Introduction
This report examines the marketing strategies as applied in Aldus Corporation. The corporation operates in the computer software development industry since its establishment in 1984. In spite of the successes that the firm initially enjoyed, changes in the business environment led to reduced sales revenues hence need to change the marketing strategies. The segmentation of the market changed from four to two (professional users and business users). The study examines the marketing mix strategies to be employed by the firm, segmentation and positioning in order to increase its competitiveness in the industry.
Market Positioning for Aldus Corporation
Aldus Corporation positions its products in different location in U.S, EU and other countries. The company products should be positioned in strategic locations so that they appear conspicuous while attracting customers. Good positioning is vital for increased profitability and performance of the company. Good product positions can be achieved through perceptual mapping. The perceptual product map for Next Group Plc in comparison with Arcadia Group and is as indicated below:
Market Repositioning: The rationale behind the reposition is that the company is redesigning its product while establishing new segments of the market. The products are redesigned to suit the needs of the professional designers and businesses since these are the new segments of the company. As the company is trying to reestablish itself, the new page maker pricing should be lower than the previous general page maker in spite of the expenses should. This would enhance competitiveness in the market. Following this repositioning, the company can have a position displayed in the map below.
Consumer and organizational Markets
Both individual consumers and organizations purchase products of an organization for different purposes. Individual consumers purchase the products for their personal use. Individual consumers constitute the consumer market of Aldus Corporation. According to Wedel & Kamakura (2000), individual consumers purchase products in smaller quantities. Organizations too purchase products from the company hence forming organizational markets. However, the purposes for the purchases of the products are different from those of individual consumers. Firms can purchase company products for further manufacturing, resale, or distribution to other firms or consumer markets hence purchasing goods in bulk. Organizational markets are not many and are made up of few firms purchasing the products of the firm. On the contrary, consumer markets are large and wide.
The two markets differ in the form of marketing used. For instance, an organization can use direct marketing and sales to customers as compared to organizational marketing. In spite of the differences, the two markets are similar because business to consumer marketing and business-to-business marketing use similar marketing strategies such as matching consumer needs and product, positioning and communication among others. Organizational markets can be divided into four major categories that include:
- Industrial markets: this organizational market is made up of individuals and firms that purchase goods for the purposes of producing other goods. Most firms found in this category are industrial firms or large corporations.
- Reseller markets: These include firms that purchase products that are manufactured by other corporations for the purposes of reselling to the final consumer.
- Government markets: the government is a consumer of vital goods in an economy. Various government agencies are involved in the purchase of goods manufactured by other firms for various reasons including provision of services and goods to the public. The provision of products and services is the duty of the government to the public (Wedel & Kamakura, 2000).
- Institutional market: this market comprises of various institutions in the society such as schools and hospitals that purchase manufactured products in large scale but for the purposes of serving people in living in the institution. The market is also good for sale of the products of the firm.
Impact of consumer and organizational markets differences on product positioning
The differences in the two markets create some impacts on the marketing strategies chosen by an organization such as Aldus. While selling its product Page Maker to individual consumers, the firm must use business to consumer marketing strategies that require establishment of direct personal relationship with the consumer. However, marketing to organizations will entail business-to-business marketing strategies. In addition to marketing, promotions conducted by an organization should focus on consumer markets because they are more responsive to advertisements. However, promotions to organizations should not include large-scale advertisements because firms are not responsive to the strategies employed by another firm.
Product Positioning is an important factor in the marketing strategy of an organization. While positioning the product of an organization, it is important that the organization keep in mind the target market and their tastes and preferences. Product positioning aims at maintaining a high and positive perception of the product among consumers given the products of other competitors in the market. According to Kotler et al. (2001), product positioning differentiates the product from other competitor products, addresses vital purchase criteria depicted by customers and it articulates the main characteristics of the product of the organization.
Wedel & Kamakura (2000) note that there are various positioning strategies that can be pursued by an organization. For instance, the organization can choose to position its product against a competitor or away from the competitor. Positioning that is based on benefits emphasizes the benefits that consumers can draw from the product of the firm while the positioning that focuses on product attributes highlights the best qualities of the product. Some organizations differentiate their products by placing them in a different category. Other positioning strategies include the use of occasions and user needs.
Market Segmentation Criteria
Segmentation divides the company’s target markets into different sectors. Segmentation is important to the company to improve its profits and market strategies by understanding their customer needs that attract and maintain them from the company’s competitors. The company’s establishment and progress has majored on behavioral and geographic segmentation. Aldus Corporation has segmented the market for page maker based on various factors including:
- Measurability: the company has divided the target market into segments based on the number professionals that would use page maker and the number of businesses that would purchase the company product.
- Accessibility: the company has been able to segment the market based on the ability to access the market. Segments in the U.S are grouped in the same segment following the fact that they are close together. This is similar to segments in EU among other parts of the world. therefore, the firm may segment into different regions based on their accessibility.
- Unique needs: the segments selected by the firm have different unique needs. The needs of the segments are based on various factors such as cultural factors, income, tastes and preferences among others. For instance, the cultural factors affecting the consumption of page market in the U.S are different from those of consumers in Asia.
- Purpose: this strategy enables an organization to manufacture a product that fits individual consumers and organizational consumers. Individual consumers purchase the production small quantities and for personal use while organization purchase the product for resale and profit motive. Therefore, consumers can be provided products in small quantities at higher prices while organizations can purchase the product in bulk and at lower prices.
Proposed segmentation for Aldus
Basing on the specific market characteristics of Aldus Corporation, the market segments can be divided into two major segments. The first segment is the business segment while the second segment is the professional segment. The business segment would be larger than the professional segment hence the commitment of more staff to the business segment than the professional segment in the organization. The proposed professional page maker would be anchored on the page maker that is priced at about $2,000. Other graphic arts professional tools would complement the professional page maker. The distribution of the professional page maker to the clients would require a new end distribution channel. A business oriented page maker product that meets business needs with the product going at $500 would serve the Business segment. The product would be an easy to use and accompanied other related products for office workers. The proposed distribution channels for the product are the broad distribution networks.
Target Markets
The company targets both individual consumers and organizational consumers in the U.S EU and the rest of the world. Individual consumers targeted are mainly professionals that would utilize page maker to produce decent typed work. The product would provide the users with a variety of desktop publishing features. On the contrary, organizational markets targeted by the firm include many computer-manufacturing firms in the market such as Apple, Macintosh systems. The page maker product manufactured would be differentiated to suit the market requirements for different computers manufactured by different corporations. The advantage of targeted organizational market is that they make bulk purchases for the product.
Stages of product life cycles
Manufactured products undergo various development stages. The stages are captured in a product life cycle. According to Saaksvuori & Immonen (2008), different products have different life cycles depending on the required raw materials and period of development. The product life cycle is important to NEXT because it helps the firm identify the time that it needs support, redesigning, withdrawal and re-designing as indicated below (Wedel & Kamakura, 2000).
Development Phase: during this phase, the expertise in the company is utilized in research and development of the product. The ideas utilized in this stage include marketing research information and monitoring competitors. The clothes of Next plc are designed and developed by the company’s employees. The development stage for Next’s Brand was in long time ago when the company began developing its own clothes for men, Women and children.
Launch/ Introduction: the launch of a product involves its unveiling into to the market. The launching stage involves advertising and promotions of the new company products. According to Anderson (1998), this stage is characterized by high costs while the sales revenue from the product / service if low. Next plc too experienced this stage during the launch of its brand products.
Growth: this stage is realized immediately after the launching of the company product. The stage is characterized by increased consumer awareness about the company products. The costs incurred by the firm remain constant while the revenues from sales increase.
Maturity: under this stage, the sales revenue realized by the organization is at its peak. As the sales reach their peak, the operating costs for the company brand declines gradually. According to Saaksvuori & Immonen (2008), the maturity stage is accompanied by competitiveness in the industry. The increased competition in the industry is the reason for the decline of the sales revenue.
Saturation: increased competitors in the industry characterize the saturation stage. The new entrants in the industry increase the participants in the industry hence pushing competition high in the industry. Organizations encounter pressure to develop new strategies.
Decline and withdrawal: at this stage, increased competition overwhelms the firm to an extent that the company profits are eroded away. The expenses are in excess of the revenue hence the exit of the firm from the industry. The company may opt to revise its product design to embrace the changes that could have occurred in fashion and technology hence the extension of the maturity stage.
After the above explanations, the product life cycle occupied by Next plc is the growth stage. The company’s brand is still growing since the company has kept on increasing its revenue and it is not near reduction. It is the reason for its expansion in other international markets. If the strategizes well, then the maturity stage would come soon and it can maintain the stage through revision of the product design.
Stage of development for professional version of page maker
Page maker is an old technology for Aldus Corporation. The company introduced the product way back in 1984 for both professionals and businesses. Following the saturation of the market and complexity in the use of the product, the company opted to diversify through product differentiation hence the manufacture of the professional version of page maker. Market diversity is a characteristic of the saturation stage of the product. Therefore, the product is at a saturation stage in which the product has reached the climax of its development. Under this stage, the product faces high competition from other competitors in the industry hence the firm realizes reduced sales revenue. If drastic measures are not taken at this stage, the product and the firm may be driven out of the market. Due to this reason, the management of Aldus Corporation sought to diversify by differentiating its page maker product into two segments, business and professional page maker. The move sought to sustain the firm longer in the industry.
Appropriate Marketing Mix for Professional version of Page Maker
According to Biemans (2010), some organizations employ various strategies in their marketing in what is called the marketing mix. The main components of the marketing mix of Aldus Corporation comprise of the product, the price, place and promotion.
The product: this is the good or service provided by the organization in a design market for its clients. Aldus Corporation provides many products including the main product, the professional version of page maker. The product has been known to solve many issues that professionals face in their task execution. The product provided the consumers with substitute technology for manual ways of working or for the purchase of outside typesetting services. Groucutt, Leadley & Forsyth (2004) note that customers can be interested in other non-physical elements of a product. They may include factors such as packaging, quality, features and the brand name. The product being sold (professional version of page maker) should meet the specific needs of the target market. Biemans (2010) adds that the appearance of the product make up what the customer is buying. In order to provide the products and services with desirable features to the customers, a comprehensive market survey is necessary. In addition, during the establishment of the newly modified professional page maker, Aldus Corporation should ensure that the new product bundle meets the business strengths and weaknesses. Before any venture is undertaken, long term thought in the line of broadening the product bundle should be undertaken. This would reduce the chances of product maturity and exit from the industry.
Price
The price represents the money that the company charges for its products or service. According to Dean & Patrick (1993), price determination is a tricky and frightening exercise for a new organization. In spite of the need to set the prices of the company product lower than competitors in a new market, the low price can send different signals. For instance, consumers may perceive low prices as an indicator of low quality. Thus, the outcome price should be neither timid nor greedy because a greedy price would drive the firm out of the market while a timid price would reduce the chances of growth for the firm. Currently, Aldus Corporation is providing Professional Page maker at a price of $2,000. This price should be reviewed based on various market segmentation factors for the professional market segment. Aldus Corporation can apply various pricing strategies in the professional markets segment as explained below:
- Cost-plus strategy: this strategy adds a standard percentage of profit above the incurred production cost. The cost can be effectively arrived at after comparison of costs incurred in production.
- Value-Based strategy: this strategy is based on the valuation perceptions of consumers of the product. The perceptions of consumers are based on various product related factors such as quality, prestige and healthy issues.
- Competitive pricing strategy: this strategy is based on the evaluation of the competitor prices and charging the price that are related to competitors. The strategy is simple to apply because what is required is the comparison of competitor’s prices. Market surveys and gathering of information is vital for the strategy (Mills, 2002).
- Going rate: The strategy charges prices based on the prices that the good is going in the market. It is applied in markets that the firm lacks control of the price in the market.
- Skimming strategy: the strategy targets high consumers. Thus, it introduces a product in the market at a high price with the intention of targeting affluent consumers.
- Discount pricing: the strategy is based on the reduction of the advertised price by a given percentage.
- Loss Leader: the strategy aims at selling the product at a price that is lower than the cost incurred in producing the product. The goal of the strategy is to attract customers to the firm. New entrants mostly apply it.
The decision on the strategy to be employed in pricing is accompanied by determination of payment periods, product bundling, discounts and allowances (Dean & Patrick, 1993).
Place
After a careful selection of the target market, the product needs to be distributed to the consumers. The nature of the product is usually considered in the choice of the distribution channels. For instance, Aldus Corporation manufactures and supplies professional page maker to its professional consumers in different regions specifically in the U.S and in EU. The distribution channels utilized by the firm are retail dealers and original manufacturers (Wedel & Kamakura, 2000). A retailer would occupy the lower end of the channel of distribution. The firm can decide whether to supply its products directly to the consumers or sales through an intermediary (Reseller sales). Whichever strategy adopted by the firm, the management needs to decide the market coverage of the product. In order to cover the market, the firm can use intensive distribution where it places its products to as many places as possible within the market. This strategy is often accompanied by low pricing (Kotler, et al. 2001).
The company can perform selective distribution where it narrows the distribution of its products to only a few businesses. This strategy enables the firm to establish a good relationship with its customers because high quality product selling retailers are provided with the opportunity to sell the products of the company. The sales volumes will dictate the inventories to hold and the best means of transportation of the products to the market. All kinds of logistics including acquisition of raw materials should be applied in order to realize the cost minimization objective.
Promotion
Product promotion refers to all means that a firm is involved in advertising and selling of the product. Through promotions, the firm lets its professional customers and potential customers know about the features of the professional page maker. According to Slack, Chambers & Johnston (2010), promotion aims at revealing the specific good features of the product being offered with the goal of convincing the consumers to purchase it. The promotion of company products should contain a clear message conveyed through an appropriate channel. The targeted audience should be professionals in need and the ability to purchase the product. After a successful market survey, the firm should identify the target for its product hence the promotion. Various promotional channels include the radio, television and the print media. Others include the electronic media and use of word of mouth.
Aldus Corporation can also rely on public relations to create a good image and reputation hence enhancing the marketability of its products. Personal selling could be utilized with sales persons being employed to sell the products of the firm.
Perceived value Concept
People observe products differently based on various factors that are best known to them. The concept of perceived value as used in business concept is the perception of the products of an organization by the consumer. The perceptions that the consumer has concerning the product may not be based on the derived utility, product price or quality, but on other factors. In addition, the perceived value of the product may not be based on the market or the impact of the product on other users. The perceived value of the page maker product offered by Aldus Corporation is that of sophistication and difficult to use. It is the reason that many consumers of the product are finding alternative or substitute products easy to use. The purpose of sales representatives of an organization is to help the clients of an organization gain a given perception of the product being offered. However, the selling process could also have a negative impact on the perception of other competitors’ products (Mills, 2002).
Impact of perceived value on Marketing strategy
The perception of sophistication of the page maker product offered by Aldus Corporation has a negative impact on the sales of the firm. The effect on the marketing strategy is a negative one and therefore calls for the change of the marketing strategy. Due to the negative effect of the perceived value on the sales revenue of the firm, the company was forced alter its marketing strategies. For instance, Aldus Corporation was forced to segment its market into two major categories from initial four strategies. The product was differentiated to suit the two market segments hence the development of professional and business versions of page maker. The price too changed with the professional being sold at $2,000 while the business version going at $500. Lastly, the distribution channels were reviewed with the firm opting for a high-end distribution channel and broad distribution networks for the professional and business versions of page maker. This was a deviation from the earlier forms of distribution.
Likely causes of problems at Aldus
Firms purchasing Aldus product, Page Maker established that the product offered by the firm was increasing in sophistication hence losing its ability to meet customer needs. However, the problem began when the product was sophisticated enough to the extent of not being able to meet the needs of less sophisticated consumers that were increasing daily. In addition, retailers, who were the primary distributors of the product failed to meet the sophistication of the high end users hence posing the danger of losing the market share. The needs of professional consumers were diversifying daily while the diversity of the product was not changing to meet the challenges. Organizational consumers changed from high sophistication to low sophistication users hence increasing the problems.
Conclusion
Aldus Corporation was established many years ago in the U.S and operates in eth software industry where it produces page maker, software that enables consumers to perform various tasks related to desktop publishing. In its operations, the firm initially had four market segments including Macintosh systems, MS-DOS, businesses and professional users. In spite of the initial successes, the level of the product sophistication increased while less sophisticated consumers increased hence posing a challenge to the future of the product and the firm. This led the management o change the marketing strategies to target new users hence differentiating the product to meet specific market needs. It is highly recommended that the firm change its strategies completely to fit into the changing user needs.
References
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Kotler, P. et al. (2001). Principles of Marketing, 3rd ed., McGraw Hill, New York, NY.
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