Analysis of marketing communications strategies

Kotler & Keller (2009:510) defines marketing communications as “the means by which firms attempt to inform, persuade, and remind consumers directly or indirectly – about the products and brands they sell”. Your marketing communications mix is the “Promotion” of the marketing P’s and covers every method and medium of communicating with your target audience. If business consists of creating value and creating customers, marketing communication covers exactly how you are going to create customers by taking your value message to the market. (Kennaugh, 2003).

MARKETING COMMUNICATIONS STRATEGIES

Kennaugh (2003) posits that the marketing communications strategy defines how you present information about your company and products, and that these strategies are crafted to: –

Establish high-level customer impressions of your company and products that are consistent with your product positioning,

Create consistent, concise, benefits-based messages that build the desired net impressions,

Determine which communications methods are appropriate for each customer segment.

From the case study, it is evident that once Debonairs have settled on a “strong positioning” statement, (Allen, 2009), they employed the following strategies in their Marcom (marketing communications) mix:

1.2.1 ADVERTISING

“The sporadic use of radio was effectively used to build the brand and create very loyal customers. The first – ever Debonairs Pizza TV ad catapulted the business forward”. (Case study)

Mayo (2009) holds that advertising has four characteristics:

It is persuasive in nature,

It is non-personal;

It is paid for by an identified sponsor, and

It is disseminated through mass channels of communications.

In the case of Debonairs, their advertising contributed to the creation and maintenance of brand equity- “an intangible asset that results from a favorable image, impressions of differentiation, or consumer attachment to the company, brand or trademark” (Mayo, 2009:4). The case study suggests that this equity translated into greater sales volumes, thus greater competitive advantage.

1.2.2 PUBLIC RELATIONS

“Celebrity guests and industry figureheads as well as local members of the community were invited to grand opening parties. Debonairs was constantly in industry magazines as well as regional and national newspapers in order to keep the brand top of mind.” (Case study)

Public relations are defined as “a management function which identifies, and maintains mutually beneficial relationships between an organization and the publics upon which its successes or failures depend “. (Mayo, 2009:4). The tool Debonairs used is publicity, which capitalized on the news value of celebrities, so that the information can be disseminated via the news media. Some consumers based their purchase decisions on an image, so in this regard Debonairs benefited in that the news reports projected what the company stands for. Another benefit is that publicity is free, saving them advertising cost.

1.2.3 DIRECT MARKETING

“The advantage of having s customer database was that they know where the customer lived, what their favorite products were, the spend per head and the ordering patterns. Pamphlet drops worked very well for the brand and a spike in sales could be seen on the day a drop was carried out”. (Case study).

Direct marketing is considered the process of communicating directly with the target customer to encourage response by telephone, mail, electronic means, or personal visit. (Mayo, 2009). The results of their market research extracted from their database, allowed Debonairs to target precisely a segment of customers and prospects, with a sales message tailored to their specific needs and characteristics. The case study suggests that by identifying those customers they can serve more effectively, made Debonairs more effective in their marketing efforts.

1.2.4 SALES PROMOTION

“Thank you for trying us out cards was sent out after the first night thanking customers for their patronage and offering an attractive special to encourage repeat business. This was exceptionally well received…” (Case study).

Allan (2009) holds that sales promotions are direct inducements that offer extra incentives to enhance or accelerate the products movement. The case study suggest that Debonairs benefitted from their sales promotion activities in that their customers were spurred into buying more pizzas, which increased sales volumes resulting in more profit.

1.2.5 PERSONAL SELLING

“Another successful locality marketing drive was’ cold canvassing’. This activity encourages franchisees and managers to walk around their neighborhoods meeting people. A few businesses are targeted every day with the objective of making those people your friends and encouraging use of the brand”. (Case study).

Personal selling includes all person-to person contact with customers with the purpose of introducing the product to the customer, convincing him/her of the products value. (Kennaugh, 2003). Debonairs’ “cold canvassing” strategy appears to have been effective in that relative senior staff canvassed for prospective customers, analyzed the prospective customers’ needs and wants, determined the product offerings to satisfy prospective customers’ needs and wants and as the case study suggest, made sales.

1.3 CONCLUSION

It can be deduced from the case study that regardless of the size and the type of the business, businesses should continually look at ways in which to create additional value for customers.

“Award- winning Debonairs, the leading pizza franchise on the African Continent” use as the cornerstone of their success, innovative marketing strategies that focuses on long-term relationships with their customers. (Nanji, 2010:1).

As is evidenced by the many successes and awards Debonairs received to date, customers are willing to pay a premium price for real value and real service.

DEALING WITH COMPETITION

2.1 MICHAEL PORTER’S FIVE FORCES MODEL

2.1.1 INTRODUCTION

Michael Porter’s five forces analysis deals with factors outside an industry that influence the nature of competition within it. The forces inside the industry (microenvironment) influence the way in which the firm competes and therefore the industry’s likely profitability. Debonairs, therefore, has to understand the dynamics of its industry and market in order to compete effectively in the marketplace.

Thurbury (1998) holds that understanding the nature of each force gives organizations the necessary insights to enable them to formulate appropriate strategies to be successful in their market.

2.1.1.1 FORCE ONE

Rivalry among competitive firms

Rivalry among competing businesses is the most powerful of the five competitive forces, i.e. the ongoing competition between businesses in the same industry for gaining customer share in order to increase their revenues and profits. The competition is more intense if the business pursues strategies that give it competitive advantage over the strategies pursued by its rivals. (Adam, 2002). The global recession has necessitated that fast food businesses increase their marketing drives and decrease their prices. Debonairs, therefore, have to be mindful of the fact that households are spending less on fast food on the one side, whilst on the other side they have to maintain market share. They also need to be aware of changes in marketing strategies adopted by the competition as this can affect their profits.

2.1.1.2 FORCE TWO

Potential entry of new competitors.

Both potential and existing competitors influence the average industry profitability. The threat of new entrants is usually based on the market entry barriers. (Thurbury 1998).

It is very easy for multinational brands to enter the South African market. Debonairs faced competition from new entrants, Dominoes Pizza and Pizza Hut; they also had to content with other multinational brands like KFC and McDonalds who have already established themselves in South Africa.

2.1.1.3 FORCE THREE

Potential Development of Substitute Products.

“The threat that substitute products pose to an industry’s profitability depends on the relative price to performance ratios of the different type of products or services to which customers can turn to satisfy the same basic need”. (Thurbury, 1998: 2). Competition from other fast food offerings like burgers or fried chicken can negatively affect Debonairs market share. After the World Cup, KFC’s market share increased, with many customers preferring its product to pizza or burgers due to its offering being cheaper than other fast food options.

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2.1.1.4 FORCE FOUR

Bargaining power of suppliers.

Kotler and Keller (2009) hold that a segment is unattractive if the company’s suppliers are able to raise prices or reduce quantity supplied. Consumers will have to pay higher prices for their product should the suppliers of cheese for Debonairs, for example, increase their prices. In order for Debonairs to maintain their prices, it is important for them to engage their suppliers in negotiations to have long-term contracts at a set rate for their products.

2.1.1.5 FORCE FIVE

Bargaining power of consumers.

Business performance totally depends on consumers, the final users of their products. Consumers yield strong bargaining power when they are huge in number and purchase in large quantities when products are undifferentiated and widely available. (Adam, 2002).

Market conditions may force consumers to become price sensitive and seek cheaper options. Debonairs’ main product, the pizza is also undifferentiated as many of their competitors make similar pizzas. In addition, consumers can easily switch to substitute products, as switching is very easy and inexpensive.

2.1.2 CONCLUSION

Porter’s five forces model supports strategic understanding where power lies in a business situation. It also helps to understand both the strength of a firm’s current competitive position, and the position it is looking to move into. Despite the fact that the five forces framework focuses on business concern rather than public policy, it also emphasizes extended competition for value rather than just competition among existing rivals. The simplicity of its application may inspire Debonairs to adopt it. (Adapted from Thurbury, 1998:3).

2.2 COMPETITIVE STRATEGIES

2.2.1 INTRODUCTION

Any company must seek to understand the nature of its competitive environment if it is to be successful in achieving its objective and retain customers.

2.2.2 COMPETITIVE STRATEGIES

Debonairs as a fast food retailer is faced with many competitors like Dominoes Pizza and Pizza Hut operating in the same industry. Intense competition and the similarity of products necessitated that they attract, retain and manage their customers. Because the product offering is undifferentiated, those customers whose needs are not satisfied by Debonairs can leave and look for substitute products that can be delivered without major inconvenience to them. Debonairs therefore have to be creative in their strategies to counter their competition.

Some of the strategies employed by Debonairs include:

2.2.2.1 Free delivery

Debonairs not only competed with Dominoes and Pizza Hut on price, they also offered a free home delivery service. Evidence in the case study suggests that this strategy was very successful: “Another differentiating feature was the idea of free delivery… the convenience element and the resultant volumes formed a critical role in the success of the business model.”

2.2.2.2 Database marketing

Kotler and Ketler (2009) hold that Marketers must know their customers. In addition, in order to know the customer, the company must collect information and store it in a database from which to conduct database marketing.

From the case study, it is obvious that Debonairs was able to maintain competitive advantage by employing database marketing as a strategy: “The advantage of a customer database was that they knew where the customer lived, what their favourite products were, the spend per head and the ordering patterns”.

2.2.2.3 Media

Debonairs realized that one of the best channels to get their product offering across to customers is the use of the media. It can be deduced from the case study that this strategy allowed Debonairs to maintain market share: “Debonairs was constantly in industry magazines as well as regional and national newspapers in order to keep the brand top of mind”.

2.2.2.4 Customer relationship management (CRM)

Rootman in Roberts-Lombard, (2009:72) describe CRM as “a business-wide strategy designed to reduce costs and increase profitability by solidifying customer loyalty.”

Indications from the case study are that Debonairs maintained competitive advantage in using CRM as a strategy: Debonairs offered “an attractive special to encourage repeat business. This was exceptionally well received… It is generally easier to get your existing customers to purchase more rather than luring new ones.”

2.2.3 CONCLUSION

For Debonairs to become as successful as they are in the fast food industry and received all the accolades that they did did not happen by chance. The case study proves that effective competitive strategy formulation paid off handsomely for Debonairs. The case study however is silent on their use of technology. My view is that the internet as well as intensive use of SMS and e-mail as primary means of communication rather than as a supplementary solution, provides opportunities for strengthening their competitive advantage,

CREATING CUSTOMER VALUE, SATISFACTION AND LOYALTY

INTRODUCTION

Customers are high value-maximizers. They will buy from the firm they perceive offers the highest customer delivered value, defined as the difference between total customer benefits and total customer cost. Sellers who are at a delivered-value disadvantage can try to increase total customer value and decrease total customer cost.

Satisfaction is a function of the product’s perceived performance and the buyer’s expectations. The key to high customer loyalty is to deliver higher customer satisfaction. Many companies therefore are aiming for total customer satisfaction. Companies that reach their customer value and satisfaction goals are high performance businesses. (Kotler, 2003).

CUSTOMER VALUE, SATISFACTION, AND LOYALTY

Debonairs Pizza created customer value, satisfaction and loyalty in the following ways:

POSITIONING

Kotler and Ketler (2009:308) define positioning as “the act of designing the company’s offering and image to occupy a distinctive place in the minds of the target market”.

The case study implies the Debonairs approach to positioning to be the following:

By attribute: “double box housing two pizzas” and

By price and quality: “the introduction of the ‘on the double’ special – two pizzas at a price point.”

Kotler and Ketler (2009) suggest that everyone in the organisation should understand the brand position and use it as context for making decisions and that the result of positioning is the successful creation of a customer focused value proposition.

VALUE PROPOSITION

The value proposition is the “whole cluster of benefits the company promises to deliver” Kotler and Ketler (2009:163). It includes all the experiences the customer will have on the way to obtaining and using the product.

Debonairs’ core proposition is “REAL TASTE, REAL VALUE, REAL FILLING”, but consumers are promised more than just a pizza. The concept of having a delicious pizza delivered to your door by a dashing delivery person – complete with tuxedo and bow tie – is a hallmark of Debonairs Pizza image.

The case study implies that Debonairs’ marketing strategies, tactics, programs and campaigns, supported and reinforced their value proposition. This is evidenced by their ‘on the double’ offering.

DIFFERENTIATION

Debonairs Pizza’s product differentiation campaigns show how their product is better than others, by emphasizing its difference. This takes the form of a unique selling proposition – “the one feature of the product that most stand out, and is usually a feature which conveys unique benefits to the consumer” (Blythe, 2006:278). An example is the marketing of their Triple Decker Pizza – an individual (19cm) size pizza that’s triple the taste, triple the value and triple the fun, with three layers, three cheeses and delicious fillings for only R 39.90.

CUSTOMER RELATIONSHIP MANAGEMENT

Customer relationship management (CRM) is “the process of carefully managing detailed information about individual customers and all customer ‘touch points’ to maximize customer loyalty.” (Kotler & Ketler, 2009:173).

“The advantage of having a customer database was that they knew where the customer lived, what their favourite products were, the spend per head and the ordering patterns… It is generally easier to get your existing customer to purchase more rather than luring new ones”. (Case study)

Arizo (2010:1) states that CRM focuses on meeting the “individual needs for valued customers”.

Debonairs was very successful in this regard in that they:

Built a customer database with information about behavior and preferences,

Data mined to detect trends, segments and individual needs,

Acted on the knowledge gained from the database and data mining.

Peppers and Rogers in Arizo (2010:3) propose four additional activities:

Identify prospects and customers by name and by need,

Differentiate the identified prospects and customers by need and differential value to the business,

Interact with customers to improve learning about individual needs and to build stronger relationships, and

Customize offerings and communications to each customer in each identified customer group.

CUSTOMER LIFETIME VALUE

Arizo (2010:3) describes customer lifetime value (CLV) as the “net present value of contribution margin of revenue streams from a customer from direct purchases and revenues from referrals who also buy, minus the cost to acquire the customer relationship”.

The case study implies that Debonairs offer customers with high CLV benefits, “attractive specials to encourage repeat business”, which bonds them more closely with the business. The case study is silent on the use of loyalty rewards that can further increase the life of the relationship and the value of the CLV.

Arizo (2010:1) posits that increasing CLV comes down to three objectives:

Increasing length of time a customer buys from you,

Increasing the amount they spend on each purchase, and

Decreasing the time between purchases.

Debonairs can maintain their market share by working on all three categories at once; as studies have shown that, a 10% improvement in each category will increase sales by 34%. (Allin, 2010:2)

CONCLUSION

Creating loyal customers is at the heart of every business. The only value your company will ever create is the value that comes from customers – the ones you have now and the ones you will have in the future. Businesses succeed by getting, keeping and growing customers. Customers are the only reason you build factories, hire employees, schedule meetings, lay fibre-optic lines or engage in any business activity. Without customers, you don’t have a business. (Kotler & Ketler, 2009).

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BRANDING

INTRODUCTION

The American marketing Association in Kotler and Ketler (2009:276) defines a brand as “a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors. A brand therefore is a product or service whose dimensions differentiate it in some way from other products or services designed to satisfy the same need”.

KEY SUCCESS FACTORS

From the case study, it is evident that Debonairs realized that getting customers is not the only thing they need to do. In today’s rapidly changing world, consumers don’t stick with products for life. Advertising and an increased feeling of independence have created consumers that will switch brands or products as soon as they feel the need to do so.

At the heart of a successful brand is a great product or service, backed by careful planning, a great deal of long-term commitment, and creatively designed and executed marketing. A strong brand commands intense consumer loyalty. (Kotler & Keller, 2009).

The key success factors in Debonairs’ approach in stimulating brand loyalty are outlined below:

4.2.1 MARKETING DRIVEN

From the case study, the assumption can be made that Debonairs is marketing driven. There is evidence that their product offerings are continually refined and innovative ways devised to communicate their offerings to the customer. E.g. their “on the double special – two pizzas at a price point… this product offering was coupled with packaging innovation and saw introduction of the double box housing two pizzas.”

Debonairs marketing strategy comprised of two focus areas:

Locality marketing: aimed at capturing increased market share

National marketing: aimed at increasing brand visibility

This strategy allowed Debonairs to maintain market share as their store turnovers grew exponentially, and through their marketing campaigns, their brand’s visibility increased.

4.2.2 DELIGHTFUL EXPERIENCE (INTERNAL AND EXTERNAL)

Whether a buyer is satisfied after a purchase depends on the offer’s performance in relation to the buyer’s expectation. Satisfaction is a person’s feelings of pleasure or disappointment resulting from comparing a product’s perceived performance (or outcome) in relation to his / her expectations. If the performance falls short of expectations, the customer is dissatisfied. If performance matches expectations, the customer is satisfied; if it exceeds expectations, the customer is highly satisfied or delighted. (Kotler, 2003).

Debonairs’ precision marketing strategy, made their brand stand out from the competition. Not only is their product delivered freely, but it is delivered to your door by a dashing delivery person – complete with tuxedo and bow tie. (Sunday Times, 25 October 1998). An additional advantage is that the offering will be free if the red dot has turned black. By all indications, Debonairs manage their value-delivery system – all the experiences customers will have on the way to obtaining and using the product. (Kotler, 2003) – quite successfully, an important factor in customer loyalty. Research in Smiles (2005:3) proved that 80% of your business is generated by 20% of existing customers.

Companies generally focus their efforts on creating dynamic relationships with external customers, often at the expense of internal customers. The case study mentions team motivation, but is silent on the role of Debonairs’ human resources in maintaining competitive advantage. Debonairs should therefore realize that happy employees are important for brand promotion as it is a touch-point of interaction with customers.

4.2.3 TECHNOLOGY / INNOVATION

Marketing managers need to be mindful of the latest technological developments as information technology progresses at a fast rate. Businesses can lose out to competitors should it refrain from noting the latest technological occurrences in its industry. Technological advancements facilitate lesser barriers between countries and regions. Via the world wide web, businesses can quickly dispatch information from one location to another without much restriction.

Debonairs’ use of database marketing is noted in the case study. The business is able to maintain market share by meeting specific needs of individual customers, thus building a loyal customer base.

In addition, TV advertising is mentioned. Debonairs targets a market that obviously spends a fair amount of time watching television. The constant adverts being flighted will therefore allow their product to generate a high level of awareness.

The case study is silent on the internet as a marketing communications channel. Online shoppers are instrumental in forming brand identities by interacting with user-generated content, online collaboration tools and online communities. This can significantly influence how the brand is perceived.

Also, creating and maintaining a blog will serve as a platform for Debonairs to channel their opinions on issues related to the business. Useful information can be supplied about products, services, and new launches. Consumers find a company blog a medium through which they can communicate with the business, and get an insight on what the business do or planned to do. In this process, customers get a feeling of being personally cared for. This will further enhance their brand reputation in the market.

4.2.4 SWIFT AND SUSTAINABLE GROWTH

The most important goal in business is to increase revenue and profits.

According to the Sunday Times (25 October 1998), Debonairs’ swift and sustainable growth can be attributed to the following strategies:

Free home deliveries: a major strategic advantage. Debonairs Pizza dominate the home delivery business which amounts for more than 50% of their sales,

Franchising: Debonairs Pizza has grown at a rate of more than 203% per year. The rapid expansion of the franchise has created investments totaling R45million.

Co-branding: as part of its co-branding concept with Steers, Debonairs Pizza has introduced an imaginative productivity layout plan for all its outlets. This has impacted positively on growth and productivity.

4.2.5 FRANCHISE PROFITABILITY

Ledsinger (2004:1) states that every action Debonairs take, and every initiative they launch, is measured against one overriding objective – franchise profitability. The case study notes that this singular path has been a driving force in Debonairs’ expansion.

Hansen (2010:2) defines a franchise as “a legal and commercial relationship between the owner of a trademark, service mark, brand name, or advertising symbol (the franchisor) and an individual or organization (the franchisee) wishing to use that identification in a business.”

The case study implies the following benefits in the Debonairs franchise relationship:

Mass media advertising,

Professionally packaged locality marketing,

New product development,

Dedicated business managers who conduct regular evaluations, and

Assistance in ensuring the highest level of quality, customer service and brand image.

According to The Sunday Times (25 October 1998) Debonairs has required a market share of more than 13% making it the leading pizza brand in the country. This has boosted the franchisor’s ranking as one of the top 10 food franchisors in S.A.

CONCLUSION

The case study proves that Debonairs as a brand are well managed and is highly successful. Their marketers understand and apply sound branding practices, which allow the business to achieve its full potential and meet any unanticipated challenge it may be faced with.

MARKETING MIX ATRATEGIES

INTRODUCTION

According to the MANCOSA Marketing Management Study Guide (2010:83):

losing profitable customers can dramatically affect a firm’s profits,

The cost of attracting a new customer is estimated to be five times the cost of keeping a current customer, and

The key to retaining customers is marketing.

Debonairs used Database- and Relationship marketing in the development of their marketing mix strategy.

DATABASE MARKETING

“The advantage of having a customer database was that they knew where the customer lived, what their favourite products were, the spend per head and ordering patterns.” (Case study).

Relating to the case study, it is clear that Debonairs used database marketing with the customer database central to their marketing activities. The following assumptions can therefore be made: Debonairs realized that:

Database marketing cannot operate alone but needs support from traditional marketing activities. Awareness building, direct response advertising and sales promotions provide essential “new blood” for the database. (Cooke, 1994). Under the Debonairs database marketing strategy, the traditional promotional techniques created the credibility needed to continue building sales to customers, exploiting the fact that advertising acts to reinforce rather than inform purchase.

Databases provide the ability to store and manipulate customer information. This provided not only better-targeted communications but also the basis for product development, quality improvement and effective customer service. An organization’s credibility lies in the relationship with the customer, rather than the range of products or services on offer. (Cooke, 1994)

Customer service provides added value. By maximizing customer knowledge, they maximized the penetration of existing products into existing markets, and can use the data to assist in identifying and targeting new markets.

By using their database to target communications with customers, mail volumes reduces and response rates improve. This means more cost efficient marketing and less sending of junk mail, which can undermine brand values.

The database marketing strategy described, worked for Debonairs because their customers were put at centre stage.

RELATIONSHIP MARKETING (RM)

Relationship marketing is the identification, establishment, maintenance, enhancement, modification and termination of relationships with customers to create value for customers and profit for organizations by a series of rational exchanges that have both a history and a future. (Kanagal, 2000).

The role of RM in the Debonairs marketing mix strategy includes the use of:

RM to improve profitability. Free delivery and convenience elements are noted in the case study. Good relationships lead to customer satisfaction. Customer satisfaction arises as their specific needs and wants are understood and served better. This leads to customer retention and consequent improved profitability.

RM to build partnerships. The case study notes the interaction of Debonairs’ managers with local potential consumers and businesses. RM fosters external partnerships through networks, collaborations and alliances. These external relations bring together market element synergistically. Personal selling plays a key role in the partnership, by influencing buyer behavior. The role of the sales person is that of a value creator, influencing competitive advantage.

Relationship technology to address the customer better. The use of database is much quoted in the case study. Information technology helps store and manipulate extensive information about the customer. This information about the customer is used in marketing called customer relationship management, which implies the development of long-term relationships with each customer in order to