in that the friend will
have some level of credibility which may cause the message to be viewed more sympathetically. Moreover, I
believe that it is important to discuss this topic further as it is relevant particularly in todays marketplace where
new marketing communication methods are emerging to take advantage of the particular characteristics of the
Internet and that communicating over the Internet offers the possibility of relating sales to promotions more
accurately (Hooley et al., 2012).

I n my opinion, an interesting aspect about viral marketing is its potential to generate buzz about a business
quickly. On contrary to traditional top-down, marketer to consumer techniques, viral marketing focuses on
personal experience of the brand and taps into the new power of the consumer. I believe that one of the reasons
why consumers find viral marketing appealing is because the campaign tends to be non-interruptive, so they
enable customers to choose to interact proactively or be passively dedicated to. This bottom up-approach respects
that the consumer is in control. In fact, viral marketing campaigns are ultimately driven by customers themselves
(Kirby & Marsden, 2005). However, I believe that it is very crucial to the success of a viral marketing campaign
that the message reaches the right audience at the right time, an audience who is willing to spread the message
effectively within their social network (Ting et al., 2010). On the other hand, for a viral marketing campaign to
succeed, it requires a clear idea, a game, a shocking idea or a highly informative idea which makes compulsive
viewing. It can be a video clip, a TV ad, a cartoon, a funny picture, a poem, song, political message or a news
item (Chaffey & Chadwick, 2012). Helm (as stated in Wilde, 2013) states that viral marketing is not just about
online word of mouth but rather about the distribution of a product, which should be offered for free via no other
distribution channel than the internet. Based on the literature, I believe that there is a strong relationship between
word of mouth, social media and viral marketing because it is a form of electronic word of mouth in which some
form of marketing message related to a company, brand or product is transmitted in an exponentially growing
way, often through the use of social media applications (Kaplan & Heinlein as stated in Wilde 2013). A good
example of viral marketing is Subservient Chicken, launched to promote a new chicken meal by Burger King. It

has circulated around millions of users worldwide and is one of the most successful viral campaigns (Chaffey &
Chadwick, 2012).

New Product Failures


I have learned that thousands of new products are introduced annually, and many fail. Statistical bureaus,
consulting firms, and trade publications estimate that one out of every three new products fail each year; others
report an annual failure rate as high as 89 to 90 percent. The annual cost of product failures to U.S firms can
reach $100 billion. Failure and success rates vary from organization to organization (Pride & Ferrell, 2013). I
believe that it is important to discuss the topic further in order to get a better understanding of the factors leading
to new product failure and what steps can be taken in order to reduce the high failure rate associated with
innovation.

Based on the literature review, I have come across many reasons that lead to product failure. I believe that one
of the most common reasons is the companys failure to match product offerings to customer needs. In my
opinion, when products do not offer value and lack the features customers want, they fail in the marketplace. For
example, Coca-Colas C2 and PepsiCos Pepsi Edge, both targeted at low-carbohydrate dieters with their
midrange calorie count, ultimately generated 1 percent share of the market together because low-carb dieters
generally avoid products with any refined sugar. Ineffective or inconsistent branding has also been blamed for
product failures. Examples of products that failed due to failure to convey the right message or image include
Microsofts Bob and Gillettes For Oily Hair Only Shampoo. Technical or design problem is another reason
that leads to product failure (Pride & Ferrell, 2013). In reference to Hooley et al., (2012) it is the case when a
product that does not work or users are dogged by technical problems. For example, MG Rovers cars were
frequently perceived in this category prior to its companys collapse.

Philips, for example, learned an expensive lesson from the product failure of its video compact disc introduced
in 1978. The laser disc provided an audio and video capability on a video disc player. Consumers could not
record on the machine; only play movies or other videos. Further, players were not widely available through
distribution channels, and promotion and publicity about the new technology were limited. Meanwhile,
customers were responding favorably to the heavily marketed and low priced video cassette recorder (VCR),
which had playback and record capabilities. The Philips video laser disc failed in the market. What does the
example tell us? The example shows that the cause of the product failure was due to the failure to study market
or customer requirements and to adapt to customer needs, ineffective promotion and inefficient distribution. In
believe that the magnitude of the failure experienced by Philips would prompt any firm to rethink how it develops
and introduces breakthrough products and technologies (Thomas, 1994). Other well publicized product failures
include Apple Computers Newton, a personal digital assistant; and Segas Dreamcast videogame console (Hill
& Jones, 2011).

My understanding is that a new product may also fail because of poor positioning strategy. Positioning strategy
is the specific set of options a company adopts for a product on four main dimensions of marketing: price,
distribution, promotion, advertising, and product features. One of the reasons for the product failure of Apple
Computers Newton besides poor quality was poor positioning strategy. The Newton was introduced at such a
high initial price (close to $1000) and that there would probably have been few buyers even if the technology
had been adequately commercialized (Hill & Jones, 2011). Hooley et. al. (2012) state that it is a price crunch
which comes when the innovating firm sets too high price for a new product whose value is not perceived by
target customers to be better or greater than existing products. Another reason that many new product
introductions fail is that companies often make the mistake of marketing a technology for which there is not
enough demand. Sinclairs C5 electric cars falls into this category an innovation without an obvious market
(Holley et al., 2012). In addition, other reasons for new product failure include poor timing, overestimation of
market size, ineffective promotion and inefficient distribution (Pride & Ferrell, 2013).

In my opinion, the best place to begin the quest to improve new product development productivity result is to
understand why new products fail to perform. I feel that an understanding of past failures, problems and pitfalls
leads to insights that ultimately result in corrective actions. I believe that this is one premise of the process of
continuous learning (Cooper et al., 2009). On the other hand, major market failures suggest the need for a more
integrated organizational response to innovation, marketing support and production capability which are as
important as research and development for success (Thomas, 1994). Lastly, Hill & Jones (2011) provide
supporting claim by suggesting a need for a tight integration among R&D, production and marketing to reduce
the high failure rate associated with innovation. The authors state that a companys customers can be one of its
primary sources of new product ideas and the identification of customer needs, and particularly unmet needs,
can set the context within which successful product innovation take place. On the other hand, integrating R&D
and marketing is crucial if a new product is to be properly commercialized and to avoid the risk of developing
products for which there is little or no demand while integrating R&D and production can help lower
development cost and speed products to the market.

Speeding new product development


Based on the literature review, I believe that managers must appreciate the value of being fast at innovation
(Hooley et al., 2012). In fact, I feel that the topic must be discussed further to understand why speed should be
important to marketers (Cooper & Edgett, 2009). In my opinion, speed has been embraced as a business strategy
that can help a firm to create a sustainable competitive advantage (Mahajan et al., 2000). A second reason why
speed to market matters is that speed yields higher profitability. My understanding is that if one can get to market
earlier, revenues are realized earlier. Since money has a time value, often the costs of delay are huge. Research
shows that the longer a project lingers in development, the more inefficient and costly it becomes (Cooper &
Edgett, 2009). General Motors, for example, has suffered from being a slow innovator. Its product cycle has
been about five years, compared with two to three years at Honda, Toyota and Mazda and three to four years at

Ford. Because they are based on five-year old technology, GM cars are already out of date when they are in the
market (Hill & Jones, 2011). In my opinion, the example further strengths the significance of speed in new
product development and a company that takes less time to develop and commercialize a new product can be
more competitive than a slower competitor (Hooley et al., 2012).

Brody & Lord (2007) also stress the importance of getting to market quickly. The authors state that by bringing
a product to market quickly, a company can reap several potential benefits. Marketers begin to sell sooner,
leading to fewer lost sales. Firms can pre-empt competition and develop a reputation for market leadership.
Hooley et al., (2012) provide supporting claim by stating that if a firm is able to launch more new products in a
given period of time, it can build a strong innovation leadership image. I believe that speedy companies are also
able to respond faster to changing customer requirements, thereby securing sales and building customer loyalty.
First-mover advantages also include the opportunity to create barrier to entry by creating good relationships with
customers and also reduce risk by incorporating latest technology, thereby creating and maintaining a leadership
position (Brody & Lord, 2007). In fact, a big difference in todays innovation markets is at which new products
can be brought to market. Development cycles that might once have taken three to four years have shortened to
twelve to eighteen months (Katsaros & Christy, 2005).

References
Brody, A.L. & Lord, J.B. (2007). Developing New Food Products for a Changing Marketplace, Second Edition.
CRC Press
Chaffey, D. & Chadwick, F.E. (2012). Digital Marketing: Strategy, Implementation and Practice. Pearson
Education
Cooper, R.G., Edgett, S.J. & Brady, L. (2009). Lean, Rapid and Profitable New Product Development.
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Enz, C.A. (2009). Hospitality Strategic Management: Concepts and Cases. Wiley
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Katsaros, J. & Christy, P. (2005). Getting It Right the First Time: How Innovative Companies Anticipate
Demand. Praeger
Kirby, J. & Marsden, P. (2005). Connected Marketing: The Viral, Buzz and Word of Mouth Revolution.
Routledge
Mahajan, V., Muller, E. & Wind, Y. (2000). New-Product Diffusion Models. Springer
McDaniel, C., Lamb, C.W. & Hair, J.F. (2011). Essentials of Marketing. South-Western College Publishing
Pride, W.M. & Ferrell. (2013). Marketing 2014. Cengage Learning
Rogers, S.C. (2009). The Supply-Based Advantage: How to Link Suppliers to Your Organization's Corporate
Strategy. AMACOM
Thomas, R.J. (1994). New Product Success Stories: Lessons from Leading Innovators. Wiley

Ting, I.H., Wu, H.J. & Ho, T.H. (2010). Mining and Analyzing Social Networks. Springer
Wilde, S. (2013). Viral Marketing within Social Networking Sites: The creation of an effective Viral Marketing
Campaign. Diplomica Verlag