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Example research essay topic: Trade Shows Competitive Advantage - 1,839 words

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Tradeshows are becoming of more importance in many organizational communications mix. Behind advertising, tradeshows account for one fifth of total marketing communications budget in the US and approximately one-fourth of the budget for European firms (Gopalakrishna, Lilien, Williams & Sequeira, 1995 & Jacobson, 1990). This report will analyze why tradeshows are becoming a more utilized marketing tool and how it contributes to achieving organizational objectives. The analysis will be broken up into two major sections, the first will analyze the strategic significance of trade shows for sustainable competitive advantage and the latter half will explore the guidelines to exhibiting a good trade show.

There are two main types of trade shows that organizations can participate in, and these are horizontal and vertical. A horizontal trade show exhibits a wide variety of products. An example of this is the Hamburg Fair, which exhibits everything in consumer and industrial goods. The other is vertical trade show, which is product specific; it may be limited; for example, to medical, computer or electronics.

Electronica is an example of a vertical trade show held each year in Munich to display the latest electronics (Kane, 1989). According to the Trade Show Bureau (TSB) (1994), the number of tradeshows exhibited in USA and Canada between 1989 and 1994 grew from 3289 4316, the number of attendees rose from 60 85 million and the number of companies from 1. 0 1. 3 million. The TSB projects a 35 % growth in trade show activities for the late nineties to the early 2000 s for the US and Canada and 15 % for Asia (Chowdhury, 1998). In 1994, the TSB estimated that over USD 53 billions were spent directly on trade shows and this excluded planning costs and overhead allocations. Kerin & Cron (1987) predicts that most corporate firms will allocate up to 25 % or more of their average annual advertising and sales promotion budgets to this promotional activity. With these large expenditures, the question that beckons is are trade shows budgets accountable?

Boom (1983) viewed tradeshow and promotional budgets as a reactive marketing tool representing an inertia habit, that is, using last years activities budgets and updating that budget to reflect this years activities. The idea being Our competitor will be there and our image reputation will be damaged if we dont show. This view is fiercely debated by Slywotzky and Shapiro (1993); McDermott (1993) and Tanner & Congo (1992) who view marketing expenditures such as tradeshows as investments and a systematic approach to gaining a competitive edge. Bottom line managers are observing and demanding accountability by the asking the important question: Do Trade Shows pay Off? The answer to this question will hopefully become self-explanatory as the benefits of tradeshows are discussed Before the benefits of trade shows are discussed, it is important to understand the role tradeshows facilitate and where it fits in corporate marketing communications strategies. The latest trend in corporate strategies is value adding (Bartlett & Ghosh al, 2000; Hill, 1997; Ans off & McDonnel, 1999; Fletcher & Brown, 1999 and Mone, McKinley & Barker 1998).

Take the pharmaceutical industry for example; the functions with the largest gross margins are not in the traditional intermediates and bulk substances, but rather in the new chemical entity and drug discovery. Below is a diagram underpinning how value adding contributes to higher profitability: Trade shows exhibited by companies are no different, its role to add value to the marketing strategies. The idea of value adding is emerging across many different industries, not just pharmaceuticals, for example Acer proactively seeks methods of value adding through their distribution channels and e-commerce to designing their own software and CPU. Trade shows are exhibited to value add to the marketing mix, it achieves this objective by: M Identifying new prospects M Servicing current customers M Introducing new products M Selling at shows M Enhancing corporate image M New product testing M Enhancing corporate morale M Gathering competitive information (Kerin & Cron, 1987; Penaloza, 2000, Zappaterra, 1999; Darby, 1998; Bendow, 1992 and Oliver, 1993) Through the sheer number of attendees, trade shows are an excellent frontier for prospecting new clients. Although scholars disagree on the range of attendees, the estimates range from 85 150 million globally.

Companies that do not scan and qualify for new customers will face significant financial challenges in the near future (Bryant, 1994; de Costa, 1995; Raton & Gerald, 1997 and Cobb 1992). A company that continuously and proactively seeks outs new clients will always have a competitive advantage over their competitors who do not. This competitive advantage can be used to create a market entrance barrier and lock out potential and new competitors (Jain, 2000; Porter 1980 and Wheeler and Hunger, 2000). An example of a company which understands this principle and the functionality of trade shows is Nippon Electric. This company uses trade shows for identifying new major account prospects, which are later, funneled to the sales force, through this process, Nippon Electric is in essence is able to lock out competitors and increase profitability by 10 % per annum (Clever, 1992). Tradeshows is also an excellent chance for the company in to engage in industry-related networking.

Networks as long been regarded as a key resource for companies (Jarillo, 1998; Atkins and Lowe, 1994 and Birley & Westhead, 1990), the industry trend which is emerging is strategic networking, which is sharing key competencies knowledge with strategic partners (Jarillo, 1988 and Miles & Snow, 1992). Through networking, the first step of relationship development can occur. Clark, Hayes and Lorenz (1985) and Bracket and Pearson (1986) identified countries such as Japan and China for example, as countries that prefer to develop a trusting relationship before a transactional one. Through tradeshows, the company has the chance to break the ice and build the foundations of a possible long lasting mutually beneficial relationship (Jarillo, 1988; Birley, 1985 and Ring and Van de Ven, 1992). Another role that tradeshows facilitates is the servicing of current customers.

Many scholars agree on the concept of lifetime value, that is, a successful company will realize that a lifetime customer is worth 10 fold the largest single transaction (Clarkson, 1995; Start, 1994 and Waddock & Graves, 1998). Through tradeshows, companies can engage in servicing not just their customers but also all their other important stakeholders such as suppliers, financial institutions and employee and so forth. Through careful event selection and product planning, a firm can utilize trade shows to communicate its message to the right people about the right products services at the right time of the buying cycle (Kerin & Cron, 1987, Bellizzi & Lipps, 1984) Introducing or testing new product or product concept has always been a popular reason for exhibiting at trade shows. Researchers have recognised that customers undergo a complex purchase decision process in which consumers have different informational needs (Wind & Thomas, 1994, Gopalakrishna et al. , 1995; Neal, Quester & Hawkins, 1999 and Cullen, 1999). Since tradeshows are a mix of direct selling and advertising, it can create the awareness in the consumers mind. Hence when the time arises when the prospects moves closer to the purchase or supplier selection process, the company that is exhibiting will be in the prospects awareness set and more information search on that company will be more likely to occur (Gopalakrishna et al. , 1995; Berman, 1992 and McMaster, 2001).

Connoisseur, the maker of premium ice cream uses the Royal trade shows around Australia just to introduce their new flavors of ice cream. In 1998, for example, the company introduced the flavor Macadamian Mambo in its Connoisseur range at all Royal shows. The launch included free sampling and market research at the show proved invaluable, it was able to gage the acceptance of the new flavor, and as a consequence, this new flavor has made it in the top five most liked flavors in the Connoisseur range (Jackson, 2001). The most frequently given explanation by senior management as to the reasoning for exhibiting at tradeshows is to sell (Hatch, 1998; Brooks, 2000 and Cobb, 1993). According to Berman (1992), trade shows offer ad sales people more face-to-face contact per hour than any other sales vehicle, the Centre of Exhibition Industry Research claims that the company can save 45 % of the cost of making a typical field sales call by selling from a trade show. Many scholars view this function of tradeshow to be only small potential of what it can really achieve (Dekimpe, Francois, Gopalakrishna, Lilien, & Van den But, 1997; Bendow, 1992; de Costa, 1995 and Kerin & Cron, 1987).

These scholars believe that tradeshows should be used in conjunction with other promotional communications mix to develop a long lasting relationship, hard selling at the trade will likely push potential clients away rather than attracting them. Hard selling will give the image that the company exhibiting is in financial trouble and needs to clear stock quickly, this is a bad image and the company will be labeled the sales piranhas (Berman, 1992). Successful companies that are success are always conducting external scanning, and tradeshows can be one avenue that can assist in this process. Tradeshows are excellent for sourcing out whats new and hot in the industry. Through the determination of industry trend, the company can monitor what their competitors are doing and how to retaliate if necessary (Gopalakrishna et al. , 1995; Berman, 1992 and McMaster, 2001).

The last role that trade show facilitates is helping the exhibitor create corporate entity and staff morale. The companys booth will reflect the companys image. Having a well-organized and lively booth will enhance the corporate image, since the potential clients has first hand view and touch or taste of the booth, they will have a better understanding of what the company does (Brooks, 2000; Plachta, 1989 and Marken, 1995). Trade show also gives the staff a chance for an outing, this will allow them a chance to show off their knowledge, and certain staff members do enjoy the limelight and hence boost their confidence and morale as a result (Dekimpe, et al. , 1997; Bendow, 1992; de Costa, 1995 and Marken, 1995) Trade shows do offer many benefits, but usually at a high cost (Braziller, 1993; Bryant 1994; de Cost, 1995; Cobb, 1993 and Marken, 1995). The broad guidelines to ensure that trade show budgets produce results are: Setting objectives Research Preparation Setting objectives for the trade show is pivotal to its success.

It is important for the trade exhibitors to understand what they want to achieve at the show. These results may be in the form of maybe creating awareness, personal selling, market testing, whatever the objective, it should be quantifiable and concise. Zappaterra (1999) reports that this is the main reason for trade shows budgets being viewed as ineffective is because its objectives clash with different organizational functions. For example, the sales department will judge the effectiveness based on the number of leads, where as the marketing department is based on long-term objectives such as brand development, and relationship...


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Research essay sample on Trade Shows Competitive Advantage

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