Integrated Service Marketing Communications and Pricing PDF

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Analyse cases in Indonesia or international cases regarding Integrated Service Marketing Communications and Pricing that have occurred (sources of articles / news / journals) and how’s the strategy for Integrated Service Marketing Communications and Pricing....

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ROLE PLAY 3 SERVICE MARKETING INTEGRATED MARKETING COMMUNICATION AND PRICING STRATEGY IN AIRLINE SERVICE

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SITI CAHYA SANTINI 1501183350 TAZKIA ZAHRA ARDANA 1501180352 AHMAD ABDOEL HARITS 1501180318 TIARA PERMATASARI 1501164019 AB-42-INT

DEPARTMENT OF BUSINESS ADMINISTRATION SCHOOL OF COMMUNICATION AND BUSINESS TELKOM UNIVERSITY 2020

Table of Content Table of Contents

Table of Content ................................................................................................................... 2 Table of Figure .................................................................................................................... 3 CHAPTER I INTEGRATED SERVICE MARKETING COMMUNICATION AND PRICING STRATEGY THEORY ........................................................................................ 4 Introduction ................................................................................................................................. 4 Background and Concept of Integrated Marketing Communication (IMC) ............................. 4 Pricing Strategy Theory .............................................................................................................. 6 Customer Knowledge of Service Prices .................................................................................................... 6 Service Variability Limits Knowledge ...................................................................................................... 6 Providers Are Unwilling to Estimate Prices .............................................................................................. 6

APPROACHES TO PRICING SERVICES ............................................................................... 7 Cost-Based Pricing................................................................................................................................... 7 Competition-Based Pricing....................................................................................................................... 7 Demand-Based Pricing............................................................................................................................. 7

CHAPTER II CASE STUDY ............................................................................................... 8 Marketing in British Airways ..................................................................................................... 8 British Airways Market Potential Analysis ............................................................................................... 9 Potential Market Share Analysis ...............................................................................................................9

Pricing Strategy for Airline Services Case: British Airways .................................................... 10

CHAPTER III INTEGRATED MARKETING COMMUNICATION STRATEGY FOR AIRLINE SERVICES CASE ANALYSIS: BRITISH AIRWAYS ...................................... 11 Integrated Marketing Communication Strategy ...................................................................... 11 Public Relation ...................................................................................................................................... 12 Advertisement........................................................................................................................................ 12 Sales Promotion ..................................................................................................................................... 13 Personal Selling ..................................................................................................................................... 13 Securing Brand ...................................................................................................................................... 13 SOSTAC Analysis ................................................................................................................................. 13

Pricing Strategy for Airline Service .......................................................................................... 14 Total customization................................................................................................................................ 15 Competitive pricing................................................................................................................................ 15 Customer profiling ................................................................................................................................. 15 Brand Image .......................................................................................................................................... 15

REFERENCE .................................................................................................................... 16

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Table of Figure Figure 1 Integrated Marketing Communication Plan ........................................................................ 11 Figure 2 Korean Air X SuperM ....................................................................................................... 12

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CHAPTER I INTEGRATED SERVICE MARKETING COMMUNICATION AND PRICING STRATEGY THEORY Introduction Integrated Marketing Communication is a step towards an integrated approach in achieving efficiency by synergy. By definition, it involves the merging of distinct communication functions in a way that allows an organization to speak with “one voice, one look” (Fitzerpatrik.K.R. 2005). Marketing communication represents the “voice” of the company and its brands and is the means by which it can establish a dialogue and build relationship with customers. By integrated marketing communication consumers learn who makes the product, for what purpose or benefit it stands and links the brand to people place, events, experiences, feelings, etc. Integrated Marketing Communication enhances companies’ ability to reach the right customer with right message at the right time and in the right place. Integrated Marketing Communication is the planning and execution of all types of marketing communication needed for a product, brand, idea, company or place in order to satisfy a common set of objectives and support the positioning of promotion. The concept of integrated marketing communication has evolved over four fundamental stages, starting from tactical coordination of promotional elements, redefinition of the scope of marketing communication and application of information and communication technology to the financial and strategic integration (Panda. T. k., 2009). Background and Concept of Integrated Marketing Communication (IMC) As a customer centred process integrated marketing communication is the first step in developing a common understanding of its purpose and value. Integrated marketing communication integrates everything that helps a company to promote its business and position its product in the market. An integrated marketing communication program must be continuous and strategic oriented. Some early attempts appeared in academic literature (Dyer, 1982; Coulson Thomas, 1983; Schultz, 1996). Integrated marketing communication began to be practiced and became a hot topic throughout (Caywood et.al. 1991; mile and rose,1994; kitchen and Schultz,1999). Caywood (1997) suggest that background for the emergence of integrated marketing communication is from three areas first from corporate or client side, an increasing competition and higher risk in markets brought by merging and acquisitions have been required to meet the consumer changing needs more successfully through new marketing strategies. Second from media and market side weakening the traditional trends of advertising. Third from, the consumer, as ongoing changes in his lifestyle have made advertisers to develop

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more elaborate and quicker response communication formats. Today’s business environment demands a well-managed and equally planned relational customer data-base, a focused and customer-oriented approach to customers and clients, and a psychological-driven prospecting approach to Sales. Reich then insists that marketers should combine proven marketing techniques with new integrated marketing communication methods to ensure success (Reich, 1998). It begins with the product development and includes packaging, pricing, selection of distribution channels, channel management, customer relationship management, total quality management etc. it involves the multidimensional, interactive, continuously measured communication that connects the brand or product and the customer (Lauterborn, 2003). The allocation of communication budget, away from mass media and traditional advertising has obviously promoted integrated marketing communication in recognition and effective marketing. The American Association of Advertising Agencies defines integrated marketing communication as “a concept that recognizes the added value of a comprehensive plan that evaluates the strategic roles of a variety of communication disciplines and combines these disciplines to provide clarity, consistency and maximum communication impact”. Apparently in just a short period, the concept of integrated marketing communication became a watch-cry not only of marketing communications, but also an integral part of corporate communication strategies of many companies. (Kitchen.J.P., et.al.,2004).it has increased communication impact, made creative ties more effective and provide consistency in communication. Integrated Marketing Communication has evolved over a period of time from awareness level of integration to image level integration to functional integration to coordinated integration to consumer-based integration to stakeholder-based integration to relationship management integration (Panda. T. k., 2009). It is a promotional tool along with other marketing mix components to gain advantage over competitors using to reach highest level of consumer satisfaction by knowing the right touchpoints. It is a data driven approach using outside-in thinking focused on identifying consumer insights using both on and off –line channel strategy to develop a stronger brand-consumer relationship (Surrender. S., and Telrandhe.N.,2010). Integrated marketing communication is thus the voice of marketing creating brand awareness, deliver information, educate the market and make a positive image of the company.

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Pricing Strategy Theory Customer Knowledge of Service Prices To see how accurate your reference prices for services are, you can compare them with the actual price of these services from the providers in your hometown. If you are like many consumers, you feel quite uncertain about your knowledge of the prices of services, and the reference prices you hold in memory for services are not generally as accurate as those you hold for goods. There are many reasons for this difference. Service Variability Limits Knowledge Because services are not created on a factory assembly line, service firms have great flexibility in the configurations of services they offer. Firms can conceivably offer an infinite variety of combinations and permutations, leading to complex and complicated pricing structures. As an example, consider how difficult it is to get comparable price quotes when buying life insurance. With the multitude of types (such as whole life versus term), features (different deductibles), and variations associated with customers (age, health risk, smoking or non-smoking), few insurance companies offer exactly the same features and the same prices. Only an expert customer, one who knows enough about insurance to completely specify the options across providers, is likely to find prices that are directly comparable. Some insurance companies— such as Progressive—base their strategy on giving customers competitive prices for insurance. Providers Are Unwilling to Estimate Prices Another reason customer lack accurate reference prices for services is that many providers are unable or unwilling to estimate price in advance. For example, legal and hospital service providers are rarely willing—or even able—to estimate a price in advance. The fundamental reason is that they do not know themselves what the services will involve until they have fully examined the patient or the client’s situation or until the process of service delivery (such as an operation in a hospital or a trial) unfolds. Most hospitals contend that their fee schedules, called chargemasters, should not be made available to patients beforehand and have fought to keep them private (Woellert, 2004). In a business-to-business context, companies obtain bids or estimates for complex services such as consulting or construction, but this type of price estimation is typically not undertaken with end-consumers; therefore, they often buy without advance knowledge about the final price of the service.

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APPROACHES TO PRICING SERVICES Cost-Based Pricing In cost-based pricing, a company determines expenses from raw materials and labour, adds amounts or percentages for overhead and profit, and thereby arrives at the price. This method is widely used by industries such as utilities, contracting, wholesaling, and advertising. The basic formula for cost-based pricing is Price = Direct costs + Overhead costs + Profit margin Direct costs involve the materials and labour associated with delivering the service, overhead costs are a share of fixed costs, and the profit margin is a percentage of full costs (Direct + Overhead). Competition-Based Pricing The competition-based pricing approach focuses on the prices charged by other firms in the same industry or market. Competition-based pricing does not always imply charging the identical rate others charge but rather using others’ prices as an anchor for the firm’s price. This approach is used predominantly in two situations: (1) when services are standard across providers, such as in the dry-cleaning industry, and (2) in oligopolies with a few large service providers, such as in the rental car industry. Difficulties involved in provision of services sometimes make competition-based pricing less simple than it is in goods industries. Demand-Based Pricing The two approaches to pricing just described are based on the company and its competitors rather than on customers. Neither approach takes into consideration that customers may lack reference prices, may be sensitive to nonmonetary prices, and may judge quality on the basis of price. All these factors can be accounted for in a company’s pricing decisions. The third major approach to pricing, demand-based pricing, involves setting prices consistent with customer perceptions of value: prices are based on what customers will pay for the services provided.

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CHAPTER II CASE STUDY This case study illustrates how British Airways (BA), the most important international airline in the world, made a lot of efforts to promote its brand and corporate image around the world during 1982-1984. The summary is structured as follows: BA advertising strategy during the 1970s, the BA advertising concept, and finally, the different reactions to the conception campaign. Initially, British Airways (BA) was originally a state-owned company formed through a merger between British European Airways and British Overseas Airways Corporation. The most important sales of BAs are the UK, which accounts for 42%. During the 1970s, BA management was transferred to non-public ownership with the aim of spicing up service quality due to annual losses. However, BAs still have a weak public image of inefficiency and incompetence even though service quality has improved. For this reason, Lord King once said that his ultimate goal is "to make airlines proud again". In particular, in terms of advertising strategy during the 1970s, BA state managers were guaranteed to design ad copy and had revenue responsibility for BA operations in their respective markets. However, these are inconsistent results thanks to advertising campaigns that vary from country to country. Marketing in British Airways To rebuild image and prestige, the S&S BA creative team came up with a new advertising concept - "simple and single-minded, dramatic and ground-breaking, immediately understood worldwide, visual rather than verbal, durable, fun and guaranteed". Thus, there has been a shift in the advertising strategy from the premise of superior product features to focusing more on brand image in the minds of passengers. However, the company's public image varies significantly across some of the targeted markets such as a reputation for good airline service in the United States but a weak brand in France and ports. A series of TV commercials with the headline "World's favourite airline" was released and one of the most expensive campaigns was "Manhatan Landing" for 90 seconds. Different opposing reactions occurred in response to the BA concept advertisement. While absolutely well received by Americans, in India, few questions were raised about whether "Manhattan Landing" would have any significance to local customers. In addition, in France and Kuwait, BA advertisements can only be introduced in cinema advertisements. In addition, the claim of "world's favourite airline" is deemed inappropriate.

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British Airways Market Potential Analysis Market potential analysis consists of evaluating the general market size of the related product that the company will launch. This may involve defining why the target market segment requires merchandise and the way that segment provides answers to meet the needs of its consumers. The potential market for British Airways products varies from factors such as: Market maturity. In mature markets, profitability is usually stable, but market potential is smaller as most players have taken market share to support the segments they serve. New players must choose a market share strategy in marketing. The technological competences of today's players and a culture of innovation and development in the industry. The untapped market size and barriers to entering the market and serving buyers. Often companies can easily see unmet needs in the market, but they find it difficult to function because of costly barriers. Determine the core needs served by your product and list all the direct and indirect competitors in the market. This can help not only in positioning the merchandise but also in better defining or segmenting it. Uncover this and the untapped market size and barriers to serving the larger market. Analyse the areas you should map when launching a product to a wider market and what challenges the company will face in the market. Estimate the current stage in the product life cycle and its implications for marketing decisions for merchandise. Potential Market Share Analysis 

Understand customer behaviour models for the British Airways industry.

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Identified the market share drivers relevant to the British Airways market.

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Segment Attractiveness Analysis - Our analysis will look at which segments are the most attractive and which should be undertaken and targeted by companies. We show in great detail which segments are most profitable for the company to enter.

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Understand the various needs and relative value of your offer by segment.

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Develop segment priorities and position merchandise that supports the needs of merchandise developed by the company. Competition & Competitive Position Analysis

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Revealing

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Pricing Strategy for Airline Services Case: British Airways For example, return flight to New York, purchased online is £376 in economy yet consumers pay a huge increase to £2728 for the same flight, (www.britishairways.com, 2011) but in first class. BA’s premium and medium strategies offers superior quality for greater price allowing the

– The price “is set higher than others to reflect better product quality and exclusivity.” (Bra...