Tradeshows are becoming of more importance in many organizational communications mix. Behind advertising, tradeshows account for one fifth of total marketing communications budget in the US and approximately one-fourth of the budget for European firms (Gopalakrishna, Lilien, Williams & Sequeira, 1995 & Jacobson, 1990). This report will analyze why tradeshows are becoming a more utilized marketing tool and how it contributes to achieving organizational objectives. The analysis will be broken up into two major sections, the first will analyze the strategic significance of trade shows for sustainable competitive advantage and the latter half will explore the guidelines to exhibiting a good trade show.
There are two main types of trade shows that organizations can participate in, and these are horizontal and vertical. A horizontal trade show exhibits a wide variety of products. An example of this is the Hamburg Fair, which exhibits everything in consumer and industrial goods. The other is vertical trade show, which is product specific; it may be limited; for example, to medical, computer or electronics. Electronica is an example of a vertical trade show held each year in Munich to display the latest electronics (Kane, 1989).
According to the Trade Show Bureau (TSB) (1994), the number of tradeshows exhibited in USA and Canada between 1989 and 1994 grew from 3289 – 4316, the number of attendees rose from 60 – 85 million and the number of companies from 1.0 –1.3 million. The TSB projects a 35% growth in trade show activities for the late nineties to the early 2000’s for the US and Canada and 15% for Asia (Chowdhury, 1998). In 1994, the TSB estimated that over USD 53 billions were spent directly on trade shows and this excluded planning costs and overhead allocations. Kerin & Cron (1987) predicts that most corporate firms will allocate up to 25% or more of their average annual advertising and sales promotion budgets to this promotional activity. With these large expenditures, the question that beckons is “ are trade shows budgets accountable?”
Bonoma (1983) viewed tradeshow and promotional budgets as a reactive marketing tool representing an inertia habit, that is, using last year’s activities budgets and updating that budget to reflect this year’s activities. The idea being “Our competitor will be there and our image reputation will be damaged if we don’t show.” This view is fiercely debated by Slywotzky and Sharpiro (1993); McDermott (1993) and Tanner & Chonko (1992) who view marketing expenditures such as tradeshows as investments and a systematic approach to gaining a competitive edge. Bottom line managers are observing and demanding accountability by the asking the important question: Do Trade Shows pay Off? The answer to this question will hopefully become self-explanatory as the benefits of tradeshows are discussed
Before the benefits of trade shows are discussed, it is important to understand the role tradeshows facilitate and where it fits in corporate marketing communications strategies. The latest trend in corporate strategies is value adding (Bartlett & Ghoshal, 2000; Hill, 1997; Ansoff & McDonnel, 1999; Fletcher & Brown, 1999 and Mone, McKinley & Barker 1998). Take the pharmaceutical industry for example; the functions with the largest gross margins are not in the traditional intermediates and bulk substances, but rather in the new chemical entity and drug discovery. Below is a diagram underpinning how value adding contributes to higher profitability:
Trade shows exhibited by companies are no different, its role to add value to the marketing strategies. The idea of value adding is emerging across many different industries, not just pharmaceuticals, for example Acer proactively seeks methods of value adding through their distribution channels and e-commerce to designing their own software and CPU.
Trade shows are exhibited to value add to the marketing mix,...