Conference Proceedings
15th Toulon-Verona Conference "Excellence in Services"
College of Management Academic Studies, Rishon
Lezion, Israel, 3-4 September 2014
pp. 319-331 - ISBN: 9788890432729
MARKETING COMMUNICATION STRATEGIES IN LOW COST, LOW
PRICE, HIGH VALUE SERVICE COMPANIES.
Annamaria Esposito, IULM University of Milan, [email protected]
The following paper aims to investigate marketing communication behaviors in support of low cost,
high value strategy in online service companies and to explore the way of creating consistency
between price, quality, perceived value, and brand values.
The paper investigates objectives and main activities of marketing communication in online service
companies adopting a “low cost, low price, high value” business model i.e. strategies, messages,
and media used by service companies to communicate and promote low cost high value services.
The paper follows a case studies research design approach. The multiple case studies method design
offers a proven tool for achieving a deep understanding and a picture of marketing communication
in some service companies joining in the Italian Low cost companies association “Assolowcost”.
Introduction
In recent years in Italian consumption markets for products and services two attitudes have
emerged: on one hand the search for high quality and, on the other hand, the development of “first
price”, which made the economic competitiveness their weapon more convincing.
This second trend stems from the awareness that a low price is no longer synonymous with poor
quality. Those who purchase low cost services, in fact, do not necessarily belong to the poorer
segments of the population, but are consumers guided in their choice by components ethical,
ideological or personal. Consumers feel in step with the times and rewarded if they buy products
low cost, because these are considered the symbol of smart purchase (Codeluppi, 2009).
The subjective component of the customer is key: when it comes to “low cost - high value” it refers
not necessarily because the objective quality of the service, but its perceived quality. The service
thus becomes attractive not only in terms of “value for money” but also “value for me” according to
the emotional attachment that generates the consumer.
The “low cost - high value” not only involves reducing production costs, logistics and distribution,
which are essential for any company, but also marketing communication strategies. Develop the
philosophy of “low cost - high value” leads to a real business model that requires companies to
dialogue with their customers.
Starting from 80s arrived in Italy the Irish Ryanair, the German hard-discounters Lidl, the Swedish
IKEA stores and fast fashion H&M, the French sports superstore Dechatlon, the Spanish fast
fashion Zara, the Dutch financial services Ing Direct, the British McArthur Glen outlets and Direct
Line Insurance.
Nowadays, because of the economic downturn and financial crisis, “low cost” service consumption
in Italy is increasing. In 2011, the sector recorded an increase of 7.43% over the 2010. For 2012 is
expected to grow between 5 and 7%. In absolute terms, the services that are more growing in Italy
are insurance (+19%), financial services (+7%), and health, which is expected to have a real boom
(+70%) (Datacontact, 2011).
There is no a recipe for success, but an ingredient must be present: the intimate understanding of the
“fundamental value” offered with the service to the customers.
Companies, to survive, have to offer a service best in class and have to communicate it to engage
ever more consumers.
Literature review
Marketing communication
Marketing literature has made and continues to make major contributions to the evolution of the
concept of marketing communication. Marketing is a dynamic discipline, constantly evolving and
promoting companies competitive innovation (Kotler, Keller, 2006).
In the past the terms Marketing and Communication were often used as synonyms to refer to
advertising. This approach is disappearing as the marketing communication is developing a
strategic role within the companies communication process.
The marketing communication is the link between marketing and corporate communication: on one
hand it is a very important lever of the marketing mix and through it organisations meet their
marketing objectives (Shimp, 2010); on the other hand it is a tool of the corporate communication
policy. Its task consists in managing relations between companies and the market, and creating
value, loyalty and confidence to gain a long-term sustainable competitive advantage (Kotler, Keller,
2006).
According to the literature review, marketing communication is a system of management tools
establishing, organizing and developing long-lasting relations with actual and prospective
customers; it is the brand’s voice (Aacker, 2011) having the objective to explain to consumers the
benefits deriving from the offered product or service, providing information concerning the
enterprise and the brand, increasing its strength and improving its image (Kotler, Keller, 2006).
So, the marketing communication is a powerful medium to connect a brand with other brands,
people, events, places and real or virtual experiences.
In Europe the marketing communication, is the communication area which has seen the biggest
growth and attracted research activities since the market has always been the priority for enterprises
(Egan, 2007).
Its borders are expanding because: marketing communication is increasingly applied in contexts
differing from traditional ones, enriching its contents and tools, widening its objectives and
attainable targets.
In the services market the concept of interactive marketing (Grönroos, 1984) is very important: it
seeks a transaction or a measurable response in terms of opportunities for interaction with the
customer (Kotler, Keller, 2006).
The nature of marketing communication is polyhedral. It has a twofold relationship: with the
marketing field, for its primary objective of developing brand awareness and image and boosting
sales; and with the communication field, for the creation and spreading of the enterprise value.
Marketing communication reflects the philosophy with which an organization approaches the
market (Kotler, Keller, 2006), and it is very important that company focuses on listening to the
customer, on understanding the perceptions and perspectives to provide the competitive dynamics
that characterize their market.
The company, in a outside-in logic (Kitchen, Schultz, 2003), has to face a customer ever more
complex: a more sophisticated customer, sensitive to technology, and overall more aware of his/her
role. In this context it is important for the companies to be able to offer products and services
meeting the consumers needs and to be able to convince them to buy.
The process of learning from listening to the customer develops an organizational innovation: the
proactive marketing (Matsuno, Mentzer 2000).
This leads to a whole new approach to marketing communication research (Aacker et Al., 2012)
determined by the complexity generated by the proliferation of tools and media, the wide variety of
government to which the company must consult with messages tailored to the characteristics of
each channel and through able to reach them effectively in the world: the integrated marketing
communication.
It goes like this just from a perspective oriented to the promotion given to current or potential
customers a single management, coordinated and synergistic with all the tools and channels
available with the aim to maximize the promotional mix (Mazzei, 2011). "Firms strive to maximize
consistency and synergy among all the promotional mix" (Kitchen, Schultz, 2003:82).
These are the years in which the evolution of media technology and new media (Brioschi 2005), the
fragmentation of mass markets and the consequent shift from mass marketing to segmented
marketing that requires companies to refocus and reset the role and significance the individual tools
of the promotional mix (Kotler, 2006).
The marketing communication concept changes “by a logic focused on business communications at
the product level to the logic of communication across the corporate-level” and “from a culture of
communication to support business decisions in a communication as an integral part of the process
of interaction with the environment” (Grandinetti, 2008, 287).
In an environment characterized by increasing competition, new digital technologies, information
overload, organizations must be able to gain the attention of their target audience. In the era of the
knowledge economy (Rullani, 2004), and experience economy (Pine, Gilmore, 1999) organizations
discover that attention is a limited resource, not purchasable, and that it has to be gained. Only if the
customer is emotionally involved companies can offer a consumption experience (Schmitt, 2003)
able to gain the consumer engagement (Hastings, Saperstein, 2008).
Analysis so far suggests that it is important a thorough and careful management of marketing
communication, since it is through it that companies build networks and interactive relationships
with their customers and prospects (Ostillio, 2009).
The importance of marketing communication is the result of a social evolution process, the
postmodernism, that has significantly affected the mental attitude and behaviour of the customers,
and then, inevitably, reflected in the management of marketing communication.
It is no longer possible to think companies know exactly what customers want and to provide it in
the shortest time in an efficient and profitable way. Consumers don't know what they want, but they
are aware of what they don’t want. Companies should, therefore, offer its customers an alternative
to the least disagreeable as possible and should choose the best way to communicate it: the key to
success is explain to customers what they want.
The last and most specific purpose of marketing communication is to generate information and to
persuade consumers to purchase the goods or services produced by firms. The communicative
contexts enrich and extend the brand name and design, shape and color of the packaging and the
product (Kotler, Keller, 2006), from the point of sale at the booth, from museums to events
(Grandinetti, 2008). These tools should then add the new emerging trends in marketing
communication: viral, guerrilla tribal, experiences, digital communications and social media in
particular comprise a wide range of online tools from the web site banners, forum and blogs that
talk about the company or the products / services provided by it, word of mouth (Mangold et Al.,
1999), forums, chat and discussion groups, rating sites products and services made by consumers, to
name a few.
Social media have defined a hybrid element of the promotional mix (Mangold, Faulds, 2009). In
fact, while they allow companies to communicate to its customers as traditional instruments, they
allow customers to interact directly with each other in conversations that are outside the control of
the firm.
Comes the need for companies to coordinate the discussions of consumers so thet it assumes a tone
consistent with the mission of the organization. In particular, as suggested by Mangold and Faulds
(2009) companies should be able to guide the conversations between consumers through simple but
effective actions, such as: providing much information on business, projecting amusing and
intriguing services, easy to use thinking about to stimulate word of mouth (Dobele, et al., 2007;
Dobele, Toleman, and Beverland, 2005).
Low cost, low price, high value services
The conventional relationship between price cost and quality in retailing is described by Porter
(1985) who affirmed that strategic congruency between price cost and quality occurs when high
services are associates with high price and high operating cost, and low service are associates with
low price and low operating cost (Rosenbloom, Dupuis, 1994) based on the stage of the lifecycle of
service. Based on the wheel of retailing (Holland, 1960), service companies enter in the market as
low cost, low price, low services operators and in the maturity they become high cost, high price,
high services.
This classic paradigm seems to be out-of-dates and replaced with a new business model under the
motto “Less is More”. Services operators, by offering fewer services at a lower cost, are preferred
and highly valued compared with market alternatives.
The Low Cost model breaks away from the paradigm that cheap is synonymous with little value
and redefines the relationship between price and value in an innovative way (Viancos, 2009).
Low Cost model is based on cost cutting but it does not reduce the value because companies are
aware of what is important and what is dispensable for the customer.
The important point about the low cost model is the value concept that goes beyond the economic
value (value per money) and comprises the notion of “customer value” that encompasses ethical
values that guide the actions of the company (Edvardsson, Enquist, 2011).
The low cost business model success is due to specific features i.e.: provide a basic service and sell
separated complementary services if requested; standardize the service production, to obtain
economies of scale; address the offer to the mass market target to assure a certain level of demand;
consider a dynamic conception of the price, that takes into account the need of the customer in
relations with the company’s capacity; invest in emerging markets; have negotiation power with
suppliers; reduce the break even point by converting fix costs in variable ones; implement a short
distribution chain, thanks to the Internet and new technologies that provide an information platform
that is in effect a point of sale (Viancos, 2009); select target or market sectors that are price
sensitive to gain customers with a policy of price reduction; innovate to offer customers solution
which fulfil latent needs; provide customers with a high level of information about the service to
increase word of mouth; engage customers to enhance their role of value co-creators (Prahalad,
Ramaswamy, 2004); realize an intensive communication policy, to incentive demand and to
generate brand notoriety using especially below-the-line actions (buzz marketing, publicity) and
new technologies (Social media, emailing, SMS, blogs).
Marketing Communication is very important for Low cost, Low price, High value services, because
it delivers the service value to the customer. The perception of the value is one of the most
important elements in Low Cost model. If customers don’t think they are getting value for money,
companies have no power. Customers have to believe they are getting value for money.
How do companies do to deliver value to customers? What sort of messages do they have to
convey? Are the price and convenience stressed up?
Excluding some studies on low cost marketing communications tools (Mariani, 2009), in Italy to
date it lacks a qualitative study focused only on the content of marketing communication in Low
Cost business model.
The study results will then draw a picture that represents what are the main themes, concepts and
the prevailing approach to marketing communication adopted by Low Cost service companies. The
results will provide the basis for further investigation of the phenomenon through a phase of
qualitative survey and following quantitative research.
Methodology
Research Design
The research design of this study includes two research questions, and a multiple case studies about
the marketing communication in Low cost service industries.
This research effort focuses on identifying successful marketing communication to convey value to
the customer of Low cost service companies.
Through the study of some Italian or multinational companies operating in Italy and adopting the Low
cost business model, this research strives to analyze the contents that led to successful marketing
communication in low cost service.
Research questions
RQ1: How does marketing communication, in low cost service companies, do to deliver the offer
value to customer?
RQ2: What kind of relationship is there between value offered and price (value for money) to create
consistency between price, quality, perceived value, and brand values?
To answer the research questions the study considers five retail online low cost service companies
operating in Italy, all of them joining in the Italian Assolowcost Association.
The companies are: Ing Direct and Webank in the banking sector, Dialogo and Quixa in the
insurance sector, and the Low-cost carrier Ryanair.
These five companies are chosen because they are direct online retailer, service providers, and have
implemented the Low cost business model. All of them realize in Italy an intensive multi-channel
communication policy, and, as retailer operating in the service industry, their markeing strategies
are based on a relational approach to customers (Gumesson, 1997; Grönroos, 1994).
Research Method
The multiple case studies strategy seems appropriate to the research purposes as it, first, enables to
collect empirical evidence and explanations within the context in which they occur (Miles,
Huberman 1994; Yin 2003). Furthermore, it enables to gather information from more research units
and allows an examination of the marketing communications contents of the selected companies.
Finally it allows to reach conclusions which can be separated from the single case studies (Yin,
2003).
Multiple-case design allows cross-case analysis and comparison, and the investigation of the
marketing communications contents in different settings. Multiple cases are selected to predict
similar results, literal replication, or to produce contrasting results for predictable reasons,
theoretical replication (Yin, 1993).
The data collected are qualitative in nature, therefore a qualitative design will serve best to answer
the research questions of this study.
The case study method seeks to answer exploratory, descriptive, or explanatory “how” and “why”
research questions based on single or multiple case studies (Yin, 2003). The case study does not
require control over the activity or process being studied and is focused on contemporary events
This exploratory study aims to investigate how marketing communications is applied in retail low
cost service companies and choses five retail service providers adopting the Low cost business
model as cases of study in the research. The focus of the study is to understand how the service
marketing communication generates value and consistency between price and values to the
customer.
Multiple case studies research is ideal for looking at research questions, which are closely
connected to their context or situation, which in business is particularly appealing. Research
questions of problems can be explored from perspectives that could be type of business specific, as
it in this study.
No other research method would have allowed a better examination of this topic at this stage of
knowledge about marketing communication in low cost service (Yin, 1993).
The study adopts the data triangulation technique by using a combination of data sources with the
effect that the strengths and weaknesses in each source are compensated when used together. The
aim is to improve the validity of the findings.
Data collection for case studies rely on many sources of evidence including documents, archival
materials, interviews, direct observation, participant observation, and physical artifacts. No single
source has complete advantage over all the others. In fact, the various sources are highly
complementary, and a good case study will therefore want to use as many sources as possible. For
case studies, the most important use of documents is to corroborate and augment evidence from
other sources, in verifying the correct spellings and titles or names of organizations, and in drawing
inferences about the nature of the organization.
Participant observation and physical artifacts have no potential relevance to the present study. The
method adopted for this study involved online marketing communication analysis, (i.e. companies’
websites, commercials, viral communication, buzz, blogs, community), documents analysis, (i.e.
press releases, other documents available on the Italian Assolowcost Association web site),
marketing communication manager interviews.
Findings from multiple case studies
Ing Direct
Ing Direct is the Italian branch of Ing Group, the world’s largest Dutch direct online bank, operating
in Italy since 2001. Ing Direct joins in Italian Assolowcost association and adopts Low cost
business Model. Customer can reach the bank throuhg online or phone contact-center.
Ing Direct offers five different products: savings deposit account with the Orange Account,
mortgage with the family of Orange Mortgage (purchase, replacement and refinancing), investment
products, Current Account Orange and Online Trading.
Simplicity, transparency, and security are the essence of the company that has reached the quota of
more than 1,274,000 customers, a business volume of over 23 billion euros and 700 employees.
Adult men and women, users of the Internet and in general of all services and products online, from
25 to 55 years are the Ing Direct core target. It is suppose that they have a good availability of
income and expenditure.
Ing Direct invests more than 50 million euros per year in marketing and communication: the only
way to Ing Direct of getting in touch with the customers and prospects is marketing communication.
The strategic communication objectives are changed over the time. In the Italian market Ing Direct
has a strong reputation and the brand awareness reaches 94%. For the year 2012 the strategic
objectives of marketing communication are to maintain the market leadership and the level of
customer growth. The communication campaigns are multi-channel, on- and off- line: Ing Direct is
present on satellite and digital TV, traditional ADV, press, Internet (website, web-channel and
banner), social media (Facebook, Twitter, Youtube). Finally, enhanced by the network effects of the
Internet, word of mouth are the most powerful media to deliver messages and values.
Main feature of communication is the use of an immediate, simple, personal, and informal
language, completely different from the other banks. Sometimes it is a real promotional language,
typical of the mass market, (i.e. "Take 6, pay 0"). Marketing communication messages, and its
icon, a big orange pumpkin, aim to evoke either the nature, than enthusiasm and wellness. The tone
of the messages is aimed to evoke sympathy, curiosity, and fun.
Furthermore, marketing communication contributes to build a brand personality that ensures an
impulse buying of banking services as they were commodities.
How does Ing Direct do for debunking the cliché that a low cost service has a low price and
therefore it does not worth very much? All communication messages convey the concept of
security: i.e. the campaign realized for the launch of the Current Account Orange in Italy at the end
of 2011 is based on human billboards in which the customers, lay down in the billboard introduces
himself to people in front of him, as they pass by, and explain its experience to the audience. The
setting brings to mind a very risky situation, nevertheless the customer (He is really a Ing Direct
customer!) is calm, safe and sound while the claim tells “ask those who have it”. (Fig. 1).
Fig. 1: three examples of the human billboard Ing Direct, by Leo Burnett agency, 2011.
Most of the Ing Direct communications are product oriented, and highlight the concept of zero cost
related to the banking services offered, and the interesting rates of returns. The convenience is
underlined but not really stressed up. Analyzing the messages conveyed to deliver value to the
customer and prospects, the real subject of marketing communication, the reason to believe in the
company proposal seems to be the safety of a smart shopping on line.
Webank.it
It's one of the first online home banking service founded in Italy in 1999. In 2009, from an internal
structure of Banca Popolare di Milano, it becomes an independent firm, 100% owned by BPM. It
operates in both a B2B and B2C market, but in this study it is considered only the retail market,
where the offered services are: savings deposit account, prepaid card, investment products,
mortgages, insurance, training on financial topics. It joins in Italian Assolowcost association and
adopts Low cost business model.
The context in which Webank operates is different from Ing Direct one. In fact Webank represents
the online face of a traditional banking group. Security, tradition and excellence are the essence of
the company that has a customer portfolio of over 100,000 direct customers and manages other
400,000 online-credit accounts related the BPM Group customers.
The core target of Webank are women and men 25-50 aged, with a good knowledge of Internet, and
the strategic objectives of marketing communication are to increase the brand awareness, acquire
new customers, and enhance the social-media relations with customers and prospects. On this topic
Webank is very active and reaches the positioning of very first bank 2.0 in Italy. The Internet (webradio, web-Tv, website), social media (as blogs, Facebook, Twitter, Myspace) generate
entertainment, buzz, and awareness, but also online communities are very important: they are tools
to design new products with the community or improve existing ones by listening to their real
needs. The budget of marketing communication is around 3 million euros and depends on the bank
performance.
The marketing communication is primarily oriented to convey institutional values such as
credibility and reliability of the online banking, then to promote the products. Marketing
communication messages use a sophisticated language and its icon, the weird animal
“Cheetahcow”, a mix between cow and cheetah, conveys the message of a bank that ensure with its
product a daily good performance (cow) and, in the same time, the management efficiency
(cheetah) (Fig. 2). The 2011 Tv spot tells audience about Webank as bank able to overcome the
boundaries of human nature, with the benefits of its proposal.
Fig. 2: Webank Cheetahcow and the 2011 ADV.
The messages stress up the unmatched interest rate, but the theme of the marketing communication,
in which lays the reason to believe to the bank proposal, seems to be the concept of power.
Quixa
Quixa S.p.A. is an Italian online insurance company, owned by AXA Group. The company, active
on the market since 2008, offers a new formula for cars and motorbikes, that includes the best of the
traditional insurance, and the benefits of a direct online insurance: on the one hand it offers the
presence of a personal advisor; on the other hand it proposes a competitive price and the possibility
to reach the company online or by phone. It joins in the Italian Assolowcost association and has
implemented the Low cost business model.
Quixa invests 20 million euros per year in marketing and communication and serves 1 million
customers. Quixa strategic marketing communication objectives are oriented to position the
company as a pioneer and innovative, enhancing the relationships with a personal advisor, and to
gain a market share of 10% of the direct insurance companies in Italy in the next 5 years.
The core target are men aged between 35 and 54 years, living in northern Italy and having a good
cultural background, attentive to cost but with high expectations about quality of the received
service.
The company massages are characterized by light and ironic tone of voice, and the spot scenes
represent extreme, paradoxical, and funny situations that unlikely occur all together. Anyway, if
they occurred, Quixa Insurance solves every problem. The communication campaigns are multichannel, on- and off- line: Press, Radio, Internet (website and banner).
The theme of marketing communication seems to be security and messages stress up the saving,
(pay less than other insurances) (Fig.3).
Fig. 3: Quixa launch Press ADV.
Dialogo
Dialogo is the online and phone insurance company owned by Fondiaria SAI Group, the third group
in the Italian insurance industry, leader in non-life sector with a market share of 20%.
Dialogo joins in Italian Assolowcost association and adopts a low cost business model that ensure a
new way to make insurance: more dynamic, and with an offer of insurance policies, based on the
principles of cheapness and simplicity. In a few years after it has earned the trust of 500,000
policyholders who choose its offers for several reasons, first of all the saving in respect of the other
insurances.
Dialogo invests 20 million euros in marketing communications, and main strategic objectives are to
create brand value and increase first contacts with prospects.
Men and women with no accidents are the core target of Dialogo insurance. The commercial
represents the target as a “works of art”, and proposes an identity between subject (customer) and
object insured (car or motorbike). The message stresses up the 50% off in the price of the insurance,
and the reason seems to be that it is not correct that everyone pays the same for insurance and it is
correct to reward who worth it (concept of justice). The campaign reaffirms the leadership of
Dialogo in the insurance field, where competition on price is taking on greater significance and,
secondly, to strengthen the empathy established between the company insurer and insured. (Fig. 3).
So, the value coveyed by the marketing communication is the “customer value” and the claim is
“the insurance where you’re worth it”. Beyond the Press, Dialogo is active in Social media as Blog,
Facebook, Twitter and Youtube.
Fig. 4: Dialogo Insurance Press ADV.
Ryanair
Raynair the Irish low-carrier airline is active in the flight field since 1985. The company operating
in Italy since 2004, is the first ever low cost carrier, and has reached in Italy a position of strength:
it is the first carrier for ten Italian airports, domestic flights on 50 routes prevail in 27 cases and a
total carrying 6 million passengers on domestic routes and 16 Italians on international flights. The
company joins in the Italian Assolowcost association and adopts a Low cost business model.
The strategic marketing communication objective of the company is to increase the number of
customer, because the Italian market is not yet saturated.
The company invests in Italy 2 million Euros in marketing and communication in the business for
consumers, in above and below the line activities, developing every month, in-house, about 30
campaigns for promoting destinations on Press, on the web, and outdoor near airports where the low
carrier flights. The expenditure represents 10% of the budget for the southern Europe.
Ryanair is used to launch “controversial ADV” to generate buzz and publicity, that could also
produce negative effects on brand reputation. The marketing communication is delivered through
parody, screwball comedy, aimed to generate fun, sympathy, unconscious reminiscence, and
collective word of mouth about the very first online low carrier.
The last ironic web message on the homepage of the company invites Italians to fly to Spain
offering low cost flights, after the defeat in the finals of European Football Championship. “If you
can not defeat the enemy, make him a friend” (Fig. 5).
Fig. 5: Ryanair “Make him a friend” ADV.
Unaware testimonial of Ryanair advertising were the former Italian Prime Minister Berlusconi, the
former French president and his wife, Valentino Rossi, the soccer coach Capello, the Spanish Prime
Minister Zapatero and also the waste scandal in Naples. Even if, without doubts, the main message
is the cheapness of the “no frill” price. Marketing communication does not explain the reason why
the offer is so cheap.
Discussion
The first research question of this study relates to how marketing communications, in low cost
service companies, deliver the offered value to the customer. The multiple case studies show that
Marketing communication opens a market space for those companies who want to build or rebuild
empathic relationships with customers and prospects. Relevant amount of money is allocated in
marketing and communication budget. The study highlights that marketing communication budgets
are spent to create communication that boost the brand equity, increase the brand awareness,
maintain the market leadership, make prospects to become customers, to enhance retail promotion
designed to increase service sales without discounting. It is clear that budgets are not spent to
realize price promotion.
The marketing communications, inspiring many of the current offers in the “low cost-high value”
service markets, are more and more smiling, ironic, and democratic.
Marketing communications stimulate unconscious reminiscence, and collective word of mouth,
utilizing a light, funny, and sympathetic tone. Messages use a clear, easy, and immediate language,
sometimes typical of mass market retail promotion.
The Low cost service companies do not propose the classical concept of “value for money”, but the
new concept of “value for the customer”. The values, the reason why to believe in the offered
service, are different time to time. They are represented by the customer experience and the safety
(Ing Direct), by the time saved thanks to a online current-account and the power (Webank), by the
presence of a personal advisor and safety (Quixa), by the value of the customer and justice
(Diaologo), by the very low price, cheapness, (Ryanair).
Multiple case studies highlight that only one in five cases, low price is the reason why to believe the
company offer. The value ensured to customers may be represented on a continuum line where:
highly tangible service values are placed at one end of the continuum, and highly intangible service
values are placed at the opposite end. Furthermore multiple case studies show that cheapness of
price is not always express in marketing communications or, if it is, is not stressed up.
The second question investigates the relationship between value offered and price (value for
money) to create consistency between price, quality, perceived value, and brand values.
The author proposes a matrix in which the two dimensions are considered (Fig. 6).
The matrix highlights four areas where are combined the four possible relationships between
cheapness and value.
Trying to allocate the five studied company in the matrix, it emerges that, among the five
considered, only one (Ryanair) offers a value represented by low price.
The other companies are on the top of the matrix where prevail intangible values and the cheapness
(saving) is explicit in the messages of insurance companies and almost completely implied in the
messages of banking companies, that stress the performance of their “product”. No company is
located on the lower left quadrant.
It could be possible represent how much the cheapness of the price is stressed up by the company,
adding a bubble in which insert the name of the company, so that the more the price is stressed up,
the more the bubble will be large.
The managerial implication of this study is that price promotion, in Low cost High value business
model, is not a way to convince customer to buy and to convey values. Price promotion could
spread the idea of a low quality of services. Although it has benefit in short-run by price promotion,
it appears not to be accord with Low cost high-value business model, and will reduce brand
reputation in the long- run. Managers should not use the price promotion as far as possible.
The study represents the first step on the topic of marketing communication in Low cost companies.
Further efforts are needed in order to refine the investigation in other low cost context, to develop
new research tools, and to consolidate the evidence of this study
Qualitative research strategies are recommended because they proved to be useful in making
possible the close observation of marketing communication dynamics.
Fig. 6: Matrix of relationship between price/quality (value for money) and perceived value/brand value (value for
customer).
Source: Author’s elaboration.
Conclusions
This exploratory study strives to understand how marketing communication, in low cost service
companies, deliver the offer value to customer and what kind relationship there is between value
offered and price (value for money), to create consistency between price, quality, perceived value,
and brand values.
The study adopts the multiple case studies research method to realize an in-depth analysis of the
phenomenon.
The study analyzes marketing communications of five Low cost companies in service industry, and
highlights the main concepts emerging from the company’s messages that are delivered to
customers and prospects.
Then, the study proposes a matrix to gather the relationships between pricing issues and value
proposed by marketing communication messages.
The study underlines that “Low cost” can be defined as “high value” for the consumers. It is
important not to confuse the low cost high value strategy with a simple low price ones and it is
crucial to understand how marketing communication takes place.
Nowadays promotions are not sufficient to attract customers: promotions reduce the market, both
for industry and for the distribution, the consumer cognitive loyalty, as behavioral loyalty is
maintained by promotion to ever higher costs (Pellegrini, 2009).
There is another way, related to innovation, that companies often have overlooked: communication.
It is, ultimately, the communication that inspires many of the current offers in the “low cost-high
value” market: conveying intangible values which are definitely the reason why customers believe
in low cost companies and buy their product.
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