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Final Communication Plan

for
Staying Competitive
Katelyn Gandolfo, Devin Larsen, Ishaan Mehta, Pancho Ortiz, Julian Verduzco
Team: 78

Table of Contents
Executive Summary ......................................................................................................................................................................... 3
Diverging Narratives .................................................................................................................................................................... 3
Situation and Background .......................................................................................................................................................... 3
Analysis & Results ......................................................................................................................................................................... 3
Recommendations & Response................................................................................................................................................. 3
Introduction ......................................................................................................................................................................................... 4
Conflicting Narratives .................................................................................................................................................................... 4
Microsoft’s Narrative ................................................................................................................................................................... 4
Consumer Narrative ...................................................................................................................................................................... 4
Situation and Background ........................................................................................................................................................... 5
History of Product Failure ......................................................................................................................................................... 5
Failed Mobile Market pursuits ................................................................................................................................................. 5
Analysis .................................................................................................................................................................................................. 6
Threats ................................................................................................................................................................................................ 7
Opportunities ................................................................................................................................................................................... 7
Recommendations ............................................................................................................................................................................. 7
Recommendation #1: Celebrity Endorsements .................................................................................................................. 7
Recommendation #2: Development for Mobile Market Re-Entry .............................................................................. 8
Communication Channels and Message: ............................................................................................................................. 8
Recommendation 1: Celebrity Endorsements .................................................................................................................... 8
Recommendation 2: Development for Mobile Market Re-Entry ................................................................................ 9
Responses .............................................................................................................................................................................................. 9
Recommendation #1 Timeline & Budget .............................................................................................................................. 9
Recommendation #2 Timeline & Budget ........................................................................................................................... 10
The Future of our Pursuits ....................................................................................................................................................... 11
Appendix............................................................................................................................................................................................. 12
Reference: .......................................................................................................................................................................................... 13

Executive Summary
Diverging Narratives
Through analyzing the internal and external narratives, we have found a key issue of consumers
viewing Microsoft as lackluster in the area of innovation causing a great amount of lost revenue.
We found that, because of our focus on innovating through well-developed operating systems
and lack of proprietary products to show our operating systems, the external narrative diverges
from our own. This has affected Microsoft’s main stakeholders but mostly our image as an
innovative company. Through this, we have determined that our recommendations will speak to
two main stakeholders; the media and the consumers.

Situation and Background


Microsoft has been described for years as lacking in the area of innovation. Leading up to the
situation at hand are a series of product failures and mobile market entry failures. Whether it be
the weakly advertised Zune or the massive loss that was the Nokia acquisition, Microsoft’s name
is consistently associated with failure in the product realm. This has yielded us a dismal aura of
innovation in the eyes of the consumer and may seriously hurt future business.

Analysis & Results


The mobile market is expanding at an alarming rate and Microsoft has nearly no part in it.
Furthermore, given our history of weak advertising support for our products, the Surface line is
at risk of becoming obsolete as our competitors continue to innovate. Our absence in the mobile
market is not only lost revenue but as time goes on the market becomes more unattainable. To
change our image there are some key opportunities that we can exploit. We can use the criticism
that would come with any new Microsoft product and turn it into praise if the product is
innovative. We also know that the Surface line is the only key competitor to the Mac series, but
it has only reached the attention of early tech adopters. Pushing this product mainstream could
mean a great increase in revenues

Recommendations & Response


Our recommendations are designed to re-draw the attention of consumers to our products.
Microsoft believes that strong celebrity endorsement can boost the sales of its existing products.
Careful selection of strong celebrity role models can entice consumers from numerous
demographics. The other recommendation comes in the form of an entirely new mobile device
and the support around it (OS & Marketplace). If done correctly this could completely change
the public perception of us and dispel any criticism.

With $2.5 billion going towards a five-year endorsement campaign we can expect a return of
around 20%. The new mobile phone would bolster a price tag of $30 billion over five years with
an expected return of 15%. Distributing it to the phone itself, a buzz campaign and a new
operating system provides us with a solid basis to build on. Each recommendation comes with a
hefty price tag but can easily change the face of the company and make us a global leader in
something other than software.

Introduction
Our team has explored Microsoft’s separation of narratives which has led us to understand the
key issue that Microsoft is perceived as lackluster in the area of innovation. Our company does
not market its products well enough and is absent in mobile phone markets which reinforces that
viewpoint and results in lost revenue. In the software realm we are a leader, but what our
consumers expect is something we don't deliver as of yet. We are missing an opportunity to
break into a new market and the window is becoming smaller as other companies develop their
products further.

This paper will be structured so that we can build to the issue through looking at narratives, as
well as, the background and situation. Then an analysis of these pertaining to the issue will lead
into the recommendations we have found. Finally, we can look at the response which wil consist
of timelines and budgets for each of the recommendations.

Conflicting Narratives
To fully understand why Microsoft should be seeking this change we need to look at what we try
to show the customers and how the customers feels about Microsoft and its operations. It’s
through this analysis that we can see the situation that presents us with a grand challenge, but
ultimately, an opportunity to impress.

Microsoft’s Narrative
Microsoft is the world’s leading software company; making innovative software for the world’s
technology consumers since 1980s with MS-DOS. Since then we have made it our mission to
continually innovate for the sake of all of our customers; consumers and businesses.

“...to empower every person and organization on the planet to achieve


more...”

Microsoft innovates daily and wants our customers to know that our software is being developed
and improved for them. We spread out our message of innovation through all of our subsidiaries
such as LinkedIn, Office Suite and Skype.

Consumer Narrative
To put it plainly, the consumer believes Microsoft to be a lackluster company when compared to
its competitors. Over the years the consumer has received products from us that have not lived
up to their expectations. Those from Microsoft include the Microsoft Kin, Windows Mobile OS
and Zune; all of which failed by design or just the fact that they failed to keep up with the
changing market.

With Microsoft currently underrepresenting its products and being completely absent from the
mobile market, the customers cannot gauge our level of innovation. Instead they have software

updates to their Dell Laptop or to their Microsoft Word, neither of which they are willing to
show off. They in turn look to our past and see the pursuits that have let them down, thus,
creating the image of a lackluster Microsoft.

Situation and Background


To better understand the roadmap to the road map to our lackluster image, it is important to look
out our previous performance in the product realm. This is where we can see our rich history of
disappointing the consumer. Each of these past examples relates directly to the recommendations
we are giving by showing exactly we fail in these areas. We are on a new page in our company, a
new CEO and new revenue for our innovations in the Cloud, we are more than capable of
improving where we have formerly failed.

History of Product Failure


Each attempt that Microsoft has made to break out of the software realm and into the technology
market has been extremely lackluster and often a failed attempt. These products and new
developments have struggled with being competitive in the technology industry when facing
giants like Apple and Samsung.

For example, the Zune came to the market five years behind the IPod in 2006. The IPod was a
true innovation after the CD Walkman from Sony, it had five years to use that hype to boost its
revenues. Looking at a simple Google Trend analysis (Fig. 1) we can see a clear separation on
search interest with the Zune yielding far less than the IPod over its lifetime. Microsoft did not
invest enough in keeping the Zune up with the market and soon the market had moved on. This
eventually yielded a market share of 1% compared to the iPods 95%, a direct result of the lack of
quality marketing for its product.

iPod Zune


FIGURE 1 – GOOGLE TREND ANALYSIS

Failed Mobile Market pursuits
Without question, one of the largest, if not the largest, loss that Microsoft has ever incurred was
that of the Nokia acquisition. From nearly the start of Microsoft’s pursuits in the mobile industry,
Nokia had a 90 percent market share of our mobile OS by using it in their phones. With rumors
of switching to Android, Microsoft took action by acquiring Nokia both to ensure that our mobile
OS had a market and an attempt to vertically integrate.

Microsoft then created former Nokia phones under its name, phones such as the Lumia. With its
own hardware and the software to fill, Microsoft sought to replicate Apple’s success in the
mobile industry. Though, taking a look at the sales roadmap of the Nokia / Microsoft merger we
see a nearly 80% decrease in sales; from Nokia’s high of around 110m down to a mere 20m (Fig.
2). The market share of our OS is now .1%, falling quite short of our intended competitor, Apple,
who falls at 14% or the industry leader, Android at 86% (Fig. 5). In the end Microsoft realized its
mistake and sold Nokia out for a total of $350 million, but when compared to the purchase price
of $7.9 billion, a consumer can easily see just how Microsoft handles a market entry.


FIGURE 2 – N OKIA / MICROSOFT S ALES

While the Nokia merger was the main contributor for Microsoft’s firm departure from the mobile
phone realm, its mobile support was also weak. The Windows Store had very few 3rd party apps
and very few Microsoft developed apps, causing people to lose interest when comparing to other
phones. Microsoft no longer provides support for the phones already sold further tarnishing our
image to the consumer.

Analysis
It is exactly this history of dying products and failed business that has bolstered Microsoft a sour
view in the eyes of the public. If we were to make a quality product, would we invest enough to
make it a mainstream product? Or, rather, would it end up being outpaced by our competitors’
products. Will our next attempt at a phone be innovative and well supported with its OS and
Store? Or will it be lackluster to the consumer just as it has before. The image we have presents
us with some serious threats but also presents us with lucrative opportunities.

Threats
We currently have a strong product line through the Microsoft Surface with it being considered
one of the only key competitors to the Mac and iPad series from Apple. Though, given our
history, this product could fall out of the public eye with a lack of marketing and support. If
Microsoft does not prioritize updating and supporting this product, competitors might move on,
taking the market with them.

We are also missing the possible revenue that comes from the mobile market. We are a large
company with a great number of resources who could be competitive in this industry given the
right amount of funding. The longer we stay out of this market, the harder it will be to actually
be competitive upon entry. Each of our competitors have new innovations in development and as
these innovations reach the public eye, Microsoft will be further and further from the market.

Opportunities
While these issues are concerning and pose a serious threat to our company, our past failures also
present us with fruitful opportunities. Apple spends over a billion dollars on advertising per year
on average, as a result, their products reach the attention of mainstream consumers. Our products
haven’t reached that mainstream audience yet, meaning, we still have revenues to collect if we
invest in innovative ways to inform the consumers.

Our past endeavors have also contributed to Microsoft being an “underdog” in a sense. Failure
after failure leads the consumer to expect a weak, innovation lacking new product. The news of a
new Microsoft development will surely be met with a slew of criticism but; is criticism not
publicity? Microsoft has the ability to surprise the consumer base if it releases a product that is
truly innovative. We can use that criticism to our advantage by driving sales off the fact that we
beat all expectations.

Recommendations
Recommendation #1: Celebrity Endorsements
In order to change the public view about Microsoft we must increase our advertising for existing
products on different media platforms. According to Tech Opinions, 46% of American
consumers prefer Apple when purchasing notebooks and laptops. When asked why they chose
apple, a majority responded that it was mainly because “everybody seems to have one of their
notebooks/laptops”. It is clear that the majority of consumers are only purchasing Apple
products to fit in with the status quo (Milanesi, 2017).

One of Microsoft’s main products is the Surface, a portable notebook. A majority of the
Surface’s sales are derived from the enterprise market. In order to increase media presence,
Microsoft must work harder to get the attention of new consumers. Even though consumers
recognize Microsoft as a brand, according to Tech Opinions, there are still 10% of consumers
who are not familiar with the Surface products (Milanesi, 2017).

In order to increase Microsoft product sales and publicity, Microsoft should utilize celebrities for
endorsements. Apple is known for using the biggest names in the mainstream media to endorse
their products and we believe that Microsoft should start implementing this tactic. Using
celebrities in our commercials will allow consumers to recall and recognize Microsoft products
more often. This strategy works due to the brain recognizing celebrities the same way that we
recognize someone that we know. If the consumer happens to be a fan, the consumer will believe
the endorsed product is more valuable because it is as if they are receiving advice from a friend.

Microsoft must select celebrities who are leaders in their own industry, innovators, trend setters,
as well as seen positively in the eyes of the public. One example that our group believes would
be one of Microsoft’s top selections is Lebron James. Lebron James is young but has been an
NBA superstar for the past 15 years. His stardom will attract consumers of different age groups
and will boost sales. According to Forbes, a celebrity endorsement can boost sales by 4% almost
immediately (Olenski, 2016). As the campaign continues, we will keep track on current trends
and select who can best represent us.

Recommendation #2: Development for Mobile Market Re-Entry


Our recommendation for Microsoft to remedy its existing internal and external communication
issues is to enter the mobile phone industry. Microsoft should create a buzz campaign in order to
spark interest in the public view for its new product. The product should be able to compete with
the Apple iPhone and the Android market, and the best way to accomplish this is to create buzz
campaigns. Buzz campaigns can include the upload of a sample picture of the new phone onto
the Microsoft website. During the iPhone year of release, Apple released a total of 9
advertisements. However, the week the iPhone was released 1,547 stories appeared in the media,
giving the iPhone an “omnipresent” feeling. This gives consumers the idea that the iPhone has
been around for a while, despite it not having been released yet. (Mickalowski 2017). Microsoft
needs to adapt a similar marketing strategy, the use of buzz campaigns allows for increased
public discussion and media coverage, this in turn leads to higher consumption of product.

Along with the introduction of buzz campaigns and apps, Microsoft should revamp the OS arena.
This means that they should create a new OS system for their Microsoft phone, creating brand
loyalty amongst consumers that enjoy their products. Customers will be satisfied with the ability
to buy Microsoft products that are exclusive to their brand rather than Microsoft outsourcing
their production to other OS manufacturers. Microsoft recently released a new OS for its
Windows operating system. Everything that runs on the OS has to be downloaded from the
Windows Store, suggesting Microsoft is heading in this direction already. (Dempsey 2015)

Communication Channels and Message:


Recommendation 1: Celebrity Endorsements
Communicating these recommendations to the desired target audience will be key to our success.
Our first recommendation, which is to use celebrity endorsements, will be used to reinforce our
position in the technological industry. The use of a celebrity shows the consumers that we are a

popular and trending brand. By using celebrities and other well-known people it will appeal to
the consumer base. Also, it will spark a sense of fandom within the consumer, causing them to
want the product as well. By using these celebrities throughout commercials on any type of
social media such as TV commercials, Instagram promotions, Facebooks ads, etc., we will be
able to reach consumers of all age, race, and gender.

● Message to Consumers: “To inform all consumers, both customers and non-customers,
that Microsoft is still a powerful, technological leader in its industry. If a celebrity can
use this product to make their day to day lives easier, it could only make yours easier. We
are the product that is there for everyone.”

Recommendation 2: Development for Mobile Market Re-Entry


For our second recommendation, developing a strong mobile market re-entry, it affects both our
consumers and the media. With this, will come more advertising, but in various ways, so our ads
will differentiate themselves from others. We want to portray to these stakeholders that we are
innovating, and we are still a growing company. With this, we plan on using social media to alert
consumers about our exciting innovation into a different industry. We will keep these two groups
updated by advertising in both commercials and ads on everyday social medias such as:
Instagram, Facebook, YouTube, etc.

● Message to Consumers: “Microsoft is excited to announce its re-entry into the mobile
market industry with a completely unseen and innovative product. We pride ourselves in
being a strong industry leader and we plan to continue to do so with release of new and
exciting products”

● Message to Media: “With re-entry into the mobile industry, we at Microsoft are excited
to be showing you all what we have been investing our efforts in. We have put an
immense amount of time and brain power into a product that will change the mobile
industry as a whole. With our continual innovation, Microsoft is more than prepared to
become a technology industry leader.”

Responses
Recommendation #1 Timeline & Budget
Celebrity Endorsement Campaign Timeline
12-9 Months Prior to 9-6 Months Pior 6-3 Months Prior Post Launch
Launch
• Identify ideal • Meet with Launch •Evaluate
•Discuss and celebrities celebrities advertisements advertisement
select and draw-up and negotiate on selected effectiveness
advertisement networks
options contracts contracts

The budget for the next five years will be $2.5 billion which allocates $500 million per year (Fig.
4). This will cover the cost of the advertising agency, distribution, performance analysis as well

as paying the celebrities. The ROI for this whole campaign is estimated to be 20%. To stay on
top of trends, this timeline will be repeated every year.


FIGURE 3 – CELEBRITY E NDORSEMENT BUDGET DISTRIBUTION
Recommendation #2 Timeline & Budget
The budget for this plan to develop a new phone will be $7 billion (Fig. 4). This was developed
by researching the budget that Apple has for its new iPhones (Jenkins). This will cover the cost
of research & development for the new phone and the buzz campaign we plan to develop. The
ROI for this campaign will be 15%, including both R&D and advertising.

The budget for the buzz campaign will be $9.24 billion, this will include outsourcing the various
advertisement spots to another company and the investment for showing it on various television
networks.

Mobile Phone and Buzz Campaign Timeline


#1 #2 #3 #4 #5
•Update •Inform •Develop and •Release buzz •Release
employees on marketing & test new advertisements phone to
new phone begin mobile phone consumers
information development
on buzz
campaign

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The budget for this plan to develop a new OS will be $18.75 billion, this was developed looking
at their cost of development for their previous OS. The ROI for this plan will be 20%.

New Operating System Timeline


#1 #2 #3
• Inform employees • Develop and test new • Release OS on new
about development OS with Marketing and mobile platform
plans IT departments


FIGURE 4 – MOBILE MARKET RE-E NTRY BUDGET D ISTRIBUTION

The Future of our Pursuits


The result of our efforts to revitalize our existence in the product marketplace will extend far past
this five year period and into the future. We will create resolutions to existing problems through
the creation of new industries that can achieve more farther down the road. The existence of a
mobile in the Microsoft mobile marketplace will allow Microsoft to innovate past the existing
status quo and enter a whole new market. In tandem with the creation of this marketplace comes
an innovative method for marketing that did not exist before, and a revitalization of the original
goals that Microsoft had at its creation. Thus, the result of our efforts is going to be far reaching
and will help Microsoft establish its dominance in the product marketplace.

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Appendix


FIGURE 5 – OPERATING S YSTEMS MARKET S HARE

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