Cost-Leader Strategy

The Cost-Leader Strategy is the strategy a firm follows to become a leader in market share. Basically the strategy focuses providing the product to the market at the lowest cost. Every action the firm takes is designed to lower the cost of delivering the product to the consumer ensuring the firm maintains the high volume turnover require in this strategy. As a result this strategy also requires the firm to constantly monitor competitive challenges and quickly responding to these challenges by anticipating them and using its cost advantage to dominate its competitors. New technologies and innovations are quickly adopted to lower production costs and increase its advantage in the marketplace.

This aggressive approach to remaining the market leader requires the firm to constantly expand the total market by seeking new users, new uses for the product and encouraging current users to use more of the product. All of these focuses will serve to increase quantity demanded resulting in still lower costs through economies of scale allow the firm to reinforce its dominance in the industry. Wal-Mart is the classic example of this strategy in action.

Differentiation strategy

The Differentiation Strategy is based on exploiting identified weakness in the position of the cost-leader or other firms in the marketplace. These might be consumer dissatisfaction with the choices available, customer services or quality of the product offered by the Cost-Leader. The firm that is following the Differentiation Strategy than develops an aggressive strategy designed to exploit this weakness and gain market share at the cost of either the Cost-Leader or other weaker firms. Target is an excellent example of this strategy countering with smaller, friendlier stores easier for the customer to navigate when in a hurry.

Focus strategy

The Focus Strategy is a strategy based on avoiding competition with the major firms in the industry by focusing on serving niche markets too small for the large firms to exploit economically. Usually these are specialty markets that are too dispersed or fragmented for a large firm to serve profitably. Often they are isolated geographically or require a special knowledge of products and market demographics. The firm then focuses on making itself master of this niche but building a value chain based on its unique needs. The Gap succeeds with improved quality and selection in the clothing field it specializes in.

Choose the marketing strategy that will bring the most success to your organization. Considering there is only one cost-leader in each industry, most companies choose a differentiation strategy. This means, of course, that you will be going toe-to-toe with the competitor with the lowest price. In this scenario, do not compete on price. Prove why your products and services are better–and enjoy the success.

In nearly every aspect of our lives, we organize tasks into simple to-do lists. A typical day can be filled with chores and activities identified by an objective and a due date. A formal project—no matter how small—shares common characteristics with larger and more complex projects. In each case, the organization and structure of project management offers the framework necessary for these projects to succeed—on time and within budget. Project management can be scaled to match the scope and complexity of a project. The overall methodology and discipline, as defined in this paper, has become the main ingredients in the recipe for success.

What is Project Management?

A project can be defined as a series of interrelated tasks with a clearly identified timeline and predetermined costs. Larson & Gray (2011) describe a project as a temporary endeavor with an established objective (pg. 5). Moreover, a project has a start date and an end date, predetermined costs, and involves doing something never before realized. The predetermined timeline encompasses a project life cycle. Overseeing the project life cycle is the foundation for project management.

Project management is the coordination and day-to-day direction throughout the stages of a project life cycle. Specifically, project management is the planning, organizing, and directing of tasks and resources for a relatively short-term objective (Hanford, 2010). With an ever-changing, competitive, and fast-paced environment, it is imperative for businesses and organizations to leverage project management for effectively monitoring initiatives and ensuring success.

Speed to market is sometimes the competitive edge that a company needs to make the leap from market follower to market leader.

Project management offers an organization the ability to have higher success rates with lower uncertainty and costs associated with a project (Manu, 2007). In short, project management means an overall product life cycle can be reduced resulting a competitive advantage for an organization. Project management is an important tool for businesses to translate strategies and objectives into realities.

The Project Life Cycle

 The individual phases of a project are organized into a project life cycle. The project life cycle is comprised of several stages. The number of stages varies based on the type of project or specific industry (Larson & Gray, 2011, pg. 7). The basic project life cycle consists of four stages: defining stage, planning stage, executing stage, and closing stage.  Project life cycle management is a granular approach for controlling the logical sequence of activities as defined by a project scope.

Undefined requirements, miscommunication, and lack of sponsorship all contribute to failed projects. A structured project life cycle approach supports a clearly defined scope and objectives while offering the best chance for achieving the project goals. A large percentage of projects fail to deliver because organizations often downplay the importance of project life cycle management. Regardless of the methodology, organizing a project into stages and identifying a project plan derived from a comprehensive project life cycle guarantees success.

During the defining or planning stage, a project undergoes an initiation process. Part of the initiation process includes the challenging task of defining the overall business opportunity (Westland, 2007, pgs. 3-4). In some cases—as it relates to innovative technology-centric projects—the business opportunity can be subjective. The trailblazing Apple iPhone project in 2007 redefined the traditional project life cycle methodology to include a significant research and development initiative to help prove the business opportunity. Without the ability to draw upon previous experience, and particularly market acceptance, Apple’s definition of the business opportunity surrounding the iPhone was assumed (Müller, 2010).

An innovative product, such as the Apple iPhone, requires a unified approach to project management. One slight misstep in any of the project life cycle stages could be the difference between a history-making product launch and an overall corporate embarrassment. Regardless of the chosen methodology, every project life cycle includes a planning phase as the first stage of the project. As proven time and time again by companies such as Apple—planning, research, and critical thinking in the early stages of a project makes for a more effective execution stage. Apple’s 10-to-3-to-1 approach to product research results in a single product design from which a formal project life cycle is developed (Walters, 2008). Critical thinking and research is mandatory in the development of a project life cycle. The planning stage of a project is the foundation for all subsequent stages. Schedules, budgets, and resources are determined at this stage of the project life cycle. A miscalculated budget or misaligned resources can be fatal to a project and devastating to a company and its reputation.

Project Organization

Once designed, planned, and accepted by management, a project must be organized. Three common project management structures used to implement projects are: functional organization, dedicated project teams, and matrix structure (Larson & Gray, 2011, pg. 65). Projects do not fit within the normal framework of an organization. A project by definition has a predetermined time to live, and therefore in conflict with an organization’s day-to-day management of ongoing activities.

The structure and organization required for effective project management is alien to many traditional companies. Regardless, the organization must adopt a structure that will have the least impact on corporate culture. Integrating a project into the existing management framework of an organization provides a high level of flexibility. One notable downside to organizing projects within the functional organization is the pace at which the project moves. Projects take longer to complete when communication follows normal management channels.

In contrast, organizing projects as dedicated teams eliminates the extra layers of management and streamlines communication. The results are faster turn-around times and a unified project team. The cost of a dedicated team, however, sometimes outweighs the benefits. A matrix arrangement leverages the advantages of functional organization and dedicated teams approaches to create a hybrid structure. The three different matrix forms are: weak matrix, balanced matrix, and strong matrix (Larson & Gray, 2011, pgs. 73-74).

Organizational culture is a company’s fingerprint in the industry. Organizational culture is the defining characteristic of a company—it cascades across all projects. An organization’s culture is many times a reflection of its leaders. Leadership is crucial in an organization. A project manager is in a position of leadership. There is a distinct difference between project management and project leadership. As the leader of a project, a project manager can exercise leadership by inspiring and motivating the teams, and by understanding the bigger picture.

Sponsorship is vital in a project. A project sponsor is one of many stakeholders with an active interest in a project. The project sponsor is the liaison between the project manager and the executives. In certain cases when it becomes necessary to acquire more resources or change direction, a project sponsor would most likely be responsible for final approval. Successful projects share a common trait. They all have a strong and common bond between the project manager and project sponsor. Open communication between these two individuals is essential.

Project Team

The five-stage team development model provides the framework for project managers to build an effective team. The five stages defined by Larson & Gray (2011) include: forming, storming, norming, performing, and adjourning (pgs. 377-378). The goal of a project manager during the team-building phase of a project is to develop a cohesive group of individuals with a positive synergy. In an idea situation, a project manager would draw upon a pool of unlimited resources to choose candidates with strong compatibility and cohesion. In lieu of a perfect world, project managers yield to the effectiveness of the five-stage model to develop his or her team.

Before the project team begins the five-stage development process, a recruiting and selection process must take place. Choosing the most capable individuals for a project team ensures success (Kristoff, 2008). A project manager must understand the specific needs of the project before selecting individuals for the project team. Additionally, a project manager should consider the schedule and be sensitive to the pace at which each team member performs. Some team members, while a perfect match for a particular task, might not work comfortably at a pace required by the project timeline.

Work Packages

Objectives, deliverables, and milestones are the first three elements of a project scope. Defining the project objective is the single most important step in developing a project scope.

A well-defined project scope is used to establish a priority matrix. The priority matrix is an effective tool for establishing project priorities. Once the priorities are determined, the project manager can create a work breakdown structure (WBS). The work breakdown structure is a detailed outline of the project. Creating a hierarchical framework of the elements within a project provides a project manager the ability to manage specific costs and efforts associated with each deliverable or subdeliverable.

Project deliverables are known as work packages. Work packages are the most granular level of a work breakdown structure. The project is at the highest level, followed by the deliverables. Each deliverable can have one or more subdeliverables. The work packages of a project can be managed, tracked, and budgeted independently. This allows a project to easily be distributed across virtual teams if necessary. A project manager needs to be aware, however, of work packages that are on the project’s critical path. Any time delays or constraints to tasks on the critical path will affect the overall timeline.

Project Management Software

There are several software packages to help organize and manage projects. Microsoft Project, for example, offers all of the tools and reporting that a project manager would need to handle even the most complex projects. In situations where several projects are running concurrently as part of an overall program, a project manager can manage the project portfolio. Project management software makes if possible to create a work breakdown structure, estimate and manage schedules and costs, and monitor activities.

Managing risks is an important aspect of project management. Project management software provides mechanisms for assessing risks. Change control is often an area for exposing project scope creep. The change control management features in Microsoft Project help track changes and report the cost and time impact a change will have on the overall project. Large integrated projects will benefit from the use of project management software. The reporting capabilities alone will justify the costs.

Project management structure, methodology, and techniques can be applied to any type of project—no matter the size. Every project shares the common characteristics of a beginning and end date, defined set of deliverables, and an overall objective. Project management brings organization and framework to the project to help ensure success. While every aspect of traditional project management may not apply to all projects, the basic principles remain effective and relevant for every situation. Marketers are not exempt from the challenges of budgets, timelines, and competing priorities. Apply project management techniques to gain a competitive edge.

References

Hanford, M. (2010). Program management: different from project management. Retrieved March 5, 2011, from http://www.ibm.com/developerworks/rational/library/4751.html

Kristoff, S. (2008). Building a successful project team. Retrieved March 7, 2001, from http://www.suite101.com/content/building-a-successful-team-a41946

Larson, E., & Gray, C. (2011). Project management: the managerial process. New York: McGraw-Hill/Irwin

Manu, K. (2007). The importance of project management in organizations. Retrieved March 7, 2011, from http://www.articlesbase.com/leadership-articles/the-importance-of-project-management-in-organizations-246928.html

Müller, C. (2010). Apple’s approach towards innovation and creativity. Munich: GRIN Publishing GmbH

Walters, H. (2008). Apple’s design process. Retrieved March 6, 2011, from http://www.businessweek.com/the_thread/techbeat/archives/2008/03/apples_design_process.html

Westland, J. (2007). The project management life cycle. Philadelphia: Kogan Page

Here’s an excerpt:

The concert hall at the Syndey Opera House holds 2,700 people. This blog was viewed about 20,000 times in 2011. If it were a concert at Sydney Opera House, it would take about 7 sold-out performances for that many people to see it.

Click here to see the complete report.

The printing industry in the United States has enjoyed success in spite of many years of technology stagnation.

A recent wave of innovation has fueled changes that are beginning to affect the organizational environment. Forces specific to the general environment are causing the printing industry to be reinvented, while forces within the task environment are redefining the supply-chain. From production employees to raw material suppliers, everyone’s role, responsibility, and relationship is changing to accommodate the paradigm shift of this five-century-old industry.

Forces within the general environment are driven by the changes surrounding all three segments of the printing industry. Technological forces are the most predominate in the pre-press and press organizations. Pre-press concentrates on the preparation of materials for printing (Brown, 2009). Typesetting, for example, belongs in the pre-press segment of the printing industry. The advent of computers and desktop publishing software has redefined the role of a typesetter. Instead of manipulating the movable type invented by Gutenberg over five centuries ago, a graphic designer uses computers to set type and perform composition tasks.

The press or output segment of the printing industry is facing change due mostly to technological forces. Digital printing technologies are challenging traditional offset and web printing companies by allowing smaller companies to compete in the same market as large commercial printers. The most costly components of print production is addressed and solved with digital printing. The equipment is easier to maintain and waste is virtually eliminated.

The opportunities and threats created by technological forces are cascaded through several other general environment forces (Jones & George, 2007). For example, demographic forces are created by the need for employees with education and skills to match the new technologies. While jobs such as journeyman typesetter have become obsolete, advances in technology defined new positions. The demographic of a graphic designer is in complete contrast to a journeyman typesetter. Typesetting was a trade that could only be mastered by working as an apprentice. Today, graphic designers can learn the skills necessary for this position while attending college or a trade school.

The learning curve necessary to become a proficient digital pressman is minimal. As a result, the average age of a digital pressman is ten years younger than a journeyman offset pressman. Another ripple effect caused by a younger workforce surrounds sociocultural forces. The overall environment and culture in the workplace is changing to suit the personalities, tastes, and interests of a younger demographic.

The overhead and wages necessary to run a successful printing business today is noticeably less than in previous years. Many businesses have made financial cuts to their printing and advertising budgets. This economic force has challenged many of the well-established commercial printing companies. However, the smaller organizations are better poised to burden the financial strain.

The Economic forces resulting mostly from the demand of cost-conscience consumers have created a crowded playing field of competitors. The smaller businesses are beginning to win bids that would have never been considered in the past. Customers that would have never been able to afford traditional printing services are not only leveraging these services, but also in some cases justifying their own installation of digital printing equipment.

The low cost of digital printing has spawned a trend of in-house printing departments. Suppliers sell the raw materials to both commercial printers and in-house facilities, and therefore not affected by the loss of commercial printing to in-house manufacturing. Distributors are removed from the supply chain in an in-house printing environment. The most disconcerting change is that the customers now become competitors. The same economic forces that cause companies to become financially frugal shift direction and expose new revenue streams for in-house production facilities.

Digital printing technologies have reshaped the printing industry. An industry that once enjoyed an exclusive membership has been diluted by technology. Although technology can be interpreted as threat to the printing industry, many opportunities have emerged as a result. Moreover, opportunities for many new entrepreneurs to explore are now possible mostly due to advances in technologies in the printing industry.

The Bureau of Labor Statistics (2008) reports that 69.3% of the printing businesses in the United States employs less that ten people. General environment technological forces are responsible. Sociocultural forces endorse the changes, and demographic forces change the face of the manufacturing workforce in the printing industry—all for the better.

References

Brown, R. (2009). A Capsule History of Typesetting. Retrieved November 16, 2009, from http://www.historybuff.com/library/reftype.html

Bureau of Labor Statistics. (2008). U.S. Department of Labor, Career Guide to Industries, Retrieved November 14, 2009, from http://www.bls.gov/oco/cg/cgs050.htm

Jones, G., & George, J. (2007). Essentials of Contemporary Management. McGraw-Hill Publishing. Boston.

With a strong distribution channel, competitive pricing, smart positioning, and aggressive advertising Glaceau VITAMINWATER^® enhanced water can become the number one energy drink in China.

Overall sales of energy drinks worldwide have doubled in the last five years (Roethenbaugh, 2009). Clever marketing and product positioning has blurred the line between energy drinks and the six categories of water that struggles to compete in the same market. Flavored waters muddy the market with nothing more that bottled water with a twist. Clustered water, the latest version of ultra purified H2O, has yet to take hold. Fitness and oxygenated waters appeal to athletes and casual gym patrons. Premium waters are typically enjoyed at fine restaurants as an alternative to tap water. Vitamin enhanced waters are targeted to health conscious individuals.

The market leader in energy drinks manufactures and distributes a product containing high levels of caffeine. The public perception is that caffeine is the most effective stimulant for energizing your mind and body. However, other energy drink companies have made attempts to make a splash in the market by using energy boosting ingredients such as green tea and ginkgo biloba (AllBusiness.com, 2005). These particular products find themselves competing with soft drinks, smoothies, and iced teas for market share—and as a result, barely providing competition for the caffeine based products.

The most compelling statistic that would encourage Glaceau to re-position their VITAMINWATER^® enhanced water in the energy drink market is the 12% annual growth prediction taking sales to over $9 billion dollars in the U.S. (ReportBuyer.com, 2007). Based on this prediction, and the knowledge that the Asia Pacific market enjoys similar sales forecasts, the timing is perfect for Glaceau VITAMINWATER^® enhanced water to enter this new market. The industry for bottle waters, fitness drinks, and enriched waters is flourishing. PepsiCo cites the declining popularity on carbonated soft drinks is partly responsible for the increase in sales of their sports drink, Gatorade (Farrell & Rappeport, 2010).

The largest segment for the VITAMINWATER^® enhanced water product in the Asia Pacific market is in China. The most recent census data shows the average total consumption expenditure for a Chinese family is 7142 Yuan, or approximately $1,053 U.S. dollars (Coutsoukis, 2004). Nearly 38% of the total expenditure is on food. Based on this information alone, Glaceau should be skeptical when deciding whether or not the market can sustain the energy drink business. One existing company has a proven track record in the Asia Pacific market.

Red Bull, the world’s leading manufacturer of energy drinks, has enjoyed several years of success in China. However, their flagship product is targeted specifically to males between the ages of 18 and 24 (Yates, 2008). Glaceau VITAMINWATER^® enhanced water, with a slight product repositioning, can cast a wider net and attract a strong target audience comprised of males and females between the ages of 18 and 49. China has approximately 700 million people that fall within this demographic model. Many, of course, do not have the income to justify purchases outside of the bare essentials. However, companies currently with market saturation have isolated the target audience.

Constant adjustments to the U.S. – China trade agreements need to be considered when planning a manufacturing and distribution strategy. There have been several talks within the last few months regarding trade barriers (Lawder, 2010). Depending on the outcome of the trade agreements between the United States and China, Glaceau may need to establish production and distribution within China as opposed to exporting the VITAMINWATER^® enhanced water product from the United States.

A few trade sectors in China are suffering from overcapacity (Gunn, 2010). The overcapacity is mostly within the industrial and commercial sectors. Environmental issues and increasing social tension are a few current weaknesses that should be monitored, but not distract from the plan to introduce VITAMINWATER^® enhanced water to the Asia Pacific market. China’s overall economic position is strong—boasting a $53 billion dollar surplus in the first quarter of 2010.

The China Food & Drink Report (2010) exposes one of China’s weaknesses as their under-developed agriculture and distribution system (Business Monitor International). Moreover, the health scares with products produced in their own country has opened a door for imports. The timing could not be better for Glaceau VITAMINWATER^® enhanced water to spring into the spotlight, and begin an aggressive campaign to dominate the energy drink market.

The Chinese government is overwhelmed with issues regarding the environment. While the 8% average growth has enhanced the standard of living for the population, it has also contributed to their environmental challenges. Any company, regardless of origin, with the intent to develop a manufacturing facility in China will find most of the opposition coming from special interest groups. Glaceau must continue to monitor and assess political risks. Coca-Cola Company has been conducting business in the Asia Pacific market for many years. Their experience in this area will help foster the necessary relations with key government officials and organization for success.

Glaceau is a privately owned subsidiary of Coca-Cola Company. The company began manufacturing enhanced waters in 1998. The Smartwater product, an electrolyte enhanced water, is the foundation for the VITAMINWATER^® enhanced water product. Glaceau VITAMINWATER^® enhanced water is produced in eleven flavors and enriched with energy enhancing natural ingredients and vitamins. VITAMINWATER^® enhanced water is positioned to compete with traditional bottled water, sports drinks, and flavored waters. The brand is recognized world wide as simply another variation of enhanced bottled water.

Glaceau has positioned its VITAMINWATER^® enhanced water product as a healthy alternative to soda. However, the Asia Pacific market currently perceives VITAMINWATER^® enhanced water as a product for the affluent. VITAMINWATER^® enhanced water in the Asia Pacific market is available in upscale restaurants and high-end retail outlets. This is in complete contrast to the public perception of the same product in North America. The company acknowledges the need to tap into a market with the potential to dwarf sales in other global markets.

What if, and at the same time, VITAMINWATER^® enhanced water is re-positioned as an energy drink?

The competition for energy drinks in China is far less crowded than with specialty waters. This is unexpected considering that caffeine-based energy drinks originated in Japan and Thailand (AllBusiness.com). The Austrian-distributed drink, Red Bull, has dominated this category for several years. Glaceau can make a strong impact and at the same time broaden the definition of energy drink to include healthy alternatives. Health conscious consumers, regardless of location, would cross over to create a new market.

All mind and body stimulating energy drinks that would compete with VITAMINWATER^® enhanced water in the Asia Pacific market contain caffeine. Glaceau boasts no artificial flavors, colors, are any chemical stimulants as contained in the products of the competitors. Glaceau can leverage their all-natural approach as the differentiator that will eliminate the caffeine-based products from the competition. The current VITAMINWATER^® enhanced water product line will not be adjusted or altered for the Asia Pacific market, but rather re-positioned as a healthy alternative energy drink.

There are over 500 energy drink products worldwide. Five producers dominate the market share.  Red Bull is the leader with 42.7% overall sales. Hanson Natural, the manufacturer of Monster brands has 16% of the market. PepsiCo has pushed their SoBe and Amp products to an impressive 13.2%. Rockstar International enjoys 12% and Full Throttle by Coca-Cola has 10% of the market (Simon & Mosher, 2007).

Each of these producers of energy drinks leverage caffeine as their main ingredient. Glaceau VITAMINWATER^® enhanced water, repositioned to compete in the energy drink market, would enjoy immediate success by attracting health conscious energy drink consumers. The assumption is that many consumers remain leery of the chemical-based energy drink, and because there are no alternatives choose to consume the caffeine riddled energy drinks. There is little competition in the energy drink market for products that bring a healthy natural alternative to the mix.

Glaceau VITAMINWATER^® enhanced water has a strong global presence, with the exception of the Asia Pacific market. This is due mostly to the fact that the product was perceived by the Asian population as an upscale water only available to the affluent. In all fairness to the consumers, without a marketing plan to properly position the product—there would be no reason to think otherwise. The strategy is to create a drink category that attracts consumers from both the energy drink category and the fitness water category.

Better positioned as an energy drink, Glaceau VITAMINWATER^® enhanced water can make an immediate impact to the Asia Pacific market by advertising the differentiator. VITAMINWATER^® enhanced water is an all-natural alternative to the chemical laden products in a can. Unlike other energy drinks, VITAMINWATER^® enhanced water is safer for a broader age group. Energy should be replaced naturally. With Glaceau VITAMINWATER^® enhanced water, you can reenergize and “harness your energy—naturally.”

References

AllBusiness.com (2005). In the energy drinks market by 2009 the United States is expected to have the largest market. Business Wire. [Electronic version] Retrieved July 21, 2010, from http://www.allbusiness.com/consumer-products/food-beverage-products-nonalcoholics/5178192-1.html

China Food & Drink Report – Q3 2010. (2010). Business Monitor International. [Electronic version]  Retrieved July 26, 2010, from ProQuest: http://proquest.umi.com/pqdweb?index=7&did=2062171471&SrchMode=1&sid=4&Fmt=2&VInst=PROD&Type=PQD&RQT=309&VName=PQD&TS=1280177041&clientId=74379.

Cateora, P. & Graham, J. (2007). International marketing. New York: McGraw-Hill Irwin.

Coutsoukis, P. (2004). Per capita annual living expenditure of urban households (2004) – China statistics census. Retrieved July 24, 2010, from http://www.allcountries.org/china_statistics/10_7_per_capita_annual_living_expenditure.html

Farrell, G. & Rappeport, A. (2010). PepsiCo net income falls 3%. Financial Times. [Electronic version]  Retrieved July 26, 2010, from ProQuest: http://proquest.umi.com/pqdweb?did=2087426421&sid=1&Fmt=3&clientId=74379&RQT=309&VName=PQD

Gunn, N. (2010). Coface’s China country rating and business climate rating. Retrieved July 21, 2010, from http://import-export.suite101.com/article.cfm/cofaces-china-country-rating-and-business-climate-rating

Just-Drinks.com (2009). Energy drink sales hindered by Thai decline – research. Retrieved July 20, 2010, from http://www.justdrinks.com/analysis/energy-drink-sales-  hindered-by-thai-decline-research_id98736.aspx

Lawder, D. (2010). US-China talks to focus on trade barriers—Geithner. Retrieved July 26, 2010, from http://www.reuters.com/article/idUSNLLIGE64020100518

ReportBuyer.com (2007). New report predicts energy drink sales in the U.S. to exceed $9 billion by 2011. Retrieved July 20, 2010, from             http://www.reportbuyer.com/press/new-report-predicts-energy-drink-sales-in-the-us-to-exceed-9-billion-by-2011/

Roethenbaugh, G. (2009). Global energy drinks market 2003-2008. Retrieved July 25, 2010, from http://www.researchandmarkets.com/reports/c29596

Simon, M. & Mosher, J. (2007). Alcohol, energy drinks, and youth: A dangerous mix. Retrieved July 20, 2010, from http://www.marininstitute.org/alcopops/energy_drink_report.htm

Yates, D. (2008). Is coffee an old man’s beverage? Retrieved July 21, 2010, from http://www.energydrinkreviewer.com/

Many paradigm cases of public relations, advertising, and marketing activities exist to provide a basis for believing there are few differences between them. Advertising and public relations are individual instruments of marketing. Both have strengths and weaknesses, and each has a specific purpose. However, the gap between advertising and public relations is closing. Eventually, there will be more similarities than differences—and as a result, public relations tactics will take the place of traditional advertising methods.

Social Media is a Marketing Conduit

The popularity of social media is largely responsible for the convergence of public relations and advertising. Social media communication channels are accelerating the inevitable overlap in definition between public relations and advertising. Public relations activities are a form of marketing. Public relations communicates information about a company and its products and services—but from a neutral, broad, human-interest perspective. Whereas, advertising is more focused on a persuasive, non-personal marketing communication (Arens, et. al., 2009, p. 4). Both methods of marketing, however, require viable and effective communication channels.

Social media is quickly becoming the desired conduit for social marketing. Companies selling ideas, attitudes, and behaviors as opposed to products and services first realized social marketing in the 1970s. Social marketing and public relations are both designed to influence a target audience or general society. Social media—not available in the 1970s—has given public relations professionals a conduit to their publics. Social networking has extended the principles of marketing and redefined the marketing mix.

The four ‘P’s of marketing—product, price, place, and promotion—are joined by four additional ‘P’s. Marketing communications across social media channels require and understanding of the expanded marketing mix. The social marketing ‘P’s include publics, partnership, policy, and purse strings (Weinreich, 2010). A social marketing or public relations ‘public’ is the target market, special audience, or segment of the general public identified by an organization. Market research is often used to isolate and group individuals for the purpose of targeted marketing communications.

Social media channels, as with most Internet-based communication conduits, are easy to penetrate but difficult to control. While it is simple for public relations professionals to participate in social media activities—such as forums, blogs, and moblogs—it is impossible to control access to the content. Moreover, the Internet encourages content sharing and site linking making it difficult to know exactly who is ultimately at the receiving end of a social media communication.

Public relations strategies include providing honest, objective information to various publics through effective communication channels (Shauib, 2011). Social media has evolved from a communication channel to a marketing conduit. Press releases, one of the most effective tools for a public relations agent, provides one-way communication to a company’s publics. Social media, however, includes mechanisms that will allow the publics to communicate back to the company. Similarly, brands are using social networking to create goodwill with its consumers and prospects by encouraging an open dialog between the company and the consumer.

Social media bolsters partnerships between businesses with complementing products or services. Partnerships and strategic alliances can amplify brands, enforce messages, and influence public opinion.  Kellogg Company, for example, partnered with the National Cancer Institute to raise awareness by showing the relationship between eating habits and the likelihood of contracting cancer (Caywood, 1997, p. 439). Social media is an excellent communication channel for cause-related marketing.

Policy, one of the social media specific ‘P’s in the marketing mix, takes place when a public relations message motivates individual behavior or influences change. The use of public relations in education and Government organizations is primarily for public persuasion. A public relations professional can leverage social media channels to communicate information about the current policies of government agencies (Cameron, et. al., 2008, p. 408). If successful, promoting policies through social media communication channels will encourage support from the people.

When social media is used to raise awareness for non-profit and cause-related organizations, there is usually a strong message that pulls on the heartstrings. At the same time, a compelling call-to-action pulls on the purse strings. Social service organizations rely on public relations marketing to not only develop public awareness and recruit new members, but also raise and replenish operating funds. Fund-raising events are critical to the longevity of a non-profit organization.

Not all press releases are the same

While social media channels deliver public relations marketing messages to target audiences in real-time, the approach and composition of a message for social media is different than traditional press releases (Dubois, 2010). Public relations is quickly becoming the marketing approach of choice for businesses of all sizes. A public relations professional relies heavily on the traditional press release to compliment other public relations activities.

The use of social media to deliver press releases moves public relations ahead of traditional advertising as an effective marketing communication option. Any communication—press release or otherwise—requires a different strategy when delivered using an online method. Every online communication should be designed for two-way communication. Dean Guadagni (2009) identifies the three common non-interactive as: broadcasting, announcements, and crowdsourcing. However, crowdsourcing offers a feedback loop between consumers and businesses.

A press release or other marketing communication deployed across Internet channels should always be positioned as an interactive communication. Not only should the message engage the audience, but also all interaction should be acknowledged and an open dialog created. A company can glean information about their publics by offering surveys and polls as part of the message strategy. Additionally, feedback from the target audience presents a company with insight into the psyche of their customers. Social media—when used for marketing communication—should not be exempt from targeted communication strategies.

Target audiences, market segments, and defined publics are unique groups that can impact the company’s goals. The process of identifying a target audience for public relations and advertising is similar. A public relations professional defines his or her ‘publics’ by using traditional methods of gathering data through primary research. This approach can be expensive, but the results are specific to the business needs. In other words, primary research approaches—such as focus groups, surveys, interviews, and observation—allow companies to identify and learn more about their target market.

Secondary research is less costly and easier to obtain. The results, however, may not be as accurate as information gleaned from primary research. Secondary research is typically a great way to quickly identify a target audience. Basic demographic, psychographic, and geographic information is important for understanding the ‘anatomy’ of the members in a target audience. This information alone is enough to develop communication strategies across social media channels, but a physical address, email address, or phone number is necessary for a direct marketing communication.

Both advertising and public relations use a mass marketing or broadcast approach to deliver messages to their respective target audience. A public relations professional will cast a wider net than an advertising professional when identifying their publics. A segmented public encompasses the target audience, but also includes secondary audiences, policymakers, and gatekeepers (Weinreich, 2010). A public relations campaign is intended to create goodwill for a product, company, or cause. One common goal of both advertising and public relations is to communicate with the target audience or segmented public in a language best understood.

Advertising is Becoming Less Effective

Every successful message strategy begins with an effective use of language. Whether the marketing campaign uses advertising methods or public relations tactics, the message must be written specifically for the intended audience. The clarity and simplicity of a message has a direct impact on the success of the communication. Jargon and clichés should always be avoided. A public relations message can lose credibility if euphemisms or discriminatory language is used (Cameron, et. al., 2008, p. 150).

Advertising messages do not carry the same credibility as pubic relations messages. Consumers know that advertisements are designed to sell a product or service. Most consumers have become callused against catchy slogans and gimmicks, leaving the door wide open for public relations style communications to replace traditional advertising. The writing styles between an advertising copywriter and a public relations writer is vastly different. Advertisements typically concentrate on a single benefit of a product or service. Public relations materials are written in a journalistic style, while offering more in-depth information about a company, product, or services (Mathlesen, 2010).

While advertising continues to have its place in the marketing toolbox, public relations is proving to be a more versatile solution. Toyota Motor Corporation experienced first hand the issues surrounding the use of advertising in a situation better suited for public relations. In March 2010—in the wake of public concern over safety issues—Toyota spawned an advertising campaign designed to promote brand loyalty and build retention. The problem, however, was that Toyota failed to address specific concerns surrounding congressional inquiries and safety investigations. Moreover, Toyota did not seem humbled by the problems and made no effort to apologize to their customers (Fredrix, 2010).

Toyota’s advertising arrogance had a negative impact on their loyal following. A public relations campaign would have provided the goodwill needed at a time when the public was unsure about the company. Additionally, public relations becomes the credibility conduit between the consumer and the company. The public trusts anything written in a press release or other public relations communication. Ford Motor Company was faced with similar challenges in 2000 when many Bridgestone tire clad Ford Explorers were responsible for over 250 traffic deaths. Ford chose to reduce their advertising efforts until the public trust was regained.

The general public is skeptical of advertising. Advertising is considered self-serving and ineffective. Branding is an important part of marketing. Public relations tactics continue to be more effective than advertising for building brands. The top five brands according to The Economist magazine are Google, Apple, Coca-Cola, Starbucks, and Ikea. In contrast, the top five advertisers are, General Motors, Proctor & Gamble, Ford, PepsiCo, and Pfizer (Elliott, 2010).

Public relations offers credibility, clarity, and cost advantages over advertising. The public has weathered advertising promises for many years. No matter how cleverly disguised, an advertisement is still designed to sell. The journalistic approach of public relations messages creates a newsworthy credibility that will never exist in advertising. Claims and comparisons sometimes cloud the underlying intention of an advertisement. A public relations message is always clear, concise, and directly to the point.

One of the greatest advantages of public relations over advertising is the cost. Marketing publicity is a form of public relations that involves getting stories published about a company’s products and services. Each product inherits the credibility of the publication. Consumer Reports, for example, is known for unbiased reviews and comparisons of thousands of consumer products. Several magazines and websites specialize in restaurant and travel reviews. All of this publicity is impartial and free.

Public relations is viral. A public relations campaign can be spread across many communication channels simultaneously. Social media offers additional advantages to public relations over advertising. Word of mouth communication is commonplace on the Internet. With a single click of the mouse, a consumer can easily share information and opinion about a product or service to thousands of individuals.

For years, the words advertising and marketing were synonymous. The recent economic challenges have forced consumers to make cutbacks on products and services. Advertisers are creating more aggressive campaigns in hopes of creating a spending frenzy. In the aftermath of government bailouts and mass media coverage of mismanaged corporations, the public is desensitized to advertising. Companies need to bring themselves into the public spotlight and win the trust of their target audience. Public relations produce goodwill in the company’s various publics (Turney, 2001).

Public relations activities blaze the trail so that advertising is more effective. Moreover, advertising is more effective if following a public relations campaign. While advertising cannot perform the same function as public relations, marketing campaigns using public relations tactics can accomplish the goals of traditional advertising—increase sales and raise company or product awareness. Advertising will always be an important instrument of marketing. Public relations is proving to be a viable alternative to traditional advertising, and the lines between the two are fading. Public relations has supplanted advertising and quickly become the new marketing ethos.

References

Arens, W., Schaefer, D., & Weigold, M. (2009). Essentials of contemporary advertising. McGraw-Hill Irwin: Boston.

Cameron, G., Wilcox, D., Reber, B. & Shin J. (2008). Public relations today: Managing competition and conflict. New York: Pearson.

Caywood, C. (1997). The handbook of strategic public relations and integrated   communications. McGraw-Hill: Boston

Dubois, L. (2010). How to write a social media press release. Retrieved January 30, 2011, from http://www.inc.com/guides/2010/11/how-to-write-a-social-media-press-release.html

Elliott, J. (2010). Advertising vs. PR. Retrieved January 28, 2011, from http://www.tvaproductions.com/article/advertising-vs-pr—17.php

Fredrix, E. (2010). Toyota: No apologies for safety problems in latest ad campaign. Retrieved January 31, 2011, from http://www.huffingtonpost.com/2010/03/07/toyota-no-apologies-for-s_n_489229.html

Guadagni, D. (2009). Social media: 5 strategies for interactive communications. Retrieved January 28, 2011, from http://innerarchitect.com/2009/06/22/social-media-5-strategies-for-interactive-communications/

Mathlesen, S. (2010). Advertising vs. public relations. Retrieved January 30, 2011, from http://www.suite101.com/content/advertising-vs-public-relations-a187370

Shauib, Y. (2011). Publics and target audiences. Retrieved January 28, 2011, from http://yashuaib.tripod.com/id12.html

Turney, M. (2001). Public relations and marketing were initially distinct. Retrieved, January 25, 2011, from http://www.nku.edu/~turney/prclass/readings/mkting.html

Weinreich, N. (2011). What is social marketing? Retrieved January 28, 2011, from http://www.social-marketing.com/Whatis.html

Listening is a five-step process consisting of listening preparation, receiving, constructing meaning, responding, and remembering (Hybels & Weaver, 2007). The first three steps are crucial. Skipping a step can be disastrous.  How accurate of a response can be derived without first preparing to listen followed by receiving information? There could not be enough information to accurately construct a meaning. The first step, preparation, is the foundation for listening. Having the proper mindset and environment are critical. The second step in the active process of listening is receiving. Hybels & Weaver (2007) define receiving as the process of taking in, acquiring, or accepting (p. 80). It is this step where we typically fall short in the art of communication.

Receiving, while mostly associated with the hearing sense, is really a function of all five senses. Using a combination of each of the five senses is active listening. Another form of listening, described by Dalmar Fisher (1999) as “reflective listening,” collects information and interacts with the speaker. A typical interaction might include repeating or rephrasing the information so as to better understand the meaning.

Listening orientation is an important process for gathering, filtering, and reacting to information. The four components of listening orientation are, “empathy, acceptance, congruence, and concreteness” (Fisher, 1999). Empathy, the most difficult component, involves listening accurately and non-judgmentally. Our natural instinct of agreeing or disagreeing based entirely on our own point of view creates an empathy barrier. As long as there are emotions drawn from personal experiences influencing opinion on what we hear, pure empathy is impossible.

Congruence, if practiced by the listener, can encourage the speaker to become more open and direct. Congruence refers to “the openness, frankness, and genuineness on the part of the listener” (Borgatti, 2000). Without congruence, empathy becomes difficult. If you are holding a grudge or upset with the speaker, it is nearly impossible to listen with an open mind.

Acceptance in communication refers to the unconditional respect a listener has for a speaker. Proper active listening identifies acceptance as one of the most important of the four components. Acceptance is closely related to empathy (Borgatti, 2000). If the listener indicates acceptance, the speaker will use more candor.

The final component of listening orientation is concreteness. Being vague in a conversation tends to encourage a volley of abstract phrases as opposed to getting directly to the point and being effective. Sometimes the topic of a conversation might be too sensitive to discuss causing communication to have little to no concreteness.

The four components of listening–empathy, acceptance, congruence, and concreteness—are important for active listening. Moreover, proper active listening is most effective when the speaker recognizes all four components practiced by the listener. Reflection, or reflective listening, reinforces listening orientation. Specifically, reflective responses provide the indication needed by a speaker to recognize an active listener. Borgatti (2000) identifies the following principles of reflective listening.

More listening than talking is a difficult principle to follow—especially for outgoing individuals. Effective listeners ignore impersonal, distant, or abstract comments—and only respond to communication that is relevant and personal. They restate or clarify what the speaker has communicated. Proponents of reflective listening try to understand the feelings contained in what others are communicating and strive to understand the speaker’s frame of reference. They do not use their own frame of reference to interpret what is being communicated. The main thing to remember is to respond only with acceptance and empathy. In the words of Stephen Seckler (2008), “Listening is more powerful than talking.”

A reflective listener responds to feelings as well as content. It is important to consider the substance of a speaker’s message before composing a response. Proper reflective listening requires the listener to respond to not only positive comments, but negative and ambivalent as well. Leveraging the four components of listening orientation will ensure a well-rounded reflective listener.

While stereotyped reactions and pretending to understand are detrimental to the success of reflective listening, not being able to recognize the nonverbal clues means only capturing partial messages. Professor Albert Mehrabian’s (2007) communication model shows only 7% of meaning in a communication is the words that are spoken. The way the words are spoken are responsible for 38% of the meaning in a communication. The lion share of meaning in a communication is non-verbal. Facial expression, posture, and gestures account for 55% of the meaning in a communication. Non-verbal communication accounts for as much as 93% of the meaning in a communication (Hybels & Weaver, 2007).

Mehrabian’s model has become one of the most widely referenced statistics in communication. The theory is particularly useful in explaining the importance of meaning (Chapman, 2009). With 7% of meaning in communication coming from words, along with 38% from tone and inflection, hearing is responsible for less than half of the total meaning of a communication. This leaves four other senses to help properly interpret a communication—to listen.

Hearing is not the only sense capable of listening. All five senses are used in active listening. Silent signals are sent at the same time a verbal communication is taking place. In many cases, these non-verbal messages are unintentional (Hybels & Weaver, 2007). Having the ability to read, understand, and interpret these signals are part of an overall listening strategy. As Hybels & Weaver (2007) point out,  “to be unaware of non-verbal communication is to miss a significant portion of what goes on in any communication situation” (p. 132). Using all five senses to listen—we need more of it.

Following all of the facets of receiving information in the five steps of listening is constructing meaning. With all of the information captured through various senses, a meaning is derived. Properly interpreting the cues, signals, and impulses requires the full and active use of all the senses (Hybels & Weaver, 2007). Misinterpreting any of the information could lead to unnecessary or inaccurate responses.

Responding and remembering are the final two elements in the listening preparation model. Both of these elements are optional. Responding is an important aspect of two-way communication. Listening preparation, receiving, and constructing meaning are all pre-processes of responding. Remembering, while an option, is important for reflecting back on a communication. The speed at which we communicate can make it difficult to construct meaning. Retrospect becomes crucial, but only possible if we are able to retain information from a communication.

Listening and hearing are two different components of communicating. You hear with your ears, but listen with all of your senses. Hearing is the act of perceiving sound by the ear, while listening requires concentration so that your brain processes meaning from words and sentences (Treuer, 2006). Most people tend to be hard of listening as opposed to hard of hearing. Listening expands on hearing when we pay attention to the meaning of what we hear. To listen properly, we need to be open to the meaning of the other person’s words. We need to “enter into the experience those words are meant to convey” (Sherven & Sniechowski, 2009). Listening is not automatic. It takes a concentrated effort to listen. Sometimes we choose to listen selectively.

Selective attention is sometimes worse than not listening at all. Only absorbing bits and pieces of information and filling in the rest with your imagination can lead to an unjust response. Hybels & Weaver (2007) define selective attention as, “the ability to focus perception” (p. 82). Everyone wants to be understood. Sometimes too much information in a short amount of time makes it nearly impossible to construct meaning. Few people can give attention to a message for more than 20 seconds (Hybels & Weaver, 2007).

Listening is an art. Developing a mastery of this art takes commitment and practice. Improving your listening efficiency is an ongoing process. Our listening efficiency is affected by our own culture, lifestyle, and emotion. “Effective listening is knowing the difference between what is said, what you hear, and what is meant” (Steele, 2009).  Our minds have the ability to listen many times faster than a person can talk. Steele (2009) identifies four stages of listening to become an effective listener. By looking directly at the person speaking, we can better sense and interpret the message. Sensing, the first stage, is learning to read body language, tone, and inflection. Interpreting the message is closely related to the receiving element of listening preparation. Evaluating or understanding and ultimately responding to a communication round out the four stages of listening (Steele, 2009).

There should be a certain amount of responsibility on the part of the speaker. Realizing there are four listening styles, a speaker should be able to communicate with everyone. The analytical listeners will be thoughtful and skeptical while attaching themselves to every word. The driver style of listener requires a speaker to be at a faster pace and quicker to the point. Amiable listeners appear to hang onto every word and care about the speaker. An expressive listener likes to be involved and be a part of what is going on (Steele, 2009).

A breakdown in communication can affect many aspects of your life. An inability to properly communicate can be devastating to both personal and professional relationships. There are noted differences by gender in the methods and effectiveness of communication. The average woman uses 25,000 words per day, while a man uses less than half (Steele, 2009). This could explain certain problems in a relationship.

The non-verbal aspects of communication vary drastically by gender. Women in North America initiate more eye contact than men (Hybels & Weaver, 2007). Because of this, it is more apparent that women have a better chance of interpreting the 93% of a communication that is non-verbal. Eye contact means observing, reading, and interpreting, facial expressions, posture, and gestures that accompany words. Women prove to be better listeners because they use several senses simultaneously to communicate. For example, women use touch more than men while communicating (Hybels & Weaver, 2007).

Overall, listening is more than hearing words, nodding, smiling, and even responding. The important thing to remember is that it is not always necessary to respond. It is, however extremely important to listen. The goal is to open the meaning of the words we hear by listening with all of our senses. “It is no longer about sound but about the thoughts, feelings, point of view, expectations, memories, sensations, beliefs—the whole of the other person—or at least as much of the whole as is available at the moment” (Sherven & Sniechowski, 2009).

Listening takes practice and intention. Listening expands on hearing and leverages all of the five senses to properly interpret a communication. The benefits of listening, as opposed to hearing, are endless. Communication is an integral part of our lives. In our relationships, we communicate one on one with our partner. The level, quality, and frequency of communication in business can affect the bottom line. Whether resolving problems, socializing, or closing a business deal, you cannot succeed without communicating.

Listening makes simple communication effective communication. Proper listening techniques–empathy, acceptance, congruence, and concreteness—guarantee effective communication. Anxiety and cognitive dissonance are two barriers that could keep us from listening and properly comprehending a communication. Other barriers include laziness, closed-mindedness, insincerity, boredom, and inattentiveness. Listening becomes easier if the person speaking uses techniques such as assertiveness and getting to the point before the audience loses interest.

While we cannot control how people communicate with us, we can choose to listen. When interaction is required, we can be better prepared to compose a response. We should all communicate with individuals at a level they understand. And above all, we should listen. Simply put, there should be more of it.

References

Borgatti, Stephen. (2000). Active Listening. MB119: Interpersonal Communication. Retrieved May 10, 2009, from http://www.analytictech.com/mb119/reflecti.htm

Chapman, Alan. (2009). Mehrabian’s Communication Research. Retrieved May 10, 2009, from http://www.businessballs.com/mehrabiancommunications.htm

Fisher, Dalmar. (1999). Communication in Organizations. Mumbai, India: Jaico Publishing House.

Hybels, Saundra & Weaver II, Richard L. (2007). Communicating Effectively. Boston, MA: McGraw Hill Companies, Inc.

Mehrabian, Albert. (2007). Nonverbal Communication. Edison, NJ: Transaction Publishers, Inc.

Seckler, Stephen. (2008). Counsel to Counsel: Listening is More Powerful than Talking. Retrieved May 10, 2009, from http://www.counseltocounsel.com/2008/03/listening-is-more-powerful-than-talking.html

Sherven, Judith & Sniechowski, Jim. (2009). There is a Real Difference Between Hearing and Listening. Retrieved May 11, 2009, from WomenTodayMagazine.com at http://womentodaymagazine.com/relationships/listening.html

Steele, Jonathan. (2009). The Art of Listening. Retrieved May 11, 2009, from http://www.speechmastery.com/art-of-listening.html

Treuer, Paul. (2006). Hearing vs. Listening. Retrieved May 10, 2009, from http://www.d.umn.edu/kmc/student/loon/acad/strat/ss_hearing.html

From Old English through Middle English and into Modern English, sometimes referred to as the Queen’s English, cultural changes influenced language. Alterations of dialect, such as pronunciation, were a direct result of the separation of societies into culturally common groups. The wealthy were educated and pronounced every word with accuracy. The lower class societies could not afford books or to properly educate their youth. As a result, a variation of the language was evolved—influenced by culture. While the words were identical, the pronunciations were radically different. History can have an intense effect on language (Ellis-Christensen, 2009).

Over the past 1000 years, England has hosted many cultural changes with accompanying languages. The United States, a young country by comparison, has spawned many variations of its own language. Derived from the Queen’s English, American English has morphed into the many dialects we use today. We have more variations of language spread across many regions within our borders than ever before. The southern states are recognized as a culture with a slower, more deliberate, pronunciation of our modern vocabulary. Extra syllables are sometimes added as well as vowels accented to create the slow southern drawl we have come to associate with southern cultures.

The pronunciation of our American English vocabulary is bound to geographic regions in our country. There are subtle differences in speech between North Carolina, Tennessee, and Virginia. Individuals from this part of the country can identify a person from one of the other southern states. The New England states have a vernacular all its own. New York has New England and Canadian influence in the northern counties. The boroughs of New York City each enjoy a variation of the New York recognizable accent.

New York, like many other diverse densely populated regions in our country, has their own language. Once again, culture influences the evolution of these languages. A stoop is the Brooklyn word for the front stairs of a building. Dogs are attracted to and a fireman would attempt connecting a fire hose to a Johnny pump. Most of New York City uses the plural of you—yooze.

The United States has managed to incubate language more granular than that of a single culture. From cultures, through societies, and down to individual neighborhoods—language is altered and molded to be unique. Words are pronounced differently and new words are formed as a way to express independence from other cultures. Society affects language. Social boundaries are blurred as schools host multilingual classrooms (Budach & Rampton, 2008). Students from many cultural and ethnic backgrounds find common ground by developing a language unique to their social environment. A variation of language is created by the melting pot of several cultures proving once again that our cultural background forges our language.

Every country has a rich history of language and culture. As long as cultures change and societies are born, language will be as unique and versatile. While the base language for each country can be linked to a culture, societies and even neighborhoods can be responsible for the many variations of a single language. Words, expressions, and non-verbal communication are all part of the language with which we communicate. Our cultural background affects our gestures and reactions as much as our dialect and inflection. Communication is defined as, “Any process in which people share information, ideas, and feelings” (Hybels & Weaver III, 2007). Not only is language influenced by culture, but communication in general. Marketing communication should be indigenous. For your next marketing campaign–watch your language!

References

Budach, G. & Rampton, B. (2008). Language in late modernity: Interaction in an urban school. Language in Society, 37(4). p. 600. Retrieved April 4, 2009, from ProQuest Direct database.

Hybels, S. & Weaver, R. (2007).  Communicating Effectively.  Boston, MA: McGraw Hill Companies, Inc.

Leila, M. E. & Goodman, J. E. (2008). A Cultural Approach to Interpersonal Communication. Language in Society, 37(4). p. 619. Retrieved April 4, 2009, from ProQuest Direct database.

Society controls mass media and vice-versa

A look back through the history of our society will reveal that we were not always influenced by mass media. This is due largely to the fact that our current level of media saturation has not always existed. Television, the most popular mass media medium, was less predominant in the 1960s and 1970s. Even if you were one of the fortunate families to own a television set, only three main channels existed. Additionally, a few public broadcasting and independent stations were in operation. Radio and television shows in the 1960s were targeted to an audience with very high moral values. The audience demographic consisted primarily of two-parent, middle-class families. The programming was a reflection of everyday life. Families living three decades ago would never have tolerated a reality show. Television shows such as, “Leave it to Beaver” was a representation of actual middle-class life in the early 1960s. The same families gathering in front of a television set to watch a 1960s situation comedy would have never accepted the programming of today. Our moral values in the early days of television dictated content and influenced advertising. We controlled mass media by our level of acceptance.

Still photography, motion pictures, telegraphy, radio, telephone, and television were all invented between the years 1860 and 1930. Mass media emerged into a capitalization of the leisure industries to eventually become the dominator of mental life in modern society. Adolf Hitler used radio for propaganda sparking concern that mass media could be used for mind control. Early studies of mass media by sociologists proved that media effects were direct and powerful. However, the level of influence on an individual depended on certain factors such as class and emotional state.

C. Wright Mills defines mass media as having two important sociological characteristics: first, very few people can communicate to a great number; and, second, the audience has no effective way of answering back (The Power Elite, 1956). The introduction of the internet into mainstream mass media has changed communication into a bidirectional process. Responding to email advertisements and answering messages in a chat room change Mills’ definition of mass media. The internet reaches a broad audience but has less of an impact on shaping society.

The majority of research in the 1960s was concentrated on television. Television was believed to be the most pervasive medium. The Mass Communication Theory provides research on the cultural quality of media output. D. McQuail identifies cross-media ownership, and the increasing commercialization of programming by a few select large corporations as a pattern of control. The conflict perspective aligns with this theory.

Media output is controlled and regulated by government. History has shown restrictions ranging from complete censorship to a lighter advisory regulation.

Everyone agrees that mass media is a permanent part of modern culture. The extent of the influence mass media has on our society is the cause of much debate. Both legislature and media executives combine efforts and produce reports showing that mass media is not responsible for shaping society. Sociologists and educators debate these findings and provide a more grounded, less financially influenced theory. Sociologists have three perspectives on the role of mass media in modern culture. The first, limited-effects theory, is based on the premise that people will choose what to watch based on their current beliefs. According to a study by Paul Lazarsfeld, media lacked the ability to influence or change the beliefs of average people (Escote 2008). Individuals living through the early days of mass media were more trusting of news stories. This is evident in the famous radio broadcast, “War of the Worlds.” A startling one out of six people believed we were being invaded by aliens. While the limited-effects theory, also known as the indirect effects theory, was applicable 40 years ago; society is not as naive today. Competing newscasts give us the opportunity to compare stories and accept only what is common between them. Unless the “War of the Worlds” was carried on every major mass media station, society today would recognize it as fiction. Even then, we would be skeptical until our President addressed the nation.

The class-dominant theory argues that the media is controlled by corporations, and the content–especially news content–is dictated by the individuals who own these corporations. Considering that advertising dollars fund the media, the programming is tailored to the largest marketing segment. We would never see a story that draws negative publicity and emotion to a major advertiser. The class-dominant theory in a newsroom extends beyond corporate control. A journalist with a specific agenda can alter or twist a story to suit their own needs.

The third, of the three main sociological perspectives, is the culturalist theory. As the newest theory, the culturalist theory combines both the class-dominant and limited-effects theory to claim that people draw their own conclusions. Specifically, the culturalist theory states that people interact with media and create their own meanings. Technology allows us to watch what we want and control the entire experience. We can choose to skip certain parts of a horror movie and even mute content on live news casts. People interpret the material based on their own knowledge and experience. The discussion forums in an online classroom is one example of the culturalist theory. Although all the students read the same text and study the same content, each student produces a different view based on experiences outside of the classroom. The result is a widely divergent group of posts and many opposite opinions open for discussion.

The Functionalist Perspective

Functionalists believe that mass media contributes to the benefit of society. Charles Wright (1975) identified several ways in which mass media contributes to creating equilibrium in society. He claims the media coordinate and correlate information that is valuable to the culture. The media are powerful agents of socialization. Through the media, culture is communicated to the masses. Serving society through social control, the media act as stress relievers which keep social conflicts to a minimum.

The functionalists idea of equilibrium is evident in news broadcast as well as late night drama programs. In both instances, all human acts lacking morality are reinforced by showing them as unacceptable and wrong. Crimes, such as murder, robberies, and abuse are shown as deviant behavior. Mass media make our world smaller. People gather in groups to watch, they talk about what they see, and they share the sense that they are watching something special (Schudson 1986).

Functionalists view mass media as an important function in society. Mass media can influence social uniformity on scale broader than every before. The internet reaches more individuals in most social groups more often than television or radio. Mass media has been accused of creating dysfunction. Postman (1989) argued that popular media culture undermines the educational system. Claims have been made that there is a link between television viewing and poor physical health among children.

The Conflict Perspective

Conflict theorists believe that mass media is controlled by corporations with the intent of satisfying their own agendas. News casts and sitcoms are not designed to entertain and inform, but rather to keep our interests long enough to deliver a well paid advertisement. The conflict perspective views mass media as a conduit for social coercion. The controllers of mass media use programming and advertising to influence certain social classes. Trends are introduced through mass media and mimicked by the public lending credence to the theory that coercion, domination, and change in our society is partly due to television, radio, print, and the internet. From the conflict perspective, modern mass media are instruments of social control (Sullivan 2007). While functionalists and interactionists agree that mass media is necessary, followers of the conflict perspective view mass media as a necessary evil. As instruments of social control, mass media plays an important role in shaping our society.

The Interactionist Perspective

From the interactionist perspective, mass media is used to define and shape our definitions of a given situation. This perception of reality seems to evolve as our everyday values and cultures change. A definition of the average American family from the 1950s and 1960s is drastically different from what we expect today. The mass media portrayal of family life has always been a benchmark to compare our own lives and successes. Mass media serves as our social acceptance gauge by providing symbols representing what is proper and what is unacceptable. The interactionist perspective shares similarities with the functionalist perspective. Both theories agree that mass media symbolizes a perfect society that individuals strive to emulate. Celebrities, athletes and other role models promote clothing, brands, and behavior while sometimes encouraging values and moral guidelines.

Mass media is defined as “the channels of communication in modern societies that can reach large numbers of people, sometimes instantaneously (Sullivan 2007).” Only recently has technology been advanced enough to realize so many methods of communication. Television, radio, and print were the original members of mass media. The internet brought chat-rooms, email, and the idea of social networking to an already media saturated society. Television and radio represent “push” communication. The consumer has little choice over the content streamed through the cable and onto their television. They can choose to change stations or turn off the television. The internet, specifically web sites, can only be delivered to a consumer if they have made a request to “pull” the content. Mass media has completed a paradigm shift from content and programming we chose to accept, to content designed to shape our society. In the 1960s and 1970s, society controlled mass media. Today, mass media has the single largest impact on our culture.  Guidelines for behavior, major beliefs, and values are all influenced by mass media. Every sociological theory concludes that mass media affects modern culture–a mediated culture.

References

Escote, Alixander (April 2008). Limited Effects Theory. http://www.socyberty.com/Sociology/Limited-Effects-Theory.112098

CliffsNotes.com (July 2008). The Role and Influence of Mass Media. http://www.cliffsnotes.com/WileyCDA/CliffsReviewTopic/topicArticleId-26957

Sullivan, Thomas J. (2007). Sociology: Concepts and Applications in a Diverse World. Boston: Pearson Education, Inc.

Wright, Charles (1975). Mass Communication: A Sociological Perspective.

Schudson, Michael (1989). The Sociology of News Production. Sage Publications, Ltd.

Leon-Guerrero, Anna (2005). Social Problems: Community, Policy, and Social Action. Pine Forge Press

Mills, Charles Wright (1956). The Power Elite. Oxford Press

Most businesses—regardless the core offering—begin as a simple vision. Sometimes, as with the case of Netflix, a frustrating situation exposed a need and at the same time inspired an entrepreneur. A video rental late fee was the trigger that motivated Reed Hastings to develop one of the most successful click-and-mortar businesses to date—Netflix.com (Jayalath & Wood, 2005). Creating a lucrative e-commerce business requires many of the same basic components as a traditional business—including a cohesive business model, compelling marketing plan, and strong implementation strategy.

A perfect storm of advances in technology, adaptation of DVD media over VHS, and an unmet consumer demand is responsible for the successful launch of Hastings’ vision.

Netflix began its journey of trail-blazing business process innovation in 1997. Reed Hastings, along with partners Marc Randolph and Mitch Lowe, decided to disrupt the traditional video rental business by introducing a new twist on the home movie service (Thomas, 2010). A perfect storm of advances in technology, adaptation of DVD media over VHS, and an unmet consumer demand is responsible for the successful launch of Hastings’ vision. Not unlike other innovative start-up companies, Netflix has undergone several strategy shifts. Each change in focus or direction has assured the company remains dominate in the movie rental industry.

Success is never guaranteed, but a strong business strategy and cohesive implementation plan will increase the odds. Hastings began his business by declaring a simple yet effective mission statement, “our appeal and success are built on the most expansive selection of DVDs; an easy way to choose movies; and fast, free delivery (Brill, 2003).” While the original concept remains the same, the business strategy has evolved to satisfy new market opportunities. Notwithstanding slow adoption by the Internet user community, Netflix has become the perfect model from which all eBusinesses could learn.

Finding the Sweet Spot

Translating market opportunity into business opportunity requires a seven-step process. Hastings followed the seven-step framework to create the original company, but also continued to leverage individual steps to re-evaluate the Netflix position in the changing market. There are four key environments to consider when analyzing a market opportunity—customers, company, technology, and competition (Rayport & Jaworski, 2004).  If the four key environments were signified by using overlapping circles of a Venn diagram, the market opportunity sweet spot would be represented in the area where all four circles intersect.

The first step of the seven-step process used by Netflix involved the identification of the unmet or underserved customer needs. Hastings, being a customer himself, was able to draw upon personal experience to help establish the opportunity nucleus. This set of unmet or underserved needs stemmed mostly from processes dictated by traditional video rental businesses. The movie rental industry had already established methods surrounding video rental, late return policies, and membership rules. Hastings believed that without competition, these brick-and-mortar movie rental companies would never have a reason to change.

Following the problem recognition step, a company needs to identify the target audience. Part of this process includes grouping customers into segments. Rayport & Jaworski (2004) refer to the most basic form of segmentation as the distinction between must-have and nice-to-have customers (pgs. 86-87). Segmentation for Netflix includes identifying customers using geographic, demographic, and behavioral segmentation approaches. The target audience for Netflix expands beyond the regions and primary market areas that typically define traditional brick-and-mortar businesses. The Netflix target audience is not limited by geography, but rather bound by technology.

The relative advantage to Netflix competitors begins with the use of technology. An Internet-based system allows a user to find movie titles easier than strolling the aisles of a video rental store. The entire supply-chain of the Netflix mail-order fulfillment system is more desirable than issues surrounding weather, store hours, and drop boxes. Netflix began its business with a distinct competitive advantage.

The next few steps—in the case of Netflix—were overlapping. Step four of the seven-step process involved assessing the resources necessary to deliver the benefits. Step five required an in-depth look into the technology required—including the impact of new technologies. The technology available in 1997 was primitive compared to what is available today. Broadband is commonplace, making the online users’ experience many times better than before—also positioning Netflix for the future. After distilling the opportunity into concrete terms, step six of the market opportunity analysis framework, Netflix justified their position in the market and identified the sweet spot of opportunity for their business.

Defining a Business Model

The value proposition, online offering, resource system, and revenue model combine to define the business model. The Netflix market position as described by Susan Verghese (2005) boasts “an easier way to choose movies, fast and free shipping, and no late fees or due dates.” The value proposition is comprised of three components—segment choice, benefit choice, and resource choice.  Netflix’ segment choice encompasses all existing competitors’ customers as well as individuals beginning to desire movies-on-demand. The benefit choice revolves entirely around the convenience of making movie selections online. The resource choice is based on a strong distribution network and supply chain that rivals the competition.

The online experience of Netflix is their differentiator in the market. Following the membership model of other movie rental businesses, Netflix expanded the scope of their offering to include several levels of membership. Rounding out the business model, Netflix created an online community where member could contribute by offering and sharing reviews. The online business model developed by Netflix has become a beacon for others to follow (Venuto, 2010).

Creating the User Experience

Rayport & Jaworski (2004) identify seven design elements of a customer interface (pg. 151). Netflix follows best practices across all 7Cs—context, commerce, connection, communication, content, community, and customization. The context of Netflix’ site follows basic rules for ease of use and navigation standards for the web. Netflix.com uses a clean, uncluttered design to present an online movie rental experience second to none. The color scheme and graphic elements remain true to the corporate brand.

Content on the Netflix website consists mostly of movie imagery, descriptions and storylines, and member posted reviews. A non-member is presented with content designed to encourage enrollment, while the member community enjoys a user-specific experience. The movie titles presented to each member are relevant to his or her likes and dislikes—based on individual movie reviews. The content includes static information regarding the Netflix organization, its affiliates, career listings, and social networking links.

Netflix provides a robust community design element to their site. Members are invited to participate in reviews, forums, and blogs. Additionally, the tell-a-friend option creates a viral element useful in word-of-mouse marketing. The community element of Netflix.com falls short of providing functionality that allows member-to-member communication. The user provided movie ratings are real-time, but the written reviews are moderated before posting live to the site.

Every member can manage his or her own personal movie queue. Much like a playlist, the Netflix queue is used to control and manage the titles and order that the movies should be delivered to the member. The site uses this customization element to provide a member-specific experience to the user. Other customization features include the movie suggestion section. Every member receives an interactive list of movie titles that can be added to their playlist. Analyzing the member’s previously watched movies and the associated ratings provide enough information to create a suggested playlist.

Netflix has mastered the challenges associated with integrating their website and other communication channels. For example, each time a movie is returned—an email is delivered to the member. The member is asked to review the movie and offer additional comments if desired. Periodically, the member receives an email asking for information regarding the timing and condition of a DVD once delivered. This information is used to monitor the quality of service of the fulfillment centers.

The Netflix website offers no external links. The connection design element is not used on the Netflix member site. However, in the non-member and public areas within the website, Netflix offers external links to the websites of major publications, well-known critics, and other movie review sites. Netflix banner ads can be found on many popular sites. Each banner ad links to the Netflix main page.

Netflix’ commerce capability is limited only by its business model. The site, framework, and infrastructure can accommodate a full e-commerce shopping cart—but the only transactions are one-time enrollments and subscriptions to the monthly service. A member only revisits the commerce section of the site if a subscription needs to be changed. Transactions are automatic and recurring. Members spend the majority of their time within areas of the Netflix website that offers movie reviews and search capabilities.

The majority of communication from Netflix to their membership community falls within the generalized online framework for marketing communications (Rayport & Jaworski, 2004, pg. 197). Netflix uses several communication strategies for prospecting and acquiring new members. Of the four categories of communication—direct, personalized, mass marketing, and general approaches—Netflix relies mostly on the general approach of banner ads, email, and viral marketing. Members opt-in to receive special notices, offers, and incentives.

Netflix uses banner advertising to direct traffic from sites with a similar audience demographic as their current target market. Several years ago, Netflix made several attempts to create an additional revenue stream by including third-party advertisements in their own DVD mailings. This concept started when Netflix realized an opportunity to promote an upcoming movie by including imagery on the famous Netflix red envelopes (Anderson, 2005).

Company Culture and Considerations

Reed Hastings defined his approach to managing expectations within his organization as “freedom and responsibility” (Conlin, 2007). Netflix allows its managers to structure their own compensation plans, but expects ultra-high performance in return. Netflix operates as a single organization—with only an online presence. The supply chain, however, extends into many market areas. This model allows for low-cost, quick distribution of the movies.

The satellite fulfillment offices also present challenges with human resources. The turnover in the fulfillment centers is high. The culture at the corporate office level is revolutionary. However, the lack of culture at the lower levels presents challenges associated with recruiting, hiring, training, and retaining employees. Netflix’ culture has evolved over the years, but the underlying message remains the consistent—reward the employees that contribute the most.

The culture of Netflix is unique and proprietary, but effective. The company might struggle to service sixteen million members if a rigid traditional culture were adopted. The processes developed and enforced by the Netflix management team are the true strength of the organization. While the recent addition of streaming on-demand movies from a Wii console or PC reduces the demand of physical media, the rapid growth of the member base offers a balance.

Conclusion

Netflix has reported 550 million in revenue for the third quarter of 2010. The Netflix business model is a chameleon to technology. As new technology becomes available, such as faster connection speed, Netflix finds new opportunities. With the adoption of new products and services, Netflix can continue their rapid rate of growth—with no end in sight. Netflix has had a negative impact on several mainstream brick-and-mortar movie rental chains. Additionally, if Netflix’ streaming video service gains momentum, the U.S. Postal Service could feel a decline in service.

Netflix has managed to operate in a space free and clear of regulations. Their competitive advantage revolves around their supply-chain and fulfillment processes. Technology plays an important role in the distribution system of Netflix. Every order is automatically queued to the fulfillment office closest to the delivery address. A cohesive business model, compelling marketing plan, and strong implementation strategy is the only common ties between Netflix and other successful online businesses. Their success comes from technology, vision, and innovation. While difficult situations sometimes inspire genius solutions—Hastings vision to eliminate movie rental late fees has proven to be far beyond genius.

References

Anderson, D. (2005). Netflix stirs up excitement for ‘Geisha Girl.’ BrandWeek. [Electronic version]. Retrieved November 8, 2010, from http://www.brandweek.com/bw/news/recent_display.jsp?vnu_content_id=1001524775

Brill, R. (2003). The Brill report: Netflix. Retrieved November 6, 2010, from http://www.tcf.net/netflix.html

Conlin, M. (2007). Netflix: Flex to the max. Retrieved November 4, 2010, from http://www.businessweek.com/magazine/content/07_39/b4051059.htm

Jayalath, H. & Wood, A. (2005). The outlook for online DVD rental: A strategic analysis of the US and European markets. HighBeam Research. Retrieved November 6, 2010, from http://www.highbeam.com/doc/1G1-182523311.html

Thomas, J. (2010). When was Netflix founded? Retrieved November 8, 2010, from http://www.life123.com/technology/home-electronics/netflix/when-was-netflix-founded.shtml

Rayport, J. & Jaworski, B. (2004). Introduction to e-commerce. Boston: McGraw-Hill

Venuto, D. (2010). A better business model from Netflix. Retrieved November 6, 2010, from http://www.minonline.com/minsiders/Domenic-Venuto/A-Better-Business-Model-From-Netflix_11158.html

Verghese, S. (2005). Can Netflix play David to the Goliaths entering the DVD online rental space? Retrieved November 7, 2010, from http://www.virtualstrategist.net/Issue7/7-1-1.HTM