Question 1: Gateway’s Decisions to Change Advertising Agencies
The primary goal of any company or business is to increase profits by maximizing sales. Gateway Company owner Ted Waitt has different reasons for changing advertising agencies for the past six years. Gateway Company markets its products with the same apparent goals, including boosting customer awareness, market share, brand image, market share, and profits (Belch & Belch). The first and foremost reason behind adopting different advertisement agencies is to seek better chances for profit maximization.
Gateway also aimed to get the appropriate advertisement theme that appeals to the customers and differentiates the organization from its rivals, and creates more sales opportunities. Looking at the past, the company reached its highest revenues in 2000 when it hit $9.6 billion and attained a market share of 8.2%, thus being ranked number three among U.S top Personal Computer (PC) manufacturers after Dell and Compaq. The company began running advertisements featuring Fox in 2001 January. Subsequently, it also discussed the future of such promotions with numerous agencies.
Following Jeff Weitzen’s resignation as Gateway’s CEO, Ted Waitt was directly involved in controlling the company’s daily activities. This resulted in a $94.3 net loss in the final quarter of 2000 since the PC business was not lucrative (Belch & Belch). After Waitt took control, the company discharged McCann-Erickson as its advertising agency. The organization decided to eliminate its corporate image’s crude and unusual aspects and build an identity as a manufacturer of sophisticated PC technology with the advanced and latest components. The company continued to use the advertising created by Siltanen/Keehn into the 2002 Fall (Belch & Belch).
Nevertheless, S/K’s contract as Gateway’s record agency did not last long since the two fell out after ten months. The Gateway then transferred its advertising to the Arnell Group in October 2002 (Belch & Belch). By changing these agencies, Gateway aimed at working with an agency that would guarantee high returns.
The second reason for working with different agencies is brand image and differentiation. Gateway sought the best approach to communicate its value proposition and product offerings to an increasingly demanding marketplace. Regular reviews in the brand image and engagement with the customer are very crucial in the present-day business since customers are becoming value-conscious and tech-savvy (Belch & Belch). The PC industry is growing at high speed, thus increasing the competition. Brand image and differentiation are key elements in ensuring the company attain a competitive advantage. Therefore, Gateway sought to develop an advertising theme that could echo the customers’ needs and differentiate Gateway from its rivals, including Apple, Sony, Dell, Compaq, and Hewlett Packard.
To meet this goal, Gateway approached different marketing agencies five times in the last six years and three times within 14 months between 2002 and 2003 (Belch & Belch). After terminating the contract with DMB&B, Gateway’s new CEO hired McCann-Erickson Worldwide, one of the world’s biggest agencies. The changes trend in the company continued. In April 1998, Gateway dropped “2000” from its name, making it Gateway (Belch & Belch). The company felt that the 2000 signature would become out-of-date in the new era. Gateway also introduced a new logo that featured a hand-drawn cow-spot box signature. Such efforts demonstrate that Gateway was pushing to improve its brand image and establish strong relationships with consumers through marketing organizations. Gateway sought a marketing organization that would effectively build a strong brand image that could bear positive results for its operations.
The third reason for using numerous marketing agencies was expanding the market and increase sales volume. Gateway’s initial external promotional agency was Carmichael Lynch, appointed to run the company’s television advertisements. Also, the company continued to use the Finex agency’s services, a London-based advertising organization, to run its Japanese and European creatives since sales in these markets were growing (Belch & Belch). As the company experienced rapid growth and its international sales grew. As a result, Gateway needed to work with an international agency. In early 1997 Gateway transferred its appraised $70 million global accounts to D’Arcy Masius Benton & Bowles, an international agency that could help in running and expanding Gateway’s international business.
Gateway Company wanted to establish a dominant position in the sale of PC worldwide. Gateway Company needed to improve on all marketing dimensions to ensure it was better positioned to compete with other rival brands (Belch & Belch). Initially, Gateway was struggling with weak sales and earnings. Waitt, the company’s CEO, realized that this organization needed to revolutionize its merchandise offerings and grow into new markets to recover its declining market share.
To ensure this success in branding, profit maximization, global expansion, and increased sales, Gateway needed to hire the best advertising agencies, which had the potential to steer it to meet its marketing objectives. Therefore, whenever any adverting agency seemed not to fit or unable to meet Gateway’s requirements, its contract was terminated (Belch & Belch). Gateway would then hire another agency, hoping it would outdo the previous agencies. Gateway was focused on meeting its goals and would not allow any agency to hold it back.
One factor that facilitates an easy transition from one advertising agency to another is that Gateway has a wide range of choices and the power to decide which agency to choose. Therefore, Gateway had the ultimate freedom to choose the advertising agency that best suited its marketing needs (Belch & Belch). Also, Gateway had the authority to cancel contracts with the advertising companies that failed to match the much-anticipated requirements and results. Gateway did not experience any challenging situations or barriers in hiring its preferred advertising agency.
Another factor was based on the fact that Gateway had well-stipulated goals and knew what was right to do. Therefore, the company and its CEO did not hesitate to act right or take the necessary measures to ensure everything was going according to plan. Failure to act right would have cost the company huge losses, including reduced sales, small market share, and limited expansion. Therefore, these elements made it possible for Gateway to make quick transitions in pursuit of its long-term goals of manufacturing and selling sophisticated computers.
Question 2: Impacts of Gateway’s Frequent Agency Switching on Branding and Positioning Efforts and Recommendations
The primary reason Gateway Company has been involved in continuously changing its advertising agencies is to improve the brand image, customers’ perception of the organization and differentiate its products to achieve a competitive advantage. Until 1993, Gateway depended on in-house print marketing (Belch & Belch). However, with marketing and technological advancements, and better management, Gateway was ready to utilize out-house advertising, including television promotions. Therefore, this leads to both in-house and out-house marketing departments.
The first advertisements from the new agency maintained the “You’ve got a friend in the business” slogan that Gateway was using for several years. Later on, the agency created a marketing theme that emphasized that Gateway goes “From South Dakota to the rescue” (Belch & Belch). One of the agency’s executives expounded on the reasoning behind the campaign by describing that South Dakota was a state of mind, a business strategy, and handling people. Nevertheless, DMB& B and Gateway started badly as both sides did not agree on the agency’s exact roles and the in-house group and promoting collaboration between the two parties (Belch & Belch).
The agency’s creative strategy was inclined towards traditional or in-house advertising that involved using scripted television spots and actors, like the one that showed a family in a computer shop where piped-in music transitioned into guiding the family about getting PCs from Gateway (Belch & Belch). The agency also created a new logo that featured a hand-drawn cow-spot box autograph. Gateway also initiated changing from a producer of personal computers to an organization that derived its revenues from numerous sources. The primary reason behind this transformation was to increase revenue sources and reduce overdependence on computer production and sale. This transition was labeled the “beyond the box” approach (Belch & Belch). The change in brand image was centered on the need to include many other products in its portfolio, such as PC financing, Internet access, and other computer-related services and accessories.
In 2003, the company created a new tagline titled “The Comforts of Gateway” in a project steered by Leo Burnett (Belch & Belch). The primary reason behind the development of this tagline was to position Gateway as a sophisticated company that focuses on providing solutions for the increasingly complicated technological world. Leo Burnett’s initial advertisements portrayed a small Americana street becoming lively as individuals used their electronic items and personal computers.
With all challenges in the advertisement agencies, marketing campaigns, collaboration of in-house and out-house marketing, the positioning and branding were not affected. To have a clear view of brand image, Gateway should pay more attention to effective concepts that make clients feel that they own the product (Kelly et al., 2015). At times, there was a debate behind a good commercial concerning the party to be awarded: An advertisement agency or a Brand manager. Changing from one advertising agency to another can have both negative and positive effects on the company’s general performance, especially concerning promotional impacts.
On the positive side, Gateway’s continuous adoption of different advertising agencies improved brand image and market positioning. Due to the adoption of a new tagline and more publicity, the marketing campaigns played a crucial role in improving customers’ perception of the company (Camilleri, 2018). Gateway made efforts to position itself as an organization that helps its clients in understanding technology and how it could help them in their day-to-day lives. This theme was echoed in most of Gateway’s marketing campaign, which utilized the “Humanology” tagline as the main objective to transfer the company’s helpful and approachable image to the business market.
As a result, customers considered the company the most appropriate to satisfy their technology-related problems. As a result, Gateway gained more new customers and loyal clients, resulting in a bigger market share and more profits. The adoption of different advertising agencies placed Gateway in a better position to understand the market (Camilleri, 2018). Therefore, the company was able to identify the right products and services to sell to the customers and the best approaches to reach them for effective results.
On the negative side, the adoption of numerous advertising agencies led to the development of many promotional campaigns. As a result, most of the taglines adopted by the company did not last long. Changing taglines made it hard for Gateway to create a clear image and identity. The company lacked a consistent slogan that ran its different marketing campaigns. Therefore, this made it difficult for customers to understand Gateway’s primary marketing objective.
Different advertising agencies proved to be quite expensive, thus making the marketing campaigns less cost-effective (Kelly et al., 2015). Any time Gateway hired or dismissed an advertising agent, it incurred a lot of money because every agency came up with a new marketing approach, disregarding what had been introduced initially by other agencies. Also, more time was wasted in hiring and dismissing advertising agencies. Perhaps if these resources were invested in a single advertising agency, it could have saved Gateway a lot of money and time.
Most of the development positioning themes developed after adjustments in Gateway’s overall business strategy. The company should continue developing new advertising taglines that represent its new tactical direction of expanding beyond personal computers and becoming providers of a wide range of electronic and digital products (Camilleri, 2018). Even though the tagline will be continuously updated, it will be crucial for Gateway to adopt a standard advertising theme. By updating the taglines, customers will feel that the company is constantly improving its products and services and will be enticed to use its products and services.
Therefore, each time the company updates its tagline, it should ensure that it has made significant changes to its products to create a holistic marketing approach. If customers find that the company only changes its tagline but makes no significant improvement in services and products, they will be disappointed and shift to other brands (Kelly et al., 2015). Promotional activities should resonate with the products and services offered. Additionally, Gateway should always strive to maintain its humanistic brand image to offer technology that improves human lives.
References
Belch, G., & Belch, M. (n.d). Gateway: searching for the right advertising. Case Studies, 1-12.
Camilleri, M. A. (2018). Integrated marketing communications. In Travel marketing, tourism economics and the airline product (pp. 85-103). Springer, Cham.
Kelly, L. D., Jugenheimer, D. W., & Sheehan, K. B. (2015). Advertising media planning: a brand management approach. Routledge.
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