Marketing communication of service-base enterprises theory and practice

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1 Marketing communication of service-base enterprises theory and practice Ing. Viera Frianová Katedra manažmentu, Akadémia ozbrojených síl gen. M. R. Štefánika, Demänová 393, Liptovský Mikuláš, Slovenská republika, tel , Abstract This article deals with some issues of service-base enterprises marketing communication. It presents some conclusions of theoretical and empirical research realised as a part of PhD student s dissertation thesis. The main attention of this article is focused on the specifics of marketing communication of service-base enterprises and also on the practice stages in the designing and implementation of their communication strategy in practice. Key words Marketing communication, communication strategy, communication process Introduction Over the last years the services industry has assumed greater importance for world economy. Continuing challenges face the increasing number of service providers also in our economy. On the other hand the service-base enterprises (service companies) have to look for competitive advantages to stack up against competitors in a competitive environment. At the present time is efficient marketing communication considered just as source of competitive advantage for enterprises. It is the source of competitive advantage for service-base enterprises, too. Maybe it is the main reason why professional public and also management of every service-base enterprise should pay more attention to marketing communication issues. Effective communications raise awareness, increase sales of services, mould customer perceptions to corporate positioning, and establish and build brand identity. Due to wide opportunities of marketing communication I consider evaluation process and monitoring of its efficiency and effectiveness to be of great importance. With regard to mentioned facts I intend to present selected part of theoretical knowledge and also practical findings and conclusions (in the second part of this article) of marketing communication process realization in the chosen service-base enterprises tourist industry service providers. My goal was by way of scientific methods (like: analysis, synthesis, induction, deduction, comparison, generalization etc.) to compare latest conclusions of marketing communication theory with practice, on the basis of results of survey (I used questionnaire with 28 questions referred to marketing communication process) to formulate conclusions and suggestions useful first of all for service-base enterprises practice. The questionnaire was completed by 30 tourist industry service providers from region Liptov (18 hotels, 6 restaurants, 4 travel agencies and 2 enterprises oriented at entertainment, sport and relaxation). In my dissertation thesis I determinate four research hypothesis/questions. This article presents conclusions applied only to two from them. The conclusions of the findings based on the theory and analyzed data (from questionnaire, interviews, internal documents of enterprises) are presented in order to answer the research questions/to verify (falsify) hypothesis. The second chapter of the article includes the implications for management as well as implications for theory and future research. Which means the outcomes and conclusions of research can be used to prepare qualified

2 assistance in overcoming main problems of marketing communication of service-base enterprises in daily practice and also to inspire first of all professional public to realize future researches of marketing communication issues. Some theoretical issues of marketing communication of service-base enterprises In general marketing communication helps define an organisation s relationships with their customers not only by the kind of messages exchanged, but also by the choice of media and occasion to suit their customer s preferences. Marketing communication of service-base enterprises is characterized by many specifics followed from distinctiveness of services (e.g. services are not physical they are intangible, services can t be stored or transported etc.) and services industry, too. Service marketers face a number of challenges when promoting their offerings. For example services need to understand the myriad promotional tools available to their businesses to increase tangible cues use those cues effectively and promote service quality (Stafford, 2002). The promotional mix of service-base enterprises has traditionally included advertising, sales promotion, personal selling and public relations, with more recent tools such as direct marketing and the internet growing in popularity for services. Another way of categorising marketing communications instruments is to differentiate between theme or image communications and action communications (Stafford, 2002). In image or theme communications the advertiser tries to tell the target group something about the brand or services offered. The goal of image communications could be to improve relations with target groups, increase customer satisfaction or reinforce brand awareness and brand preference. This might eventually lead to a positive influence on the (buying) behaviour of the target group. Below-the-line or action communications tools seek to influence the buying behaviour of target groups and to persuade the consumer to purchase the product service. The primary goal is to stimulate purchases. In practice, theme and action campaigns are not always that easy to discern. Sometimes the primary goal of advertising is to sell, as in advertisements announcing promotions or direct response ads. (Pelsmacker; Guens; Bergh, 2007). In the development of the general theory of marketing communication, it is necessary to transfer from the simple to its wider comprehension in several aspects. One of the results of such an approach is the utilisation of integrated marketing communication. The now ubiquitous philosophy of integrated marketing communications (IMC), where the diverse promotional tools come together into an integrated and coherent whole, is yet another critical area of investigation for effectively promoting services (Tripp, 1997). Given the lack of concreteness for most services, an effective IMC strategy may prove to be a strong tool in overcoming intangibility. The problem of intangibility remains, although new theoretical approaches to the subject are emerging to help service marketers better understand the challenges associated with the vagueness and abstract nature of the service (Mittal, 1999), and which promotional tools best overcome these challenges. One of the key elements in IMC is a strategic communication plan. It allows marketers to build a synchronized communication strategy that reaches every market segment with a single, unified message. The objectives of any service-base enterprises promotional strategy can be drawn from an appropriate mixture of the roles of promotion: to increase sales, maintain or improve market share, create or improve brand recognition, create a favourable climate for future sales, inform and educate the market, create a competitive advantage relative to competitor s services or market position and to improve promotional efficiency. Systematic approach to promotional planning and strategy encompasses the following activities/stages:

3 1. Situation analysis 2. Determining communication objectives (including identifying target markets/audience) 3. Establishing promotional budget 4. Deciding on the message, promotional and media mix 5. Measuring and evaluating promotional results/effects The objectives of the communication strategy are derived from the objectives of the promotional strategy. The objectives can further be categorised based on the model of communication process. For example communication objective of model AIDA is to create and maintain awareness, interest, desire and action to all the target groups. Wells et al. (2000) state that communication objectives of service-base enterprise should be quantified in terms of success/failure and timescale. This to ease the control as actual results can be measured against quantified objectives. Moreover, the previous year s objectives, and corresponding results, help to make the planning job a little easier, as previous experience provides a better idea of what are realistic objectives for the future. Objectives should be S.M.A.R.T: Specific, Measurable, Actionable/Achievable, Realistic/Relevant and Timely/Time Specific) (Drucker, 1954). Clear objectives also give direction to the following creative efforts. Once the objectives have been set the budget can be determined by a number of methods which can be broken down into two approaches: top-down and bottom-up. There is no universally accepted norm for determining the marketing communication budget although there is a growing use of the objective and task method. When service-base enterprises establishing an appropriate promotional mix, which consists of a selection of strategies from more then one of the communication tools, Rowley (1998) proposes issues to be taken under consideration, such as the available budget, the marketing message, the complexity of the service-base enterprise tailored product services (packaging, programming and people), distribution of the product, the stage in the product/service life cycle, and competition. Furthermore, the communication mix is composed differently depending on the focus of promotion activities. It can be focused directly on end users customers (e.g. tourist, client of a bank, patient, student) or on intermediates of services (e.g. travel agency, information office). When measuring and evaluating promotional results it can be difficult to differentiate between the effect of promotion and the other elements of the marketing mix (product services, price, and place). However, it is important to observe the effects of promotion, by looking at sales figures and any measures of reputation available. Marketing communication of service-base enterprises in practice The findings show that the product of service-base enterprises is of major consideration in all aspects when determining the promotional budget and communication mix. I found that using of marketing communication tools by tourist industry service providers depends on particular situation. For example enterprises increase using of communication tools during fall of customer s demand (during decrease selling of their services, decrease employment of their spare capacity), especially in the low season. The findings show that in this situation hotels above all offer comprehensive packages of services together with the short-term price reducing and advertisement (in press and own web sides). Restaurants use expansion of their supply (they offer new services with regard to their quality). Travel agencies communicate with customers/markets by their price, they sell their products using advantaged prices (at last minute) also they communicate by means of

4 different mass media (dominate Internet). To achieve new customers or new markets they increase frequency of their advertisements. The findings show that the marketing communication of chosen enterprises is characterized by its wider comprehension. Promotion mix of service-base enterprises includes not only traditional communication tools and methods they communicate also by new modern tools and channels (Internet, buzz marketing, direct marketing, event marketing, sponsorship etc). Personal channels are implemented in practice of service providers more than non-personal ones. Managers of tourist industry service-base enterprises in region Liptov are agree on the following opinion: the best advertisement for service providers in tourism are recommendations of their satisfied customers. In connection with this idea and with regard to importance of people in services providing process managers consider high quality and professional personnel/staff of service-base enterprise the main requirement of entrepreneurial practice and also prerequisite for success achievement in tourism. To be marketing communication between personnel and customers efficient and unified (especially during personal selling) many of service providers in tourism (e. g. tourist agencies) implement own communication standards. Also the finding shows that cooperation among service-base enterprises in tourism visible increase. Some enterprises realize crosspromotion strategy (e. g. between enterprises oriented at entertainment and relaxation and hotels). Through the right cross-promotion enterprises can attract more customers with less effort. Cross-promotion has the potential for a big marketing payoff because partners can successfully expand through each other s customer base. They can gain on inexpensive and credible introduction to more of their kind of customer more effectively than with the traditional solo methods of networking, advertising, or public relations. The conclusions of the findings verify hypotheses of dissertation theses: Service base enterprises realize marketing communication with regard to their specifics including specifics of their product services; enterprises use marketing communication tools with regard to particular situation. I found that 83, 3% of analyzed service-base enterprises have own marketing strategy. 70% of enterprises realize process of marketing communication by own communication strategy which represents integral part of their marketing strategy. Communication strategy helps them easier overcome many problems related to realization of marketing communication in practice. The findings show that marketing communication of service-base enterprises has further more strategic character. By planning, implementation and evaluation of communication activities/campaigns enterprises emphasize importance of their previous experience with realization of those activities. Enterprises use services of marketing communication experts/agencies only rarely/sporadically. Establishing of promotional budget brings them the biggest problems in practice. 60% of enterprises establish promotional budget on the bases of their actual financial possibilities. With regard to the mentioned facts enterprises to overcome the problems should use of the objective and task method or rather the combination of methods altogether. The budget can be set as a percentage of sales, the budget can be set on the basis of share-ofvoice parity with competitors, the budget can be set as the result of an analysis of the desired objectives and tasks required to achieve those objectives etc. 87, 3% of enterprises monitor and evaluate effects of marketing communication not only continuously but also at the end of every communication campaign. There are several modules and indicators that can be used to monitor the communication effects (advertising monitor, billboard monitor, web monitor, long-term effects measurement etc). First of all most of the service producers in tourism monitor and evaluate effect of marketing

5 communication on sales of their services. Evaluating effects is a learning period servicebase enterprises can find out what worked, what didn t, what would happen if or if not and not least, what they learnt during the project is effect on sales. With regard to the fact that marketing communication brings many long-term effects enterprises should apply to evaluation of return on communication investment (ROI), too. The conclusions of the findings verify hypotheses of dissertation theses: Achievement of marketing communication goals of service-base enterprises is influenced by process of preparation, creation and implementation and also monitoring and evaluation of success rate of marketing communication strategy. Conclusion The findings show that marketing communication of service providers in tourism from region Liptov is distinguished by a positive evolutionary trend (wider comprehension of marketing communication, strategic character of marketing communication process, enterprises communicate by new modern tools and channels etc.). Marketing communication is the most visible of any of the marketing mix variables. It is of vital importance that any communication activity is set in the context of the overall marketing strategy. It involves the setting of its own objective and budget which should be soundly based on the target audience as should the marketing communication mix decisions. Marketing communication research should be used to establish the effectiveness of the communication strategy. All marketing communications practitioners, including service-base enterprises, should be ready to capitalise on any future developments in the field of communication. References Periodicals GROVE, S. J. CARLOS, L. DORSCH, M. J.: Comparing the application of integrated marketing communication (IMC) in magazine ads across product type and time. Journal of advertising Available: ROWLEY, J.: Promotion and Marketing Communications in the Information Marketplace: Journal, Library Review, Vol. 47, No 8 STAFFORD, M. R. Promotion of services: Journal of Services Marketing, 16, 2002, Nr. 5, ISSN ZEITHAML, V. A. PARASURAMAN, A. BERRY, L. L.: Problems and Strategies in Services Marketing. Journal of Marketing. Vol. 49, 1985, ISSN Books KIRÁĽOVÁ, A.: Marketing destinace cestovního ruchu. Praha: Ekopress 2003, ISBN MATEIDES, A. ĎAĎO, J.: Služby. Bratislava: Epos 2002, ISBN PUTMAN, A. O.: Marketing Your Services: A Step-by-Step Guide for Small Businesses and Professionals. Hardcover 1990, ISBN Books (composite authors) BOVÉÉ, L. C. THILL, J. V.: Marketing. USA: McGraw-Hill 1992, ISBN ĎAĎO, J. PETROVIČOVÁ, J. KOSTKOVÁ, M.: Marketing služieb. Bratislava: Epos 2006, ISBN KOTLER, P. KELLER, K. L.: Marketing management. Praha: Grada Publishing 2007, ISBN PELSMACKER, P. GEUENS, M. BERG, J.: Marketing communication: A European Perspective. New York: Pearson Education 2007, p. 425, ISBN WELLS, W. BURNET, J. MORIARTY, S.: Advertising Principles and Practice. Upper Saddle River: Prentice Hall 2000

6 Other reports and documents Tri-Media (2003): Integrated Marketing Communication. Marketing & Publicity INC [On line] Available: Summary Viera Frianová Marketing communication of service-base enterprises theory and practice At the present time is efficient marketing communication considered just as source of competitive advantage. It brings wide opportunities to service-base enterprises. Marketing communication of service-base enterprises is characterized by many specifics followed from distinctiveness of services and service industry, too. The findings show that marketing communication of service providers (30 tourism enterprises from region Liptov) is distinguished by a positive evolutionary trend. The outcomes and conclusions of theoretical and also empirical research can be used to prepare qualified assistance in overcoming main problems of marketing communication of service-base enterprises in daily practice and also to inspire to realize future researches of marketing communication issues.