Compares marketing communications for distinctive product classes - FMCG, goods and services

1. Differences in Applied Marketing Communications for FMCG, goods and services Presentation of Master’s Thesis Guna Ozolina June , 2008

11. Empirical findings and conclusions on major research question

12. Communication message (1) Moral appeals are applied more often for FMCG than for goods and services. The motive for this activity grounds on fact there is low brand loyalty in FMCG sector because products are frequently purchased and relatively cheap. Moreover, majority of products use more than one appeal, consequently consumer is flooded with variety of emotional and rational appeals, while moral appeals are used rarely. Thus, moral appeals are used as a tool to differ from other FMCG available to consumer. This is wise approach because currently trend of environmental protection is topical as well as special subgroup of so called “green thinkers” has been emerged and number of their followers is growing Please see next 3 slides

16. Communication message (5) Additionally to communication message’s appeals testimonials are applied mostly for services than for goods and FMCG. The primary reason for celebrity usage is ensuring credibility. This is essential issue when level of product’s intangibility (product display is not possible), inseparability (consumer is involved in production process) or heterogeneity (hard to achieve standardization) is high. Please see next 2 slides

19. Communication message (8) There is tendency that application of AIDA model and USP is more successful (simultaneously used at least three components) when product is highly tangible. The finding could be explained severally. First, producers of FMCG advertising are more professional than those who produce for goods and services. Besides, from author’s own empirical evidences the majority of customers of advertising agencies are exactly FMCG companies. Second, product’s features of FMCG are easier to comprehend than product’s features of goods and services, thus, for FMCG application of AIDA framework and USP is simpler. Please see next 2 slides

22. Advertising (1) Durables apply less ATL activities. Application of internet as advertising media is very seldom because majority of sample goods do not consider web page as essential communication channel (results of observation of web pages), application of other media is limited to availability of content – commercial, print, jingle and outdoor – if it is not available internationally, neither it is available in local market. Therefore the most effort for goods is focused on other IMC tools, mainly, sales promotion and personal selling. Please see next 1 slide

24. Advertising (3) More tangibles products are advertised more. Marketing communications of FMCG applies advertising tool more frequently than other product classes. It grounds on fact that FMCG have short duration, they are purchased often and they have low brand loyalty. Thus, by continuous advertising activities, certain FMCG brand is regularly kept in consumer’s memory in order to be as the choice of number one when the need arouses. Intangible products are purchased more seldom, their price is more expensive and buying decision process is longer than for FMCG. Thus, for long term buying processes the role of advertising is least, while increases the role of brand, reputation, and relationship coherently managed by the rest of IMC tools such as public relations, sales promotion, personal selling and direct marketing. Please see next 1 slide

26. Advertising (5) Services apply more institutionally orientated communication than product orientated communication. The motive for this activity is simple – if product’s intangibility is higher, then additional credibility is needed in order to convince consumer the service is qualitative, therefore, company’s reputation and image start to play a great role in comparison to tangible products. Please see next 2 slides

29. Public relations (2) There is direct relation with product’s intangibility and amount of press releases and publications as a result. If intangibility is higher, there are distributed more press releases, thus, greater number of publications is reached. Please see next 1 slide

31. Public relations (4) T here is no clear tendency between number of positive, negative and neutral publications for each product class and extent of applied public relation tools. Author explains this fact due to basic objective of public relations – manage relationship with company’s (and its products’) stakeholders, thus, it is very dynamic and tailored process that could not be looked across larger scale such as product class Please see next 1 slide

33. Public relations (6) There are no significant difference in application of public relations tools depending on product classes just personal interviews are not used at all for goods sector. However, there probably might be differences. Moreover, there is difference in application of public relations tools depending on resource ownership of the company. Most of local and mixed capital companies consider public relations just as tools with whom to generate positive publicity and organise internal events, not as tool with whom to expound management’s decisions within company. Thus, there is smaller usage of such internal communication tools as internal magazine and internal attitude measurement in the product classes whose sample contained less international companies – mostly service companies. Please see next 2 slides

36. Sales promotion (1) Current activities of application of trade oriented sales promotion depends on extent of product’s tangibility. Namely, FMCG and goods are applying trade oriented sales promotion, while services are less active. Motive of the finding is grounded on general cooperation concept between product’s producer and its partners. In FMCG and goods sectors they are dealers, in services sectors they most often are partners working on terms of franchise or own network of shops or just individual shops / saloons. As in Latvian market the latter is not yet widespread while the former is, it is obvious that trade oriented sales promotion is applied more for FMCG and durables than for services. Please see next 1 slide

38. Sales promotion (3) Consumer oriented sales promotion is most applied in FMCG sector followed by services sector, while goods sector is focusing more on trade oriented sales promotion and other IMC tools. Thus, there is no any reference to product’s features. Author thinks the finding grounds on the current situation of Latvian market. The most popular consumer oriented sales promotion tools for any product class are price-offs and event marketing. As the motive for this action is simplicity of use and lack of consumer insights and knowledge about competitors. Additionally, in sector of FMCG the most often applied sales promotion tools are samples, bonus packs and contests; in sector of goods – contests, while in sector of services - loyalty programs and premiums. To sum up, there are yet observable some tendencies of consumer oriented sales promotion appliance according to product’s features. Refund is the most unpopular consumer oriented sales promotion tool. This fact is based on several reasons. First, companies do not want to face unpredictable losses that could occur in cases when product does not meet consumer’s expectations. Second, there exists aspect of subjectivity. And finally, companies are rather reluctant to apply new tools if they are not tried by somebody else before, they do not realize that being a pioneer gives competitive advantage. Please see next 2 slides

41. Personal selling (1) Application of personal selling is directly dependant on product class and its features. If intangibility is higher, personal selling is more intensive. Personal selling tools as sales consultants and sales presentations are mostly applied in service sector, while tools as samples and trials are mostly applied in FMCG sector, and then followed by goods sector. Please see next 1 slide

43. Direct marketing (1) Direct marketing is applied rather equally for any product class. Although such tool as direct mail / e-mail is most often used in FMCG and services sectors, while online shopping and mail catalogues are most often applied in goods sector, but telesales is most widespread in service sector. To authors mind, choice of direct marketing tools is based on features of certain product rather than product class. Please see next 1 slide

45. Communications in general (1) Generally, communication activities of any of sample products are generated by application of various marketing communication tools more or less coherently, thus, IMC are applied. Although not all of marketing managers interviewed really know meaning of the term. However, this fact does not influence general application of IMC but definitely leaves impact on extent of application. I nternational companies have more serious approach for planning of communication management. Communications and its budgets are planned resulting from overall financial target, certain communication activities are based on researches and regular measuring of attitude changes is more than two times obvious for international companies than for mixed and local ownership companies.

46. Communications in general (2) Ownership plays role in IMC, especially while organising communication functions and structure, planning and taking decisions of communication management. There is more emphasized role of internal communication in international companies. They comprehend the internal communication is not just about organising events for employees but also regular informing and expounding of management decisions. More than half of local and mixed ownership companies, while asked about internal communication, answered there is no problem for them to meet and communicate about certain issue on the spot, just when the need arouses. They assume internal communication as everyday’s relationship among employees therefore mixed and local ownership companies mostly see internal communication as entertaining events for employees. While just international companies understand the role of internal communication is not only team building but educating any employee about company’s overall objectives and each employee’s particular role in its achievement, where internal magazines and regularly scheduled face to face meetings are essential.