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AUTHOR(S): HJERTVIKREM, YVIND DATE: MAY 18, 2012 STUDY PROGRAMME: B.S.
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TITLE: MICROSOFTS BRAND REPUTATION RELATED TO EMPIRICAL LITERATURE OF THE CORPORATE IDENTITY, CORPORATE IMAGE AND CORPORATE REPUTATION
ABSTRACT:
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Microsofts Brand Reputation Related to Empirical Literature of the Corporate Identity, Corporate Image and Corporate Reputation
Abstract
Microsoft is known as global brand especially with respect to innovation operating systems. Current study highlight the strategies adopted by Microsoft and the brands corporate identity, reputation and image in todays competitive scenario. Consumers always desire better and more effective products, services and technologies. Innovation grants this desire. In an extremely competitive industry like that of the technology industry, continuous research and innovation is not just a boon, it is mandatory. Microsoft encourages employees to communicate directly with senior officials to share their views, suggestions and probably even complaints. Senior employees keep their doors open to facilitate such communication. Even with such a casual atmosphere, the work ethic in this organization is concrete and well defined. Microsoft has proved itself in the technology innovation area over the past few decades by competing successfully in the industry and enabling people, processes and organizations to work, communicate and run better. Keywords: Corporate identity, corporate reputation, corporate image, technology industry, technology innovation, corporate branding.
Introduction
Microsoft Corporation is a global brand name unparalleled in the technology industry. It single handily dominates the home and office computer system market making it a software giant. Microsoft leads the IT industry because of multiple reasons; the user friendly nature of their operating systems, the quality of their products, the importance they give to customer service and feedback and the huge funds invested for research and development in order to ensure that they live up to their motto Be whats next. Providing these amazing solutions obviously comes at a cost and also involves the purchase of expensive licenses. These costs and the growing demand for web based applications have challenged Microsofts position in the IT marketplace. Microsoft is working towards addressing these issues by researching and developing improved software that meet the continuously growing needs of the customer and also making them cost effective by reducing licenses etc. 1
Microsofts Brand Reputation Related to Empirical Literature of the Corporate Identity, Corporate Image and Corporate Reputation
Competition has significantly increased in all areas, be in operating systems, servers, communication media etc. Microsoft is constantly undergoing changes and innovation in order to retain its position as the leader of the industry. This paper aims at analyzing Microsoft from all angles: the industry it belongs to, its current situation and what the road map of this great organization may look like and thereby present some strategies/suggestions that could be implemented and how it would affect the organization.
Microsofts Overview
Microsoft History & Products
Microsoft came to being on April 4, 1975, when William H. Gates and Paul Allen decided to develop and sell BASIC interpreters for the Altair 8800 ( a microcomputer design ). It is now headquartered in Redmond, Washington (Bick, 1999). Things started looking bright in 1980 when Microsoft received a contract from IBM. IBM was working on a PC and wanted Microsoft to come up with an Operating system for the new PC. In order to honor the contract, Microsoft bought Q_DOS operating system from a programmer for around $50,000 and renamed it to MS-DOS. MS-DOS helped Microsoft dominate the home computer operating system market in the 80s. Microsoft was incorporated in 1981, following the release of the IBM PC with MS-DOS (Bick, 1999). The Initial Public Offering got the company 61 million US dollars after it went public in 1986. Windows, the OS that we are all familiar with, was initially called Second generation operating system, OS/2 in 1987. Microsoft continued research and innovation and came up with Microsoft office later on. Microsoft office is now the most widely used Office Suite available today. The beginning of the century saw a major change in the organizational structure of the company. Ballmer was appointed CEO and Gates the Chairman and Chief Architect. Windows XP, the most successful and stable windows to date, was launched in 2001. The year 2001 also saw the birth of the legendary video game console Xbox which is still loved and admired to this day.
Microsofts Brand Reputation Related to Empirical Literature of the Corporate Identity, Corporate Image and Corporate Reputation
Research, innovations and upgrades continued and in 2007, Microsoft launched the Windows Vista whose user interface was nothing short of a visual treat. Microsoft Office 2007 also saw the light of day in the same year. On a more personal front, Bill Gates took a break from his role as Chief Architect in 2008 in order to focus on some personal commitments. He however continued to be the Chairman and took decisions on areas of research and key development areas. By 2009, Microsoft, which started as a simple software development company, had its presence felt in almost all areas of the IT industry ranging from software products and hardware devices to software development tools and Internet services.
Microsoft Goals
Microsofts main goal is to address the most pressing issues and to provide immediate attention to resolve these issues.
Microsoft Culture
The work culture at Microsoft Corporation is one that is desired and craved by anyone who works for the IT industry. The company itself and the individuals in the company value integrity, honesty, openness, personal excellence, constructive self-criticism, continuous self-
improvement, and mutual respect. Along with these core values, the entire organization is committed to its customers and partners and works hard on its passion for technology. The work culture permits employees to dress casually thereby keeping them comfortable at all times. Work life balance is never a concern as working hours are flexible along with a Work from Home option when necessary (Dowling, 2001). The work culture at Microsoft encourages innovation, research and development, recognizes and awards innovative ideas, and does not shy away from risks. Even while Gates has been away since 2008 on personal commitments, the work culture has still managed to be the same. This is attributed to Gates passing on his ways to the other senior board members and management. In short the Microsoft culture is smart, effective, aggressive, and focused towards achieving its goal of technological excellence (Bick, 1999).
Microsofts Brand Reputation Related to Empirical Literature of the Corporate Identity, Corporate Image and Corporate Reputation
Branding
A strong brand is a precious invaluable advantage as the battle to attain customers is intensifying day by day. A brand is nothing but a sign, symbol or name that uniquely identifies the product or service being sold. In the following few paragraphs, lets take a deep dive into understanding how the concept of branding came into place and what its implications are (Dowling, 2001).
Origin
Studies show that the term brand is derived from the Norse word brand which meaning to burn. Here it actually referred to the practice of burning a mark into a product to mark ownership of the product. In earlier days the product could be cattle (branded by farmers) or also slaves (branded by their masters). The branding was generally done by the use of a hot iron stamp. However, branding methodologies are no longer the same as before. Slavery of course has been abolished and cruelty towards animals is a heinous crime (Haig, 2003). Some of the earliest examples of branding to identify and distinguish good quality products from the bad one does can be seen in the oil lamps made in the Greek islands. A special mark (or brand symbol) was placed on the lamp for people to understand that it was the longer lasting one. This is exactly what happens in the competitive marketing industry today. Companies build brands and market them in such a way so as to tempt customers to opt for the new branded products. When a brand is an immense success for a company it becomes the flagship product of the company. A legally protected brand name is called a Trademark (Haig, 2003).
Definition
The brand is a huge concept. Having just one definition for it may not be optimum. One has to consider a lot of scenarios when it comes to defining branding namely visual, perceptual, and positioning, added value, image and personality of the product or service. In simple terms a brand can be defined as a product, service or concept that is publicly distinguished from other products and services. Individuals and scholars have given their own definitions for branding. For e.g., Brassington and Pettitt have defined branding to be the creation of a three dimensional 4
Microsofts Brand Reputation Related to Empirical Literature of the Corporate Identity, Corporate Image and Corporate Reputation
character for product, defined in terms of packaging, colors, symbols etc., that distinguish it from other products provided by competitors (Kwon, 2005).
Importance of Branding
Great branding along with marketing and advertising can achieve 1) Greater credibility 2) Motivation to the consumer 3) Setup user loyalty showing confidence that the customer has towards the branded product. 4) Deliver the necessary message clearly => communicates information about the product and the way you do business (Lilien & Rangaswamy, 1999).
Microsofts Brand Reputation Related to Empirical Literature of the Corporate Identity, Corporate Image and Corporate Reputation
A brand is thereby not something to be considered lightly and every business should and will have a brand profile. The brand should be given focus, attention and should undergo innovation in all aspects so as to give the company the above mentioned advantages and many more as well. Branding can help springboard the company forward thereby giving the firm a competitive edge. Lets move on to see in detail the importance of branding considering different areas (Lilien & Rangaswamy, 1999).
Microsofts Brand Reputation Related to Empirical Literature of the Corporate Identity, Corporate Image and Corporate Reputation
New Products
Having a good brand image makes it easier to introduce new products that have the brand name of its existing older products. Customers loyal to the older products know that the brand is of great quality, reliability and repute and will have no problem trying out the new products. Consider for e.g. Heinz regularly introduces new products into the market. Customers trust Heinz as a brand owing it to their high quality and packaging and are hence like to try the new products as well. This explains how a brand image can propel the companys profits. Moreover, by introducing a new product in the brand, it indirectly acts as promotion to the already existing products (Brnn & Ihlen, 2009).
Brand Loyalty
Brand loyalty can be defined as the customers commitment and faith in the brand to make repeated purchases in spite of market pressure from other competing brands. E.g. Apple has a huge customer base that is willing to overlook other developments and only buy apple computers and tablets. Brand loyalty helps the company attain stability and enables better use of resources. Some of the key factors influencing brand loyalty may include perceived value of the product, trust, satisfaction and repeat purchase behavior. When brand loyalty is achieved, the firm can use this loyalty to sell its products at premium prices. However a premium prices does not mean an unreasonable price. In order to maintain brand loyalty, the seller has to ensure that the prices are kept reasonable (Moingeon & Soenen, 2002).
Microsofts Brand Reputation Related to Empirical Literature of the Corporate Identity, Corporate Image and Corporate Reputation
example of a branding in the public sector that aims at providing health care to all the corners of the nation. Since NHS does not seem to be involved in the profit making business, the competition against the organization is nothing short of zero (Melewar, 2008; Schmidt & Ludlow, 2002). As mentioned earlier, every organization should understand the essence and expression of its brand. The main aim of NHS is to spread awareness and understanding among the people towards safe sex practices by placing ads on TV or through newspaper adverts. The flashing of the NHS brand name on TV brings about an immediate understanding that a lifesaving venture is to follow immediately. Such ventures are taken seriously even though there is no profit involved thereby enabling NHS to reach its goal of saving lives. Customers today live in a world filled with branding. It would be wrong if the public sector did not move along with the changes induced by time (Haig, 2011).
Microsofts Brand Reputation Related to Empirical Literature of the Corporate Identity, Corporate Image and Corporate Reputation
Microsofts Brand Reputation Related to Empirical Literature of the Corporate Identity, Corporate Image and Corporate Reputation
Open source allows users to view, modify and redistribute software. This in turn has had a major impact on the bargaining power of suppliers. Suppliers of software applications have been reduced to the bare minimum. In order to reduce cost, most of the supplier support backward compatibility thereby reducing costs. Bargaining power is still present for those brands that have concrete brand images and brand names like that of computer chips, processors and operating system. Other than for these few components, the bargaining power in the industry has been severely diminished (Riel and Balmer, 1997). From the buyers point of view, the availability of products is immense with the increasing number of suppliers and the products they offer. This gives the buyer decent purchasing power as in the buyer has the ability to choose from a load of product offerings, designs and the major advantage being that most of the offerings have similar features e.g. personal computers. Products that use proprietary software are unique and provide an exception to this case e.g. Apples iOS, Linux. The technology industry is so versatile and so fast growing that even the five forces namely external factors that affect the visibility of the industry, new competitors, existing competitors, buyers and suppliers cannot prevent profits from being generated for new, innovative and likable products.
Driving Forces
The main driving forces that impact any industry are government regulations, customer base and innovation. This holds true from the technology industry as well. Of late, the Internet has been another driving force with the potential to be the most dominating force in the industry. Web based applications that are easy to use and have a decent user interface can be accessed directly from home has been the biggest change in Internet recently, along with word processors, excel sheets and presentation capable applications. It is mandatory that the seller keeps his products up with the trend and never lag behind (Wheeler, 2003).
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Microsofts Brand Reputation Related to Empirical Literature of the Corporate Identity, Corporate Image and Corporate Reputation
With the steady inflow of new, improved and better products into the market, product innovation should be considered as the most important driving force in the technology industry. Any new innovation from another product should be countered with a more innovative cost effective solution in order to maintain the existing customer base and to sustain customer loyalty, an ever diminishing characteristic. In the technology driven world of today, competition keeps the prices down. This is based on the fact that the consumers are willing to try out new products and are even getting tech savvy. People crave for newer better products thereby creating opportunities for the development of new desirable products (Wheeler, 2003).
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Microsofts Brand Reputation Related to Empirical Literature of the Corporate Identity, Corporate Image and Corporate Reputation
Strategy
Predicted Moves
Apple
Continue to successfully launch new products into the market Launch cloud computing operating system to compete with Microsoft Windows Continue innovation and improving products to gain market share
Linux
Low-cost provider
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Microsofts Brand Reputation Related to Empirical Literature of the Corporate Identity, Corporate Image and Corporate Reputation
Success Factors
Innovation is the key to success in the technology industry. Releasing new products to counter the new ones that enter the market everyday requires planned innovation and effort. Without innovation, it is impossible to maintain brand loyalty. A perfect example would be the downfall of Nokia and Alcatel due to their lack of innovation and insight in the smart phone industry. However, innovation alone does not guarantee success. Distribution plays an equally important role. New advertised products should be available easily to the customer. If marketing and distribution is ill managed, customers may move on other products that are more easily available and that meet their requirements.
Brand Attractiveness
The hip and happening nature of the technology industry is mainly due to its fast paced growth, competition and market size. New products are welcome in this market and this makes competition extremely intense and challenging. Just like every other industry, the technology industry lots of issues and concerns. Prominent among these concerns is software piracy. Even though piracy is illegal and punishable by law, preventing software piracy is no easy task (Riel and Balmer, 1997). Software giants like Microsoft lose millions of dollars every year in software piracy and have even introduced their own initiatives to prevent the same. Even though various measures like use of code keys, hardware codes and anti-piracy software's have been introduced, piracy still seems to be happening extensively. The technology industry is already massive but there still seems to be room for growth as there is always a demand for better more innovative products.
Microsofts Brand Reputation Related to Empirical Literature of the Corporate Identity, Corporate Image and Corporate Reputation
Microsofts Vision to enable people and businesses throughout the world to realize their full potential. Objective Microsoft plans to make its vision come true by "creating technology that transforms the way people work, play, and communicate.
Qualitative Analysis
Microsoft has always allocated sufficient funds in the areas of research and development. R&D fosters innovation which is extremely important to stay alive and competitive in the industry. Microsoft has also invested significantly in order to purchase technologies, acquire companies and invest in intellectual property rights. Although Microsoft is headquartered at Redmond, Washington, the company has taken steps to improve innovation on a global scale by setting up facilities all over the United States of America as well as other countries like China, Denmark, India, Canada etc. and many others. This not only helps innovation but also helps Microsoft employ the best talents from all over the world thereby remaining competitive in local and international markets through innovation and better distribution. Microsoft has employed a structured three-part process that provides context for defining initiatives, plans for measuring change, and demonstrating business value. This methodology 14
Microsofts Brand Reputation Related to Empirical Literature of the Corporate Identity, Corporate Image and Corporate Reputation
results in a prioritized portfolio of opportunities, a program for change and value prediction, and also in value realization globally as well as locally (Riel and Balmer, 1997). Microsoft has taken various steps and measures to increase customer satisfaction and to localize products and services. Call centers have been set up all over the world so that a higher level of support is provided to customers as the staff can relate to and better understand the local culture and sentiments. Microsoft has also planned to become more aggressive by reducing the prices of a lot of products from the ever famous Windows to their office products and Internet services.
Financial ratios 2009 Net profit margin Debt to Equity Return on Asset Current Ratio
24.93 percent
0.29
18.71 percent
1.82
2008
29.26 percent
0.18
24.29 percent
1.45
The above table throws some light onto the financial reports of Microsoft. As it can be seen, the profit margins remain high even though 2009 saw a massive economic recession. The debt is minimal with respect to the returns and these shows why and how Microsoft continues to be the stronghold of the technology industry.
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Microsofts Brand Reputation Related to Empirical Literature of the Corporate Identity, Corporate Image and Corporate Reputation
Public awareness and building of company image through advertising, sales and marketing is mandatory and Microsoft has allocated funds to ensure this as well. Microsoft Windows is the desired OS used by most multinational organizations because the support services provided and its compatibility with other softwares make the product worth it (Haig, 2011). Owning a product such as Windows requires great distribution capabilities. Microsoft maintains a good rapport with its suppliers and distributors and uses SAP Supplier relation Management and Customer relationship management to ensure that the products are always visible and are never lagging in the competitive market. Multiple programs have also been introduced to reduce the operational expenses incurred during production thereby allowing the product to be sold at a lower rate. One such program is the Resource Management program. This helps tackle the issue of easily available open source applications in the marketplace. The support activities help maintain customer satisfaction and increase customer loyalty and are currently in place all over the globe thereby increasing performance of the entire chain (Haig, 2011).
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Microsofts Brand Reputation Related to Empirical Literature of the Corporate Identity, Corporate Image and Corporate Reputation
Weight Microsoft Score Google Score Market share Innovation Distribution Marketing Total
Apple Score
Linux Score
8 7 9.5 7 31.5
6 8.5 8 2 24.5
4 9 6 9 28
2 8 3 1 14
Table 3.0: Weighted assessments of Microsoft competitors Google is the company to watch out for with its exponential growth when compared to the other organizations. Focused on web development, applications, smart phones and cloud computing, Google seems to have it all figured out towards becoming the industry leader over the next few years. Google products are easily available to any customer with access to Internet. This eliminates the need to even have a separate budget for marketing. In the tech industry, customers can choose from a variety of products. It is important that these products are distributed and available easily. The marketing budget of Microsoft ensures easy availability of the product and hence the market share of Microsoft is extremely high. Microsoft is not the only company with significant investments in distribution. Apple has also joined the league by making its products available online and in major stores/malls all over the world. Linux is a little low on the distribution front and needs to improve in this area in order to gain market share.
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Microsofts Brand Reputation Related to Empirical Literature of the Corporate Identity, Corporate Image and Corporate Reputation
Implementation Recommendations
In order to facilitate continuous growth Microsoft needs to invest in R&D, innovation, retaining of top talent and recruitment of new talent to come up with new fresh innovative ideas. Recruiting should be done in a cost effective manner. Supplier Relationship Management should also be given utmost importance and a good rapport needs to be maintained with the distributors of products and services as they are one of the most important success factors in the industry.
Budgets
Research and innovation is a key to the success of an organization in the technology industry. Sufficient budgets should be allocated in the research and development labs of the organization in order to promote innovation. Along with retaining top talent, recruiting new skilled talent also helps in the growth of the organization. This can be achieved by providing sufficient budget to ensure this to the HR team. Microsoft Bing has entered the market but has not yet generated the buzz for people to move from Google to Bing. Improved marketing strategies have to be defined in order to increase the use of Bing and to prepare for the launch of Azure (Wheeler, 2003).
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Microsofts Brand Reputation Related to Empirical Literature of the Corporate Identity, Corporate Image and Corporate Reputation
Microsoft has placed its hands on almost all sectors in the technology industry and has not failed in any of its activities. Be it innovation or marketing and sales strategies, Microsoft has excelled in all of them and has provided quality services and products thereby generating a massive customer base. Microsoft continues to be a market leader and a great source of investment for shareholders as there are no signs of the company wearing down. There are only prospects of growth and prosperity for the years to come.
Brand Strength
Brand strength can be defined as the strength of the consumer demand for a brand, relative to the competitor. A unique brand personality and a unique brand identity are the key requirement mandate to building brand strength. Brand identity is however always mixed and confused with brand image. The table below shows the difference between brand image and brand identity (Aaker, 2004). Brand identity is a more complex, richer and more significant concept to consider when creating a brand. A brand is not all about appearance and brand strength emphasizes on this (Aaker, 2004). Brand Image Appearance More on the receivers side Passive Reflects superficial qualities Backward looking Tactical Associations already there Brand Identity Substance More on the senders side Active Reflects enduring qualities Forward looking Strategic Associations aspired to
Microsofts Brand Reputation Related to Empirical Literature of the Corporate Identity, Corporate Image and Corporate Reputation
Based on the above table, brand image can be defined as the value that customers have in their mind for the brand and brand identity is what the product really is. Rather than have a strategy to build a brand image, companies should focus on strategies that build brand identity. In order to ensure brand image and identity are aligned, specific strategies are needed to be rolled out and sincere management efforts have to be put into place. In order to fix the brand, a complete study has to be done to understand where the product stands in the market at present and how its image can be aligned with its identity (Aaker, 2004).
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Microsofts Brand Reputation Related to Empirical Literature of the Corporate Identity, Corporate Image and Corporate Reputation
In the corporate world, procurement of products is greatly influenced by brand personality. Research has shown that computer buyers rate hardware and software companies based on various dimensions of brand personality.
Conclusion
To summarize, branding strategies play an extremely important and significant role in achieving product success, customer loyalty and in keeping the product alive in the intensely competing market. Based on these findings, it is our sincere request to anyone interested in the selling of products in the technology industry to plan and define a brand identity and strategy about what the product is what it plans to be and how it can be differentiated from those available in the market. Dont underestimate the importance of a likable personality: Likability is a key factor to bridge the gap between the customer and the brand. It is one of the most underrated parts of the technology process. Don't underrate brand personality: It is near impossible to create a brand that appeals to everybody. Such an attempt should be avoided. Brand personalities are bound to attract a certain group of people. A successful brand personality is one that does not try to cater to everyone but to specific group. Dont be misled by research that appears to diminish the role of personality: Based on results from quantitative research, it is clear that functional attributes are responsible for product consideration and procurement. However quantitative research alone does not cover all scenarios. A qualitative research is required as well. This will help pin point and better understand brands and their personalities and how they help in the overall branding of the organization.
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Microsofts Brand Reputation Related to Empirical Literature of the Corporate Identity, Corporate Image and Corporate Reputation
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Microsofts Brand Reputation Related to Empirical Literature of the Corporate Identity, Corporate Image and Corporate Reputation
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