Case study 1– Microsoft
Microsoft is the world’s most successful software company. The company was founded by Bill Gates and Paul Allen in 1975 with the original mission of having “a computer on every desk and in every home, running Microsoft software.” Since then, Microsoft has grown to become the third most valuable brand in the world through strategic marketing and aggressive growth tactics.
Microsoft’s first significant success occurred in the early 1980s with the creation of the DOS operating system for IBM computers. The company used this initial success with IBM to sell software to other manufacturers, quickly making Microsoft a major player in the industry. Initial advertising efforts focused on communicating the company’s range of products from DOS to the launch of Excel and Windows-all under a unified “Microsoft” look.
Microsoft went public in 1986 and grew tremendously over the next decade as the Windows operating system and Microsoft Office took off. In 1990, Microsoft launched a completely revamped version of its operating system and named it Windows 3.0. Windows 3.0 offered an improved set of Windows icons and applications like File Manager and Program Manager that are still used today. It was an instant success; Microsoft sold more than 10 million copies of the software within two years-a phenomenon in those days. In addition, Windows 3.0 became the first operating system to be preinstalled on certain PCs, marking a major milestone in the industry and for Microsoft.
Throughout the 1990s, Microsoft’s communication efforts convinced businesses that its software was not only the best choice for business but also that it needed to be upgraded frequently. Microsoft spent millions of dollars in magazine advertising and received endorsements from the top computer magazines in the industry, making Microsoft Windows and Office the must-have software of its time. Microsoft successfully launched Windows 95 in 1995 and Windows 98 in 1998, using the slogan, “Where Do You Want to Go Today?” The slogan didn’t push individual products but rather the company itself, which could help empower companies and consumers alike.
During the late 1990s, Microsoft entered the notorious “browser wars” as companies struggled to find their place during the Internet boom. In 1995, Netscape launched its Navigator browser over the Internet. Realizing what a good product Netscape had, Microsoft launched the first version of its own browser, Internet Explorer, later that same year. By 1997, Netscape held a 72 percent share and Explorer an 18 percent share. Five years later, however, Netscape’s share had fallen to 4 percent.
During those five years, Microsoft took three major steps to overtake the competition. First, it bundled Internet Explorer with its Office product, which included Excel, Word, and PowerPoint. Automatically, consumers who wanted MS Office became Explorer users as well. Second, Microsoft partnered with AOL, which opened the doors to 5 million new consumers almost overnight. And, finally, Microsoft used its deep pockets to ensure that Internet Explorer was available free, essentially “cutting off Netscape’s air supply.” These efforts, however, were not without controversy. Microsoft faced antitrust charges in 1998 and numerous lawsuits based on its marketing tactics, and some perceived that it was monopolizing the industry.
Charges aside, the company’s stock took off, peaking in 1999 at $60 per share. Microsoft released Windows 2000 in 2000 and Windows XP in 2001. It also launched Xbox in 2001, marking the company’s entrance into the multibillion-dollar gaming industry.
Over the next several years, Microsoft’s stock price dipped by over $40 a share as consumers waited for the next operating system and Apple made a significant comeback with several new Mac computers, the iPod, the iPhone, and iTunes. Microsoft launched the Vista operating system in 2007 to great expectations; however, it was plagued with bugs and problems.
As the recession worsened in 2008, the company found itself in a bind. Its brand image was tarnished from years of Apple’s successful “Get a Mac” campaign, a series of commercials that featured a smart, creative, easygoing Mac character alongside a geeky, virus-prone, uptight PC character. In addition, consumers and analysts continued to slam Vista for its poor performance.
In response, Microsoft created a campaign entitled “Windows. Life Without Walls” to help turn its image around. The company focused on how cost effective computers with its software were, a message that resonated well in the recession. It launched a series of commercials boasting “I’m a PC” that began with a Microsoft employee (looking very similar to the PC character from the Apple ads) stating, “Hello, I’m a PC and I’ve been made into a stereotype.” The commercials, which highlighted a wide variety of individuals who prided themselves on being PC owners, helped improve employee morale and customer loyalty.
Microsoft opened a handful of retail stores-similar to Apple stores-in 2009. “The purpose of opening these stores is to create deeper engagement with consumers and continue to learn firsthand about what they want and how they buy,” Microsoft said in a statement.
Today, the company offers a wide range of software and home entertainment products. In the ongoing browser wars, Internet Explorer holds a 66 percent market share compared to Firefox’s 22 percent and Safari’s 8 percent. In 2009, Microsoft launched a new search engine called Bing, which challenges Google’s dominant position in the marketplace and claims to give better search results. Microsoft’s most profitable products continue to be Microsoft Windows and Microsoft Office, which bring in approximately 90 percent of the company’s $60 billion in revenue.
Questions
1. Evaluate Microsoft’s strategy in good and poor economic times.
2. Discuss the pros and cons of Microsoft’s most recent “I’m a PC” campaign. Is Microsoft doing a good thing by acknowledging Apple’s campaign in its own marketing message? Why or why not?
Case study-2
General Electric (GE) is made up of five major divisions that operate in a wide range of industries: Energy (Energy, Oil & Gas, Water and Process Technologies), Technology Infrastructure (Aviation, Enterprise Solutions, Healthcare, Transportation), GE Capital (Commercial Lending & Leasing, Consumer Financing, Energy Financial Services, GE Capital Aviation Services, Real Estate Financing), NBC Commercial (Cable, Film, Networks, Parks & Resorts), and Consumer & Industrial (Appliances, Consumer Electronics, Electrical Distribution, Lighting). As a result, GE sells a diverse array of products and services from home appliances to jet engines, security systems, wind turbines, and financial services. GE’s revenues topped $161 billion in 2009, making it so large that if each of its five business units were ranked separately, they all would appear in the Fortune 200. If GE were its own country, it would be the 50th largest in the world, ahead of Kuwait, New Zealand, and Iraq.
Thomas Edison originally founded the company as the Edison Electric Light Company in 1878. The company, which soon changed its name to General Electric, became an early pioneer in lightbulbs and electrical appliances and served the electrical needs of various industries, such as transportation, utilities, manufacturing, and broadcasting. GE became the acknowledged pioneer in business-to-business marketing in the 1950s and 1960s under the tagline “Progress Is Our Most Important Product.”
As the company diversified its business-to-business product lines in the 1970s and 1980s, it created new corporate campaigns, including “Progress for People” and “We Bring Good Things to Life.” In 1981, Jack Welch succeeded Reginald Jones as GE’s eighth CEO. Over Welch’s two decades of leadership, he helped grow GE from an “American manufacturer into a global services giant,” and increased the company’s market value from $12 billion in 1981 to $280 billion in 2001, making it the world’s most valuable corporation at the time.
In 2003, GE and the company’s new CEO, Jeffrey Immelt, faced a fresh challenge; how to promote its diversified brand with a unified global message. After extensive consumer research, the company launched a major new campaign called “Imagination at Work,” which highlighted its renewed focus on innovation and new technology. The award-winning campaign promoted units such as GE Aircraft Engines, GE Medical Systems, and GE Plastics, focusing on the breadth of GE’s product offerings. GE initially spent over $150 million on corporate advertising, a significant expenditure but one that created efficiencies by focusing on the core GE brand. The goal was to unify these divisions under the GE brand while giving them a voice. “When you’re a company like ours, with 11 different businesses, brand is really important in pulling the identity of the company together,” said former Chief Marketing Officer Beth Comstock. “Integration was important in communicating the brand across the organization and to all of our constituents.”
The new integrated campaign got results. “Research indicates GE is now being associated with attributes such as being high tech, leading edge, innovative, contemporary, and creative,” stated Judy Hu, GE’s general manager for global advertising and branding. In addition, survey respondents continued to associate GE with some of its traditional attributes, including trust and reliability.
In 2005, the company extended the campaign with its next initiative, “Ecomagination,” which highlighted the company’s efforts to develop environmentally friendly “green” technologies such as solar energy, lower-emission engines, and water purification technologies. The company leveraged the “Imagination” tagline again with a 2006 campaign called “Health Care Re-Imagined” that featured innovative GE health care products for detecting, preventing, and curing diseases.
Immelt made some strategic restructuring decisions that helped the company survive the worldwide recession of 2008 and 2009 and also helped shift it even more in the B2B direction. GE moved from 11 divisions to 5 and sold off some of its consumer-focused businesses, including 51 percent of NBC Universal (sold to Comcast). This shift allowed GE to spend more resources on innovation, green initiatives, and its growing businesses such as power generation, aviation, medical-imaging, and cell technologies. GE continued to use the Ecomagination campaign and introduced “Healthymagination,” which communicated its advances in medical technologies around the world.
GE’s recent corporate campaigns have united its business units, but its success rests on its ability to understand the business market and the business buying process, putting itself in the shoes of its business customers. Consider its approach to pricing its aircraft engines. GE knows that purchasing an aircraft engine is a multimillion-dollar expenditure, and one that doesn’t end with the purchase. Customers (the airlines) face substantial maintenance costs to meet FAA guidelines and ensure reliability of the engines. So in 1999, GE pioneered a new pricing option called “Power by the Hour.” This concept gives customers an opportunity to pay a fixed fee each time they run the engine. In return, GE performs all the maintenance and guarantees the engine’s reliability. When demand for air travel is uncertain, “Power by the Hour” provides GE’s customers with a lower cost of ownership.
This kind of B-to-B marketing savvy has helped GE cement its top position in the Financial Times’s “World’s Most Respected Companies” survey for years. Its understanding of the business markets, its way of doing business, and its brand marketing have kept GE’s brand equity growing. Indeed, its brand equity was ranked fourth and valued at $48 billion in the 2009 Interbrand/BusinessWeek ranking of the
“Top 100 Global Brands.” “The GE brand is what connects us all and makes us so much better than the parts,” Chief Marketing Officer Comstock said.
Questions
1. Discuss the importance of B-to-B marketing and a strong B-to-B brand to GE.
2. Have “Imagination at Work,” “Ecomagination,” and “Healthymagination” successfully communicated GE’s focus on its newer endeavors? Why or why not?
