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Marketing Trends 2005—Part Two

Industry experts share their views for 2005


January 20, 2005
Copyright © 2005 CARIBBEAN BUSINESS. All Rights Reserved.

The road ahead for advertising and public relations companies, new corporate Internet and car sales trends, as well as impending changes for island distribution companies were the topics discussed by industry experts in a recent roundtable sponsored by the Sales & Marketing Executives Association of Puerto Rico (SME).

The gathering, for SME members, brought together the likes of Triple-S Public Relations & Advertising Vice President Vivian López, Popular Auto Public Relations & Marketing Vice President Edouard Lafontant, as well as Popular Inc. Corporate Strategy Planner José Rojas and Bacardi Corp. General Manager Ángel Torres. Other participants were Motor Ambar Marketing Manager Sadia González, America Online Puerto Rico Interactive Marketing Manager Margarita Lloveras, University of Phoenix Public Relations & Advertising Vice President Olga Rivera, and Plaza Provision Marketing Manager Héctor Vélez.

Public relations vs. advertising

"In the past few years, changes in the market have ignited a controversy regarding the relationship between advertising and public relations strategies, which will wind up overpowering the area of public relations," said Vivian López, public relations and advertising vice president for Triple-S Inc. "Traditional advertising and public relations companies will cease to exist, and advertising will overtake public relations because we aren’t living in the same world anymore. The world has changed, and strategies have changed with it," López noted.

López mentioned the case of the health market, where women now make most of the family’s health-related decisions. "Women want and need to be informed, to be in contact with the product and, therefore, seek out information before making any decision. This means today we need more than just a television or radio ad because this kind of customer likes to be pampered, to be heard," she said.

The public relations executive added that as a result of this same market trend, many companies have switched from full advertising to more public relations-oriented strategies. "A good example is Starbucks, which has relied more on public relations than on advertising to promote its stores in Puerto Rico, with a great deal of success."

Consumers are placing more emphasis on value than on price, and also want to be empowered with information that can help them better manage their lifestyles, López stated.

The disappearing mass market also has triggered more direct-marketing strategies, such as in-depth research, López added. "We are saturated with advertising coming at us from all angles, making marketing research more necessary."

López pointed out that corporate responsibility will have an even bigger role in 2005 with consumers becoming more aware of companies investing back into their communities. "This can be witnessed when we see how many companies with a corporate responsibility program have increased their viability by 30% compared to companies with no such program."

The dot-com era…again?

In 2005, many companies launched or revamped websites. However, according to Margarita Lloveras, interactive marketing manager for America Online Puerto Rico, this trend is only the beginning of what is going to be a very busy year on the island with regards to the Internet.

"This year is going to be a year of growth and development for many interactive strategies," Lloveras said, adding "this goes for integrated marketing strategies for all sectors, from retailers to cars and banking, and the Internet will be a part of every industry as companies become more aggressive in their quest to reach the consumer."

"We have entered a second phase where it isn’t enough to have a presence on the Internet. We must become more effective in how we use the Internet to reach the consumer," said Lloveras.

This trend will boost the need for web developers and Internet experts who will be in charge of this new face-lift of interactive strategies. Lloveras believes this new resurgence of web pages will provide an enormous new investment for advertising agencies with interactive divisions and web developer companies.

Advertising spending in interactive strategies is about 1.5% of the total on the island, which is about $2 million, including the development of web pages, e-mail marketing, and postership (placement of Internet ads on websites). In the U.S., the average for interactive strategies is about 5% of the total advertising spending, approximately a $10 billion investment.

According to Lloveras, a good example of this trend is Plaza Las Américas’ interactive pilot project. This project will merge traditional offline and online marketing strategies into a new interactive marketing plan.

Lloveras believes the biggest growth will be in customer service centers, which allow companies to communicate directly with clients. "In the health sector, we’ll see more interactive strategies where companies will communicate on a one-on-one basis with their clients, health providers, and potential customers," she said.

The growth of broadband, DSL, and cable-modem services will increase the role of the Internet within corporate strategies. "The capacity for speed will take strategies to the next level, providing consumers with a more positive Internet experience," Lloveras said.

According to Lloveras, high-speed Internet access will grow dramatically given the fact that today broadband penetration on the island is less than 5%. "Puerto Rico has a lot of room to grow as far as broadband is concerned," she said. "U.S. broadband penetration is about 50%. Growth expectations for broadband in Puerto Rico will increase it to 15% this year."

Local experts estimate Puerto Rico’s Internet surfing population at about 1.2 million. However, new Internet studies will be done in 2005, and the group suspects that figure may reflect an increase.

New product for the island

Entering the Puerto Rico market has become the goal for many product manufactures around the world, according to Héctor Vélez, marketing manager for Plaza Provision.

The constant introduction of new products has boosted the distribution industry despite forecasts of its collapse. "A few years back, when the megastores came on the scene, many believed distribution companies would disappear. However, that hasn’t happened. On the contrary, they’ve continued to grow and thrive, welcoming new products to their roster," Vélez said.

The challenge of marketing these new products has created a new synergy of strategies, where two products can be seen sharing promotions or advertisements. "Sometimes it’s better for a manufacturing company to deal directly with a distributing company than with the entire market. In that sense, they have us as a client, and we do what needs to be done to reach the market," he remarked.

Within the produce and food products sectors, distribution companies are now facing the challenge of supplying consumers with little time to prepare home-cooked meals. "We’re now competing against the [fast-food restaurants’] $3.99 combos for the consumer who is too busy to prepare a meal," Vélez stated.

Distributing companies have adapted to this consumer lifestyle trend by providing customers with a variety of products and choices that make meal preparation easier. "We now have to think about ways to make consumers’ lives easier and introduce products that compliment their lifestyles," he explained.

Also, food and dieting trends, such as low-carb diets, continue to boost sales for those specific products. "Distribution companies adapt to consumer trends. Today, it’s low-carb, tomorrow it will be something else, but these trends serve to boost the sales of very specific products," Vélez said.

Future mergers are always possible. "The market is healthy, and some companies are healthier than others, so mergers may be a possibility," Vélez added.

This Caribbean Business article appears courtesy of Casiano Communications.
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