Potential Marketing Approaches for ISA (Intelligent Speed Adaptation)

Diploma Thesis, 2001

144 Pages, Grade: bestanden



1 Introduction
1.1 Background
1.1.1 Informative or Active Support
1.1.2 Signal by GPS or Roadside Transmitters
1.2 Purpose
1.3 Limitations
1.4 Problem Analyzes

2 Method
2.1 Systematic Combining
2.2 Data collection
2.3 Primary data
2.4 Validity and Reliability
2.5 Secondary data
2.6 Benchmarking

3 Theory
3.1 New Product Development Strategy
3.1.1 New Product Development and Partnering
3.1.2 New Technology Commercialization and Diffusion
3.2 Managerial View
3.2.1 A Kind of Standard Approach
3.2.2 Definition of the Managerial Approach
3.3 Market Segmentation
3.3.1 Needs-Based-Approach
3.4 Organizational Relations
3.5 Change Process
3.6 Social Marketing Approach
3.6.1 Definition of Social Marketing
3.6.2 The Development of Social Marketing
3.6.3 Core Principles of Social Marketing
3.6.4 Consumer Orientation and Key Segments
3.6.5 Exchange
3.6.6 Alliance Building
3.6.7 Long-Term Planning Approach and High Involvement Issue
3.6.8 Going further than the Individual Customer
3.7 Differences between Economic and Non Economic Marketing
3.7.1 Different Missions and Final Goals lead to Different Benefits
3.7.2 Product Complexity
3.7.3 Negative Demand
3.8 Interaction Approach
3.8.1 Relationships became Networks
3.8.2 Comparison of the Network and the Interaction Approach
3.9 Industrial Networks Approach
3.9.1 Characteristics of the Different Parts of a Network
3.9.2 The Structures of a Network (Håkansson, 1992)
3.9.3 A Second Stage in the Network Conceptualization
3.9.4 Connection with ISA
3.10 Comparison and differences Managerial and the Network Approach
3.10.1 Localization of the Different Approaches
3.10.2 Coordination and Social Aspect
3.10.3 Unit of Analysis
3.10.4 Dynamism
3.10.5 The future position of the different paradigms
3.11 How will we lead our Study about ISA regarding these Approaches?

4 Data Presentation
4.1 Authorities
4.1.1 Customer
4.1.2 Product
4.1.3 Network
4.2 Car Manufacturer
4.2.1 Customer
4.2.2 Product
4.2.3 Network
4.3 Insurance Companies
4.3.1 Customer
4.3.2 Product
4.3.3 Network
4.4 Research and Safety Institutes
4.4.1 Customer
4.4.2 Product
4.4.3 Network
4.5 Professional Drivers
4.5.1 Customer
4.5.2 Product
4.5.3 Network

5 Analysis
5.1 Network Analysis
5.1.1 Actors
5.1.2 Actor Bonds
5.1.3 Resource Ties
5.1.4 Activity Links
5.2 Transition
5.3 Analysis - Social Marketing Point of View
5.3.1 Segmentation
5.3.2 Early Adopters
5.3.3 Slow Adopters
5.3.4 Benchmarking

6 Conclusion
6.1.1 Comments upon the Actual Network
6.1.2 Actual Problems
6.1.3 Comments about the Social Marketing Perspective

7 Recommendations

8 References

9 Appendix

1 Introduction

1.1 Background

ISA (intelligent speed adoption) is a safety device that helps the driver to keep the speed limits within the urban area and in local towns, villages ….In this way it should help to reach the “Vision Zero”(Swedish National Road Administration). This means that no one should need to be killed or seriously injured on the roads-a reversal in the trend in traffic safety programs. In the past, these programs focused on dealing with problems when they occur and individual road users were given the greatest responsibility for safety...The most important overall change is that the human factor alone should not be blamed for causing an accident. There are several different designs and functionalities for the product:

1.1.1 Informative or Active Support

The informative support can be either acoustic or optic. The acoustic support warns the driver with a beep tone as soon as he exceeds the driving limit. While the optical support changes a green light, which is situated at the dash board, to red when the limit is exceeded.

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Figure 1-1 Informative ISA system, source: ISA in Sweden

The active support can be divided into a compulsory system and the so-called “active accelerator”. The compulsory system reduces the amount of fuel provided for the engine and avoids in this way driving over speed limit. It is not possible for the driver to control the compulsory system. The “active accelerator” works in a similar way, as soon as the driver is over speed limit the pressure needed to accelerate is getting higher. In emergency case it is possible to override the system by pushing the accelerator to its limit.

1.1.2 Signal by GPS or Roadside Transmitters

The signal used for providing the necessary information about the speed limitation on each street can either be provided by satellites and digital roadmaps (GPS) or roadside transmitters situated on the streets close to the traffic signs.

In our study we are investigating the different ways of intelligent speed adaptation except the compulsory system. The reason for this is that it is not wanted by the user and that it is no opportunity to introduce this system within a reasonable time period.

1.2 Purpose

The topic of our thesis is to find out how it is possible to market ISA in large scale. The focus on the ISA project is to see how the different stakeholders can cooperate on an introduction strategy for ISA. In particular how is it possible to attract the automobile industry to offer ISA as an individual alternative to the buyer and how to attract the insurance companies as well as the authorities to give reductions on taxes or fees. Another important point of our study is to see what can be the gateway and agreements that did not exist previously between the car manufacturers, the governmental authorities and the insurance companies in order to share the cost of implementation of such a system and to promote efficiently the ISA system.

The ISA problem can be connected to the more general question about the possibilities to introduce a new technology that limits the personal control.

The study can also be used in general for marketing products where the advantage for the several stakeholders is not obvious from the beginning and where only a cooperation can lead to success.

1.3 Limitations

In our study we are investigating the different ways of intelligent speed adaptation except the compulsory system. The reason for this is that it is not wanted by the user, according to a former thesis performed by Anja Hase (2000) and that it is no opportunity to introduce this system in an within a reasonable time period.

Another limitation will be that we will focus on car manufacturers in Sweden therefore that they are of main importance for the Swedish market. In addition interviews with other European car manufacturers are performed to get a wider perspective.

On more limitation is that we are only investigating direct relationship and do not look at indirect influences.

1.4 Problem Analyzes

One of the major problems is to find out what are the car industries needs, wishes and preferences concerning ISA. Which technical and other features are valued very high by the car industry and which technical solutions are preferred. That is because the car manufacturers are embedded in network of different actors and resources. This embedded relation puts limits on what they can do. However it also gives raise to different opportunities. It is important for the car manufacturers to be able to combine ISA with other products that they have or will have in the future. Further more, what other products they have often depends on what suppliers they have. It might also be important that ISA fits with the image that the car manufacturer has, which often corresponds to the kind of customers it has. (For example safety image for Volvo or sport car image for Porsche.)

Beside the car manufacturer’s relations with suppliers and customers that will have an impact, the current relations with insurance companies and authorities will have an important impact by reducing taxes or dues. This is what we call network effects. Mainly concerning the possible ways to convince the car industry about the positive aspects and their own advantage. To answer this question it is necessary to know how the communication / relation between car manufacturers, insurance companies and authorities work and how it can be, if necessary, improved and which synergies can be adopted by the different stakeholders.

The influence of the society is one more key topic, mainly the influence of the stately economical politics, the esteem by the state as well as laws, regulations and standards. Is there any amount of cost that can be transferred to the end user or how much costs are the car manufacturers willing to pay themselves?

In our thesis we try to find out how the relation/network between the participants (car manufacturers, insurance companies, authorities, customers, research units) in the marketing process for ISA are and how they can be improved. We will strike the problem from different angles so that it is possible to get an overall view that includes all the main participants. The influence of regulations and arrangements between the different actors is another focus of our work.

2 Method

2.1 Systematic Combining

The main characteristic for this approach is continues movement between an empirical world and a model world. Systematic combining is a process where theoretical framework, empirical fieldwork and case studies evolve simultaneously and it is particular useful for development of new theories (Dubois and Gadde). Systematic combining is especially useful where empirical data and case studies have to be compared to theories to improve and develop those theories further.

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Figure 2-1 Systematic Combining

We will use Systematic Combining as a working tool for our thesis. The reason for this is that there is a lot of theory about the network approach and in this way we would like to connect our real world problem to a theoretical framework and modify the theory in a way that makes it possible to meet the uniqueness of our problem.For our purpose the tight and pre-structured framework will be used.

2.2 Data collection

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According to Yin (1994), data can be collected via six different sources: documentation, archival records, interviews, direct observations and physical artifacts. Yin calls this use of multiple sources of evidence “triangulation”, which means that the researcher has the opportunity to obtain multiple measures of the same phenomenon, which in turn adds to the validity of any scientific study.

Table 2-1Advantages and disadvantages of different data sources

Yin (1994) states that no single source has a complete advantage over all the others. In fact, the various sources are highly complementary.

2.3 Primary data


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Interviewing is a method of collecting data in a more personal way, which builds upon being directly involved and interacting in the process of understanding (Scheinberg, 2001). It is possible to distinguish between different types of interviews concerning the structure or the depth of the interview.

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Table 2-2Structure of Interviews (Gillham 2000)

An interview can be used as the main instrument of the research or it can be a supplement to other methods.

Although it is possible to gain great number information about a specific topic, it has to be recognized that this method has its limitations. First off all people are often not willing to participate in interviews. On the other hand the accuracy of the answers is not always so reliable. Especially more or less unstructured interviews are highly time consuming.

Interviewing relevant people, representatives from car manufacturers, insurance companies and authorities, will be an important part of the work. This should allow us to collect data in a more relevant way, building upon being directly involved in the process of understanding. The stake of the interviews will be to obtain the point of view of each representative of the different stakeholders involved in the project, and what are the solutions they can purpose in term of market price, incentives, special promotions and cooperation that they can apply for the launch of ISA.

For our purpose, semi structured interview will be useful. The reason is that we will not really know how far people are willing to answer the questions therefore that we might touch areas of their R&D work. For this reason we must be able to conduct the interview in a more flexible way, paying attention to what the interviewee wants to say and not stick rigorously to a predefined question.

Our study will be mainly targeted towards six important stakeholders in the system:

- Car manufacturers
- Insurance companies
- Governments and public authorities
- European Union
- Professional Drivers
- Safety Research Institutes

Concerning the car manufacturers, our main goal will be to seek, if they are prepared to launch this product on the market? How they plan to manage to attract the end-consumer to buy such a system? How the implementation of such a system can be done?

The interview of insurance companies must lead us to ask them, what are the different actions that they are able to set in order to incite the end user to buy a car equipped with such a system, and to see what will be the advantages and the feedbacks for them.

The interviews of the government executives and the European Union will be targeted to strive to know, what is the degree of willingness that they want to put in the project, what are the compensations and helps that they are able to provide in term of:

- Tax reduction for the end user
- Helps granted to the car manufacturer who will implement such a system in vehicle
- Commercial promotion of the system in itself
- Help to develop and maintain the referencing of the speed limits over the road network
- Law and regulations
- Standards

Initially, we have planned to interview people from safety devices departments from car manufacturing companies, who will be able to give us some theoretical and market-related information. People responsible for road safety and public finance in the government of their perspective countries will be interesting partners in this study too. Concerning the insurance companies, we think that the best interlocutor will be specialized in marketing for car products.

We have interviewed the following stakeholders:

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Table 2-3 Interview partners

2.4 Validity and Reliability

Validity and reliability are two variables that help to measure the quality of the information gathered for a study.

The validity measures to which extent the received information is the information meant to receive, this can manly be two issues:

a) If the question can be misunderstood
b) If the person interviewed is the right person

Of same importance is the reliability of the study. If the same result is reached every time the reliability is high. Therefore it is important to ask the identical question all the time. Validity is a broader and more difficult issue than reliability: for a measure to be valid, it must be reliable. Therefore, reliability is a necessary but not a sufficient question for validity (Kinnear and Taylor, 1996).

To assure high validity in our study we try to simplify the questions as much as possible. A second step is that we give the interview catalog to our two supervisors to get a feedback about the questions. In the third stage we try the interview with a person that is not directly involved in the process. These three steps are undertaken to assure that the possibility to misunderstand the questions is as low as possible.

Finding the right person to conduct the interview is an even more difficult achievement. Therefore we contacted the companies quite long before the scheduled interviews to give them time to find the responsible person for the case. The second method we use to assure interviewing the right person is that we ask at the beginning of the interview about the background of the person and her/his connections to ISA.

To gain high reliability in our study we try to ask always the same questions. The problem is that we are interviewing people from different sectors and therefore we have to make small changes in our survey to adjust the questions to our interviewee.

2.5 Secondary data

Sources for secondary data are literature including books, reports, articles of journals and articles on the Internet.

We have relayed on a large amount of theoretical material about marketing mainly concerning the topics traditional marketing, network approach and social marketing. We used different sources for this information such as books, articles as well as online articles. In our case we also used previous reports about ISA published by Vägverket as well as a previous thesis concerning problems about ISA.

2.6 Benchmarking

Benchmarking involves evaluating another company’s business processes and adopting them to incorporate best practices to improve performance, search for innovative ideas and gain a competitive advantage. The goal of benchmarking is to learn from others, adapt, implement and improve (AIPAC).

The benchmarking objective in our case was to compare the conditions of the introduction of ISA with the one existing for previous safety devices or products carrying a social aspect and benefit.

The benchmarking object in our case will be the catalyst, the airbag and the belt warning system. The reason for this is that it has quite a lot of similarities. The most significant one is that the customer did not require any of these products and therefore special marketing procedures were established.

3 Theory

We are going to use several different theories that we will introduce in this chapter closer. Later on we will use them for our analyzes.

3.1 New Product Development Strategy

The PDMA (1996) defines Product Development Strategy as the strategy that guides the product innovation program.

Cooper and Kleinschmidt (1996) found that four factors are critical to success in new product development: a high-quality new product process, a defined new product strategy, adequate resources of people and money, and adequate R&D spending. These were identified as the drivers of new product performance: that is, they strongly influenced one or both of the dimensions of performance.

They defined new product strategy is a key parameter and can be materialized by defining and communicating clear sales and profit goals for the product along the development phase. Having a clear strategic focus (that is knowing what markets or technologies the business unit would concentrate on) is also a positive factor, as the adoption of a longer-term focus (rather than being completely driven by short-term, incremental projects).

Nevertheless, the new strategy for a new product development (NPD) must also fit with the overall business strategy. Adequate resources of people and money also contributed strongly to increasing NPD performance. Three components made up this driver: senior management must devote enough resources for the business unit to reach its objectives; available R&D budgets are adequate; and the right people are available and given sufficient release time.

3.1.1 New Product Development and Partnering

Recent years have seen tremendous growth in the number of partnering or cooperative arrangements between companies vying for sustainable global advantage. Millson, Raj, and Wilemon (1996) examine cooperative arrangements for joint development and commercialization of new products (which they call NPD alliances), focusing on the process of NPD alliance formation and identifying issues that need attention during this process. Millson et al. (1996) argue that several NPD problems can be overcome through the use of NPD alliances.

Additionally, products may be insufficiently developed because information possessed by customers or suppliers (potential NPD alliance partners) had not been sought out. These authors note that NPD partnering is a process, not an isolated event, and propose a model of the NPD alliance formation process consisting of 4 stages:

1. Awareness,
2. Exploration,
3. Commitment,
4. Dissolution.

Murray and al. (1996) suggest that careful attention early in NPD can help firms avoid the problems that can lead to lessened trust and partnership dissolution: early in the NPD process, prospective partners should agree on a plan that includes each partner's goals, methods for mutual NPD, and a statement of how the plan will be renewed.

When it comes to build the partnership alliance, we can identify the following questions that need to be asked by a firm willing to enter an NPD alliance:

- What benefits will be gained by partnering?
- What are the needs of our prospective NPD alliance partners?
- What are the benefits and costs of an alliance in terms of technology and market access?
- What types of alliance provides the right amount of flexibility and control?
- How is perceived the behavioral control?

This pattern would allow the different stakeholders to have a first measurement of the stake of entering the partnership.

3.1.2 New Technology Commercialization and Diffusion

When it comes to launch a new product on the market, it is possible can define several sub processes that come after the product development phase. When it comes to the speed of an innovation adoption, the character of the innovation in itself and the extent to which early users encourage others to follow can increase this speed. Concerning the characteristics of the products, researchers agree on a model to measure “how” the new product is adaptable. Based on the work of Everett (1962), it is build upon five factors:

- The relative advantage of the new product,
- Its compatibility with the customer activity,
- Its complexity,
- Its divisibility,
- And its communicability (How likely is the product to appear in public places where it is easily seen and studied by potential users) (Supposed to be high on new cars devices).

The second important change is the spreading of the world. Merle Crawford (1994) defines it as the degree to which early users actively or passively encourage others to adopt a new product. If they do, it will be rapid. These studies focus on the innovators (first adopters) (the first 5 to 10% of those who buy the product) and on the early adopters (the next 10 to 15 %): it is assumed that, if the product is marketed to reach these “primary movers”, then they spread the word to the others and do the promotion of the product through the other levels of customers which might be targeted.

In order to define and identify these interesting customers, Merle Crawford (1994) advice to follow the five traits that have most of the time emerged from the studies:

- Venturesomeness: the willingness and desire to be daring in trying the new and different, “sticks his neck out”; “deviates from the group social norms.”
- Social integration: frequent and extensive contact with others in one’s area, whether work, neighbourhood or social life, a strong industrial counterpart.
- Cosmopolitanism: point of view extending beyond the immediate neighbourhood or community, interest in world affairs, travel, reading.
- Social mobility: upward movement on the social scale, successful young executive or professional types.
- Privilegedness: usually defined as being better off financially than the others in the group. This trait tends to reflect attitude toward money as much as possession of money.

Since we are mainly interested in the launch of ISA on the market, we will try to see what is the position of the product regarding these characteristics, by looking at the concepts that ISA is carrying and what are the best assets and factors that can be advanced by the different actors in order to promote efficiently the product. We will also see, according to the feedback from the interviews, what are the traits that are supposed to reflect the state of mind of a costumer adopting ISA in his new car.

3.2 Managerial View

3.2.1 A Kind of Standard Approach

The marketing mix management paradigm has dominated marketing thought, research and practice since it was introduced almost 40 years ago. To challenge marketing mix management as the basic foundation for all marketing thinking has been as heretic as it was for Copernicus to proclaim that the earth moved (Grönroos, C ). The Four Ps of the marketing mix are an indisputable paradigm in academic research. For most marketing researchers in large parts of the academic world it seems to remain the marketing truth today. Kent (1986) refers to the Four Ps of the marketing mix as "the holy quadruple...of the marketing faith...written in tablets of stone". Grönroos even emphasizes that “the four Ps of the marketing mix have become the universal marketing model or even theory and an almost totally dominating paradigm for most academics, and they have had a tremendous impact on the practice of marketing as well”.

Today, methods following the broad traditional and managerial approach are still dominating the research in industrial marketing, especially in the United States where the “gurus” of the industrial marketing such as Kotler are from. So, as it is, the 4P's remains the most widely known and commonly used marketing concept in marketing theory.

3.2.2 Definition of the Managerial Approach

This approach to marketing is build around the core of the marketing mix; the so-called “4 Ps” model:

- The product itself, (P roduct)
- The price charged for it, (P rice)
- The way it was promoted, (P romotion)
- The distribution and marketing channels. (P lace)

The Product is the good or service, which, the company offers to consumers, whose characteristics meet the customers' needs. The Place is the form of access, which, consumers may have to the product (Palmer, 1998). The Price is the cost of the product to the consumers, solely in terms of money. The Promotion is the communication sent from the company to the consumers informing them about their product (Kotler et al., 1996). This includes advertising, personal selling (eg attending exhibitions), sales promotions (eg special offers), and atmospherics (creating the right impression through the working environment). Public Relations are included within Promotion by many marketing people. All this elements are organized around the management of individual brands. We can gather the questions underlying under these 4 P’s in the following table:

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Table 3-1: The 4 P’s and their underlying questions

Originally designed by McCarthy in 1960 on the bases of the work of Borden (1965), the marketing-mix model was introduced as a tool for achieving a ”marketing-oriented” philosophy in practice (McCarthy, 1960), more Customer-oriented than Production oriented, like this was in the previous era. Kotler (1967) followed a few years later the same line of thought and launched what he called the “new marketing concept”, emphasizing on the fact to have a more customer-targeted view and a unified focus. Therefore, the “new” marketing concept reversed the logic of the old one to some extent: in the old concept the company started from its own existing products and thought of ways to increase sales. In the new concept the company starts with the customer (existing or even potential) and works its way back into the company asking what products or what solutions (in term of design and manufacturing concepts) are necessary for satisfying the needs of those customers: the corporate profit come out of satisfying customers needs through integrated marketing activities (Brännback).

The managerial approach was differentiated into many different schools having in common to be all regarded as “managerial” (their ultimate goal is to determine managerial structures and models for industrial marketing). These schools have sometimes altered the 4P’s model into a more extended model, giving other dimensions by adding some concepts within the 4 basics ones. Another trend can also be found in the “service marketing concept” (Grönroos, 1982), which appeared in the middle of the 70’s as a result of criticism of the traditional mix-marketing paradigm and took growth during the 80’s, mainly lead by Scandinavian researchers, targeting their studies towards the customer relationships aspects of the industrial marketing. Another school of though (initially presented by Robinson, Faris and Wind in 1967), more oriented towards supplier/Buyer relationships and organizational and whose trend is to look at organizational buying behaviors such as defining buy-classes and buying centers (Robinson et al., 1967) was build up at the end of the sixties.

The social marketing approach is also another segment composing the managerial approach. This approach was especially targeted to the study of the marketing of products and behaviors presenting a social issue and a benefit for the whole society.

3.3 Market Segmentation

Market segmentation leads to better targeting, assists in prioritizing market campaigns and creates more customer-focused communication.

The origins of the term can be traced back to Wendel Smith’s (1956) trailblazing article of the 1950’s, which introduced the concept as being ’based upon developments on the demand side of the market and represents a more precise adjustment of product and marketing effort to consumer and user requirements’. Smith’s approach was widely adopted during the sixties and seventies.

Market Segmentation is, according to Kottler (2000), an effort to increase a company’s precision marketing. The starting point of any segmentation discussion is mass marketing. In international business, segmentation needs to consider the existence of segments that transcend national borders and understand differences across countries in the structure of segments.

Market Segmentation refers to identifying distinct groups of consumers whose purchasing behavior differs from others in important ways. A market segment consists of large identifiable group within market with similar wants, purchasing power, geographical location, buying attitudes or buying habits. Each segment’s buyers are assumed to be quite similar in wants and needs; yet not two buyers are really alike (Kottler, 2000). Segmentation can be considered as an approach midway between mass marketing and individual marketing.

Segment marketing offers several benefits over mass marketing. The company can create a more fine-tuned product or service offering and price it appropriately for the target audience. According to Kotler (2000) the company also may face fewer competitors in the particular segment.

It is possible to distinguish between three different segmentation approaches:

- The Two-Stage Approach,
- The Nested Approach and
- The Needs-Based-Approach.

In our case we are going to use the Needs-Based Approach and therefore we are going to describe it here briefly.

3.3.1 Needs-Based-Approach

Most recently, a three-stage, needs-based approach for segmenting business markets has been proposed. It is designed to identify potential early adopters of new technologies by using organizational needs revealed in actual purchasing behavior, based on the assumption that past purchase behavior is a good predictor of future behavior. The first stage is ed to delineate firms that have broadly similar needs and to reduce the total market to generally manageable segments. The second stage is microsegmentation, designed to further segment the macrosegments based on benefits and/or needs. The authors argue that while needs are the most logical segmentation base, they provide managers with only part of the information necessary for target market selection and development of marketing strategy. Hence, the third stage is to further describe microsegments in terms that can be directly linked to specific elements of marketing strategy, according to Hayes (1996).

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Figure 3-1 Needs-Based-Approach

To form the macro segment the following characteristic is used:

- Kind of driver

While for the micro segmentations the behavioral characteristics are used:

- Safety conscious drivers
- Non safety conscious drivers

In an additional micro segmentation we divide the drivers in age groups. This is due to specific needs during different age phases.

Using these variables the goal is to identify different segments with similar needs, so that the strategy of involving them in the marketing process of ISA can be the same for each single segment.

A big benefit of the segmentation theory is that it is applicable to the social marketing theory, since the customer orientation is stronger than in profitable marketing view. Moreover, this segmentation allows the marketer to identify the subgroups that will be the more receptive to the product or service.

We are using the Needs-Based-Approach for the reason that the need of different segments is important for the marketing of ISA. A fitting device will be better accepted by the population if it can fulfill their specific needs.

3.4 Organizational Relations

The relationships between buyers and sellers are rather like the relationships between people. They don’t just happen. Instead, it takes efforts by both sides to make them work. These efforts in business markets can take many forms (Ford 1998).

According to Jörg Sydow (2001) in a “society of organizations” the economic success and survival of profit-making organizations, as much as for non-profit organizations, increasingly depends on the quality of the relations they maintain with other organizations.

It is possible to distinguish between two different kinds of organizational relationships both providing access to external resources: a rather market-like nature may prevail, or, increasingly evident, they may resemble relations within organizations, in terms of the intensity of communication, exchange of personnel or level of trust. These two types of relationships, although they often coincide in practice, are of a very different nature. However, both lines of thought lack a processual understanding of the formation and management of inter-organizational relations.

Inter organizational relations can be analyzed from two different perspectives

(1) In a firm perspective the co-ordination of local and non-local client and partner relations and their impact on foreign market performance are analyzed.
(2) In a regional perspective the impact of formal institutional context within a metropolitan arena on the organization of business relations is focused.

Development of buyer-seller relationship

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Figure 3-2 Development of Relations, Source Ford, D., 1998.

Every new relationship starts out from some pre-existing situations and so we must take that as a starting point for our analysis. The evaluation of the new counterpart in the pre-relationship stage will take place without commitment at that time.

During the exploratory stage the buyer and supplier are engaged in serious discussions or negotiation about a possible purchase of a business or a piece of capital equipment, or during the prototype or sample delivery for a frequently purchased component. In this stage the amount of learning that is required and that actually takes place in the two companies is probably at its greatest. No routine procedures will have been developed to cope with issues as they arise and both parties are likely to have to invest considerable management thought and time to the relationship and they may have great uncertainties about any future benefits. In this stage the relationship will appear to be costly and the future benefits uncertain, particularly when compared with other, existing relationships. There will also be a lack of trust and a concern about the other company’s commitment. Each party has to convince the other that they are seriously interested in the relationship and at the same time have to gain the interest of the other party. Demonstrating commitment is an important way to earn the trust of its partner so that it can come to expect similar commitment in return. But the exploratory stage mainly consists of discussion and negotiation and a company doesn’t have many opportunities to demonstrate its commitment in a concrete way.

A relationship is in the developing stage when the business between the two companies is growing in volume or changing in character in a positive way. This stage is also characterized by intensive mutual learning. The uncertainties of the two companies about each other’s ambitions and abilities will have been reduced by the interaction between them. In this stage, learning is likely to be more directed towards the specifics of the relationship and finding out about the investments and adaptations that are required and are appropriate for the company to make. These adaptations can include major investment to develop a product or a process or the pattern of interaction between the companies. As the relationship between the companies develops, their mutual adaptations increase and their commitment to each other grows. But this development does not continue inevitably and either party can cause development to slow, whether consciously or not. Even in the development stage it is possible for one or both of the companies to revert to the pre-relationship stage with another counterpart.

The stable stage occurs when the companies have reached a certain stability in their learning about each other and in their investments and commitment to the relationship. This could occur after service or commodity delivery has become routine, or after several purchases of capital products. It is not possible to put a time scale on reaching this stage as some relationships may never achieve it and others will quickly become quite stable if only a little learning and investment is required. The stable stage has positive advantages for the companies. It can lead to establishment of standard operating procedures, norms of conduct and trust. This means that the uncertainty that each feels in its dealings with the other will be low and the companies will have low handling costs. However, the stable stage can also lead to problems. These occur because the routines that allow the relationship to operate with low costs and little managerial involvement may not be questioned, so that they increasingly relate less well to either companies’ evolving requirements. This process is referred as institutionalization. The effects of institutionalization can be important both in the relationship itself and elsewhere in the wider network.

In our study we will use the relationship approach to clarify the relations between the different stakeholders and later on design the network between them regarding the fact that the relationship approach is very closely linked to the network approach therefore that a network exists of a sum of different relations. According to Ford (1998) a relationship can bind different relationships together. Because no relationship exists in isolation, what happens or is achieved in one will always be related to what is happening in at least some others.

Organizational relationships are crucial for the development of a working network. For this reason we investigate the ISA problem regarding this field.

3.5 Change Process

When it comes to the process of buying a product from the buyer, some researchers have developed a model of the way people change their troubled behavior. This model is mainly due to the work of Prochaska and DiClemente (1982).

One of the model’s major contributions is the recognition that behavior change unfolds through a series of stages. That is, individual progress through a series of stages in recognizing the need to change, contemplating a change, making a change, and finally sustaining the new behavior. Most important, they have learned that it is critical to understand and identify the stage an individual is in before a successful change intervention can be designed and applied.

Stages of Change

- Precontemplation: Consumers are not really thinking about their behavior as being appropriate for them at this point of their lives. They have no intention to take action within the next 6 months.
- Contemplation: Consumers are actually thinking about and evaluating recommended purchase/behavior. They intend to take action within the next 6 months.
- Preparation: Consumer have decided to act and they are trying to put in place whatever is needed to carry out the purchase / behavior. They intend to take action within the next 30 days and have taken some behavioral steps in this direction.
- Action: Consumers have made the purchase for the first time and are adopting the behavior for the first time. The change of behavior will occur in less than 6 months.
- Maintenance: Consumers are committed to the behavior and have no desire or intention to return to the earlier state. They have changed overt behavior for more than 6 months.
- Termination: Overt behavior will never return, and there is complete confidence that they can cope without tear of relapse.

Prochaska and DiClemente (1982) also identified nine processes of change (the mechanisms people use) to be applied to the level of either the individual's experience or environment to produce the change in behavior: consciousness raising, social liberation, emotional arousal, self-reevaluation, commitment, countering (or counter conditioning), environmental control, reward, and helping relationships.

illustration not visible in this excerpt

Table 3-2 Process of change for a customer adopting a new behavior, adapted from McCormack Brown, K, University of South Florida, 1999, website:http://hsc.usf.edu/~kmbrown/Stages_of_Change_Overview.htm

Since we have seen that ISA is carrying a social marketing aspect and is supposed to initiate a change in the driving behavior of the adopters by instigating a kind of social responsibility, we will try to see in which measure this process of change can be applied for ISA adopters. We will strive to detect in which stage and to which process the different customers can be identified in.

3.6 Social Marketing Approach

The ISA device is part of this range marketing product where the advantage for the adopters and the different stakeholders involved in the project is not obvious from the beginning and where only a cooperation can lead to success: ISA deals with a reduction of driving control since the adaptor, when activated, and limit the speed of the car. The essential benefit of such device, that is reducing traffic accident and by this fact improving traffic safety. The adopter is acting primarily out-off self-interest, but for a more general purpose, that is to produce a benefit for the society: it is totally related with a social marketing ambition and therefore will develop this concept here.

The term social marketing was first coined by Kotler and Zaltman (1971) to refer to the application of marketing to the solution of social and health problems such as brotherhood, safe driving and family planning. The concept has been created on the assumption that since Marketing has been remarkably successful in encouraging people to buy products, it can also encourage people to adopt behaviors that will enhance their own - and their fellow citizens’ - lives.

3.6.1 Definition of Social Marketing

A contemporary definition of the social marketing can be found in Kotler (1994):

“The social marketing concept holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors, in a way that preserves or enhances the consumer's and the society's well-being”.

Social marketing is a framework that draws from many other bodies of knowledge such as psychology, sociology, anthropology and communications theory to understand how to influence people’s behavior (Kotler and Zaltman, 1971). Like generic marketing, social marketing includes a planning process involving consumer-oriented research, marketing analysis, market segmentation, objective setting and the identification of strategies and tactics. It is based on the voluntary exchange of costs and benefits between two or more parties (Kotler and Zaltman, 1971). However, social marketing involved a more global complexity since its aim is to change human behaviors, in complex economic, social and political climates with often very limited resources (Lefebvre et al., 1988). Furthermore, while, for generic marketing the ultimate goal is to meet shareholder objectives, for the social marketer the bottom line is to meet society’s desire to improve its citizens’ quality of life. This is a much more ambitious - and more blurred - bottom line (Mac Fayden et al., 1999).

Abratt and Sacks (1988) pinpoint a difference between the terms “societal marketing” and “social marketing” since social marketing is defined with reference to the product while societal marketing with reference to the audience. However, since these two appellations are often used interchangeably by a lot of practitioners and academics in the marketing field, we will get rid of this difference by using the term “social marketing”.

3.6.2 The Development of Social Marketing

The notion of social marketing was developed in pair with the expansion of the marketing concept combined with a volunteer public health policy towards disease prevention. During the 1960s, commercial marketing technologies began to be applied to health education campaigns in developing countries (Ling et al., 1992).

In practice, numerous studies were led during the 1960’s about different issues mainly as part of international development efforts in third world and developing countries such as family planning programs or distribution of contraceptives.

While social marketing was being practiced in many countries by this time, a widespread growth in its popularity, and the transfer of the knowledge in traditional marketing field to the non-profit sector has been carried out both by business school scholars and professors and by scholars in others disciplines as well as specialized journals devoted to non-profit marketing (Andreasen et al., 2000) (namely Journal of Non-Profit and Public Sector Marketing; International Journal of Nonprofit and Voluntary Sector Marketing) . We can also notice an emergence of centers of expertise in this field. Nevertheless, social marketing can be considered as a minor subject in the marketing research field.


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Potential Marketing Approaches for ISA (Intelligent Speed Adaptation)
Chalmers University of Technology Foundation Göteborg
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ISBN (eBook)
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ISA, Intelligent Speed Adaptation, Marketing, Netzwerktheorie, Soziales Marketing
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Ingeborg Knauseder (Author), 2001, Potential Marketing Approaches for ISA (Intelligent Speed Adaptation), Munich, GRIN Verlag, https://www.grin.com/document/628


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