Answered: QUESTIONS 1. Identify the principal…

Principles Of Marketing

17th Edition

ISBN:9780134492513

Author:Kotler, Philip, Armstrong, Gary (gary M.)

Publisher:Kotler, Philip, Armstrong, Gary (gary M.)

Chapter1: Marketing: Creating Customer Value And Engagement

Section: Chapter Questions

Problem 1.1DQ

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One of the oldest principles of marketing is that sellers may sell features, but buyers essentially buy benefits. This is a distinction sometimes lost on technology led organizations, and the service sector is no exception. Recent experience of the UK‟s largest telecommunications company, Vodafone, illustrates how crucial it is to see service offers in terms of the benefits they bring to customers. The company was aware of extensive research which had found high levels of confusion among purchasers of mobile phones, with a seemingly infinite permutation of features and prices. With four main networks to choose from, dozens of tariffs and hundreds of handsets, it easy to see why buyers sought means of simplifying their buying process. Throughout the 1990s, Vodafone had positioned its UK network as superior technically to its competitors. Advertising focused on high coverage rates and call reliability. Vodafone was the UK's most popular mobile phone operator, with almost eight million customers, including 4.2 million Pay as you Talk customers. It had opened the UK's first cellular network on 1 January 1985 and was the market leader since 1986. Vodafone's networks in the UK - analogue and digital - between them carried over 100 million calls each week. It took Vodafone more than 13 years to connect its first three million subscribers but only 12 months to connect the next three million. Vodafone had the largest share of the UK cellular market with 33% and had more international roaming agreements than any other UK mobile operator. It could offer its subscribers roaming with 220 networks in 104 countries. Despite all of the above, Vodafone was aware that although it was recognized as an extremely strong business in the corporate marketplace, it was not so strong in the market for personal customers. Research indicated that personal buyers bought Vodafone for essentially rational reasons rather than having any emotional attachment to the brand. The success of the competing Orange network, which had developed a very strong image, was a lesson to Vodafone that many people did not understand many of the product features on offer, but instead identified with a brand whose values they could share. Vodafone recognized that it needed to be perceived as adding value to a consumer‟s lifestyle. Given the increasing complexity of product features, positioning on technical features was likely to make life more confusing for personal customers. An alternative approach was needed which focused on image and lifestyle benefits. The company decided to hire Identica – the consultancy that originally created the One 2 One brand – to revamp its brand communications and advertising strategy in an effort to make Vodafone more appealing to personal customers. Identica created a new „visual language‟ for the Vodafone brand. Vodafone became involved in the biggest ever TV, press, poster and radio advertising campaign in its 15 year history. Employing a completely new style, the new advertising centred around the theme: 'You are now truly mobile. Let the world come to you' and featured a new end-line - Vodafone „YOU ARE HERE‟. The campaign demonstrated how Vodafone's products and services were designed to make life easier for its customers. The campaign, created by BMP DDB, was worth £20 million over two months alone and ran for the whole year. Bringing meaning to the Vodafone brand and what it represented, a series of advertisements, through a range of media, showed how Vodafone let the world come to its customers, enabling them to be truly mobile. This portrayed how Vodafone always pioneered to make things more possible for its customers in a wire-free world. In press and poster executions, Vodafone used arrows photographed in various real life situations to depict its flagship services, e.g. a weather vane was used to illustrate the Vodafone Interactive weather service showing how weather information could be brought to customers through their mobile. Each advertisement again had the Vodafone „YOU ARE HERE‟ end-line. The arrows indicated the directional approach of Vodafone, letting the world come to the customer. Other executions illustrated cinema listing information, sports updates, share price information, international roaming and the Vodafone Personal Roadwatch 1800 service. The change in emphasis by Vodafone seemed to be timely. The mobile phone industry was facing a new wave of confusing product features hitting consumers, with the development of Wireless Access Protocol (WAP) phones and the newer “Third generation” phones due to be launched in 2001. It seemed inevitable that all of the competing networks would be offering confusing permutations of features with their service, so Vodafone calculated that, given similar levels of reliability and sophistication by all networks, a favourable image and lifestyle association would be an important source of competitive advantage. Given the right image with existing technology, there would be a strong probability that consumers would migrate with the brand to the new technology when it arrived. Source: adapted from “Vodafone Image Shift”, Marketing, 4th May, 2000 and Vodafone Home Page, http://www.vodafone.co.uk. CASE STUDY REVIEW QUESTIONS 1. Identify the principal benefits to customers which derive from a mobile phone. What differences are likely to exist between market segments? 2. Is a strong brand identity on its own a source of sustainable competitive advantage? To what extent must this be backed up by real product features? 3. Are goods different to services in the way that a distinction is made between features and benefits?

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