HOME AUTOMATION – The Target Market Analysis


Read it also in PDF

INTRODUCTION

Chips, wires, hardware, software, processors, cables, memory sticks, switches, installers, buttons, Wireless connection, robots, mobile phones, main frames, touchscreens, IPhones…technology has never been used and featured as so important and essential key as it is doing in these present days.  More importantly is to assume that this reality has been taking place all around us, from being woken up by clock alarm till brushing your teeth with an electric brush or even setting the sleep timer of your TV set before go to sleep . It can be found in all forms in simply every single action we take in our everyday routines.

Besides that, for having this benefit of an online life, where by being connected to your computer enables you to be aware of what is happening in every part of the world in real time, it is hard to believe that many years ago – more precisely in 1865 – the news about such an event with the magnitude of the Abraham Lincoln’s assassination had taken more than one week till it reached England and Europe by steamship.1

Therefore, since the technology formed its enormous influence in everybody’s life, the human-beings are continually seeking for its improvement and how to adequate its usage to their household daily tasks. Whereas, behind this idea, there are some issues that must be considered about how to figure out the complex scope of this advent in terms of modifying peoples’ lives and what is the true role of it, once so much trust is being credited in it, qualifying some functionalities which were classified as superfluous to something that could no longer be substituted.

In fact, this all has to do with the reliability and security the conditions of applying such a mechanism allow people to obtain. All the more in this day by day environment whereby a new breakthrough is frequently made, people are starting to think that instead of isolated technologies, the new way of using machines or technological appliances can be made in an integrated method. It means that all pieces of equipment designed and employed to facilitate the daily tasks at home will be able to “converse “ to each other by unified their functions in only one and central command.

Picture 1: The Jetsons – a futuristic and humorous way

of how technology was perceived in the past

  HOME AUTOMATION


The term is already known as Home automation and as the name says it is automation of the home, housework or household activity. The main functions may include central control of lighting, HVAC (heating, ventilation and air conditioning), home theatre equipment, motorized blinds and curtains, irrigation systems and other systems in order to provide not just security as mentioned before but comfort, energy efficiency or simply convenience. Home automation for the elderly and disabled can provide increased quality of life for persons who might otherwise require caregivers or institutional care.

Another way to defined it may be done by the term of Domotics, derived from the Latin word domus and informatics or a contraction of domestic robotics, and it refers to intelligent houses meaning the use of the automation technologies and computer science applied to the home.

There are many other ways to state the topic above and the functionalities this may present are certainly uncountable for who adopts it. In this Target Analysis it will be called Home Automation. Whereas the main picture is possible to be captured out of the conceptual description which is “If applied properly, advancing technology can make things simpler” (Vanderheiden, 2002)2.

Picture 2: A simple overall functionality of Home Automation

 

 

OPPORTUNITY

The concept of House automation or any aspect that might encompass this term can be applied in many areas, such as the following ones: Commercial, Educational, Government, Industrial, Institutional, Municipal Government and Residential. However the idea is to increase the use and consumption of technological devices and apparatus among the households.

Apart from the desire of enjoying all the benefits the technology is able to provide, the usage of it is still perceived and considered as potential. One article I used to exemplify my thinking says:  “…even though smart houses have long caught attention of researchers and considerable effort  has been put toward enabling home automation, these technologies have not been widely adopted despite being available for over three decades”.3 It means that the vast majority of all  homes around the world has never installed or applied considerably any item that reminds of the integration of the systems that encompasses the concept of Home Automation.

Regarding the statement showed above and a research done by ABI Research – Market Intelligence Company specializing in global connectivity and emerging technology – that emphasizes and highlights that even though the current market of 1.8 million automated house worldwide by the end of this year seems not to cause any amazement in investors and companies, that number is actually set to rise sharply soon, exceeding 12 million in 2016 4.  Still according to this research the reason for this abrupt growth is the result of standards-based, “no new wire” wireless and powerline technologies such as ZigBee* that drive down system costs and expand the addressable market.

* ZigBee Smart Energy is the world’s leading standard for interoperable products that monitor, control, inform and automate the delivery and use of energy and water. It helps create greener homes by giving consumers the information and automation needed to easily reduce their consumption and save money, too.

Eco-friendly mentality is another area that the Home Automation industry can explore. As people generally are becoming more environmentally concerned, the idea of combining Home Automation and Eco-friendly houses is one considerable alternative for the business to succeed. By positioning the company as a Green Brand, associating it with environmental conservation and sustainable business practices, the corporation has an enormous chance of being rapidly accepted and this will certainly boost its image towards customers.  The applications of this term can have many facets,  since saving and reducing the power bills by generating electricity using own solar panels and wind turbines till reducing emissions of carbon dioxide by using special appliances. This is all meant to provide at the same time an ultimate and ecological usage of natural resources along with maximum comfort and security. 

In general, this mix of products – which includes hardware, software, devices and machines – and services – visit, installation and maintenance –   has global potentiality to increase its usage. Whereas for the assessment of this delivered value to customer, the focus will be concentrated on one specific market, considered a relevant center for further assumptions of success in this business segment.

 

 

CHALLENGES

 

            Despite sounding an exciting idea, the adoption of the concept Home Automation is still considered and judged quite worrying for who do it. Basing on the facts described on the article used to support this Target Analysis, there is some of what they call barriers which are not enabling this technology to become broadly accepted amongst customers. These barriers are defined as: high cost of ownership, inflexibility, poor manageability and difficulty achieving security. They implicate in either new or existing customers. In this particular article, the investigation was based on existing customer, but these barriers are also perceptive to new ones who have a wrong prejudgment about it.

 

Whereas, the final conclusion of this article mentions that the turnaround for the Home Automation to finally figure as something people can trust is to prove its real useful usage to consumers, this means it will need to overcome these barriers and transfer its results back to them

 

MARKET


Even being recently considered the 24th most expensive city in the World in a survey by Swiss bank UBS5 – jumping up from the 43rd position in a period of two year time – Auckland is a multicultural city with 1,354,900 residents, 31 percent of the country’s population 6. For its importance it is the location for most major international corporations’ office in New Zealand. Its GDP features as the highest in the country and were estimated at US$47.6 billion in 2003, 36% of New Zealand’s national GDP, 15% greater than the entire South Island6. For these environmental aspects, Auckland seems to be a good reference in terms of measuring the impact and the results of the utility of this product/service towards consumers.

 

COMPETITORS

             According to Yellow Pages 7, there are approximately twenty three companies, that sell or/and provide products/services related to Home Automation, registered in Auckland. The number seems to be impressive due to lack of consumption this product/service has showed to have. Whereas, these companies are classified for providing at least one product/service that regards automation – for instance electrical services, cabling, etc. For that reason some of them can easily be discredited as actual rivals or direct competitors. Besides that, if the search considers only Auckland Central, the result drops to nine companies operating in Auckland Central. So the real number of competitors or companies that provide similar service are reduced in this mentioned region. Apart from that, not all are able to offer the same specialized customer service as the new company does (Integration of house automation).   Therefore it appears as good location to place the main office.  

Picture 3: Location of some competitors in Auckland Central

Even though the central area is relatively occupied of apartments and flats, which has as its main dwellers students or tourists (and somehow they would not be investing in this kind of product/service), the surroundings areas, especially Ponsonby and Parnell, are interesting areas to be nearby. Due to the high standard location these places feature and to purchasing power the people who live there have, by establishing the business in between them, features as an important factor to the future company.

Another perceived and common characteristic on these companies is the opening hours. Most of them operate just on weekdays (Monday to Friday) within commercial hours (9.00 am to 5.30pm). Just a few companies operate at flexible hours or are available at appointments. This also can be one differential point, because consumers normally focus their attention on these issues when they have free time (weekends and non commercial hours).  Moreover, considering the unpredictability of the technology, problems can occasionally occur at any time, so it is expected from the companies to be standing by for customers when this happens. So flexible hours or even 24 hour-service is a noticeable opportunity identified within this market


 

 RESEARCH

 

 

For this part of the Target Analysis, a short questionnaire of  was developed and given to ten people at random in order to identify their trends related to Home Automation. The questions, in total seven, were about the consumer’s opinion, idea, current situation, preferences, costs, willingness and conditions to adopt the Home automation in their lives.  As the concept is still not well-defined nowadays, a brief description of it was given at its beginning to introduce the theme to the interviewees.

 

The questions 1, 2, 3 and 7 are multiple-choice, with four or sometimes five alternatives available. The remaining questions (4, 5 and 6) are based on a scale of preference, interviewees are asked to judge which topic are more interesting by numbering them from 1 (less relevant) to 5 (more relevant).

 

A sample of this questionnaire can be seen here.

 

 

RESULTS

 

 

            After interviewing, these are the following results collected for each question:


 

1.      Overall idea of Home Automation

          4 people consider (representing 40% of total) it is an attractive option, but they do not know much of it;

          3 people (30% of the total) considers it as an article of luxury, functional but not essential;

          2 people (20%) do not have an opinion about it.

2.      House inhabitants

          5 people (50%) live with more than 3 people;

          4 people (40%) lives with 2 or 3 people;

          1 person (10%) lives with another person.

3.      Any children (up to 15 years old) amongst this inhabitant number.

          4 people said YES (40%);

          6 people said NO (60%);

 

4.      The main reason to adopt Home Automation

 

          30% would adopt it to provide more security;

          26% would adopt it for comfort;

          18% would adopt it for convenience or in order to increase life quality.


5.      The main reason NOT to adopt Home Automation

 

          30%  thinks it is too expensive;

          21% thinks it requires too much attention spent (time and maintenance);

          19% thinks the inflexibility of not meeting requirements or not matching up components.


6.      What characteristic would change their opinion about adopting automation.

 

          33% prefer the affordable prices;

          23% credits that the transparency of the investment and costs would be the reason;

          22% would change opinion through regular/timely maintenance or effectiveness demonstration


 

7.      Reasonable amount of money to be spent on this Home Automation to satisfy all the needs

 

          60% finds the amount between NZ$1,000 and NZ$5,000;

          20%  finds the amount up to NZ$1,000

          20% finds the amount between NZ$5,000 and NZ$10,000


 

ANALYSIS

 

Through the extracted figures from the questionnaire, some facts can be pointed out to understand consumer’s behavior in regard to the technology offered.

The first question intends to find out what is the first idea consumers have when the topic Home Automation is discussed. The most chosen alternative involves people who think it is an attractive option, however they do not know much about the topic. Combining this with the people who do not have an opinion about it, it sums 60% of the total. This emphasizes that despite liking the sound of the Home Automation, the concept has not completely reached people’s awareness and it results in lack of knowledge. As a result, this absence of information could be the explanation the demand might be defined as low and the reason why products/services have never aroused and provoked a great interest on consumers.

Another important point in this questionnaire was related to the users’ main motivation to adopt Home Automation. More than 55% responded that Security (30%) and Comfort (26%) are their favorite option, which can delimit some areas the business can focus its operation on.

Nonetheless,   there is a downside which is about their perception around the cost-efficiency. The idea of investment is still distorted and most of them – 30% of the total – associate these products/serviceswith high prices of acquisition, installation and maintenance as the leading cause for not purchasing it. The question number 3 also indicates that by acquiring these technologies, customers’ time might be spent on tasks in order to keep all the devices working properly or as the way they want which is due to maintenance and customization as well. So 21% of the interviewees might consider it superfluous.

Therefore, with the purpose of discovering a possible solution for the cost issue, the question number 6 presents some potential alternatives that might be considered attractive to customers and would make them interested in adopting this lifestyle. As expected, the majority chose Affordable Price as their main aspect with 33% of the total. Following it, we have Transparency of the Investment and Cost, Demonstration of Efficiency and Timely and Regular Maintenance provided by the company with 23%, 22% and 22%, respectively. Even though the Demonstration of Efficiency had a certain balance amongst the other alternatives – apart from Affordable Prices – it is a topic which aroused lots of questions from customers about its implementation and how this demonstration would be like. It can be used as a good starting point for customers to understand and perceive the whole idea of using such product/service. Linked with it, there is the Transparency of Costs, which can be placed as the following step after the demonstration part. By understanding and assimilating the functionalities and benefits, customers will be able to judge with more precision what is convenient and useful to them and besides they will be capable of analyzing the cost-investment they are making.

There is another important characteristic related to question 6 which consist of is that although the interviewees judge the Affordable Prices something that would give them a chance to try using Home Automation, the perception of cost-investment is considerably different. This argument can be seen in the question 7 where asked how much of investment would be reasonable for them to cover all the needs with automation. Surprisingly, among all the alternatives – which contained the option “up to NZ$1,000” – 60% of the total said that an outlay between NZ$1,000 and NZ$5,000 would be considerable to start. This means the majority is conscious that a medium/large investment is necessary to provide decent products/services and they seem to be willing to pay for that. This information is of great significance for the company to elaborate its set of offerings in a way not to launch cheap – which may be perceived as of not good quality – or overpriced, which may become unaffordable to consumers.

 

FINAL CONCLUSION

In conclusion, some findings identified in this target market analysis can be used to drive the company’s strategic towards consumers. The following list gives us some of the highlights already discussed in this work and will probably be used to position and target the market which it will be included:

          Regarding outside researches, the concept of Home automation has an incredible potential to grow up by the year of 2016;

 

          According to the outcomes collected through the application of the questionnaire, consumers have a positive impression and feeling about the technology, just seem not to be fully aware of its purpose as well as the costs involved;

 

          On the same results, it is perceived that for the customers to enter into this market, the companies would need to find an equilibrium between effectiveness and affordable prices;

 

          The aimed market place – Auckland City – has not many companies specialized in Home Automation, which is a good chance of how to be positioned at;

 

          The competitors also do not work in flexible hours or hours that may meet consumer’s requirements, which can be defined as differentiated customer-service.

 

So under these premises, these next phases of this work, such as the “Creative Brief” will be elaborated.

 

REFERENCE LIST

1 Nova Scotia’s Electric Scrapbook (2010).Transatlantic Telegraph.. Retrieved 2011 from

http://ns1763.ca/victco/cabotcablem.html

2 Vanderheiden, G. (2002). Future Technology Developments and Domotics. Retrieved from http://www.sentha.tu-berlin.de/paper/vanderheiden_miami.pdf

3 Brush, J. ; Lee, B.; Mahajan, R.  Home Automation in the Wild: Challenges and Opportunities. Retrieved May 2011 from http://research.microsoft.com/apps/pubs/?id=145863

4 ABI Research (2011). “No New Wire” Technologies to Drive Home Automation Market to 12 Million Systems in 2016. Retrieved8June 2011 from http://www.abiresearch.com/press/3693

5 NZ Herald (2011). Auckland 24th most expensive city Retrieved 17 August 2011  from http://www.nzherald.co.nz/recruitment/news/article.cfm?c_id=83&objectid=10745628

6 Wikipedia (2011) Auckland. Retrieved 17 September 2011 from http://en.wikipedia.org/wiki/Auckland

7 Yellow Pages (2011) Retrieved from http://maps.yellow.co.nz/business/home-automation/auckland/#p=bus&what=Home+Automation&where=Auckland+Central&offset=1

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Existing Market, existing product, new market or new product?


How hard it is to create and imagine a new business!

For some people it seems to be clear as the day light but for some other ones who just have an entrepreneurial thinking it is difficult sometimes to precisely believe this or that business can reach consumers at their visceral needs and expectations.

Watching a lecture of Giapo (check it out) – the owner of Giapo which sells organic ice cream in the middle of Queen Street, Auckland –  who said something like this:

The secret of a successful business is not just about numbers and figures, it is how strongly you believe this will succeed…. then this feeling will give you all the tools and directions you need to achieve your goals” .

In terms of passion I’d say he’s completely right. First of all you must believe in what you’re selling and offering to consumers, otherwise there’s no point in starting up a business if you do not think it will deliver benefit to your potential customers. Secondly, the tools he mentioned is nothing less than the spirit of making the business succeed at any price, by inventing, innovating, creating, designing,  giving incentives, promoting, reinventing and others.

On the other hand, by analyzing figures and making plans based on them may not be a bad thing, it is not just essential from my view.

Whereas, for this project number 2, I’ve thought of something new that has been in the market for such a long time, but consumers are not fully aware of its usage and benefits. Apart from that, I had once applied for a position of a company which works within this segment. I was impressed by the way they wanted to grow in the following years, something not less than 30%.

This business segment is known, among other names,  as Home Automation and in the next chapter I will be trying to create an image of what might be done if this became business, ran by me!

The Campaign Evaluation – whereby this all starts….


Read it also in here… Secret Tournament in PDF

INTRODUCTION 

All of the campaign stars

Scenario

Football has always fascinated fans, not for nothing is the most popular sport in the world, with over 3.5 billion fans worldwide 1.  And on the eve of such a massive and great event as the Football World Cup, the marketing industry was ready and about to explore all the aspects of the advertising. Especially at these times, the publicity for big organizations, or even small ones, seems to be obvious: pick a traditional national team or a specific and famous player and associate them or him to their brand. The national teams normally have a company (or companies) as sponsor(s) and in order to cause a big impact on consumers, these companies attempt to position their brand through the passion for the sport.  That is truly an efficient formula to adopt on these cases, regardless their type of business segment. By relating their brand to any player (or team) which is on focus at that specific time, just adds more value to their brand towards customer.  Whereas, this had become a trend amongst organizations throughout those years. So, the question was: what if they went further and brought a feeling of innovation that an event such a World Cup deserves? The environment was set for new ideas, especially for the crescent rivalry between two sportswear companies that would be performing in the fields.

Briefing – Nike

Founded in 1964 and renamed in 1978 as Nike, the company had always been struggling to be considered one of the top brands in foot and sportswear. Despite originally being an American organization, where sports such as football, basketball and baseball are more practiced, the company  decided after several years that to become a global brand they had to go after the world’s most popular sport: soccer, or as it is known outside the U.S., football.

According to the Nike’s Vice President for Global Brand and Category Management, Trevor Edwards, “In Europe and Latin America and Asia, if you’re not about football, you don’t count”2. In 1994, when Nike started to focus on this revolution, it had only 2% of the soccer equipment market. Therefore Nike’s  approach used was the same successful strategy as before which consisted in promoting its products through sponsorship agreements with celebrity athletes – including Ronaldo (considered two times best player in the world in 1996 and 1997), Roberto Carlos (second best player in 1997 and reverenced as the best in his position), Luis Figo (best player in 2001), professional teams – such as Barcelona, Arsenal, Inter Milan – and national teams (including Brazil, Portugal, Holland and Korea).

On the other hand their biggest issue was still how to face with equality a traditional brand as Adidas and become the number one amongst the football fans. Besides being a strong competitor, the competitor brand was also sponsoring eleven national teams (against eight of Nike), including previous world champion France. It would provide the game ball for every match and outfit more than 25,000 referees, linesmen, officials and volunteers.3 Apart from all those disadvantageous facts, the 2002 World Cup seemed to be an occasion that Nike looked forward and needed to turn this reality around.

CAMPAIGN        

In early 2002, more precisely in March, Nike launched a worldwide marketing campaign represented of what was called The Secret Tournament. This campaign could easily be separated into three main stages, which are: tease, excitement and involvement. The advert was created by the agency Wieden & Kennedy (Amsterdam), and is part of a three-month campaign that includes posters, TV and cinema advertising, print, outdoor, radio, an interactive CD-ROM and theme-park posters 4. All of them have their key importance to the whole campaign and synergy among them was essential for the tactic of the marketing to work and match perfectly as a warm-up for the World Cup.

Tease

The initial approach began with teasers of posters about an enigmatic campaign involving the symbol of the scorpion on billboards, flyposters and sprayed onto walls all over the big centers.

The billboards of Scorpion KO and the confrontation’s posters in Italy

Afterwards, the first TV ads were screened, showing no more than a pair of soccer cleats and that same picture of a scorpion.  These three different commercial can be seen on the this alternative page:

After all the mystery created by emblematic symbol, the relevance and the meaning of the Scorpion was revealed by Nike in the press:

 – “As an icon of danger and intrigue, the scorpion serves as the symbol for stinging play. Seen popping up around the world since mid-March [2002], the sinister and segmented arachnid evokes the speed and venomous strikes that bring victory.”

In fact, the symbolism of a Scorpion represented “the quick and deadly style of play” with which Nike wanted to be identified by its consumers. It was actually in contrast with the methodical, defensive style called German football (clearly referring it to Adidas).

Although the commercial was considered intriguing, it did not inform any content about the tournament, its rules, its competitors, any information or detail about it. Despite not telling much of the campaign at the first sight, day by day the advert was reaching out more people and creating a feeling of curiosity amongst all. That was the feeling and the result Nike expected from the market.

It was certain that new commercials were on the way to be presented. But nonetheless, not to make customers too nervous about their expectations, on the same commercial, there was a reference to nikefootball.com, where visitors could play video games and learn in 12 languages more about the tournament. The “virus” was already being spread all over the world.

After all the suspense generated by the campaign, would the fans really wait till the next episode?

 Excitement

This phase began in April, with a series of small commercials that show a group of around twenty men heading to a large oil tanker docked in an unknown harbor and within there was a massive cage with football turf. They actually were football stars of that time and most of them would be featuring in the upcoming World Cup, a few months later.  By the tournament’s rules they would be split into eight three-man teams playing a round robin series of sudden-death games in the small indoor field encased in the steel cage.

The Players and other elements

Nike seemed to have chosen thoroughly each of the players, regarding those the company already had some endorsement agreement and others from countries that would be playing as favorites in the competition. The intention was purely political and consisted in having at least one player from the traditional teams (such as Brazil, France, Italy, Spain, Holland, England and Argentina) and host countries (Japan and Korea). Whereas, the key features were around Brazilian and French players, each of them with four representatives. The reason for that is these two national teams had disputed the previous World Cup final in 1998, therefore their stars were on focus during this period. Here is a description given by Stefan Olander, Nike Europe’s Brand Communication Director, at that time about the selection:  “They are creative, exciting and innovative when it comes to finding the single touch needed to score a goal and win a game. They also represent the spontaneity, joy and skill of the game, and hopefully all those features come out in Secret Tournament.” 5 The Teams were distributed as the following separation shows:

Triple Espresso

  • Francesco Totti (Italy)
  • Thierry Henry (France)
  • Hidetoshi Nakata (Japan)

The Untouchables

  • Patrick Viera (France)
  • Paul Scholes (England)
  • Ruud Van Nistelrooy (Holland)

Cerberus

  • Sylvain Wiltord (France)
  • Lillian Thuram (France)
  • Edgar Davids (Holland)

 Toros Locos

  • Saviola(Argentina)
  • Luis Enrique (Spain)
  • Freddy Ljungberg (Sweden)

Os Tornados

  • Luis Figo (Portugal)
  • Ronaldo (Brazil)
  • Roberto Carlos (Brazil)

Funk Seoul Brothers

  • Denilson (Brazil)
  • Ki Hyeon Seol (Korea Republic)
  • Ronaldinho (Brazil)

Equipo del Fuego

  • Hernan Crespo (Argentina)
  • Claudio Lopez (Argentina)
  • Gaizka Mendieta (Spain)

Tutto Bene

  • Tomas Rosicky (Czech Republic)
  • Fabio Cannavaro (Italy)
  • Rio Ferdinand (England)

One observation is relevant in regard to the nationality of the players. Even though Germany performs and often achieves significant results throughout the editions of World Cup (winning three past editions), no German player was involved in this campaign. In order to deposit a “scorpion characteristic” on the players and transmit it to the consumers, Nike intended to veto any German vestige that possibly reminded of its main competitor, Adidas – which is a German company and has its key and main sponsorship with German national team.

The tournament’s referee was also an attraction, featuring nothing less than Eric Cantona, a French former player, one of the first ones to be sponsored by Nike, regarding the endorsement strategy, and famous for being a skilled and troublemaker player in field.

Another important and new aspect about the campaign was its soundtrack. “A Little Less Conversation, a Little More Action” a remixed Elvis Presley song that Nike used for its ads. The song rapidly became the number one hit in 13 countries.

You can check all the commercial clips combined on the following links:

Involvement

As the campaign was becoming solider amongst the public opinion, it was time for Nike to bring the consumers as part of that game.  Thus, what they could call Involvement period of the campaign was launched in June at various locations around the world. Nike opened parks in each of these following big centers: London, Mexico City, Buenos Aires, Montevideo, Los Angeles, Madrid, Paris, Rotterdam, Santiago, São Paulo, Seoul, Beijing, Tokyo, Berlin and Rome, to host tournaments for young players (for ages between 11 and 15 year old).  Approximated figures divulged that nearly two million players participated.

Snapshots of the Involvement phase all over the world

Involvement phase – A huge ad, announcing the tournament in Berlin

Apart from the tournament, Nike built identical replicas of the oil tanker (the arena where the supposed tournament was taking place in the TV commercials) around the cities and the fans were able to play the tournament on X-BOX and PCs, as the pictures below show.

Fans were able to feel the sensation and live the experience


 CAMPAIGN EVALUATION

As a preparation strategy for the upcoming event, The Secret Tournament or Scorpion K.O advert would probably have a lifetime. Therefore, its approach was based on an outstanding and remarkable campaign which would have to rapidly have its strong impact on consumers and brings the ideal atmosphere to the event through the brand Nike, with its peak during the World Cup (in June) and eventually declining as the event finishes till its deadline – the end of the tournament. To ensure its goal would be completely achieved in all aspects, the campaign needed to be very efficient and attention-grabbing, hitting and making consumers globally involved in a maximum of three month time. They were aware they would be operating under a very strict deadline so the communication amongst all vehicles should be working in perfect harmony. The importance of the IMC for Nike in this campaign is well-defined by Solomon (2009, pg. 287) Nike wanted to build ongoing relationship with customers, rather than simply causing a one-time product purchase or short-term change in behavior.6

The cycle of the Phases vs. Lifetime of World Cup

           


Target consumers

Facing with the dispute against another well-known worldwide traditional company as Adidas, Nike attempted to focus its effort on the youngster football fans – around ages between 10 and 16 –  because they were perceived as having less brand loyalty. According to Nike’s VP,  Trevor Edwards, “they are the future”. By associating this statement to this new campaign it is noticeable Nike wanted to reach the new generation and send the message that brands, especially Adidas, were already considered old-fashioned.

In addition, Nike perfectly knew the weight and how influent the extraordinary athletes it was sponsoring were to their fans. For a teenage boy – for an example – the image of Ronaldo, who represented his hero and inspiration, could certainly induce him to relate the player to the brand and all his hopes of becoming a footballer. A simple and objective conclusion could be drawn out of it, by associating the purchase of Nike products would make him look like his great idol. Chitty (2008, pg.93)7 defines it as User Imagery, when the people (consumers) and brand are portrayed as being virtually the same thing. In this case, it was not a typical user, it was the superstars but Nike was relying on the consumer’s projection and dreams of being one in the future.

The advertising appeal, described by Solomon (2009, pg. 301) 8 as the central idea of the ad, was also intriguing, even after revealing what the tournament was about. The idea of putting the best players of the decade in a cage and make them play against each other till the first team scores a goal sounded more like a deadly or animal battle which instigated everyone’s curiosity, especially its target public. Although knowing it was a fiction, who would never wonder which one would be the winner?

Positioning and Objective

As previously mentioned, Nike desired to be seen as reference in the football market.. But this reality was being dominated by Adidas for a long time, especially after the 1970 World Cup, when the company became the official sponsor of the competition.

Nike’s most used element was advertising, which includes mass communication channels, which attempts to achieve communication objectives such as brand awareness or influencing consumers’ attitude towards the advertised brand (Solomon, 2009; pg.291). Due to its deadline, the campaign had relatively a short time to become renowned, for that reason Nike adopted the advertising tactic to quickly become popular. Besides, this worldwide campaign wanted to be positioned as innovative, defying the existing trends. The idea was meant to introduce a new and invigorating view about the sport, which contained the resurgence of the football as an “art”. This art of football basically means skillfulness and certain abilities found in players who do the unpredictable and decide matches for their teams. The purpose of the strategy was to question the methodical and traditional way of playing and set a talent search, or as the adverts were trying to impose, the Scorpion style. Undoubtedly, Nike was intending to be related to this new era of the sport. This could be defined as Emotional Strategy, which consists in reaching the consumer at a visceral level in order to have products bought on the basis of emotional and personal factors (Chitty, 2008, pg.141) 9. Whereas, the key point of the company was to be spreading this feeling to the international market – where the sport is definitely a fever – and which has an apparent potential of great growth in revenue. It was a clear definition of brand awareness strategy and how the brand wanted to be recognized by its consumers in the global market.

Mercurial Vapor I – the football cleat launched before the World Cup

The interaction through the advent of the internet was something that also could be classified as innovative. At that time, the number of Internet users was 631 million worldwide, much less than 2.08 billion registered by the end of 2010 12. Even so, by stimulating people to look for further information in its mysterious commercials, Nike would have thousands, or even millions, of accesses everyday on its website. This represented a good opportunity for the consumers to learn about the campaign and take a glance at the new Nike products and accessories. According to Kitchen (2010) 13, the technology does not only interact consumers but it acts as a facilitator in establishing a relationship with individual consumers and companies. By applying this facilitator, Nike created an immense “virtual showcase” and it played a differential and valuable key to the continuation of the whole campaign, through an individual perspective.

Besides the campaign, one instant could certainly be celebrated by Nike as one of the greatest moments of exposure in this World Cup. It was during the final, featured by Germany (Adidas) and Brazil (Nike) – which beat the German squad and won the Cup for a record fifth time. The inspired Ronaldo (picture) scored two goals wearing a pair of chrome Mercurial Vapors. The “football art”, strongly preached by Nike in its campaign, had really won. In its deepest dreams, Nike would never have imagined such a moment like this.

Ronaldo: Scoring one of the goals (and wearing the Mercurial Vapor).

General results and impacts

It is difficult to affirm with precision how profitable this campaign was or how successful it was in terms of money. But some association can be made through the Annual Reports of Nike during the years of 2002 and 2003.

By analyzing Nike’s revenue through the Financial Report of 2002 (which ended on 31st of May 2002), Nike’s international (outside US) revenue was still behind its domestic revenue. In fact the campaign did not capture all the campaign impact for not including the whole year of 2002.  However, the impact of the great effort made through the campaign was perceptible in the following report in the middle of 2003 and constituted a different reality. It was showing for the first time in the company’s history, the international revenue had surpassed – by around US$500 million – the domestic one. The international market that includes Europe, Middle East, Africa, Asia, Pacific Region and Latin America, had finally become a key role in the organizational context. The graph below shows the comparison amongst all the markets Nike acted.

                                                                          Graph: Comparison between Nike’s Revenues – 2002 vs. 2003 14

And this international surpassing remained a constant truth even in the present days since 2003, figuring as more profitable than the domestic with approximately 50% of Nike’s total revenue including all markets out of U.S.

Apart from that, the total revenue figures had never increased as the way they were; it was the record revenue outside and inside the company, a total of US$10,697 million worldwide in 2003. The company continually kept its growth throughout the years reaching extraordinary US$ 20,862 million in this current year.

Market Share

All the effort and investment made in this campaign illustrated how significant Nike was featuring to the world of sportswear and how important this was to its global strategy of becoming number one in this segment. In fact the rivalry between Nike and Adidas has made them shift places every year, competing head-to-head to the top position. In the meantime, other brands, such as Puma, were also developing and find their own space in this competitive market. This graph, from 2008, shows how market share is distributed:

Reference List

1 Answer.com. (2011). What’s the most popular sport in the world. Retrieved 2011 from

http://wiki.answers.com/Q/What_is_the_most_popular_sport_in_the_world

2 Wharton. (2003). Secrets of Successful Ad Campaigns: Lessons from Absolut, Nike and NASCAR. Retrieved 22 May 2003 from http://www.wharton.universia.net/index.cfm?fa=viewfeature&id=491&language=english

3 USA Today (2002) Marketers freely capitalize on soccer fever . Retrieved 28 May 2002 from http://www.usatoday.com/sports/soccer/cup2002/2002-05-28-usat-marketing.htm

4 PythOnline’s Daily Llama (2002) Nike launches Terry Gilliam’s World Cup ad. Retrieved 7 April 2002 from http://www.dailyllama.com/news/2002/llama116.html

5 BBC UK (2002). ‘The Secret Tournament’ – the Nike World Cup 2002 Advert. Retrieved 24 July  2002 from  http://www.bbc.co.uk/dna/h2g2/A776009

6 Solomon, C., Chitty, H.(2009). Marketing Real People, Real Choices (5th ed.)

North Shore: Pearson Education New Zealand, Copyright.

7 Chitty, W., Barker, N., Shimp, T. (2008). Integrated Marketing Communications (2nd ed.).

Melbourne: Cengage Leraning Australia Pty Limited.

8 Solomon, C., Chitty, H.(2009). Marketing Real People, Real Choices (5th ed.)

North Shore: Pearson Education New Zealand, Copyright.

9 Chitty, W., Barker, N., Shimp, T. (2008). Integrated Marketing Communications (2nd ed.).

Melbourne: Cengage Leraning Australia Pty Limited, 105

10 Footy Boots (2011). Nike Mercurial Vapor III. Retrieved from://www.footy-boots.com/nike-mercurial-vapor-iii/

11 World Mapper (n.d.) Internet users 2002. Retrieved from http://www.worldmapper.org/display.php?selected=336

12 Physorg (2011). Number of Internet users worldwide reaches two billion. Retrieved 26 January 2011 from http://www.physorg.com/news/2011-01-internet-users-worldwide-billion.html

13 Kitchen, P. (2010). Integrated Marketing Communication. Retrieved from http://onlinelibrary.wiley.com/doi/10.1002/9781444316568.wiem04001/full

14 Nike Annual Report 2002 and 2003. Retrieved from http://invest.nike.com/phoenix.zhtml?c=100529&p=irol-reportsOther

15 Nike Annual Report 2011 Retrieved from http://invest.nike.com/phoenix.zhtml?c=100529&p=irol-reportsannual

16 Nike Annual Report 2011 Retrieved from http://invest.nike.com/phoenix.zhtml?c=100529&p=irol-reportsannual

17 Wikinvest (n.d.). Puma AG Rudolf Dassler Sport. Retrieved from http://www.wikinvest.com/stock/Puma_AG_Rudolf_Dassler_Sport_%28PUM-FF%29

The Secret Tournament – The 2002 Nike Advert


Hi everyone!

Well, as our First Assignment required, I was asked to pick a very interesting marketing campaign, I had automatically remembered this one I’m going to share with you….

In fact, we watched a video of  Nike (during one of the first classes) about its expansion into new international market through the world’s greatest passion: FOOTBALL! (or as it is described outside US, soccer)

As a Brazilian  and big fan of this sport would be hard not to pick something  related to it, specially because the association between products and football is strongly explored in Brazil, which is completely reasonable regarding how essential it seems to be to the fans. To understand the importance of the sport in there, the comparison to what the All Blacks represent to New Zealand is completely suitable…

Apart from what was said, in my opinion was also very well-produced campaign with global dimensions, which makes harder for a campaign to become famous, regarding all the effort that is needed to equally reach all those markets…. and registers the exact moment Nike was trying to expand its market on the eve of a huge event as the World Cup (in this case, 2002)

The result was sensational: a mysterious beginning, great players competing against each other, many commercials, events with the  participation of the public and the perfect warm-up for the upcoming event – the world cup….

The fans had never been pleased this way and Nike knew it would be a step forward to its global strategy.

So have a seat, grab a cup of coffee and relax….I will be trying to tell you how this story was

Picture: The very intriguing initial logo of the campaign – The Scorpion KO

Hello Marketing world!


Marketing has always fascinated me…….even back in the days whereby I barely knew about its existence, I always got myself intrigued by the power of commercials and ads making people interested in products or services they were offering.

Nowadays, I realize it is actually a small part of this immense World of creation and creativity,  in which the main role is to open and lead the companies to new pathways and directions through the customer’s satisfaction and, obviously, profitability.

I’m now embarking towards this new world…. I’ll be creating some contents and will be grateful to have some external opinion about them…feel free to ask, question, criticize or compliment….any kind of manifestation is welcome…..

See you in the next chapters then!

Diego Romero