Friday, July 11, 2008

Case study :Gateway: Searching for the Right Agency

Discussion Questions
Questions No- 1

Analyze Gateway’s decisions to change advertising agencies so many times over the past six years. Identify and discuss specific factors that may have led to each decision to change agencies?

ANS: As a student of advertising and promotional marketing we analyze Gateway’s all decisions those are influence Gateway to change advertising agencies so many times over the past six years, here we try to discussion those point.

1. Gateway Searching for best way to communication to there customer and build strong brand image.
2. Increasing there sales in international market.
3. Increasing there sales and maximize there profit.

Gateway Searching for best way to communication to there customer and build strong brand image: Brand image and communication with customer is very important element in modern business so Gateway searching for the best way to communicate its product offerings and value proposition to an increasingly tech savvy and demanding marketplace. In a business as competitive and fast evolving as the PC industry, Gateway recognizes that differentiation and brand image are very important in developing and sustaining a competitive advantage. However, Gateway has struggled to find an advertising theme that resonates with consumers and clearly differentiates the company from competitors such as Dell, Hewlett Packard (HP)/Compaq, Sony, and Apple. In the process Gateway changed advertising agencies five times over the past six years and three times in a 14 month period from early 2002 to 2003. A week after dismissing DMB&B, the new CEO announced the hiring of McCann-Erickson Worldwide , one of the largest agencies in the world, as it new agency of record. Meanwhile the changes at Gateway continued. In April 1998, the company dropped 2000 from its name, shortening it to Gateway as it felt that the “2000” moniker would become dated in the new millennium. The company also introduced a new logo featuring a hand-drawn version of its signature cow-spot box. So it is very clear that gateway try to improve there Brand image and built strong relationship with customer through the advertising agencies that why Gateway change there advertising agencies so many time.

Increasing there sales in international market: The Company’s first outside agency was Carmichael Lynch, Minneapolis who was hired to handle its television advertising. In addition to Carmichael Lynch, Gateway had retained the services of the London-based Finex agency to handle its European and Japanese creative as the company’s sales in these markets were increasing. As Gateway 2000 grew rapidly and its international sales increased, the company decided it needed a global agency. In March 1997 the company moved its estimated $70 million worldwide account to D’Arcy Masius Benton & Bowles, a global agency that could help the company with its growing international business.

Increasing there sales and maximize there profit: profit maximizing is a very common goal for any company so Gateway also try to maximized there profit in very common way, to change there advertising theme and boost up there sales to maximized there profit. Gateway’s revenue hit an all time high in 2000 reaching $9.6 billion while the company’s market share was 8.2 percent, making it the number three PC maker in the U.S. behind Dell and Compaq.Gateway began running the ads featuring Fox in January 2001. However, in the month prior Gateway had held discussions with several other agencies about the future of its brand and the direction of its advertising. In late January, after a management shake-up, Jeff Weitzen resigned as CEO and Ted Waitt resumed control of the daily operations of the company once again. Upon his return as CEO, Waitt announced a net loss of $94.3 in the fourth quarter of 2000 as Gateway's core PC business was not profitable. A few days after Waitt resumed control of the company, Gateway dismissed McCann-Erickson as its agency. Gateway management decided that it was time to "farm out" the quirky and folksy aspects of its corporate image and create an identity for the company as a maker of sophisticated computer technology with the latest in advanced components. Gateway continued using advertising developed by Siltanen/Keehn into the fall of 2002. However, S/K’s tenure as Gateway’s agency of record was short-lived as the company parted ways with the agency after 10 months and moved its advertising to the Arnell Group, New York in October 2002.

So at last our discussion we can say that gateway change there agencies many time because gateway want to maximize there product sales, built strong brand image and take strong position in market, take competitive advantages and also maximize there profit that way they change so many time there advertising agency.

Question NO 2

Discuss how Gateway’s frequent agency switching has affected the company’s branding and positioning efforts. What recommendations would you make to Gateway management regarding its agency switching and its impact on the company?

ANS: History of Gateway’s we see they switching there agency so many time, some time they switching there agency to outside agency and some time in-house agency and also so many time they change there advertising agencies but it is very clear that they change there advertising only for built there strong brand image and take a strong position in existing market. Until 1993, Gateway 2000 relied solely on print advertising that was produced in house. However, as the company grew rapidly, it decided to add television ads to the media mix and to retain the services of an outside agency to work with its in-house advertising department. The company’s first outside agency was Carmichael Lynch, Minneapolis who was hired to handle its television advertising and The first in-house advertising department is DMB&B’s, focusing on the consumer market and handling most of the media buying outside of PC publications The first ads from the new agency retained the “You’ve got a friend in the business” tagline that Gateway had been using for several years. A few months later the agency introduced a campaign theme saying Gateway goes “From South Dakota to the rescue.” An agency executive explained the rationale behind the campaign by noting that “South Dakota is a state of mind, a way of doing business, and dealing with people.” However, Gateway and DMB& B got off to a rocky start as both sides grappled with the precise roles of the agency and the in-house group and how to collaborate. Also, the agency’s creative approach was geared more toward traditional advertising that used actors and scripted TV spots, such as one showing a family in a computer store where piped-in music segues into advice that the family can get what it really needs from Gateway. A week after dismissing DMB&B, the new CEO announced the hiring of McCann-Erickson Worldwide , one of the largest agencies in the world, as it new agency of record. Meanwhile the changes at Gateway continued. In April 1998, the company dropped 2000 from its name, shortening it to Gateway as it felt that the “2000” moniker would become dated in the new millennium. The company also introduced a new logo featuring a hand-drawn version of its signature cow-spot box. Over the next few months Gateway began moving its corporate headquarters from South Dakota to San Diego, a move that company officials said was prompted by difficulties in recruiting key executives to a small town in the Midwest. Gateway also began changing the process of transforming itself from a manufacturer of personal computers into a company that would derive its revenue from a variety of sources. The “beyond the box” strategy was designed to diversify Gateway’s offerings to include PC financing, Internet access, and various other computer-related accessories and services. New advertising from Leo Burnett broke in May 2003 using yet another new tagline, “The Comforts of Gateway.” The goal of the new advertising is to underscore Gateway’s folksy charm while positioning the company as a solutions provider for an increasingly complex technological world. The first commercials from Leo Burnett depicted a small town Americana’s main street coming to life as people use their computers and other personal electronic items.

So at last our discussions we can say that Gateway’s frequent agency switching has affected the company’s branding and positioning efforts and Gateway management regarding its agency switching and its impact on the company not Handel there agency very wells. Branding and positing is very important of any company but establish brand image not come from easily, it takes some time and handwork to give company brand and position in market. Many company create there brand image to use brand manager who is responsible for the total management of brand, Including planning, budgeting, sales, and profit performance. Under this system the responsibilities and functions associated with advertising and promotion are transferred to the brand manager, who work closely with out side advertising agency and other marketing communications specialists as they own ad agency and may compete against other brand within the company, not just against outside competitors.

Question No 3

If you were an executive at an advertising agency and Gateway’s decided to switch agencies again, would you advise your account development team to pursue the company’s business? Why or why not?

ANS:Yes if I am an executive at an advertising agency and gateway’s decided to switch agencies again I would give advice my account development team to pursue the company’s business Because this case we see so many times Gateway change there agency. Some time they use in home agency some time the use outside agency. In the process Gateway changed advertising agencies five times over the past six years and three times in a 14 month period from early 2002 to 2003 but the must of the time agencies can not reverse its declining sales in the stagnant personal computer industry.
The company knows that the personal computer, as well as other segments of the consumer electronics industry, have become extremely competitive and having a strong brand image is critical for companies who want to continue to compete in these markets.
Virtually every business organization uses some from of marketing communications. However the way a company organizes for these efforts depends on several factors, including its size, the number of products it markets, the role of advertising and promotion in its marketing mix, the advertising and promotion in its marketing organization structure. Many companies have all those structures are need to boost advertising agency. I thing Gateway also need some those advertising agency those are can fulfill gateways need like reverse there declining sales and build strong brands image to help these market. At an executive of advertising agency I want to take those kind of challenge are related to advertising and promotional marketing at the same time also I am try to maintain company business.



……. END………………………………………


No comments:

Picture Of The Day

Picture Of The Day