My Essays

Failure is not, in itself, a Desirable Outcome of Entrepreneurial Activity. Discuss

Sun, 25 Nov 2007 18:41:20 +0000

"There are no failures — only feedback."
R. Bandler
"What we call failure is not the falling down, but the staying down."
Mary Pickford
“I would never promote to a top-level job a man who was not making mistakes...otherwise he is sure to be mediocre."
Peter Druker
"Failure is the opportunity to begin again more intelligently."
Henry Ford
"A minute’s success pays the failure for years."
Robert Browning
(Source: motivatingquotes.com)
Introduction
The idea that failure could, in any walk of life, be a desirable outcome appears absurd, and asked whether you wish to fail, one would presume the question to be rhetorical, however, as the quotes above demonstrate, some believe differently.

This essay will discuss how desirable failure within an entrepreneurial activity, looking into both arguments for and against this issue. This includes what is learnt from a failure, as well as what is not. It is also important to recognise that risk is intrinsically relative to failure and this will also be addressed. The idea of “luck” also comes into this argument, which will be explored, but firstly we must define who it is who may or may not benefit from failure.

The Entrepreneur
What is an entrepreneur? Many people take the opinion that the term entrepreneur covers only a few people, with Virgin owner Richard Branson being the stereotype. The theory to which this opinion is related is that the motivation is purely financial, growth is crucial and amassing a huge personal fortune is critical. However, the umbrella of entrepreneurs spreads beyond the loadsamoney image of the 1980’s.

There are many different views on what defines an entrepreneur but for the purpose of this essay, the contemporary definition set out by Timmons (1989:p48) will be used. “Entrepreneurship is a human, creative act that builds something of value from practically nothing. It is the pursuit of opportunity regardless of the resources or lack of resources, at hand. It requires a vision and the passion and the commitment to lead others in the pursuit of that vision. It also requires willingness to take calculated risks.” This can be simplified as to someone who takes, finds or uses resources to do something new, and is highly motivated to achieve their vision.

Describing Failure
There are many different views and opinions within the entrepreneurial world as to what counts as failure, and as such it is difficult to define. To demonstrate how a failure can be a success, and what effects whether something is a success or failure we will borrow from the world of football. In football a failure is;
• relative to the league position and/or quality of players (situation),
• dependant on number of matches (time frame) being discussed
• based on expectations of ;
o Team and club members (internal: owner/employees/share holders)
o Fans, journalists, other team footballers (external: competitors, industry analysts, customers etc.)

For example, if Arsenal, Champions of the previous season loose their first three matches of the season to the three teams just promoted up from the league below, this series of results maybe deemed a failure. This would be because their situation, relative to their opposition suggests they should be victorious, the time frame is only three matches, and everyone’s expectations were for three Arsenal victories.

It skip back to the entrepreneurial world, business ‘x’ whose initial sales are dramatically lower than their forecasts, and competitors they deemed to be inferior have been taking their market share, then some may be quick to describe business ‘x’ as a failure.

Jumping back to the parallel of football, should the time frame be extended to the whole season and Arsenal were to change their training regime (a change to internal factors) and win all other games and ended the season crowned champions it would certainly not be deemed a failure. Some may even argue that it was the early season “failures” which spurred the team onto their Championship success.

Again, linking this back to the entrepreneur, what if, because of the early “failure” business ‘x’ experienced, the employees were better motivated or trained which led to better quality production or service, then over the financial year, business ‘x’ maybe deemed a success. In these parallel examples, the football manager/entrepreneur is reactive to the failings and changes things in an attempt to change the teams/businesses fortune. This is in fact a demonstration of how failure can be desirable because it makes the entrepreneur realise there has been something wrong and encouraged change.

Defining Failure
The main definition given by the Cambridge dictionary describes failure as “to not succeed in what you are trying to achieve or are expected to do”. This idea of failure being relative to the targets – what one is attempting to achieve – is an effective one for this essay, and one which is echoed by McGrath (1999). “An initiative can be said to have failed when it is terminated as a consequence of actual or anticipated performance below a critical threshold (Gimeno, Folta, Cooper, & Woo, 1997). In other words, failure is the termination of an initiative that has fallen short of its goals.” It is however, interesting that McGrath includes the idea of closure due to “anticipated (poor) performance” as a form of failure. This is to say that when it is recognised that a business is sliding down the proverbial slippery slope, if it is closed it should be classed as a failure.

The business information service company, Dun and Bradstreet however use a differing definition of failure in their 1998 census research. Failure is defined as when “Firms (become) involved in court proceedings or voluntary actions involving losses to creditors; Firms going out of businesses without loss to creditors are not considered business failures: they are discontinued businesses.” This definition suggests that as long as the business closes with out dropping below Gimeno et al.’s “critical threshold” – even when it has been forecast – it is not classed as a failure.

Causes of Failure
The causes of failure can be split into four many categories; Market, Operational, Financial, and Human (Cave, 207 Failure Lecture, Wk8). In terms of market failure, the most common error it seems is in the entrepreneur being overly optimistic regarding the market they are entering or a part of. As Deakins (1996) discovered, a lack of market knowledge was the fourth most important factor in business failure. Operational failure covers such things as the location of the business, cost estimates, and excessive start up costs. The Financial failure covers poor cash management, high-gearing, and taking too much income out of the business (excessive drawings). These first three categories are all external causes of failure. Human of course covers all managerial sides of the business, and is therefore an internal cause of failure, and the most controllable of the four categories.

Learning from Failure
The most important, and commonly citied reason, purpose and benefit of failure is to what is learnt, and this can be the desirable outcome of the failed entrepreneurial activity.
Deakins, for example, found that a lack of knowledge of marketing was the most important factor in business failure but of course this, as with any other factors of business failure must be recognised by the entrepreneur.

Zacharakis, Meyer, & DeCastro (1999) bring in the “fundamental attribution error” which says that “attribution theory predicts that people are likely to attribute their failures to external causes (Bettman and Weitz 1983; McArthur 1972) whereas they will attribute other people's failures to internal causes.” By this Zacharakis et al. suggest that the attribution theory – something which is part of human nature – means entrepreneurs are more likely to recognise managerial factors as the source of failure for other business failures. However, when discussing their own business failures they are more likely to blame external factors, those that are out of their control for the businesses collapse. The figures are more positive than this suggests however, with entrepreneurs in the Zacharakis et al. studies citing internal factors 58 percent of the time when considering their own failures and 89 percent of the time when considering failures across all entrepreneurial activity.

“By identifying external causes, such as changes in product market conditions or financing problems, entrepreneurs exonerate themselves and protect their egos.” This view considers that some entrepreneurs may rule themselves out as a cause of failure as to maintain their own personal image of themselves. For entrepreneurs in whom this trait is present Zacharakis et al. suggest that rejecting that failure was a result of their actions – or inactions – are far less likely to succeed in other business ventures because they are “probably directing their problem-solving efforts to the wrong place.”
Zacharakis et al. also recognise that the entrepreneur may fear that investment will dry up if they admit that it was their error that led to the failure. “In addition, the entrepreneur may believe that capital will be more forthcoming if the problem is external, since the cause of failure was not poor management but market or external forces.”

However, Cope, Cave and Eccles (2004) state that a “VC’s decision to invest in an entrepreneur is not negatively affected to any significant degree by a previous experience of failure” and that as long as the entrepreneur can explain the reason for the failure, acknowledge their limitations and be prepared to “stand aside if necessary then the ability to receive future VC support is not jeopardised to any significant extent.” Having said this Cope et al. also state that if there have been “multiple failures and very little success” then it is important to question the abilities of the entrepreneur.

Management change from failure
It has been recognised that some entrepreneurial activity fails because the entrepreneur, although successful in start-up and business creation, is let down by their management abilities. Meyer and Dean (1990) describe this as the “executive limit” of the entrepreneur, when “their inability to manage the firm becomes detrimental” (Zacharakis et al.). It is therefore important to implement a professional manager as this is more likely to encourage survival in the business (Zacharakis et al. : Flamholtz 1986; Hambrick and Crozier 1985; Hofer and Charan 1984; Tashakori 1980). Here again, the entrepreneur needs to learn their limitations, and understand that to be successful there is the importance of professionals for every part of the system that makes up their business. Recognising that their business has moved on and although it is still their business, it is crucial to have a good team themselves.

Risk and Failure
The Timmons definition of the entrepreneur used within this essay includes that the entrepreneur “requires (a) willingness to take calculated risks”, that is, risks which the entrepreneur believes to be low enough in relation to the possible future success. This is backed up by Swinson (1998) states that “Risk-taking lies at the heart of profitable business.” Inherent within any risk is the possibility of either failure or success, and therefore a business failure would suggest that a risk-taker was possibly at the helm.

Luck from Failure
An interesting issue raised by the guest lecturer Ian Gordan was the idea a failure becoming fortunate. I forget which industry Mr Gordan was working within, but the venture failed and he was forced to cease trading within it. This failure meant that he become removed for one industry and in order to recover, he plunged himself into the mobile communications industry – just as mobile phones began to take off across the world. He described how had it not been for the failure in the average industry he was a part of he would not have got into the mobile communications industry at, what in hindsight, was such an opportunistic time.

Conclusion
In direct response to the question, failure is not, in itself a desirable outcome of entrepreneurial activity, if by this the question asks “is failure, separated from all other aspects (e.g. Learning, experience etc.), a desirable outcome of entrepreneurial activity”. How ever, common sense has led the author to believe that the topic was to encourage thought surrounding the pro’s and con’s of failure, and as such has engaged in this activity.

As shown at the beginning of this essay; Henry Ford once said "Failure is the opportunity to begin again more intelligently." This helps in answering the question, in that failure leads to trying again, and, as a factor in the Timmons definition of an entrepreneur is in being highly motivated, the aspect of trying again is more inherent in an entrepreneur. In contradiction to Mr Ford’s statement however, it must be said that the most desirable outcome of all would surely be to succeed first time.

This leads onto the entrepreneurial love of “lady luck”. Many entrepreneurs speak of luck based on their current situation, and therefore base it on fortunate circumstances or being in the right place at the right time. But where could any one of these entrepreneurs be now had they not experience failure, did it indeed improve them, did they learn the right lessons, or have they in fact merely exceeded their expectations following the knock back of failure?

Bibliography

motivatingquotes.com , accessed; 8/12/04, http://www.motivatingquotes.com/failure.htm

Carter, S, Jones Evans, D; Enterprise and the small Business. Prentice Hall, England 2000
Cave, F (2004) Business closure and Failure, ENTR 207 lecture, Wk 8

Cope Jason , Cave Frank and Eccles Sue; Attitudes of Venture Capital Investors Towards Entrepreneurs with Previous Business Failure http://www.lums.co.uk/publications/viewpdf/262/

Deakins, D, ‘Entrepreneurship and small firms’, McGraw-Hill (1996) cited in ENTR207 Failure Lecture, week 8

Dun and Bradstreet: Statistical Abstract of the United States: 1998

Linda Leung The entrepreneur's spirit; Network World. Framingham: Aug 23, 2004.Vol.21, Iss. 34; pg. 69, 1 pgs

McGrath, Rita Gunther. Academy of Management. The Academy of Management Review. Briarcliff Manor: Jan 1999.Vol.24, Iss. 1; pg. 13, 18 pgs

Meyer, G. D., & Dean, T. J. (1990). An upper echelons perspective on transformational leadership problems inhigh technology firm. Journal of High Technology Management Research, 1, 223–242.

Swinson, Chris; Presidents page: Entrepreneurs. Accountancy. London: Dec 1998.Vol.122, Iss. 1264; pg. 97, 1 pgs

Zacharakis Andrew L, Meyer G Dale, DeCastro Julio. Differing perceptions of new venture failure: A matched exploratory study of venture capitalists and entrepreneurs; Journal of Small Business Management. Milwaukee: Jul 1999.Vol.37, Iss. 3; pg. 1, 14 pgs

Marketing Strategy for Swatch (Joint project with Matt Ryan)

Wed, 1 Dec 2004 18:31:08 +0000

Executive summary

The watch industry is in decline, fact. We put this down specifically to the strong time keeping competition – our competition. This not only comes in the form of other watch manufacturers or clock manufacturers, this is from industries totally separate to either of these, and from companies who do not specialise in time. Our competition in the 21st century is from hand held personal electronic devices such as PDA’s, MP3 players and Mobile phones. All these are bought to complete totally separate tasks to a watch, but include accurate digital clocks. These devices have become crucial to everyday life for the majority of the population and, as such, the consumer does not leave home without them.

This is not the only cause for concern. The largest age group – that which we have targeted throughout the existence of Swatch – is getting older, and the younger age groups are far smaller, as couples have fewer children. Our 15-> 24 year old market is growing up and not providing a large enough generation to follow.

Within this declining market, Swatch is suffering from the proliferation of direct competitors, competing in the same specific segments to ourselves. We believe, however, that this is of little concern compared with the threat of complete extinction of the watch industry from the electronic devices mentioned above.

We do not have the expertise to create a Swatch Mobile phone or Swatch MP3 player, and the technology doesn’t exist for us to put these devices within the small confines of a wrist watch. We cannot compete successfully inside these industries and as such, we must collaborate with them, something our strong brand name allows us the possibility to do.

We believe the wrist watch must change, and with our rich history of advancing the industry, we, as Swatch are the ones to do it.

We give you the Swatch remote. A technology that has the ability to work alongside all our products without permanently affecting their appearance. The Swatch remote utilises two existing technologies in Bluetooth and Floating LCD displays. One allows data to be sent to and received from any other Bluetooth device (mobile phones, PDA’s, MP3 players). The other allows this data to be displayed, apparently floating above the watch face, within the glass cover of the watch case, ensuring the beautiful Swatch face is in no way harmed by this addition of digitalisation.

Initially piggy backing on the successes of the ipod, through a collaboration with Apple, an iSwatch will be released allowing users to read song track information and simple wireless control of the device, such as volume control and skipping ability. Following this, the remote wristSwatch will be released, fully compatible with the majority of leading mobile phones and PDA brands, allowing users to read text messages and screen calls from the comfort of their remote wristSwatch.

Situation Analysis

As a member of the Swatch Group, we make up part of the largest and most successful watch conglomerate in the world, accounting for between 22 and 25% of the global watch market value in 1997. Our incredibly strong brand name has been mainly derived from the continued sponsorship of major sporting events around the world, most notably being the official timekeeper at the past three Olympic Games in Atlanta, Sydney, and most recently Athens. Our Swiss roots have also been maintained, reinforcing that positive brand value, as the official timekeeper of the Swiss established Ski World Cup. This association with events where precision timing is essential has helped sustain the technical and functional associations with the brand.

On the flip side, the sponsorship of extreme sports and active gaming events makes Swatch synonymous with adventure and excitement while being cool and sassy within these youthful sporting markets. Swatch are official sponsors of the annual snowboarding “Boarder-X” event, as well as associations within surfing, wind-surfing, wakeboarding, skateboarding, mountain biking, and kayaking. The company is also the main sponsor of the Federation Internationale de VolleyBall (FIVB), the largest international sporting federation in the world, mobilised through the Swatch FIVB World tour.

As well as sponsoring entire sports and sporting events, Swatch also support specific sporting personalities within these disciplines creating the Swatch ‘ProTeam’ – ambassadors of the Swatch brand.

This strong brand image, created and maintained through the factors outlined above, provides a very valuable asset to the firm and one that is not only recognised by consumers but also by other businesses. Envied by many, the Swatch brand image gives us an advantage over our competitors in the business market as it opens up the possibility of developing relationships with other established brands from other markets, something we believe is crucial in today’s ever-changing, technologically advanced, consumer world.

The size of the Swatch Group empire gifts Swatch the capacity and machinery in place to increase production in any sector. This encourages reduction in unit costs. This coupled with the prestigious production location of Switzerland, the legally protected label, "Swiss made", and the resulting connotations of quality, allow us to maintain the brand philosophy “combining top quality with a highly affordable price”.

In today’s highly fashion conscious consumer world self-image is on a par with – if not exceeding – the importance of functionality in everything around us. Watches are no different. Gone are the days when watches were a tool of time keeping, now they are an item of clothing that must fit both the occasion and the rest of the users outfit. As such, consumers, especially females, require and acquire several differently styled watches for different occasions. By focusing on this desire for watches to match outfits, the potential product lines available to Swatch are countless, as is the opportunity for links to be established with various fashion retailers and manufacturers. Unfortunately, the more involved Swatch become with the fashion market, the more risks we face with the volatile nature of the industry.

The watch market is changing with the world, where Swatch once enjoyed market dominance with its range of unique, fashionable, novelty watches, the early 1990s saw sales remaining relatively stable, only increasing by 30% since1986 – there are many reasons for this trend, however, the key issues involve:

• A decrease in the size of Swatch’s target market
• Increased competition – many new firms positioned in direct competition with Swatch
• A general drop in prices

With Swatch moving further along its product life cycle toward maturity, the company relied on an extended product line in order to sustain its growth (producing more than 70 different models per season, with a high variety of limited editions), however, despite the success of these product lines, current trends would suggest that Swatch will begin to see a fall in sales over the next decade as the target market (typical buyers tend to be between 15-29 year olds) decreases.

As the above table demonstrates, the total number of buyers in the European Union market clearly peaks inside Swatch’s target audience of 15-29 year olds in 1993 yet, in contrast, this age bracket sees a dramatic drop in sales projected for 2008. Interestingly, the 2008 curve echoes that of the 1993 curve, with the number of group sales rising to its peak in the 35-39 year old age bracket (the same consumer base from the 20-24 year old bracket in 1993).

The UK market has been singled out in this table to further demonstrate the trend, as is the case with the other countries that make up the EU, the UK’s projected sales for 2008 dip noticeably in comparison to the sales in 1993.

The western world’s aging population must be a concern for Swatch as their main consumer base within the 15-29 year olds age over the next decade, changing their needs, wants, and demands as they do so. The market that remains in the target age group is far less interested in the Swatch brand; they are a text-addicted, internet-loving, technologically aware generation that arguably ‘look down’ on watches given their relatively limited capabilities (why would you need a watch when every electrical device around you tells the time?)

Despite this trend, new firms continue to enter the market. This influx of new competitors, several positioned in directly against Swatch, coupled with the shrinking market are driving down prices significantly. As well as new firms entering the watch market (and current firms expanding), competition also appears in the form of other technological devices, the vast majority of which offer time-management capabilities (such as stopwatches and alarms) as standard. In some respects watches are becoming increasingly redundant as, in the western world at least, there is no real ‘need’ to look at your watch to find out the time – mobile phones, the internet, digital television services and even cars, all allow an individual to find out the time whilst they perform another activity (an ever-present trend in modern society).

As a result of this changing market, it is no wonder Swatch, and its competitors, have had to drop their prices and increase their availability considerably. Swatch have benefited from the large economies of scale they gain with such mass production, as well as the inevitable advancement in technology and production methods – reducing all costs involved in manufacturing. Added to this, they have taken the opportunity to sub-contract machinery to other Swiss watch manufacturers, relieving the pressure on sales.
Key Issues

The most important issues surrounding the future prospects of the Swatch brand name involve that of the increasing level of competition facing the firm, as well the ever changing needs and wants of the target market. Essentially, the Swatch brand name must be evaluated and the key question must be asked – does the brand still hold its unique, novelty appeal?

Whilst the future of the target market does look bleak, Swatch continue to see relatively stable sales, if this trend of stable sales in a declining market continues, Swatch will have effectively been growing in the market – perhaps as a result of other companies leaving, or simply due to the success of the firms own product line extensions. With this in mind, Swatch’s appeal may be as strong as ever, however, as the data above shows, this appeal does not seem to be attracting the younger successors to the current target age bracket with projected sales seeing a decrease of 20% over the next decade.

As European societies move more in line with the wants and needs of an aging population, the current marketing strategy at Swatch will become far less effective. Assuming the current trends in the market are maintained, Swatch may need to re-position itself further away from the wealth of similar competitors, more toward the prosperous metal watch segment (which is only being covered very lightly by the Irony product).

The research presented to us on Swatch suggests that the brand exists at the low priced end of the watch market, away from the more functional Hong Kong brands and edging closer to the prestigious stylised market where other traditional Swiss brands reside. Although our perception of the Swatch brand was originally one of a more high quality, exclusive brand, it is clear from the novelty, plastic nature of the current product line that Swatch do, in fact, deliberately position themselves in this segment of the market.

Whilst this tactic has proven successful in the past (and arguably continues to succeed as sales remain stable), the dominance of the world market by traditional Swiss brands, coupled with the success of Japanese and Hong Kong imports, as well as the emergence of a new market made up of licensed metal sport watches, illustrates the fact that Swatch could potentially achieve more (in terms of profitability) if they were to re-position themselves into these markets (perhaps under a new business name to avoid any brand image confliction, following in the footsteps of Timex who cover a much wider area of the watch market by controlling several different brand names aimed at various different market segments).

Research into the product positioning of Swatch in comparison with other major brands in the segment echo the low-price image the firm has established, interestingly however, the study also places the product line very close to the sporty end of the market (with ‘conservative’ being the opposite end of the scale) – a perception we were not aware of. Certainly with the emergence of the new licensed metal sports watch market, within which many of the key global sports market firms (Addidas, Nike, Puma, etc) reside, will increase the level of direct competition on Swatch. Despite the established brand name and previous success, this new market could prove devastating for Swatch, as, not only will the firms entering the market appear more reputable (with regard to sports knowledge and experience), but they will also appeal to the growing metal watch market – a market Swatch has very little involvement in. However, the value of the Swatch name must not be forgotten as it could prove to be the company’s greatest asset following any re-positioning effort.

Whereas firms such as Seiko and Citizen are able to dominate the extreme end of the ‘sports vs. conservative’ positioning scale by providing technological innovations that Swatch can not offer (due to the advent of analogue quartz watches), such brands would find it nigh-on impossible to re-position into this metal watch market without a very effective marketing strategy due to their weaker brand power (Essentially this could be seen as a East Asia vs. Europe issue where East Asia represents the cheap but technologically advanced segment, and Europe represents the traditional, high quality segment)

The strength of the Swatch brand name is partly a result of the many Swatch stores across the world (ranging from the western countries you would expect to find, right across to less economically important countries such as Algeria, Guatemala, and the Republic of Yemen). Having stores solely devoted to the brand immediately provides a certain level of prestige amongst customers and, perhaps, a higher perceived price as a result. These positive associations with the brand contradict the current positioning, gifting the company the scope to re-position quickly and effectively.

Yet it may not be necessary for a full re-positioning strategy as, whilst the European population ages, the Asian market continues to boom with a youthful population. Indeed, the above conflict between East Asian and European brands could benefit Swatch as their original marketing strategy may prove highly successful in these new markets, contrasting the East Asian strategy in those markets, and potentially allowing them to dominate the untapped markets of less developed countries.
Ideas

As we have shown there are several key issues for Swatch to consider with regard to the future of the firm, the following recommendations plan to tackle these issues in order to aid the continued success of the Swatch brand. These recommendations are born from the key issues previously discussed including:

• Paranoia and fear in terms of safety of ones self and family has grown dramatically, meaning people now like to know where their loved ones are at all times
• The largest market age group is growing older – the teen market we built our brand on will be 30 to 39 year olds in 2008
• Global youth market is in decline
• Electronic devices such as PDA’s, MP3 players and mobile phones have become crucial life items and all clearly display the time.

We believe the following to be viable options for the future of Swatch, the opportunities we believe are best for Swatch are discussed in detail further on.

• Move away from the declining youth market in Europe and into the growing East Asian market
• Move out of the consumer goods market and concentrate on the corporate route in two key areas;
o Precision timing for electronic devices, and CPU’s
o Dongle devices, such as electronic keys, taking technology from the ski lift passes incorporated in the Swatch ‘Snowpass’ watch
• Leave everything as it is and milk as much from the declining market as possible to avoid fighting a lost cause
• Investment in new product development
o Utilising Bluetooth to connect devices with watches
o GPS transmitters within watches to allow parents to track children’s whereabouts
• Gain licences to sell under the banner of other brands such as Billabong, as Timex have done successfully with the likes of Timberland

Recommendations

We believe that the mobile phone is our biggest competitor by far as it becomes a universal device removing the need for many other products such diaries and cameras, and includes time-keeping. We believe the watch will die out no matter how attractively it is designed, and as such, fashion issues will ultimately become redundant.

Swatch has always tried to lead the market in terms of technological advances and we believe it is this tradition that will allow Swatch to remain profitable despite the extinction of many other watch companies in the dying watch market.

Picture the scene, a young professional has left the confines of the office for the warmth of the summer sun to enjoy a lunch made up of a Pret A Manger Turkey, Sausage, Sage & Onion Baguette with a Starbucks cup of Decaf Mocca Java. Just as she is queuing to pay for the coffee she receives a text message to her mobile phone, deeply lodged within her handbag. With the bagged baguette and coffee in one hand and purse in the other she fumbles through her handbag to find the elusive mobile, but, devastatingly, as she digs deeper within the bag she looses concentration and spills some of the boiling hot Decaf Mocca Java down her skirt and onto her suede Prada boots.

Or at least this used to be the case, as we pick up the story as the text message arrives…

With the bagged baguette and coffee in one hand, she rotates her purse laden hand and watches as the message is slowly scrolled through on an LCD display floating above the traditional looking chronometric Swatch clock face.

We at Swatch don’t do mobile phones, we have no experience in the market place, and the market place has no room for us. Equally, mobile phones have no experience of being anywhere near as compact as a simple wrist watch, so how can our visionary scene become an ever present event?

Our new Swatch does not do away with the mobile phone, people have become too attached to them and the technology cannot accommodate anywhere near such a small device. Instead we see the Swatch becoming the middleman between user and device, a Universal Personal Remote Control, harnessing the ability of the wireless data transmission technology of Bluetooth. This allows the swatch to stay highly compact whilst bringing the main functions of the devices to the user – the swatch is simply a Bluetooth receiver and display.

The display unit will be hidden when not in use allowing the user to appreciate the Swatch design how they always have. This is achieved by using a floating LCD which appears in the glass above the traditional watch face and hands. This technology was first implemented by Casio in their 1995 watch Twincept, but since then has apparently not been used. The technology is ideal for our purposes as it will only affect the aesthetics of the watch when the “remote” function is ‘awoken’.

Our vision is not limited to mobile phones. And it is the Apple ipod which we believe is crucial in the launch of this new technology.

The Swatch remote would allow for only basic track navigation in order to maintain the small size and appearance people expect of watches and therefore only a maximum of three buttons is recommended. These would operate as
1. Skip forward one track
2. Skip backward one track
3. Play/ pause

In keeping with the ipod system, we believe that replicating the highly innovative scroll wheel through a rotating bezel to control volume (and possibly, in the future, a far more sophisticated track navigation) would be a very useful addition, although this may initially cause problems with waterproofing.

The strong brand name of Swatch gives us the edge over many competitors, especially in terms of innovation. We believe our history and philosophy match similarly with those of Apple - both strive for top quality products whilst maintaining low competitive prices and both are highly innovative and ambitious in terms of design. With such a powerful brand image, our well established name will undoubtedly allow us to approach Apple with a realistic hope of securing a contract to be an official partner to the ipod.

We recommend this collaboration should have a greater priority than with mobile phones, and should be seen as the initial phase of the new Swatch strategy. In the present market, the success, strength, image and exclusivity of the ipod are so enormous that this association will significantly help in the release of our product. Piggy-backing on the ipod will help gain credibility for a device being released from the already trusted name of Swatch. We will also benefit from the technology enthusiasts and visionaries that make up the majority of ipod owners, whose personality traits encourage early adoption of new products and technologies.

Following this strong introduction, we can begin to realise our mobile phone aims. The ipod collaboration will introduce the possibilities into the consciousness of the consumer and will make the release of mobile phone compatibility accepted with little to no concerns or reservations from consumers.

Our Swatch remote addresses the two main threats and problems we have become aware of. It is an idea which, rather than challenging the competition within the watch industry, accepts defeat and works alongside these challengers, totally rejuvenating and revolutionising the concept of the wrist watch. We also resist cannibalising our product range as the floating LCD technology can be incorporated into any standard watch without affecting the designs Swatch creates. We maintain everything Swatch has built up and everything it stands for whilst ensuring the firm continues trading for many years to come – at the centre of the consumers’ electronic world.

Brand Communities

Sun, 1 Feb 2004 16:39:53 +0000

Brand; “ A name, term, sign, symbol or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.” (Kotler, Armstrong, Saunders and Wong, 2002:469) The concept of brands, branding and theories of brand loyalty have led to the creation of over 1.5 million registered brand names in Europe alone (Liebman, 1999) with many that have emerged as strong and well known. The brands Coca-Cola, Microsoft and IBM were ranked first, second and third – respectively – in 2000 in a list of 75 billion dollar brands (Kotler et al., 2002:472) and this wealth comes from being known worldwide. Brands are important because the consumer has learnt from evidence they have been exposed to – be it positive or negative – that different brands mean different things. The brand meaning is the emotional, often irrational consumer interpretation of a brand and this influences buyer behaviour. It is the perceived personality and character of the product or service that helps encourage or discourage brand loyalty by consumers (Fanning 1999). But brand loyalty is not the be all and end all of branding. A deeper, stronger level of a brand exists, where consumers become ‘members’ of the brand. They become part of a brand community. This report will explore the idea of brand community, through existing literature and through limited and simple research conducted in part, by the author. This research was undertaken in a presentation on brand community, with the sample being the small audience of Marketing Undergraduates who raised some interesting questions which will also be explored here in.
A brand community is defined by Muniz and O’Guinn (2001) as a specialized, non-geographically bound community, based on a structured set of social relations among admirers of a brand. From this we can see that brand communities are not limited to location, as the traditional idea of a community may entail. It is also clear that all members of a brand community share the same or at least similar strong, positive opinions – or to be more precise, emotions – towards the brand. However, little else can be taken from this definition until the concept of ‘community’ is evaluated and fully understood.

Community, in its traditional form, is a concept which many sociologists believe has been destroyed by its opposite – society – which is its replacement in today’s modern world. Muniz et al. (2001) quote Tonnies (1887) as defining community as a customary, familial, and emotional (rural) environment whilst society is defined as the mechanical, contractual, individualistic, and rational (urban) environment. Tonnies (1887 cf. Muniz et al. 2001) was saying that members of a community had a sense of belonging whilst members of society were simply statistics; depersonalised and unfamiliar to one-group as a whole. This can be explained better by breaking community down into what Muniz et al. (2001) describe as the three core community commonalities, accumulated from a variety of sociology literature. To explain the core commonalities we evaluate each separately, firstly defining the commonality from the literature, then demonstrating it. Here we introduce the example of a possible brand community in the form of the supporters of the team – the brand – Portsmouth Football Club (PFC), of which the author is a member. To demonstrate that Portsmouth Football Club is a brand we refer back to the definition provided by Kotler et al., (2002:469). PFC is identified in both name and in the moon and crescent crest, the symbol (see fig 1, to the right). It is used to identify the service of entertainment provided by Milan Mandaric, the chairman, the seller; for he receives payment in the form of gate receipts from the paying audience, the crowd. The brand is unique so as to differentiate itself from other teams, its competitors.

The first core community commonality is that of Gusfield’s (1978) consciousness of kind, which Muniz et al. (2001) state as the most important of the three core commonalities. Consciousness of kind is assessed as “the intrinsic connection that members feel toward one another, and the collective sense of difference from others not in the community” it is a type of “shared consciousness, shared knowing of belonging”. This shared consciousness is certainly one of the key parts of being a supporter of PFC and can be seen in the shared emotion of extreme delight when a goal is scored and immense disappointment when one is conceded. It is also seen at far deeper levels, where opinions are shared regarding performances of individuals in the team and decisions of “who had a good game”. The consciousness of kind is not bound to the area surrounding the stadium, and can be experienced often on another, higher level when abroad. Once, in Rome, whilst queuing to enter the coliseum, the author recalls noticing the person in front wearing a hat bearing the PFC symbol (fig 1) and so immediately started conversing. This intrinsic connection that the author knew existed destroyed any normal barriers to conversation and meant the two parties conversed as if they knew one another as long lost friends immediately. The collective sense of difference from others not in the community can also be shown through the various chants targeted at opposition supporters, and especially to PFC’s fierce rivals, Southampton Football Club. From this we can see that consciousness of kind is certainly apparent for the brand PFC.

The second core community commonality is in shared rituals and traditions. Rituals “are conventions that set up visible public definitions” (Douglas, Isherwood 1979 cf. Muniz et al. 2001) “and social solidarity” (Durkheim 1915 cf. Muniz et al. 2001). This means that rituals are activities undertaken by group individuals to show their membership to the group to non-members. Rituals are used by group individuals to define themselves from non-group members, and to show unity. The most common ritual is that of wearing a PFC replica shirt, although this is extended to wearing any apparel or item that bears the PFC symbol (fig 1.) such as hats, scarves, coats, badges or a combination of any of these. Traditions are described as “sets of social practices which seek to celebrate certain behavioural norms and values” (Marshall 1994 cf. Muniz et al. 2001). These can be demonstrated in terms of PFC brand members through the chants sung (or more precisely, shouted) at matches; however these are not restricted to match day. The most famous PFC chant is the ‘Pompey Chimes’ – Pompey being the nickname for PFC – which ring out as “Play up Pompey, Pompey Play up!” and is repeated at matches continuously. Despite this though, it is well known supporters to end a conversation with a fellow supporter, with “Play up Pompey!”. From this evidence, it is plain to see that shared rituals and traditions are experienced with the brand PFC.

The third and final core community commonality is that of a sense of moral responsibility (Muniz et al. 2001), where members feel a sense of “duty” or “obligation” to the brand and to the community as a whole. “This sense of moral responsibility is what produces, in times of threat to the community, collective action” (Muniz et al. 2001). To analyse this final commonality we must look at what has happened when the PFC brand has been threatened. Throughout the 1990’s the PFC brand was regularly threatened with relegation, often needing victories on the final day of the season, and throughout this period supports voiced their support in numbers at these matches and throughout the seasons. However, the biggest threat came on 03/02/99 (www.insolvency.co.uk) when PFC went into administration after several years of appalling financial management, which would result in PFC being kicked out of the league if a buyer was not found by July that same year. The fans immediately set about getting as much media attention as possible in an attempt to real in a buyer, which went as far as the fans dressing as under-takers and walking in precession, to the ground carrying a coffin with a PFC branded flag draped over it. These demonstrations of moral responsibility coupled with consciousness of kind, and rituals and traditions are proof that PFC supporters are indeed members of the community of Portsmouth Football Club. Referring back to the Muniz et al. (2001) definition of a brand community, we note that it is non-geographically bound, however, they maybe geographically concentrated (Holt 1995 cf. McAlexander, Schouten, and Koening 2002), scattered (Boorstin 1974 cf. McAlexander, et al., 2002), or even entirely non-geographical, based through the space of the internet (Granitz, Ward 1996 cf. McAlexander, et al., 2002). In the example of PFC, we notice that the brand community is geographically concentrated in the Portsmouth area, but certainly not exclusive, with supporters club in/on the following; The Isle of Wight, Sussex, London, The Midlands, The North, South Wales, Scotland, The United States, and Australia. The brand is also spread throughout the internet, with at least 73 separate websites dedicated to the brand (www.pompeychimes.org). From this we can conclude that the brand of PFC does have a brand community in its supporters based worldwide.

The example of PFC is used to demonstrate the theory of a brand community because of the existing knowledge of the author and because sport’s supporters are one of the most common form of brand communities, however many other brand communities can be found. Considering the evaluation of the third core community commonality, in that “this sense of moral responsibility is what produces, in times of threat to the community, collective action” (Muniz et al. 2001) we can suggest that brand communities maybe strongest where the brand is or has been threatened. This in turn suggests that the weaker the brand is within its market place, the stronger the sense of brand community. Further examples of this are provided by Muniz et al. (2001) and McAlexander et al. (2002) in IBM Apple Mac and Jeep. In these parties research it was noted that their were strong senses of community centered on both these brands, with Jeep users meeting at regular rallies, such as Jeep 101, and strong Apple Mac communities existing via the internet. Both these brands’ existence has been threatened, Jeeps strong heritage as a traditional four wheel drive by new modern 4WD makes such as Toyota, Nissan and Suzuki and Apple Mac by that of Microsoft. Muniz et al., (2001) propose that stronger brand communities form around brands with a strong image and a “rich and lengthy history” along with threatening competition. The use of existing history to the brand keeps communities vital and reproduces the culture, this in turn encourages both unity between generations and offspring of members to become members themselves. The sharing of brand stories from the past reinforces consciousness of kind between members and contributes to the heritage of the community; ensuring members know where it has come from and what it stands for – a type of internal brand meaning, a social construct of brand meaning. This promotes members to feel ownership of the brand. When a consumer feels ownership, they also become in their own sense, a legitimate member of the brand. Legitimacy is key to becoming a member as well as being a key part of being a member. “Legitimacy is a process whereby members of the community differentiate between true members of the community and those who are not” (Muniz et al., 2001:7). In this way, members self officiate the community, ensuring that members have the both the brands’ and the community’s interest at heart. This is seen as deciding whether a member “really knows the brand opposed to using the brand for the wrong reasons” (Muniz et al., 2001:7). This idea of ‘using’ a brand can be shown in the brand communities of successful football brands such as Manchester United, having only a small number of true supporters compared to the vast number of “glory hunters” following the brand purely because it is successful. Muniz et al. (2001) note that membership is not denied, but that there is the existence of status hierarchies, with those doing most within the community positioned highly. ‘Glory hunters’ in this hierarchy would be nearer at the bottom. Not all brand communities, however use this method of self officiating, with legitimacy far less noticeable in brand communities of more unsuccessful or more unpopular brands. Here a strong sense of anti-community is sensed, where members unite behind one brand due to their dislike of another brand. This is very evident with Apple Mac computer users, who are united due to the threat of Microsoft which instils an emotion of hatred to that of the dominant brand. As Muniz et al. (2001) discovered “Mac community members have a strong moral certainty, feeling that they are doing the right thing by resisting the Microsoft tide.” This anti-community is another aspect of consciousness of kind within the brand community. “Through opposition to competing brands, brand community members derive an important aspect of their community experience” (Muniz et al. 2001). The brand community is strengthened by the consciousness of kind of feeling unique, feeling as a minority.

These aspects of brand community help strengthen the brand and makes its future easier to for-see, allowing investment to be made into the brand based on the security of a ‘fan base’. Because of this, brand community is a desirable aspect of branding and as such, marketers wish to be able to build them. However, as we have seen from the stages to brand community, they depend mainly on self officiation by those un-officially related to the brand. Jeep is an example of a brand who have taken successful steps to induce and expand brand community.

Annually across America, Jeep, the 4WD brand host meetings known as Jeep 101 to which jeep owners are formally invited. At these events jeep owners are shown the various off road capabilities of their vehicles, features which other wise would remain un-used in their traditional school run lifestyle. The formal invitation is only a small factor in the strong after sales service, the relationship between brand and consumer maintained strongly by Jeep. At Jeep 101, owners are pushed to go further with their jeep than they would, by Jeep officials who know the limitations of the vehicles and push them to those This encourages Jeep owners to view the brand as more personal than they normally would, as shown in this analysis of the Jeep user, Susan, from McAlexander et al., (2002). “Susan viewed “Jeep”, a corporate entity as a caring institution, a family that provided her a sense of belonging and importance…Jeep was there in the form of a real person to support her in achieving a meaningful personal triumph…She feels and values a sense of community among Jeep owners”. This is because she went through these experiences not only with her vehicle but with other users similar to her, with their vehicles. Here Jeep setup the environment for the natural creation of brand community. This demonstrates how despite community crucially being created by its members; non-corporate entities, the brand community can be encouraged by the corporation without the members of the community feeling the brand has had any influence.

The research underwent by the author was designed to investigate whether the sample, Undergraduate Students, felt as if they were part of a brand community, or whether they believed they were individual. The research was completed by asking members of the sample to sit in one of two groups, those who felt they were members and those who felt they weren’t, and then their views towards these ideas were noted down. Our sample overwhelmingly felt they were not members of brand communities, because they believed it meant they were loosing their freedom of purchase. They did not like the idea that they were in anyway part of a segment that could be stereotyped although after the presentation of brand community, many realised they were in fact part of brand communities. This initial rejection could well have been influenced by the fact they were all marketing students and felt, possibly, that they knew marketing techniques and therefore could be less affected by such ideals. This cannot be tested as there were no non-marketing students present to compare results with. Due to problems with our data capture techniques however, much of our data – in the form of notes – was lost and so few conclusions can be made.

From this report, we can conclude that brand communities do exist and that they can create a new dimension to customer loyalty, where members make purchases based on the community of which they are a part. We can also see that they must be formed naturally, and controlled by the members but that corporations can stimulate their creation and growth. We have also seen how brand community provides a new type of competitive advantage, based on a long-term fan (customer) base, instead of the tradition of product differentiation. This is a new concept which needs far more research into it for us to be able to understand and use it further.
Word count 2,741

Bibliography

Douglas, M, Isherwood, B, (1979) The World of Goods, New York: Basic

Fanning, J (1999) “tell me a story: the future of branding”, Irish Marketing Review, 12, 2, 3-15

Fournier, S (1998) “Consumers and Their brands: Developing Relationship Theory in Consumer Research” Journal of Consumer Research 24 (March) 343-373

Kotler, Armstrong, Saunders, Wong (2002) Principles of Marketing: third European Edition Prentice Hall

Liebman, M (1999) “What’s in a name? How and why global branding is done” http://www.cpsnet.com/reprints/1999/11/NameBranding.pdf visited on 8/1/04

McAlexander, J.H, Schouten, J.W, Koening H.F (2002), “Building brand community”, Journal of Marketing, 66, 1, (Jan) 38-55

Muniz, AM Jr, O’Guinn, TC (2001) “Brand Community”, Journal of Consumer Research, 27, 4, (March) 412-32

Tonnies, F (1887), Gemeinschaft and Gesellschaft, translation by Loomis, CP (1957) Community and Society, Michigan State University Press.

www.insolvency.co.uk, visited 9/1/04 http://www.insolvency.co.uk/rec/admsum99.htm

www.pompeychimes.org, visited 9/1/04 http://www.pompeychimes.org/modules.php?op=modload&name=Web_Links&file=index&POSTNUKESID=f893fd446ceac5acec29d26d57e9d3ad

www.port.ac.uk, visited 9/1/04 www.port.ac.uk/ournews/ 080702.htm

Discuss the use of Fear Appeals in Adverts

Mon, 15 Dec 2003 16:40:01 +0000

Advertising, “any paid form of non-personal presentation and promotion of ideas, goods and services by an identified sponsor” (Kotler, Armstrong, Saunders, Wong 2002). It is estimated that each day we are exposed to thousands of adverts (www.rab.co.uk), each attempting to sell their ideas, goods or services to us, and to stand out from this huge crowd, different techniques are employed. One such technique involves the use of fear to motivate the consumer to buy into the ideas, goods or services, and this technique is known as a fear appeal. This report will investigate how fear appeals are used and when they are effective. The use of fear does raise ethical and moral questions and these issues will also be explored.
Firstly it is important to understand what fear is. Fear is described as “a relational construct aroused in response to a situation that is judged as dangerous and toward which protective action is taken” (Rogers 1983). This definition allows for variance through personal definitions of danger which rely heavily on what is important to the individual, for example their life, their safety or even their social status. From this definition we can say that fear is an emotion experienced when something an individual deems as important is put at risk. From this we can begin to understand how a fear appeal works.
Fear appeals are defined as “highlighting the negative consequences that can occur unless the consumer changes a behaviour or attitude” (Solomon, Bamossy and Askegaard 1999:176) but immediately we see problems in this definition. Fear is more than negative consequences; these consequences must have a negative effect on something deemed as important by the consumer. This shows that an effective fear appeal must show the importance of the threat in order to create or emphasise the fear, and this is described by Geller (2003) as the “threat component”.
The threat component is designed to 1) motivate the consumer into seeing (or believing) the risk exists, and 2) that it is also important to the consumer. This sets the scene for the consumer – it creates the fear – so that a solution to the fear can be put forward in the form of the advertised product. This solution side to a fear appeal is what Geller (2003) calls the action component, where the consumer is 3) shown the key to the problem and 4) decides that this is the appropriate action to take. These four stages within Geller’s (2003) two components are the stages of the Protection Motivation Theory, PMT (Rogers 1983). Rogers’ PMT shows that firstly a threat must be acknowledged; secondly that the threat is a likely possibility if no action is taken; thirdly that an effective “coping response” exists and forth and finally; that the consumer must believe they personally can use the coping response to remove the risk. This final stage was developed by Bandura (1977) and is known as self-efficacy. Effective application of Rogers’ (1983) PMT to create a fear appeal depends on the use of the fear appeal.
There are several uses of fear appeals, but first we will investigate Safety Messages. Safety messages are those adverts which attempt to encourage the consumer to change their behaviour for the sake of their own, and others’ safety. Their purpose is to teach – the product being promoted is an idea – the consumer and fear appeals here are most effective as the research of P Slovic (1991) shows; “when an audience can visualize the negative consequences happening to them, personal apprehension is activated and people become receptive to learning strategies for avoiding feared consequences.”
The most common form of safety message adverts are those for road safety and cover all range of aspects of the road, here are a few examples (www.tv.cream.org). The message maybe to; wear a seat belt (clunk-click every trip); be aware of motor cyclists (think once, think twice, think BIKE!); keep your distance (only a fool breaks the two second rule); or not drink drive, among many others. Safety messages are possibly the hardest messages to get across to the consumer because here the consumer believes they are safe and that the message is designed for the unsafe lunatics on the road. The “it will never happen to me” approach is most common amongst young people, as Irwin and Millstein (1986) discovered, finding that “perceived vulnerability to health and safety threats increases directly with age”. Because of this difficulty to get the consumer to listen to safety messages, fear appeals are employed with high levels of fear, but convincing this stubborn audience that they need to change their actions is difficult. Here we look again to the research of P. Slovic who finds that “collective statistics don’t scare us nearly as much as an individual case study” and that “a personal story from an individual similar to the audience heightens perceptions of vulnerability and thus makes the threat seem real, relevant, and frightening”. This can be recognised in road safety adverts such as the seatbelt-use promotion using the dramatisation example of a mother driver on the ‘school run’. In this advert the mother is killed as a direct result of her teenage son – seated behind her – failing to wear a seat belt being launched forward and crushing the mother. This advert shows other teenagers, under the “it’ll never happen to me” illusion that it could happen, and uses the fear of having to live with the effective man slaughter of their mother. The final message 'Belt up in the back. For everyone's sake' shows a course of action and because it is given as an almost flippant instruction, it is clear to the consumer how simple it is to do. This advert, clearly meets the four stages of Rogers’ 1983 Protection Motivation Theory, and the campaign, launched in July 1998, increased child rear-belt usage from 80% to 91% and adult usage from 48% to 59% over the year starting April 1998, clearly very efficient (www.thinkroadsafety.gov.uk).
Another common use of fear appeals is in health messages, again used to scare people into changing their ways because all other methods of getting the message across have failed. Such an advert is the new campaign (launched 1/1/04) by the British Heart Foundation (BHF), showing the consumer the effect smoking has on their arteries, and therefore their long term health. The advert shows a group of friends in a pub having a drink and smoking cigarettes, a scenario which many smokers find themselves in and therefore can relate to. But in the advert, after they light up, fatty goo starts oozing from the end of their cigarettes, dripping down their fingers and landing on clothes (www.society.guardian.co.uk). The advert then shows this ‘goo’ being squeezed from the arteries of a 32year old into a Petri dish (see fig 1 and 2 below). The advert is designed to make the consumer – the smoker – become afraid of smoking, as the BHF state; “The message is clear - if you smoke you risk clogging up your arteries…and every single time you pick up a cigarette we want you to remember this fact.” This approach attempts to make smokers look at cigarettes and become almost physically sick. “The graphic image, linking a cigarette and an artery, serves as a reminder of the dangers of smoking every time a smoker picks up the cigarette” (www.bhf.org.uk). This advert has been very successful in trials, with the BHF finding that “some smokers who took part in our research groups have already decided to give up cigarettes”, and is expected to have a big impact over the next year. This advert however, should in theory be an ineffective fear appeal as it does not fit to Rogers’ PMT, as it fails to show the smoker a solution to the problem, except to quit smoking. Quitting any addiction is a very difficult procedure and it is common for such adverts to accept that Geller’s action component is difficult to implement. Because of this these adverts use very heavy threat components, to make the consumer desperate to quit and ‘find out more’, this is one of the hardest steps towards quitting, and so I could be argued that finding out more is the action component for such adverts.
These two types of fear appeals, in safety and health messages, are often deemed ethically and morally ‘right’ because they are promoting ‘socially accepted’ positive messages. Ethicality and morality is often discussed in terms of deontology and teleology, and this social acceptance is the later of the two. Deontology “asks if the needs of the public are being met by the ad format, or if the method is humane and correct” while teleology looks at the direct consequences of the ad and whether it produces “the greatest balance of good over bad”. Teleology also assesses whether “the greatest number of people are being served by selling the product”, in other words, is it “promoting beneficial goods that improve the consumers quality of life” (Benet, Pitts, LaTour 1993). In the case of health and safety messages it is clear that teleology and deontology are met, and so there is little doubt that these fear appeals are both ethically and morally right. We begin to see problems in ethics and morality of fear appeals as fear is used to part consumers with hard earned currency to dispel these fears.
As previously shown by Irwin and Millstein (1986) the older the consumer gets, the greater vulnerability they feel, and as such advertisers often use fear appeals when targeting older consumers. Many ‘Peace of mind products’ exist, but we must ask which comes into existence first; the product or the fear. A ‘peace of mind product’ will use a fear appeal to promote itself, by showing the consumer – often elderly – how they desperately need the product, and encourages the consumer to believe the product has been created to solve their problems. But in fact it is very plausible that the fear demonstrated would not have been considered by the consumer had the advert not been shown. A good example of this is shown in adverts for the personal communications device, Aid-call. Aid-call is a small device worn around the user’s neck which can be pressed in an emergency to contact the Aid-call helpline, who in turn will send appropriate help to the user. The advert dramatises an elderly woman falling down the stairs and being unable to get up, and emphasis is put on the fact that she lives on her own and so there is no one there to help her up. The advert then focuses on the device around her neck (see fig 3 below) and the simplicity of how to use the device is demonstrated while the voice-over explains how affordable the product is and how it provides peace of mind, allowing such persons to continue to live at home and not feel vulnerable. For those living alone who had not considered the threat, they are now thoroughly worried of having a fall and are likely to want to order an Aid-call as soon as possible. The advert also makes consumers with elderly relatives worry about their safety. It meets Rogers’ PMT stages, but is it ethical to sell it through fear, especially when the advertiser knows that their target audience will feel highly vulnerable after seeing the advert?
The ethicality of fear appeals is crucial in the effectiveness of the advert because an advert deemed unethical or immoral can cause negative reactions towards the product and or brand. Reactions to an advert deemed unethical range from “consumer indifference toward the advertised product to more serious actions such as boycotts or demands for government regulation” (Snipes et al., 1999) and “some researchers suggest that…improperly used fear appeals damage the credibility of advertisers” (Ellis, SD). This shows that not only can unethical or immoral use of fear appeals be damaging to the image of the product and or brand, but also to the whole profession of advertising. Unethical fear appeals are more noticeable in adverts that play on fears of rejection in social environments based on appearance, such as adverts for anti-wrinkle cream which play on fears of becoming un-attractive with age, or simply of becoming old. 2042
In conclusion we can say fear appeals in adverts must be used very carefully because, dependent on the consumers opinion on its ethicality, can have a positive or negative effect on that which is advertised. The ethicality of fear in safety and heath message adverts are generally accepted, as it is the most effective method of transmitting the message, but as advertisers begin to cross over to saleable products the acceptance varies and this can have a negative effect on the profession as a whole. The bottom line for the ethics of this practice is whether the product is created for an existing and extensive fear or whether the advertiser creates a fear in order to sell an existing product.
For a fuller insight, further investigation is needed into fears of social status and vanity and how this is created and used to promote products. It is also important to investigate why and when fears are rejected as this will make fear appeals more effective.
Word count 2,200

N.B. I was informed by Susan Auty that an automatic 10% tolerance level exists, taking maximum word count to 2,200. See attached email

Bibliography

Bandura, A (1977) “Self-efficacy: Toward a unifying theory of behavioral change”, Psychological Review 84 191-215
Benet, S, Pitts, RE, LaTour, M (1993) “The Appropriateness of Fear Appeal Use for Health Care Marketing to the Elderly: Is it OK to Scare Granny?", Journal of Business Ethics, 12, 45-55.
Ellis, SD, “fear appeals”, http://ouray.cudenver.edu/~sdellis/FearAppeals.pdf visited 7/1/04
Geller, E Scott (2003) “Scared safe: How to motivate safety involvement”, Occupational Health and Safety 6, 1 (Feb) 6-10
Irwin C.E, Millstein, S. G. (1986) “Biopsychosocial correlates of risk-taking behaviors during adolescence: can the physician intervene?”, Journal of Adolescent Health Care, 7, 82–96
Kotler, Armstrong, Saunders, Wong (2002) Principles of Marketing: third European Edition Prentice Hall, Page: 626
Rogers, R W (1983) “Protection Motivation and Self-efficacy: A Revised Theory of Fear Appeals and Attitude Change”, Journal of Experimental Social Psychology 19, 469-79.
Slovic, P, Flynn J. H, Layman, M. (1991), “Perceived Risk, Trust, and the Politics of Nuclear Waste,” Science, 254, 5038, 1603-1607
Snipes, LaTour, Bliss (1999) “A model of the effects of self-efficacy on the perceived ethicality and performance of fear appeals in advertising”, Journal of Business Ethics 19, 3 (April) 273-286
Solomon, Bamossy, Askegaard, (1999) Consumer Behaviour: A European Perspective Prentice Hall, Page: 176
www.bhf.org.uk, visited 7/1/04 http://www.bhf.org.uk/smoking/utilities/press_releases.asp
www.rab.co.uk, visited 6/1/04, http://www.rab.co.uk/publications/html/wearout.htm
www.society.guardian.co.uk, visited 7/1/04 http://www.society.guardian.co.uk/publichealth/story/0,11098,1114349,00.html
www.thinkroadsafety.gov.uk, visited 7/1/04, http://www.thinkroadsafety.gov.uk/campaigns/seatbelts/rear.htm
www.tv.cream.org, visited 7/1/04 http://tv.cream.org/thecore/adroad.htm
www.aidcall-alarms.co.uk, visited 5/1/04, http://www.aidcall-alarms.co.uk/how_it_works.htm

The Influence of Advertising on the Creation of Brand meaning

Tue, 1 Apr 2003 16:31:27 +0100

When shopping, consumers choose one product or service out of a selection of similar items in that product or service category. Persil washing powder may be selected above Ariel, or McDonald’s preferred to Burger King. But these selections are not purely based on the facts of price and quality, they are also based on consumer beliefs regarding these brands; the brand meaning. The brand meaning is the emotional 1, often irrational consumer interpretation of a brand and this influences purchase choice. It is the perceived personality 1 and character of the product or service and helps encourage brand loyalty by consumers. But where does this brand meaning or image come from and how is it created? Fanning describes the brand meaning as a public image based on “impressions, ideas, opinions and random associations” 1 by potential purchasers. But these impressions, ideas, opinions and random associations must have a semantic connection with the brand that has been made by the consumer. The consumer’s image of a brand is slowly built up from the evidence they gather over time. Everything discovered by the consumer, however trivial, is translated into a meaning and significance 1 that affects their opinion of the brand and therefore what the brand means to them. “People build brands in their heads - whether or not the owners of that brand intend them to” 2. The owners of these brands therefore wish to influence this construction by consumers and are believed to do so using a variety of marketing methods such as user imagery; advertising; and packaging 3. The creation of brand meaning is not purely from advertising, as Stockdale describes; “out in the real world, genuine belief is earned, after consumers have heard what the brand has got to say.” 4.
This report looks at the influence advertising has on consumers to build brand meaning that the company desires. Two main brands will be used to help discuss the issues raised;
• Škoda, the motor car manufacturer;
• Nike, the sports equipment, clothing and footwear
These have been selected due to their UK advertising campaigns and their changing brand meaning and image over this time. Nike has become a symbol of sporting success, maintaining a very positive brand meaning. Škoda meanwhile was at one point in its history a symbol of failure and embarrassment, and is only now beginning to turn this image on its head.
Advertising is defined as “any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor” 5 and therefore not only covers television adverts and posters but also methods such as sponsorship. Brands have four main types of meaning; attributes, benefits, values and personality 6. Each of these have differing effects on the consumer’s interpretation of the brand. Attributes are the features of the product or service that can be reflected into the brand meaning. The attributes of the product or service can not be altered with advertising but can only be promoted by it. Nike products are engineered to maximize their efficiency in the sporting arena and are produced to the highest quality. Features such as the specialized ‘Air’ soles are a major attribute of their range of ‘Nike Air’ trainers and are were heavily advertised in the late 80’s including a campaign called ‘AirRevolution’ that cost over seven million dollars 7. The adverts centered on the advantages of these new trainers; their benefits. The main benefit was the increased comfort of the shoe and was shown with a ‘spring board’ image.
Since the creation of Nike in 1971, the company has heavily invested in advertising and promotion of their brand through normal advertising and sponsorship of sports personalities. Between 1973 and his death in 1976, one of Americas best track runners in history, Steve Prefontaine wore Nike shoes as he broke many track records. This was his choice of footwear and encouraged others to use this new brand 7 – he was not paid to carry the brand. Endorsements such as this are highly successful in promoting a product as it is believable and honest. These are two of the three key features in a successful advert. KAS&W tell us that advertising appeals should have three characteristics; they should be meaningful, pointing out benefits to make the product more desirable; believable, prevent consumers from doubting the honesty of the advert, and finally distinctive, setting the product apart from the competition8. The voluntary endorsement of Nike trainers by Prefontaine succeeds in all three characteristics. It is meaningful because the product has brought great success to a user, it is believable because it is the users choice and he is not being paid to wear them, and it is distinctive because they have brought the user unrivaled success. Realising the affect of having a successful sports person using and therefore endorsing their products, Nike signed up the young tennis prospect John McEnroe in 1978 because they believed he was the personification of the Nike brand - colourful character and feisty personality. This use of human characteristics within a brand helps to enable a consumer to make associations between the brand and the type of user of the brand. By becoming a user the consumer is attempting to express his or her own self 9, an ideal self 10, or specific dimensions of the self 11 through the use of the brand12. By aspiring to be like McEnroe, consumers aspire to use Nike footwear, and they build a portrait of what Nike means, its brand meaning, around its most famous user.
In 1981 McEnroe won two major tennis championships whilst using Nike footwear and this was used in billboard adverts by Nike’s advertising agency, Wieden and Kennedy. The posters showed two images of McEnroe playing tennis, one at Wimbledon and one at the US open, with the Nike tick logo clearly visible on his footwear. Beneath each picture the location and date is written with “singles and doubles Champion” also written beneath each picture. At the base of the poster both the swoosh and ‘Nike’ logos are displayed 13. Wieden and Kennedy were now ensuring that consumers were indeed associating Nike not only with McEnroe but more importantly with success. This is an example of the evidence consumers use to create an image of brand meaning, and from this a brand meaning is molded through advertising.
Nike’s next major connection with a sporting personality was in 1985 with young basketball player Michael Jordon. Nike not only sponsored Jordan but created a separate range of footwear branded “Air Jordan”. Nike were trying to make Michael Jordan synonymous with their brand and any successes he would make would also by associated with Nike, more so than with McEnroe. Sponsorship falls into the definition of advertising, and therefore any influence on brand meaning from sponsorship is an influence of advertising. Sponsorship is though, a very risky type of advertising. With a television commercial the company can mold the advert into the brand meaning they require, but with sponsorship, the sporting personality becomes an ambassador for the brand. All of their actions will be connected to the brand, be they positive or negative. As Nike had created ‘Air Jordan’ they were committing themselves to the sponsorship. However, as risk increases, so do the heights to which it can have a positive effect on the brand. By succeeding, Michael Jordan’s success could, in part, be put down to the brand that he believed in.
Nike were creating more “brand imagery associations” 14 using Michael Jordan. This builds up a mental image in consumers minds of types of users of the brand and if positive, results in social approval 14. This is where users of a brand receive positive opinions and feedback from other consumers. This social acceptance of a brand encourages more consumers to use the brand and so it becomes fashionable – furthering the creation of a positive brand meaning.
In 1986, following the success of their footwear, Nike were able to extent their brand to clothing, creating apparel for McEnroe in Tennis and then Jordan in Basketball 15. Nike were able to make these extensions because Nike had built a brand image of success in sport instead of success in footwear, achieved through the sponsorship of McEnroe. The creation of brand meaning builds an image of the brand within the consumer’s minds and this tells consumers not only what the brand is but more importantly what it cannot be 16. By creating a brand meaning of sporting success, extension to sports clothing was simple and made simpler still when it was linked with the personalities who had made their brand such a success. In 1991 Michael Jordan helped the Chicago Bulls win their first NBA championship, 5 years after teaming up with Nike, another example of success brought from the Nike brand – from zero to hero.
It is not only sponsorship that brings about brand meaning, slogans used within adverts are a key influence on how brands are viewed. In 1988 Wieden and Kennedy created the slogan “Just Do It” for the Nike brand to encourage consumers to get into Nike clothing and footwear and get out and succeed. The slogan was launched on a poster with a distant image of a runner and a quote of him that read; “I run 17 miles ever morning. People ask me how I stop my teeth from chattering in the wintertime. I leave them in my locker” followed by the slogan “Just Do It” 13. The advert promotes the idea that an aged man with false teeth dons his Nike gear and just does it. This slogan has been synonymous with Nike and therefore with the brand image and meaning. It creates an image that Nike is designed for and available to everyone, and brings their top technical advances in sportswear to aid anyone’s sporting demands.
From the example of Nike we see a heavy influence on brand meaning from their advertising methods, especially sponsorship, which they continue to this day. Due to the success of their sponsored ambassadors, satisfaction of consumers and constantly improving attributes bringing new benefits to users Nike have successfully upheld a strong and positive brand meaning. Their methods of advertising and perceived quality of products (brought about through endorsements and adverts) have meant there are no negative influences on the brands meaning.
Other companies meanwhile have failed to maintain quality of their goods or the perceived quality to ensure their brand meanings stay positive. This results in the brand becoming socially rejected and so consumers do not wish to be associated with them. To flourish the brand must change this consumer opinion. The brand Škoda has, in the past been immediately associated with failure and embarrassment, but since being taken over by Volkswagen in 1991 has been slowly gaining consumer approvals and increasing the image of the brand.
The origins of the Škoda motor car date back to 1905 but it was not until the 1930’s that the brand name Škoda was introduced. The quality of their cars pre-war was reasonable but post war, as western technologies advanced, the quality and reliability of the Czechoslovakian company’s vehicles stayed the same and floundered in comparison. That was until the end of the nineteen eighties, and beginning of the nineteen nineties when the end of communism came about and the brand became part of the Volkswagen group. A new production plant was built in 1996 and with it came the new Octavia. Two years later and an Octavia world rally car was unveiled onto the world rally car scene and it came 3rd in the World Rally Championship against 5 other world class manufacturers 17.
Before its take over by Volkswagen, Škoda cars had an infamous reputation for being highly unreliable to such an extent that Škoda joined ‘blonde’, ‘light bulb’ and ‘knock knock’ in having its own chapter in joke books. The following joke highlights the meaning of the company at the time; “why do Škoda’s have rear-heated-windows? To keep your hands warm while you push it.” The brand meaning of Škoda had become very poor and the word Škoda had become synonymous with ‘unreliable’, ‘cheap’, ‘uncomfortable’ ‘undesirable’ and as has just been shown, ‘joke’. Škoda carried out limited advertising, attempting to brand themselves as very cheap motor cars to carry users from A to B but with many extra features such as the rear heated window described in the joke. The vehicles often failed to carry users from A to B and therefore the extra attributes became of little benefit. Škoda were not in a position to mold their brand meaning from fresh clay, like Nike but from a broken pot. Volkswagen had a brand in Škoda that came with an unwanted meaning that was set into consumers minds; it had become a social outcast that no consumer wanted to be associated with.
After ten years of Volkswagen ownership, the Škoda brand has been fully rejuvenated, so much so that in 2000 its Fabia car was voted best European car 18 and recent advertising in the UK resulted in a 20% rise in sales19 on the previous year. Volkswagen put all of their technological knowledge into all Škoda manufacture and design whilst maintaining low costs, and so the product associated with Škoda has completely changed. The brand meaning of Škoda meanwhile stayed the same and so advertising was implemented to update the consumer image of the Škoda brand.
The Volkswagen group accepted the failings of the Škoda brand and advertised the new models using a unique form of comparative advertising. Comparative advertising is a type of persuasive advertising used by companies to compare their brand with another competing brand 20. In this case the comparison is created between what Škoda is and what consumers think Škoda is. In a series of adverts created by the agency Fallon 21 consumers were shown people attempting to link the new Škoda models with the old brand image before being reassured, “it’s a Škoda, honest”. The billboard advert (fig.1) shows the miss conception that consumers are expected to make – that the car and badge (Source: www.fallon.com)
Appear to be a miss match. This acceptance, honesty and almost apology of previous failings of the brand within the adverts has as much effect on the perception of the brand as the story in the advert itself. As Emma Halls of The Times described, “Glossy ads will not sell but the truth will” 22. Initially the influence of advertising in the creation of a brand meaning was non-existent and built purely on its performance. After improving the product, up-take was slow due to the remaining brand meaning, but following this advertising campaign from the first half of 2002 an increase in sales of 20%, compared to the same period in the previous year 19, was experienced.
This report suggests that advertising – any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor5 – has a large influence on the creation of brand meaning. Brand meaning is created within the minds of consumers over time and built up from all evidence they are exposed to. Advertising, packaging, quality of product, price of product, recommendations – both positive and negative, stories, news reports, social acceptance as well as personal experiences of the brand by users create the consumers own interpretation of the brand and hence forth its brand meaning. The first four of the above list of influences are the main factors that the company have control over and are used to combat the other influences that are creating an undesirable or unwanted brand meaning.

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