Microsoft IMC Report

Executive Summary

The problem:

This paper is an Marketing communication strategy plan for Microsoft. Microsoft is one of the leading companies in digitalization and technologically advanced era. However even most strong and known brands sometimes get challenged in modern fast moving world. Microsoft products such as operating system and Microsoft office is used among a huge number of computers and laptops globally. Over the past years technology got more advanced and companies in IT sector as well as all others face the necessity for fresh new ideas to expand their brands and increase the profits.

The problem that Microsoft and also other IT companies involved in developing and incorporating AI in their portfolio is mainly the people perception of it. Microsoft is mostly seen as a company providing software for computers. The lack of knowledge about the AI developments and cloud services, is problem that Microsoft is facing. Additionally there is a false perception around AI and its safety, privacy and other usage related issues. The goal is to have in people's mindset the idea that Microsoft is the leading company in AI technologies and usage to help solve problems and other challenges students and educational institutions face.

Overview:

A great deal of research was conducted to create a plan most suitable and beneficial to reach the desired objectives such as increasing customer awareness, encourage purchasing behaviour and reach the mind of target audience to have AI associated with Microsoft. This plan includes a profile of the target market audience are inspired creators well educated university students in age range 18-28 that are dependent on technology daily, have a busy schedule an active lifestyles and need to be time efficient. They live in university towns or newly graduated living in bigger cities, highly motivated who prefer convenience. In the paper is also presented marketing creative strategy and the big idea, channel/media strategy with the usage of YouTube, Instagram and Twitter to reach the targeted audience. It presents also companies SWOT analysis, short overview of competitors in terms of what they do in AI areas and how far their development came. As well as financial budgeting, execution forecast plan and positioning.

1. Introduction

Microsoft is an American multinational technology company with its headquarter in Redmond, Washington. It was established in 1975 by Bill Gates and Paul Allen. The big breakthrough was already established operating system modified and named MS-DOS software first developed for IBM PC in 1981. By the 1990 company already sold more than 100 million of copies licensed to other personal computer manufacturers. In 1993 Windows 3 was selling at a rate of one million copies per month and around 90% of the PC’s in the world were running on Microsoft operating system. By mid 1990s it became one of the most powerful and profitable companies in America (Hall, 2018). Throughout years, Microsoft developed many products and services and most recently it has become one of the few companies that's highly investing and exploring AI possibilities. Current CEO Satya Nadella made it clear that their business model is now more about the cloud services then Windows software. Under his leadership, Microsoft tripled its stock price in just over four years and made acquisitions with companies like Nokia and LinkedIn (Novet, 2018). In 2018 Microsoft employed 131 000 people (Statista, 2018), and was estimated to have a worth of about $850 billion competing closely with Apple for the most valuable company in the world (Lohr, 2018).

2. Company Analysis

Microsoft has been developing AI and machine learning for a long time and has tried to incorporate it everywhere. In 2016, the company established a new AI and Research group with 5,000 people, which grew to 8,000 just one year later. This growth indicates Microsoft's commitment to expand and innovate in the tech industry (Marr, 2017). Microsoft holds a powerful position in its industry since it has the Support of an abundance of available data and cloud services that are able to run millions of computations. Many Microsoft products such as Skype, Cortana, Bing, and Office already includes some AI integrated. For example, in PowerPoint the Quick starter uses AI to help and find the best suited template based on an one single word search. Additionally, cognitive vision system analyzes photos and auto-generates Alt-Text (Ulanoff, 2017). Microsoft is setting up more teams that focus on including and expanding AI into other areas of its products to help make people’s lives easier. Microsoft has already activated a department for researching AI deployments in healthcare at its Cambridge facility. The aim is to create predictive analytic tools to help people with diagnosing diseases, recommending the right treatments, and alerting them of any medical problems (Marr, 2017).

SWOT:

Strengths:

Microsoft is a global brand operating in around 190 countries and a world leading operating system used by more than 500 million devices all over the globe. It withheld a strong brand image throughout the decades, which helped it's trustworthy image in its customers' eyes; thus, supporting the company's fast growth (Pratap, 2018). CEO Satya Nadella is an effective visionary who boldly restructured and reinvented the company. With a customer centric vision he created the solutions that have great business value for customers. Under his leadership Microsoft became a leader in cloud industry (Dudovskiy, 2019). Diversified product portfolio compared to their main competitors such as Apple or Samsung. Microsoft offers operating systems for computing devices, phones, servers, and other intelligent devices, business solution applications, software development tools, video games, and many more. Microsoft also sells hardware such as phones, PCs, tablets and other intelligent devices and accessories. All that diversifications makes company stronger since it protects the company from downturns in any specific segment (Dudovskiy, 2019). Strong partnership with other big companies such as Lenovo, LG, Gionee and others provide an extra competitive edge and allow it to accomplish higher market share since partners provide a direct access to its tools and increase the opportunity for development and innovation of products that are technologically advanced (Pratap, 2018).

Weaknesses:

Microsoft is slow in innovation regarding its operating system. Windows XP is more or less old and abandoned in terms of new features and capabilities. For many, Windows 7 is still more preferred than the new Windows 10, since the upgrade does not offer substantial value. While competitors such as Apple are considered to be further ahead with their operating system capabilities. As a main leader in operating system sector they can afford that for now. Internet explorer was for almost two decades the leading browser application with market share of more than 90% until in 2008 Google launched Chrome. In 2015 Microsoft tried luck with Microsoft Edge, but their browser is still far behind Chrome, Firefox or Safari (Dudovskiy, 2019).

Opportunities:

Growing its market is the greatest opportunity for Microsoft. Fast demand for cloud services is causing companies to have a so called cloud war. However, Microsoft has a great advantage here since the next strategic development in Cloud industry will be in software; particularly with connections to AI, Blockchain, and Machine learning. Microsoft deep development of all layers of the cloud already puts it in a leading position (Ferguson, 2017). AI awareness among people and businesses is increasing and with it the demand to include it in the everyday life (Pratap, 2018). The benefits of use such as increased productivity; it is projected to increase labour productivity for 40%; new ways of how work is done and more are making it appealing for usage thus, (Accenture, 2019) giving companies like Microsoft, Amazon, IMB a great opportunity to expand their portfolio of products and services they offer and increase their profitability. Microsoft already has partnerships that are beneficial to its operations such as LG, Lenovo, LinkedIn. Such partnerships and acquisitions allow the brand to expand and grow faster. Their financial strength gives them opportunity to do some more acquisitions in future with businesses that add value to their core business to strengthen their competitive advantage in fast changing environment (Bhasin, 2018). With fast growth of smartphone demand especially in developing countries such as China and India Microsoft could expand their smartphone market and invest into a development of their Lumia phone (Bhasin, 2018).

Threats:

With saturation of the tech industry, concerns over people's privacy and their data safety is increasing especially after scandals involving personal invasions. These scandals and accusations Causes countries to protect its citizens and establish tighter regulations in the legal department. This forces the developers to incorporate a none intrusive solution into their products and services (Pratap, 2018). Another threat involves the high cost in the R&D departments (Pratap, 2018). Despite the diversified portfolio, Microsoft has competitors in every part of their business, such as Apple, in software industry, and in cloud and AI industry there are many players like Amazon, Google, IMB (Bhasin, 2018). High demand for new, improved and better technology is something all companies in industry are facing, causing the industry to make higher investments in R&D departments to satisfy customers who want the best possible offered technology generating cannibalism among companies own products and services (Pratap, 2018). Due to advanced technology PCs are getting side tracked by more portable, highly capable smartphones and tablets that are just more convenient, faster and easier to use for everyday life. Many major computing brands noticed their market share shrink and their sales fall. Since Microsoft is a prime provider of software and devices it might hurt their profits (Pratap, 2018). Pirate market and the illegal use of software system is a major thread and Microsoft is not really able to control it. Company loses billions of dollars because of pirated versions across the world. The 30% or more piracy rate costs Microsoft a great deal of revenue. Major illegal users of software system are developing countries such as India and China (Ferguson, 2017; Bhasin, 2018).

3. Competitors Analysis

Microsoft’s main competitors in AI sector are mainly Amazon, Google, IBM, Apple, and Samsung. Amazon did an amazing job by integrating AI and machine learning in their own core business: Amazon.com. The website suggests to customers what to buy next or read next based on their purchasing history. Over the years they expanded the AI business and created the Echo and Alexa voice platform and later the AWS offering AI Services and machine learning to individuals and businesses (Levy, 2018) (Amazon AWS). However they did not expand their AI knowledge in such extend as Microsoft is doing in healthcare and education. At Google their mission with AI is to bring the benefits to everyone. Their AI products and services are AlphaGO by DeepMind division a computer program that knows how to play Go game, auto machine learning model builder, AI voice assistant for android devices and Google home smart speaker backed up with google assistant, (Rouse, 2018) and TensorFlow an open platform for high performance computation (Tensorflow, 2019). IBM has been in AI for longer time with the development of Watson intelligent platform capable to process a large range of information and adapting to almost any application with extension into Power AI platform and IBM cloud. IBM also offers services to assist customers in implementing AI in their business. (McGregor, 2019). As for Apple and Samsung is concerned their AI development is more close connected with their products and limited to virtual personal assistant, on device AI capabilities (Samsung.com, 2019), voice assistant, and home automation device supported by machine learning (Dwoskin, 2017). Although the competition is big in AI industry Microsoft has an advantage, with big data available though million of Office subscribers, OneDrive cloud-based services and a specific research team for AI development (McCracken,2019). Additionally, with the effort of the CEO Satya Nadella and his visions of Microsoft there is also a fact that Microsoft core business is technology related therefore stronger supported by all means of necessary sources which for example Amazon is not. Microsoft is expanding the AI in so many different areas then competitors and making AI helpful for people.

4. Marketing Objectives

Our main objectives for our marketing campaigns are to increase customer awareness for Microsoft, educate customers on the use and production of AI, allow customers to associate AI with Microsoft, increase customer engagement and ultimately increase profits.

Increase Awareness for Microsoft AI:

The main platforms used to increase AI awareness will be our creative advertisement and social media updates. We chose to focus on YouTube and Instagram in particular because of the large amount of traffic both media see on a daily base. Our creative advertisement will act as an introduction of AI to our target audience. A unique video advertisement means that we can create media buzz for Microsoft. Ultimately, we hope that people will associate AI with our creative add and with Microsoft. We want our social media updates to reach as many people as possible. Therefore, we chose Instagram as the main outlet for this task. Instagram have multiple channels for its contents. For example, a company Instagram page, stories on the company account, sponsorship posts, and advertisements through stories. The sponsored posts and advertisement stories are difficult to identify as advertisements and can, therefore, trick the audience into watching an ad. We strongly believe that the diverse outlets Instagram provides will allow us to increase awareness for Microsoft AI. Facebook and Twitter also contribute to bringing awareness and knowledge to our target audience. However, these two platforms are more limited in the types of outlets that content can be displayed in. Furthermore, Facebook has now become more popular with the older generation which is not our target market (Statista, 2018). Twitter also lack inactive accounts for our target market (Aslam, 2019) but we still believe that Twitter is a valuable asset, especially to increase customer engagement.

Educate Target Audience on AI:

The animated tutorial videos that will be launched on all social media platform. The key objective of this marketing scheme is to educate our target audience. These tutorials will deliver the bulk of the information related AI and how Microsoft incorporates it into its software. Our marketing objective here is to educate our consumers without making it boring. This is why we decided to make each video short and straight to the point. According to Seer, a YouTube advertisement should be 52 seconds (Alum, 2015). An alternative platform we plan to convey information is through TV programs. We will plant Microsoft’s AI enhanced products in shows like the Big Bang Theory and have characters use the products and explain the features of the products. This form of educating forces our audience to continue to watch and will allow the information to seem less like an ad and more genuine.

Increasing Customer Engagement:

We will be bettering customer relationships and increasing customer engagement through Twitter and on campus booths. We decided to use Twitter because there are 2200 retweets per second (Dugan, 2011). Furthermore, hashtags can allow people to easily find information related to Microsoft’s products as well as any updates Microsoft might have for its customers. Additionally, it will also allow Microsoft to monitor their product performance. Microsoft will now be able to see what customers are looking for in their AI Software, things Microsoft might be able to improve on, and can allow the company to directly address any questions or concerns its target audience may have. When taken upon these factors, we strongly believe that Twitter can help Microsoft build a stronger customer relationship and increase the numbers of “builders” using Microsoft AI platforms. Our other main customer engagement campaign will be completed through on-campus booths at conferences and hackathons. We believe that this will be an effective way to not only educate people but also convince them that Microsoft is the company for them. Furthermore, in person selling conveys a lot more information and emotions. This could be used to the company’s advantage since salesmen can directly address every question and concern there and then. Personal selling has more persuasive power and will engage customers not only in the sales department but also in the education department.

5. Positioning

Microsoft’s research and AI group grew from 5,000 to 8,000 employees in one year showing dedication towards AI development (Bishop, 2017). It is aggressively trying to improve and stay ahead of its competitors in the AI technology sector. When compared to its competitors like IBM, Amazon, Google, and Apple it is positioned somewhere in between them. Microsoft’s Cortana when compared to Siri, Alexa, and Google home lacks behind in pricing options since it is not the cheapest at $199.95. Both Google and Amazon have cheaper and more expensive options. Apple’s Siri is the only other AI-bot that is more expensive than Microsoft’s at $349. However, Apple’s overall AI program is not as advanced as some of the others. It has now invested more in AI research but it lacks behind in comparison to Microsoft who has been pushing its AI department for the past few years (CBinsight, 2018). Amazon and IBM do not focus as much on softwares that assists in office work like the Microsoft 365 and Google have yet to develop renown computers and tablets (Appendix 8).

6. Communication Objectives

With this marketing campaign we intend to communicate to our target audience two main ideas. The first being that AI is not difficult to use and is all around us already and the second being that Microsoft is the trustworthy leader in the AI industry. We want to make sure that all the fears and stigmas around AI are cleared and show the true potential and benefits of use AI can have. We want people to associate Microsoft with AI and their amazing work they are doing for example as mentioned above incorporate AI in healthcare or how they help deaf people to learn. Microsoft alone employs some people with hearing disability but even more they are developing technology to help them. In Rochester Institute of Technology in upstate New York students with hearing disability are part of campus life and attend lectures as normal students but with help of Microsoft they have now beside the ASL also a so called Microsoft Translator, an AI-powered communication system that uses an advanced form of automatic speech recognition to translate raw spoken language, into fluent, punctuated text and it can do so with 60 different languages (Roach, 2018). Additionally they launched the Hearing AI app and Seeing AI app giving people with hearing and sight disabilities an easier way to communicate with the world. (Ward, 2017) We want to change people's mindset to see that Microsoft is not just another tech giant company trying to take advantage with technological improvement and make big profits with it. Our goal is to show that Microsoft is using AI for purposes of making life easier for everyone and everywhere possible.

As mentioned above our primary platforms to market the big idea are ones that are popular among our target market such as YouTube, Instagram and Twitter. We believe they will be the most efficient way of increasing Microsoft AI awareness from 60 to 80 percent and increase the number of users up to at least 70%. When selling to institutions the most suitable way seems to be personal selling and sales promotions. We believe that these marketing strategies will allow institutions to be well informed of our products we offer and ensure cost efficiency.

7. Segmentation Target Audience

We’ve identified three possible target markets. The first being the Advanced users. This segment of people includes those who are AI savvy and are comfortable with using AI in their daily lives. There are 10% of internet users in the world who consider themselves AI experts (Kats, 2017). The second segment of people belongs to the AI Learners, these are the people who have a basic knowledge of AI but is not yet comfortable with exactly what it is and how it works. This segment represents approximately 53% of internet users (Kats, 2017). The last segment is the AI Cavemen. This segment consists of people who have no knowledge of how AI operates and has a strong stigma towards AI. These people represent 37% of internet users. Our goal for this Microsoft campaign is to focus on the 53% between the ages 18 to 27 whom we’ve decided to name the Inspired Creators.

8. Market Analysis

The typical Inspired Creator would be someone who is in University or has recently graduated from University. They are interested in the AI world but don’t know where to start familiarizing themselves with. Furthermore, they are ambitious, creative, and have a strong sense of time value. They look for convenience since their schedules are usually filled. We chose this group of people because their characters best match Microsoft’s goal of “helping the planet to achieve more” since this segment is actively trying to create and innovate. Cortana will help this segment to better organize their daily tasks. Furthermore, this segment has great potential of reaching Microsoft’s goals for increasing AI usage from 15% to 25% and increasing consumer knowledge for Microsoft AI from 60% to 80%. We believe that we may be able to influence those who are not currently interested in AI with our creative ad and convert some of the experts in AI from another platform to Microsoft. However, we decide to not focus on these two segments because the yield for investing in these two segments are relatively low in comparison to our chosen target audience.

The Student institutions we have identified are separated into three segments. The first tier, second tier, and third tier Universities. The First-tier Universities are well-established universities with an advanced computer science department and are often rich in history (e.g. California Tech). These Universities usually know which type of software platform works best with their institution, students, and faculties. They already have a company they are loyal to and it will be difficult to convince them to switch software. The second tier Universities are universities that are also well-established but are not known for their computer science department (e.g. New York University). These Universities don’t have a thorough idea of what software best suit the institution; however, they are willing to find the best fit. The biggest factors when considering a transition of software companies for the second tier universities are time-efficiency, cost, and adaptability. They does not want to spend a large amount of money investing in different software. Furthermore, they do not want the transition of software to interfere with its faculties' daily activities. Lastly, they are looking for something that is easy for the faculty and students to adapt to. The third tier Universities are colleges like Langara. They are not as motivated and established as the first and second tier universities. They are usually indifferent to the type of software they use and their biggest concern is cost. In this campaign, we plan to focus on the second tier universities since they best match our target audience and best support Microsoft’s overall goal of fuelling the next wave of innovators. Furthermore, with Microsoft’s advanced AI technology it will be cost and time efficient to install and update (e.g. storing information in the cloud). It also makes its platforms easier to use by allowing people to set up their platforms themselves rather than waiting for a technician (Abdalla, 2018).

9. Creative Approach

Our theme for our marketing campaign is to follow the concept of Dr. Seuss in Horton Hears a Who (Appendix 5). We want to capitalize on the idea that each AI code acts like a Who that people are oblivious to. These AI codes will live in their own world and learn as we do and create enterprises. However, these enterprises will be only a part of a certain Microsoft AI platform (e.g. Microsoft 365). We chose this segment because we believe that the age group we decided to focus on composed of people who grew up listening to stories of Dr. Seuss. This campaign strategy will not only bring sentimental values but will also effectively educate our target audience.

We plan to currently only launch one main video ad. This ad will begin by zooming in from the sky. It will follow the "birth" of Arthur and Indie (AI characters) and their growth. It will display how they are educated to become well functioning AI. Then once they have graduated, they will be put into the workforce to maintain companies called Cortana or Microsoft 365, which are Microsoft’s AI-based programs. The ad will finish by zooming out of the sky, to a scene of a student using Cortana for their school work and then zooming out once again to the globe, then a pixel, and finally the Microsoft logo. We strongly believe that this animation will effectively eliminate any negative stigma people may associate AI with and will allow people to associate advanced AI technology with Microsoft. The humor and storyline incorporated within the ad will make the seemingly difficult information easy to understand. We plan to launch this campaign through social media platforms like YouTube, Facebook, Twitter, and Instagram with the hashtag #AIlearnstoguide.

The other video campaigns we plan to release are also animated. The difference will be that these videos will be more informative. They will focus on showing off Microsoft AI programs’ functions like voice activation, improved searches, and edge with Cortana (Rutherford, 2015). The tutorials will display the most efficient way of using each program as well as how these programs can make our target audience’s chaotic life easier. This is an important component of our campaign since it will identify the differentiate factors Microsoft platforms have in comparison to programs.

Along with the video campaign, we will also hold two innovation competitions. Participants must submit projects of what they have created with Microsoft’s software that uses AI with the hashtag #AIlearnstoguide. There will be three winners for each competition, and each winner will win an assortment of Microsoft products. For example, a year of Microsoft office 365 and a Microsoft touchpad. This campaign aims to engage our target audience with our products. Furthermore, to encourage our target audience to better understand and learn how to use Microsoft AI products. This will help reach Microsoft’s marketing goal of increasing product usage from 15% to 25% and increasing target audience knowledge of Microsoft products from 60% to 80%. Additionally, it will

When promoting institutions, we suggest sponsoring events or hosting on campus information booths. This is because it will allow the students to test out Microsoft’s products and it will also allow institutions to see how Microsoft’s products can benefit its students. Furthermore, personal selling is better fitted for products that require heavy financial investments (Economic Times, 2018). It will allow the schools to thoroughly understand why Microsoft is the leading AI company, what it has done to better themselves everyday, and how a little investment now can lead to the foundation of cultivating innovators and problem-solvers.

10. Channel/Media Strategy

Social Media:

We will be focusing most of our advertising through social media. This is because nearly 100% of young adults across Canada use the internet daily (Statista, 2018). Young adults now depend on the internet not only to communicate with each other but also for entertainment, shopping, and keeping up to date with the news. The internet is a tool that the millennials and Generation Z rely on for everyday tasks. It allows them to complete an abundance of tasks and errands in their busy lives.

YouTube: Our main video advertisement will be released on YouTube advertisement first. It will also be featured on Microsoft’s YouTube account. We choose YouTube as opposed to more traditional platforms such as television and magazines because these platforms have seen a dramatic decrease in viewership. According to Marketing Charts, television viewership between the ages of 18-34 dropped by 12.3% in 2018 alone (Lupis, 2018). The magazine industry’s revenue has seen a decrease of almost 20 billion dollars from 2007 to 2017 (Fuller, 2017). In contrast, YouTube has over 63 million viewers daily watching over 1 billion videos. Over 95% of YouTube’s ads meet viewing standards (Tran, 2017) reaching over 4.6 million 18-28 years olds in Canada alone (Tran, 2018).

Other Media: We also plan to launch our video advertisement on Microsoft’s Facebook, Instagram, and Twitter page. We decided this course of action because we want to maximize our media reach. Although YouTube is an influential platform for our target audience, Facebook does not fall far behind with over 80% of our target market on its platform. Instagram has a 64% utilization rate within our target audience (Tran, 2018) and over 200 million people visiting business profiles each day (Hootsuit, 2018). Twitter represents the smallest percentage of usage within our target market but it is still an important media platform since we will be holding our Microsoft AI Innovation Competition through Twitter with the hashtag #AIlearnstoguide. Additionally, Twitter has over 2200 retweets per second generating a profuse amount of information each day.

Television:

In addition to the traditional Social Media advertisement channels, we want to introduce a new twist on the traditional television channel. As mentioned above, the number of people still subscribed to television is decreasing dramatically; however, the number of people watching television shows and movies have not decreased. In fact, Netflix subscription has grown from 25 million to almost 150 million from 2012 to 2018 (Molla, 2018). We suggest that Microsoft exploits in-show advertisements. An in-show advertisement is sponsoring a TV show or a movie and having the characters in the TV-show or the Movie use the product on set (Appendix 7). We believe that this would be effective not only because it will reach a large amount of viewership, but will also allow us to showcase our product without making it seem like an advertisement. We will be able to take advantage of the TV-show’s storyline to educate our audience about our product and its capabilities.

University Sponsorship:

University Sponsorship combines personal selling along with event marketing. Conferences and Hackathons at institutions provide a perfect platform for Microsoft to showcase its products to the students and institution as well. We suggest having a booth with the latest Microsoft products that incorporate AI technology. The students who attend each conference will wander by the booth and try out the products themselves. This way they can see for themselves how a product operates and how AI can complete tasks more efficiently and conveniently. We also suggest Microsoft station sale representatives at the booths. The sale representatives will use personal selling to provide important information needed to prove why Microsoft AI software is better than its competitors’. Personal selling is especially effective when it comes to a higher valued product. Microsoft’s goal at these University events is not only to sell and educate the students but also the institutions. Having representatives at the University will allow the Computer Service department to have fully disclosed information. Thus, making a more knowledgeable decision when switching to Microsoft software.

11. Conclusions

To conclude Microsoft would greatly benefit through our social media marketing campaign reaching desired marketing and communication objectives, reach target audience and trigger wanted behavioural changes and expand the brand awareness among people. It would affect them greatly if they would show how much effort they actually put in AI development and prove people that AI can be also used in more than just business, entertainment industry and as a smart voice assistant. Their contribution in developing AI for healthcare and educational purposes is generous payback to society. Additionally they could gain some competitive advantage through the fact that they are first on the market to offer AI in connection with the education system.

12. Appendix