Marketing planning process
The first consideration in a marketing planning process is analysis, this involves establishing the characteristics of the customers, the strengths and weaknesses of the company and competitors, and the external environment. The subsequent step in the process is planning, this involves selecting a target market, formulation of strategies on how to reach the target market, and determination of marketing objectives. After planning, the next step in the process is implementation; this involves budgetary allocations, delegation, and staffing. Control is then undertaken to evaluate progress against customer satisfaction and profit objectives. The ultimate step is a review, where a constructive evaluation of the process is undertaken to ensure that objectives are achieved next time (McDonald, 2007).
There are several weaknesses in the approach used by Mainspring Company. The company should first establish its strengths and weaknesses. The strengths of the company include the innovation of a new type of screen that is easier to produce and offers enhanced image quality. The weakness of the company is that it produces unbranded screens that are not easily distinguished from others on the market. On the other hand, the strengths of Mainspring’s competitors are that they can exploit Mainspring’s technological innovations for their benefits and they have an edge in terms of pricing. Their weaknesses are that they are new entrants into the market and are yet to build a credible customer base.
Mainspring must also clearly identify the target clientele of the company. The company mainly sells its products to other companies that manufacture laptops, specialist medical equipment, and arcade games. In recognition of this fact, the company should formulate tailor-made marketing strategies for this particular segment. For example, Rolex watches are high-end luxury timepieces and thus are marketed exclusively to that clientele.
After planning, Mainspring should go-ahead to implement these plans. For instance, the marketing department of the company should apply marketing strategies focused exclusively on the companies that use the company’s screens. The Company also has to consider budgetary allocations for these initiatives. The next step the company must undertake is evaluating the satisfaction of their customers with the products as compared to the profit margin. Finally, the company should review the entire process to determine the gains made and the objectives that have not been achieved. This approach is likely to improve the productivity and profitability of the company.
Changes in the marketing environment and their impact on the current and future marketing of Mainspring’s products
The prevailing marketing environment is not static, it is constantly changing. These changes have the potential to impact significantly on the marketing of Mainspring’s products… To adequately analyze the impact of these changes, it would be useful to utilize the STEP environmental analysis and Porter’s 5 forces model of market attractiveness.
The acronym STEP is used to classify the influences in the wider environment on the marketing of the company’s products. STEP describes the socio-cultural, technical, economic, and political or legal aspects of the external environment. About the current and future marketing of Mainspring’s products, the socio-cultural dimension deals with changes to the composition of the society in terms of the growing demand for laptops especially by women, young people, and households where more than one computer is required because of the internet usage. Also, the growing demand for arcade machines has been witnessed as customers are quickly getting bored with the existing games in the market. This trend is likely to have a significant effect on the marketing of Mainspring’s products.
The technological component of the STEP environmental analysis deals with the research and development of completely new products and the upgrading and enhancement of existing products. About Mainspring the innovation of the new screen necessitated the formulation of new marketing strategies. The E stands for Economic factors. A definition of economy describes it as the system of production, distribution, and eventual consumption of goods and services. (Sadler and Craig, 2003) Economic factors are relevant to marketing because they determine the purchasing power of the consumers of a particular service or commodity.
Finally, in the acronym STEP, the P refers to the political and legal factors. Political and legal policies set limitations on what marketing initiatives can or cannot do and restrictions regarding the products and services on offer. (Pickton and Masterson, 2010) In the case of Mainspring Company, the political and legal factors come into play with the introduction of new legislation that requires conformity to restrictions on the emission of electrical discharge. All screens produced by the company already conform to these stringent guidelines. These restrictions are likely to have a considerable impact on the future marketing of the company’s products.
Porter’s “5 Forces” model
Porter’s “5 Forces” model of market attractiveness can also be applied in analyzing the changes in the marketing environment that will affect the current and future marketing of Mainspring’s products. Porter’s model is applied to evaluate five significant threats that determine e whether a particular market is attractive or unattractive (Porter, 1998).
The model identifies the threat from direct competitive rivalry as the most important threat in the model. According to the model, if the consumers of a product see little difference between two similar products, they are likely to base their choice on the price of the commodity. In recognition of this fact, most new entrants in the market resort to price cutting. In the case of Mainspring Company, rival companies offering screens that are in all respects similar to the company’s are the source of direct competition. The model goes ahead to identify threats from suppliers. The suppliers may end up colliding with each other to charge high prices for certain raw materials. In the case of Mainspring Company, the suppliers of the raw materials needed to make the screens may form a consortium that charges inflated prices for the materials.
Consumers have the potential to pose a threat to an organization. These consumers are not individual buyers of commodities but are large firms that account for large proportions of a company’s sales and therefore have the leverage to negotiate for lower prices. This scenario is evident in Mainspring where the buyers of the screens are the manufacturers of laptops, arcade games, and specialized medical equipment that may have the ability to agitate for lower prices and thus threaten the success of the organization. The model further identifies new entrants into the market as potential threats, Regarding Mainspring Company; the new entrants may have surmounted barriers to attain a position where they can pose a serious challenge. The final threat identified in Porter’s model is the threat from substitutes. If the needs of the consumer are not specific, they may opt for an alternative from the wide array on offer. For instance, in the case of Mainspring Company, consumers may opt for any screen that is being offered by rival companies.
An evaluation of current market information and a discussion on the range of marketing strategy options available for Mainspring
To evaluate current marketing information and discuss a range of marketing strategy options available to Mainspring Company; it would be useful to apply Porter’s generic strategy model and Ansoff’s matrix.
Porter’s Generic Strategy Model
According to Ferrell and Hartline (2008), a marketing strategy is a well-articulated plan, usually conceived as part of the overall corporate plan that deals with the development, distribution, and pricing of the commodity. The marketing strategy identifies the marketing goals of the organization and determines how these goals will be achieved within a stipulated time frame.
Porter’s generic strategy model is focused on the notion that there is hardly ever a single right strategy for an organization; the strategy chosen must be suitable for the goals of the organization. According to Porter, all successful companies used either differentiation, focus, or cost leadership. The most suitable approach for Mainspring Company is cost leadership. Cost leadership involves bringing down the cost of a particular commodity so that the organization becomes synonymous with low prices in that particular market. For Mainspring, the market for screens has become crowded with other companies offering similar products. To remain competitive, the company should be recognized as the cheapest option while maintaining high standards of quality.
Ansoff’s matrix
Ansoff’s matrix, also known as the product-market scope matrix is a tool of analysis that was developed to evaluate the product-market approach to the formulation of marketing strategies. The matrix focuses on five important functions, the first of this being consolidation a strategy that is applied by the company in an attempt to retain the existing customer base of the company as opposed to attempting to attain expansion in market share.
Market penetration is another essential element in the Ansoff matrix. It is achieved when a company goes into a market with current products by acquiring a competitor’s customer base or by attracting customers who were non-users of the product in question. (Hill and Jones, 2010) About Mainspring, this may involve the acquisition of the customer base of rival companies. The matrix further deals with market development. This involves promoting the sales of an existing product in an emerging market. About Mainspring this may involve the marketing of the company’s products in other regions, countries, or continents. Closely related to this is product development which deals with the design and promotion of new products that are meant for the existing market. Mainspring Company can capitalize on this avenue to expand the products on offer. Finally, diversification is a component of the Ansoff matrix deals with expansion into emerging markets and the introduction of new products. This strategy applies to Mainsprings as venturing into new markets and the introduction of new products would help spread the risk for the company.
The Ansoff matrix can be represented diagrammatically as such:
SWOT Analysis for Mainspring
Strengths
The company successfully launched a new screen in the market that has the benefit of enhanced image quality and is easier to manufacture. This invention heralded prosperity in the future of the company.
Weaknesses
The company produces unbranded screens that are virtually indistinguishable from others on the market. Other companies are exploiting this fact to produce and market similar screens.
Opportunities
The company is well placed to exploit the opportunities in the emerging market for screens. There has been mounting demand for laptops especially for young people, ladies, and in households where more than one computer is required because of internet use. Moreover, there is an increase in the rate of replacement of arcade games.
Threats
The biggest threat facing the company is mounting competition from new entrants in the market who are producing identical screens to those produced by Mainspring.
Benefits of Relationship Marketing for the Company
Relationship marketing describes a strategy that is formulated in an attempt to encourage customer loyalty to the company in the long term. This approach is aimed more at retaining customers than in acquiring new customers (Hennig-Thurau and Hansen 2000). Relationship marketing is driven by offering consumers information that is tailored for their particular needs (Egan, 2008). Typically, the approach fosters repeat business. Relationship marketing is centered on personalized treatment for customers and establishing a personal relationship with them (Peck, 1999).
Mainspring Company is in the business of selling computer screens to other businesses. In this respect, the company has several viable opportunities for the development of relationship marketing. This particular marketing strategy is grounded on the establishment of a relationship between the company and the customer. In recognition of this fact, the company must maximize contact with the customer at each point of interaction, from the order right through to the delivery of the products. For example, when a company deals with the mainspring, they should be treated with personalized, individualized treatment right from the initial point of contact.
The company can also benefit from the application of e-marketing strategies. These strategies are particularly relevant in this day and age that has been commonly termed as the internet age. The company should consider marketing via search engines whereby searching related topics will contain a link to the company’s website. The company should also consider the use of e-mail notifications of special offers, discounts, and such information to existing and prospective customers.
Mainspring can comprehensively utilize relationship marketing by also offering a loyalty program for its customers and offering them discounts on special occasions. This approach is associated with several benefits. A major benefit is ensuring customer loyalty, these loyal customers would be willing to try new products from the company and even pay more for the company’s products. Additionally, loyal customers can offer feedback about the company’s products. However, the most significant benefit of relationship marketing is boosting the sales and market share of the company.
Strategic Marketing Objectives
Strategic marketing is a process that has several objectives, among these is the conversion of the mission statement of a company into performance targets and the formulation of a benchmark to monitor these targets. (Foxall, 1981) Strategic management also has the objective of innovating new products and services. Essentially, strategic management is meant to increase sales, expand the company’s market share and brand recognition (Wilson and Gilligan, 2005).
An evaluation of the prevailing conditions suggests that Porter’s generic strategy model is the best-suited approach to Mainsprings Company. This is because; the application of cost leadership would propel the growth of the company and increase profitability. This is because, with the entry of other companies, offering virtually identical products to mainsprings implies that the only way the company can establish dominance is by offering good quality products at the lowest prices.
Cost leadership is a workable strategy for the company; however, the company can also consider differentiation. At the moment, the company exclusively produces computer screens. This implies that the company’s market capitalization is limited to that particular segment. The company should consider diversifying its product portfolio to include other products apart from computer screens. The need for differentiation is further underscored by the emergence of stiff competition from other companies. To illustrate the effectiveness of the strategy, consider two companies, Intel and Bosch that have both demonstrated the benefits of differentiation.
About the Ansoff model, it is useful to examine both the short term and long term objectives of the company. An essential component of the matrix is market penetration, Mainspring can, in the short term, aim at capturing about 15% of the market, this would be an upgrade from the10% market share achieved over the last three years. In the long run, Mainspring should achieve a 25% market share capitalization.
Another element of the Ansoff model is market development. This strategy involves targeting existing customers in the existing market segments as well as new customers in emerging markets. The matrix also deals with product development. In the short term, Mainspring should venture into the manufacture of other products apart from screens. In the long run, the company should have established itself as a significant player in the alternative electronic products other than screens. Finally, the matrix deals with diversification, the matrix also deals with diversification. These objectives correspond with the company’s sales objectives and are SMART that is; they are, specific, measurable, agreed, realistic, and timetabled.
In considering strategic marketing objectives, it is important to consider the application of the Boston grid. The grid is represented diagrammatically as such:
The grid divides opportunities into four distinct groups. The dogs represent the low market share and low market growth. The cash cows represent a high market share accompanied by low market growth. The stars represent a high market share along with high market growth. Finally, the question marks represent low market share accompanied by high market growth. The sector of the Boston grid that’s most descriptive of the company is the cash cow segment. Mainspring enjoys a high market share of the computer screens market; however, this sector is recording low market growth. To counter this, the best remedy is differentiation.
Critical evaluation of the tools and techniques used
Several tools and techniques have been used in the case study. One of these is the STEP analysis tool; it is applied to examine factors that are external to an organization. The tool is instrumental in understanding the overall environment in which an organization operates. It is simple and inexpensive and fosters the development of strategic thinking. The tool also has the advantage of highlighting potential threats to an organization. However, the tool is not without its shortcomings; the tool is usually presented in form of a simple list that is not critical. The tool also encourages the over-analysis and this analysis may be based on unfounded assumptions. Moreover, the tool focuses exclusively o environmental factors without taking into account other factors that may affect the organization. (Allen, 2001)
Porter’s “5 Forces” model is another tool that has been used in the case study. The tool is useful for gauging the attractiveness of a particular market; however, it does not consider non-market changes that may affect the organization, for instance, political changes. Additionally, the model under-evaluates the impacts of administrative regulations and does adequately consider fast-changing organizational dynamics. (Hargroves and Smith, 2005)
According to Campbell et al (2002) Porter’s Generic Strategy Model is a useful tool of analysis. However: the model proposes clear-cut distinctions without considering the possibility of the existence of areas of commonality, for instance between cost and differentiation.
Ansoff’s matrix is widely regarded as an important tool of analysis; however, it has some inherent weaknesses. The matrix is very simplistic and does not account for the influence of external environmental factors (Gray and Gray, 2000).
References
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